Is local sourcing out of fashion in the globalization era? Evidence from Italian mechanical industry

The paper concerns a study on the changes affecting leading cluster companies' supplier relationships. In particular, the paper aims at investigating under which conditions and how industrial cluster companies rely on local suppliers in the current context of international competitive pressure and easier access to international supply sources. The research methodology is qualitative and based on a long-term longitudinal research of three case studies of Italian industrial cluster companies that are leading firms in specific niches of the mechanical industry. Two main questions are debated: under which conditions have industrial cluster companies relied on local suppliers? What has been the evolution of relationships between industrial cluster companies and their local suppliers? The empirical analysis shows that local suppliers have been playing strategic roles in different ways in distinct historical phases, contributing actively in terms of knowledge and competence development, production flexibility, delivery performance and cost efficiency.

Research highlights► International sourcing strategy might not be the only option to organize production activities for cluster companies. ► There is limited attention to the role of local suppliers that have been historically linked to mid-sized cluster companies. ► Leading cluster companies might choose to remain closely integrated within the local supply network. ► Empirical analysis shows how in distinct phases local suppliers have been playing different strategic roles.