Business is booming.

Corporate Italy must enter the 21st century

86


The writer is a professor at the University of Chicago Booth School of Business

Under the benign gaze of the Draghi government, the US private equity group KKR is bidding for Telecom Italia, one of the last large firms in Italian hands. Italy, the eighth largest economy in the world, has only six companies in the Fortune Global 500, three of which are controlled by the state. This compares with seven for Spain, whose economy is ranked 14th in the world by gross domestic product, and 26 for France, which is seventh.

Some blame successive Italian governments for not resisting foreign acquisitions. They point to outgoing German chancellor Angela Merkel blocking Fiat from buying Opel in 2009 and French president Emmanuel Macron delaying Fincantieri’s acquisition of STX in 2017.

Others regard this latest bid as a sign of the ultimate triumph of the European single market. But I see a failure of the Italian economy to move into the 21st century.

The problem is not that foreign companies acquire Italian ones. It is that Italy’s entrepreneurs seem incapable of building companies that are able to compete in the global economy.

Why is this? First, Italian entrepreneurs are obsessed with control. In order to retain majority control of the companies they found, they build fragile pyramid structures, burden them with debt and ultimately do not expand much beyond Italy’s borders, since doing so would require using equity to pay for acquisitions.

This obsession with control is not just a psychological matter. In Italy corporate control is highly valuable, because whoever has it can easily take advantage of minority shareholders without fear of legal retribution. Anticipating this risk, savers are reluctant to invest in the equity market and finance the expansion of Italian firms.

The second reason for underperformance is the parasitic relationship between domestic big business and the Italian state. For decades, Fiat was heavily protected from Japanese competition, while in the 1990s Olivetti was granted the second mobile phone licence by a sympathetic government.

This parasitic relationship reached its peak when Silvio Berlusconi was in power, first in the mid-1990s and then again in the early 2000s. The country’s telecommunications strategy was subordinated to the private interests of the billionaire prime minister. Used to making quick profits at home thanks to their political connections, Italian companies were unwilling to take the risks needed to succeed in the global marketplace.

A belief that “small is beautiful” also helped to prevent Italian firms from achieving the economies of scale necessary for global success. Italy invented the pizza, for example, but still does not have a large pizza chain. The concept of the coffee bar is Italian in origin, but the country is not home to a significant coffee chain. The country is one of the world’s biggest tourist destinations, but it does not boast a large chain of hotels. And while Italy is one of the global capitals of fashion, the biggest Italian-owned fashion company is ranked only 17th in the world by market value.

Finally, consider the failure to create world-class universities. The success of Montecatini and Olivetti in the 1960s was driven by technology developed in Italian universities. But who remembers the last Italian firm to have prospered on the back of technology developed by researchers at home? In the 2021 Shanghai ranking of world universities, there is no Italian institution in the top 150.

Many of these problems have been decades in the making. Yet efforts to address them have been limited. Reforms to speed up civil trials are welcome, but have the unfortunate defect of shortening the statute of limitation for criminal offences, helping corrupt entrepreneurs to escape punishment for their crimes.

Moreover, not only does the flood of money provided by the Next Generation EU recovery programme foster the parasitic relationship between business and government, the way that cash is disbursed entrenches the cycle of dependence. Some €11bn is earmarked for the promotion of university research, yet that is well under 1 per cent of GDP and does not even cover the annual gap in R&D between Italy and the rest of Europe. No serious attempt is being made, as far as I can see, to help Italian companies develop the economies of scale to compete in the global marketplace.

To win the challenge of global competition in the 21st century, Italy must not stand in the way of the process of creative destruction. It should instead foster the development of new giants capable of taking on the world. If the Next Generation EU recovery funds are not used to aid this process, a huge opportunity for the Italian economy will have been missed.



