*2.2.1 Markusen's theory*

Markusen is a Professor and the Director of the Project on Regional and Industrial Economics at the University of Minnesota's Humphrey Institute.

Markusen's study, being focused on income-generating activities in city and regional contexts—therefore territorial—has analyzed the dynamics in a district perspective. Markusen's theories originated from her inductive study of the district phenomenon as observed in the United States, particularly in the high-tech districts of Orange County and Silicon Valley. By scanning the conditions in which some manage to remain "sticky" places in a "slippery" space, the study rejects the "new ID", in its Marshallian or more recent Italianized form, as the dominant paradigmatic solution. Beginning from the classic Marshallian model, she identified different types of ID ("sticky places"), corresponding to specific managerial philosophies, with rather disparate company configurations, internal versus external orientations and governance structures. The analysis is showing that the formation of districts is

**113**

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study…*

in the presence of one or more large companies, in vertical integration.

the larger ones in the role of suppliers or subcontractors.

reflects the structure of the oil districts.

which all companies benefit [45].

outside the territory [45].

*2.2.2 Hub-and-spoke ID*

In our analysis, we considered the hub-and-spoke industrial district, because it

The hub-and-spoke ID, in **Figure 3**, occurs in situations where one or more large companies serve as an economic centre of attraction within a geographic region, leading to the birth of other small and medium companies, which cluster around

The intercompany relations in this type of district are generally of two types: first of all, relations will develop between local small companies of the territory, and secondly, a certain number of new companies will activate new connections with others, developing higher levels of agglomeration and urbanization from

The identifying characteristics of these districts are the presence of one or more large companies, the vertical integration in one or more productive sectors and the existence of a series of small suppliers, which surround the larger ones [45]. Hub-and-spoke districts can be configured according to two different structures. A "ring" conformation occurs in the case of complete dependence of small businesses on large companies or central institutions, both as suppliers and for market access. A "nucleus" form occurs when small businesses benefit from agglomeration synergies due to the presence of larger organizations but are not necessarily involved in direct commercial transactions with them. Whatever the form, the development of hub-and-spoke structures is based on the situation that local companies do not have significant connections with suppliers and competitors

often stimulated and favored by the presence and power of multinational companies and the state. These elements permit the development of complex systems that small companies would be unable to form alone. Markusen's views the causal elements of aggregation as factors of diversification, leading to a typology of three distinct types of non-Marshallian clusters: (i) the "hub-and-spokes" model, which revolves around one or more dominated, externally oriented companies; (ii) the "satellite platform", a set of unrelated branches inserted in links of external organizations (e.g. skilled labour, natural resources); and (iii) the "state anchored" cluster, focused on one or more public sector institutions, which generate a particular demand flow. The hub-and-spoke and satellite platform variants are considered more prominent in the United States than the other two. The study of industrial districts requires a broader institutional approach and must include incorporation across the boundaries of the districts. The results of the research suggest that a purely locally targeted development strategy will fail to achieve its goals. The analysis of each type was carried out at national, regional and local levels. Particular elements of the industrial agglomeration were considered, such as the reference market, consumers and producers of goods and services and promoters of innovations, with revenues for the distribution and procurement of goods and companies, with the power of the internal and external markets. The hub-and-spoke industrial district is typical of the economies in which, within a geographical region, one or more large companies have the role of a generation of small- and medium-sized enterprises, which gravitate around the hub, to carry out activities of suppliers or subcontractors. The intercompany relations that follow this typology are of two kinds: on the one hand, they are established between small local businesses; we are witnessing a phenomenon based on new enterprises and can give rise to connections with others, which benefit from agglomeration and urbanization. This reality, then, can be seen in their peculiarity

*DOI: http://dx.doi.org/10.5772/intechopen.86298*

*The Management, Sharing and Transfer of Knowledge in the Oil Districts - The Case Study… DOI: http://dx.doi.org/10.5772/intechopen.86298*

often stimulated and favored by the presence and power of multinational companies and the state. These elements permit the development of complex systems that small companies would be unable to form alone. Markusen's views the causal elements of aggregation as factors of diversification, leading to a typology of three distinct types of non-Marshallian clusters: (i) the "hub-and-spokes" model, which revolves around one or more dominated, externally oriented companies; (ii) the "satellite platform", a set of unrelated branches inserted in links of external organizations (e.g. skilled labour, natural resources); and (iii) the "state anchored" cluster, focused on one or more public sector institutions, which generate a particular demand flow. The hub-and-spoke and satellite platform variants are considered more prominent in the United States than the other two. The study of industrial districts requires a broader institutional approach and must include incorporation across the boundaries of the districts. The results of the research suggest that a purely locally targeted development strategy will fail to achieve its goals. The analysis of each type was carried out at national, regional and local levels. Particular elements of the industrial agglomeration were considered, such as the reference market, consumers and producers of goods and services and promoters of innovations, with revenues for the distribution and procurement of goods and companies, with the power of the internal and external markets. The hub-and-spoke industrial district is typical of the economies in which, within a geographical region, one or more large companies have the role of a generation of small- and medium-sized enterprises, which gravitate around the hub, to carry out activities of suppliers or subcontractors. The intercompany relations that follow this typology are of two kinds: on the one hand, they are established between small local businesses; we are witnessing a phenomenon based on new enterprises and can give rise to connections with others, which benefit from agglomeration and urbanization. This reality, then, can be seen in their peculiarity in the presence of one or more large companies, in vertical integration.

