Published by EH.Net (July 2012)

Andrea Colli and Michelangelo Vasta, editors, Forms of Enterprise in 20th Century Italy: Boundaries, Structures and Strategies. Cheltenham, UK: Edward Elgar, 2010. xii + 327 pp. $147 (hardcover), ISBN: 978-1-84720-383-0.

Reviewed for EH.Net by Federico Barbiellini Amidei, Banca d?Italia.

While it is well established in the economics literature that technological change is a key ingredient for fostering growth, there is no consensus among scholars concerning the different capability of countries in exploiting the successive waves of innovation that, since the first Industrial Revolution, have marked modern economies. Italy, in this respect, represents an ideal case study: starting from an agricultural-based economy in the nineteenth century, it undertook a distinctive industrialization process and registered unprecedented output and total factor productivity growth in the second half of the twentieth century, which made it one of the richest countries in the world ? although it has recently been hard-hit by a stagnation and negative productivity growth phase. In this book Andrea Colli (Department of Institutional Analysis and Public Management, Bocconi University) and Michelangelo Vasta (Department of Economics, University of Siena), supported by the valuable contributions of other distinguished economic historians, turn to the ambitious task of offering the reader a broad and comprehensive reconstruction of the evolution of the Italian productive system across its different economic phases characterizing the twentieth century. By extending Chandler?s classic micro- business history-based perspective, focused on large corporations, to the rich variety of business forms contributing to Italy?s wealth, the authors build a conceptual framework in which they distinguish both the common features as well as the peculiarities of Italy?s economic development with respect to those experienced by other leading economies. The task is challenging and the detailed introduction by the editors clearly shows that the different approaches followed by economic historians in this field are still far from being reconciled. Colli and Vasta ? considering the standard set of characteristics such as size, legal form, performance, and type of governance and ownership ? identify seven different relevant typologies of enterprise for Italy: big business, State Owned Enterprises (SOE), foreign-controlled companies, small firms, medium-sized firms, municipalized firms and cooperatives.

The first part of the book focuses on large companies, showing how, depending on switches in technological regimes, their importance for Italy?s economic growth changed over time in relation to the Italian delay in the diffusion of new technologies (Giannetti and Vasta) and documenting the relative weight of the different types of corporate ownership and financing structures (Conte and Piluso).? As neatly stated in the Foreword by Franco Amatori, ?big business ? was the engine of growth especially in the phases of more intensive growth.? At the same time, according to the editors, ?strong turbulence is a dominant feature of Italian big business, both in manufacturing and [especially] in the service sector? (p. 11), i.e. Italian big corporations were often unable to consolidate their position after having successfully joined the top 200, due mainly to the impact of new technological waves in the case of manufacturing, and to the impact of major institutional changes induced by the State ? in particular a sequence of nationalization and privatization processes ? in the case of the service sector. The role of family-owned companies is also discussed, even if the relevance of this type of enterprise for the Italian economy?s long-term competitive performance does not emerge distinctly enough in this first section of the book. In two separate essays, the crucial role of State intervention is measured ? this deserves to be highlighted ? and assessed, both as a direct supplier of products and services (Toninelli and Vasta), and as an enhancing mechanism for the development and consolidation of private-owned Italian corporations, especially through sound international and domestic technological transfer promoting economic and industrial policies in the post-WWII phase (Fauri). Interestingly while the European Recovery Program (ERP) loans accrued mostly to Italian big business to buy modern U.S. machinery, the Italian government also ?passed specific financing laws for the SMEs? (p. 125) and made possible the purchasing of domestically-produced machinery with ERP (counterpart) funds. Andrea Colli?s essay on foreign-controlled firms as a crucial actor for Italy?s developmental path is particularly innovative and rewarding. Via a quantitative investigation, foreign capital, invested in high-tech and capital-intensive industries, emerges as constantly relevant in the country?s industrialization process, in particular for its crucial contribution in transferring technologies to the indigenous industrial fabric in the 1950s-60s, thanks to a ?more friendly governmental attitude towards foreign investments? and a new legislation on foreign direct investments (p. 102). Considering that in the early 1960s 80 percent of Italian stock market capitalization pertained to enterprises belonging to one of the eight main industrial groups and that half of the 200 main industrial firms belonged to a group[1], additional research could be fruitfully devoted to ?not independent firms? ? to the measurement and assessment of the nature and consequences of the affiliation of many Italian big, medium and small firms to private (often family-controlled) and public groups.

The second section of the book is dedicated to the study of small firms and local production systems. In particular, three essays discuss the evolution of industrial clusters (Perugini and Romei), municipalized firms (Fari and Giuntini), and artisanal firms (Longoni and Rinaldi). By using a mix of quantitative and qualitative methods, how these different forms of enterprise coped with changes in the economic and institutional environment, supported by public intervention, is clearly spelled out. Actually, one of the main points raised is that ?the Italian state played a central role in fostering the post Second World War advancement of SMEs? (p. 205), on a scale unparalleled in Europe in particular for artisanship/micro-firms. While only future research will allow us to evaluate the relative weight of state aid and its impact on the two entrepreneurial forms[2], the evidence provided here convincingly encourages a reconsideration of the ?traditional dichotomous view of the existence of large, state-supported enterprises on the one hand, and of small and Mancunian-like, not state supported enterprises on the other hand? (p. 14). The long period here covered by the authors ? 1900 to 1960/70 ? allows them to track and highlight the long-term nature of the Italian industrial districts? developmental path. This section?s historical analysis of industrial districts deserves careful attention from anyone interested in understanding the peculiar structure of Italian SMEs. It emerges from the volume, for example, that their success was historically often driven by international trade trends and trade liberalizations (while interestingly their crucial expansion following World War II, was driven by the virtuous association of export growth and internal market expansion).

