Transition management strategies of confiscated mafia-type firms: the role of public administrations and nonprofit organizations

Abstract

Purpose

This study aims to investigate transition patterns originating from the confiscation of mafia-type firms, examining public administrations and nonprofit organizations' roles.

Design/methodology/approach

This study investigates the case of “Calcestruzzi Ericina Libera,” a firm located in Sicily and confiscated from the Mafia in 1996. The analysis covers an extended period (approximately 25 years).

Findings

The empirical analysis documents the pivotal role of informal networks, comprising public administrations and nonprofit organizations. Confiscation processes are successful if transition management strategies are governed through a network and a collaborative approach is followed after the confiscation to support the firm.

Originality/value

Mafia-type firms have been examined academically from different perspectives, but few studies have focused on the steps taken after their confiscation.

Citation

Bisogno, M. (2023), "Transition management strategies of confiscated mafia-type firms: the role of public administrations and nonprofit organizations", Journal of Public Budgeting, Accounting & Financial Management, Vol. 35 No. 6, pp. 121-139. https://doi.org/10.1108/JPBAFM-03-2023-0041

1. Introduction

The purpose of this study was to investigate how to manage transition patterns originating from the confiscation of mafia-type firms, with an emphasis on public administrations and nonprofit organizations' roles. A network governance approach was used to examine a collaborative model of a peculiar public service: the resurgence of confiscated mafia-type firms (and, more broadly, the social use of confiscated assets).

This study's primary motivation relies on organized crime (OC) and mafia-type firms' growing importance in several countries. The presence of both OC and mafia-type firms is not a mere economic or legal issue but carries several negative implications from different perspectives. Previous literature has adopted varying approaches; however, only a few studies have examined the effects of confiscation procedures (Bivona, 2012) implemented in specific contexts, such as Italy, where the presence of both OC and mafia-type firms dates back to the late 1880s (Paoli, 2004). Confiscation is a disruptive event, in which previous shareholders (who belong to—or are connected closely with—a Mafia organization) are dispossessed, and the firm is assigned to the central government, becoming a state-owned enterprise. A court-appointed manager is put in charge of operating the firm, with the task of first avoiding bankruptcy and then implementing turnaround strategies. As discussed later, these tasks are complex, and the issues to address go beyond merely turning a profit. The company must be transformed through a “legally compliant” managerial style while fighting against previous shareholders (mafiosi). Furthermore, the firm needs to regain market share and achieve competitive advantages in a potentially hostile market environment. Therefore, it is claimed here that solid support from public administrations is required, coupled with close collaboration with other actors, e.g. nonprofit organizations; consequently, a collaborative approach is needed to investigate different actors' roles (managers and other employees at the confiscated firm, central government and its local agencies and departments, regional/local governments, nonprofit organizations, etc.).

Transition management studies, integrated by the Old Institutional Economics (OIE) literature, are used as a theoretical framework through which to investigate the change processes that confiscation triggers. This approach allows for investigating broad transformation processes based on collaborative leadership by considering the various actors involved (Loorbach et al., 2015; Pahl-Wostl, 2009), and it requires examining changes from a long-term perspective (Rotmans et al., 2001; Loorbach, 2010). Therefore, this research employed a case study, namely a firm (Calcestruzzi Ericina Libera) confiscated from the Mafia in 1996, which is currently run by a social cooperative consisting of its workforce, because of a business lease agreement with the central government. The analysis covers 25 years, investigating the main change processes that occurred during this period.

Findings that emerged from the analysis indicated that confiscated firms require substantial support and a network governance approach, with the central government and local/regional governments playing a significant role. Furthermore, close collaboration with other actors, e.g. nonprofit organizations, also is pivotal.

The remainder of the paper is structured as follows. Section 2 reviews previous studies on the topic, while Section 3 lays out the study's theoretical framework. Section 4 establishes the study's context, introducing the reader to confiscation procedures. Section 5 explains the research methodology, and Section 6 presents the study's findings that emerged from data analysis. These findings are discussed in the final section, along with the study's limitations.

2. Literature review

OC and mafia-type firms have been investigated from different perspectives to identify their distinctive features and effects on people, society, and the economy of a region or country (Holmes, 2016; Paoli, 2014).

One of the older streams investigated the structure of traditional OC organizations (Cressey, 1969), which have been described as bureaucratic organizations based on a hierarchical and pyramidal structure, with specific tasks assigned to each level. Codes of conduct regulated the organizations and the relationship between OC members. This approach aimed to explain how these organizations were managed (at that time), rather than their illegal activities. For this reason, this stream was criticized for not considering their illicit activities' economic impact (Ianni and Reuss-Ianni, 1972). Nevertheless, this approach has been reconsidered (Paoli, 2014) to emphasize that Mafia organizations essentially are based on ritual brotherhoods, with the primary aim being to attain and consolidate their local political power. Furthermore, by merging economic and political-science perspectives, scholars have argued that Mafia organizations tend to increase their power over a specific territory by providing a service to people: protection. Therefore, Mafia organizations are interpreted as a sort of “alternative government” (Paoli, 2003), providing services that (weak) public-sector entities cannot. This approach also could explain mafia-type firms' monopolistic power and how they can control territory while competing with governments. However, this “benign” interpretation collides with the extortion and abuse of power that characterize OC and mafia-type firms (Kleemans, 2014).

A different stream concentrates on analyzing negative externalities due to mafia-type firms' presence in a territory, often operating as legitimate businesses. Under this approach, scholars investigated illegal markets (Block and Chambliss, 1981; Reuter, 1983; Moore, 1987; Haller, 1990; van Duyne, 1993) to understand transnational illegal activities' effects generated by differences in policies and regulations adopted in different countries (Passas, 1999). Further studies documented how mafia-type firms (and, more generally, Mafia organizations) negatively affect GDP per capita (Pinotti, 2015), discouraging direct foreign investments (Daniele and Marani, 2011). Conversely, the public subsidies' magnitude was associated positively with the presence of mafia-type firms (Barone and Narciso, 2015).

