Literature has mainly focused attention on understanding whether organized crime impacts on economic growth, broadly intended. Yet, at the local level, much little is known as to how crime may affect economic activities. Using a unique geo-localized dataset on Italian firms, we show that in municipalities where the city council is dismissed because of Mafia infiltration, there is a reduction in the added value of firms located in neighboring municipalities and operating in the construction sector. We also find that the effect is larger the longer the absence of the organized crime in the municipal council.