Swedish Firms Research Articles

Efficiency in electricity distribution in Sweden and the effects of small-scale generation, electric vehicles and dynamic tariffs

We measure the cost of technical inefficiency for local electricity distribution firms in Sweden using Stochastic Frontier Analysis, and explore how small-scale generation, the number of electric vehicles and the introduction of dynamic pricing schemes affects the transient inefficiency and efficiency scores. Our results show little to no effect of these environmental variables on the cost of technical inefficiency of electricity distribution grids in Sweden.

Price Setting Behaviour of Pakistani Firms: Evidence from Four Industrial Cities of Punjab

Macroeconomic research has mostly been focused on investigating micro foundations of the theory and transmission channels of policy ever since rational expectations have found place in the literature. It was in the 1990s that macroeconomists started working on models incorporating the assumption of nominal rigidity in the optimal behaviour of individuals and firms. These models have gained empirical support from both aggregate as well as firm-level data. The evidence for developing countries on the issue is limited and Pakistan is no exception. This study aims at investigating the price setting behaviour of Pakistani firms. Besides this, the potential effects of changes in financial cost on the overall pricing and production decisions have also been investigated. Pakistani firms perceive themselves to be operating in a competitive environment though most of their clientele is regular. The majority of the firms use current information while reviewing prices. Around 70 percent of the firms use either a state-dependent pricing rule or a combination of both time and state-dependent rules. Pakistani firms revise and change their prices usually in the months of June and July. The main determinants of change in the price level are the cost of raw material, energy and inflation. The competitors’ price generally figures in price decrease. Among the causes of price stickiness, implicit contract with the customers is at the top; the fixed term contract comes next. Most of the firms change their wage structure annually. About half of the firms index their workers’ wages to inflation and for the purpose refer to the earlier inflation rate. On the whole labour productivity and changes in inflation rate are observed as the main determinants of wage change. 1. INTRODUCTION Ever since rational expectations nave found place in the literature much of the research in the area of macroeconomics has been focused on investigating micro foundations of macroeconomic theory and transmission channels of policy. Macroeconomists started working on macro models in the 1990s incorporating the assumption of nominal rigidity with explicit modelling of optimal behaviour of individuals and firms, [see for instance, Rotemberg and Woodford (1997); McCallum and Nelson (1999); Woodford (2003)]. These models incorporate various forms of price and wage rigidities making monetary policy effective, though only in the short run. More recently these models have gained empirical support1 from both aggregate as well as firm-level data. In this regard micro-level evidence is more convincing since aggregated data may depend on the assumptions used and methodology employed, whereas micro level research offers direct evidence. For instance, micro level data directly investigates the price-setting behaviour of firms. Some studies in the literature on the price setting behaviour of the firms investigate the issue by collecting data from a particular sector of the economy or a group of firms [e.g. Kashyap (1995); Dutta, et al. (1999); Copaciu (2004)]. Another strand of literature, with the pioneer work of Blinder (1991), uses a survey-based approach to investigate various aspects of price stickiness. These studies have an added advantage as they allow additional insights and permit a clear ranking of the causes and patterns of price stickiness. Hall, et al. (1997) extended Blinder’s work for UK firms. Similarly Apel, et al. (2005) investigated the price setting behaviour of Swedish firms and Fabiani, et al. (2004) did the same for Italian firms. A number of survey-based studies conducted within the Eurosystem’s Inflation Persistence Network used this approach. A limited number of studies are also available that focus on developing countries. Studies in Pakistan have little micro level focus which this study as the first attempt to deal with the firms’ price setting behaviour aims to do. Besides this, the potential effects of changes in financial cost on the overall pricing and production decisions have also been investigated. Moreover this study is different from others in that data has been collected through enumerators and field investigators instead of mailing questionnaires to respondents. The study mainly focuses on four issues. First, the type of pricing rule; whether it is state-dependent or time-dependent? Second, what type of information (past, current or future forecast) is used for price calculations and, what is the frequency and size of the average price change. Third, it deals with different theories of price stickiness by investigating the determinants. The wage setting behaviour, which has certain implications for the effectiveness of monetary policy, is the fourth area the study deals with. The study proceeds as follows: Section 2 highlights the methodological issues. Section 3 outlines the main characteristics of the market. Section 4 deals with the price setting behaviour while Section 5 highlights determinants of price change and causes of price stickiness. The wage setting behaviour is investigated in Section 6 and Section 7 concludes the study.

