Benefits of regulation to small and micro businesses

Purpose To understand how small and micro businesses experience benefits from regulation, and to explain why benefits are experienced unevenly. Design/methodology/approach Adopting an inductive, interpretive methodology, a sample of 23 UK-based business owners was interviewed about their responses to regulation, data being analysed thematically. Findings Despite the challenges experienced responding to dynamic change represented by Covid-related regulations, businesses experienced three forms of benefits: operational, strategic and re-evaluative. These findings were analysed through the dynamic capabilities framework, specifically sensing (operational), seizing (strategic) and reconfiguring (re-evaluative). Further, analysis identified that business attributes of spatial fixity and business model elasticity mediated the experience of benefits within a context of greater regulatory control. Originality/value The benefits of regulation experienced have not been theorised in detail previously, and the empirical evidence and analysis presented contribute to an ongoing conversation about the responses of smaller businesses. The article shows that benefits emerged not despite the regulation that often posed difficulties to businesses, but through it. This article's theoretical contribution connects the micro experience of business response to regulation with the macro regulatory context and offers a mechanism for understanding the contexts and attributes of why some businesses benefit and others do not, showing how regulatory constraints can enable benefits. The analysis extends dynamic capability theory by identifying increased regulatory control through a shift in governance paradigm as a mechanism for new sensing, seizing and reconfiguring responses, with businesses' capabilities being mediated and constrained by the two attributes.