Co-location of R&D and production in fashion industry

Purpose – 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. Design/methodology/approach – 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. Findings – 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. Research limitations/implications – This paper presents some limitations in that it focuses only on fashion industry without considering other sectors. Practical implications – 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. Originality/value – 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.