Barriers to adopting circular business models: A cross‐sectoral analysis

AbstractFirm‐level adoption of circular business models is a crucial part of the transition toward circular economy, but companies that delve into such pursuits often encounter a series of barriers that hamper their success. Although multiple studies on barriers to circular economy have been made, there is a lack of understanding of how barriers are formed under firm‐specific characteristics such as sectoral conditions and the type of circular business model adopted. To bridge this gap, we illustrate a barrier framework in a multiple‐case study including nine Swedish firms. We derived about 28 barriers within five categories of circularity approaches (design, waste, service, platform, and nature) across three sectors (furniture, electronics, and garment). This research contributes to the circular economy literature by revealing how adhering to certain sectors and circular business approaches significantly changes the way barriers are perceived by firms. The outcomes may support both practitioners and policymakers as they facilitate circular economy transitions.

Learning to Use Trade Preferences: A Firm and Transaction Level Analysis of the EU–South Korea FTA

Abstract This article examines imports by Swedish firms and the utilization of the tariff preferences offered by the EU–South Korea Free Trade Agreement. To benefit from tariff preferences, the importer must make a formal request to use the preferences and also document the origin of the imported products (with a certificate of origin provided by the foreign exporter). This may be costly, and some importers choose to pay import tariffs even when tariff preferences are available. Hence, the preferences are not fully utilized. Using a detailed firm–transaction level data set on Swedish imports from South Korea, we analyse the determinants of preference utilization and how firms learn to use preferences. The results show that preference utilization is strongly correlated with potential duty savings, which depend on the preference margin and the size of the import transaction. From a learning perspective, we find that preference utilization is closely related to the number of import transactions undertaken by the firm, suggesting a learning-by-doing mechanism. The length of time the firm has been involved in importing activities plays a smaller role.

Organisational Resilience and the Covid-19 Pandemic: Exploring Factors Amplifying the Effects of Organizational Resilience on Swedish Retail Stores

This paper reports on findings from a study of Swedish retail stores, with the aim of discussing the triggers and amplifiers by offering a nuanced perspective on the effects of organisational resilience (OR) of the COVID-19 pandemic on Swedish firms. The study is based on interviews with 28 store managers. Drawing on the concept of organisational resilience, we offer three contributions. First, we empirically and theoretically develop the discussion on triggers of OR. Second, we explain that the positive and negative effects of a crisis on particular firms’ OR can be amplified (or inhibited) by certain factors, which we call the amplifiers of OR. These amplifiers include the retail industry sector, store location and type of ownership. Third, we empirically illustrate the consequences of the COVID-19 pandemic and its restrictions on the retail sector in a Swedish context.

Exploring How the University Ecosystem Can Mobilise Resources for Social Innovation and Entrepreneurship: Knowledge-Intensive Entrepreneurial Firms in Sweden

Social innovation and entrepreneurship are argued to be crucial for enabling inclusive and sustainable transformation. However, we know less about how universities can enable social innovation and entrepreneurship amongst students and employees. This article explores one specific channel for university impact - supporting knowledge-intensive entrepreneurs (KIE) in delivering social innovation as services. We conduct a theoretically informed case study at the University of Gothenburg, Sweden, analysing one firm started by alumni and one firm started by employed researchers. We propose a conceptual framework, explicating how social KIE entrepreneurs mobilise resources from the university in knowledge-intensive services of social impact.

Graftee and Grafting in Firm Internationalization

This study focuses on enhancing the understanding of how firm internationalization is triggered by investigating how firms cope with the lack of knowledge and networks when entering a foreign market. More specifically we are interested in answering the following research question: How do firms enter foreign markets without market-specific knowledge and market-specific network insidership? To this end, the present study implements a case study of 12 Swedish firms internationalizing into emerging markets. The study found that firms “graft” expert individuals to help firms penetrate foreign markets where they have no prior history or experience. Further, we observed the qualities of a specific type of actor we refer to as a “graftee” by describing grafting actions and showing how these graftees help firms acquire experiential knowledge and network insidership. Our empirical evidence shows that grafting impacts the form and process of internationalization, sometimes enabling an effectuation-driven market entry while, at other times, enabling a causation-driven process.

Industrial design rights and the market value of firms

This paper studies how investments in design affect the market value of firms, using European Registered Community Designs and national Swedish design rights data combined with R&D, patent and trademark data, for the period 2003–2013. This paper is the first large-scale quantitative study using industrial designs rights to measure design. Nonlinear least-squares regressions are used to investigate the association between these variables and the market value of Swedish firms. The results show that industrial designs rights have a positive and significant relationship to the market value of firms. It provides both new evidence on the effect of industrial design rights on the market value of firms and internationally comparable results for other intangible assets such as patents, trademarks and R&D. Theoretically, the paper contributes to the understanding of design knowledge and the valuation of design rights.

