Regulatory Problems in Industries with Very Small Firms
In the present paper the following hypotheses have been tested: 1. pressure groups have a marginal role in fragmented industries. In fact, fragmented industries are characterised by the presence of many small firms and by self-centred entrepreneurs, prone more to conflicting than to co-operative behaviours;
2. regulatory interventions in fragmented industries have a strong impact on industry’s structure by selecting the enterprises and modifying their strategic and structural profile;
3. the single firms are particularly vulnerable to regulatory interventions in fragmented industries as they can impose fundamental changes that they may not be able to face.
The above hypotheses have been tested in the context of the tannery industry, a fragmented industry with about 2,500 enterprises and more than 25,000 employees.
Specifically, the analysis has concentrated on evaluating the impact of the "Legge Merli" no. 319 of 10/05/1976 and subsequent alterations on the structure of the tannery industry and the behaviour of the single firms. This is a law which had great momentum in shaping the tannery industry as it fundamentally changed the economics of the firms and severely altered competition both among Italian tanneries and vis-à-vis foreign ones.
The research methodology includes both qualitative and quantitative instruments. On the quantitative side, a longitudinal series of balance sheets of 191 firms have been analysed for the period 1986 – 1991, together with industry’s secondary data. On the qualitative side, the research has focused on the analysis of published sources, interviews with entrepreneurs and other industry-experts (about 30 interviews were performed).