Scholars also have examined the control that mafia-type firms (and OC) have over a particular socioeconomic context. Frequently, mafia-type firms launder money from illegal activities and exercise social control over the territory (Dalla Chiesa, 2009). These firms operate strictly as criminal organizations, functioning as subordinate tools of Mafia organizations. In this respect, turning a profit does not seem to have the same importance as it does with legal firms. However, it is unclear how much the connection between a mafia-type firm and the Mafia organization affects profit (Bertoni, 1997; Arlacchi, 2007). Scholars have argued that Mafia firms' profit could be interpreted as “social and political profit,” considering the high return they achieve in terms of relations, legitimization, the efficacy of their authority, and their presence in a specific territory (Fiorentini, 2000). Accordingly, mafia-type firms may enhance their control and power (Bertoni, 1997).

Scholars also have claimed that mafia-type firms benefit from different competitive advantages compared with legal firms, as the former reduce several costs by not following particular laws (e.g. taxes, environmental issues, social security, workplace safety, etc.; Ravenda et al., 2015) and avoid incurring debts because of the availability of black-market money derived from illicit trafficking (Arlacchi, 2007). Thus, violating laws allows mafia-type firms to achieve a monopolistic position in several strategic sectors. Consequently, Mafia infiltration of the legal economy aims not only to launder money derived from illegal activities, but also to consolidate social power in a specific territory (Fantò, 1999; Riccardi, 2014; Sciarrone, 2014).

However, a recent literature stream has been investigating mafia-type firms' profitability, scrutinizing their components, operating cycles, probability of default, tax-evasion aggressiveness, and earnings management practices (Bianchi et al., 2022), finding that they tend to report lower operating performance than law-abiding firms (Bisogno and Vaia, 2020). Ravenda et al. (2015) found that mafia-type firms tend to manage earnings more aggressively and avoid paying labor taxes. In a subsequent study, Ravenda et al. (2018) examined earnings management during the confiscation period. With a few exceptions (Bivona, 2012), the effects of confiscation were not investigated in depth, despite about 60% of confiscated firms either filing for bankruptcy, liquidating, or winding up inactive (https://benisequestraticonfiscati.it).

To sum up, while previous research has focused more on OC structure and the sociopolitical power of mafia-type firms and organizations, more recent research has been examining these firms' profitability. Confiscation's effects remain under-investigated, i.e. a literature gap seems to exist. Thus, this study intends to contribute to the debate by focusing on the impact of seizure, and to what extent a firm confiscated from a Mafia organization can implement a successful turnaround strategy with the support of public-sector entities and nonprofit organizations. Concretely, this research aimed to scrutinize the gap between what is written in laws (“law in books”) and how policies and laws are used in practice (“law in action”) (Sergi, 2017).

3. Theoretical framework

The theoretical background of this research relies on transition management studies (Grin et al., 2010), integrated by the Old Institutional Economics (OIE) approach (Burns and Scapens, 2000; Scapens, 1994; Scapens, 2006). The main concept of the transition management framework is that dealing with broad transformation processes requires involving several actors, and collaborative leadership is needed, as centralized approaches may be ineffective (Pahl-Wostl, 2009). Accordingly, transitions are interpreted as a result of co-evolving processes based on nonlinear changes, which are expected to affect organizations and their managerial styles, as well as behavior and daily routines. Transitions are viewed as fundamental changes in a system structure, contributing to the development of a new structure (Loorbach and van Raak, 2006). In so doing, transition studies allow for investigating changes from a long-term perspective (Rotmans et al., 2001; Frantzeskaki and de Haan, 2009; Loorbach, 2010). Therefore, they provide a valuable backdrop through which to comprehend how to address complex problems and face failed public policies by examining the implementation of reorientation strategies.

It is worth observing that the transition management framework has been adopted primarily in studies concerning sustainable development and complex societal sustainability challenges, such as climate change, pollution, biodiversity, recycling, and so on. This study attempts to shape this framework on a different topic, which is, nevertheless, an important issue. Governments should implement effective remedies to protect people, safeguard legal firms, avoid OC and mafia-type firms' violent methods and illegal trafficking, and infiltrate institutions. In this respect, confiscation of assets and firms belonging to the Mafia has proved to be one of the most effective remedies.

A confiscation is a disruptive event that leads to a destabilization period, whose outcome could be filing for bankruptcy or implementing a turnaround strategy, after which a new dynamic equilibrium could be achieved. Therefore, transition pressures, such as those that a mafia-type firm experiments with after a confiscation, are expected to create a transitional pattern, leading to a transitional governance model based on an informal network (Loorbach et al., 2015). The various actors involved (e.g. the confiscated firm's personnel, public-sector entities, and nonprofit organizations) are required to cooperate in the implementation of new managerial approaches, developing new ideas and projects to be applied in a specific context (Nevens et al., 2013). To translate these ideas and projects into a practice management framework, van der Brugge and van Raak (2007) suggested focusing on operational, tactical, and strategic governance activities. The three spheres are strictly related, and transition management comprises cyclical and multi-actor processes, as Figure 1 illustrates.

