Small Business Act - Report 2016

Support initiatives for micro, small and medium enterprises implemented in Italy in 2015 and in the first half of 2016


The overall strategy of the Italian Government continues to focus on implementing a modern industrial policy - concentrated on factors and not on sectors - which takes account of the specific dimensional characteristics of the production system: it is a well-known fact that SMEs hold an important position in the Italian production fabric, not only as a percentage of the total number of enterprises, but above all in terms of their contribution to employment and GDP. However, they continue to be penalised by delays in investment and in recovering productivity. Their central role is confirmed by the numerous initiatives undertaken in favour of Micro-SME’s over recent months, by enhancement of the Central Guarantee Fund and also by the numerous and carefully structured actions in favour of the ecosystem of innovative start-ups and SMEs, ranging from simplification of the balance sheets of small enterprise to the measures aimed at assisting the startup of new business activities.

The recent economic debate rightly returned the challenge of productivity to a central priority, alongside the dimensions of the enterprise. In fact, although it is true that small enterprise in Italy has a lower average productivity and less propensity for internationalisation and innovation compared with other countries, it should also be emphasised that the size of firms is not enough in itself to explain the weak performance of the Italian economy. Many studies (Banca d’Italia, Istat, MET study centre) highlight how the question of low quality enterprise is an overarching aspect with respect to the size of enterprise and how even the smallest firms may have an excellent ability to compete on the market.

The key issue is therefore the propensity of the entrepreneur to take a modern path towards growth and consolidating competitiveness. This change can only be triggered by creating the right external conditions to encourage it, such as improving the tax situation, by creating a taxation system which rewards those who invest, particularly in research, development, know how and innovation; reducing energy consumption, particularly for firms operating in the most energyintensive sectors; modernising funding for enterprise, by creating a more wellstructured supply, which is less bank-centric and more capable of giving access to the open capital market to SMEs as well; improving both tangible and intangible infrastructures, by investing in ultra broadband based on a fibre to the factory model, and also by undertaking initiatives which act on internal company factors, such as overcoming the paradigm of family capitalism, in which management of enterprise is mainly family-run.

The question should therefore be reformulated: which policies could best contribute to increasing the productivity of small Italian enterprises?

How can SMEs be encouraged to innovate and to export, thus indirectly ensuring their growth in size, financial consolidation and increased competitiveness?

The challenge the Government faces therefore relates to four main issues: how to ensure more favourable taxation for enterprise, how to encourage capitalisation and financial consolidation of enterprise through a more efficient allocation of capital to industrial applications, how to promote investment in innovation, digitalisation and internationalisation and how to make it more profitable for small and medium-sized enterprise to abandon investment strategies, market strategies, financial structures and governance which are frequently unsuitable for maintaining competitiveness and productivity.

A great deal of work has already been done, from deregulation of non-bank channels of business funding to the tax measures aimed at encouraging investment in renewing capital goods (so-called Super-depreciation) or innovation (such as tax credit on R&D and the Patent Box), without forgetting that technology renewal and digitalisation of the manufacturing system is a cornerstone of the “Industry 4.0” strategy recently introduced by the MISE through the wide range of measures included in the 2017 Budget, to name but a few.

These are important processes of development in regulations which will not only encourage the most dynamic and best-equipped firms to invest in digitalisation, but also move the inefficient ones from situations of inertia and non-productivity and thus relaunch the entire Italian production system. The Report, which is now in its VII edition and was cited as a “best practice” by the European Commission in February 2011, accompanies other official monitoring and assessment documents of the MISE, such as the third Report to Parliament on the state of implementation of regulations supporting the ecosystem of innovative start-ups and SMEs, which is currently being prepared and will provide a detailed analysis of the impact the various measures will have on the Italian production system.

The Report has been translated into English to ensure the information it contains reaches a wider audience and will be distributed at the major European and international institutions.

I would also like to take this opportunity to thank the “Production Activities” Commission of the Conference of the Regions and the Autonomous Provinces for drafting Attachment 2 on the most recent measures adopted by the Regions to support enterprise networks.

General Director for Industrial policy, Competitiveness and Small and Medium Enterprises

 

Small Business Act - Report 2016 (pdf)

 


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