Structures, knowledge and innovation in industrial manufacturing districts - A study of the preconditions, challenges and strategies amongst SMEs in traditional LMT industries in Kalmar County

Abstract: Globalization is an increasingly pervasive factor in the economy, and due to the increasingly international market and competition, it is becoming progressively difficult for firms in traditional, mature industries in high-wage countries to remain competitive. This thesis highlights the case of the Småland-Blekinge region that is performing paradoxically well, largely due to a manufacturing industry that continues to prosper in the region, contradicting conventional predictions regarding economies of agglomeration, industrial manufacturing and competitiveness. Following an extensive literature review on industrial districts, learning and innovation, several key themes are extracted through a coding process based on a series of interviews with representatives from twelve SMEs in the district. The industrial and socioeconomic characteristics of the industrial district, including profound diffusion of knowledge through strong informal networks, are found to set the preconditions for learning and innovation activities that take place in the district. The structure facilitates external economies - such as knowledge spillovers - and collaborative innovation, making the aggregate output of an integrated system of many small, geographically proximate firms highly significant – while simultaneously allowing the individual firm to retain one of its most important competitive advantages, namely, its flexibility.