It is now widely believed that economic trends are strictly linked to social ones and that the way an area works cannot be regarded as the sum of processes which take place in different contexts - industry, society, environment - but as a single dimension of development where relations between different contexts become essential. Along these lines, more and more attention is given to corporate social responsibility, defined in the Green Paper of the European Commission in 2001 as "a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis".
To guarantee an ever greater quality of production and to safeguard the sustainable development of society, companies are trying to establish a control system that started off as a simple product control and has now become a comprehensive quality system ensuring the respect of social and environmental concerns the European Commission refers to.
The adoption of a quality management system is a strategic choice for companies. Its main objective is to meet customers' requirements and expectations through a more efficient organisation, competitive advantage, product quality and environmental protection. Moreover, a wide-ranging quality management system and its certification by an accreditated institution is a necessary requirement to take part in tenders. Quality is regulated by the International Organization for Standardization (ISO) which is made up of many national organisations, including Italy's UNI (Ente di Unificazione Italiano). The European and Italian approach to quality is based on "quality certification", i.e. compliance with UNI EN (Note 1) ISO standards by an accredited institution. The certifying body must in turn be accredited with Sincert (Note 2) which guarantees the quality of the certifying company.
Certification of management systems accredited by Sincert cover all product categories. Certification granted so far within the accereditation system concern tens of thousands of manufacturing facilities and include the following product types: certification of quality management systems according to general or industry-specific standards; (Note 3) certification of environmental management systems (ISO 14001); certification of health and safety-at-work management systems (OHSAS 18001); certification of information safety management systems (BS 7799 - ISO 27001); certification of food safety management systems (ISO 22000).
Data available on the quality management systems of companies confirm that the number of manufacturing facilities (Note 4) with quality certification is constently increasing. In the past two years the number of manufacturing sites with certification in the Veneto Region has grown more and more (+21.3%) thus reaching 13,399 companies by the end of 2007 or 10.3% of the national average - equivalent to 2.4% of regional local units. (Table 5.1.1)
Data grouped by homogeneous economic industries show that the service industry accounts for almost 42% of the certified regional productive facilities followed by the manufacturing ones - 39.3%. Approximately 16% of certified organisations are in the building industry. Within individual industries, it is to be noted that 10% of certified manufacturing facilities are in the metal-working industry, 8.5% in the professional company services, 5.6% in the optical and electronic industries, 4.3% in the mechanical one, and 3.9% in the food industry. (Figure 5.1.1) and (Figure 5.1.2)
The environment seems to be more and more relevant in the purchasing behaviour of consumers. Stricter and stricter regulations are enforced to drive companies to adopt an environmentally friendly management system and certification practises for the validation of their actions and achievements in environmental protection.
Achieving environmental certification requires greater organisational and managerial effort and - at least in some cases - considerable investment in new technology.
Data confirm the growing importance of environmental certification. In the last few years the proportion of productive facilities with environmental certification out of the total of certified facilities has been constantly on the increase all over Italy. In Veneto the relative weight of productive facilities with environmental certification rose from 1.5% in 2000 to 7.2% in 2007.

A study of factors affecting business success provides greater insight into the economy of an area. Thus both regional and national policies can be better directed with a view to revealing the mechanisms underlying the creation and distribution of wealth and hence to understanding to what extent economic growth is linked with a widespread improvement of citizens' welfare.
A European survey on "Factors of Business Success (FOBS)" (Note 5) was conducted on a sample of companies in a reference population consisting of all new companies founded in 2002 and still surviving after three years. Survey data show the reasons behind the creation of a company and the personal and social factors behind its success.
Age, gender and education are some of the features that can outline the profile of a company founder who is on average male, is about 40 years of age and has a upper secondary school diploma. In line with the national trend, more than 65% of new entrepreneurs in Veneto are under 40. Moreover, four out of five new entrepreneurs are men, while the national ratio is three out of four.
Those who decide to set up a new company are driven by the desire of greater professional and economic independence. One of the most important reasons is the desire to be self-employed. For 83.2% of the new Veneto region entrepreneurs this is the main reason why they set up their own businesses together with the prospect of higher profits - 75.8% - and the desire of a new challenge - 64.7%.
In the list of the most important reasons there are also more personal reasons, first of all the desire to escape a not so satisfactory job - 49.4% - and the desire to make an innovative idea come true - 37%.
The need to avoid unemployment - 28.5% - does not seem to be highly motivating in setting up new enterprises as opposed to the national level (47%). This confirms that Veneto business is much more lively and mature. (Figure 5.1.3)
The most relevant difficulties in setting up a company concern establishing contacts with the customers - a hurdle for 26.2% of the new entrepreneurs in Veneto, but also to cope with the various complex administrative matters to set up a new business - 27.7% - and to find the funds - a problem for 14.3% of entrepreneurs.
To set up their businesses, nearly nine Veneto entrepreneurs out of ten use a starting capital consisting of personal finance followed by credit with collateral (19.6%), credit by family members and friends (19.3%) and credit without collateral - 9.8%. Only 1.2% of new Veneto entrepreneurs reported having received public subsidies against a national average of 7%.

