Recomposed institutions: smaller firms' strategies, shareholder-value orientation and bank relationships in Germany

Small- and medium-sized enterprises (SMEs) are embedded differently in institutional spheres than large corporations. This influences how they are affected by institutional change. Based on our observations, scholars of the transforming German coordinated market economies are mostly focusing on large enterprises. In contrast, we explore how institutional change in the financing sector affects privately owned SMEs, especially those engaged in manufacturing. Additionally, we asked who is pushing SMEs towards a stronger shareholder-value orientation and how they respond to these changes. Although the direct impact of capital market actors on German SMEs is still limited, we find a diffusion of advanced management tools, which is linked in the literature to the shareholder-value concept, and a redefinition of firm-bank relationships without embracing the arms'-length, equity market-oriented mode of finance. These two features constitute a recomposition that includes institutional continuity as well as change.