Large and entangled: Italian business groups in the long run

Abstract

This article, by using both a qualitative and quantitative approach, focuses on large business groups (BGs) in Italy. It provides a methodology of analysis which aims at re-constructing the boundaries and the relevance of BGs in a national economy in the long-run, identifying a country-specific taxonomy of both their forms and the rationales (logics) for their existence. By adopting an original methodology, that is the network analysis, and by using a large and comprehensive dataset (Imita.db), this article also provides some proxy measures of the relevance of the largest BGs in the Italian economy, something which has never been done before in Italian business history research. The analysis clearly shows the persistence of large and entangled BGs in the Italian economy. It confirms that this particular form of business organisation is neither limited to the less developed countries, nor is simply a second best functional substitute of the multi-divisional form diffused in the liberal market economies. Finally, this article also suggests a research itinerary which can also be fruitfully applied in business history to other specific cases.

Keywords::

• business groups (BGs)
• network analysis
• Italian capitalism

Acknowledgements

We would like to thank Franco Amatori, Fulvio Coltorti, Paolo Pin and Alberto Rinaldi for helpful suggestions. A previous version of this article was presented at the XVI World Economic History Congress: Session entitled: “Business Groups in a Historical and Comparative Perspective (Nineteenth to Twenty-first Centuries)” held in Stellenbosch (South Africa) in July 2012. The authors are grateful to the organisers (María Inés Barbero and Núria Puig) and all participants for comments and criticisms. Finally, we thank warmly the editors of this special issue and the anonymous referees for their valuable suggestions. The usual caveats apply.

Notes

^1.Shiba and Shimotani, “Introduction”, 2.

^2.Pavan, Strutture e strategie; Dyas and Tanheiser, The Emerging.

^3. Available at http://ec.europa.eu/internal_market/company/docs/shareholders/study/final_report_en.pdf, last accessed October 2012.

^4.Whittington and Mayer, The European Corporation.

^5.Rumelt, Strategy, structure.

^6.Almeida and Wolfenzon, “A Theory of Pyramidal Ownership”; Colpan, Hikino, and Lincoln, The Oxford Handbook.

^7. e.g. Barca and Becht, The Control of Corporate Europe.

^8.Colpan and Hikino, “Foundations of Business Groups.”

^9. ibid.

^10.La Porta, Lopez-De-Silanes, and Shleifer, “Corporate Ownership.”

^11.Weimer and Pape, “A Taxonomy of Systems.”

^12. Whittington and Mayer, The European Corporation.

^13.Whitley, Divergent Capitalisms.

^14.Hall and Soskice, Varieties of Capitalism.

^15. Colpan and Hikino, “Foundations of Business Groups.”

^16.Johnson, La Porta, Lopez-De-Silanes, and Shleifer, “Tunneling.”

^17.Dewaelheyns and Van Hulle, “Internal Capital Markets.”

^18.Amatori and Colli, Impresa e industria; Giannetti and Vasta, Evolution of Italian Enterprises; Amatori, Bugamelli, and Colli, “Italian Firms.”

^19.Amatori, “Growth via Politics,” 109.

^20.Bonelli, Lo sviluppo di una grande impresa, 82 ff.

^21. Amatori et al., “Italian Firms.”

^22. Amatori, “Growth via Politics.”

^23.Fubini, “L'integrazione verticale,” 92 ff.

^24.Zamagni, “The Rise and Fall.”

^25.Coltorti, “Note sulla modificazione.”

^26.Brioschi, Buzzacchi, and Colombo, Gruppi di imprese.

^27.Amatori and Colli, Business History, 171 ff.

^28.R&S-Mediobanca, Le privatizzazioni in Italia.

^29. Barca and Becht, The Control of Corporate Europe.

^30.Rinaldi and Vasta, “The Structure of Italian Capitalism,” “The Italian Corporate Network” and “The Italian corporate network after the ‘Golden Age’.”

^31. Coltorti, “Note sulla modificazione”; Brioschi et al., Gruppi di imprese; Bianchi, Bianco, Giacomelli, Pacces, and Trento, Proprietà e controllo.

^32. Brioschi et al., Gruppi di imprese; Borsa, Capitani di sventura.

^33.Amatori and Colli, Impresa e industria.

^34.Toninelli and Vasta, “State-owned Enterprises,” 74.

^35.Rinaldi and Vasta, “The Structure of Italian Capitalism” and “The Italian Corporate Network after the ‘Golden Age’.”

