Corporate Governance in Italy. Groups, Families and Financial Institutions in a European Mirror, 1896-2000

This article deals with the long-term institutional diversity arguing that it is probably the peculiar result of underlying institutional complementarities between corporate ownership, legal environment and financial system. The main aim of this paper is to show, at least in general terms, how some major European patterns can be recognised in the evolution of the corporate governance of large Italian businesses. Thus, it will provide a general framework which could be useful in placing it in a wider perspective on government intervention, legal schemes and financial institutions. They were influential in shaping a national model of corporate governance as well as of capital structure, certainly with some original elements but essentially as a species of the European one. In order to shed light on this fundamental characteristic of Italian capitalism, the relationship between national big business and Europe, both as a market and as a political subject, will be considered. Over time, European firms and/or financial institutions offered a model of corporate governance or retained relevant stakes in Italian firms or banks. Europe also directly or indirectly intervened as a political and economic community by shaping or conditioning Italian corporate governance, as for instance occurred in the last two decades through the privatisation process. Two main facts seem to be relevant in categorising Italian capitalism as a part of the broader institutional model of continental Europe. First, in the long run, large firms have been dependent on resources offered by a bank-oriented financial system, such as in France and Germany, and corporate finance has largely preferred debts and outside investors as a consequence, except whenever a phase of sustained economic growth allowed a shift towards a self-financing mechanism. Second, typically by means of bailouts, State intervention and State-owned enterprise played an important role in supporting industrial sectors and banks, at least until the early 1990s, when the European Commission and lawmakers powerfully intervened in financial regulation and globalisation processes started to exert severe pressure on State-owned enterprises via budget constraints.