This paper analyses the structure of Italian capitalism during the post-WWII economic
miracle by focusing on the governance and management of small and medium firms. Using
innovative sources, the paper shows that poorly conceived and/or enforced laws and legislation
created incentive for business owners to be stockholders rather than stakeholders of their firms. This
attitude emerges in two areas. Firstly, Italian business owners adopted structures of governance
aimed only at protecting insiders, often at the expense of firms’ development. Secondly, in Italy
business consultants had a unique and wide role in the management of firms, and acted to protect
the benefits of insiders rather than the interests of the company. These two issues also contribute to
explain the well-known problem of the dwarfism of Italian firms and the scarce capacity to
innovate