The operational sphere concentrates on practices and concrete projects, and takes a short-term perspective, being based on mobilizing actors and executing projects and experiments. This sphere deals with practically implementing a new way of thinking and operating, which is rather challenging and demanding. Indeed, the development of informal networks, conceived as a social and physical space where various actors can propose different ideas and projects, require that transition perspectives are translated into the actors' operating context (Nevens et al., 2013), facing obstacles and barriers. Therefore, when future developments are highly uncertain and common approaches are insufficient, as in the case investigated here, actors need to seek alternatives way of thinking and operating (Loorbach and van Raak, 2006; van der Brugge and van Raak, 2007; Van Buuren. and Loorback, 2009), and an interplay between the domains of public, no-profit and civic action is required (Vakkuri et al., 2021).

The tactical sphere aims to translate these new ways of operating into transition paths, focusing on structures and taking a mid-term horizon approach, meaning that co-production processes are required to develop coalitions and define transition agendas. In this vein, regulatory, institutional, and economic barriers could hamper future developments toward the desired direction. Accordingly, this sphere also includes evaluation, monitoring, and learning activities, to overcome barriers and solve issues due to tensions among the actors involved, which could also suggest a revision at the strategic level.

The strategic sphere is based on dialogues on norms and values and deals with formulating collective and long-term objectives. Through the convergence of heterogeneous actors' perspectives and problem perception, this sphere is expected to lead to problem structuring and the establishment of a transition arena, which is a multi-actor network of innovation related to a specific transition issue (Loorbach and van Raak, 2006). Discussions and interaction among actors facilitate the emergence of sustainability visions, namely a change in perspective.

The transition path from illegal mafia-type approaches to legally compliant ones entails radical changes in rules and routines, suggesting integrating the transition management framework—especially its operational sphere—by the Old Institutional Economics (OIE) approach (Scapens, 1994; Burns and Scapens, 2000). Following Scapens (2006, p. 11), OIE “seeks to explain the behaviour of economic agents in terms of rules, routines and institutions”. Routines are a recognizable pattern of actions, that might involve different actors, representing a source of change or a source of stability and inertia (Burns and Scapens, 2000). The transition pattern following the confiscation represents a favorable occasion for removing previous routines. However, such a process questions consolidated behavior and beliefs (Manes-Rossi and Bisogno, 2020), and the mafia-type organization to which the firm belonged may impede the process and resist changes (for instance, mafiosi can oblige the confiscated firm's customers and suppliers to cease doing business with it). OIE can then permit the investigation into the development of a new structure (Loorbach and van Raak, 2006), based on different rules and routines, enable the understanding of the relationship between the way in which “things should be done” (e.g. rules), and the way in which “things are actually done” (e.g. routines), and then the relationship between “law in books” and “law in action” (Sergi, 2017). As Laughlin (1991) maintains, it is necessary to observe the process of change to correctly interpret transformation paths due to external jolt (e.g. confiscation).

4. Setting the context

Italy is an interesting setting in which to investigate mafia-type firms, as OC and mafia-type organizations have a long history there, and their presence, particularly in four southern Italian regions (Campania, Calabria, Apulia, and Sicily) dates back to the late 1880s (Paoli, 2004). Later, these organizations extended their influence into other wealthier Italian regions (e.g. Lombardy; Varese, 2006), representing an economically relevant phenomenon. According to the Italian Institute of Statistics, proceeds generated by the three major Italian OC organizations (“Cosa Nostra”; Camorra; and ’Ndrangheta) totaled about 12% of Italy's GDP (Bianchi et al., 2022).

Several policy instruments have been implemented in Italy to target the Mafia. The so-called Rognoni-La Torre law was passed in 1992 to introduce the new crime typology of criminal mafia-type association, adding article 416-bis to the Italian Criminal Code (La Spina, 2014). After the murders of two judges active in the fight against Mafia (Giovanni Falcone and Paolo Borsellino), a widespread social movement against Mafia culture developed in Italy. It became clear that the fight against the Mafia should not be delegated only to police forces and judges, and that mafia-type organizations pose a threat to democracy and its principles, which concern everyone. One of the most relevant outcomes of this process was a national petition to the Italian Parliament to pass a law that enhances confiscation procedures on assets belonging to the Mafia while facilitating their social use. The law, passed in 1996 (no. 109) with the significant support from Libera [1], became a turning point in the battle against the Mafia: Whatever assets––e.g. real estate, stocks, and firms––could be confiscated. The law allows for precautionary seizure, separate from judicial trial, to settle any criminal responsibilities of those being accused. Therefore, the seizure of assets can occur immediately, long before the conclusion of financial and asset-related legal inquiries that could take years to complete.

All confiscated assets are funneled to the central government. In the case of individual assets or groups of assets––e.g. real estate––the process is straightforward and quite manageable: Assets can be assigned to local governments, which can transfer them to nonprofit organizations or social cooperatives, thereby benefitting local communities. Conversely, seized firms are not easy to manage. According to law 109/1996, seized firms are assigned to a temporary court-appointed administrator, who must take a legal approach and implement a turnaround strategy. Until 2010, temporary administrators were required to collaborate closely with both the local department of the central government (“Prefettura”) and the local office of a central government agency (“Agenzia del Demanio”) as the owners of confiscated firms. However, complex bureaucratic procedures interfered with this turnaround process, as many firms were not assigned to an administrator and went bankrupt. This led to workers losing their jobs and confiscated firms' suppliers reducing their revenue, eliciting negative social and economic impacts. Afterward, a national agency for Seized and Forfeited Goods was created (“Agenzia Nazionale per l’Amministrazione e la destinazione dei beni sequestrati e confiscati alla criminalità organizzata”; henceforth ANSBC), which aimed to overcome these difficulties. In actuality, ANSBC can intervene from the very beginning of the procedure, from the precautional confiscation until the final assignment, which is supported by experts and interest groups (Paoli, 2014). However, it can be observed that court-appointed managers face significant difficulties in promoting paths of sustainable development which aim at ensuring the going concern of firms after the confiscation (Bivona, 2012). The process is still complex, characterized by several issues that hamper the implementation of turnaround strategies, leading to the bankruptcy of the firm. The ANSBC has to support the court during the process, steering at a distance the activities carried out after the confiscation and stimulating workers' buyout. Therefore, a new anti-mafia code was passed in 2011, with the final amendments approved in November 2021, aimed at improving the efficiency of confiscated assets and firms' assignment procedures. Thus, while in the past court-appointed administrators were expected to fulfill only “ordinary managerial activities”, nowadays, they are supposed to plan new strategic initiatives under the surveillance of the ANSBC. The institutional support of central government agencies, coupled with the ability to plan innovative strategic initiatives, plays a crucial role in enhancing the probability of a confiscated firm to surviving [2].

