Studying the history of Italian small business is good for the culture of enterprise in general, but we need the right guides because it’s easy to slip into rhetoric, to stick with the known and fall back on the same old paradigms that see small business as a panacea for all of the nation’s economic ills. The latest work by Valerio Castronovo serves just this purpose and does so with the rigor of a history book, but with the allure of a voyage. 

Recently published by Laterza, “L’Italia della piccola industria. Dal dopoguerra a oggi” (The Italy of small enterprise. From the post-war era to today) is, in fact, a history book, but one that tells the tale of the culture of small and medium enterprise and so, by way of inference, also that of the nation’s large corporations. 

Castronovo starts with a series of observations. Over the last 50 years, the development of a great many small businesses has marked both the economic landscape and the very evolution of Italy and has led to a number of transformations in Italian society and certain aspects of the nation’s very identity. Along side “grand capitalism” there has been—and there still is—a sort of “molecular capitalism”. This way of seeing and of doing business first became popular in the wake of the decentralisation of some of the activities of the leading industrial complexes and was then ingrained through a sort of ingenuity and versatility that was almost magical. 

But that alone was not enough. For Castronovo, small business also supported the rebirth of a great many small towns and villages in Italy, from the northeast down to the south-central part of the peninsula. Today, one wonders if many of these small businesses will be able to survive both this challenging recession and the competitive pressures coming from emerging nations. 

In the author’s view, this will only be possible if they manage to make a qualitative leap forward in terms of creativity and innovation, openness to the contributions of management, and relations with the international marketplace. But it will also take changes in fiscal legislation and bringing an end to the nation’s suffocating bureaucracy and contradictory legislative landscape. Castronovo even goes so far as to say that what we need is new, more appropriate industrial policy, which, at the end of the day, also means a change in our culture of enterprise.

L’Italia della piccola industria. Dal dopoguerra a oggi

Valerio Castronovo

Laterza, November 2013 

Ethics is for everyone, for small businesses as much as for large corporations, and yet it’s easy to slip into the trap of calling for ethical behaviour by the largest multinationals while forgetting to do the same with small and mid-sized businesses, letting the image of the SMB in the chokehold of banks and big business take over. It’s not easy to talk about ethics for small business, but we must. We must because there are always two sides to ethics, one for the businesses that have to adopt them and the other for those that benefit from them.

A work by Donovan A. McFarlane (from the H. Wayne Huizenga School of Business and Entrepreneurship, Nova Southeastern University, Fort Lauderdale, Florida) is helpful in this regard in that it applies a thorough approach to ethics for small business. Recently published in the Entrepreneurship and Innovation Management Journal, “The Importance of Business Ethics to Small Ventures” looks, in particular, into the issue of the vulnerability of small business and into business ethics, both of which are key to understanding the activities of this type of business and, above all, to the role that they play within the economy as a whole.

The author then explores the literature on the topic and seeks to determine what the “ethical obligations” of small business are, as well as to identify the standards of business ethics and the ethical challenges facing small businesses. But McFarlane doesn’t stop there. He then attempts to identify four areas in which ethics is especially important to small venture practices, namely laws, the system of social organisation, morality and religion, and relations with stakeholders, before coming up with a series of recommendations for improving ethical behaviour in order to create value for the customer and to better the image of the business itself.  Recommendations that we all should read.

The Importance of Business Ethics to Small Ventures 

Donovan A. McFarlane

Entrepreneurship and Innovation Management Journal

Volume 1, Issue 1 (November 2013), Pages: 50-59

Humanism is to be defended against the “growing technicalisation of teaching” and the “corporate visions” of universities. “The appeal for human sciences”, signed by Alberto Asor Rosa, Roberto Esposito and Ernesto Galli della Loggia, is published in the latest edition of the prestigious magazine Il Mulino, directed by Michele Salvati and which has just come out on sale. It poses the question of the “classical” roots of national culture, also leveraging on the strength of the signature of three great intellectuals, very different in terms of disciplines (a man of letters, a philosopher and a historian) and of political and cultural orientation yet fully on the same wavelength as regards the values of national identity and therefore of the future of Italy. It is a fundamental appeal which upholds the importance of the long sharing of historical, literary and philosophical culture, from Dante to Manzoni, Machiavelli to Vico, as the actual basis of national cohesion and as a resource on which the relationship between culture and society, population and political commitment and between present and future is founded, without which “a country is condemned to regression”. The three scholars fear “the disintegration of human knowledge as processed during centuries of Italian history and more”, the technicisms in which the only gauge for judging merit is “useful”, the weakening “of the critical look at reality” and the slavish adherence to social models founded on the “standardisation according to globalised parameters of the current ideological worship of markets”.

