What Makes Small and Medium Enterprises Competitive

: This paper aims at understanding the determinants of Italian small- and medium-sized enterprises competitiveness. Having in mind the fact that the Italian economic system relies substantially on small firms which have managed to stay competitive by adopting strategies such as the creation of well-integrated social and institutional clusters (the so-called industrial districts) or specialising in the production of quality goods (the so called made in Italy). However, the growing competing pressure coming from the Far East has rendered this production system vulnerable, challenging its internationally competitiveness. By developing a conceptual model we identify the sources of competitiveness of Italian SMEs. The model is tested using a unique database which collects data, for the year 2004, over a sample of 2,600 SMEs.