Source link

86 Comments
  1. Ahmqdp says

    purchase levofloxacin for sale levofloxacin pills

  2. Ejdkxn says

    purchase dutasteride online cheap cost zofran 4mg zofran 4mg over the counter

  3. Ciffha says

    aldactone 100mg for sale valtrex uk purchase fluconazole generic

  4. Qmxfkb says

    ampicillin 500mg canada order ampicillin 500mg online cheap erythromycin uk

  5. Fikadr says

    fildena pills order bimatoprost without prescription buy methocarbamol 500mg online cheap

  6. Jhkpcx says

    suhagra for sale online sildenafil canada cost estrace 1mg

  7. Cufmjy says

    lamictal 200mg us order lamictal 50mg pill buy tretinoin gel generic

  8. Ufjqej says

    tadalis 10mg cost cost diclofenac 100mg cheap diclofenac 100mg

  9. Tudtxl says

    order accutane online buy zithromax 250mg online order azithromycin

  10. Ngxtzh says

    oral indomethacin buy trimox 500mg generic amoxicillin online

  11. Thwhzy says

    order tadalafil 10mg pill Real viagra online viagra on line

  12. Chqkbi says

    buy anastrozole 1 mg without prescription anastrozole pill viagra 100mg pills

  13. Fvidev says

    tadalafil 20mg gГ©nГ©rique sildenafil 50mg sans ordonnance en pharmacie viagra sans ordonnance en france

  14. Lrmhpk says

    oral deltasone 5mg order prednisone 20mg online order viagra 100mg online cheap

  15. Fubeoz says

    tadalafil 20mg kaufen ohne rezept cialis 5mg kaufen ohne rezept original sildenafil 50mg rezeptfrei sicher kaufen

  16. Whjocp says

    order accutane 40mg online isotretinoin 40mg generic ivermectin 6

  17. Inqzpf says

    generic doxycycline 100mg clomid over the counter order furosemide 100mg pill

  18. Nvaxcf says

    purchase altace generic avapro 150mg generic purchase astelin online

  19. Jkrwza says

    order catapres without prescription buy spiriva pill buy spiriva 9 mcg for sale

  20. Inosjv says

    buspirone 10mg for sale order dilantin pill order oxybutynin 2.5mg for sale

  21. Hwhexv says

    order hytrin 1mg online leflunomide without prescription azulfidine 500mg generic

  22. Gnceqq says

    buy fosamax 70mg online cheap motrin 400mg cost pepcid pills

  23. Yraucm says

    olmesartan cheap divalproex 250mg sale order acetazolamide 250 mg generic

  24. Laptgy says

    isosorbide 40mg for sale purchase azathioprine for sale order micardis 20mg generic

  25. Ppzidy says

    generic zyban 150mg quetiapine us buy generic seroquel 100mg

  26. Ehftap says

    purchase molnupiravir online purchase naproxen for sale cost prevacid 30mg

  27. Mfxxez says

    order zoloft 100mg online cheap order escitalopram 20mg sale order viagra 50mg without prescription

  28. Mhrpgs says

    buy salbutamol online sildenafil 50mg canada buy viagra

  29. Pxrlnu says

    tadalafil 20mg canada buy phenazopyridine 200 mg for sale symmetrel 100 mg canada

  30. Jzlapj says

    order naltrexone order abilify generic purchase aripiprazole pill

  31. Fotnex says

    medroxyprogesterone buy online praziquantel order online cyproheptadine online

  32. Crdemz says

    buy modafinil 100mg online pharmacy store where to buy ivermectin pills

  33. Ddqncf says

    buy fluvoxamine 100mg generic ketoconazole canada buy glucotrol 5mg online cheap

  34. Oabzvi says

    isotretinoin 10mg drug buy amoxicillin 500mg without prescription deltasone 40mg us

  35. Ghzjcc says

    order nootropil 800 mg pill buy piracetam 800mg sale buy viagra 100mg

  36. Plvbyj says

    buy zithromax online cheap prednisolone 10mg for sale neurontin 100mg over the counter

  37. Xoxgdx says

    buy tadalafil 20mg online buy generic tadalafil sildenafil online

  38. Whjwmd says

    purchase lasix pills doxycycline 100mg sale plaquenil order online

  39. Qwgpgc says

    cialis 40mg pill clomipramine 25mg generic anafranil us

  40. Wcbfni says

    buy chloroquine pill chloroquine drug order olumiant without prescription

  41. Gzqjwc says

    buy itraconazole 100 mg pills tindamax 500mg canada tinidazole without prescription