The case study laid out in the following sections involves a firm that experienced precautional confiscation in 1996 (one of the first such firm seizures after law 109/1996 was passed), with the seizure completed in 2000. The process was long and complex, characterized by several difficulties. The outcome has been positive due to the strong will of the local “Prefetto” and close collaboration with nonprofit organizations, namely Libera and Legambiente (https://www.legambiente.it), which supported (and facilitated) implementation of appropriate strategies by the court-appointed manager. Thus, this emerging network is one of the keys to examining the “Calcestruzzi Ericina Libera” case.

5. Research methodology

This research adopts a case-study approach, which allows for an in-depth examination of a specific, complex system in a “real-life” context (Simons, 2009). A case-study approach is viewed here as a research strategy to select what is to be studied (Stake, 2005), implying that boundaries concerning places and time periods are pointed out (George and Bennett, 2005).

Following Wieviorka (1992), the case to be investigated (i.e. an individual confiscated firm) should not be viewed as a mere instance of a class (i.e. firms seized from criminal organizations). More specifically, investigating cases means considering both a specific, historical unit of analysis and the case's analytical frame, which delimits class. Thomas (2011) used the expressions subject and object of the study, clarifying that “the case that is the subject of the inquiry [should be viewed as] an instance of a class of phenomenon that provides the analytical frame—an object—within which the case is conducted and which the case illuminates and explicates” (p. 513; emphases added).

The subject of the analysis examined here can be viewed as a diachronic “building block” study of a particular phenomenon (George and Bennett, 2005; Thomas, 2011) in an effort to exemplify the analytical object of the analysis, providing a sort of exemplar knowledge (Thomas, 2010). This building block, while supporting the analysis of the dynamic of the relation between the study's subject and object, attempts to enrich the domain of the theoretical framework used in this article by investigating mafia-type firms' transition management patterns after confiscation (George and Bennett, 2005).

5.1 Research setting and subject of the study

This study investigated “Calcestruzzi Ericina Libera” (hereafter Ericina), a firm that belonged to a Mafia organization until the Italian government confiscated it in 1996. The analysis covered a long period (from the provisional confiscation that occurred in 1996–2022), so it is a longitudinal case study whose purpose was to investigate the process of change due to the confiscation. Ericina was selected by considering the basic criteria for a theoretical sampling approach (Eisenhardt, 1989; Eisenhardt and Graebner, 2007). First, confiscated firms experience a radical change, shifting from an illegal managerial style—which allows for avoiding or substantially limiting competition with other firms—to a legally compliant one. Second, after the confiscation, a central government agency (the Agenzia del Demanio, then replaced by the ANSBC) becomes the new owner. Third, the role of several actors—not only public-sector entities but also nonprofit organizations—is expected to be important in a context characterized by the strict control that Mafia organizations exercise over a specific territory.

Twenty-five years after confiscation, Ericina is currently a healthy firm, managed by a social cooperative consisting of its workforce due to a business lease agreement with the central government. After the confiscation, the firm was in danger of going bankrupt, but thanks to direct involvement by local departments and agencies of the central government and close collaboration with nonprofit organizations, e.g. Libera and Legambiente, the firm implemented a risky but successful turnaround strategy. Rules and internal routines changed entirely, abandoning the previous mafia-type approaches for legal and sustainable ones.

5.2 Object of the study and data analysis

The object of this study was the process through which changes were implemented (Thomas, 2011) and how they impacted organizational routines. The analysis was conducted ex post, and the researcher attempted to reconstruct the antecedents of the changes by interviewing the main actors (Liguori and Steccolini, 2012). Changes that occurred during the various steps (from the first provisional confiscation to the definitive one, and then the stipulations of a business lease agreement onward) were considered. To avoid bias in the ex-post rationalization of the implemented changes (Ahrens and Chapman, 2006), data from semi-structured interviews were triangulated with open-answer questions and archival analyses (Qu and Dumay, 2011) based on financial statements, data available on the Ericina website, and existing media articles and videos. This triangulation aimed to increase the results' credibility (Manes-Rossi and Bisogno, 2020).

Direct interviews were conducted between February and April 2022 with key actors, namely: the current chairman of Ericina's board of directors; Ericina's CEO; two executive members of the board of Libera. The chairman has been working at Ericina since 1991, and he was one of the leaders of the transition from a mafia-type to a legal firm. The CEO had a key role in implementing innovations (as described in the following section). One of Libera's executive board members was directly involved in organizing training activities and supporting Ericina's workforce during the transition, while the other board member is still involved in supporting firms confiscated from the Mafia. The interviews focused on the theoretical framework depicted in the previous section, with each interview lasting 60–120 min. Considering the long period covered by the analysis (25 years), it was not possible to conduct direct interviews with other key actors. Accordingly, existing media interviews and videos drawn from several sources (Ericina's website, TV broadcasts, media articles, etc.) were used, as occurred in previous Mafia's research; for instance, Vaccaro (2012) utilized, among other documents, articles from local newspapers and magazines, stickers (pizzini) and video-interviews. This allowed for including in the analysis the head (at the time of confiscation, e.g. 1996) of the local department of the central government, “Prefetto” Mr. Sodano (who passed away in 2014) and the chair of Libera, who played an active role after the confiscation of Ericina. Thus, several existing videos were repurposed for use as data, including broadcast media and YouTube videos, a practice that is becoming common in social science research (Jewitt, 2012).

