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Advantages and disadvantages of the Italian entrepreneurial talents

Les talents de l’entrepreneuriat italien, avantages et désavantages
Gli aspetti originali dell’imprenditorialità italiana
Vera Zamagni


Cet essai présente les traits originaux de l’entrepreneuriat italien qui, pour des raisons historiques, s’est jusqu’à présent focalisé sur des PME (Petites et Moyennes Entreprises). Pour les rendre compétitives sur le plan international, les entrepreneurs italiens ont développé avec un certain succès une stratégie de spécialisation et de construction de réseaux. Cependant la globalisation a présenté des défis auxquels il faut faire face par des réformes institutionnelles avec par la consolidation des entreprises de dimension moyenne, c’est‑à‑dire, le « Quatrième capitalisme ».

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The structure of the Italian economy

  • 1 There is now (2012‑2015) a comprehensive history of IRI in six volumes, Storia dell’IRI (1933‑2000 (...)
  • 2 Zamagni, 1993, Felice, 2015, Ascesa e declino. Storia economica d’Italia.

1Italian industry has very ancient roots, going back to the Middle Ages, when the Italian merchants conquered European markets with their manufactured products, becoming leaders in Europe for cultural, artistic, technical and economic innovations. Italian manufacturing later declined, although it did not disappear altogether, especially in the manufacture of silk, and resurrected at the end of the 19th century, some decades after the unification of the country. Italian entrepreneurs have been capable since take off (1884‑1913) to modernize, adopting international technology and occasionally contributing to innovation in specific fields (electricity, chemicals, engineering), but they have normally kept their firms smaller than in the rest of the advanced world. Big businesses have been exceptional and, as a result of WWI and the 1929 crisis, most of them fell in the hands of the State that produced a very original bailing out operation ended with the creation of a public holding called IRI1, which controlled 40 % of the Italian joint stock companies of the time. The reconstruction after WWII confirmed IRI and developed other state‑owned holdings (ENI, EFIM, ENEL are the most important ones) shaping a dualism of the Italian industrial sector: big business was in the hands of the State (SOEs), with very few exceptions (Fiat, Pirelli, Olivetti), while private enterprise managed the very large amount of SMEs2.

  • 3 Zamagni, 2009.

2The management of big business by the Italian State did not show the same degree of effectiveness of its French counterpart, but it was not entirely negative. Among the 9 largest Italian companies appearing in the Fortune list of the Global 500 in 2013, 6 are former SOEs partly privatized, and one is still 100 % state‑owned. Among the largest and most successful former SOEs, Finmeccanica3 stands out as the most technologically advanced (it produces helicopters, aircrafts components, missiles, satellites, electronic systems for defence and aviation, space instruments). It has some joint ventures with the French Thales, and has acquired the British Helicopter company Westland, and the American defence company DRS. But the control by the State of the largest Italian enterprises had two perverse effects:

  • a) It prevented the formation of a class of managers capable of administering big business, because state managers were too protected and “parochial” to be able to contribute to the privatization wave. This meant that during privatization since the 1990’ it was not easy to find “private” managers capable of making the old SOEs competitive.
  • b) It prevented the internationalization of Italian industry, because SOEs remained “national” and this remains a problem largely unsolved even today.

3Private enterprises being practically confined in Italy to SMEs tried to reach excellency under this size constraint using two instruments, specialization and networks. Italian SMEs started specializing in all those sectors in which design and customization mattered, taking advantage of the centuries old manufacturing traditions and of the artistic heritage of the country. Italian SMEs have become famous in the world not only for the highly differentiated consumer goods (the “made in Italy” fashion), but also for engineering and chemical products tailored to the needs of their clients. They have also been capable of exploiting the implication of the electronic revolution that has exploded the process of production at the world level, becoming suppliers of components for many multinational corporations. Perhaps the best example is the Brembo company from Bergamo, which produces brakes for all the automobile and motorcar companies of the world.

  • 4 For a general overview of industrial districts, see Belussi & Sammarra (eds), 2009; Becattini, Bel (...)
  • 5 Of the 10 700 companies examined by the Mediobanca sample of companies with 50 499 employees, 1450 (...)
  • 6 With reference to “Fourth capitalism”, see Colli, 2006, p. 7. See also by the same author, 2003, a (...)

4Not being able to exploit economies of scale because of their limited size, Italian entrepreneurs have tried to exploit economies of scope, but not in one single plant (as it happens in corporations), rather building up tight networks. Networks can be of different type; in Italy, the practice of networks has been extensive particularly in two versions: industrial districts (geographical clusters) and what has been named “fourth capitalism”. The industrial districts are a geographical conglomeration of SMEs specialized in different versions of the same product: the place becomes a permanent exhibition of all the varieties of one single product. We have a ceramic district in Sassuolo, a spectacles district in Friuli, a packaging machinery district in Bologna, a bicycle saddles district in Veneto, and other hundreds of them spread around North and Central Italy (only a few exist in the South, among which a sofas district in Puglia)4. “Fourth capitalism” is instead less geographically defined phenomenon including a few thousands medium size companies5 capable of internationalising and becoming world leaders in final products, outsourcing the production of intermediate parts to the smaller producers of the area6. They are also called “pocket multinationals”.

5Italy has become highly competitive in a large number of “niche” products (about 1000), which have allowed the country to support exports, even across the present crisis. This is why Italy still has industry, as table 1 shows.

