Business Model Innovation

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While technology innovation, product/service innovation and even process innovation are often taught; it is business model innovation that is driving the growth or many enterprises.

Leading companies such as McDonald’s, Microsoft, Xerox, GE, Amazon, H & M, Dell, eBay, Lego, Federal Express and others owe much of their success and even existence, in many cases, to business model innovation. However, still most courses emphasize product/service and or technology innovation.

The course takes a practical approach to understanding, teaching and building business models. Whether it is breaking down business models into their fundamental components, analyzing the current models used in certain industries or synthesizing new models from models existing in various industries, this course aims to place business model innovation at the center of the value creation.

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The Innovation Revolution in Agriculture pp 117–145 Cite as

Development of Sustainable Business Models for Innovation in the Swedish Agri-sector: Resource-Effective Producer or Stewardship-Based Entrepreneur?

  • Per-Ola Ulvenblad 2  
  • Open Access
  • First Online: 08 October 2020

11k Accesses

1 Altmetric

This chapter focuses on the development of sustainable business models for innovation in the Swedish agri-sector. This is important for several reasons. Many of society’s challenges are linked to social, environmental and economic aspects of agriculture, and numerous agri-companies have been reduced to subcontractors with little influence, and are struggling with low profitability.

Previous research regarding agri-companies have mainly focused on production and cost-efficiency aspects. Research regarding sustainable innovation and sustainable business models in the agri-sector is limited to date. To fill in this gap, the aim of this chapter is to illustrate and analyse how Swedish agri-companies develop sustainable business models. An integrated theoretical framework combining research regarding sustainability-oriented innovation and sustainable business model archetypes has been developed in order to collect and analyse the eight agri-companies in the study.

Swedish agri-companies focus not only on optimization but also on their organizational transformation and systems building when developing sustainable innovation. They have developed diversified business models. A common, important factor is to adopt stewardship roles. Further, the value intention of agri-entrepreneurs is a relevant factor when developing sustainable business models.

  • Sustainability-oriented innovation
  • Business model archetypes
  • Agri-company
  • Stewardship
  • Societal challenges
  • Value creation
  • Value intention

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5.1 Introduction

This chapter focuses on the development of sustainable business models for innovation in the Swedish agri-sector. This is important for several reasons. At the global level , many of society’s challenges are linked to social, environmental and economic aspects of agriculture. Worldwide food production must increase by 70% from 2009 to 2050, and in developing countries, the increase needs to be 100% (FAO 2011 ). However, productivity growth has fallen and remains below potential in many countries (OECD 2019 ). Simultaneously, the negative climate impact of agriculture has to be reduced. The recently released IPCC Special Report on Climate Change and Land highlights the interconnection between climate change and the agri-sector (including forestry). At the same time, as some parts of the agri-sector are drivers of climate change, sustainable agriculture and forestry can reduce climate change (IPCC 2019 ). Further, research has suggested that investment in agriculture is an effective strategy to achieve many of society’s development goals, like poverty and hunger, nutrition and health, education, economic and social growth, peace and security and preserving the world’s environment (Dobermann and Nelson 2013 ).

The IPCC report also states that climate change represents a threat to the agri-sector (IPCC 2019 ). As research has identified, there is a need to focus R&D on how to improve agricultural adaptation to climate change, especially in food-insecure human populations (e.g. Lobell et al. 2008 ). Furthermore, sustainable food production will have to address aspects such as the nutritional quality of diets and positive health effects (Benbrook et al. 2013 ; Średnicka-Tober et al. 2016 ).

Agricultural research has made important contributions to poverty reduction and food security over the last 40 years (Thornton et al. 2017 ). Research has also identified investment in R&D as an important driver of growth in agricultural production efficiency (Alston 2010, 2018 ; Fuglie et al. 2017 ). Regardless, European Union’s Research and Innovation Programme “Horizon 2020” (European Commission 2011 ) and United Nations’ “The 2030 Agenda for Sustainable Development” including the 17 sustainable development goals (SDG) (Griggs et al. 2013 ; United Nations 2015 ; European Commission 2016 ) call attention to the need for more research and innovation on food security and sustainable agriculture.

At the firm level, many agri-companies often struggle with low profitability. In order to be able to produce, distribute and sell more food, they need to achieve profit goals. The majority of agri-companies have focused on their role as producer at the beginning of the food value chain and, consequently, have focused on becoming more effective and being able to produce more with the same, or less, resources. However, the issue of profitability remains an issue for agri-companies (Dobermann and Nelson 2013 ; Ulvenblad et al. 2016 ), and they face increasing demands from governments, local authorities, other companies in the agri-value chain and end customers regarding quality and sustainability issues.

