Summary
When global rules stagger, small and medium-sized enterprises (SMEs) feel it first. Our research published in the Journal of Management Studies looks back to a severe stress test in Italy’s 1930s autarky to see how resource-constrained firms adapted to deglobalization and economic nationalism. We identify four replicable moves that helped SMEs survive (and sometimes thrive): market repositioning, national rebranding, disguising the core business, and mobilizing formal international ties. These lessons travel surprisingly well to today’s fractured world economy.
Why this matters now
Trade fragmentation, sanctions, and politicized supply chains make life harder for small firms with thin margins and limited political influence. Yet SMEs also have advantages: flexibility, focus, and community credibility. History shows how they can turn constraints into strategy, provided they choose the right repertoire of moves and use limited resources wisely.
What we studied
To get close to what SMEs were actually doing under autarky, we worked with the Istituto Mobiliare Italiano (IMI) loan dossiers preserved in the Intesa Sanpaolo historical archive. These files read like “mini case histories” of firms facing a sudden collapse of openness. They typically combine the entrepreneur’s loan application and project description (often explaining why inputs had become scarce or expensive, how markets were shifting, and what the firm planned to do), financial statements and collateral documentation, and IMI’s internal business intelligence assessments produced by the technical committee in charge of approvals. Crucially, they also include technical reports written after on-site visits by IMI officials, describing plants and machinery, production processes, workforce and management structures, and the feasibility of proposed investments in light of autarky priorities. We analysed dossiers for 77 funded SMEs and complemented them with evaluation files for 21 unsuccessful applicants, which allowed us to compare trajectories and inductively build the four-part strategic playbook from recurring patterns in these narratives. In terms of geography, the SMEs in our materials were based across Italy, from major industrial and port centers such as Milan, Bologna, Genoa, and Trieste to smaller specialized towns such as Como and Gragnano near Naples. Location was not a formal explanatory variable in our analysis, but the archival records repeatedly hint at how place shaped what was feasible.
The four moves SMEs used, and what they look like in practice
1) Market repositioning: pivot from niche to mass
When global luxury demand collapsed, some firms abandoned market niches at home, repackaging quality into affordable formats. Biscuit maker SAIWA shifted from premium treats to mass biscuits, modernized production, and recovered profitability. Others that clung to niche positions struggled to keep up. The principle is simple: redeploy existing brands and capabilities rather than inventing new ones.
2) National rebranding: align the story with the state
Firms with little lobbying muscle leaned on narrative. Ducati (then an electronics firm) and preserves maker Arrigoni framed their work as advancing self-sufficiency, which eased access to credit and contracts. By contrast, rivals who avoided nationalist messaging found finance and public tenders harder to secure. The lesson: where politics shapes markets, legitimacy often follows the story you tell, so handle with care.
3) Disguising the core business: explore without betting the company
Some SMEs underplayed their main line while experimenting in politically favored niches. Ambrosoli (honey and candies) briefly produced steel wool to signal alignment; Ducati dabbled in strategic materials while core sales still came from capacitors and radio gear. The move works when experiments remain small, reversible, and credibility enhancing, not when they become costly detours.
4) Mobilizing formal ties: structure your reach
Diaspora connections and personal ties helped in good times, but formal, contract-based export networks proved more durable under sanctions and scrutiny. Arrigoni and Motta kept selling abroad by relying on agents, depots, and coordinated pricing, while competitors with informal setups lost share. The takeaway: institutionalized channels cushion shocks and reduce cross-border frictions.
A note on ethics
In 1930s Italy, the state increasingly controlled key business lifelines such as access to credit, import licenses, contracts, and scarce inputs. For many SMEs, “alignment” did not necessarily mean ideological support. It often meant speaking the regime’s language, emphasizing how the firm served national self-sufficiency, or shifting visible activities toward politically favored priorities in order to keep operating. These choices could help a firm survive, but they also came with real moral and practical risks: they could strengthen an authoritarian system, expose the firm to stakeholder backlash when politics changed, and create long-run reputational damage. We discuss this to explain what firms did under constraint, not to endorse it. For managers today, the broader lesson is that political alignment is never a “free lunch”: it requires clear red lines, transparency, and careful attention to the reputational and ethical consequences.
Our contribution fits into a broader conversation about how firms navigate legitimacy, morality, and reputation when politics reshapes markets. In particular, our cases provide grounded, archival insight into the “grey zones” of nonmarket strategy and moral legitimacy under instability, which complement the arguments developed by Anesa et al., 2024; Blake, Markus and Martinez-Suarez, 2024; den Hond et al., 2014; Scherer et al., 2016; Siraz et al., 2023 in the Journal of Management Studies.
So what: practical takeaways for today’s SME leaders
- Make your brand a bridge to affordability. Convert premium credibility into quality-at-scale offerings for home markets before demand craters.
- Practice political ambidexterity. Calibrate messaging to legitimate public priorities (jobs, resilience, regional development) while avoiding irreversible entanglements. Keep optionality.
- Sandbox strategic experiments. Pilot small, fast, visible projects that fit policy winds, but do not starve the cash engine that pays for them.
- Upgrade relationships into contracts. Where you rely on overseas demand, formalize arrangements such as agents, service levels, and multi-market coverage to survive inspections, tariffs, and sudden rule changes.
Want the full story?
This blog distils findings from our archival study of Italian SMEs navigating autarky and war. For methods, case details, and tables, please see the full paper at https://doi.org/10.1111/joms.70033.
References
Anesa, M. et al. (2024) “Reassessing Moral Legitimacy in Times of Instability,” Journal of Management Studies, 61(3), pp. 857–887. Available at: https://doi.org/10.1111/joms.12889.
Blake, D.J., Markus, S. and Martinez-Suarez, J. (2024) “Populist Syndrome and Nonmarket Strategy,” Journal of Management Studies, 61(2), pp. 525–560. Available at: https://doi.org/10.1111/joms.12859.
den Hond, F. et al. (2014) “Playing on Two Chessboards: Reputation Effects between Corporate Social Responsibility (CSR) and Corporate Political Activity (CPA),” Journal of Management Studies, 51(5), pp. 790–813. Available at: https://doi.org/10.1111/joms.12063.
Scherer, A.G. et al. (2016) “Managing for Political Corporate Social Responsibility: New Challenges and Directions for PCSR 2.0,” Journal of Management Studies, 53(3), pp. 273–298. Available at: https://doi.org/10.1111/joms.12203.
Siraz, S.S. et al. (2023) “Theorizing the Grey Area between Legitimacy and Illegitimacy,” Journal of Management Studies, 60(4), pp. 924–962. Available at: https://doi.org/10.1111/joms.12901.
