Large businesses are inefficient in an insidious way. It's incredibly expensive and inefficient to tax them and get money out of them once you put money into them. This sole problem is why the neoliberal welfare state does not work. Simply making the most powerful organisations around more powerful does not actually force them to then turn around and help the powerless, it actually just makes them more capable of not doing that.
Does favouring small businesses actually reduce international competitiveness? Sure - in the same sense that not subsidising large businesses reduces international competitiveness. But what is the good of having an internationally competitive business you can't get money back out of? What if ItalyCorp decides they are not an Italian company, but actually a company based out of the Canary Islands in no way bound to Italy? Making a business internationally competitive has no point if you can't also make it your vassal, which you can only really do in cases where the business relies on some state resource, and even then a large business is likely to corrupt the government anyways.
Small-Medium sized businessmen by contrast are much much easier to tax once they're past the subsidies. Besides that, they tend to spend relatively large amounts of their in-country in ways that can be taxed efficiently, and on other businesses which can also be taxed efficiently. It makes addressing income inequality more efficient.
Does favouring small businesses actually reduce international competitiveness? Sure - in the same sense that not subsidising large businesses reduces international competitiveness. But what is the good of having an internationally competitive business you can't get money back out of? What if ItalyCorp decides they are not an Italian company, but actually a company based out of the Canary Islands in no way bound to Italy? Making a business internationally competitive has no point if you can't also make it your vassal, which you can only really do in cases where the business relies on some state resource, and even then a large business is likely to corrupt the government anyways.
Small-Medium sized businessmen by contrast are much much easier to tax once they're past the subsidies. Besides that, they tend to spend relatively large amounts of their in-country in ways that can be taxed efficiently, and on other businesses which can also be taxed efficiently. It makes addressing income inequality more efficient.