The Internationalization Process of Medium Sized Firms in the Italian Manufacturing System

The paper examines the processes of internationalization in medium sized firms in the main regions of the so-called "third Italy" (North-East-Center Italy). The focus on medium sized firms is because of their increasing role in the Italian manufacturing system. Italian small firms typically show remarkable ability to penetrate international markets through light modes of entry (export), but find it difficult to establish stable forms of internationalization. This paper aims in particular to assess to what extent medium sized firms are able to cope better than small firms in the international arena. Using data from financial statements for 2001 and 2005, we analyze the percentage of sales abroad and the number, value and location of foreign subsidiaries and joint venture to understand the internationalization patterns of 197 medium-sized firms. In the period analyzed, we found an increase in the level of internationalization (both export and direct investments), based especially on small companies (250-499 employees). Most of the companies analyzed confirm the general pattern of Italian manufacturing firms, based on a high level of exports and a lower level of foreign subsidiaries. The data confirm a "globalization gap" in that most foreign direct investments go to countries within the EU, which should be considered as a unique national market. In general, medium sized Italian companies seem unable to overcome the internationalization problems typically encountered by small Italian firms.