A Historic Imperative of Global Compatibility

Swedish companies have traditionally been dependent on exports due to its small domestic market size of 8.9 million inhabitants. Most Swedish multinationals generate between 80% and 90% of their revenues abroad. Sweden has been in favor of free trade since a comprehensive political debate in 1867. The government realized that in the long run, it could not restrict the entry of foreign goods to the Swedish market if it wanted to create wealth by selling Swedish goods abroad.

Sweden's early dependency on exports forced Swedish companies to develop an understanding of how to gain access to foreign markets and how to develop products for global distribution. Hence, Swedish companies exposed themselves to global competition, heterogeneous markets, and foreign technologies early on, enabling them to bring home and instill within Sweden a global business mindset.

The English Language ” A Basis of Global Interoperability

Understanding the importance of an international "interoperability" of the Swedish people, the Swedish educational policy has succeeded at making Sweden's entire work force practically fluent in English. Television programs are rarely translated from English to Swedish. Instead, they have Swedish subtitles , which amounts to free English classes for all of Swedish society. Furthermore, the Swedish educational system allows tax money to "follow the pupil " to the parents' choice of educational institution, enabling a broader and more diverse range of private schools . In a private school in Stockholm, 50% of classes are taught in English. The system attracts foreign families such as expatriates , knowing that they will find a spirit of international openness, will be " understood ," and can easily integrate into Swedish life.

Even though Sweden today has the highest number of large multinational corporations per capita in the world, not many medium-sized companies have had access to the capital, the networks, and the skills required for successful global expansion. The political system in Sweden is not built around the needs of medium- sized companies, typically causing small enterprises to select niche markets and to stay small, waiting to be bought up. Hardly any medium-sized companies exist in Sweden today, as the work force is active either in very small companies or very large companies with over 5,000 employees .

An Economy Based on Large Multinational Companies

Although Sweden's welfare to a large extent depends on its exports, the exports of only a handful of its giant multinationals are the true determinants of Swedish prosperity . In 2000, 44% of Sweden's GDP derived from exports, of which 15% alone was generated by Ericsson. The automotive manufacturers Saab (General Motors), Volvo-Passenger (Ford), and Volvo Scania, together contributed another 13%. There is a general awareness of the fact that when things go well for Ericsson, things go well for Sweden, and vice versa.