Firm Competitiveness, Specialisation, and Employment Growth: Territorial Level Relationships

Abstract

The concept of competitiveness is today a central element for regional development, European cohesion policies and smart specialisation strategies. Despite being born for firm-level analyses, competitiveness is indeed commonly used at the territorial level, mainly at the regional or urban scale, normally measured with different composite structural indicators. However, since territorial competitiveness is unevenly distributed in space, territorial units smaller than a full NUTS-2 region might be differently competitive and hence suited to implement differentiated cohesion policies and smart specialisation strategies. To test the hypothesis that these firm-level indicators can characterize the intraregional differences in aggregate performance, the paper sets up a meta-analysis framework between these indicators and structural indicators (employment growth and specialisation index) measured at the NUTS-3 level. For the meta-analysis at this novel intraregional level, the paper exploits the Lombardy region as a case study. Lombardy is well suited for the aims of this paper, being a large and competitive European region, whose territory—as well as its labor market—is highly differentiated, from peripheral and mountainous areas to many medium and small cities, second-tier large cities and a large metropolitan area—the city of Milan. All these territories are characterized by different economic and social vocations, but all share the same regional administration. The results of the meta-analysis show that firm-level indicators correlate with the aggregate performance of regions and that the structural measures selected can characterize different territories in different conditions. Hence, the competitiveness of firms seems to translate into aggregate territorial performance at small spatial scales. This implies that territorial specificities are also relevant inside regions and should be considered in designing regional policy interventions, such as those of the Smart Specialisation Strategy (S3).