Who Really Holds Power in Your Small Business?
Who holds the power in your SME
Power shapes your decisions whether or not you name it. Leaders who can see it make better choices.
In a small business, power rarely sits where the org chart says it does. The founder may hold the title, but the bookkeeper may hold the knowledge, and the longest-serving manager may hold the room. Research shows that people with power act differently. They pay less attention to others and act more on their own goals (Keltner et al., 2003). In a small team, that shift can quietly narrow the choices you consider.
Five sources of power
Social psychologists French and Raven (1959) described five bases of power. Three are formal, because the organisation grants them:
Legitimate: the authority that comes with a title or role.
Reward: the ability to give pay, promotions or praise.
Coercive: the ability to punish or withdraw privileges.
Two are informal, because colleagues grant them:
Referent: influence that comes from being liked and admired.
Expert: influence that comes from being trusted for specialist knowledge.
Steel and Chiang (2025) applied this model to company boards. The same logic holds for an SME leadership team, an advisory board or a founding partnership.
Where power shows up in decisions
Power tends to surface in three places.
The agenda. Whoever controls the agenda controls what gets discussed. Influence through networks can matter as much as a formal title.
The final call. When one person or subgroup dominates, dissenting views fade and weaker options win.
The information. Whoever holds the key facts holds the advantage. When information is shared unevenly, colleagues cannot challenge decisions well (Steel & Chiang, 2025).
Three questions to ask this week
Who sets our meeting agendas, and who never does?
Who speaks first, and does everyone else then fall into line?
Who holds knowledge that no one else has?
What changes
Seeing power clearly does not remove it. It lets you spread it more wisely, so that expertise and good ideas count for more than rank or charm. In the next post, we look at how to put that into practice.
References
French, J. R. P., & Raven, B. (1959). The bases of social power. In D. Cartwright (Ed.), Studies in social power (pp. 150–167). University of Michigan.
Keltner, D., Gruenfeld, D. H., & Anderson, C. (2003). Power, approach, and inhibition. Psychological Review, 110(2), 265–284.
Steel, A., & Chiang, A. (2025). Power dynamics on boards. SID Directors Bulletin, Q1, 46–49.
