“Italy’s new start with corporate culture”, wrote Professor Carlo Bellavite Pellegrini (historian with the Università Cattolica of Milan) recently (20th February) on the comments page of Corriere della Sera. A serious topic, which is worth taking up for the readers of our blog. Corporate culture as a “framework of values and principles” This applies to companies who are naturally lead players and also to the country as a whole, above all at times of major crisis. In fact Bellavite Pellegrini notes that in the current context of progressive debasement of our national memory, history and identity, the corporate culture of some companies in Italy can usefully become a tangible sign and world standard, instantly recognisable, for communicating to markets and to the world the extraordinary talents, creativity and taste which have always had a permanent place in Italy. Identity becomes a driver of competitiveness and representation of the past and future. The historian mentions the historical archives of Fondazione Pirelli, Intesa San Paolo and Mediobanca as testimonies of the positive efforts of large companies, not only in the preservation of memory but also in communicating to all stakeholders and to the market the set of values which the company has interpreted and intends keeping alive. A symbolic and functional system also has to be built together of relationships between creativity, artistic and scientific research (a new frontier with many of the more innovative contemporary artists, such as Saraceno and Nicolai, as lead players, the brains behind works of great critical and public acclaim at the Hangar Bicocca), an interpretation of the changes in trends in tastes and markets, decoding of social and therefore also economic changes. A relationship with the local area (Bicocca for Fondazione Pirelli) also has to be strengthened. Bellavite Pellegrini also notes that culture and art are shared values in the history of a nation and as such represent factors of stability, civil confidence and social cohesion, essential prerequisites for the maintaining of an adequate social capital necessary for the proper working of the markets. In this respect corporate culture represents a positive external factor benefiting the country, also through the redevelopment of towns and suburbs according to the missions which corporate cultures perform in favour of the communities where they are located. Business is therefore culture also from this point of view.

Do forms of business founded on the idea of no charge exist? Can economics really be reconciled with altruism, business with other people, the market with giving? Economics is a challenge to be won not only because companies fight the daily battle of costs and prices, but also because economics itself can have different implications closer to humankind, even mapping out a corporate management different from that which is most widespread nowadays.

These are non-theoretical but absolutely practical questions given that they can affect the working management of companies.

For a better understanding, economists, entrepreneurs and philosophers have worked on an analysis built around the Encyclical of Benedict XVI Caritas in Veritate or Charity in Truth. This has produced Cultura d’impresa e costruzione del bene comune. L’Enciclica Caritas in Veritate per un mondo migliore [“Corporate culture and construction of the common good. The Charity in Truth Encyclical for a better world”], around three hundred pages of works edited by Angelo Ferro and Pierluigi Sassi for the Unione Cristiana Imprenditori e Dirigenti [Christian Union of Managers and Entrepreneurs] and the publishers Libreria Editrice Vaticana.

If economics is a challenge, Charity in Truth constitutes a challenge to the challenge. The Encyclical is in fact an economic and social analysis of the situation in the 21st century with strong ethical references, but whose thinking bases above all on the need for not separating economics from mankind, i.e. widening the concept of the person to the concept of relations which makes human action the sign of creating of the common good, i.e. human social living.

The book thus narrates an original and in-depth reflection in which contributions from economists stand alongside the recounting and description of the practical applications of the social doctrine to successful business, to the world of training, credit and social dynamics. A process which supplies original ideas to be tried out and applied also in other firms.

The Encyclical and the actions revolving around it thus end up by reasoning on at least two concepts – charity and business – which are apparently unconnected yet which increasingly seek each other out and often come together.

Cultura d’impresa e costruzione del bene comune. L’enciclica Caritas in veritate per un mondo migliore

A. Ferro – P. Sassi

Libreria Editrice Vaticana, 2010

Better business and greater innovation with the Web, where more efficiency is created and the risk is spread. Innovation is generated more easily when dialogue in all directions is possible. In industry these concepts have been widespread for some time although not yet fully put into practice, even if in recent years firms have moved increasingly away from the integrated and hierarchical supply chain model in favour of more fragmented inter-organisational networks made up of strategic partnerships with outside units. Examples of this are the many cases in industries such as car, textiles and clothing, food and special production areas such as bathroom fittings, precision mechanics and applied electronics.

