Territorial capital and firm performance: evidence from Italian regions

PhD thesis

Morretta, V. 2017. Territorial capital and firm performance: evidence from Italian regions. PhD thesis Middlesex University Centre for Economic and Enterprise Development Research
TypePhD thesis
TitleTerritorial capital and firm performance: evidence from Italian regions
AuthorsMorretta, V.

The aim of this thesis is to examine whether and how the coexistence of different local assets, conceptualized in the form of territorial capital, influences firm performance in diverse sectors, across different geographical areas of Italy, contributing to endogenous economic development. The notion of territorial capital conceived as a mix of tangible and intangible local resources accumulated in a certain place, incorporates several notions which have been extensively studied within the field of economic geography but provides a distinctive emphasis upon the coexistence and combination of these resources as a defining characteristic of different territories.
This study is pursued through a mixed method approach, based on the collection of quantitative and qualitative data. The quantitative analysis is conducted across 20 Italian regions and considers 12 different economic sectors where firms operate. The sample includes about 92,000 companies; the analytical framework is based on the derivation of a measure of Total Factor Productivity (TFP) at firm level, where the contribution of factor inputs is estimated using a Cobb-Douglas production function. The analysis then focuses on the relationship between TFP and a set of different territorial resources at regional level from 2004 to 2012. The qualitative analysis consists of 26 semi-structured interviews conducted with SME owner-managers. Firms are selected in two different regions (Lombardia and Sicily) representing ‘extreme cases’ and in three different sectors (ICT, Accommodation and Food services, Manufacturing). The pursuit of qualitative analysis allows the exploration of how the coexistence of different local resources influences firms’ performance, and whether they represent a source of competitive advantage from the perspective of entrepreneurs themselves.
Results from the mixed method analysis show that both tangible and intangible territorial resources are an important source of firm performance, with varying effect across regions and sectors. More specifically, this analysis contributes to the new growth theory, potentially opening new frontiers of research, aimed at explaining long run productivity in terms of endogenous factors and mechanisms based within the coexistence of inputs rooted within different territories. Secondly, this research contributes empirical knowledge pertinent to theories of endogenous development as it supports the idea that a factor of competitiveness can be found within territories; in particular it demonstrates that the presence of territorial capital may increase firm productivity and generate competitive advantages related to location. Finally, this study contributes empirical knowledge to the resource based theory of the firm as it explains how territorial capital, in the same way as firms’ internal resources, can become a source of sustainable competitive advantage for firms. In particular the analysis highlights the importance of created advanced resources or ‘capabilities’ at the local level, which are produced through long term investment, in contrast to inherited basic resources provided by ‘God’ or ancestors.

Research GroupCentre for Enterprise, Environment and Development Research (CEEDR)
Department nameCentre for Economic and Enterprise Development Research
Institution nameMiddlesex University
Publication dates
Print07 Nov 2017
Publication process dates
Deposited07 Nov 2017
Accepted06 Nov 2017
Output statusPublished
Accepted author manuscript
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