Enrico Santarelli

Start-up size and industrial dynamics: some evidence from Italian manufacturing

Abstract The aim of this paper is to shed some light on industry dynamics in Italy. For this purpose we use a large and comprehensive longitudinal data base, identifying the start-up of new manufacturing firms and their subsequent post-entry performance. This enables us to link the survival and growth of firms in each manufacturing industry specifically to their start-up size. While in a tobit regression (at the two-digit level) we find no evidence to link start-up size with survival, the growth rates are negatively and significantly correlated with initial size. As in previous studies dealing with other countries, this evidence suggests that Gibrats Law fails to hold, at least for small, new-born manufacturing firms.

Innovation, Formal vs. Informal R&D, and Firm Size: Some Evidence from Italian Manufacturing Firms*

On the basis of data from two recent surveys on innovation diffusion in Italian manufacturing industry, this paper shows that informal R&D is an important part of the total R&D undertaken by small and medium sized firms. Nevertheless, when an output indicator such as the number and the nature of the innovations introduced by firms of different size is used, it emerges that small firms have introduced mainly incremental rather than major innovations. The paper therefore suggests that systematic R&D undertaken by large firms within structured laboratories is more effective (in terms of product innovations) than occasional R&D carried out by small firms.

Analyzing literature-based innovation output indicators: the Italian experience

This paper presents the results of a study on the product innovations introduced in the Italian market in 1989 and reported in a selected number of trade journals. The analysis of data collected by means of this literaure-based counting procedure confirms that R&D oriented industries and large firms do not in Italy have a marked competitive advantage in innovation. The country appears to be instead characterized by a significant presence of consumer goods industries and small firms in innovation. Our data indicate a statistically significant association between trade competitiveness and strength in product innovation, and show the comparatively higher capacity for product innovation of some of the industries in which Italy achieves a positive performance in international trade. Moreover, the presence of spillovers as the regional level from both private and public R&D expenditures proves to be positively correlated with the development of product innovations. Finally, small firms with fewer than 50 emloyees appear to be more innovative than is usually believed to be the case.

From Which Source Do Small Firms Derive Their Innovative Inputs? Some Evidence from Italian Industry

This paper relies upon the hypothesis that the “knowledge production function” – defined in the geographical sense – is characterized by coefficient estimates which vary with firm size. In particular, large firms depend for their innovative output on direct and indirect R&D inputs, whereas small firms more extensively exploit the spillovers from research activities carried out by universities and by other firms. This hypothesis is tested against two different sets of data: the first based on patent statistics and dealing with 20 Italian regions over the period 1978–86; the second consisting of a selected number of product innovations identified by a literature-based counting procedure and dealing with 46 Italian provinces in year 1989. The results of regression analysis support the hypothesis that firms belonging to different size classes resort to different sources for the knowledge relevant to their innovative output. In particular, industry R&D prove to play a relatively more important function than do spillovers from university research in generating innovative output in large firms, whereas the opposite is true in the case of small firms.

The relationship between size and growth: the case of Italian newborn firms

This paper analyses the relationship between size and growth for a group of Italian newborn firms in the instruments industry. The main finding is that Gibrats Law of Proportionate Effect exhibits a behaviour dependent on the firms life cycle. In particular, even if in the years immediately following start-up the law could be rejected, since smaller firms have to rush in order to survive in the market, in subsequent years growth rates seem to converge towards a Gibrat-like pattern. This result is confirmed by the separate analyses carried out for micro-firms and larger firms.

Industry Dynamics and the Distribution of Firm Sizes: A Nonparametric Approach

The aim of this paper is to analyze the evolution of the size distribution of young firms within some selected industries, using as a background three theories of the distribution of firm sizes that identify a process of passive learning (Jovanovic 1982), one of active learning (Ericson and Pakes 1995), and an evolutionary one (Audretsch 1995) in the postentry dynamics of business firms. We use a nonparametric technique, the kernel density estimator, applied to a data set from the Italian National Institute for Social Security (INPS), consisting of 12 cohorts of new manufacturing firms that were followed on a quarterly base for six years. We find that firm size distribution is in general skewed to the right, although different industries display different paths and speeds of convergence toward the limit distribution. This finding is fairly consistent with theories allowing for industry heterogeneity in terms of structural and technological features, which, in turn, result in industry-specific evolution of the size distribution of new entrants.

The determinants of firm start-up and entry in Italian producer services

In this paper the determinants of new firm formation in the producer services are studied by using National Security data on firms with at least one employee. Two ratios are computed and analysed for the 95 Italian provinces: an index of fertility represented by the share of new enterprises on employees, and a birth rate represented for each province by the ratio between new enterprises and resident population. On examination of the determinants of this process, we found that the average wage rates and the ratio of utilized credit to the total line of credit negatively affect both indexes, and that both indexes are affected positively by sector growth and by a measure of small firm presence. The index of fertility is also explained by a dummy variable which identifies for each province those policies which are aimed at fostering the process of new firm formation. The birth rate is instead affected by a dummy variable which is equal to one for the provinces in which the chief towns of each region are located and zero otherwise, and by the potential demand for new producer services arising from the industrial sector.

Start-up size and post-entry performance: the case of tourism services in Italy

A large and comprehensive longitudinal database is used to identify the start-up of new firms in the Italian tourist industry and their subsequent post-entry performance. Analysed in particular is the link between the survival of hotels, restaurants, and catering firms in each Italian region and their start-up size. By using logit estimation, it is found that for eighteen out of twenty regions the relationship has the expected sign, although only for twelve regions and the country as a whole did it turn out to be statistically significant.

The Survival of Family Firms: The Importance of Control and Family Ties

Abstract The aim of this article is to analyze the survival patterns of a group of family firms which have already spent at least 25 years in the market. To this end, we use the Kaplan–Meier product limit estimator supplemented with qualitative information gathered by direct observation and discussions with entrepreneurs. The main findings are that small family firms which have reached their 30th year in the market face a very high risk of sudden exit, increasing with firm age. Further control carried out by means of interviews with entrepreneurs identifies problems connected with succession as one of the main causes of the decision to close down.

Growth of Incumbent Firms and Entrepreneurship in Vietnam

This paper analyzes the relationship between the performance of incumbent firms and the net entry of new firms by combining different theoretical views of entrepreneurship. It shows that new knowledge and ideas created but not commercialized by incumbents are an important source of entrepreneurial opportunities for nascent firms. Different regression models to treat dynamics and endogeneity issues are applied to test the research hypothesis that growth of incumbent firms in a region will stimulate start-up activities by creating new profit opportunities for potential entrepreneurs. Vietnam’s regional micro-data from 2000 to 2008 are used for this test. Four controlling indicators – entrepreneurial demand, market structure, regional economic environment, and market innovativeness – are found to exert a statistically significant effect on new entries.