Enhancing micro-enterprises performance: The role of the regional environment

This paper investigates the impact of the regional environment on firm performance, focusing on a sample of 97,838 manufacturing firms in Italy. Utilizing multilevel modeling, the study reveals several key findings. First, the regional context explains approximately 10% of the variability in firm performance. Second, micro-enterprises demonstrate lower performance levels compared to larger counterparts. Third, a more competitive regional environment is associated with higher firm performance across all sizes of firms. Importantly, micro-enterprises tend to benefit relatively more in competitive regions, leading to a narrowing performance gap with larger firms. These findings underscore the importance of policy initiatives aimed at enhancing regional competitiveness, particularly in supporting micro-enterprises to address their inherent weaknesses and improve overall performance.