Corporate or Network Governance? The case of the Italian Productive Chains and their scaffolding finance approach.

We investigate and find out the inner differences between stand-alone firms and those participating to Productive Chain Networks (PCNs) as far as ownership and corporate governance characteristics are concerned. PCNs are typical Italian economic realities made of small and medium enterprises (SMEs) which behave like a unique meta-firm. Different clusters are found from an empirical analysis: firms outside PCNs, leaders in PCNs and suppliers participating to PCNs. The clusters differentiate on corporate governance practices and the consequent capability to attract funding from financial institutions. The inner differences in governance structure relate to the underpinnings of the competitive advantage of the chain: the higher the human capital contribution, the more the governance frame diverts from standard managerial models. Our empirical findings show that the typical banks’ financing system (i.e. as it stems from Basel II and III rules) prefers to allocate credit to firms with worse corporate governance attributes, since a scaffolding finance approach links to the adopted models of firm’s governance when participating to PCNs.