Table 1: Some comparative economic indicators

Some comparative economic indicators
Exports of manufacturd goods Billions Euros Trade balance, Total products Billions euros Manufac-turing Production Billions euros Per capita GNP EU=100 Mean wealth per adult Thousands $ Public Debt As %of GDP
2014 2014 2013 2003 2014 2013 1995 2014
Italy 330 43 906 112 97 241
Germany 941 220 1976 116 124 192
France 342 -72 877 111 107 296
UK 259 -134 611 123 108 243 48 89
Spain 69 -25 447 100 93 124 62 98
Netherlands 67 309 133 130 186 73 69
Sweden 91 1 217 127 124 299 70 44
Greece 8 - 20 56 93 72 177

Sources: EU official statistics. Mean Wealth per capita comes from a survey of the Credit Suisse, Global Wealth databook 2013.

The challenges to be faced

6Having said this, there are a number of serious problems with the present Italian industrial basis. The most important ones are in my opinion the following:

  • Globalization has offered some advantages to Italian industry, as mentioned before, but has raised also very serious challenges: Italy does not have leading multinationals, with all that this implies. It does have plants from foreign multinationals, which find it interesting to produce in Italy, for reasons which are different from sector to sector, but this is obviously not the same thing, especially, because research is often kept outside Italy. This means that Italian highly qualified young people have often to move abroad to find jobs adequate to their qualification. Italy presently suffers of a serious brain drain.
  • All over the world SMEs are administered by families and these are not always ready to managerialize and to provide generational change, producing a high rate of firms shut down, especially as the country shows a great decline in birth rates.
  • Italy still has the “Mezzogiorno” problem, the solution of which needs a different approach, after the ages of infrastructures building, of subsidization of capital invested there in capital‑intensive plants, and of welfare transfers. The Mezzogiorno does not host many industrial districts and accounts for a very few successful medium size companies, while the former SOEs presence has shrunk everywhere. Probably, industrialization is no longer the appropriate policy, at the exception of agro‑industry. Rather, a number of services could be better developed: tourism (including agri‑tourism), logistics, ports and sea transportation.
  • Politics must be persuaded that public debt is not a way of facing the country problems; on the contrary, it is a way of causing additional problems, as it has happened in the recent crisis. Having a too high public debt accumulated in previous years, the Italian State could not support domestic demand which contracted in a drastic way, causing a fall in GDP incomparable with that of most European countries and a dramatic rise in youth unemployment. Reforms are needed to redress competitiveness of the system and possibly allow the strengthening and enlarging of at least some Italian companies.


7In my opinion, Italy is now trying to part company from her previous mistakes. The present government seems to have learned some lessons in terms of how to put public finances under control and promote reforms. A more adequate managerialization of SMEs also seems underway, but the road to strengthening big business is still at the very beginning. What is not in sight yet is a change of approach with our Mezzogiorno problem. My hope is that, if the change of our Constitution, which is underway, transforming the Senate in a Chamber of the autonomies will in fact take place, decision making in general will be made more rapid and the responsibilities of Regions and Municipalities directly represented in Parliament to produce wiser projects of development will become clearer.

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Belussi Fiorenza & Alessia Sammarra (eds), 2009, Business Networks in Clusters and Industrial Districts: The Governance of the Global Value Chain, Routledge, London, 448 p.

Becattini Giacomo, Marco Bellandi & De Propis Lisa (eds), 2009, A Handbook of Industrial Districts, Elgar, Cheltenham, 863 p.

Colli Andrea, 2006, Capitalismo famigliare, Il Mulino 7, Bologna, 155 p.

Colli Andrea, 2003, The history of family business 1850‑2000, CUP, Cambridge, 116 p.

Colli Andrea, 2002, Il quarto capitalismo. Un profilo italiano, Marsilio, Venice, 118 p.

Felice Emanuele, 2015, Ascesa e declino. Storia economica d’Italia, Il Mulino, Bologna, 385 p.

Jones Marian V., Dimitratos Pavlos, Fletcher Margaret & Stephan Young (eds), 2009, Internationalization, Entrepreneurship and the Smaller Firm: Evidence from around the World, Elgar 16, Cheltenham, 264 p.

Mediobanca‑Unioncamere, 2009, Le medie imprese industriali italiane (1997‑2006), Ufficio studi di Mediobanca, Storia dell’IRI, 1933-2000, 2012-2015, Laterza, Bari.

Zamagni Vera, 1993, Economic History of Italy 1860‑1990, Clarendon Press, Oxford, 432 p.

Zamagni Vera, 2009, Finmeccanica. Competenze che vengono da lontano, Bologna: Il Mulino, Bologna, 385 p.

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1 There is now (2012‑2015) a comprehensive history of IRI in six volumes, Storia dell’IRI (1933‑2000), Laterza, Bari.

2 Zamagni, 1993, Felice, 2015, Ascesa e declino. Storia economica d’Italia.

3 Zamagni, 2009.

4 For a general overview of industrial districts, see Belussi & Sammarra (eds), 2009; Becattini, Bellandi & De Propis (eds), 2009; Jones, Dimitratos, Fletcher et al. (eds), 2009, p. 16.

5 Of the 10 700 companies examined by the Mediobanca sample of companies with 50 499 employees, 1450 were eliminated because they were controlled by large enterprises and 4900 because they did not meet the revenue requirement for medium size companies. Around 4000 form therefore the core of “Fourth capitalism”. See Mediobanca‑Unioncamere, 2009. The data bank is updated every year.

6 With reference to “Fourth capitalism”, see Colli, 2006, p. 7. See also by the same author, 2003, and 2002.

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Vera Zamagni, « Advantages and disadvantages of the Italian entrepreneurial talents », Cahiers balkaniques [En ligne], 45 | 2018, mis en ligne le 05 décembre 2018, consulté le 12 avril 2021. URL : ; DOI :

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Vera Zamagni

Professeure, Scuola di Economia, université de Bologne, Italie

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