The use and development of technology definitely foster business success and growth. Since the 1950s industrial and agricultural mechanisation have increased both industrial and agricultural productivity. This has led to greater welfare and more services. Now that the electronic age is over, the new frontiers are information technology and other innovative technologies such as nanotechnologies, biotechnologies, etc. (Table 5.1.2)
Currently available indices on the extent of use of information technologies in companies show that Veneto has kept pace with development. Personal computers are quite widespread among the whole of companies with more than 10 staff. 72% of companies use broadband, and over half of the companies have a website while a quarter of staff use PCs with internet connection. (Figure 5.1.4)
More advanced technologies are not as widespread, but in North-East Italy (Note 6) a quarter of companies with 10 staff or more using computers are equipped with with CRM (Note 7) systems and companies receiving electronic invoices account for over a third of the total. In general, internet connection is used to access banking or financial services - 90.4% - but also to get information about markets - 59.2% - or to purchase digital services or information - 47.8%. Digital signature has not become standard practice yet: in messages it is only used by 22.3% of companies. 87.4% of companies using computers has online contacts with public administration with the main objective of getting information and carrying out administrative procedures wholly or partly. Companies using software to manage sale and/or purchase orders are 64.3% in North-East Italy. This percentage is much higher than the national average (59%). (Figure 5.1.5) and (Figure 5.1.6)
Regardless of the technology employed, the production system is assessed by its results, i.e. based on the quality achieved. Every production system operates in a highly competitive environment where any hope of economic survival is made possible by an improvement of product quality as markets evolve - and also by favourable conditions in terms of social and economic policies. However, constant technological progress and structural innovation are necessary in order to guarantee an improvement in product quality. The evolution of design within a given technology also accounts for the constant improvement in the performance of the production system and hence its resulting output.
In a highly globalised world, innovation regarding services, technology, products or processes is becoming more and more strategic for the companies' competitiveness, both in the industrial and in the service sectors. Entrepreneurs are aware that in order to introduce and foster innovation scientific research needs to be supported and adequate resources need to be invested in terms of funds and personnel. In Veneto as well as on a national level more than half of the expenditure on Research & Development is covered by companies, followed by universities covering 37.5% and 30.2% of total R&D expenditure in Veneto and in Italy respectively. (Table 5.1.3)
The Lisbon objective, laying down that two-thirds of expenditure on R&D shall be funded by the private sector, has not yet been achieved, whereas it has already been fulfilled in some northern European countries. However, in 2005 (Note 8) the Veneto companies invested more in Research and Development than the previous year - +6.6% of expenditure and +12.5% of staff.
The business cycle trend in 2004-2005 was upward for the Veneto enterprises, and in the medium term between 2000 and 2005 the increase of R&D investment was considerable, even better than the national figure. Expenditure was up +43.2% and staff up +23.2% (Note 9). In 2005, Veneto companies accounted for 46.4% of the overall staff employed in research and invested 80,951 euros for each one of them, which is a lower amount than the national average of 111,000 euros.
Medium term expenditure increased in all sectors. From 2000 to 2005 the overall national increase was 25.2%, in Veneto 36.2%.
The growth of expenditure per inhabitant in R&S in the 2000-2005 period was 30.6% in Veneto and 23.4% in Italy. Overall €74,884 were spent for each person working in this field against €89,010 in all of Italy.
In 2005 staff employed in research activities increased by 8.8% in Veneto compared to 6.8% at national level. But this corresponds to only 2.2 staff in Veneto per every thousand inhabitants or almost one staff unit fewer than in all of Italy (3). (Figure 5.1.7)
However, growth of expenditure on R&D as percentage of GDP has come to a standstill. Europe is still far from the Lisbon objective of 3% by 2010. The goal for Italy - 2.5% of expenditure as a percentage of GDP - is still far from being fulfilled: the national share stood at 1.1% and the regional one at 0.59%(Note 10) in 2005.