However real economics always takes theory by surprise. Some empirical research projects, for example, show how the network approach is now spreading also in contexts in which digital technologies play a central role and which enable business to be carried out while demolishing the traditional time, space and function barriers. Indications are in fact arriving as feedback from these areas, useful to manufacturing companies which were the first to try out certain solutions.

An understanding of the situation is gained from reading Digital Business Strategy and Value Creation: Framing the Dynamic Cycle of Control Points by Margherita Pagani (from the marketing department of the Bocconi University), to be published in MIS Quarterly. Pagani starts from the study, first theoretical and later in field, of the development of the production organisation of the European and US broadcasting industry to reach conclusions which can be of interest to the whole of industry. The case study and empirical data instead succeed in identifying three different clusters of control points, i.e. specific configurations whereby the transactions necessary for the supply of a service are carried out: a vertical one, a network structure and one based on a multilateral platform. Furthermore the research in fact demonstrates how, driven by the market and technology, companies have to learn how to exploit the so-called “breaking elements” in order to survive, elements of innovation, changes in process and direction which break up existing balances in an organisation and can destroy or rebuild it, in addition to learning how to communicate better internally and with one another.

Digital Business Strategy and Value Creation: Framing the Dynamic Cycle of Control Points

Margherita Pagani

MIS Quarterly, 2013

It is a term with ancient roots, but with a modern sound, and one that is at the centre of highest levels of economic debate: resilience. They speak of resilience in the economic policy documents coming out of the White House and in studies being published by the OECD. The term is being used in many discussions at the World Economic Forum in Davos, and was even seen on three pages of one issue of La Repubblica (23 January). Resilience. It is a term that comes from Latin (“resilere”: to leap back) and means having an ability to adapt to change, to absorb stress, to accept setbacks rather than attacking them head on and risking disaster. Adaptability, in other words. The opposite of rigidity. Or of fragility.

For experts in ecosystems, it is the ability to find a new state of equilibrium following an external shock to the system. For engineers, it is the elasticity they see when they study rubber, plastics or certain nanotechnologies being used now in materials such as steel or concrete. For economists, it is flexibility in the face of change. Indeed, this same flexibility, or adaptability, is at the heart of Italy’s “culture of enterprise”. It is that brand of customisation typical not only of traditional Italian craftsmen, but also, and above all, as found in the most sophisticated manufacturers of industrial tools, which are building production facilities (from steel mills to packaging plants for foodstuffs or pharmaceuticals) for their customers throughout the world.

So it could be said that the best in Italian manufacturing has always been resilient, up to and including the “factory of the third millennium”, a factory that is a unique blend of lasers and craftsmanship, research and prototype testing, production sites and offices providing a range of complex services, a synthesis of technique and aesthetics, of new materials, new forms, new applications.

Nowadays, there is an expression that is being thrown around in all of the most authoritative economic circles to describe this tendency of ours: “resilient industries”. It may not exactly roll off of the tongue, but it is, in essence, a form of recognition of our success and something for which we should continue to strive.

A “manual” for creating a company or, rather, for creating an environment for production, the culture of production and a new socialisation. Because companies, factories and plants are not just places where something – material or immaterial – is manufactured, but places where something is created. Provided the company is planned, built and managed in a certain way. Unlike what is often seen.

However it takes an indication of the route, of the steps to be taken, an inspiration. In many respects this is what Filippo Monge has done with his Sistema impresa. Cultura, valore, innovazione [“Corporate system. Culture, Value, Innovation”], a manual in its third edition which condenses into approximately 300 pages everything that has to be known in order to set up a company worthy of the name.

Monge lectures in economics at the University of Turin but is also immersed in the real world of companies and therefore expresses himself in practical terms, basing on certain questions. Why, for example, do children colour and have always coloured factories with a grey crayon? Why in the collective imagination does the word “company” or “firm” call to mind images which are not always positive?

The answers lie in a void, that created by the lack of a modern corporate culture, which this manual in fact intends filling.

For too long now, says Monge in fact, a modern corporate culture has been missing among the new generations. Today it is often taught how to govern a company, how to manage it, but never (or rarely) how to set it up. For a better understanding we have to turn to the masters of this subject such as Zappa, Fazi, Golinelli and Ghoshal for whom the company becomes a positive workshop of experiences and economic development.