The focus on efficiency, economies of scale and growth has been an effective approach for the agri-sector (Alston 2018 ). Over time, many of the small cooperatives and networking firms in the agri-sector have either joined or become large multinational companies through mergers and acquisitions. Though this trend has led to cost-effective production and distribution systems, has it also built barriers for sustainable business model innovation in the agri-value chain?

In recent times, small agri-companies have often been reduced to a subcontractor role without any real influence (Ulvenblad et al. 2016 ). It is known that power asymmetry combined with low-quality business relationships can lead to suboptimization and a reduced ability to identify and meet end-consumer needs (Benton and Maloni 2005 ; Schulze-Ehlers et al. 2014 ). Large companies mainly look for standardized products that suppliers produced at low cost, and innovations developed by smaller companies along the food chain making products better but different can be difficult to integrate into big companies’ business plans and delivery systems.

These are important issues, because of the increased worldwide competition, advanced technological developments and large-scale production existing in the agri-sector, and with a resulting general trend towards fewer and larger farms (OECD 2016 ), it remains to be seen whether the global goals of sustainable agricultural development can be met.

The agri-sector is different from other industries for several reasons: food from living things, animals and plants, must meet specific welfare, health and safety requirements. Furthermore, production and often distribution are generally connected to a specific geographic area, where nature and climate may have important influence and establish constraints to production and distribution. OECD ( 2019 ) highlights the need for more responsive agricultural innovation systems, since climate change and weather-related production shocks are expected to increase the challenge of improving productivity, sustainability and resilience on farms.

When increasing productivity, efficiency and economies of scale have become very important in the agri-sector, small- and medium-sized agri-companies engaged in business model innovation focusing on sustainability must take a more strategic and innovative perspective. A strategy for these companies can be to expand their business not through traditional growth, but rather by diversifying activities and focusing on cooperation. Research have shown that small- and medium-sized agri-companies that have been able to overcome the challenges of the agri-sector have developed sustainable business models based on a diversified approach (Ulvenblad et al. 2016 ), a network approach (Lawson et al. 2008 ) or a value-net approach (Kähkönen 2012 ). These sustainable business models often generate value not only for customers but also for other stakeholders, the community and the environment (Barnett and Salomon 2012 ; Kiron et al. 2013 ; Schaltegger et al. 2016 ).

Previous research regarding agri-companies have, in general terms, focused on production and cost-efficiency (Alston 2010 , 2018 ). Further, research regarding business models has often addressed industries other than the agri-sector (Tell et al. 2016 ) such as media, information technology and biotechnology industries (Johnson 2010 ).

Schaltegger et al. ( 2016 ) state that “The business model perspective is particularly interesting in the context of sustainability because it highlights the value creation logic of an organization and its effects and potentially allows (and calls) for new governance forms such as cooperatives, public private partnerships, or social businesses, thus helping transcend narrow for-profit and profit-maximizing models” (p.5). This is line with Boons et al. ( 2013 ), who conclude that business models are useful for the creation and study of sustainable innovation. Lambert and Davidson ( 2013 ) and Zott et al. ( 2011 ) have shown that a sustainable business model is a useful tool when studying how a single company or an entire value network achieves sustainability in terms of environmental, social as well as economic value. However, the existing research on sustainable business models in the agri-sector has often been limited to and addresses developing rather than developed countries (e.g. the United States and European countries) (Beuchelt and Zeller 2012 ). Even though a structured literature review reveals an increasing number of research articles that examine sustainable business model innovation in the agri-sector, there is a need for more research on this topic (Tell et al. 2016 ).

To summarize, businesses in the agri-sector face difficult challenges – but have also unique opportunities to develop sustainability-oriented innovation and sustainable business models which create value in other ways than low-cost production. However, even if the needs at the global and firm levels are large, research regarding the development of sustainable business models within the agri-sector is limited. This is a significant issue, since profitable agri-companies, which develop sustainable business models and advance along the agri-value chain, need to become part of the solution at a moment in history when the world needs more food, which is to be produced and distributed in sustainable ways.

In order to reduce the research gap identified, the aim of this chapter is to illustrate and analyse how Swedish agri-companies strive to develop sustainable business models to innovate their business activities. I will illustrate, map, categorize and analyse the orientation of the practices of sustainability innovation and the development of sustainable business models. The research questions are: (i) “How do Swedish agri-companies apply sustainable innovation practices?”, (ii) “Which sustainable business models do Swedish agri-companies use?”, and (iii) “How can these innovation practices and sustainable business models be understood?”

