The Italian paradox: excellent companies, an unproductive system

This is not merely a statistical curiosity. Productivity increases significantly with company size, and as firms move from micro-enterprises to large enterprises, value added per employee more than doubles. This is because scale enables investment in technology and skills, access to distant markets, better negotiation with suppliers and customers, the attraction of capital and talent, and the spreading of fixed costs – which remain prohibitive for a small business – across larger volumes. A simple exercise illustrates what is at stake and the huge opportunity that lies ahead for us as a nation: if the distribution of employees across size categories were the same as in Germany, whilst maintaining the productivity levels that Italian firms currently achieve in each category, the country’s value added per employee would rise by around 17 percentage points, exceeding that of Germany.

Seventeen productivity points are not just an abstract concept. They mean higher wages, greater capacity for investment, higher tax revenue and greater resilience in the face of shocks – in other words, a benefit that would be shared amongst all the company’s stakeholders and the country as a whole. It would, however, be a mistake to conclude that small businesses are a problem to be solved. Our entrepreneurial model has produced extraordinary supply chains, industrial clusters capable of competing on global markets, and a flexibility that others envy. The point is another: size, which for decades has been just one variable amongst many, is becoming a fundamental prerequisite for competitiveness. The digital transition and artificial intelligence, the reorganisation of supply chains, and the growing demands for compliance and sustainability require investments and skills that have a minimum entry threshold; those who remain below that threshold risk seeing their ability to remain in the market eroded, year after year.

The good news that emerges from a European comparison is that the problem does not lie in the quality of our businesses, but in their size. And size, unlike entrepreneurial culture, can be changed. Organic growth, acquisitions, mergers between peers and supply chain alliances are different paths, each with their own risks and requirements, but all are viable. However, we need to view growth in scale not as an end in itself, but as the result of a clear strategy, supported by appropriate management and governance capable of seeing it through.

The GEA Business Forum 2026, to be held on 4 November at Borsa Italiana, will focus on these questions: how to grow, with what resources, and how to manage the complexity that growth brings with it. Because the small scale of Italian businesses is not a foregone conclusion, but a situation that can be challenged.

Senior Partner & CEO and Tito Zavanella, Senior Partner and Chairman of GEA Management Consultants