Firm networks: the phenomenon - Revision history

Moratoc at 16:34, 23 August 2023

2023-08-23T16:34:13Z

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The '''network contract''' made its entry into the national regulatory landscape by d.l. 5/2009, in whose art. 3, paragraphs 4 ''ter'' - 4 ''quinquies'', the reference discipline is still provided. In part, under paragraph 4 ''ter'' cited, «''with the network contract several entrepreneurs pursue the purpose of increasing, individually and collectively, their innovative capacity and competitiveness in the market and to this end they undertake, on the basis of a common network program, to''» carry out one or more of the following activities:

* «''cooperate in predetermined forms and areas pertaining to the operation of their businesses''»;
* «''or to exchange information or services of an industrial, commercial, technical or technological nature''»;
* «''or else to jointly engage in one or more activities falling within the scope of their enterprise''».

== The relevance of the phenomenon at a European level ==
The aggregative phenomenon between enterprises is aimed at greater growth and increased competitiveness. It has stimulated the reflections of European institutions on several occasions with regard to small and medium-sized enterprises (SME), from the following different points of view.

* '''[https://www.sba.gov/sites/default/files/files/Small%20Business%20Act.pdf Small Business Act (SBA)]''' of 2008.

This is a European Commission Communication containing a sort of decalogue in support of SMEs, in which the development of models favoring cooperation between enterprises (including the Italian firm networks and the German cluster networks) is cited as an example of good practice.

* '''[https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF Guidelines on the Applicability of Article 101 TFEU to Horizontal Cooperation Agreements]''' (2011/C 11/01).

These guidelines typify the following categories: research and development agreements; joint production agreements; cooperation agreements in patent matters (patent pools); joint purchasing or selling agreements; reciprocal service provision agreements; cooperation agreements in promotional activities. The antitrust matter, only mentioned here, is indeed a separate issue, since, it should be noted, the network contract is not typified and regulated as relevant as an agreement restricting competition.

== The relevance of the phenomenon at a national level ==

* Statute of Enterprises (l. 180/2011): Art. 1 (2) explicitly states that the aim pursued is to ensure the full application of the SBA, while Art. 2 (1) (n) indicates among the general principles “''the promotion of policies aimed at aggregation among enterprises, also through the support of clusters and enterprise networks''”.

* Decree-Law No. 78/2010, Article 42 (2''quater'') which provides for tax benefits.

* Decree-Law No. 5/2009, which contains the main rules about the organization of firm networks. For the essential elements of this law see "[[Firm networks and essential legal issues]]".

== Practical implications: sustainability and digitalization ==

==== The network as a legal instrument to support sustainability. ====
Given its neutral connotation, the network may well be functional to instances of sustainability in any economic sector. They acquire a particular value to the extent that they implement innovation in the production process, thus following the same guidelines of the sustainable development model: innovation of production cycles, product innovation, implementation of eco-innovations and environmental innovations.

In particular, consider the extension of the network tool to agrifood companies (legislative decree 83/2012). In this sector, there is a phenomenon of so-called sustainable intensification, by which is meant a management of the land and natural resources that makes it possible to produce, with scarce resources and minimal environmental impact, at the same time food and positive environmental externalities (biodiversity, landscape, etc.).

==== The network for promoting technological innovation. ====
Significantly, the Italian Court of Cassation, 21 January 2009, no. 1465, with reference to a joint venture stated that “''the development and exploitation of technologies is one of the fields in which the need for cooperation between companies is most significantly manifested, so that the extent of the necessary investments, the consequent financial commitment in relation to the often very long timeframes for execution and exploitation, and the high risk of failure of the initiative lead to the “sharing” of burdens and risks between several companies''”.

== The phenomenon in data ==
Main features of existing firm networks in Italy:

'''a)''' '''Wide variety of sectors involved''': 22% agribusiness, 13.2% trade, construction 13.1%, tourist services 10%, professional services and mechanics 12%.

'''b) Strong incidence of small enterprises''': 51% micro enterprises, 20% small enterprises.

'''c) Enterprise density primarily below 10 enterprises''': almost 52% are micro-aggregations (2-3 enterprises). The data show a progressive polarisation of network contracts on the extreme levels of entrepreneurial density.

'''d) High degree of geographical concentration''': compared to the experience of industrial districts, networks in many cases also include enterprises located in very distant areas, and indeed interesting forms of aggregation have developed between enterprises operating in different geographical divisions. However, networks between enterprises tend to develop mainly within the same geographical area (81.8%) (uniregional networks constitute 71.60%, within which uniprovincial networks constitute 50.9%).

