The principal aim of this project was to seek for distinctive governance initiatives in points of economic success located in regions of general failure, in particular comparing western and central European experiences. We deliberately concentrated on localities in difficult situations: declining clothing and textile manufacturing regions in areas with histories of ‘malgoverno e malavita’ (poor quality government and high levels of crime, including organised crime). We chose the areas around Naples and Lódz. In both we found little zones of ostensibly thriving production, mainly among small firms, many very small indeed. In both cases small firm size was primarily dictated by poor trust relations outside the family.
Our principal governance finding was the dependence of firms in both areas on the shadow economy. To some extent this provided the only governance available, making firms dependent on illegality to survive; but it also limited and hampered them, as well as contributing to a continuity of organised crime. However, in the Italian cases it was also possible to see changes in more formal governance arrangements very much in line with the processes being generally discussed in NEWGOV.