Staying Local and Competitive: Northern SME´s Construal of Community and Business Strategies – Reacting to Economic Crisis

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 both to capitalize on environmental opportunities as well as to minimize the impact of environmental threats. The firms differ in their relationships of the surrounding community and in the strategies they pursue, including how they manage environmental change and adversity. SMEs are often the first victims of a prolonged economic crisis because of their limited financial resources and dependence on banks’ lending. The study companies’ reaction to economic crisis indicates a difference in their then emergent modification of strategies suggesting that cultural differences affect how the firms behave in the face of adversity.