'''e) Degree of inter-sectoral heterogeneity of network enterprises declining''': almost 61 % of networks involve enterprises operating in different sectors. However, this figure is declining and unisectoral enterprises, now 39.1 %, are gradually increasing (in 2014 they were only 16.2 %). Bi-sectoral networks stand at 33.9%, showing the reluctance of entrepreneurs to attempt productive, instead, multi-sectoral relationships. It should be noted, however, that the level of sectoral heterogeneity is higher among the subject-networks.

'''f) 10% of the network-companies are multi-sectoral''': they are present in at least two network-contracts.

'''g) Prevalent location in the Centre''': 35% Central regions, 26% South, 21% North-East, 18% North-West.

'''h) Prevalence of corporations''': they are 52% (48.4% are srl), compared to 25.5% of sole proprietorships (very widespread in the Centre), 13.6% of partnerships (very widespread in the North-East) and 6.9% of cooperatives.

Summary remarks:

* The direction seems to be towards broader aggregations on the territory, within differentiated production systems.
* Within the single networks, sectoral differentiation is progressively decreasing: the aim seems to be to increase the competitiveness of single Italian enterprises, as seen predominantly micro and small, instead of building relationships between complementary sectors. On the other hand, the prevailing sector remains the agrifood one, networks in the tertiary sector are less widespread.

Essential documentation is available on the following web pages:

* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1642755291rapporto_Reti_2021.pdf National Observatory on Enterprise Networks 2022];
* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1627935349foto_reti_primosem_2021.pdf Photo of enterprise networks, 1 semester 2021].

← Older revision		Revision as of 16:34, 23 August 2023
Line 1:		Line 1:
	The ~~'''~~network contract~~'''~~ made its entry into the national regulatory landscape by d.l. 5/2009, in whose art. 3, paragraphs 4 ''ter'' - 4 ''quinquies'', the reference discipline is still provided. In part, under paragraph 4 ''ter'' cited, «''with the network contract several entrepreneurs pursue the purpose of increasing, individually and collectively, their innovative capacity and competitiveness in the market and to this end they undertake, on the basis of a common network program, to''» carry out one or more of the following activities:		The network contract made its entry into the national regulatory landscape by d.l. 5/2009, in whose art. 3, paragraphs 4 ''ter'' - 4 ''quinquies'', the reference discipline is still provided. In part, under paragraph 4 ''ter'' cited, «''with the network contract several entrepreneurs pursue the purpose of increasing, individually and collectively, their innovative capacity and competitiveness in the market and to this end they undertake, on the basis of a common network program, to''» carry out one or more of the following activities:

	* «''cooperate in predetermined forms and areas pertaining to the operation of their businesses''»;		* «''cooperate in predetermined forms and areas pertaining to the operation of their businesses''»;
Line 8:		Line 8:
	The aggregative phenomenon between enterprises is aimed at greater growth and increased competitiveness. It has stimulated the reflections of European institutions on several occasions with regard to small and medium-sized enterprises (SME), from the following different points of view.		The aggregative phenomenon between enterprises is aimed at greater growth and increased competitiveness. It has stimulated the reflections of European institutions on several occasions with regard to small and medium-sized enterprises (SME), from the following different points of view.

	* ~~'''~~[https://www.sba.gov/sites/default/files/files/Small%20Business%20Act.pdf Small Business Act (SBA)]~~'''~~ of 2008.		*[https://www.sba.gov/sites/default/files/files/Small%20Business%20Act.pdf Small Business Act (SBA)] of 2008.

	This is a European Commission Communication containing a sort of decalogue in support of SMEs, in which the development of models favoring cooperation between enterprises (including the Italian firm networks and the German cluster networks) is cited as an example of good practice.		This is a European Commission Communication containing a sort of decalogue in support of SMEs, in which the development of models favoring cooperation between enterprises (including the Italian firm networks and the German cluster networks) is cited as an example of good practice.

	* ~~'''~~[https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF Guidelines on the Applicability of Article 101 TFEU to Horizontal Cooperation Agreements]~~'''~~ (2011/C 11/01).		*[https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF Guidelines on the Applicability of Article 101 TFEU to Horizontal Cooperation Agreements] (2011/C 11/01).

	These guidelines typify the following categories: research and development agreements; joint production agreements; cooperation agreements in patent matters (patent pools); joint purchasing or selling agreements; reciprocal service provision agreements; cooperation agreements in promotional activities. The antitrust matter, only mentioned here, is indeed a separate issue, since, it should be noted, the network contract is not typified and regulated as relevant as an agreement restricting competition.		These guidelines typify the following categories: research and development agreements; joint production agreements; cooperation agreements in patent matters (patent pools); joint purchasing or selling agreements; reciprocal service provision agreements; cooperation agreements in promotional activities. The antitrust matter, only mentioned here, is indeed a separate issue, since, it should be noted, the network contract is not typified and regulated as relevant as an agreement restricting competition.
Line 22:		Line 22:
	* Decree-Law No. 78/2010, Article 42 (2''quater'') which provides for tax benefits.		* Decree-Law No. 78/2010, Article 42 (2''quater'') which provides for tax benefits.

