Italian Success and British Survival: Case studies of corporate governance and innovation in a mature industry

In this paper, we present case studies of two heavy engineering firms, one Italian and another British, in order to shed light on the reasons that might explain the Italian marked competitive advantage in such industries and the British progressive loss of market share. The analysis is based on a new theoretical framework that argues that national systems of finance and corporate governance have had, and continue to have, a profound effect on the resourcing and management of technological change, and on the development of firms more generally. It will be shown that the corporate governance of the Italian firm and, more in general, the system of finance in which it operates are of support to technological change and innovation in the engineering sectors. Instead, the British firm appears to operate in quite the opposite conditions.