6. Findings

Ericina has been producing cement conglomerates since 1991, with its main plant located in Trapani (Sicily) and other minor plants in Valderice and Favignana. Ericina's primary customers are small and medium-size construction firms, and several competitors operate in the same area. However, the excellent quality of its products, a highly qualified workforce, and a favorable geographical location give Ericina a competitive advantage.

After law 109/1996 was passed, Ericina was conditionally confiscated under suspicion of being a mafia-type firm, then in 2000, the confiscation was definitive. Accordingly, Ericina became a state-owned enterprise under the control of a central-government agency (Agenzia del Demanio), and the court appointed a manager.

During the first year after the confiscation, Ericina experienced significant financial difficulties, including a 50% decrease in annual revenue. Furthermore, older customers continued to pay for the products they bought from Ericina through relatives of the mafioso who previously owned the firm.

Thanks to the collaboration with the company's workforce, the court-appointed manager undertook a major effort to redevelop relationships with previous customers while searching for new ones. However, this approach was insufficient, and the firm experienced increasing difficulties securing new contracts. Financial problems caused workforce layoffs, while revenue continued to decrease, and the business the company generated was insufficient to turn a profit:

After the confiscation, several customers stopped buying products from Ericina. Relatives of the imprisoned mafioso, the previous owner of the firm, spread the word among older (and potentially new) customers that our prices were substantially higher than those of other firms. This caused a reduction in revenue of about 50% (Ericina’s Chairman of the Board).

Progressively, the firm's new managerial style impacted internal routines. To exemplify: previous routines originated from the “moral suasion” of mafiosi, who were able to manipulate markets to eliminate direct competitors, signifying that Ericina undoubtedly received purchase orders from customers with regularity. Furthermore, the selling price was imposed by mafiosi. The transition to a legal managerial style meant that Ericina had to compete with its competitors, and customers had the option of buying from other firms. In the years following the confiscation, former institutionalized rules were superseded, and new routines were implemented (Burns and Scapens, 2000). This represented an institutional innovation (Loorbach and van Raak, 2006) characterized by a new (legal) culture that emerged progressively. However, no clear path to a broader agenda was evident (Kemp et al., 1998).

Ericina was in an operational sphere of its transition path (van der Brugge and van Raak, 2007), as it was highly focused on concrete projects, but was operating with a short-term horizon, with urgent issues to address. The new set of rules strove for being institutionalized, because of several barriers; this approach could have solved short-term problems, but it would not have guaranteed the firm's survival in the medium and long term.

According to the transition management cycle, discussions and interaction between different actors facilitate the development of both change in perspective and a new sustainable vision (Loorbach and van Raak, 2006). The court-appointed manager and the head of Trapani's central government department, Mr. Sodano, implemented several remedies to sustain Ericina. They were aware of the advanced technical skills that the firm could offer compared with those of competitors; therefore, with the collaboration of the firm's workforce, the firm started building new relationships with institutional and social actors. Mr. Sodano and the court-appointed manager organized several meetings with local entrepreneurs and the local industrial association to encourage them to do business with Ericina, touting its high-quality products sold at competitive prices. Furthermore, Mr. Sodano insisted that it was important that the whole local community support this state-owned firm in implementing its turnaround strategy. However, he was aware of the risk of filing for bankruptcy, which was (and still is) a negative signal to the community and the firm's workers, who could lose their jobs. In the same vein, Libera was progressively involved in the emerging informal network, a social space where different actors propose ideas and projects (Nevens et al., 2013).

An asset acquired by the State—which had both a strong symbolic value on the territory and an important impact in a strategic sector for the mafia, such as concrete—had to be saved and become the emblem of the State’s revenge on mafia organizations (Mr. Sodano, Prefetto of Trapani) [3].

Safeguarding jobs is an effective antidote to the mafia (Chair of Libera) [4].

Indeed, Mr. Sodano also maintained solid ties with Father Luigi Ciotti, chair of Libera, which has been very active in the fight against the Mafia since 1996. Libera's staff was highly supportive, being a source of strength to the workforce. At that time, Libera intensified its relationship with both institutions (e.g. the Trapani's department of the central government) and other nonprofit organizations (e.g. Legambiente) to create a sort of local network to sustain Ericina's workforce during such a complex phase. The court-appointed manager also played a crucial role in this process:

The role of Libera was not only limited to a close collaboration with the Prefettura of Trapani. Libera also contributed to creating a territorial network consisting of other nonprofit organizations to sustain and support the workforce of Ericina in the delicate phase after the confiscation (Libera Executive Board Member).

Revenue started to increase, and one of the primary outcomes of these efforts was a contract that Ericina secured that was tied to the renovation of Trapani's dock ahead of the 2005 America's Cup. Table 1 illustrates both revenue and profit trends from the period, as well as some profitability ratios.

According to this data, it seems that short periods of non-equilibrium created new opportunities to steer Ericina in a desirable direction (Loorbach et al., 2015), and these steps could be attached to a tactical sphere, with important changes occurring due to a close collaboration with the Prefettura of Trapani and Libera.

