Size and Strategy of Italian Industrial Enterprises (1907–40): Empirical Evidence and some Conjectures

It is now common knowledge that the growth and diffusion of large-size enterprises has been one of the main features of the Second Industrial Revolution (Schmitz, 1993). As a consequence, the market has changed from a competitive to an oligopolistic one. The accelerated process was fuelled by the substantial advantages of large companies over the smaller ones. Firstly, as Chandler (1990) has emphasized, they enjoyed scale and/or scope economies favoured by the mass production for a mass market. Secondly, they are credited with a greater propensity for innovation. There are two possible reasons for this: innovation is a function of R&D expenditures and, thus, of the size of the company (the second of Schumpeter’s arguments; Cohen-Levin, 1989) or is cumulative within each technological paradigm and, therefore, causes the average size of the firm to grow until a new paradigm emerges (the new version of the Schumpeter’s first vision; Scherer, 1986; Dosi, 1988). Finally, large corporations can be viewed as a more efficient instrument for handling transactions costs (Williamson, 1975). The United States was at the forefront of transformation, and other countries (including, in this case, the United Kingdom) were forced to imitate. Therefore, a limited diffusion of large enterprises is considered a sign of backwardness. By pointing out how local managerial and organizational traditions and capabilities shape the characteristics of the same industry in different countries, Kogut’s recent work (1992) only partially amends this conclusion.