This produces the philosophy which Monge seeks to apply and which constitutes the core of the book. Creating a company does not mean just creating business but also generating resources, experiences, skills and knowledge. To do this it takes new ideas in a modern vision focused on the needs of the stakeholders and the competitiveness of local areas, as well as responsible choices and sustainable decisions.

Sistema impresa. Cultura, valore, innovazione

Filippo Monge

Franco Angeli, 2012.

Many people make decisions in companies, even when there is just one “boss”. This at least is the situation observed when investigating a set of companies which, despite everything, are growing in terms of production and presence on markets. In fact the larger the company, the more the origins of the decision-making process and business creation are scattered. This may seem predictable, but the reality is different. Studying and understanding in full how decisions take shape and are eventually applied in practice is an effective way of understanding the corporate culture of single companies and, above all, improving their management further.

An investigation of how decisions are taken in a large company was recently carried out by Olga Belousova and Benoît Gailly, both from the Louvain School of Management (Université Catholique de Louvain), in a fact-filled article which appeared in a Working Paper by the same school. 

“Corporate entrepreneurship in a dispersed setting: actors, behaviors, process” is the title of the work, aiming to examine how corporate entrepreneurship is formed and evolves in a dispersed setting, i.e. one where contributions can be obtained from different corporate ranks.

After a review of the economics and management literature already available on the subject, the two authors decide to enter the arena, i.e. the company, to gain a better understanding. The work therefore studies the decision-making mechanisms in a multinational chemicals company, with a history spanning 140 years, which operates in more than ten different areas concentrated in two sectors of activity and which employs more than 25,000 people in approximately 50 countries around the world. Considering the process behind decisions involving new products, new markets and also new production technologies, Belousova and Gailly explain how employees from different managerial ranks can contribute to the creation of corporate entrepreneurship and how these contributions succeed even in changing a project which develops over time. All this to arrive at a conclusion: corporate entrepreneurship is increasingly a combination of formal and informal activities taken on by multiple individuals to the extent of mapping out a collective image of the company, ever farther from that of the single man at the helm.

Download pdf

Corporate entrepreneurship in a dispersed setting: actors, behaviors, process

Olga Belousova-Benoît Gailly  

Louvain School of Management Working Paper Series (2012,05).

Culture has and must have an intrinsic value, one that is non-instrumental and cannot be directly orientated. Only if we are able to recognise this non-negotiable value will we also achieve the wide-ranging effects of economic growth and improvement in the quality of life which culture will inevitably bring about. This claim, shared in full, is by the Italian president Giorgio Napolitano and is discussed in Il Sole 24Ore regarding the “States General of Culture” launched by the daily. The theme is also taken up by the philosopher John Armstrong when he says that the solidity and diffusion of humanistic disciplines are essential to democracy. Disciplines that teach critical thought, use of the imagination and compassion, and transform individuals into global citizens, in other words people capable of an overall vision of the world. We therefore need an education which teaches beauty and critical thought and thinking should be reformed in order to promote humanism, logic and other studies. A real “polytechnic culture”, to use an expression dear to Pirelli corporate culture. There is also an economic value of course. Armstrong explains in the magazine Philosophical Inquiries that if what we seek is a flourishing economy then we have to see that the business world absorbs the best of what humanistic disciplines are able to offer. Not only technical but science too, philosophy, a sense of things, an in-depth and in-perspective look, the synthesis of a new humanism. Naturally, on the subject of economics, without demonising profit, which will arrive as a result.

Creating is the rightful duty of a true entrepreneur. Furthermore creation, again within a company, is also involved when introducing a new product, with a particular design, devised to satisfy new consumers or to invent a market which did not exist before. However a strange thing happens: when looking inside the process which takes us from the idea to the product, we catch a glimpse of the entire nature of each company, its culture, its history, the story of its management and of its work force.

This look inside processes of this kind is an important exercise tried out by Michele Bottoni (a young economist and former student of Ca’ Foscari and the University of Ferrara, specialised in marketing), with his Design-driven Business. Quando lo spirito di innovazione anima la cultura d’impresa [“Design-driven business. When the spirit of innovation drives corporate culture”].Bottoni bases on an assumption: “design is a mechanism which foresees an exercise in translation, requiring a considerable creative and cognitive effort capable of generating innovation. Consequently the fundamental assumption on which this process is based is the recognition of tradition, and corporate culture, as intangible capital”.

