Proximity and Knowledge Governance in Localized Production Systems: The Footwear Industry in the North Region of Portugal

Proximity is a key concept in the explanation of traditional and emergent production systems. Recently, the role of geographical proximity has been qualified on the basis of the argument that other types of proximity should also be taken into account in the explanation of innovation and, particularly, knowledge governance in production systems (e.g. sectoral innovation systems, global production networks, etc.). Drawing on in-depth research at the level of the company, this paper discusses to what extent the introduction of new technology, fashion and design, and control of distribution networks is changing the localized footwear production system in the North region of Portugal. The results indicate how leading innovative companies are developing distant spatial relationships in order to gain access to new critical knowledge using different strategies that are modifying the very nature of the spatial agglomeration. As new types of proximity emerge and new governance mechanisms are put in place, we argue that a new industrial and innovation policy is needed to sustain these traditional industrial agglomerations.