The density and dynamism of businesses has a strong influence on every geographical area, as it increases its competitiveness by developing the capacity to attract workers and by offering opportunities for growth. In our times of a changing international economic landscape, a not-so-obvious prerequisite to confront market globalisation and financial market turbulence is company solidity. In a difficult stage of the business cycle and in view of the profound changes companies' financing underwent as a consequence of the reform of company law (Note 11) in 2003 and of IRES (Note 12) - which was enforced in 2004 - the situation of Veneto enterprises is analysed on the basis of budget indicators. The study consists of companies that have a budget reserve deposit requirement with the Chamber of commerce, industry and crafts. In this case, the accounting reports of 53,514 Veneto companies from Boreau Van Dijck's AIDA archive including over 540,000 Italian businesses have been considered. The companies considered include all the companies with deposit requirement and a turnover equal to or above 100,000 euros, including farms and real estate companies and excluding insurance companies and financial companies from 2004 to 2006.
The single budget entries have been aggregated so as to calculate some significant indicators relating to the whole of companies analysed in Veneto and compared with Italy as an aggregate. The objective is to provide some information on the health of companies as a whole by highlighting both the strengths and weaknesses of the regional company aggregate. Thus some budget entries and indicators have been aggregated to get values for the Veneto company aggregate and the Italian company aggregate. For example, if the turnover of the Veneto company aggregate is given, what is meant is the sum of all turnovers of all the companies in the area under examination.
This analytical approach is illustrated by providing information which - albeit accurate - concerns a subset of the Veneto production system or reference area. On the basis of data and indicators taken from official sources the 53,514 businesses examined turn out to be 12% of the 460,000 (Note 13) active companies for 2006, but if we compare them with corporations only they make up almost 80% of the total.
The overall turnover of these businesses was €187bn in 2005. Comparing this value with the Istat estimate of the turnover of almost all Veneto manufacturing and service companies - about €250bn - such companies can be fairly confidently said to produce three-quarters of the overall Veneto turnover.
The added value of the Veneto companies' aggregate as previously defined is about 60% of the overall Veneto business production. The lower impact of added value compared to turnover can be partly accounted for by the professional and business activities listed as partnerships with high professional skills and profitability, with a high ratio between the value and cost of production. These partnerships are not included in the data. Banks, insurance companies and financial companies are also not included, but they do not affect data as their activities are not included in the overall Istat reference values either.
The turnover of the Veneto companies' aggregate for 2006 is €197bn and accounts for slightly over 9% of the national aggregate turnover. Its value is 3½ times lower than the one registered for Lombardia and can be compared with that of Emilia Romagna in absolute terms. The operating result is €9.5bn or 9% of the Italian total. The operating profit is €6.5bn or slightly over 11% of the Italian one. This percentage doubled compared to the two previous years. When it comes to cash flow (Note 14) Veneto contributes 9% to the national total. These basic data show a positive trend in absolute terms compared to the two previous years with growth rates even over 5%.
Structural analysis is based on a comparison between financial and capital quantities. The structural margin and the net working capital represent a company's ongoing and variable financial requirements respectively. The structural margin is equal to the net assets minus net fixed assets which indicate the ongoing financial requirements. It gives an indication of a company's long-term structural financial balance and can generally be used to assess net assets with reference to investment, a company's expansion potential and the adequacy of net assets in relation to the company's size. In theory, the structural margin ought to be positive, but in practice this is hardly ever the case. Therefore, its extent changes according to the company's financing methods. The structural margin of the Veneto companies' aggregate for 2006 is €17bn or 4.5% of the national aggregate's loss. Compared to 2004, it has gone down by 5% - probably as a result of the tax reform, but is stable in comparison with 2005. However, this is linked to the available medium and long-term financing and its cost as these can offset negative net assets.
Net working capital consists of gross working capital - consisting of stock, debtors and financial assets - less short-term liabilities. It amounted to €24.5bn in 2006, which means a 60% increase on 2004. Despite this positive trend and the stability of the index of availability, the quantity of stock increased over the same period. This increase is about €10bn or 20% compared to 2004 and shows a slowdown of sales. This was confirmed by the average stock turnover which grew from 80 days in 2004 to 88 days in 2006. (Table 5.1.4) and (Figure 5.1.8)
Solidity ratios are used to examine a company's ability to adjust to market conditions by checking the correlation between the company's investment and financial structure and its degree of independence from third parties. The debt/equity ratio measures capital solidity as a ratio between third parties' capital and own capital and showing to what extent the company is dependent on external financing - from banks, capital market and other financing institutions. The value of this composite ratio was 0.62 in 2006 and 2005, down from 0.67 in 2004 as a probable result of tax reform in company taxation with the introduction of IRES and a ceiling on the possibility to deduct interests paid which drove companies to own financing. The ratio is positive considering a 2 or 3-point gearing margin. In this way, the cost of borrowing can be borne. The average cost of borrowed capital is 5 to 6% - in line with the market.
