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How does embeddedness of firms influence competitiveness and local development?
The article illustrates the characteristics of a distinct typology of industrial organization, with a particular attention on firms’ embeddedness as a key driver of competitive advantage and local well-being.

Industrial districts of the Italian north-eastern and central regions (the “Third Italy”) are rightly considered the pride and joy of the country’s manufacturing system, and have been looked at as an example of an alternative paradigm of development, capable of marrying economic competitiveness with territorial development. The aim of this article is to illustrate the characteristics of this distinct typology of industrial organization, with a particular attention on firms’ embeddedness as a key driver of, and bonding factor between, competitive advantage and local well-being. It then illustrates how districts have evolved in the era of globalization, and particularly as a consequence of phenomena such as the emergence of district-born multinational enterprises and the market-re positioning strategies adopted by district firms. 
It concludes by suggesting that districts have, to some extent, lost some of their embeddedness, and that this might be one of the determinants of the loss of competitiveness, as well as of the decreased ability to contribute positively to local development and well-being.

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