Ownership Structure, Innovation Process and Competitive Performance: the Case of Italy
The Italian industrial sector is characterized by a number of peculiarities compared to other advanced countries. One of these is the small average size of its firms. This particular model of organization of production, based on the small dimension and often on informal relationships within and outside the firm, guarantees flexibility and a high degree of specialization, two key factors of the Italian economic performance. But this model presents some limits too, one being related to the ownership structure and governance of firms. Another characteristic of the Italian industrial sector is its weakness in high-tech industries: innovative activity is still far from the level reached in the major industrialized countries, and Italian trade deficit in the technologically-advanced sectors is persisting. In this paper, we try to assess whether the weak performance of the Italian economy in the high-tech sectors may depend upon ownership structure in Italy. Ownership structure can influence innovative activity because it implies particular forms of risk and profit sharing, and particular financial sources. The first part of the paper presents the main characteristics of Italian corporate governance and ownership structure, as well as the innovation system in Italy, comparing them with the situation in other industrialized countries. In the second part of the paper, we estimate a probit model over a sample of firms from the precision tools sector, the pharmaceutical sector, the glass and ceramics sector and the furniture sector to test how the probability of patenting an innovation is affected by the ownership of the firms, among other variables. Estimation analysis indeed shows that the innovative output is affected by the ownership structure, as this variable turns out to be significant in many specifications of the model.
|Date of creation:||Nov 1999|
|Date of revision:||Nov 2000|
|Note:||Paper prepared for the "Corporate Governance and Investiment Project", Aarhus|
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