Defusing Digital Disruption Through Creative Accumulation: Technology‐Induced Innovation in Professional Service Firms

AbstractHow will digitalization change the future of work in professional service firms (PSFs)? And how can they adapt to new technology and avoid potential disruption? Building on an interview study in the Big Four auditing firms in Sweden, we contribute to research on the future of work in PSFs by unpacking the process through which PSFs expand their domain of expertise towards technology and complement competence‐destroying innovations with competence‐enhancing innovations. They do so by engaging in a process of ‘creative accumulation’ through ‘competence expansion’, consisting of three overlapping sub‐processes – skill acquisition, skill dissemination, and skill integration – and intertwined cycles of service, process, and organizational innovation. We also contribute to the literature on innovation in PSFs by contradicting the view of PSFs as inert and technology‐avert. Instead, we show how they proactively engage in both top‐down and bottom‐up technology‐induced innovation to reshape their work and defuse the threat of digital disruption.

The impact of the Covid‐19 pandemic on the environmental sustainability strategies of listed firms in Sweden

AbstractHow macroeconomic crises affect firms' environmental sustainability strategies is an open question. We study the impact of the Covid‐19 pandemic on the environmental sustainability strategies of firms listed on the OMXNasdaq stock exchange in Sweden. The analysis is based on a survey distributed twice, once during the summer of 2020 and once during the summer of 2021 with detailed questions related to the firms' environmental strategies. We find that most firms view the pandemic as an opportunity to strengthen their environmental strategies. However, we also find that the economic downturn caused most firms to redirect scarce resources away from environmental sustainability. We also find that firms which had adopted the Taskforce on Climate‐Related Financial Disclosures were less likely to divert resources. These short‐term results indicate that the pandemic will not enhance firms' environmental sustainability practices in the future.

Why reshore? Evidence from Swedish firms

Reshoring, which refers to the relocation of previously offshored activities back to the home country, is a topic of growing interest in the literature. Two primary motivations for reshoring have been identified: the adoption of automation technology by firms and rising wages in offshoring destinations. In this study, we propose a novel method for identifying and quantifying reshoring using micro-data from Sweden. We then apply this measure to examine the validity of the two reshoring motives. Our findings indicate that reshoring is positively associated with technological advancements within firms, while we find no evidence to support the notion that rising income in offshoring countries prompts reshoring.

Business angels and firm performance: First evidence from population data.

Business angels dominate early-stage investment in firms, but research on their effects on firms is scarce and limited by sample selection. To address sample selection, we propose using population data and we develop an algorithm for identifying business angel investments in such data. We illustrate this novel approach by applying it to detailed and longitudinal total population data for individuals and firms in Sweden. In our application, we focus on a subset of business angels-active business angels who are themselves successful entrepreneurs with a profitable exit. We then study active business angels' effects on firm performance, using population data. Employing a quasi-experimental estimator, we find that the business angels invest in firms that already perform above par. There is also a positive effect on subsequent growth compared with control firms. However, contrary to previous research on business angels, we cannot find any impact on firm survival. Overall, the paper underlines the need to address sample selection when studying business angels and suggests using population data for identification.

The role of the EU non-financial reporting directive and employee representation in employee-related disclosures

ABSTRACT This study investigates how the European Union (EU) Directive (2014/95) on Non-Financial Reporting and employee representation within the board affects the extent and quality of employee-related disclosures. Using a sample of Swedish firms listed on the Nasdaq OMX Stockholm Exchange, we find that both the Directive and employee representation on the board positively affect the extent and quality of disclosures on employee-related matters. We document that employee-related disclosures are more precise and less uncertain among firms with employee representatives, although the level of uncertainty increases after implementing the Directive. Moreover, our interaction analysis indicates that the Directive and employee representatives affect employee-related disclosures independently. This finding suggests that both internal corporate governance and external regulation are important, and that the Directive ensures a minimum extent of disclosures at firms that lack internal governance mechanisms (i.e. employee representation on their corporate boards).

