The paper analyses the effect on manufacturers in Italy's footwear districts of international competition, and investigates the underresearched nature of the link between international competition and the internal cohesion of districts. It addresses if and how global competition provokes the (partial) geographic fragmentation of local supply chains, dislocating select local parts manufacturers in its wake. The findings suggest that when international competition threatens the viability of local production, firms with the requisite organisational capabilities delocalise parts of the value chain. This helps them to retain competitive advantages but it also reduces agglomeration. This insight should inform regional development policy.

The paper analyses the effect on manufacturers in Italy’s footwear districts of international competition, and investigates the underresearched nature of the link between international competition and the internal cohesion of districts. It addresses if and how global competition provokes the (partial) geographic fragmentation of local supply chains, dislocating select local parts manufacturers in its wake. The findings suggest that when international competition threatens the viability of local production, firms with the requisite organisational capabilities delocalise parts of the value chain. This helps them to retain competitive advantages but it also reduces agglomeration. This insight should inform regional development policy.