Small & Medium Gold & Fashion Enterprises (SMEs) in Arezzo, Italy: Competitive Challenges and Strategic Implications

ABSTRACT. This paper provides some empirical evidence on organizational characteristics and strate- gies of firms in the Italian gold and fashion industries. The analysis is based on a data set of three SME clusters in Arezzo (a city and province in Tuscany, Italy, southeast of Florence) which led us to the identification of two main alternative strategies which can be implemented when facing the new global competition: a firm-centered brand strategy and an outsourcing strategy (a supply alliance with co-branding possibilities with one or more large Italian firms). We analyzed the resources and compe- tencies of firms that adopted different export marketing strategies and further explored the relationship between strategic choices and performance of participating firms (measured in terms of growth, innova- tion, and export capabilities). The results show that the choice of a strategy is strongly influenced by the ability of SMEs to respond to changes in consumer behavior and competition, and that some variables significantly affect performance. Both strategies can be effective, and in some cases it is suggested to follow the middle of the road competitive approach: combining the two strategies, exporting own brand directly to the end markets and collaborating with a large firm in order to achieve a sustainable and significant competitive advantage.