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Discovering the dark heart of Italian capitalism: a perspective from Supreme Court legal cases and business consultants’ analyses (1950s-1970s)

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  • Paolo DI Martino

    ()

  • Michelangelo Vasta

    ()

Abstract

This paper analyses the structure of Italian capitalism during the post-WWII economic miracle by focusing on the governance and management of small and medium firms. Using innovative sources, the paper shows that poorly conceived and/or enforced laws and legislation created incentive for business owners to be stockholders rather than stakeholders of their firms. This attitude emerges in two areas. Firstly, Italian business owners adopted structures of governance aimed only at protecting insiders, often at the expense of firms’ development. Secondly, in Italy business consultants had a unique and wide role in the management of firms, and acted to protect the benefits of insiders rather than the interests of the company. These two issues also contribute to explain the well-known problem of the dwarfism of Italian firms and the scarce capacity to innovate.

Suggested Citation

  • Paolo DI Martino & Michelangelo Vasta, 2014. "Discovering the dark heart of Italian capitalism: a perspective from Supreme Court legal cases and business consultants’ analyses (1950s-1970s)," Department of Economics University of Siena 698, Department of Economics, University of Siena.
  • Handle: RePEc:usi:wpaper:698
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    File URL: http://repec.deps.unisi.it/quaderni/698.pdf
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    References listed on IDEAS

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    1. Jappelli, Tullio & Pagano, Marco & Bianco, Magda, 2005. "Courts and Banks: Effects of Judicial Enforcement on Credit Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 223-244, April.
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    3. Alexander Dyck & Luigi Zingales, 2004. "Private Benefits of Control: An International Comparison," Journal of Finance, American Finance Association, vol. 59(2), pages 537-600, April.
    4. Felice, Emanuele & Vecchi, Giovanni, 2015. "Italy’s Modern Economic Growth, 1861–2011," Enterprise & Society, Cambridge University Press, vol. 16(02), pages 225-248, June.
    5. Nuvolari, Alessandro & Vasta, Michelangelo, 2015. "The Ghost in the Attic? The Italian National Innovation System in Historical Perspective, 1861–2011," Enterprise & Society, Cambridge University Press, vol. 16(02), pages 270-290, June.
    6. Zingales, Luigi, 1994. "The Value of the Voting Right: A Study of the Milan Stock Exchange Experience," Review of Financial Studies, Society for Financial Studies, vol. 7(1), pages 125-148.
    7. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    8. Lubinski, Christina, 2011. "Path Dependency and Governance in German Family Firms," Business History Review, Cambridge University Press, vol. 85(04), pages 699-724, December.
    9. Andrea Colli & Alberto Rinaldi, 2012. "Institutions, Politics and the Corporate Economy," Department of Economics University of Siena 664, Department of Economics, University of Siena.
    10. Giuseppe Maria Longoni & Alberto Rinaldi, 2010. "Industrial Policy and Artisan Firms (1930s–1970s)," Chapters,in: Forms of Enterprise in 20th Century Italy, chapter 9 Edward Elgar Publishing.
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    More about this item

    JEL classification:

    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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