The evolution of owner-entrepreneurs’ taxation: five tax regimes over a 160-year period

The institutional literature suggests that long-term tax incentives are crucial for entrepreneurs, but studies on this topic are hampered by problems related to how to define and measure entrepreneurial income. We resolve these problems by drawing on a theoretical definition of the entrepreneur as an owner, which enables us to identify entrepreneurship empirically by means of investments made by active owners of closely held corporations. Using detailed Swedish tax data, we analyze the tax incentives for such owner-entrepreneur investments from 1862 to 2018, thereby highlighting the evolution of a general institutional phenomenon through a long-run, in-depth, country-specific analysis. We calculate the annual marginal effective tax rate (METR) on capital income for investments, distinguishing between average- and top-income entrepreneurs, and between three sources of finance. We identify five tax regimes that indicate substantial differences in institutional quality over time according to the magnitude of the METR and METR differences between average- and top-income entrepreneurs and across sources of finance. Growth-conducive tax incentives shed light on why so many successful entrepreneurial firms were founded in Sweden around 1900, whereas increased taxation helps explain the absence of new large entrepreneurial firms in Sweden after World War II. Improved incentives can be associated with Sweden’s recent entrepreneurial renaissance.

Prior partnering experience and preferred alliance partner diversity of small firms

PurposeThis study investigates how small firms develop preferences for varying levels of alliance partner diversity by applying a behavioral perspective.Design/methodology/approachData were collected via an original survey administered by the Swedish National Bureau of Statistics (SCB) of 1,026 Swedish firms with 50 employees or less. Hypotheses were tested by specifying a series of fractional response regressions.FindingsThe results show a U-shaped relationship between experienced and preferred alliance partner diversity in small firms and further show moderating effects of firm age, prior growth and environmental dynamism. The findings suggest that preferences towards diverse alliance portfolios in small firms may arise, not only from well-informed deliberate strategic thinking based on prior experience, but also as a consequence of cognitive bias.Practical implicationsThe findings suggest that (1) small firms considering a wide variety of alliance partners should carefully investigate whether they are, in fact, capable of mastering a highly diverse alliance portfolio or if they are overconfident novices. (2) Holders of homogenous alliance portfolios should recurringly investigate whether homogeneity is due to informed strategy or inertia.Originality/valueThis study contributes to the literature on alliance partner diversity and behavioral alliance portfolio configuration by shedding light on the learning mechanisms that shape alliance portfolio strategies of small firms by explicating the complexity of how different experience levels of partner variety affect current alliance portfolio preferences.

Understanding, mapping and reporting of climate-related risks among listed firms in Sweden

ABSTRACT We study the mapping and reporting of climate-related risks among firms listed on the NasdaqOMX stock exchange in Stockholm in four goods-producing industries. Our study contains two parts: (i) a study of the firms’ external communication through their annual reports, sustainability reports and webpages, and (ii) a follow-up survey of the top management team. The survey contains quantitative questions and free text answers, which provide additional insights into the mapping and risk-handling of climate-related risks among the firms. We find that firms are likely to engage in some form of mapping and reporting of climate-related risks, but there are variations among the firms. Furthermore, the management of climate-related risks appears to be a residual issue for most firms with little active engagement from the management team or board of directors. Key policy insights Public policies and private initiatives, such as the EU’s Non-Financial Reporting Directive/Corporate Sustainability Reporting Directive (NFRD/CSRD), the EU Taxonomy for Sustainable Activities, and Task Force on Climate-related Financial Disclosure (TCFD), may redirect and accelerate investments promoting a low-carbon and climate-resilient economy. Although most firms map and report climate-related risks, the understanding of the nature of these risks, of underlying problems, and of what a climate transition implies, varies across firms and industries. The success of the EU’s NFRD/CSRD, the EU Taxonomy for Sustainable Activities, and TCFD requires an improved understanding of climate-related risks among the firms and a more proactive engagement of the management team. Policymakers must provide firms with additional guidance aimed at improving their understanding of climate-related risks and thus their capacity to manage these risks. Firms need to, individually and jointly, revise their theoretical and empirical understandings of climate-risk management and especially the role climate-related risks play in the new policy setting. The TCFD has an important role to play, but as a voluntary initiative, it is insufficient to generate change among all firms.

Spatial variations in financial constraints of SMEs—evidence from firm-level estimates of investment-cash flow sensitivities in Sweden

It is well established that there is uneven availability of credit across space, in particular for SMEs. The evidence on whether this translates into differences in actual business investments remains scarce. We assess this question by using firm-level data for Swedish firms and estimate the extent to which the average investment-cash flow sensitivities of firms vary across the urban–rural hierarchy. We find that the world of financing is not yet flat for the majority of Swedish SMEs. Companies located in non-metro regions are most dependent on own cash flow in their investments. The results hold for all firms, firms of different sizes, firms operating in low-end services, unaffiliated firms and those belonging to domestic corporations. In contrast, investment-cash flow sensitivity of firms operating in high-tech services and those belonging to a multinational enterprise does not differ geographically. On average, regional investment-cash flow sensitivity is lower in bigger, denser and more educated local labour market regions; it is higher in regions with greater concentration of SMEs.

