Manufacturing national consent for industrial policy: a microhistorical analysis of Finnish shipbuilding

Abstract Industrial policy, the use of state power to influence the development of industries, has become increasingly influential in international business, yet its firm-level dynamics remain understudied. Through a history-to-theory approach and microhistorical analysis, we investigate how the Finnish shipbuilding industry employed nonmarket strategies (NMS) to influence outward-oriented industrial policies that supported its international expansion. Grounded in New Institutional Economics, we identify two key industrial policy shifts – in the mid-1950s and early 1980s – that reduced cross-border transaction costs for Finnish shipbuilders to enhance their international competitiveness. Before each shift, the industry proactively aligned its business interests with national policy priorities, engaging in what we term “manufacturing national consent” – positioning the sector as critical to national interests to legitimize supportive policies. We critically assess the double-edged role of NMS in industrial policy, demonstrating that while it creates regulatory capture and hinders alternative economic pathways, it also fosters government–business collaboration, improving the prospects of effective policy design. We further account for country-specific factors and broader inter-country dynamics to analyze policy implications for home-country firms. In all, our study contributes to the revitalization of industrial policy as a topic in the IB discipline by uncovering the active role of firms in shaping policy outcomes.