Together with the debt/equity ratio analysis, a study of the structure of assets and its financing sources by means of coverage ratio is also useful. In an assessment of horizontal equilibrium it is important to consider the coverage ratio of assets with own capital which was 0.78 in 2008 - up compared to the previous two years. It shows a structural margin with possibilities for future development. The coverage ratio of assets with durable sources is 1.19. This points to a balanced financial structure, all the more so as there are no requests for short-term repayment of assets. (Table 5.1.5)
Profitability ratios are used to relate a company's profitability to ownership and show the economic efficiency of ownership metrics. They are divided into two groups depending on whether they measure profitability and efficiency such as ROI, ROS and ROA (Note 15) and profitability relating to the whole management such as ROE (Note 16). as the set under examination is rather varied, only ROI is studied in the first group. ROA is commonly used for banks and insurance companies while ROS is only calculated for industrial and commercial companies as it deviates - at least in theory - from the domain under examination.
ROI relates the operating profit to invested capital as it measures return on investment. The value calculated for Veneto in 2006 is slightly over 9% and reflects the trend of growth in Italy too. In the three years analysed it is about 2 percentage points over the national average. Its level is satisfactory as it was above the average cost of money in 2006.
After assessing operating profitability, i.e. characteristic management, as measured through ROI, the analysis of profitability continues with a study of extra-characteristic management. (Note 17) The impact ratio, i.e. the ratio of net profit and operating profit, was 0.69 in 2006, a higher value than in the two preceding years. If the fiscal burden is the same, the higher value of the ratio can be ascribed to a lower impact on financial management as already mentioned with reference to the debt/equity ratio.
ROE measures how convenient it is to make investment as risk capital and is based on the ratio of the net operating profit and net assets. In 2006 the estimated value is close to 11% which is considerably higher than the average cost of money. This, as well as the fact that the Veneto companies' aggregate is definitely higher than the national aggregate (6.9), and the fact that ROE measures the efficiency of all choices made by companies during their operations, shows that the Veneto management is efficient.
Liquid ratios are used to assess the short-term creditworthiness of a business by relating assets to liabilities in order to estimate its solvency.
The quick ratio measures the extent to which current assets and liabilities are balanced. Its value - for 2006 as in 2005 - is 0.77, which is slightly higher than the 2004 figure. It is slightly lower than the Italian value.
The current liquid ratio is the ratio of current assets to current liabilities. Its value for 2006 is 1.23. It expresses the ability of a business to repay its short-term debts with its liquid assets from the same period. These values are like snapshots of the end result of the accounting period. Anyway, a current liquid ratio over 1 can be said to indicate the ability of the Veneto companies' aggregate to repay its short-term debts with its available liquidity and its expected receipts for that period.
To have an idea of the trend of liquidity over time turnover and duration ratios should be available. The turnover ratio of invested capital is the ratio of net profits to invested capital and indicates how many times total investment is used as a consequence of sales. In 2006 it was 0.92, down compared to two years before, but still considerably higher than the Italian figure of 0.77. This measure of efficiency in capital management is higher for Veneto than for other Italian regions. (Note 18) In Veneto the assets used to achieve a given turnover are commensurate with the result. The average duration of credit in 2006 is 70 days - up on comparable periods but in line with national data both in terms of quantity and of pattern. Instead, the average duration of debts is increasing both in Veneto and in Italy. In Veneto it was 101 days in 2006, but still 6 days lower than the national average. As already mentioned, inventories rose from 80 days in 2004 to 88 days in 2006. This deterioration places Veneto above the Italian level of 74 days.
Development ratios measure the patterns of management. In this case they have to be interpreted with reference to the business cycle and market changes. Patterns also need to be compared with those of the national aggregate and other regional aggregates in order to assess the pace of development.
As to capital development, the growth rate of investment is almost 8%, which is higher than the Italian share. The same applies to the growth rate of capital funds, which is slightly over 7%.
As to income development, turnover and added value growth are both positive and slightly over 5%. Compared to the national situation, income development is ahead by about two percentage points. The growth rate of operating income is high percentagewise - about 20% - but considerably lower than in 2005. In 2005 the growth rate of operating income was in line with the other two rates of economic growth just outlined.
The innovation ratios measure the propensity to development by means of a company's ability to create its own resources and finance its own operations. In this case the trend is positive as it derives from a higher re-investment rate (Note 19) than the depreciation rate of total assets. This analysis also holds true if tangible and intangible assets are considered individually in the 2004-2006 period.
Efficiency ratios measure a company's ability to use its financial means in the best possible way. As there are no accurate data on the number of staff, the turnover ratio per member of staff and generally per capita cannot be given.
Therefore, the labour productivity index is calculated as the value of production on labour cost and is 8.56. This figure is slightly increasing and is in line with national data.

