Networks within industrial districts: Organising knowledge creation and transfer by means of moderate hierarchies

This paper furnishes evidence of innovative modes of organisation of inter-firm relationships and knowledge management within industrial districts. With the aid of a district firm, we first highlight the marked tendency among the largest companies to eschew an exclusively endogenous innovative process. Next, we analyse how the leading firm can play an active role within a network by assigning outside its boundaries tasks that were once undertaken in-house. This happens gradually with the moderate hierarchisation of originally destructured network relationships. In its attempt to organise innovative modes of design and manufacturing, without losing control and strategic legitimisation, the leading firm elects a coordinating agent with direct responsibility over a selected team of specialist suppliers. © 2000 Kluwer Academic Publishers.