So how does that make the Italians different from anywhere else? See the formation of Luftwaffe field divisions for example or basically the entire history of the US armed forces from 1900 to the present day for interservice/branch rivalry, in terms of the officer/enlisted division see the criticism by PHANTOM officers of US performance in Europe in 44 (or US internal criticism in 42/43 for that matter)
However that does mean the performance of the armies in the field was incompetent.
At Alamein, Folgore, Brescia and Pavia divisions were basically annihilated but suffered 50% + casualties before surrendering.
The mobile formations in North Africa were generally regarded as something between competent and formidable, even with the equipment problems.
8th army after being surrounded in little Saturn fights on for several weeks, elements breaking out of the encirclement following repeated bayonet charges against entrenched Russians. Overall a somewhat better performance than 6th army.
And then there is Savoia.
The Italian problem is less competence per se, than size. In 43 for example the Italian army total strength is 6 million the US army 7.5m from a much greater population base. There comes a point at which talent runs out, the Italians designed that in to their system.
But the Italian armies in the field, ARMIR, North Africa, Ethiopia all performed creditably up to the point they were destroyed by obviously superior forces (bigger, better equipped, supplied etc) its difficult to see how a smaller Italian army would be ‘better’ as it will face the same enemy and a smaller Italian army would not be able to provide the occupation forces for some significant guerrilla wars in the Balkans where they were reasonably successful.
What you are not going to be able to do is turn the Italian army into a Blitzkreigy panzer force - thats prevented by the geography of Northern Italy and fundamental levels of industrialisation.