For a better understanding of how this mechanism works in real life, the author explores the organisational structure of those firms which preserve the values of the small Renaissance workshop. Areas of excellence of Italian savoir-faire such as that of shoes, wood and iron come under the spotlight. Bottoni recognises firms as a “place of education in the language of the brand-DNA and the entrepreneur as a catalyst of unspoken knowledge, difficult to categorise”.

The fact that in corporate creation not everything can be classified is the lynchpin of the argument. Bottoni realises this and even says that true innovation in firms does not depend on rules but on the exceptions that confirm them. All this is in a creative process which accumulates knowledge from design project to design project, experiences brought about by market fluctuations and the change in corporate strategies and the social and cultural context within which the company operates.

Design-driven business. Quando lo spirito di innovazione anima la cultura d’impresa

Michele Bottoni

Zona, 2012

Companies are increasingly interacting with the communities of which they are part, even when the latter are at world level. How do they do this and why?

An important investigation into this aspect of corporate procedure has been carried out by Andrea Fosfuri and Marco Giarratana (from the Management and Technology Department of the Università Bocconi), with Esther Roca (from Universidad Carlos III of Madrid) in Community-Focused Strategies (published in Strategic Organization).

The three researchers base on specific cases such as Patagonia, manufacturers in California of outdoor clothing and an active member of various environmentalist communities, or Kiehl’s, which produces cosmetics and is known for its sponsoring of Heritage of Price, a non-profit group involved in human rights equality. Then there are those of Shell Oil and many others. Fosfuri, Giarratana and Roca examine the different specific examples from the viewpoint of corporate strategies and coin the concept of “community-focused strategies” (CFS), i.e. those corporate actions whereby a company is committed to setting up relational links with one or more communities which represent (potential) customers. The authors then classify the CFS in four types: signalling, identity-enhancing, identity-creation and avoiding.

Signalling strategies indicate the alignment of corporate values with those of the existing community, yet with weak corporate commitment to the values of the community. This is the case of Shell Oil, which invests in environmentalist advertising schemes. The second type of CFS, identity-enhancing, is marked by a strong investment by the company with respect to the social values of the community. For example O’Neill sponsors surfing competitions at the same time as days dedicated to cleaning and safeguarding beaches. Identity-creation CFS instead require a more active role to be played by the company in relation to the community. The company itself supplies, via a set of actions fully in tune with its products, most of the identity to the community in which it operates and which would not exist without the presence of the company. This is the case of famous examples such as Ducati, Harley-Davidson and Piaggio. Finally avoiding CFS are put in place when the company abstains from coming into contact with the communities.

All this, and this is possibly the most important feature, is tackled from a practical stance: one of the authors’ goals is in fact that of proposing a series of suggestions for managers about which strategy to choose, in which resources to invest and the potential limits and problems to be avoided.

Community-Focused Strategies

Andrea Fosfuri, Marco Giarratana, Esther Roca

in Strategic Organization, volume 9, issue 3, pages 222-239.

The competitiveness crisis in Italy as an economy depends also on its low rate of productivity. Productivity, specifically for a European country which has to stake on “aesthetic and artisan”, “premium” and “top-of-the-range” products with high added value, is based on a series of social and cultural software items. A solid critical awareness of the culture of the national economy. A strong social capital, with a network of relations which guarantee unity in competition and collaboration (“cum petere”, to move forwards together). An increasingly sophisticated human capital, which depends above all on the quality and the quantity of training received. Italy unfortunately is increasingly lacking in this respect. A fact pointed out by Gian Arturo Ferrari (one of the most authoritative managers in publishing, for years part of the top management of Mondadori) with his condemnation on the cover page of Corriere della Sera of 30th January regarding “the link between a school curriculum that has been cobbled together, worthless vocational training, chaotic university system, desolating reading figures and their logical consequence, i.e. very low productivity”. Proof of this? In the dramatic figures of plummeting university attendance, with almost 60,000 students less over the past ten years. Uncultivated human capital. A resource of commitment and skills potential which is gradually being depleted, at the very time when the key factor in growth lies in processes of the knowledge economy. What’s to be done then? Investments are needed, for an economic recovery which is a long time coming. As well as radical reforms, and not only regarding economic issues in the strictest sense of the word but also in fact culture and training. Instead decreasing amounts of public investments and expenditure of low value have been allocated, unlike in other major EU countries.