The purpose of this paper is to analyze how important is co-location of R&D and production for firms originated from high-cost countries and to provide evidence of the relationship between the different strategies of location choices and co-location.
In order to investigate the relationship between R&D/design-production co-location and strategies of location choices for production, this paper uses a cluster analysis of 37 Italian firms that operate in fashion industry.
This article finds that co-location results in a dominant strategy for firms under the following conditions: high level of product customization, coordination difficulties between R&D and production, rapid change in production process technologies and product complexity difficult to be coded.
This paper presents some limitations in that it focuses only on fashion industry without considering other sectors.
This paper has some managerial implication in that offers some insight on decision making in organization. In particular offers some insights of how important is having an internal R&D/design function rather than collaborating with external designers in order to achieve competitive advantage in terms of product quality, product design and also brand name reputation.
This paper suggests that the co-location of R&D and production may improve the firms' performance considering the need for constant interaction between the two units. Moreover, it suggests that the co-location of R&D and production both within and external (within the firms' region and/or within the country) to the firms might be important. Furthermore, larger firms in terms of turnover have a greater preference to locate the R&D function close to the production function.