The mechanisms of knowledge governance: State owned enterprises and Italian economic growth, 1950-1994

The grafting of the tools of communication studies on the economics of knowledge helps to investigate the mechanisms of knowledge governance. The actual economic benefits stemming from knowledge externalities depend on the characteristics of a) their sources, b) the context in which spillovers take place, c) the possible recipients. In the Italian experience between 1950-1992, state owned enterprises (SOE) have been one of the most effective mechanisms of knowledge governance. Italian SOE were very effective emissaries of knowledge externalities as they imitated the US corporate model of intramuros R&D laboratories and yet were characterized by an objective function based upon output maximization under the constraint of average profitability. Their support to the growth of the system was crucial not only with respect to the creation of basic infrastructure but also as active players in implementing effective mechanisms of knowledge governance. Research activities carried out by SOE were mainly based in upstream industries, with multiple user-producer interactions with firms active in downstream industries, and aimed at implementing a knowledge base characterized by high levels of generic content and a wide scope of application. Moreover the specific objective function of SOE favoured higher levels of knowledge generation than exploitation. These characteristics helped disseminate relevant knowledge externalities that played a strong and positive role on total factor productivity in the second part of the XX century in Italy. Their role was stronger than the knowledge externalities stemming from research activities carried out by private firms.