1. EN = European Norm.
   
2. Sincert = (Si)stema (N)azionale per l'Accreditamento degli Organismi di (Cert)ificazione e Ispezione (National System for the Accreditation of Certification and Inspection Bodies). It was founded as a non-profit organisation in 1991, which was officially recognised by Italian Ministerial Decree on June 16, 1995.
   
3. ISO 9001:2000, QS 9000 and AVSQ 94 - Automotive ; ISO 13485, ISO 13488 - Medical devices ; EN 729-2, EN 729-3, EN 729-4 quality requirements for welding.
   
4. Certifications concern both organisations as a whole and their individual productive facilities. Data shown here are to be interpreted taking into account that they can refer to several facilities of the same organisation.
   
5. The European survey carried out by Istat gives greater insight into determinants of success - and not of failure - with reference to population, social and motivational characteristics of the entrepreneur who founded the business besides the economic motivations of the business itself.
   
6. For this the results of the Istat 'Survey on the use of information technology and communication in businesses' are significant only in terms of distribution. North-East distribution refers to Veneto, Trentino Alto Adige, Friuli Venezia Giulia and Emilia Romagna.
   
7. Customer Relationship Management.
   
8. Latest year available.
   
9. For debit full-time equivalent staff was considered.
   
10. It is to be noted that during the survey the quality of data was found to be somewhat wanting. To find information that is more relevant to the region a revision of the Istat survey has been promoted by the Veneto Region Statistical Office, even if the survey is constantly changing.
    
11. Italian Legislative Decree 5-6/2003.
    
12. Ires = tax on businesses' income (Legislative decree 344/2003).
    
13. Source: Infocamere.
    
14. Cash flow is the sum of net profit and depreciation and is the money flowing into cash.
    
15. ROI = return on investment , ROS = return on sales, ROA = return on assets.
    
16. ROE = return on equità.
    
17. It refers to events that are not part of business activity. It includes the balance of financial operations, of extraordinary management and fiscal impact.
    
18. Emilia Romagna, Lombardia, Piemonte and Lazio.
    
19. It is the ratio of new fixed investments and gross assets.