Amid these changes, Ericina encountered strong resistance. The court-appointed manager and the workforce had to fight against previous shareholders (i.e. mafiosi) who attempted to regain ownership of the firm. In fact, through a fictitious header, they tried to regain control of the firm and the cement market. This header asked Agenzia del Demanio to take over the firm while a corrupt civil servant from this agency tried to authorize the transaction. As a court decision revealed later, the mafiosi strategy consisted of trying to lower Ericina's market value by decreasing revenue and then purchasing the firm for a low price. However, Mr. Sodano refused to authorize it:

Mr. Sodano considered the proposal to take over Ericina suspicious. He understood that the proposal was coming from the mafiosi, and he suddenly stopped it (Ericina’s Chairman of the Board).

Mr. Sodano was then perceived as an obstacle and was moved to another Prefettura. A trial is still in place to ascertain whether this transfer was due to the strains that the then-local mafiosi put on politicians (Bova, 2019; Ziniti, 2009). This was a clear sign of how mafiosi tend to resist confiscation, as their purpose is to maintain social and economic power over a specific territory (Fantò, 1999; Riccardi, 2014; Sciarrone, 2014).

Furthermore, according to Libera's chair [5], Agenzia del Demanio was considered the “weak link” in the confiscation process. Thus, at an institutional level, all tasks regarding confiscated assets were subsequently assigned to the ANSBC.

Meanwhile, in 2005, law 109/1996 was amended, allowing for the creation of social cooperatives, in which the confiscated firm's workforce can forge a business lease agreement with the central government (the firm's owner). Libera strongly supported Ericina during this phase. Workers were insecure about the managerial role they would be asked to carry out. In this sense, Libera, on the one hand, provided a kind of moral support, aiding in solving workers' doubts; on the other hand, it guided the workforce toward an understanding of all legal and technical issues regarding the establishment of a social cooperative. Several meetings were necessary, and Libera's staff—in conjunction with practitioners—organized training activities to explain the opportunities offered by the law related to a business lease agreement with the central government. Therefore, in 2008, all employees decided to invest their retirement benefits to form a social cooperative:

Libera provided the workforce with training activities to illustrate the opportunities of the amended law 109/1996. More specifically, thanks to the collaboration of qualified trainers, the characteristics of both social cooperatives and the workers' buyout were illustrated. Furthermore, Libera organized several meetings with the workers to assist them in solving their doubts and worries, providing a sort of moral support (Libera Executive Board Member).

One should take into account that workers did not have specific competence regarding managerial issues. In short, we were required to have an entrepreneurial approach while addressing complex legal issues. Libera gave us relevant support by organizing training activities, and we learned a lot about how to manage the transition to the new course of entrepreneurship (Ericina’s Chairman of the Board).

Consistent with the tactical sphere of the transition management cycle (Figure 1), this means that several barriers can hamper future developments toward the desired direction; to overcome these barriers, the tactical sphere underlines the importance of monitoring and learning activities, considered as the two pillars that sustain the evolutionary change processes. Furthermore, the decision to establish a social cooperative provided a fresh start, allowing the new managerial team to plan new initiatives, turn a profit and guarantee the firm's survival. Thus, it can be argued that the tactical sphere of the transition management cycle ran concurrently with a strategic approach (Loorbach et al., 2015).

Indeed, the difficulties that Ericina experienced suggested the need to implement a new strategic approach to regain market share. Ericina's staff realized that producing cement for the same market and using traditional production processes would be insufficient to ensure long-term sustainable development. Ericina was supported by Libera and Legambiente, and subsequently the National Association of Producers of Recycled Agglomerates, in launching a project to construct a highly innovative construction waste recycling plant. The informal network was then enlarged, involving another nonprofit organization, Legambiente, which is active in promoting sustainable campaigns to preserve the environment and promote sustainable economic development. Furthermore, from a financial perspective, 2.5m euros were required, and the funding was raised from several sources:

1. The Sicily Region provided a non-repayable loan of 1.1 million euros.

2. A bank provided a 20-year unguaranteed loan of 700,000 euros under the “moral guarantee” that Libera provided.

3. Another confiscated firm (“Immobiliare Strasburgo”) bought shares issued by Ericina, raising another 219,000 euros.

4. Ericina invested its own liquidity (about 500,000 euros).

Implementation of this construction waste recycling plant (“Recupero Omogeneizzato Scarti Edilizi” [ROSE]) was a forward-looking decision, as Ericina's CEO pointed out:

ROSE plant makes it possible to produce high-quality materials obtained by recycling building waste. It was a forward-looking decision. Although the European Union issued a recommendation in 1990 to use at least 30% of raw materials deriving from waste treatments, Italian legislation introduced this requirement in 2003. However, it was not applied. Our motto was and still is that industrial waste is not discarded materials, but a resource (CEO of Ericina).

ROSE was (and still is) the only construction waste recycling plant in southern Italy. In November 2014, the European Commission invited Ericina to represent Italy at a construction recycling workshop. Ericina illustrated ROSE's technical solutions at the workshop, which were well-received [6].

Therefore, encouraged by Libera and Legambiente, Ericina became a forerunner, implementing production processes based on the concept of a circular and sustainable economy (Pavia, 2012). However, Ericina also had to fight against heavy resistance from customers who were (and still are) skeptical about the quality of raw materials produced from recycled waste. This skepticism sprang from other recycling procedures used by Ericina's competitors, which were ineffective from a technical perspective, unlike Ericina's.

We organize periodic meetings and carry out training activities to illustrate the characteristics of the ROSE plant and the high-quality level of its technical procedures to overcome skepticism and encourage having a positive approach toward the use of recycled materials (CEO of Ericina).

