Social Networks and Industry Competitiveness The Case of Liliw Footwear Industry

One of the effects of trade liberalization is the reduction of tariff rates for the manufacturing sector. Aldaba (2012) found that trade liberalization has increased the likelihood of firms exiting the manufacturing industry. Unless domestic firms face economies of scale, they will not be able to cope to the adverse effects of trade liberalization. The footwear industry is an example. It has been reported that the footwear industry in Marikina, known as the Shoe Capital of the Philippines, and in Binan, Laguna are said to be slowly dying in these areas. This has adversely affected shoe laborers who, because of lack of employment opportunities in their respective localities, have started to move to other places in search of employment. A number of them found employment in Liliw, Laguna. This study explores the conditions that enable the footwear industry to flourish amidst competition at the local, regional, and national levels and to explore the role of social networks in the competitiveness of four selected footwear firms in Liliw. Results showed that Liliw footwear industry was able to compete in the market effectively due to the following factors: the reputation of Liliw as producer of affordable, cheap, and marketable footwear products, increased competition among local footwear producers, enmity of local footwear producers against imported footwear products from China, and the existence of financial and community support arrangements.

Keywords: social networks, industry competitiveness, footwear industry, trade liberalization