The appeal by the three scholars should be taken into serious consideration also by those who deal with corporate culture and the conviction is that science and technology should be ideally included in the context of cultural activities (see the thoughts on “technicism and ethics” according to the lesson by Karl Popper, in last week’s blog), manufacturing and craft skills, free research and applied research. A “polytechnic” culture in other words. According in fact to the lesson of humanism which did not separate cultures but which was able to keep alive in full harmony the beauty of the painting by Piero della Francesca with his sophisticated knowledge as mathematician.

Humanism as synthesis. A typically Italian attitude, one of our “classics”, to be valued and upheld.

The argument of the three scholars seems to target, if anything, a technicist drifting which has nothing to do with the essential nature of science and further study, at the various levels of education in Italy, of a solid, robust and documented scientific culture. The drifting, that is, of those who shallowly thought that the values of education in Italy should have been summed up as English, computer science and business without understanding either the values of the originality of the language or the importance of an education which, with humanistic and science subjects, teaches all the adoption of deep, critical, free and responsible thought.

So we come back to humanism. Also as regards the specific features of the interest by corporations and market values. The financial crisis has taught us not to trust the so-called “marketism” (the ideological supremacy of the market) and instead to assign importance to values and rules (and therefore to controls and sanctions) without which the market is reduced to the far west. The fabric of the market is in fact good relations, as a place for exchanges not only of goods and services but also cultures, views from and on the world, of products which embody, as a distinctive and original and therefore competitive factor, the characteristics and values of those who have imagined, designed, produced and marketed them.

In Italy’s “politecnici” and France’s “écoles polytechniques”, with their high level of education, alongside subjects related to science and technology teach the mastery of philosophy, drama and writing. A good engineer needed by a company has to take account of techniques and also the more sophisticated cultural tools for describing all the complexities which a mobile and ever-changing world makes headline news.

Welcome therefore to the debate on the risks run by humanism and on the answers to be provided. Not only by those responsible for human sciences but by anyone keen on questions of civilisation, freedom and well-balanced development. In other words a human development.

The success of a firm also depends on the geographical area where it is located and, moreover, depends on the territory which surrounds it. Local stimulation and obstruction have an important effect on the productivity and wealth of firms and the people who work there and therefore, ultimately, on results too.

 

Le cento Italie della competitività. La dimensione territoriale della produttività delle imprese [“The One Hundred Italys in the Competitiveness Race. The Territorial Dimension of Corporate Productivity”], a book printed a few weeks ago by Rubbettino, represents a good handbook for a better understanding of the links between territory and corporation, between local conditions and results in terms of corporate productivity. 

 

This is not just academic research. 61,498 companies, in the manufacturing industry alone, were screened for the period 2001-2010. 

 

The three authors, S. Manzocchi, B. Quintieri and G. Santoni, first make a distinction between the competitive factors within the company and those due to specific external factors in the territory where the company operates (credit, human capital, criminality rate, infrastructure, etc.). By narrowing down the survey further the book ultimately demonstrates how, in the first ten years of the 21st century, companies operating in urban areas have become more competitive compared to the national average. On a par with other conditions their productivity exceeds by around 7% the Italian average. A figure which has nothing to do with the features of the relevant industry but only with the territory in general terms. It is explained that no significant effect is found for classification in one of the traditional areas of manufacturing, which does not mean that they no longer work but that the drive in terms of total productivity by the factors has gradually weakened. In brief, from a comparison between areas of manufacture where economic activity is highly specialised in some fully defined sectors and urban areas where economic activity is concentrated on the territory although branching out into many departments it would appear that the first are losing their competitive edge to the benefit of towns and cities. 

 

The myth of the specific manufacturing industry district would appear therefore to have crumbled away and the importance emerges for firms of diversification, of the possibility of taking on board different inspiring ideas and of a multidisciplinary concept rather than specialisation at all costs. There is a move from a single-theme culture to a multiform one. 

