Internationalization and industrial districts: evidence from the Italian automotive supply chain

In this paper we focus on the determinants of internationalization and, in particular, on the specific role played by the agglomeration of small and medium sized enterprises (SMEs) through their proximity to a large firm. We study the characteristics of the internationalization process in a representative sample of 786 firms in the Italian automotive supply chain. After building an Internationalization Strategy Index (ISI), we perform a multinomial logit econometric analysis. The main findings of the empirical analysis are: (a) Italian automotive supplier firms mainly go in the foreign markets through export, i.e. the simplest internationalization mode; (b) as predicted in the literature, individual firm characteristics play a significant role in the probability of internationalization; (c) firms located in the province of Turin, where the dominant car assembler (Fiat) in Italy has its headquarters, or more generally, in large automotive industry districts, enjoy a clear localization advantage; (d) interestingly, we also find that internationalization is negatively correlated with the share of Fiat in suppliers' sales, and that suppliers located in a district and less dependent on Fiat are also those adopting the most advanced internationalization strategies.