Currently, Ericina is viewed as a symbol of the State triumphing over the Mafia, and its staff organizes awareness campaigns and periodic visits with young students to tell them its story and illustrate that the Mafia can be defeated (Ericina's staff uses the slogan: “Together we can”; Giacomarro, 2011):

[Calcestruzzi Ericina Libera] is a small, but significant, example of the possibility of producing real changes in territories that unfortunately suffer from the invasive presence of mafia organizations (Chair of Libera) [7].

However, Ericina still is facing bureaucratic issues and obstacles. As the CEO and the chairman of the board pointed out during the interviews, Ericina was asking for support to replace its cement truck fleet. In a proposal to the ANSBC, the firm aimed to buy or rent trucks that belonged to other confiscated firms and currently were not in use, but several legal issues emerged. Furthermore, complying with legal rules seemingly led to Ericina being penalized compared with its competitors. For example, as observed, construction firms must use at least 30% of recycled construction waste. However, Ericina's competitors do not comply with this rule, and public binding frequently does not include this aspect as a mandatory requirement to award public contracts.

7. Discussion and conclusions

Ericina can be viewed as one of the rare successful cases of firms confiscated from the Mafia. It has been examined here through a diachronic building block case study of a particular phenomenon (George and Bennett, 2005; Thomas, 2011). The process through which changes were conducted and how they impacted organizational routines were investigated, with transition management studies used as a theoretical framework to delineate the boundaries of the subject of this research.

This study attempted to refine this theoretical framework by enriching its domain while sharing its fundamental pillar: Dealing with broad transformation processes requires involving several actors, and collaborative leadership is needed (Pahl-Wostl, 2009) to address complex phenomena, which are expected to affect the managerial style, behavior, and daily routines. Confiscation is a disruptive event for mafia-type firms, leading to fundamental changes and helping to develop a new structure (Loorbach and van Raak, 2006). Furthermore, as the investigated case documented, a long-term horizon should be considered; otherwise, it would not be possible to examine appropriately the roles that different actors play in implementing new managerial, legally compliant, and sustainable approaches, as well as investigate how new ideas and projects are developed and applied to a specific context (Nevens et al., 2013). Following van der Brugge and van Raak (2007), it is necessary to consider operational, tactical, and strategic spheres to conduct a diachronic study (Thomas, 2011) that allows for observing changes over time. From this perspective, the transition management approach has been enriched here by conceptually borrowing from the OIE framework (Burns and Scapens, 2000).

The short-term perspective is essentially based on the need to solve urgent issues that arise naturally after confiscation. The firm needs to maintain and/or regain its position in the market, while the court-appointed manager must face legal and administrative issues. Coming back to a legally compliant managerial style is essential, as the central government is the new owner of the firm. Furthermore, internal organizational routines are expected to change radically. This first phase has an operational nature, with the court-appointed manager required to mobilize the workforce while dealing with pressure from external actors (e.g. the mafiosi who previously owned the confiscated firm). Considering the large number of firms that file for bankruptcy after confiscation, this step can be viewed as a sort of experiment (Loorbach, 2007). It can be argued that the practical implementation of a radically new way of thinking is demanding and challenging because of the conflicting objectives of the involved actors (i.e. the court-appointed manager and the workforce vs the mafiosi). Transition management “experiments” are highly risky, and Ericina was no exception. Financial difficulties, coupled with a strong resistance to change, made it clear that the approaches and solutions that Ericina adopted at that stage were insufficient, while future developments appeared uncertain. In this kind of situation, where an emerging hybrid setting has to be managed (Vakkuri et al., 2021), Loorbach et al. (2015) suggest forming a transition team comprising actors from different backgrounds. In the case investigated here, an informal team was created, in which both public-sector organizations (the local Prefettura) and nonprofit organizations, such as Libera and Legambiente, strongly supported the court-appointed manager and the workforce. This allowed for structuring problems to be solved, establishing a sort of transition arena in which actors were encouraged to reflect on their evolving routines (Scapens, 1994; Van Buuren. and Loorback, 2009).

However, this institutional innovation (Loorbach and van Raak, 2006) is insufficient, as a clear link with a broader agenda (Kemp et al., 1998) needs to emerge. Therefore, a longer-horizon perspective is essential to implement and monitor the effects of both tactical and strategic decisions. In Ericina's experience, the remedies that law 109/1996 introduced (particularly the possibility that a social cooperative could manage the confiscated firm) were put into place, and the workforce was allowed to forge a business lease agreement. However, this was still insufficient, and a gap between “law in books” and “law in action” (Sergi, 2017) still emerged. According to the tactical sphere of the transition management cycle, an additional tool was found to be essential: training activities, which—in the Ericina case—were aided by Libera. Furthermore, the strategic decision to develop the ROSE plant project opened new market opportunities, thanks to the non-repayable loan obtained from the regional government and other concessionary loans.

Change processes then should develop continuously through co-evolving steps that help mold a new organizational structure. The longitudinal nature of the case study and the long-term horizon covered by the analysis (from 1996 onward) has led to an understanding of how to deal with the transition to a legally compliant context, as well as the effects deriving from reorientation strategies (Rotmans et al., 2001; Frantzeskaki and de Haan, 2009; Loorbach, 2010).

From a theoretical perspective, this study attempted to build a “block” (George and Bennett, 2005) by investigating the dynamics of the relation between the subject and object of analysis (Thomas, 2011). This allowed for illustrating the close relationship between different strategies and tools. Complex issues––e.g. returning to a “legally compliant” managerial style, fighting against mafiosi, regaining market share, achieving competitive advantages in a potentially hostile environment, and turning a profit––require a holistic approach based on an informal network. In this vein, this research attempted to enrich the spectrum of research questions that could be investigated through transition management studies so as to deal with various problems due to the confiscation of mafia-type firms. Accordingly, transition management studies conceptually can borrow from the OIE approach, which suggests considering how processes of change evolve over time (Scapens, 1994; Burns and Scapens, 2000). Table 2 summarizes findings emerging from Ericina's case, interpreted through integrating transitional management spheres (operational, tactical, and strategic) with key actors, issues and challenges, and the impact on rules and routines, according to the OIE approach.

