Ownership, Governance, Management and Firm Performance: Evidence from Italian Firms

We explore the role of ownership, governance and management characteristics as potential drivers of the performance gaps between firms located in the Centre North and South of Italy. First, we document that southern firms are characterized by a more frequent family ownership and a higher fraction of local and family directors within the board. Moreover, entrepreneurs and managers of Southern firms have lower education and are less inclined to adopt structured managerial practices and advanced technology. Second, we examine to what extent these differences account for the performance gap between the two areas. We find that managers’ human capital explains one tenth of the difference in firm size; family ownership accounts for one tenth of the differences in productivity. Although the analysis is purely descriptive, our findings suggest that ownership, governance and management play a significant role in explaining firm performance and account for a non-negligible fraction of the North–South divide.