How do Small Firms Manage their Political Environment? - A Network Perspective

Abstract: To this point research on firms’ political behavior has contributed knowledge concerning large firms’ relationships and strategies with political actors and their surrounding environment. Less is known about small firms’ behavior towards political organizations. As a matter of fact, the fields of international marketing, international business and corporate political science have left the political behavior of small firms almost untouched. Therefore, extant literature assumes that small firms due to their resource constraints are passive receivers of political initiatives.About 99 percent of all firms within the European Union are small firms, and it is therefore questioned whether all these firms are passive receivers of political initiatives. The intention with this thesis is to challenge some assumptions regarding how small firms manage their relationships with political actors concerning EU related rules and regulations. Consequently, the study raises the overarching research question; how do small firms manage their political environment?Theoretically, the study takes a network perspective on business political interaction to examine both individual and/or collective political behavior of small firms. It develops a theoretical view constituted of knowledge, commitment and legitimacy. Methodologically, two sequential stages are followed: first an in-depth qualitative case study of three successful cases is presented and second, the in-depth understanding is broadened to a wider population of firms based on a quantitative survey.A central contribution of this thesis is to aid research on the political behavior of small firms. It is found that small firms, in contrast to prevailing assumptions, do possess political resources. They are not passive receivers of political initiatives. Instead, the findings show that small firms are active and can exercise influence. This, however, is shown to be dependent on the firm’s political commitment, political knowledge and competency and business-political legitimacy. It is also shown that small firms mobilize these critical resources not only directly, but also indirectly through various intermediating actors. Besides the theoretical contributions, these conclusions are important not just because of the managerial implications but also, and perhaps more importantly, for the policy implications that can be drawn from the study. Being exploratory and opening up the black box of small firm’s political behavior, the thesis ends with a number of future research directions.