From the Industrial District to the Global Firm: Swatch Group and the Swiss Watch Industry, 1960-2010

Abstract

This paper focuses on the issue of the emergence of leading firms within industrial districts during the second half of the 20th century. Taking the example of the Swiss watch industry, it argues that institutional factors played a key role in this process. Cartel agreements, set up in the 1920s, combined with the legal backing of the federal state from 1934 onwards, maintained an industrial organization based on small and medium-sized enterprises (SMEs) and prevented the appearance of big firms. However, the liberalization policy adopted in the early 1960s sounded the death knell of the cartel and encouraged industrial restructuring through M&As. Swatch Group was founded in this context in 1983, and went on to establish itself as the largest watch business in Switzerland and in the world. The firm began relocating part of its production facilities abroad in the mid-1980s, especially in East Asia, and turned into a multinational enterprise during the 1990s.