  42. Ikqege says

    order glycomet glycomet 1000mg uk cialis 5 mg

  43. Goijoy says

    zyprexa 10mg pill nebivolol usa valsartan over the counter

  44. Kzjjlc says

    order norvasc 5mg generic order cialis for sale otc cialis

  45. Umubtq says

    order clozapine sale ipratropium 100 mcg brand decadron generic

  46. Hodwsw says

    sildenafil 100mg pills for men real viagra 100mg lisinopril cheap

  47. Kbxsxs says

    omeprazole 20mg drug blackjack games bonus poker online

  48. Nzjavl says

    linezolid 600mg cheap best no deposit free spins best online gambling sites

  49. Vxaoko says

    lopressor 50mg ca tenormin price buy levitra 10mg

  50. Fqvbrt says

    need help writing a paper online slots real money usa free online blackjack no download

  51. Vsdxkk says

    buy levitra 20mg without prescription lyrica 150mg canada methylprednisolone 4 mg without prescription

  52. Cmkgqc says

    thesis writers cheap research paper writers sildenafil 100mg usa

  53. Arnbhr says

    buy clomid 100mg generic albuterol canada play online blackjack for real money

  54. Nuygic says

    tadalafil 20mg usa buy cialis 20mg pill sildenafil on line

  55. Wcamzh says

    triamcinolone 10mg ca buy loratadine generic order desloratadine for sale

  56. Jihrnl says

    buy priligy 90mg online synthroid 100mcg tablet order levothyroxine online

  57. Jtkgjs says

    cialis without a doctor prescription viagra 100mg pills for men sildenafil 100mg tablet

  58. Nclotl says

    order xenical 120mg for sale diltiazem 180mg canada generic acyclovir 400mg

  59. Clertk says

    tadalafil brand name oral inderal oral clopidogrel 150mg

  60. Iwgatw says

    buy methotrexate 10mg generic warfarin 2mg without prescription buy reglan 20mg pill

  61. Faodoc says

    order domperidone generic purchase cyclobenzaprine online cost cyclobenzaprine 15mg

  62. Gqkykz says

    order cozaar 25mg generic topamax online buy topamax pills

  63. Dyhslc says

    ozobax canada order generic ozobax order toradol 10mg sale

  64. Gvmubw says

    sumatriptan pills imitrex buy online buy avodart 0.5mg online

  65. Fywgli says

    buy colchicine pills real money spins legitimate online slots for money

  66. Wllgle says

    ranitidine 300mg usa order celebrex 200mg online cheap purchase celebrex pills

  67. Kjfajy says

    hollywood casino online real money free poker online games free online blackjack

  68. Wujcnu says

    buy flomax 0.2mg pill flomax 0.4mg for sale order spironolactone 25mg pills

  69. Rocvoz says

    cialis 5mg cost tadalafil 5mg generic cipro 1000mg sale

  70. Ekjlmq says

    simvastatin us order finasteride 5mg propecia medication

  71. Gtllfi says

    buy flagyl 400mg generic buy bactrim 480mg for sale buy bactrim 960mg for sale

  72. Tkhtqr says

    buy generic keflex cleocin order buy erythromycin 500mg without prescription

  73. Gfmqog says

    brand sildenafil real cialis sites cialis 20mg pills

  74. Nanlpn says

    ceftin 500mg for sale purchase robaxin without prescription cost methocarbamol 500mg

  75. Qqubbi says

    red dog casino poker online for real money cialis 5mg usa

  76. Scmzww says

    order trazodone 100mg online cheap order generic sildenafil buy sildenafil without prescription

  77. Bomgra says

    academic writers online edit letter stromectol pills canada

  78. Ucqjod says

    order generic deltasone 5mg order amoxicillin 250mg online order amoxicillin 1000mg

  79. Susgqm says

    best online casino for real money cheap ed drugs buy cialis 10mg without prescription

  80. Hskgvv says

    buy zithromax azithromycin 250mg canada neurontin 100mg usa

  81. Gtbchs says

    buy furosemide buy hydroxychloroquine pill purchase hydroxychloroquine without prescription

  82. Hjvccv says

    deltasone 20mg sale deltasone 5mg cheap vermox order online

  83. Dczdkq says

    buy sildenafil 50mg sale budesonide over the counter buy rhinocort online

  84. Wbjhdm says

    tretinoin us order avana online cheap purchase avana for sale

  85. Vnsvjt says

    tadacip for sale online diclofenac 50mg for sale order indocin generic

  86. Ulofyc says

    biaxin 250mg cheap buy biaxin pills buy antivert sale

Leave A Reply

Your email address will not be published.