From craft to flexibility: linkages and industrial governance systems in the development of a capital-goods industry in Mendoza, Argentina, 1895-1990

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1993-04-01
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Virginia Tech
Abstract

This thesis examines the development of a capital goods industry in Mendoza Argentina through an analysis of linkages and industrial governance systems. Linkages are material, informational, and financial flows among firms. Industrial governance systems are the social practices that cement linkages. Hence, linkages are understood as socially embedded and not as market transactions governed solely by price considerations.

The study has two major arguments. First, it claims that contrary to conventional industrial location theory firms do not locate in view of the previous existence of certain favorable factors, but rather construct these factors as they grow. This argument is operationalized by asking how firms generate in time their own linkages. Examples taken from the 1895-1990 period include labor and subcontractors, clientele, services, and the emergence of economic groups. Second, this study argues that the capital-goods industry in Mendoza is undergoing a Substantial (and unprecedented) transition in the way production is organized. The transition is part of the larger shift taking place at both the national and global scales. The analysis focuses on the historical pattern of linkages and governance systems in the industry, and contrasts that pattern with that of the recent decade.

Implicit in the previous two arguments are two territorial dimensions. First, the development of “industry produces regions" (Storper and Walker 1989). Second, at the intra-city level this means that the evolution of the industry (and specifically its linkage structure and governance systems) has a direct bearing on the direction and nature of the city’s growth.

These two arguments are illustrated through empirical work in Mendoza, a city of close to a million people in western Argentina. Over 100 interviews gathered over ten months reveal the origins, evolution, and current form of linkages in the capital-goods industry. These interviews are complemented by data from a variety of sources.

The main conclusions of the study are three. First, the study illustrates the richness and depth that emerges from a project based on substantial fieldwork. Second, it shows the advantages of conceiving industrialization not as the location of plants in response to favorable conditions, but as a process initiated by the firms themselves. Third, the dissertation shows that the capital-goods industry of Mendoza iS in a transitional phase towards new ways of organizing production. The transition is expressed in new linkage structures, new governance systems, and the emergence of new types of firms and institutional arrangements.

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