The third section of the book represents a bridge between the two previous ones, as it explores with analytical details the dynamics of firms? size changes. The two essays (Castellucci and Giannetti, and Lavista) are focused on the tension faced by Italian firms between growing, consolidating, and downsizing. The crucial feature that emerges from the authors? long run analysis is the transitory condition of the Italian medium-size firm, with few exceptions, such as those representing the post-WWII ?Made in Italy? sectors (in an appropriate enlarged definition to include upstream mechanical suppliers of capital and intermediary goods to light consumer goods producers). Moreover, by looking more generally at the changes in firm size ? focusing on firms which expanded the most during the 1930s-1970s time span ? it appears that growth was fostered by market competition (the fastest growing firms were mostly active in sectors characterized by relatively lower barriers to entry) and that it was typically associated with technology-intensive sectors. Again a strong turbulence emerges as characterizing leap-frogging medium-sized firms, showing over the long run a high mortality rate in the period after the leap. The authors consistently challenge, for the post-1970s era, the traditional picture of an Italian business system characterized by a complete polarization between large and small (often very small) companies, highlighting in particular the emergence in recent decades of a new entrepreneurial form in Italian industrial demography: the medium-sized pocket multinational enterprise, described often as the protagonist of a new ?fourth [industrial] capitalism.? The challenge of identifying these firms capable of competing in globalized markets specializing in niches (by) maintaining a medium size ? often emerging from the entrepreneurial seedbed of industrial districts once exposed to the strains and opportunities of globalization ? and explaining their competitive positioning into an intermediate size category, calls for a new generation of business history studies, complementary to the newly provided statistical evidence.
The final section of the book consists of a single essay (Battilani and Zamagni) exploring a type of enterprise which is quite relevant for the Italian economy (almost 6 percent of total employment in 2001 ? much more than in other countries), which has expanded significantly in recent decades: the cooperative firm. It is interesting to notice that, as highlighted by the authors, the recent successes of Italian cooperatives came in large-scale service production ? an area of structural weakness for Italian private initiatives ? thanks to the gradual overcoming of financing constraints through access to a wider range of debt and (quasi-) risk capital, and to the formation of cooperative networks in charge of strategic coordination and common crucial business functions, rather than the still significant State support.??

The lesson we learn from this book is that there is no such thing as a free lunch in economic history; we cannot reduce the complexity of the interplay between private and public actors of the economy into a few, stand-alone elements. On the contrary, the book invites the reader to consider the interaction of the different forms of enterprise with local and national institutional changes, coupled with the opportunities offered by international trade, in order to understand the conditions that allowed (but sometimes prevented) the country to gain from the different processes of technological advancements developed during the twentieth century. The very rich variety of subjects discussed and the widespread use of quantitative information to corroborate the analyses, offer a unique opportunity to look at the evolution of the Italian economy from many different views, and, cross-checking and referencing the different essays, to draw stronger and broader conclusions out of the information contained in each of them. Echoing and paraphrasing Amatori?s foreword, this an important book as it represents: i) a successful attempt to combine structural, institutional and macroeconomic perspectives of economic history together with the microeconomic perspective of business history, through the unifying fabric of quantitative micro, meso and macro evidence, so as to maximize their specific strong points and overcome their specific weaknesses; and ii) a fruitful reconciliation ?of the two ?souls? of Italian business history,? the Chandlerian big business centered one and the ?Copernican? ?small businesses and non-heavy industrial sectors? based one, so as to produce a convincing eclectic new ?localized? synthesis. This two-fold innovative character of their research project allows the authors to tackle the challenge of re-writing the Italian chapter of the ?varieties of capitalism? story with useful new answers and intriguing new questions. In conclusion, since a historical perspective of Italian enterprises is extremely useful nowadays when it comes to discussions of the new role of State intervention, the strengths and weaknesses of the Italian productive system, the windows of opportunity offered to SMEs by the globalization process, etc., this book is greatly rewarding reading for anyone interested in deepening knowledge of the rise and the ongoing transformation of Italian capitalism.


1. Only one quarter of these firms were listed on the stock exchange, as shown by Federico Barbiellini Amidei and Claudio Impenna (1999) ?Il mercato azionario e il finanziamento delle imprese negli anni Cinquanta,? in F. Cotula (ed.), Stabilit? e sviluppo negli anni Cinquanta. 3. Politica bancaria e struttura del sistema finanziario, Editori Laterza: Rome-Bari.

2. For example, the impact of 58 billion lire in preferential loans to artisanal firms granted in 1963 by Artigiancassa should be compared to the 14 trillion in total loans granted by the banking system or to the 6 trillion in loans granted by the medium/long-term special credit institutions in the same year. (These data come from a study in progress at our research unit.)

Federico Barbiellini Amidei is an Economist at Banca d?Italia, Economic Research Department, Economic and Financial History Unit. His main fields of interest are economics of innovation, Italian economic history, FDI and MNC development, corporate finance, and financial regulation in a historical perspective. His recent publications include The Dynamics of Knowledge Externalities. Localized Technological Change in? Italy, Edward Elgar, 2011 (with C. Antonelli); ?Innovation and Foreign Technology in Italy, 1861-2011,? Economic History Working Papers, 7, Rome: Bank of Italy, 2011 (with J. Cantwell and A. Spadavecchia); and ?Corporate Europe in the U.S.: Olivetti?s Acquisition of Underwood Fifty Years On,? Business History, 2012 (with A. Goldstein).

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