Pandemic crisis and firm survival: evidence from the Italian manufacturing industry

The paper studies the characteristics that affected firms' ability to react to the economic crisis induced by the COVID-19 pandemic. We use firm-level data on Italian manufacturing companies to examine the role played by external relations and the characteristics of the local environment. In line with recent works, the study finds that micro-firms, highly indebted and less productive firms have a higher probability of exiting the market. Results also support the view that digital presence and financial soundness have favoured the survival of enterprises. Beyond firm-specific factors, we highlight that a firm's resilience capability is related to its external linkages, namely the participation in a group or to a network contact. As for local ecosystem factors, while firms in industrial districts have a higher default probability, our results suggest that an innovative local environment can slightly mitigate the probability of permanently closing during the crisis. The paper investigates firm survival in Italy at the onset and during the COVID-19 pandemic. In addition to individual characteristics, we focus on the role played by external relations and the characteristics of the local environment. Building on previous research on a firm's resilience to shocks, the analysis considers traditional idiosyncratic determinants related to the internal organization (size, age, group membership, capitalization, profitability, productivity, debt maturity structure, & mldr;). and contextual, ecosystem factors. The study supports the view that specific individual factors (size, low debt and short-term exposure, productivity, presence of a website) have helped enterprises to waive the crisis. Besides, belonging to a group or a network contract is both associated with a lower probability of exiting the market in the period 2020-2022. Firms in traditional industries -fashion and furniture-have had a higher default probability than firms in other manufacturing industries. The location in industrial clusters increases the default probability with a moderating effect exerted by a specialization of the local labour system in the medium to high-tech industries and/or knowledge-intensive services. Finally, it is also worth noting that the region-specific length of lockdown policies is not significantly associated with firm survival.