Abstract
This study examines the impact of perceived organized crime presence on firms’ research and development (R&D) activities and technical efficiency. The analysis employs data derived from an original survey conducted by the Bank of Italy, encompassing a representative sample of over 2,600 Italian firms within the industrial and service sectors. The survey captures firms’ perceptions regarding the presence of organized crime, which we consolidate into a synthetic measure of the perceived risk associated with mafia syndicates that may potentially impair firm operations. Our empirical findings indicate that firms operating in regions and sectors with high levels of organized
crime risk are significantly more likely to experience a decline in their propensity to invest in R&D and adversely affect their technical efficiency. Organized crime appears to distort market dynamics by escalating operational costs and reducing firms’ ability to utilize production factors effectively,
thereby undermining entrepreneurial dynamism. These insights highlight the necessity for policymakers and financial institutions to incorporate organized crime risk into their assessment models and implement targeted financial measures to mitigate its adverse economic impacts.
crime risk are significantly more likely to experience a decline in their propensity to invest in R&D and adversely affect their technical efficiency. Organized crime appears to distort market dynamics by escalating operational costs and reducing firms’ ability to utilize production factors effectively,
thereby undermining entrepreneurial dynamism. These insights highlight the necessity for policymakers and financial institutions to incorporate organized crime risk into their assessment models and implement targeted financial measures to mitigate its adverse economic impacts.