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In the discussion on the prospects for growth of the manufacturing system in Italy one still unsolved problem stands out: the small size of the firms. There is a great concern regarding not only sectors facing strong competition from countries with a low labour cost, but even sectors with a good position in the world market, as the engineering firms in the province of Modena. As a matter of fact, in the mechanical-engineering sector there is a large number of small firms and only very few firms belong to “groups” (and instances of foreign groups are rare): small size of independent companies is considered a sign of weakness that could be a mark of their inability to operate on international markets and thus to face the challenges of globalization. The paper investigates the systemic characteristic of the mechanical-engineering production system in Modena and the strength of many short chains of linkages within the network of companies operating at local level for the global markets. Our focus is the dynamics of change of the system. The literature on industrial districts has frequently emphasized how the firms that operate in the district are in competition with one another, when it is a question of firms specializing in the same stage of the production process; whereas they cooperate in the case of firms operating in different stages in the same production filière. This particular pattern of competition and cooperation among firms specializing in a stage could be one of the distinguishing marks of the system (“equilibrium” factors, as Brusco, 1989 and 1999, calls them). This explanation supposes that the firms can be either in competition or cooperating, we find forms of competition, for certain activities, among firms that cooperate for other activities. The data on the presence of competitors among the suppliers or the clients give an idea of how extensive this phenomenon is in the Modena engineering system. In this paper we show that the weak points of Modena’s mechanical-engineering industry lie not so much in the size of the firm as in the mechanisms that fuel and regenerate the competences needed to sustain the development of the network of firms. This line of research opens new question in the analysis of market systems and network of competences that are addressed in the last part of the paper.
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