The societal problem
Small and medium-sized enterprises (SMEs) are a crucial to contemporary economies and societies. For example, in the EU-27, SMEs make up over 99% of businesses, 64.4% of employment and 51,8% of value added in the non-financial business sector (Bella et al., 2023). Hence, policies aimed at stimulating sustainable development that are not supported by small and medium-sized companies (SMEs) and aligned with their interest, are likely doomed to fail. However, three underlying problems are intersecting and may well lead to a perfect storm for SME’s, their employees and societies at large:
1) While business is often portrayed in the public debate as a united front with homogenous preferences regarding policies, there increasingly strong signs that this is simply not the case. Both theoretical developments in the scientific study of business interests (Thelen & Kume, 2006; Silvia & Schroeder, 2007; Ibsen, Ellersgaard & Larsen, 2021) as well as a slew of anecdotal evidence suggest substantial and worsening conflicting interests between SMEs and large, multinational businesses.
2) Business interest organizations have substantial political power as a legitimate and representative ‘voice of business’ that puts them in ‘driver’s seat’ when it comes to shaping policies (c.f. Traxler, 2010, Brandl & Lehr, 2019). Yet, recent research (Lehr, Jansen & Brandl, 2024) shows that SMEs are systematically underrepresented in these organizations’ membership, lending some credibility to the long-standing hypothesis that such organizations are not truly representative but rather biased towards the interests of large businesses (Traxler & Huemer, 2007).
3) There is a dire lack of adequate, systematic and independent empirical evidence on the political interests and representation of SMEs. Thus, while it will be crucial for policy-makers to understand the extent and nature of the ‘SME interest and representation’-problem, this remains an area where much is assumed and little is actually studied.
The scientific problem
There are three interrelated issues that limit our current understanding or SME interests and representation:
1) The lack of integration of relevant arguments and approaches from different disciplines contributes to a substantial knowledge gap. Whereas influential theories in political science and political sociology (e.g., Coleman, 1974; Dahl, 1977; Lindblom; 1977; Przeworksi & Wallerstein, 1988; Hall & Soskice, 2001) stress the importance of business interests for shaping politics and policy, these disciplines have largely neglected to empirically and systematically study these issues directly at the appropriate micro-level. Such studies are more common in economics and business administration, but these disciplines, in turn, largely neglect to study the political interests and representation of businesses.
2) While classic theories assumed, sometimes implicitly, that business interests within countries can be treated as more or less homogenous (e. g. Offe & Wiesenthal, 1980; Korpi, 1983; Esping-Andersen, 1985; Jacobs, 1988; Przeworksi & Wallerstein, 1988; Hall & Soskice, 2001), this is increasingly challenged by more recent arguments that business interests are increasingly heterogenous and conflicting (e.g. Silvia, 1997; Culpepper, 1999 & 2007; Hacker & Pierson, 2002; Melitz, 2003; Mares, 2003; Thelen & Kume, 2006; Plouffe, 2015; Ibsen, Ellersgaard & Larsen, 2021). Yet, there persists a great deal of theoretical unclarity regarding the mechanism that contribute to this interest heterogeneity and to differences in the quality of political representation among businesses. Less still is known about how these mechanisms might apply to sustainability policies and about the of role business interest organizations in the representation of SME interests.
3) Until now, research has produced mostly small-scale case-studies of specific policy issues and some studies of business interest organizations (i.e. not of businesses themselves). This implies that what little empirical evidence we currently have, may well be highly idiosyncratic, based biased perspectives and subject to ecological fallacies. Thus, while there is no shortage of theoretical arguments, we currently are unable to thoroughly test them due to the lack of large-scale, micro-level data that measures SME’s political interests and representation directly.
Approach and design
Taking advantage of a recently completed, large-scale panel-dataset on SMEs (Lehr, 2024), this project will address these problems by studying the magnitude and role of the various hypothesized divides among business in interests and representation from a multidisciplinary perspective. It will address political interests and representation in general, but also zoom in in on two specific issues, namely sustainable production and employment relations specifically. The data were collected in 2023 and 2024 in The Netherlands by Verian (previously Kantar) among owners, directors and senior HR-managers of a representative sample of 901 SMEs within the TNS-NIPO BusinessBase panel. These data are unique in that they provide direct, systematic measurements of the political interests and representation of businesses. This allows us to address the following central research question:
Central research question
What are the barriers to the sustainable representation of small and medium-size enterprises in achieving sustainable development?
This central research question will be addressed through sub-projects focusing respectively on descriptive analyses of interests and representation of business a) in general, b) in sustainability policies, c) in employment relations, and d) through business interest organizations; and explanatory analyses of these outcomes that will test various contemporary arguments on intra-business divides and cleavages. The descriptive analyses will be based on relatively straightforward descriptive statistics (i.e. frequency distributions). The explanatory analyses will be based on combination of cross-sectional (analyzing each survey wave separately) and panel (generalized linear) regression models (disentangling the between- and within variation with the Mundlak approach and thereby also allowing for a reduction of bias in causal estimates by accounting for unobserved heterogeneity). Given the (arguably) exogenous shock resulting from the shift in the political composition of the Dutch government after the 2023 elections occurring between the two survey waves, comparisons between the waves and supplementary heterogeneity analyses will also be performed in order to aid inferences on the impact of contextual political change (i.e. by estimating a wave-specific fixed effect and interacting this with characteristics of the SMEs that relate to whether they are likely to benefit relatively more/less from the new government).