Size and strategy of Italian industrial enterprises (1907-1940): Empirical evidence and some conjectures

Conventional wisdom concerning Italian industry does not fit well into the general scheme of the Second Industrial Revolution as constituted by the growth and diffusion of large-size enterprises. This wisdom held that Italian industry was dominated by a small group of large enterprises as a direct consequence of the country's backwardness. These enterprises were weak giants, unable to attain the dynamic advantages usually reaped by such organizations. Such interpretations have been generally based on qualitative evidence because the quantitative evidence is very scanty. The older studies suggest a very high concentration, while recent studies stress the evidence of scale economies and market imperfections. Neither result is convincing for technical reasons. This paper therefore aims at a reassessment based on a newly constructed database of Italian joint stock companies. This evidence does not support the traditional view. Rather, it indicated that concentration indices are fairly low and that they do not grow over the period, the bulk of the firms being of medium size and the giant companies few. Although such a situation could be attributed to Italian backwardness, the paper concludes that this view is too simplistic. It concludes by showing how successful Italian companies have been able to take advantage of their size by means of flexible strategies.