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The current crisis is different from the situation 2008/2009, but again it is a tremendous challenge for the economies across Europe. The Corona-crisis is hitting the economies symmetrically, though with differences in magnitude levels, while the 2009 crisis was primarily a crisis of the banking industry and the manufacturing sector. This time, value chains are substantially affected. As the virus does not hit all countries at the same time, there will be distortions in the value chains over the next months. The assessments on the impact on national GDPs range from a best-case scenario -5% for Germany to a worst-case scenario of -12% for Italy. To deal with the impact of the crisis a European rescue programme is needed immediately, including bringing down infection rates and providing sufficient medical equipment and services. Regarding the economic support, the comprehensive efforts by the ECB and the Commission, including loosening the rules concerning state aid and the provision in the context of the SURE programme for short time work are very welcome. In a second phase, Europe will need a common recovery programme fostering economic development and coming back to sustainable growth quickly. Europe must secure open borders for goods, services and labour, which are crucial for the maintenance of the single market and for restarting cross-European value chains. Europe needs a large-scale and timely initiative to foster growth through public and private investments, focusing on health, technology, and the green economy. The Green Deal should play a key role for the design of the economic recovery programme. The 1.5 trillion euro plan foreseen by the Commission is appropriate to address the challenge faced by European economies. However, to avoid asymmetric rebounds within the EU after the emergency, the European recovery plan must be implemented soon and in a coordinated fashion. Unilateral national actions such as intra-EU border closures should be avoided as they increase uncertainty, lower business confidence, and raise costs. As supply chains are closely knit between EU member states, a common strategy for exiting the crisis will be of paramount importance to re-establish normal economic relationships among European firms and maintain the international competitiveness of the European industry.

This paper provides first empirical evidence of the joint effects that innovation strategies and human resource management practices exert on firm growth. By exploiting unique information from a large sample of Italian manufacturing companies in the very recent years, it shows that investing in technology and implementing performance-based pay policies are both positively associated with a significant turnover, employment and labor productivity growth premium. However, their joint adoption does not necessarily sum the two effects. In particular, performance-based rewards boost growth of non-innovators and of firms pursuing relatively simple innovation strategies, centered around the acquisition of embodied technology. For firms strongly relying on R&D as an additional lever for product and process upgrading, the estimated effect of having in place monetary incentive mechanisms is null or even negative.

This paper investigates the institutional determinants of the industrialization processes that have characterized non-Western economies in the 20th century. By comparing the different approaches followed by East Asian, Latin American and Former Communist countries to acquire and build endogenously productive knowledge, we document their commonalities as well as their distinct features. We show in particular that they all embraced infant industry protection policies and adopted a pervasive public control of their strategic industries. However, the Asian experience also highlights the importance of conditional, selective and export-oriented policies in sustaining successfully the emergence of new industrial powers in the pre-globalization era.

This work analyzes the extent to which local social networks affect workers' labor market outcomes and firms' economic performance. By exploiting variations in firms' ownership generated by takeovers, we find that belonging to the same community of origin as the new employer significantly increases an employee's job retention probability. Finally, we show that the share of local employees retained after the takeover is negatively associated with the probability of closure of the acquiring firm.

Examining Board: Professor Andrew Ellul, University of Indiana Professor Luigi Guiso, Supervisor, EIEF, Rome Professor Andrea Ichino, University of Bologna Professor Alessandro Sembenelli, University of Torino. Defence date: 4 June 2013 First made available online on 9 July 2013. This thesis investigates the social dimension of entrepreneurial activity, showing the importance of embeddedness with local communities and institutions in affecting corporate strategies. The first two chapters contribute to the literature on family firms. The focus on family businesses allows us to study the importance of non-pecuniary benefits and costs attached to control, which are tightly linked to the degree of personal accountability that shareholders have for the actions of the company. The two chapters both use a difference-in-difference identification strategy to study how employment policies, and access to bank lending, differed between family and non-family firms during the recent economic and financial crisis. In particular, the first chapter looks at the geographical distribution of workforce adjustments, finding evidence of a systematic preference in family firms for job preservation and job creation close to their headquarters. The second chapter shows how the presence of a family block-holder had a positive effect in mitigating the adverse effects of the credit crunch. The third chapter of the thesis instead studies the importance of shared norms and values arising at the level of local social networks in reducing the uncertainty involved in hiring new workers. Specifically, it shows that a shared community of origin between employers and employees positively affects both the likelihood of retaining a job after a takeover and the economic performance of the acquiring firm.

In this paper we study how access to bank lending during the recent financial crisis differed between family and non-family firms. Our theoretical prediction is that the presence of a family block-holder in the company attenuated the agency conflict in the borrower-lender relation, because of the higher non-monetary cost of default entailed in this type of corporate ownership structure. Because this information is to a large extent soft, we further investigate the interaction between the family firm status and the screening technology adopted by banks. Using highly detailed data referred to Italy, we exploit the change in the credit allocation following Lehman Brothers’ bankruptcy. We find that family firms experienced a contraction in granted credit lower than non-family firms. Results are robust to ex-ante differences between the two types of firms and to bank-specific shocks. In line with our prior, banks that increased the role of soft information in their lending practices reallocated credit towards family firms.

The purpose of this paper is to study how family firms, compared to widely-held companies, reacted to the 2008 economic crisis in terms of employment adjustments. By using a difference-in-difference approach, we provide empirical evidence that di- vergent paths of adjustment between family and non-family firms exist, with family firms systematically preferring to safeguard workplaces close to the firm's headquarters, compared to other plants. We offer a new theoretical framework consistent with these findings, that we define the social recognition motive, based on the psychological rela- tion linking the family owner with his community of reference. We investigate possible alternative explanations for the results, most of whom can be ruled out in our setting. Finally, we test more directly for the validity of the social recognition theory, finding encouraging results in line with the predictions.

This paper studies how access to bank lending differed between family and non-family firms in the 2007-2009 financial crisis. The theoretical prediction is that family block-holders’ incentive structure results in lower agency conflict in the borrower-lender relationship. Using highly detailed data on bank-firm relations, we exploit the reduction in bank lending in Italy following the crisis in October 2008. We find statistically and economically significant evidence that the contraction in credit for family firms was smaller than that for non-family firms. Results are robust to ex-ante observable differences between the two types of firms and to time-varying bank fixed effects. We further show that the difference in the amount of credit granted to family and non-family firms is related to an increased role for soft information in Italian banks’ operations, following the Lehman Brothers’ failure. Finally, by identifying a match between those banks and family firms, we can control for time-varying unobserved heterogeneity among the firms and validate the hypothesis that our results are supply driven.