 

 

Le cento Italie della competitività. La dimensione territoriale della produttività delle imprese

S. Manzocchi, B. Quintieri, G. Santoni

Rubbettino, October 2013

 

 

There is no doubt that people are the real resource of companies. That which in more technical terms is referred to as “intellectual capital”, and which takes on different forms according to the organisations. Naturally the entrepreneur also plays a part as the person with the idea behind the enterprise and the one who has to spark its fulfilment, organising a firm (this is at least what economic theory teaches us). However nothing can be done without the right people.

It is therefore important to understand which conditions enable training of the intellectual capital which most suits the firm. Also because, as mentioned above, there are no moulds to be adopted for all uses and all circumstances and in other words experience is used as a basis.

All this is then even more important today. In the technology era but above all that of knowledge an understanding of the role of intellectual capital is decisive. The effects of intellectual capital on e-service innovation by Shih-Wen Liao and Ja-Shen Chen (from the College of Management, Yuan Ze University, Taiwan) serves to add a useful piece of knowledge to all this.

The two researchers start with the consideration that with the emergence of an economy based on knowledge, intellectual capital is a critical factor for enabling companies to obtain a competitive lead in increasingly complex environments.

The research therefore bases on a series of effective theoretical explanations in order to check them out through innovative work relating to e-service on Taiwan. The first conclusions of the research (the work is in fact still in progress) demonstrate that the level of intellectual capital is particularly decisive also in order to improve organisational capacity and the capacity for creating innovation in services.

This is confirmation of the special formula which cannot be completely defined by analytical models, which is determined in companies and which, ultimately, allows positive balance results to be obtained. In other words intellectual capital is a byword for the true core of actual corporate culture which governs the organisation and production goals.

The effects of intellectual capital on e-service innovation 

Shih-Wen Liao, Ja-Shen Chen

College of Management, Yuan Ze University, Taiwan

There is profound ethical and cultural significance in technology, in science that leads to new opportunity and in innovation that continues to transform the society in which we live, making it better, freeing it from uncertainty concerning healthcare, the environment and quality of life, as well as from the oppression and anxiety of “community service”. A lesson of critical, responsible optimism in this regard comes from one of the 20th century’s greatest philosophers of science and liberty, Karl Popper, the Italian translation of his German-language work “Technologie und Ethik” having recently been published by Rubbettino. Rereading this work in these times of crisis in the search for new dimensions of scientific knowledge and its impact on society and the environment can help astute politicians, business people, educators and scientists to understand how to construct better, more sustainable equilibrium.

Science and innovation are what is needed by a Europe seeking to break free from the ideological wastelands of political thought made by “bookkeepers” and protectors of small-minded national egotisms (thereby ignoring the fact that the much needed balance in public accounts and caution towards inflation are just tools for a virtuous path of growth and not absolute values in and of themselves) and to put into practice strategic decisions for development. Indeed, without creating jobs for the future generations or building structures for social inclusion, without renewing the roots of that social and political pact that characterised its rebirth immediately following the disaster of war, what sort of Europe would we have?

Giulio Giorello, another wise philosopher of science, was right when he wrote (in Corriere della Sera on 1 December) of the end of the “Europe of nation states” and called for a model inspired by CERN in Geneva, that hotbed of research for scientists from around the world (including a significant share of Italians) bringing together theoretical and experimental physics, freedom in research, and a proper use of financial and human resources in order to achieve results of the highest order, a place where Europe is not just another bureaucratic acronym and in which competitiveness with the rest of the world is based on the achievement of real results.

This is the Europe that Politecnico di Milano had in mind when reflecting on its 150-year history (the first academic year having begun on 29 November 1863, just two years after the unification of Italy in a vibrant, open and entrepreneurial Milan) and setting ambitious plans for the future, including the announcement of an agreement with Technische Universität in Berlin and Ecole Centrale in Paris to create a university of truly continental scope. One step beyond the partial agreements already in effect, the underlying idea is to create a place of culture, education, research, science and the dissemination of innovation that is able to enhance competitiveness in the international marketplace and to attract new talent (in line with the European challenge for a “knowledge economy”) – a synergy with the most dynamic enterprises looking to invest where the high-quality human capital is found.

