The growth pattern of Italian manufacturing firms: failure or success?

Firms’ ability to compete in the global market crucially depends on their ability to innovate and to introduce new products or processes into the market. This typically requires a more complex and structured business organisation, which Italian firms have historically been reluctant to adopt, primarily because of their smaller size. We underline how the growth pattern of Italian manufacturing firms was crucially affected by historical and institutional factors that enabled businesses to profit from a favourable economic and institutional framework, at least until the first oil shock. The dramatic change in the national and international institutional frameworks that followed negatively affected the growth pattern of Italian firms, whose average firm size started declining or, at best, remained consistent with sizes in the late ’60s. We further investigated the growth pattern of Italian firms over the last 15 years and found that Italian businesses decreased their size, as downsizing was the predominant pattern. There are, however, weak signs suggesting that a few medium-sized firms have marginally increased their size and thus their ability to compete in the global market. Future investigation will prove whether this symptom will develop into a positive growth pattern, but at this stage, it seems unlikely.