Strategic reactions of Italian firms to globalization under the EMU

Purpose of the paper: e paper aims to investigate the strategic choices of Italian firms in response to globalization under the European Monetary Union. Methodology: Firms are classi ed into four groups according to their productive efficiency and productivity dynamics. e probability of the rms to fall into each category is estimated using a multinomial logit regression. Findings: We show that the rms followed di erent strategies to respond to globalization under the constraints of the European Monetary Union. Human resource strategies were at the core of strategic options: the firms that showed sustained productivity growth used a more quali ed, higher salaried workforce, whereas other rms tried to keep up with the pace by lowering labour costs and exploiting the dualism of market labour. Research limits: e study is based on a sample of continuing rms. It does not consider the real e ects of entry and exit on technological progress and we do not analyse the productivity dynamics related to mergers and acquisitions. Practical implications: e dualism of the labour market allowed the “regressive”, short-lived adaptation of a group of rms to access increased global competition. A balanced labour market would promote investment in human capital and push rms towards the use of innovation as a competitive strategy. Originality of the paper: is investigation is based on an original database with a wealth of information on labour forces, which allows us to study rm strategies. e use of e ciency measures, combined with the ordered logit model, permits a novel look at the dynamics of the strategies of Italian firms.