A new argument using embeddedness and sensemaking to explain small firms' responses to employment regulation

Abstract

In this essay, we develop a new argument about how the concept of embeddedness and a sensemaking approach can be used to theorise small firms' regulatory responses, especially to employment regulation. We want to move beyond the simplistic and narrow conceptualisations of resistant action in small firms in response to regulation. We contribute to theorising on small firms' regulatory responses by developing an embedded account of social action that takes us beyond the dichotomy of individualised (micro) and institutional accounts (macro) explanations of firm behaviour. Our argument emphasises the situatedness of small firm behaviour shaped by, and in turn shaping, the contexts in which they are embedded. We go beyond stereotypes to give a nuanced account of situated action. In conclusion, we briefly outline how our ideas can be operationalised to explain small firms' diverse responses to regulation.

How Do Regulations Affect SMEs? A Review of the Qualitative Evidence and a Research Agenda

“…In-depth, qualitative studies are required to more fully explore the indirect effects of regulations and how regulations interact with other forms of influence. Recently, steps to understand regulations and the responses of small businesses situated in particular contexts have been proposed by Mayson and Barrett (2017). Drawing on Uzzi (1997) and incorporating Weick's work on sensemaking, Mayson and Barrett (2017) 'seek to explain why adaptation occurs and how it does ' (p. 191).…”

“…Recently, steps to understand regulations and the responses of small businesses situated in particular contexts have been proposed by Mayson and Barrett (2017). Drawing on Uzzi (1997) and incorporating Weick's work on sensemaking, Mayson and Barrett (2017) 'seek to explain why adaptation occurs and how it does ' (p. 191). To achieve this, Mayson and Barrett propose a research methodology that appreciates a business's context and is centred on interviewing owner-managers.…”

Employers' perceptions of the Labour Contract Law: regulatory responses in the small and medium-sized enterprise sector in China

“…Despite the neglect of the SME sector and the lack of theory building in this field, a number of scholars have made contributions when theorising how SMEs are influenced by regulations. For example, Mayson and Barrett (2017) brought the concepts of embedddness and sensemaking together to explain small firms' regulatory responses. Their approach highlights that heterogeneous responses made by owner-managers are dependent upon how they make sense of the internal and external situatedness.…”

HRM in small and mediumsized enterprises (SMEs)

“…It is generally advanced that matters such as employment legislation is burdensome to smaller businesses, that is restricting expansion or constraining entrepreneurial innovation because of 'red-tape' or costly bureaucracy (Hann, 2012). However, Mayson and Barrett (2017) advance that such an argument is limiting. It is not necessarily true or generalizable that regulation is somehow inevitably all-constraining to all smaller firms.…”