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

In this essay, we develop a new argument about how the concept of embeddedness and a sensemaking approachcan be used to theorise small firms’ regulatory responses, especially to employment regulation. We want tomove beyond the simplistic and narrow conceptualisations of resistant action in small firms in response toregulation. We contribute to theorising on small firms’ regulatory responses by developing an embeddedaccount 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 behaviourshaped by, and in turn shaping, the contexts in which they are embedded. We go beyond stereotypes to givea nuanced account of situated action. In conclusion, we briefly outline how our ideas can be operationalisedto explain small firms’ diverse responses to regulation.Contact: Dr Susan Mayson, Department of Management, Faculty of Business andEconomics, Monash University, PO Box 197, Caulfield East, Victoria 3145, Australia.Email: [email protected]: regulation; sensemaking; embeddedness; small firms