	* Decree-Law No. 5/2009, which contains the main rules about the organization of firm networks. For the essential elements of this law see "[[Firm networks and essential legal issues]]".		* Decree-Law No. 5/2009, which contains the main rules about the organization of firm networks. For the essential elements of this law see "[[Network contract under Italian Law\|Firm networks and essential legal issues]]".

	== Practical implications: sustainability and digitalization ==		== Practical implications: sustainability and digitalization ==
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	Main features of existing firm networks in Italy:		Main features of existing firm networks in Italy:

	~~'''~~a)~~''' '''~~Wide variety of sectors involved~~'''~~: 22% agribusiness, 13.2% trade, construction 13.1%, tourist services 10%, professional services and mechanics 12%.		a) Wide variety of sectors involved: 22% agribusiness, 13.2% trade, construction 13.1%, tourist services 10%, professional services and mechanics 12%.

	~~'''~~b) Strong incidence of small enterprises~~'''~~: 51% micro enterprises, 20% small enterprises.		b) Strong incidence of small enterprises: 51% micro enterprises, 20% small enterprises.

	~~'''~~c) Enterprise density primarily below 10 enterprises~~'''~~: almost 52% are micro-aggregations (2-3 enterprises). The data show a progressive polarisation of network contracts on the extreme levels of entrepreneurial density.		c) Enterprise density primarily below 10 enterprises: almost 52% are micro-aggregations (2-3 enterprises). The data show a progressive polarisation of network contracts on the extreme levels of entrepreneurial density.

	~~'''~~d) High degree of geographical concentration~~'''~~: compared to the experience of industrial districts, networks in many cases also include enterprises located in very distant areas, and indeed interesting forms of aggregation have developed between enterprises operating in different geographical divisions. However, networks between enterprises tend to develop mainly within the same geographical area (81.8%) (uniregional networks constitute 71.60%, within which uniprovincial networks constitute 50.9%).		d) High degree of geographical concentration: compared to the experience of industrial districts, networks in many cases also include enterprises located in very distant areas, and indeed interesting forms of aggregation have developed between enterprises operating in different geographical divisions. However, networks between enterprises tend to develop mainly within the same geographical area (81.8%) (uniregional networks constitute 71.60%, within which uniprovincial networks constitute 50.9%).

	~~'''~~e) Degree of inter-sectoral heterogeneity of network enterprises declining~~'''~~: almost 61 % of networks involve enterprises operating in different sectors. However, this figure is declining and unisectoral enterprises, now 39.1 %, are gradually increasing (in 2014 they were only 16.2 %). Bi-sectoral networks stand at 33.9%, showing the reluctance of entrepreneurs to attempt productive, instead, multi-sectoral relationships. It should be noted, however, that the level of sectoral heterogeneity is higher among the subject-networks.		e) Degree of inter-sectoral heterogeneity of network enterprises declining: almost 61 % of networks involve enterprises operating in different sectors. However, this figure is declining and unisectoral enterprises, now 39.1 %, are gradually increasing (in 2014 they were only 16.2 %). Bi-sectoral networks stand at 33.9%, showing the reluctance of entrepreneurs to attempt productive, instead, multi-sectoral relationships. It should be noted, however, that the level of sectoral heterogeneity is higher among the subject-networks.

	~~'''~~f) 10% of the network-companies are multi-sectoral~~'''~~: they are present in at least two network-contracts.		f) 10% of the network-companies are multi-sectoral: they are present in at least two network-contracts.

	~~'''~~g) Prevalent location in the Centre~~'''~~: 35% Central regions, 26% South, 21% North-East, 18% North-West.		g) Prevalent location in the Centre: 35% Central regions, 26% South, 21% North-East, 18% North-West.

	~~'''~~h) Prevalence of corporations~~'''~~: they are 52% (48.4% are srl), compared to 25.5% of sole proprietorships (very widespread in the Centre), 13.6% of partnerships (very widespread in the North-East) and 6.9% of cooperatives.		h) Prevalence of corporations: they are 52% (48.4% are srl), compared to 25.5% of sole proprietorships (very widespread in the Centre), 13.6% of partnerships (very widespread in the North-East) and 6.9% of cooperatives.

	Summary remarks:		Summary remarks:
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	* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1642755291rapporto_Reti_2021.pdf National Observatory on Enterprise Networks 2022];		* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1642755291rapporto_Reti_2021.pdf National Observatory on Enterprise Networks 2022];
	* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1627935349foto_reti_primosem_2021.pdf Photo of enterprise networks, 1 semester 2021].		* [https://www.retimpresa.it/wp-content/uploads/zf_documents/1627935349foto_reti_primosem_2021.pdf Photo of enterprise networks, 1 semester 2021].

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