Authors: Roberto Rondinelli, Maria Carmela Schisani, Giancarlo Ragozini
This paper investigates the historical roots of business familism in Southern Italy. Using a social network analysis and employing surnames as proxies for family ties, we introduce and explore various measures of business familism. Our analysis reveals that the persistent embeddedness of firms in family ties was a structural feature of the business system in the South throughout the 19th century. The analysis also documents significant variations in the trends of business familism across different economic sectors.
Persistence of business familism over the 19th century
A team of researchers from the University of Naples Federico II has conducted a groundbreaking analysis of business records from 19th century Naples, tracking over 3,500 firms and 28,000 people between 1800 and 1913. Using surnames as proxies for family ties, they developed innovative measures to analyze how deeply firms were embedded in family networks. Their findings show that family-based business was not just prevalent but remained remarkably stable throughout the century, even after Italian Unification in 1861. This suggests that the modern prevalence of family firms in Southern Italy, recently highlighted by the Bank of Italy as a factor in the North-South productivity gap, has deep historical roots.
Differences of business familism across economic sectors
The study reveals important variations across economic sectors. Manufacturing and retail trade showed consistently high levels of family involvement, with small family workshops and stores dominating these sectors. This pattern aligned with the region’s consumption patterns and economic structure. However, some sectors like banking saw declining family involvement after Unification, particularly as large joint-stock banks emerged. Public utilities and construction also showed lower levels of family embeddedness, especially when foreign investment increased.
Contribution to the debate on Southern Italy’s economic delay
The research makes a significant contribution to ongoing debates about Italy’s economic divide. While recent Bank of Italy research has identified family control as a factor in Southern Italy’s lower productivity, this historical analysis suggests the issue has deeper roots than previously recognized. Rather than being simply a modern phenomenon, the dominance of family business appears to be a structural feature that emerged from and was reinforced by the region’s socio-economic conditions in the 19th century. This persistence challenges simplistic modernization narratives and suggests that addressing regional economic differences may require engaging with deeply embedded business cultures and institutions.
The study provides new empirical weight to discussions about the role of family ties in economic development. While some scholars have argued that strong family networks can support business formation, particularly in industrial districts, this research suggests that in Southern Italy, widespread family control may have reinforced patterns of small-scale enterprise and limited modernization. This nuanced historical perspective helps explain why family business remains such a distinctive and enduring feature of Southern Italy’s economy.