Municipal procurement, productivity and dynastic management: evidence from Italian firms

This article analyzes the role of municipal public procurement in shaping the productivity of local firms. Combining firm-level data on Italian limited liability companies with administrative records of public procurement contracts from 2010 to 2018, we find that higher per capita municipal procurement spending is associated with higher productivity among firms located in the same municipality. This positive relationship is significantly weakened for firms with dynastic top management (i.e. managed by a member of the owner’s family), and stronger in larger municipalities outside specialized industrial districts, where more diversified local economies, procurement of services, and higher worker mobility enhance productivity.