Regional Cultures of Production
With the shifting nature of capitalist competition in recent years, many have argued that systems of innovation and production have become more social in nature. This assertion has two distinct but related components. First, production systems are coming to be characterized by a more finely articulated social division of labour, achieved through the process of vertical disintegration of large firms and the growing use of various forms of outsourcing, including subcontracting to smaller supplier firms. This externalization of the production process is said to offer the chief advantage of agility in meeting the needs of ever more rapidly changing and fragmented markets. As market demands shift qualitatively, producers are able to respond more effectively in such ‘open’ systems because they can more readily absorb the innovative ideas of supplier firms to help them devise new products and improvements, and because they can rework their sources of supply to match the particular attributes of the ‘product of the moment’, in both cases drawing upon the rich resources of a large collection of suppliers. The second component is that, as individual firms come to rely more heavily on their relations and exchanges with other firms, non-market forms of interaction become more important. Viewed in terms of the Williamsonian continuum between public markets and private hierarchies, much of the interesting action is seen to be taking place in the middle ground: relations are social, but are increasingly buttressed by trust. In particular, as Harrison (1992) pointed out in a classic essay, for these innovative production systems to function properly, firms must develop a considerable degree of interdependence on one another (including surrendering proprietary information) but will only do so when a relationship of trust has been established. Such relations are more likely to arise when firms interact with one another directly and repeatedly over time, as they will tend to do when they are located in the same region (see Crewe 1996). However, as sociologists such as Granovetter (1985) have pointed out, this interaction takes place through informal as well as formal mechanisms, and is reinforced by shared histories and cultures.