^36. Toninelli and Vasta, “State-owned Enterprises.”

^37.Galasso, Storia dell'industria elettrica.

^38. Pavan, Strutture e strategie.

^39. Brioschi et al., Gruppi di imprese.

^40.Goldstein, “Privatisation in Italy.”

^41.Zorzini, “L'organizzazione dell'industria”; Luzzatto Fegiz, “Il consiglio di amministrazione”.

^42.Zerini, “L'economia capitalistica”; Radar, Organizzazione del capitale finanziario; Benedetti and Toniolli, “Concentrazione industriale.”

^43.Barca et al., Assetti proprietari e mercato; Barca and Becht, The Control of Corporate Europe; Bianchi et al., Proprietà e controllo.

^44. See for example, Giannetti and Vasta, Evolution of Italian Enterprises.

^45. For full details on Imita.db, see Vasta, “Appendix”. The database is freely available on line at: http://imitadb.unisi.it/en/.

^46. Data for companies and boards of directors are available for 1911, 1913, 1921, 1927, 1936, 1952, 1960, 1972, and 1983; for balance sheets, time series are available for the span from 1900 to 1971 and for 1982 and 1983.

^47. The threshold was set at 1 million Italian lire until 1940, with the sole exception of 1914, when it amounted to 500,000 lire. In 1952, the threshold was raised to 10 million, then to 25 in 1956, 50 in 1961, and 100 from 1964 through 1972. Finally, for the benchmark year 1983, the threshold was further raised to 2 billion lire.

^48. For 1983, there are not enough official data on the representativeness of the sample. However, according to an estimate such a weight could be 83.3% of the total of Italian joint stock companies; see, Cerise, Rapporto finale.

^49. Imita.db, last accessed, January 2012.

^50. For example, Wasserman and Faust, Social Network Analysis; Scott, Social Network Analysis.

^51. The interlocking directorates technique is based upon the analysis of the links created between two units (i.e., two firms) when an individual belongs to both; that is, a director of two or more companies in the case of ownership structure. The analysis comprises the re-construction of the articulation of inter-company links by quantitative techniques of varying complexities.

^52. See, for example, the recent comparative project carried out by Thomas David (University of Lausanne) and Gerarda Westerhuis (Utrecht University). The outcome of this project is: David and Westerhuis, The Power of Corporate Networks which contains studies for 14 different countries throughout the twentieth century.

^53. Of course, the same method is also used to calculate the aggregate share capital.

^54. Inclusiveness level inversely depends on the number of links required to define a company as belonging to a group. If only one link is required, and without any qualification of the director, inclusiveness is high. When a “qualified” link is required, the probability that a company belongs to a group drops, and inclusiveness is low.

^55. Toninelli and Vasta, “State-owned Enterprises”.

^56.Rinaldi and Vasta, “The Italian Corporate Network After the ‘Golden Age’.”

^57.Aganin and Volpin, “The History of Corporate Ownership,” 354; Amatori and Colli, “Corporate Governance.”

^58.Vasta, “The Largest 200 Manufacturing Firms,” 99 ff.

^59.de Jong, Higgins and van Driel, New Business History?

Additional information

Notes on contributors

Andrea Colli

Andrea Colli, PhD in Economic and Social History (Bocconi University, Milan) and Professor of Economic History at the Department of Policy Analysis and Public Management, Bocconi University, Milan.

His research interests range from the history of Italian business enterprises, to small and medium-sized enterprises, to the role played by foreign direct investments in the course of the Italian industrialization process.

He has published several articles in the main business history journals. He is associate review editor of Family Business Review since October 2012. His most recent books reflect some of these research interest. With Michelangelo Vasta he has edited and published, in 2010, Forms of Enterprises in 20th Century Italy. Boundaries, Structures and Strategies, Elgar. With Abe de Jong and Martin Iversen, Mapping the European Corporations: Strategies, Structures, Ownership and Performance, Routledge 2011 and with Franco Amatori has written Business History: Complexities and Comparisons, Routledge 2011.

Michelangelo Vasta

Michelangelo Vasta has received his D.Phil at the University of Oxford. He is now professor of Economic history at the Department of Economics and Statistics of the University of Siena. Most of his research work has dealt with Italian economic development from the Unification to the present. His fields of research range over macro and micro perspective and focus on technical change, institutions, corporate networks and international trade. He has been published extensively on the major economic and business history journals such as Economic History Review, European Review of Economic History, Explorations in Economic History, Business History and Enterprise and Society.