Politecnico’s European alliances are also an important challenge for Milan, as a forward-looking metropolis and driver of Italian development. The stated goal of the school’s rector, Giovanni Azzone, is “to develop talent for the development of the territory”, with Politecnico serving as a pillar on which “to increase the competitiveness of an ecosystem centred around Milan and extending out to Turin, Trieste and Bologna, the only macro-area able to successfully compete with the other international networks”. Milan is already (according to recent studies) one of the world’s top 25 “university cities” thanks to the great results in research, education and ties with business that have been achieved by the area’s public and private universities, and Politecnico continues to invest (€10 million each year) “in attracting the best Italian and international students” and in promoting partnerships with professors and researchers from around the world. “We are acting with the optimism of one who creates innovation and development,” Azzone said, and with the responsibility – both historical and contemporary – of one aware of playing a key role in strengthening both Italy’s economy and its education system. This, too, is the “ethics of technology” if you will, coming back to Popper.

We can be quick to point the finger at the industrial “system”, but that would be misguided because no single business is the same as another. This may sound obvious, but it is often forgotten by those commenting on the status of industry, either in Italy or abroad. In short, the whole is not the same as its component parts. Not better or worse, just different. 

Nonetheless, many experts overlook the obvious and claim that Italian “industry” isn’t open enough to innovation or focused enough on international markets, or that it’s making do with too many small and mid-sized firms that lack technological skill. They see it as a sort of dinosaur, not like anything else around it.

But if we look at the facts, we see quite a different picture. This is the assumption underlying a vast field study conducted by the Confindustria Research Centre, which has resulted in a book, “Nuove strategie delle imprese italiane” (New strategies of Italian businesses), written by Fabrizio Traù, an economist at the centre, and Alessandro Arrigheti, an industrial economist at the University of Parma. 

The results of the study confirm that Italy’s “industrial whole” is not the same as its component parts. In fact, if we look deeper into Italian industry, we find many surprises. According to the authors, in order to interpret the logic behind the change that is currently under way in Italian industry, we must let go of the idea that it is a homogenous entity. And this is where we find the surprise. In order to understand what’s actually happening, we need to look at the facts, as the authors explain, in light of an emerging form of dualistic development. On the one hand, we see a highly dynamic group of businesses that are adopting significantly different strategies than in the past, while, on the other, we have those that still seem to be prisoners of that past, unable to keep pace with the changing times. But there is another surprise, as well. The businesses that are able to succeed are not isolated cases of extraordinary excellence, but rather a significant segment of enterprises that have avoided competitive solutions based on cost and economies of scale and have placed technology and quality human capital at the foundation of their strategy decisions. In other words, a successful business is one that puts the emphasis on technology and hard work. 

Nuove strategie delle imprese italiane

Alessandro Arrighetti, Fabrizio Traù

Donzelli, October 2013

With families dedicated to their businesses and businesses drawing their lifeblood for growth from their families, one thing is certain: the bond between a business and its leader can be as strong as the one between that leader’s family and the business they created. But things don’t always go as hoped. Being a family that created a business is not the same as being a good business family, and it’s important to understand why that is, particularly in the complex world in which we now live. Nowadays, the already delicate balance between the bond of a business family and the business itself can be thrown off even more easily than in the past.

“Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance”, a study conducted by three US universities (Northeastern University in Boston, University of Mississippi in Oxford, and the University of Louisville), has sought to shed some light on how a business and its family intertwine.

The stated goal of the three researchers, Justin B. Craig, Clay Dibrell and Robert Garrett, was to study the influences family business culture and business management have on each other. More specifically, the three sought to “draw on the resource-based view of the firm” to understand the influence that the family, family business culture and flexible planning systems as drivers of innovation have on firm performance.

To conduct the study, questionnaires were given to small and mid-sized family businesses. The key point to come out of the work (published in the Journal of Family Business Strategy this November) was that the existence of a good culture of enterprise within the family positively influences firm performance and, in particular, its flexibility in operations and its ability to innovate, but the success of a business comes out of an often fragile, unfathomable sort of chemistry, a combination of culture and background, of intuition and calculation, that is difficult to replicate and entirely unsuited to being captured by simple models.

Examining relationships among family influence, family culture, flexible planning systems, innovativeness and firm performance

Justin B. Craig, Clay Dibrell, Robert Garrett

Journal of Family Business Strategy, November 2013

For the first time, the Pirelli Foundation is displaying the works of Renato Guttuso, created by the artist for Pirelli beginning in the late 1950s.