Gender roles or gendered goals? Women's return to rural family business

PurposeThis paper aims to add to the theorization of the gender dynamic in rural areas by investigating the motives of women who join their family firm (or their spouse's family firm) and thereby defy the demographic trend of rural flight. The context of this study is the depopulation of rural areas with the closing of basic services and relocation of the younger population, and educated women in particular, to urban areas. Consequently, rural family businesses risk failing to find successors and suffering forced closure or relocation. The empirical site of the study is rural family firms in Sweden, a context characterized by a high level of gender equality in legislation and culture but gender-conservative business structures in rural regions.Design/methodology/approachThe empirical case in this paper builds on a qualitative study of nine (9) life course narratives of women entrepreneurs in a rural region of Southern Sweden who have returned to rural areas to join their family business. The authors follow the view established by gender scholars that women are active agents in navigating their lives, and their life story narratives offer insight into the considerations that inform their choice to stay or return to rural locations. In Sweden, the setting for the study, gender equality is widely supported by legislation, policy and institutional frameworks and popular understanding of gender relations. In contrast to the gender-progressive policies of Sweden at large, women's entrepreneurship in rural regions of Sweden tends to follow traditional gender hierarchies and face similar constraints as in rural areas of other countries. The juxtaposition of these competing sets of ideals makes Sweden an important and interesting place to study and draw insights from the experiences of women entrepreneurs.FindingsThe findings reveal that women who choose to join rural family firms view them primarily in a positive light and see this choice as aligned with their need for professional flexibility and assertiveness, rewarding relationships, and a calm, secure, well-balanced life. Theoretically, the study implies that women choosing to engage in rural family firms seek non-material benefits, such as work–life balance and social support, and may be driven in part by a sense of psychological ownership that extends to the rural community.Originality/valueThe findings provide novel insights on women as active agents in navigating their lives and the intrinsic (e.g. alignment of personal values) and extrinsic (e.g. community support) motives that inform their decisions. The study also raises questions regarding how women perceive themselves as “fitting in” to rural settings and to what extent the sense of security within these settings that the women describe may be contingent upon factors such as their families' embeddedness within the community as well as their conformity to the local social norms.

Sustainable development considerations in supply chains: Firms' relationships with stakeholders in their business sustainability practices—A triangular comparison

AbstractThis study aims to investigate focal firms' business sustainability relationships in connection with their stakeholders in supply chain networks. A questionnaire survey was sent to a sample consisting of large Swedish firms, with 107 usable questionnaires returned. The results reveal which stakeholders are of interest for firms in sustainability efforts. The results are compared with earlier findings from Norway and Spain in a triangular approach. The former is a similar country, while the latter is different to Sweden in several ways. In addition, the study uncovers which stakeholders in the supply chain network should be considered. The study also demonstrates how firms can implement business sustainability in their supply chain networks and shows the extent to which different stakeholders are considered in sustainability efforts. The study contributes to sustainability research and stakeholder theory in supply chain networks. Opposite to earlier findings, this study showed only minor influences from national culture and institutions on firms' sustainable business practices in supply chain networks.

Quality functions' use of customer feedback as activation triggers for absorptive capacity and value co-creation

PurposeThe purpose is to understand how the role of quality functions might evolve amidst digitalisation and an increased focus on services. This study focuses on customer feedback and how it can function as activation triggers for developing absorptive capacity, as well as how it relates to the value creation processes.Design/methodology/approachFollowing a qualitative research design, the authors gathered primary data from interviews with quality managers at 17 UK and Swedish firms and triangulated it with secondary information from the firms' web pages.FindingsThe findings show that customer feedback-based activation triggers can support development of absorptive capacity in the quality function if there are established processes for acting on customer feedback. This is often the case for codified feedback, which normally concerns products. However, digitalisation offers new opportunities of engaging in value co-creation, and firms need to develop digital capabilities to manage new technologies and data analytic tools. For personalised feedback (the main category of service-related feedback), established processes are missing.Originality/valueThis study work contributes to knowledge about how quality functions respond to customer feedback on both products and services. It clarifies why the quality function sometimes struggles to contribute to service quality as much as to product quality. From a theory development perspective, the authors contribute to understanding customer feedback-based activation triggers, how they lead to development of absorptive capacity and their relation to value co-creation on a functional level.