Italy, Europe’s third largest economy, owes its firepower to a paradox that has lasted for at least forty years: we are one of the European countries with the best performing SMEs, but at the same time we have almost completely lost our ability to express large companies capable of competing in global markets.
The Italian production system is predominantly driven by literally millions of small businesses.
Italy is a country founded on SMEs
This is the picture that emerges from the dataMestre CGIA Research Officeaccording to which small and medium-sized Italian companies not only represent the largest share of the national production fabric, but, when compared with those of the same size in other main European countries, they are systematically better performing.
Over 4.7 million SMEs operate in Italy, equal to 99.9% of the total number of businesses. These activities employ 14.2 million people, i.e. 76.4% of national employment.
The counterpart of large companies is numerically irrelevant: just 4,619 companies, 0.1% of the total, which however employ 4.4 million workers (23.6%).
Leading SMEs for employment, added value and productivity
The contribution of SMEs to the economic system is equally significant in terms of results: they generate 64% of national turnover and 65% of added value, while large companies stop at 36% and 35% respectively.
Extending the comparison to the entire EU, Italian SMEs emerge as a positive unicum. Despite having a numerical distribution similar to that of the main European competitors, the economic weight of our SMEs is decidedly greater:
- they contribute 74.6% of total employment, compared to 55.2% in Germany;
- they generate 62.9% of turnover, compared to 35.8% in Germany;
- they produce 61.7% of the added value, compared to 46% in Germany.
A surprising fact also concerns productivity: the smallest Italian SMEs (10-249 employees) are more productive than the German ones by 4,229 euros per employee, equal to an advantage of 6.6%. The gap becomes even more marked in the 50-249 employee range, where medium-sized Italian companies record an advantage of 15.1%, equal to over 10,000 euros per employee.
However, the picture is reversed in micro-enterprises (0-9 employees): here the negative gap with Germany remains very large, -33%, and it is precisely on this size class that a significant part of the structural criticalities of our production system are concentrated.
PMI, because there is no complete overtaking of Germany
The central issue remains the size of the company. In Italy, productivity increases as the number of employees increases, but the majority of the production fabric is made up of micro activities which often are unable to support investments in innovation, research, digitalisation and human capital.
If the country were able to systematically increase investment levels even in micro businesses, Italy could surpass Germany in all size classes under 250 employees. However, it should be remembered that, alongside the excellence of manufacturing, significant delays persist in the services and tertiary sectors, where productivity remains lower than European standards.
Big business in danger of extinction
The other side of the Italian paradox is the progressive disappearance of large companies. Until the 1980s, Italy boasted both public and private national champions: Montedison, Montefibre, Pirelli, Fiat, Italsider, Olivetti, Stet, Alumix, Angelini, just to name a few.
Chemistry, metallurgy, automotive, plastics, IT: in many sectors we were at the top in Europe and sometimes in the world.
Today Italy has seen the number of large industrial players dwindle. The limit is not only economic but also strategic.
