Measuring People Management and Shareholder Value Creation Relationship. An Empirical Approach from Italian Firms

Italian companies are characterized by the presence of many small- and medium-size firms, along with some large organizations facing new challenges to improve financial results. In recent years being an Italian market player has not been so easy - even those with large and considerable production capacity – because market conditions do not always allow firms to sustain long-term competitive advantages. This is even more true considering the economic and financial crisis that began in the late summer of 2008; however, this goes beyond the purpose of this study on Aida’s dataset update. Moreover, this paper considers shareholder value theory as well as the thesis supporting the relationship between employee development and responsibility, productivity improvement, employee commitment and financial performances. These considerations confirm that leadership development practices need to be integrated in workplaces to take real advantage of greater productivity creation and, as a consequence, greater shareholder value creation (Rappaport, 2006). The paper develops two different methodologies: a qualitative one (case histories) and a quantitative one (multiple regression). The first part of the paper, sections 1-3 (M. Pellicelli), presents the shareholder value theory and the value based management principles in the European context. In particular, we will analyse the significant results obtained by companies listed on the Italian stock market in terms of total shareholder return. The second part of the paper, sections 4-6 (C. Casalegno), presents leadership and leadership development theory an analyses the principal factors adopted by listed Italian companies that have obtained the best shareholder value results. In the third part, sections 7-8 (E. Cerruti), we illustrate the methodology and the dataset characteristics used, the characteristics of the variables set chosen, and the research results for the listed Italian companies. Finally, we analyse in detail the level and the intensity of the relationship between human capital and the dynamic of shareholder value creation.