The remaining of this chapter is organized as follows: A conceptual framework will be articulated, and, subsequently, the methodological research approach will be presented. Later on, eight Swedish cases including companies and cooperatives will be illustrated and analysed. Once these cases are discussed, some aspects of theory development will be developed. Finally, based on the most salient learnings from the research, guidelines for agri-entrepreneurs will be provided as well as suggestions for future research.

5.2 Conceptual Framework

The theory section is organized as follows: sustainability in the agri-sector, sustainability-oriented innovation, sustainable business models and eight types of sustainable business models.

5.2.1 Sustainability in the Agri-sector

The field of sustainability is a relatively new discipline that has developed over the last 15–20 years (Coad and Pritchard 2017 ). Nidumolu et al. ( 2009 ) showed a decade ago that sustainability became innovation’s new frontier. They stated that sustainability is a fundamental layer of organizational and technological innovations that yield both bottom-line and top-line returns. This has only escalated further during the last decade. The majority of businesses are now well aware of the importance of sustainability, which represents a key driver for innovation and a challenge in many aspects at the same time. The challenges include not only obvious aspects such as products, processes, technologies and business models but also more abstract dimensions like cognitive, psychological and organizational challenges (Sharma 2017 ).

Sustainability in the agri-sector is of vital importance since this large sector uses over 37% of the total land area of the world and 21% of the land area of the European Union. If forestry is included, the area used reaches 68% of the world and 46% of the European Union (FAO 2019 ). Further, the agri-sector represents a significant component of the EU economy, accounting for about 7% of its total exports. The agri-sector also accounts for 4.3% of the total labour market in the European Union (Eurostat 2018 ).

Many businesses in the agri-sector are small companies with primary production as the dominating aspect of their business. These companies need new ideas and approaches to become more profitable at the same time as they are exposed to both internal and external pressure to become more sustainable. Internal pressure to build a business on sustainable values may arise from the board, management, shareholders, family and employees. External pressure can be derived from competitors, customers, special interest groups and governmental regulation-legislation (Tell et al. 2016 ).

There are also actors and forces working in the opposite direction, contributing to an increasing “unsustainability” of the agri-food sector. Bernard et al. ( 2014 ) have identified actors whose impact can lead to decision-making in the agri-company which leads to unsustainability: (i) loss-making investors and credit providers who abandon farms due to low economic returns; (ii) angry neighbours and environmental activists engaging in silent or active conflict, because they are negatively affected by farming activities; (iii) dissatisfied customers at the endpoint of value chains who do not trust the quality of products or disapprove of production conditions; and (iv) overacting regulators who over-regulate farm activities. Even though each actor perceives their actions as sustainable, they can influence agri-companies’ management path towards unsustainability. Further, Fritz and Matopoulos ( 2008 ) have identified forces that can lead to unsustainability, such as (i) globalization of the agri-food industry resulting in increased imports and exports; (ii) consumer changes in consumption, resulting in a larger demand of food products, often out of season, that are transported long distances; (iii) the concentration of the sector, which has resulted in an ever-increased power imbalance in favour of retailers; and, finally (iv) major changes in delivery patterns with most goods now routed through supermarket regional distribution centres using larger heavy goods vehicles.

Despite the pressure to raise efficiency and lower costs from strong actors in the food value chain, many agri-food companies strive to conduct a sustainable business from social and ecological perspectives as well as from an economic one. Recent research (Cagliano et al. 2016 ) has identified three main integrated challenges for sustainability in the agri-food sector: first, the interdependency between food production and environmental, human and physical resources; second, the important role – sustainability and health aspects – of food for humans; and, third, the special characteristics of the food supply chain, with companies of different size and different sustainability focus.

The mindset and awareness of the owners and/or the managers of agri-companies can be an important factor for the development of sustainability-oriented innovation (Cagliano et al. 2016 ). Walker has identified this as a values-based driver (Walker 2012 , 2014 ). Further, Barth et al. ( 2017 ) have found that many agri-food producers have a strong “value intention” to conduct their agri-business in a sustainable way. Explanations for this could be that many agri-companies are family businesses, rooted in their communities and strongly connected to the land of the ancestors. The owners/managers have experienced the effect of their actions on their land and production. They have accepted a responsibility for coming generations (Ulvenblad et al. 2016 ; Barth et al. 2017 ).

