Adaptive Capacities under Pressure: Industrial Transformation and the Changing Institutional Foundations of Mechanical Engineering in Germany and Italy

Werner Eichhorst () and Gemma Scalise ()
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Werner Eichhorst: University of Bremen
Gemma Scalise: University of Milan Bicocca

No 19050, IZA Discussion Papers from IZA Network @ LISER

Abstract: This article examines how the transformation of export-oriented manufacturing is reshaping the role of coordinated institutions. Comparing the mechanical engineering sectors of Baden-Württemberg and Lombardy, it investigates how firms develop adaptive capacities in different institutional contexts. It conceptualises adaptive capacities as a multi-level process emerging from the interaction between firm capabilities, industrial relations, skill formation systems and regional governance. The findings show that coordinated institutions no longer diffuse adaptive capacities broadly across manufacturing systems but increasingly operate as selective infrastructures, concentrating opportunities for innovation, upgrading and employment stability among firms with stronger organisational resources and denser institutional embeddedness. While institutional coordination continues to support adaptation more effectively in Baden-Württemberg, its benefits have become increasingly uneven. In Lombardy, weaker institutional coordination reinforces firms' reliance on internal capabilities and deepens uneven patterns of adaptation.

Keywords: adaptive capacities; industrial transformation; mechanical engineering; coordinated institutions; comparative political economy (search for similar items in EconPapers)
JEL-codes: J21 J38 J50 (search for similar items in EconPapers)
Date: 2026-10
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