New Swedish Entrepreneurs Approaches to European Expansion

   

New Swedish Entrepreneurs' Approaches to European Expansion

When expanding throughout Europe, the cultural heterogeneity that companies encounter is a central challenge. One of the most important factors for successful expansion in the European environment is sufficient capital. Whereas the venture capital market in Sweden in the second quarter of 2001 was probably in worse condition than that of other European countries , two years ago the situation was excellent , and was considered by some to be the best in Europe. From 1995 to 1999, the average annual growth of private equity and venture capital investments in Sweden exceeded 200% per annum. Today, there are approximately 250 venture capital companies in Sweden. Due to the generally risk-averse Swedish culture, the largest VC investments in Sweden are typically not taken by Swedish VCs, whereas Swedish VCs are seen as very good for seed and start-up financing. In the case of the online fashion retailer Boo.com, for example, which expanded into several European countries simultaneously before being shut down shortly after in 2000, it was mainly non-Swedish capital that was lost.

The Swedish Internet ventures that expanded throughout Europe in the second half of the 1990s were true pioneers, and they consumed more capital and rose faster and higher than other companies, thanks in part to the hype surrounding the growing e-commerce bubble. As a consequence, they also had a longer way to fall, and when the bubble burst they fell faster and farther than most of their European counterparts. In this respect, Sweden experienced wider extremes than did the other countries.

The strong drive of Swedish ventures such as Boo.com, Boxman, Framfab, or Icon Medialab to internationalize during the second half of the 1990s indicates that Swedes may well "have it in their blood" to expand across borders. Niklas Flisberg is co-founder of Result Knowledge Venture Management, a Swedish firm that specializes in internationalizing Internet- related start-up companies. Mr. Flisberg tells the stories of Result and Boxman, the online retailer that was eventually bought by Bertelsmann and then closed down to stop its towering losses.

Niklas Flisberg

Networking enabled expansion ” A truly european e-commerce site? Well, almost.

Boxman was one of the first European companies to sell compact discs over the Internet. The initial success of Boxman outside of Sweden was achieved through extensive public relations and personal networking. Personal networks are considered to have been a key success factor in the short but exciting life of Boxman. The founders' international networks were complemented by the local networks. These were brought into the company by locally hired country managers. These local networks enabled the company to transfer what had already worked in Sweden to foreign markets. Boxman failed shortly after one of its co-founders left to start Result. His previous experience with Boxman provided Result with a great set of contacts to expand into Europe, so Result could grow while it was internationalizing its clients , setting up its own international operations in the process.

Today, Result has offices in numerous European countries, employing 100% local management. I believe that customers in France will buy from a French company more readily than from a Swedish company. Result's satellites throughout Europe thus need to be "truly local" companies. Within this context, the challenge has not been to recruit the local managers. Rather, the challenge surfaced when cultures started colliding within the company. At one point, the French executives accused the Swedes of not putting enough management power behind their decisions. At the same time, German and British managers were voicing similar complaints, saying that there was not enough hierarchy in the firm. The flat organizational structure that the founders were trying to establish throughout Europe encountered serious resistance in the other countries and even had a negative effect on the overall atmosphere in the firm. Furthermore, the Swedish culture caused confusion within the local satellites. While local managers believed that implementing the Swedish culture was a good idea and found it positive to be part of the decision-making process, they nonetheless had trouble abandoning their home culture. They repeatedly asked from more directives from the Swedish home office.

Boxman grew with the hype of the New Economy and went down when its bubble burst. Result has been experiencing difficulties itself, as more and more Internet-related companies have refocused on their home markets before expanding abroad. Nonetheless, the lessons learned are relevant for future international ventures. Entering foreign markets in Europe has necessitated extensive personal networks. Strong local management has been important to effectively combine the cultures of the founding team and the locals recruited in foreign countries. Entrepreneurship cultures vary from country to country. The executives of small companies going international are confronted with an ever-greater challenge to manage efficiently across borders. Owing to their head start and traditional international competence, Swedes may be more qualified to do so than some other nationals.

   


Creating Regional Wealth in the Innovation Economy. Models, Perspectives, and Best Practices
Creating Regional Wealth in the Innovation Economy: Models, Perspectives, and Best Practices
ISBN: 0130654159
EAN: 2147483647
Year: 2002
Pages: 237

flylib.com © 2008-2017.
If you may any questions please contact us: flylib@qtcs.net