In Italy, for example, regulations that kick-in at the 15 employees threshold appear to have encouraged firms to stay small (although these are de facto now no longer in force). 8 A similar phenomenon has been observed in France, where size-contingent regulations appear to cause firms to cluster below 50 employees.
9 Wider product and labour market regulations may also affect firm growth by hindering firm entry and exit and hence discouraging reallocation. For example, differences in product market protection are associated with differences in ICT adoption and diffusion in the service sector.