Productivity, Competitiveness, and Territories of the Italian Medium-Size Companies

International Journal of Economics and Finance, 2017, 9(12)

17 Pages Posted: 17 Jan 2017 Last revised: 26 Oct 2017

See all articles by Fulvio Coltorti

Fulvio Coltorti

UniversitĂ  Cattolica of Milan

Daniela Venanzi

Roma Tre University - Department of Economics

Date Written: January 16, 2017

Abstract

The medium-sized firms (MEs) are the cutting edge of the Italian manufacturing sector. They have a crucial role in influencing the behavior of the local systems whose they are part (2/3 of the total firms are located in industrial districts). This study investigates the drivers of Italian MEs’ productivity, a fundamental aspect for assessing their ability to compete successfully. The classical approach (i.e. TFP) in measuring productivity is inapplicable to MEs, whose business model is characterized by: i) specialized production at the leading technological edge; ii) organization based on vertical and horizontal supply chains, where the major players are small companies, specialized on single production phase; iii) marketing strategy focused on market niches, which are created/dominated thanks to product differentiation and continuous innovation and where MEs impose premium prices. The empirical evidence shows that: i) the RTS are not constant, but decreasing and size and productivity are inversely related; ii) the quality of the workforce is the major driver of productivity: companies that employ a low-salary workforce are less productive than those that use more skilled and costlier workers; iii) territories matter: knowledge-intensive service firms as well as infrastructures and managerial skills have a positive impact on productivity.

Keywords: Measurement of Productivity, Drivers of Productivity, TFP, Italian Medium-Sized Firms, Industrial Districts

JEL Classification: D22, D24, L26, L6

Suggested Citation

Coltorti, Fulvio and Venanzi, Daniela, Productivity, Competitiveness, and Territories of the Italian Medium-Size Companies (January 16, 2017). International Journal of Economics and Finance, 2017, 9(12), Available at SSRN: https://ssrn.com/abstract=2900336 or http://dx.doi.org/10.2139/ssrn.2900336

Fulvio Coltorti

UniversitĂ  Cattolica of Milan ( email )

Largo Gemelli 1
Milan, MI Milano 20123
Italy

Daniela Venanzi (Contact Author)

Roma Tre University - Department of Economics ( email )

Via Silvio d'Amico 77
Rome, Rome 00145
Italy

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