"The Size Issue" as an Organisational Problem. The Nature and the Evolutionary Logic of the Medium Business Sector in Italian Industry

The paper argues that the shape of the long-run size distribution of business firms is basically determined by the availability of organisational capabilities, and that its changes over time (the "direction" of change) depend on the way in which (exogenous) "environmental" conditions affect firms' decisions as to what extent the division of labour has to take place within their boundaries rather than being allocated through market transactions. In such perspective it is argued that the growth of firms brings about important changes in their internal shape, by involving the development of more and more "control" functions. In particular, in this connection Italian firms seem to be characterised, in the current phase of industrial development, by a tendency towards growing complexity, sub specie of the internalisation of a larger set of activities (other than production) with respect to the past.