In our analysis, we considered the hub-and-spoke industrial district, because it reflects the structure of the oil districts.

#### *2.2.2 Hub-and-spoke ID*

*Current Issues in Knowledge Management*

of ID was proposed by Markusen [45].

Markusen is a Professor and the Director of the Project on Regional and Industrial Economics at the University of Minnesota's Humphrey Institute.

Markusen's study, being focused on income-generating activities in city and regional contexts—therefore territorial—has analyzed the dynamics in a district perspective. Markusen's theories originated from her inductive study of the district phenomenon as observed in the United States, particularly in the high-tech districts of Orange County and Silicon Valley. By scanning the conditions in which some manage to remain "sticky" places in a "slippery" space, the study rejects the "new ID", in its Marshallian or more recent Italianized form, as the dominant paradigmatic solution. Beginning from the classic Marshallian model, she identified different types of ID ("sticky places"), corresponding to specific managerial philosophies, with rather disparate company configurations, internal versus external orientations and governance structures. The analysis is showing that the formation of districts is

*2.2.1 Markusen's theory*

"a socio-territorial entity characterized by the simultaneous active presence, in a circumscribed territorial area, determined from a naturalistic and historical point of view, by a community of people and business population" [29]: it constitutes a productive area, in which the factors of the sociocultural matrix are placed as determinants of the competitive advantage achieved by small businesses located in the same geographical unit [30, 31]. In these terms, it derives from the interaction, both of economic-industrial elements and of a historical-sociological nature. Thus, the district is an integrated, ordered system of companies in which the local culture serves as the unifying element. The individual components become functions of the whole, or expressions of the connections with the other units, and are both cause and effect of the social environment. Some Italian economists and sociologists, starting from the concept of the Marshallian agglomeration of companies, have given a strong improvement in building and highlighting the concept of ID, as a new research unit of economic analysis [28] halfway between the concept of industry and business. The authors grouped in the neo-Marshallian approach contribute to the definition of industrial districts—as a complex socio-economic environment—which present unique characteristics both in the economic-structural and sociocultural profile. In this perspective, the transationalist study [32–35] aims to identify a particular configuration of the institutional environment and the community market and places the district as a form of industrial organization located in the half between market and hierarchy. The association of the ID with the flexible specialization model, alternative to mass production [36], has increased the interest in the new business category, supporting new study perspectives; these perspectives are focused on the analysis of clusters as evolution of interorganic systems, networks and cognitive systems, within which the driving role of the individual companies that inhabit the area plays a central role. More recent are the studies of business economics that tend to report the survey on the business district, individually designed, on the interpretation of the relational ties that are established between the different district actors, i.e. a relational approach, and on the company analysis as a cognitive system [37–42]. Interest has also grown internationally: of particular interest are the reflections of scholars of economic geography, in particular, by Krugman [43] and Porter's [44] position on cluster, seen as a key element for the competitiveness of nations. Industrial district, cluster, local innovation system, innovative environment and innovative local "milieu" (environment) are the names proposed by various research contributions. In the 1990s, while other studies continued to rework the Marshallian model of districts, an important new classification

**112**

The hub-and-spoke ID, in **Figure 3**, occurs in situations where one or more large companies serve as an economic centre of attraction within a geographic region, leading to the birth of other small and medium companies, which cluster around the larger ones in the role of suppliers or subcontractors.

The intercompany relations in this type of district are generally of two types: first of all, relations will develop between local small companies of the territory, and secondly, a certain number of new companies will activate new connections with others, developing higher levels of agglomeration and urbanization from which all companies benefit [45].

The identifying characteristics of these districts are the presence of one or more large companies, the vertical integration in one or more productive sectors and the existence of a series of small suppliers, which surround the larger ones [45].

Hub-and-spoke districts can be configured according to two different structures. A "ring" conformation occurs in the case of complete dependence of small businesses on large companies or central institutions, both as suppliers and for market access. A "nucleus" form occurs when small businesses benefit from agglomeration synergies due to the presence of larger organizations but are not necessarily involved in direct commercial transactions with them. Whatever the form, the development of hub-and-spoke structures is based on the situation that local companies do not have significant connections with suppliers and competitors outside the territory [45].

**Figure 3.** *Hub-and-spoke district.*

Furthermore, the economies of scale must be relatively large, while the turnover of companies and personnel will be relatively low, with the exception of contacts with external suppliers [45]. Economic and financial decisions regarding operations in the hub-and-spoke district are usually made at the local level; however they arise and influence situations globally. Commercial relationships between smaller suppliers and larger companies, generally, involve long-term contracts [45]. The "hub" companies can develop a certain depth of understanding and relationships with both local and external societies, which can include the exchange of personnel. However, these will not be characterized by the integration and intensity typical of the relations that characterize the Marshallian district. In the theoretical conception of the hub-and-spoke district, labour markets are usually internal to large companies—for managerial personnel—and within the district as a whole for other employees. In this sense, the situation would be less flexible than the Italian model, in which workers of all types circulate among the large and small companies of the district. Both the original Marshallian and Italian models present a situation in which the district gives rise to a single local identity and culture, with a very close and dependent relationship of the entire district [45].
