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This paper investigates the ways managing directors (MDs) in small and medium-sized enterprises (SMEs) involve employees in strategic conversations. The paper examines how managers interact with employees in strategic conversations, and why the managers do so (or do not), to generate empirically grounded knowledge about the nature of internal openness in SMEs.

This study employs a general inductive approach and is based on in-depth interviews with 60 Swedish MDs with development and growth ambitions.

The paper develops a model of employee involvement in strategic conversations based on the nature and intensity of the MD–employee interaction. A key finding is that SMEs exhibit wide variation in terms of employee involvement, from virtually no employee involvement to, in some cases, far-reaching company democracy. The reasons for this variation are complex, but personal preferences and company size are shown to have an impact, as does, to some degree, ownership structure. In contrast to existing research, the limitations and drawbacks of involving employees in strategic conversations are outlined.

The study provides important insight into MDs' views and practices of internal openness in strategic conversations in SMEs. A model of employee involvement in strategic processes is outlined, and potential limitations of internal openness are highlighted.