Being Efficient to Stay Strong in a Weak Economy. The Case of Calabrian Manufacturing Firms

Abstract

The aim of this work is to study the efficiency of firms operating in Calabria, a small and economically-lagging Italian region. The analysis is carried out by estimating a stochastic production frontier for an unbalanced panel of manufacturing firms which are observed over the 1998-2006 period. Results show that the efficiency score is, on average, about 60%. A declining trend is observed over the last three-year period, 2004-2006. Moreover, efficiency increases with firm age and when firms export. Inconclusive evidence is found for the role of investments in ICT and R&D. This is not very surprising given that private effort in technological activities is extremely low in Calabria (private R&D intensity was less than 0.075% of regional GDP in 2010). Keywords ICT, R&D, Stochastic Frontier, Calabria, Manufacturing FirmsF. Aiello, C. Castiglione 96 nomies: a high degree of dependence on external public transfers; a low degree of internationalization; a weak innovative system; a fragile financial structure; widespread corruption. Just an example for all. When considering the regional innovation system, it emerges that in Calabria the investments in R&D were, in 2010, 150 MLN of Euros, about 0.5% of regional GDP. In Italy this figure is equal to 1.53%, about half of 3% target set for Italy by Europe 2020. Dramatic signals come also from the composition of Research and Development (R&D) expenditure: in 2010, 85% of investments are made by universities. The differences between Calabria and the rest of Italy are therefore really worrying in the private-sector: when in Calabria firms spend 1 euro in R&D, the counterparts in the north-west of Italy spend 11 euro. In short, Calabria is an interesting case-study because firms face a context that is poorly endowed in terms of external factors which act as stimulus and support for individual growth.By following this line of reasoning, it becomes extremely interesting to analyze how Calabrian firms react to the absence of any type of positive territorial externality. They can act by adopting the best practices in order to be internally strong and efficient and overcome the diseconomies of being located in a poor economy. To this end, this work applies the Stochastic Frontier Approach (SFA) to measure the efficiency scores of an unbalanced panel data of Calabrian manufacturing firms observed over the 1998-2006 period. Efficiency is meant to be the distance from the regional production frontier, which we estimated by using the model specification proposed by [8]. Data are from the VIII, IX and X surveys carried out by Mediocredito Centrale-Capitalia (MCC) and Capitalia-UniCredit.With regard the economic model used in the empirical setting, it is clear that efficiency gains are dependent on many factors, the most influent of which should be the Information and Communication Technologies (ICTs) and the R&D efforts made by each company. In other words, it is expected that the introducing and adopting of technology will translate to a systemic increase in efficiency and productivity...

Ethical strategic alliances for the sustainable recovering of a territory

“…Despite efforts at the national and the supranational level, the southern regions have not succeeded in inverting the trend (Svimez, 2014). Beyond the weaknesses of the southern Italian regions, also typical of underdeveloped regions, Calabria is characterized by the following (Aiello and Castiglione, 2014): a high degree of dependence on external public transfers (European Commission, 2015), a low degree of internationalization, a fragile financial structure, widespread corruption, an unemployment rate of more than 20 per cent (Nisticò, 2014) and a weak innovative system[5]. Furthermore, since the 1970s, the entire area has developed a clientelistic mentality (exchange of goods and services for political support) vis-à-vis the major parties, which are often voted in exchange for jobs and favors, which in turn increases corruption.…”

“…A vast literature on strategic alliances and networks has thus emerged in fields such as economics, management, sociology and organization theory (Kim and Vonortas, 2014), with much of the research focused on the implications of strategic alliances and networks in terms of marketing or technological advantages and on their effect on the performance of firms engaging in such a relationship (Chan et al , 1997; Kale et al , 2002)[1]. However, in this stream of literature, few papers deal with the benefits that alliances could bring to the economic system within which they operate, and these papers deal with the competitive and productive advantage of the industrial system (Ricciardi, 2011; Aiello and Castiglione, 2014).…”