Staying Local and Competitive : Northern SMEs’ Construals of Community and Business Strategies

Locally owned, northern SMEs often find themselves working out of and in small communities in sparsely populated regions. Using a constructive research design and semi-structured interviews with SMEs from Northern Finland, Norway and Iceland this study highlights the relationship between the firm and the community in which the firm forms a part. We suggest that the nature of this relationship, and how firms as represented by their owner-manager construe the relationship between the firm and the local community, have important implications for the type of strategies firms pursue to capitalize on environmental opportunities, as well as minimize the impact of environmental threats. How firms construe their relationship to their community and local and non-local actors we suggest is likely to reflect the founding history of the firm and the motivations and the background of the managers and founders. Based on the literature review and analysis, we tentatively identify three types of firms, which we refer to as focused builders, broad builders and harvesters. As well as differing in their relationships and views of the surrounding community, these firms seems to differ in the strategies they pursue, including how they manage environmental change and in some cases adversity. The “focused-builder” is deeply associated with a specific community, which constitute the site production as well as a source of human capital. Here strategies are oriented towards developing the community and the firm. The fate of the community and the firm becomes intertwined. The ensuing perspective is long term and involves a long-term commitment towards investing in human capital and social capital. The “broad-builder” is also committed to a local community but construes the community in broader and less specific ways to include a more heterogeneous set of stakeholders. Again, strategies are geared towards developing the community and investing in social capital but towards a broader and more diffuse set of stakeholders (through what could be referred to as common well-being). The “harvester” construes the community as distinct from the firm and as primarily a source of resources (e.g. natural resources in the form of scenery or plants). Harvester firms bear a clear demarcation between on the one side a closely-knit inner circle of business associates and family members and a more transactional and instrumental relationships to other community actors and resources. Implications for practice and further research are discussed