Direct and indirect impact of political activities on business performance - the case of the European Union and Swedish small firms

Abstract

In this paper, the consequences of decisions by the EU on SMEs' business performance are analysed. The business network approach is employed to study how the coercive or supportive behaviour of political organisations directly and indirectly affect SMEs' business performance. The result highlights that the direct effect refers to the immediate interaction between the political and business units, whereas the indirect concerns the outcome of political units on other business firms that SMEs have relationships with. To test the assumed direct and indirect effect on business performance, four hypotheses are formulated and tested with PLS using data from a quantitative survey involving 134 SMEs in Sweden and the EU. The paper emphasises the importance of a firm's business relationships as being affected by coercive actions of political organisations, as well as receiving the full benefit from those actions of a supportive nature.