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Firms Growth, Size And Innovation An Investigation Into The Italian Manufacturing Sector

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  • Piergiuseppe Morone
  • Giuseppina Testa

Abstract

This article aims at understanding the determinants of Italian small- and medium-sized enterprises' (SMEs) turnover growth having in mind the fact that the Italian economic system relies substantially on small firms which have traditionally managed to stay competitive by adopting strategies such as the creation of well-integrated social and institutional clusters or specialising in the production of quality goods (the so called Made in Italy). However, the growing pressure coming from the Far East has rendered this production system vulnerable, challenging its international competitiveness. Building on a conceptual model, we found that, on average, young firms are more likely to experience positive growth; moreover, turnover growth is positively associated with firms' size, process innovation, product innovation and organisational changes. In contrast, marketing innovation does not considerably affect Italian SMEs growth. When restricting our focus to a sub-sample of innovative firms, we found that those firms investing directly in innovating activities are almost 30% points more likely to experience positive growth, which is significantly affected also by workers and managers' re-qualification. Finally, among innovative firms, process innovation and organisational changes are, by far, the most influential innovating strategies. The model was tested using a unique database which collects data for the year 2004, over a sample of 2600 SMEs.

Suggested Citation

  • Piergiuseppe Morone & Giuseppina Testa, 2008. "Firms Growth, Size And Innovation An Investigation Into The Italian Manufacturing Sector," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(4), pages 311-329.
  • Handle: RePEc:taf:ecinnt:v:17:y:2008:i:4:p:311-329
    DOI: 10.1080/10438590701231160
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    References listed on IDEAS

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    1. Acs,Zoltan J. & Carlsson,Bo & Karlsson,Charlie (ed.), 1999. "Entrepreneurship, Small and Medium-Sized Enterprises and the Macroeconomy," Cambridge Books, Cambridge University Press, number 9780521621052, June.
    2. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, September.
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    1. Mahmutaj Lura Rexhepi & Krasniqi Besnik, 2020. "Innovation Types and Sales Growth in Small Firms: Evidence from Kosovo," South East European Journal of Economics and Business, Sciendo, vol. 15(1), pages 27-43, June.
    2. Šarlija, Nataša & Bilandžić, Ana, 2018. "Does Innovation Matter for SMEs' growth in Croatia?," 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disruptive Change (Dubrovnik, 2018), in: 6th International OFEL Conference on Governance, Management and Entrepreneurship. New Business Models and Institutional Entrepreneurs: Leading Disrupt, pages 356-375, Governance Research and Development Centre (CIRU), Zagreb.
    3. Kyunga Na, 2021. "The Effect of On-the-Job Training and Education Level of Employees on Innovation in Emerging Markets," Journal of Open Innovation: Technology, Market, and Complexity, MDPI, Open Access Journal, vol. 7(1), pages 1-18, January.
    4. Kyunga Na & Young-Hee Kang, 2019. "Relations between Innovation and Firm Performance of Manufacturing Firms in Southeast Asian Emerging Markets: Empirical Evidence from Indonesia, Malaysia, and Vietnam," Journal of Open Innovation: Technology, Market, and Complexity, MDPI, Open Access Journal, vol. 5(4), pages 1-16, December.
    5. Laura Bravi & Gilberto Santos & Alessandro Pagano & Federica Murmura, 2020. "Environmental management system according to ISO 14001:2015 as a driver to sustainable development," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(6), pages 2599-2614, November.
    6. Miroslav Mateev & Yanko Anastasov, 2010. "Determinants of small and medium sized fast growing enterprises in central and eastern Europe: a panel data analysis," Financial Theory and Practice, Institute of Public Finance, vol. 34(3), pages 269-295.
    7. Sérgio Nunes & Raul Lopes & Nerys Fuller-Love, 2019. "Networking, Innovation, and Firms’ Performance: Portugal as Illustration," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(3), pages 899-920, September.
    8. Daniel Amente KENEA, 2020. "The Role Of Innovation Strategy In Improving Organizational Performance And Productivity: Focus On Heineken Beverage Industry, Ethiopia," Annals of the University of Craiova for Journalism, Communication and Management, Department of Communication, Journalism and Education Sciences, University of Craiova, vol. 6(1), pages 31-56, December.
    9. Insu Cho & Heejun Park & Jeongil Choi, 2011. "The impact of diversity of innovation channels on innovation performance in service firms," Service Business, Springer;Pan-Pacific Business Association, vol. 5(3), pages 277-294, September.
    10. Ali-Yrkkö, Jyrki & Martikainen, Olli, 2008. "The Impact of Technological and Non-Technological Innovations on Firm Growth," Discussion Papers 1165, The Research Institute of the Finnish Economy.
    11. Demetris Vrontis & Giuseppe Tardivo & Stefano Bresciani & Milena Viassone, 2018. "The Competitiveness of the Italian Manufacturing Industry: an Attempt of Measurement," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 9(4), pages 1087-1103, December.
    12. Marcelo Vieta, 2015. "The Italian Road to Creating Worker Cooperatives from Worker Buyouts: Italy�s Worker-Recuperated Enterprises and the Legge Marcora Framework," Euricse Working Papers 1578, Euricse (European Research Institute on Cooperative and Social Enterprises).
    13. Ana Ferreira & Ana Lúcia Teixeira & Ana Roque Dantas, 2015. "Non-technological innovation activities mediate the impacts of the intra- and extra-organizational contexts on technological innovation outputs," Enterprise and Work Innovation Studies, Universidade Nova de Lisboa, IET/CICS.NOVA-Interdisciplinary Centre on Social Sciences, Faculty of Science and Technology, vol. 11(11), pages 9-43, December.
    14. Muhammad Nouman & Aamer Taj & Saleem Gul, 2017. "The Individual's Influence on Low-Technology Innovation: A Critical Realism Based Case Study on North-West Pakistan's Marble Sector," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 9(1), pages 131-155, March.
    15. E. Ryabova V. & M. Samodelkina A. & Е. Рябова В. & М. Cамоделкина А., 2018. "Факторы Устойчивого Роста Российских Компаний // Factors Of Sustainable Growth Of Russian Companies," Финансы: теория и практика/Finance: Theory and Practice // Finance: Theory and Practice, ФГОБУВО Финансовый университет при Правительстве Российской Федерации // Financial University under The Government of Russian Federation, vol. 22(1), pages 104-117.

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    More about this item

    Keywords

    JEL Classification; L1; O31; C24;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models

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