From a practical perspective, to supersede previous mafia-type routines successfully and then increase the probability of survival, a firm must receive support after confiscation from public-sector entities (in the case investigated here, local departments of the central government and the regional government). Furthermore, support from other actors (in the case examined here, Libera and Legambiente) can play a fundamental role. Training activities are also essential to facilitate the process of change and implement new organizational routines, which will give rise to new institutionalized rules (Burns and Scapens, 2000). The main lesson to be learned is that the fight against the Mafia starts (not ends) with confiscation. Public administrations at different levels are expected to support confiscated firms in order to help streamline bureaucratic procedures and reduce obstacles, resulting in the survival and profit-making of confiscated for-profit entities. Furthermore, establishing a social cooperative to manage the firm after the confiscation suggests that for-profit entities may gradually slide into becoming hybrid organizations, where the need to make a profit is strictly related to the desire to benefit the community, transmitting a clear message: “together we can beat the Mafia”, to paraphrase Ericina's motto.

This research focused on a single economic segment––cement production––that mafia-type firms traditionally control in Italy. Therefore, this sector's characteristics may affect the dynamics of the relation between the object and subject of the analysis. Accordingly, investigating other cases of confiscated firms operating in different contexts could be interesting to understand if and to what extent organizational routines are affected. Training activities' role could be different, so that the public-sector entities' support may follow other trajectories.

Furthermore, future research could adopt a multiple case studies approach by examining both successful and unsuccessful cases of confiscated firms. This would allow for exploring how different actors may contribute to confiscation outcomes. In this last respect, a different theoretical perspective could be used to investigate value-destruction processes (Cui and Osborne, 2022) by considering the nexus of public and private value (i.e. to guarantee firms' success after confiscation, with several advantages for the local context), which is particularly relevant in the case investigated here.

Finally, the broad period that the analysis covered did not allow for conducting direct interviews with all the key actors involved in the case; therefore, the analysis was based on various data, including existing media articles and video interviews (as in Vaccaro, 2012). This could be viewed as a study limitation even though repurposing existing videos and media articles is becoming common in social science research (Jewitt, 2012).

Figures

Figure 1

Transition management cycle

Table 1

Revenue, EBITDA, profit/loss for the period, and financial ratios

Item	2003	2004	2005
Revenue (€)	1,455,832	1,584,176	4,188,606
EBITDA (€)	−84,461	−5,733	190,734
Profit/loss for the period (€)	−83,873	−72,770	4,795
ROA	−8.31	−5.74	3.38
ROE	−10.80	−11.38	0.74

Source(s): Ericina's financial statements

Table 2

Key actors, issues and challenges, impact on routines and rules in the transition management spheres

	Operational sphere	Tactical sphere	Strategic sphere
Key Actors	• Prefetto Mr. Sodano • Court-appointed manager • Agenzia del Demanio	• Prefetto Mr. Sodano • Court-appointed manager • Libera	• Workforce • Libera • Legambiente
Issues and challenges	• Legal/administrative issues • Maintain and/or regain position in the market. • Conflicting objectives of the involved actors	• Mafiosi tried to regain control over the firm • Insufficient institutional innovations • No link with a broader agenda	• Need for new strategic initiatives • Need for financial support • Overcoming buyers' skepticism • Overcoming bureaucratic issues
Impact on routines and rules	• New ownership • Adoption of a legal managerial style • Meetings with local firms and industrial associations	• New contracts and increase in revenue • Support from the government and nonprofit organizations • Training activities	• Establishment of a social cooperative • Workforce managerial role • Implementation of ROSE. • Awareness campaign

Source(s): Author's own work

Notes

1. Libera was established in 1995 and is currently a network of associations, social cooperatives, movements and groups involved in a commitment against mafias, corruption, and crime. It also stands for a commitment to social justice, the protection of rights, transparent politics, a democratic legality based on equality, and a living and shared memory. Libera's basic idea is that mafias and corruption are not only criminal issues but also social and cultural ones, to be tackled by joining forces. For more information, see www.libera.it.

2. It is worth observing that the ANSBC has recently signed an agreement with the Italian Institute of Certified Public Accountants, to jointly develop programs and strategies to support firms after the confiscation (https://benisequestraticonfiscati.it/firmato-il-protocollo-dintesa-con-il-consiglio-nazionale-dei-dottori-commercialisti-e-degli-esperti-contabili/).

3. Giacalone (2021), Interview to Mr. Sodano.

4. Criscenti (2009), Interview to Father Ciotti.

5. Mazzola (2005), Interview to Father Ciotti (minutes 24:30–26:20). The interview was carried out as part of a TV journalistic enquiry (Report, January 15, 2005), “La Mafia che non spara” (“Mafia that does not shoot”). This investigation discussed (apparently) non-violent methods used by mafia-type firms and Mafia organizations to increase their economic and political control over a territory.

6. See http://www.calcestruzziericina.it/european_commission.html.

7. Interview to Father Ciotti: «Antimafia: la Calcestruzzi Ericina diventa “Libera”» («Antimafia: Calcestruzzi Ericina becomes “Libera”»: https://www.unimondo.org/Notizie/Antimafia-la-Calcestruzzi-Ericina-di-Trapani-diventa-Libera-93674 (accessed: March 11, 2022).