SMEs performance in public procurement and the Italian Legality Rating

Abstract This study investigates the impact of the Italian Legality Rating (LR) on small and medium enterprises (SMEs) in public procurement. The LR, issued by the Italian Competition Authority, evaluates firms based on fiscal transparency, anti-corruption practices, corporate responsibility, and sustainability. While larger firms are more likely to obtain higher LR scores, SMEs benefit significantly from holding the certification. Using firm-level data and a Regression Discontinuity Design, we find that the LR doubles SMEs’ tender-winning probabilities, highlighting its role as a strong institutional signal. Our findings emphasize the LR’s potential to enhance SMEs’ competitiveness in public procurement.