This paper studies empirically how an increase in the cost contracting, reflected by a worsening in access to justice, affects firms’ reliance on hybrid modes of governance in Italy.
The analysis focuses on a widely used contractual arrangement available to Italian firms by law, the consortium.
Consortia set up an internal system of rules, both formal and informal, to regulate relationships among their members. I investigate whether self-regulation within consortia may make up for worsened access to court by exploiting the variation in access to court induced by the 2013 reform of the Italian judicial geography. Results unveil a positive effect of worsened access to justice on the stock of active consortia and on member firms’ participation.
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