Specialization in a Declining Industrial District

Although flexible specialization is regarded as one of the hallmarks of industrial districts, its consequences for firm performance have not attracted much empirical attention. Using event-history data on a complete population of textile-clothing firms in Baden-Württemberg in the Reutlingen (Germany) district from 1946 to 1993, this paper tests the proposition that specialized firms have a survival advantage over more integrated firms. Logistic regression models of failure probabilities show that, contrary to predictions derived from the district model, horizontally and vertically integrated firms have outlived more specialized firms. This study demonstrates the importance of dynamic research designs that incorporate information on strategic differences in a complete population of district firms, observed over an extended time frame.