Development of Asymmetric Cost Behavior in Italian Manufacturing SMEs during the Crisis Period

Abstract

Purpose of the article: The aim of this article is to investigate the asymmetric cost behavior of small and medium-sized enterprises (SMEs) in the Italian manufacturing industry during the period 2020–2023, with a focus on cost behavior during the crisis and the post-crisis period. The study examines how the economic conditions of the COVID-19 pandemic affected traditional cost behavior theories in the manufacturing SME sector.

Methodology/methods: The research utilizes the model by Anderson et al. (2003) applied to a large dataset of 56,017 Italian manufacturing SMEs obtained from the Orbis Europe database. Statistical analysis covers three periods: 2020/2021, 2021/2022, and 2022/2023, which allows tracking the evolution of cost behavior asymmetry over time. The regression models test the relationship between logarithmic changes in total operating costs and sales, including an interaction dummy variable to capture asymmetric cost behavior. Statistical significance is tested using F-statistics at the α = 0.05 level.

Scientific aim: The scientific objective is to empirically document the dynamic evolution of asymmetric cost behavior (cost stickiness) in manufacturing SMEs over the economic periods in question, thereby contributing to the theory of asymmetric cost behavior.

Findings: The results confirm an evolution in cost behavior across the three periods in the manufacturing sector. The period 2020/2021 exhibits an anti-sticky cost behavior with a positive interaction coefficient (+0.107), reflecting a cost-cutting response to supply chain shocks. The subsequent periods 2021/2022 and 2022/2023 demonstrate pronounced cost stickiness (interaction coefficients –0.255 and –0.222, respectively). All models show high explanatory power, with R² in the range of 0.708–0.772, and are statistically significant at p < 0.001.

Conclusions: The article provides evidence that crisis conditions in the manufacturing industry can temporarily alter the established asymmetric cost behavior, but that traditional sticky cost behavior gradually re-stabilizes after the crisis subsides. These findings have important implications for corporate crisis management and cost management strategies of manufacturing firms.

Keywords: cost stickiness; manufacturing SME; COVID-19; industrial cost behavior; Italy; industry

JEL Classification: M15, M21