From Growth to Size Transition: An Analysis of Italian SMEs

In this paper, we study size transition – namely, a shift from one size category to another, regardless of whether the change is in an upward or downward direction – in Italian SMEs. We investigate the drivers of size transition and, leveraging upon the tenets of the behavioral agency model, we focus on the role of ownership type (family- versus corporation-owned SMEs) on the probability of an SME to move from one size category to another. Furthermore, we study the moderating role of the presence of a foreign owner and the group dimension. Using a sample of 86,708 Italian SMEs over the period 2014-2021, we find that family-owned SMEs are less likely to experience size transition compared to corporation-owned SMEs. Furthermore, results suggest that the number of companies in the group weakens our main relationship. Finally, our post-hoc analyses show that downsizing and upsizing are driven by different determinants.