Abstract: A Special Kind of Management: IRI, 1950-1980

Franco Amatori and Daniela Felisini

Abstract

The state-holding IRI was created in 1933 as a way to sever the dangerous ties between banks and large industrial concerns in Italy. De facto, the three major banks at the time had been transformed into holdings for the nation's largest companies. This placed the central bank in a risky position, as it was the bottom line lender and if it unexpectedly stopped funding, it could have suffocated the economy. IRI's main goal was to put an end to the German model of the Universal Bank in Italy and, by doing so, create a system for supplying credit in an economy made up of small and medium-size firms. At the outset, IRI was not designed to be a permanent entity. But the companies controlled by IRI needed to be brought back to a "healthy" status and then privatized once their debts had been repaid. This plan revealed itself impossible to achieve because (1) most of the companies were extremely capital-intensive (making them expensive to sell off at the end of the process), and (2) because of their costly structures, they were also very expensive to manage. IRI found itself responsible for the care of industrial companies at the same time its format was based on a holding (IRI) totally owned by the state, while the companies held by IRI were open to private shareholders and responded to civil law as private concerns. In its early years, the companies making up IRI sought out the best managers available to lead the firms. These men were relatively free of political constraints (though they had to respond to the overall demands of Fascism, the war, and the policy of autarky). They enjoyed even greater freedom in the decade immediately following World War II, when there seemed to be a form of benign neglect by the political powers. But the contradiction remained: a holding owned by the state (and controlled by politicians) with companies that needed to be competitive players in the market. To lead the companies there was a need for a special kind of management: individuals in tune with market signals but also sensitive to extra-business demands that usually called for investments based on political and social reasons rather than sound economic objectives. The three alternative ways of handling this challenge (getting out of the system, being cooperative with the requests of politicians, or trying to reconcile market imperatives with broader extra-company goals) will be examined via the stories of three key managers of IRI in those years (Giuseppe Glisenti, Alberto Capanna, and Pasquale Saraceno).