Cooperation and competition in the industrial district as an organization model

Starting from the theory of the industrial district, this paper concentrates on the interplay between competition and cooperation characteristic of the industrial district as an organization model. After recalling the wide vertical and horizontal division of labour between firms in the district, it is shown how cooperation based on local custom and investments in personal reputation allows for the coordination of a large part of complementary activities carried out by local independent firms. Subsequently, we see how competition between firms and agents specialized in similar activities drives them towards allocative efficiency and innovation. Finally, the paper focuses on the reciprocal balance between cooperation and competition which is necessary for stability over time in the industrial district.