A New York Times article (29 July 2011) describes the challenges faced by small Italian firms (“piccolo bello”) which form the backbone of the industry in Padua, Italy.  Firms face the need to work with 10 to 20 different government organizations to start a business, with a new store opening requiring at leat five years of planning and approvals.  The guild system requires firms to outsource payroll checks requiring an outsourced cost of 50 euros a check, beyond the government mandated paperwork and black market and corruption issues.  Successful small firms have resorted to accessing global capacity to survive. Given Italy’s need for growth, is a focus on decreasing regulation the path to success or would it only drive more revenues into the black market ? Is the era of the small firm over, and should mechanisms be evolved to encourage larger firms that can be more easily monitored ?