For many, small firms are everyday realities of the economy and visible in every high-street and industrial estate. Their existence and importance is unquestionable. Such beliefs are understandable, but the authors of this new book would suggest they are misguided. The Political Economy of the Small Firm challenges the assumptions regarding small firms that pervade society and political representation. Small firms are not organised into a homogenous sector that has a clear constituency or political influence. In fact, the small firm is shown to be an inconstant political construct that is discursively ethereal and vulnerable to political exploitation. Fusing theories from political science, management and linguistics, Dannreuther and Perren assert that the idea of the small firm is an important discursive resource used by political actors to legitimise their actions, influence their citizens and help sustain regimes of accumulation. On top of this, the authors also empirically test their claims against 200 years of UK parliamentary debate, from the Industrial Revolution to the Blair government. The political construction of the small firm is shown not only to provide rhetorical mechanisms to maintain periods of capitalist accumulation, but also to increase the relative autonomy of the state and to centralise power to elite politicians. For a period of 150 years up to the 1970s, the small firm was an unexplored presence, below the political radar and resonant with poor working standards and extreme forms of competition. During the so-called Fordist period from the 1930s, the small firm was seen as the dirty, out-dated, contrast to the clean, modern future represented by mass production and corporations. The perceived failure of Fordism led to the invention of the small firm and its presentation as an ideal political construct. By fabricating assertions of what small firms are and what they want, frequently out of conjecture, the authors of this book show how political elites have been able to advocate radical reformist agendas since the 1970s in the name of a phantom constituency.

Since the early 1970s, the small firm has received considerable attention from economists and politicians in the UK and the European Union, yet there has been a noticable lack of interest from the political science community. Now this has changed, and Charlie Dannreuther argues that this increased interest from political science in the institutional aspects of policy-making indicates a concern for the role of habitual and socially supported logics of action that may be a more appropriate way of explaining SME policy. He shows that the concept of legitimacy is central to recent political science writing on the New Institutionalism in Political Science.
This theoretical framework is applied to three arenas of political activity which are central to understanding policy-making in contemporary Europe: the identification and formation of societal interest; the making of national decisions and the development of policy in the European Union. Dannreuther concludes that, in addition to explaining SME policy and providing a framework for future analysis, the evolutionary approach outlined in The Political Economy of the Small Firm has much broader potential uses in the understanding of policy-making in a global society.