The exhibit, entitled “Renato Guttuso: on the banks of the Nile”, includes 5 Indian Ink drawings and an oil on canvas painting, all inspired by the artist’s travels with Giovanni Pirelli along the banks of the Nile in 1959.

From Thebes to Memphis, from Luxor to Cairo, the illustrations depicted mythical lands populated by locals going about their daily routine, brought to life through the unmistakable strokes of Renato Guttuso.

The exhibit is open to the public (appointment required) Monday through Friday from 10:00am to 5:00pm. For bookings, call +39-0264423971 or write to info@fondazionepirelli.org.

A new drive for enterprise is being seen among young people according to the organisers of the “Festival of Collective Intelligence” (Festival dell’intelligenza collettiva), two days of meetings and debate that was organised by the CNA (Confederazione nazionale dell’artigianato) in Florence in early November focused, this year, on manufacturing and the “maker culture”.

The idea is not a new one. “Cultura#manifattura” (Culture#manufacturing) was the title for CulT Venezie, the European cultural exhibition that attracted more than 25,000 visitors (and a great many youth) for the three days of debate at the San Basilio Terminal, with particular emphasis being placed on the intersection between traditional Italian manufacturing know-how and the innovative technologies being used by today’s “makers”.

In times of crisis, when the traditional job opportunities become more scarce, both in large-scale manufacturing and in the service industry, one way out is that of the start-up, or entrepreneurship. According to statistics published by Movimprese (the statistics unit of Unioncamere), 100,000 new businesses were started from January to October 2013 by individuals younger than 35. That’s one-third of all start-ups during that same period. These were often technologically aggressive start-ups, active not only in retail sales (20%), the restaurant industry (5.6%) and construction (9.4%), but also in manufacturing and high-tech industries. Makers. “Digital natives” able to unite manufacturing and the web, bricks-and-mortar and digital, in new ways. It is a synthesis of the typically Italian brand of individualism and the tendency Italian’s have to keep their business tied to their roots, to strengthen social capital and mutually beneficial relationships, to bring together “individual” and “community”.

This neo-manufacturing “maker” culture is becoming increasingly popular. They have talking about it in the English-speaking world for a few years now with The Economist, for example, coining the phrase “additive manufacturing” (i.e. 3D printing, products made by adding layer upon layer of material to go from an idea right to the finished product). In Italy, this is manifesting itself in some unique ways, given Italy’s focus on dynamic small businesses and high-quality craftsmanship. Of course, it is a trend that is quite distinct from the idea that “small is beautiful” (an idea that had become an ideology of “microcapitalism”, of a brand of individualism that was not yet cooperative but no longer competitive and of family-oriented entrepreneurship), while also different from certain sociological interpretations whereby “makers” would replace the failing large-scale and mid-sized corporations.

More realistically, it is a phenomenon to be watched closely, facilitated, supported (both culturally and financially) and incentivised (through industry-centric legislation in the areas of lending, innovation, research and taxes). How exactly? A few interesting ideas came out of the CulT conferences in Venice. The story of Maurizio Costabeber and his DWS, a small firm in the province of Vicenza, tells of a 3D printer pumping out jewels with a filigree of such perfection that they cannot be copied. Or that of Riccardo Donadon, founder and chairman of H-Farm, who said, “In the world of the institutions, there is great ignorance concerning this phenomenon that we are taking part in, but we have to keep moving forward. Here, in the past, a manufacturing industry sprung up spontaneously. We knew how to make things. We always have known, and now we have to continue down that same path.”

Massimo Russo, editor of Wired Italia, a publication keenly aware of the primary aspects of innovation, reiterates, “Italy is at the centre of a great wave of innovation. With 3D printers, the manufacturing landscape is changing. With additive manufacturing, it’s no longer convenient to find labour elsewhere.” Custom products for markets in which a drive for originality is becoming increasingly common, as is the drive for flexibility without downtime or warehousing costs. A hybridisation of fast prototyping and actual manufacturing is possible given the right skills. “Hackers and makers need to come together,” Russo says. “And here in Italy, this hybrid individual has existed for ten centuries. They are the craftsmen, albeit digital ones.” Change is under way, and the future is bright.