The Structuring of Working Relationships in Small Firms: Towards a Formal Framework

Abstract. Small firms operating in competitive conditions are often assumed to follow the dictates of the market. Existing institutionalist research shows that they are in fact embedded in networks and thus shaped by social institutions. It does not, however, show how different types of firm are embedded in different ways. A formal framework is thus developed, setting out the external context and internal resources that shape small firms ’ behaviour. The framework is illustrated with empirical examples, and a research programme is outlined. Key words. embedd-edness; HRM; institutionalism; small firm