Americans trust small businesses more than any other institution — including the military, the police and the medical system.
Sixty-eight percent said they had a “great deal” or “quite a lot” of confidence in small businesses, experiencing only a slight dip from 70% the previous year, according to a new survey from Gallup.
But most Americans don’t really have a handle on what defines a small business, and romanticize small businesses as part of the American dream, explained experts.
The Small Business Administration generally defines small businesses as those that have less than 1,500 employees and pull in less than $41.5 million in revenue a year. However, when the average person is thinking of a “small business,” they likely have mom-and-pop shops in mind, said Cindy D. Kam, a political science professor at Vanderbilt University who specializes in political psychology, public opinion and political participation. (Gallup did not define “small business” for its respondents.)
Small businesses are part of the American dream and the country’s capitalist ideology, said Samara Klar, an associate professor at the University of Arizona School of Government and Public Policy.
If you head to many political campaign pages, you’ll find that candidates identify as small business owners. It’s one of the only institutions that hasn’t been politicized, and garners support from both Republicans and Democrats, Klar pointed out.
“So there’s no question they’re one of the more revered identities that we have in American politics. And [they’re] something that people really root for,” she explained.
“Small businesses are so heterogeneous, I think it’s quite difficult to extract a stereotype of them, except for this idea that they are local mom-and-pops,” Kam said.
And that stereotype masks the possibility that businesses classified as “small” can be larger than we expect, still pull in millions of dollars a year, commit fraud or sell dubious products — just like any other business.
“There’s still this romanticized view of how commerce should operate that I think provides a foundation for people to trust small businesses,” Kam said.
When small business is covered in the news, the press is generally positive, Kam said, pointing to the formation of movements like “buy local.” Yet when there are negative stories about small businesses, because they’re seen as individuals, the category as a whole does not “get sullied,” Kam said.
If small businesses benefit from “a romanticized, very Americana view,” and are perceived as “the heart and soul of the American economy,” then big businesses are viewed as the opposite, Kam said.
“They are the robber barons, the railroad empires, the monopolists, the guys on top — usually these are men — who are taking advantage of the little guy,” she said. “So in that sense, the whole stereotype and vision of what big business is almost runs against the romanticized notions of the American dream.”
In the mid-19th century, nearly all businesses were small, explained Naomi R. Lamoreaux, an economics and history professor at Yale University and a senior research scholar at the University of Michigan Law School.
But with the growing development of railroads and large-scale manufacturing organizations, the term “small business” gets defined in opposition to these entities.
“Since those had such negative associations in people’s minds, small business is always a positive,” she said. “It’s what you’re protecting from these monsters, like Standard Oil.” The public had a hostile reaction to Standard Oil based on the idea that the company pushed legitimate businesses into bankruptcy or used unfair means to acquire smaller businesses, Lamoreaux explained.
There have been points in history where the public got accustomed to the dominance of large firms, like the big three automakers in the 20th century, Lamoreaux said. After World War II, companies known as “center firms” — which were the largest companies in the most important industries — were able to offer higher wages and better benefits to workers, she added.
“Then the economy got more competitive again in the late 20th century. And as the economy got more competitive, then some new giants emerged,” Lamoreaux said.
Correction (July 22, 2022): A previous version of this story misstated what types of companies were able to offer workers higher wages following World War II.