5.2.2 Sustainability-Oriented Innovation (SOI)

During the recent decades, the use of concepts connected to sustainable innovation, such as green innovation, environmental innovation and ecological innovation, have grown (Schiederig et al. 2012 ). In recent years, circular economy (Korhonen et al. 2018 ) and circular innovation (Guzzo et al. 2019 ) have also emerged as concepts. Bigliardi and Bertolini ( 2012 , p 400) offer three explanations for this growing interest: “it may confer legitimacy, enhance competitiveness, and highlight ecological responsibility in an environment of both regulatory and consumer sensitization”. However, the connection between innovation and sustainability has still to be developed further (Neutzling et al. 2018 ). Adams et al. ( 2016 ) have, after conducting a structured literature review of both academic and grey literature, identified four shortcomings with previous work. There is uncertainty regarding what sustainability actually means and how it can be achieved, because of the large variety of different conceptualizations. Previous work also tends to treat sustainability dichotomously (sustainable/not sustainable), rather than as a dynamic, unfolding process that is achieved over time. Further, previous work often overlooks the social dimension. Finally, many reviews of environmental management and sustainability exclude contemporary grey literature.

Based on their literature review, Adams et al. ( 2016 ) developed a framework of sustainability-oriented innovation. Their perspective is that “sustainability-oriented innovation involves making intentional changes to an organization’s philosophy and values, as well as to its products, processes or practices to serve the specific purpose of creating and realizing social and environmental value in addition to economic returns” (p. 181). The framework starts as regulatory compliance with incremental change at the firm level and culminates with radical change at the large-scale systems level. The researchers claim that moving through the framework requires a step change in philosophy, values and behaviour, which will be reflected in the innovation activity of the company.

The framework is divided into three dimensions (from diminishingly unsustainable to increasingly sustainable). The first dimension, technical/people, is about a movement in the literature from a focus on technology, i.e. a “set of tools”, to a recent focus on people-centred innovation. The second dimension, stand-alone/integrated, is internal and describes how “innovation for sustainable manufacturing has moved from end-of-pipe, stand-alone solutions to modes of practice that require sustainability to be more deeply embedded in the culture of the firm” (p. 183). The third dimension, insular/systemic, reflects the firm’s view of itself in relation to a wider socio-economic system beyond the firm’s immediate boundaries and stakeholders.

These three dimensions represent three sustainability-oriented approaches on the journey to a sustainable business, operational optimization, organizational transformation and system building that a firm can have when it comes to innovation objective, outcome and relationship, defining the sustainability of the business (Table 5.1 ).

5.3 Business Models

Business models are descriptions of how companies create value through exploitation of business opportunities (Rosca et al. 2017 ). Business models can be regarded as structured management tools, which are considered especially relevant for success (Magretta 2002 ). The research regarding business models has been growing since the mid-1990s (Osterwalder and Pigneur 2012 ). In recent years, research has put a steadily increasing focus on business models (Wirtz et al. 2016 ).

Most of this research addresses the importance of business models for companies’ competitiveness, renewal and growth (Chesbrough and Rosenbloom 2002 ; Johnson 2010 ; Lambert and Davidson 2013 ; Teece 2010 ). Companies can apply several business models simultaneously, regarding, e.g. different products or markets (e.g. Aspara et al. 2013 ; Casadesus-Masanell and Tarziján 2012 ).

Researchers have used a variety of business models’ definitions and settings in their studies, from the single company to the entire value network (Johnson 2010 , Zott et al. 2011 , Osterwalder and Pigneur, 2012 ). Even though empirical research on business models in 1996–2010 has focused on media, information technology and biotechnology industries (Lambert and Davidson 2013 ), a newly conducted structured literature review shows that the number of articles published regarding business models in food production has grown during the last 5 years (Tell et al. 2016 ). However, Wirtz et al. ( 2016 ) state that the growing field of research for the business model is in a consolidation phase, which still contains research gaps and thus offers possibilities for future research. The researchers suggest that research about business models’ forms and components should be empirically validated, since a certain heterogeneity regarding this research area’s focus has been determined.

Several researchers have discussed the central building elements of a business model: (i) value proposition, (ii) value creation and delivery and (iii) value capture (Bocken et al. 2014 ; Richardsson 2008 ; Osterwalder and Pigneur 2005 ). The value proposition is typically concerned with the product and/or service offering to generate economic return (Boons and Lüdeke-Freund 2013 ). Value creation and delivery is at the centre of any business model, and companies create and deliver value by seizing new business opportunities, new markets and new revenue streams (Beltramello et al. 2013 ; Teece 2010 ). Value capture is about considering how to manage cost structure and create revenue streams from the provision of good, services or information to users and customers (Teece 2010 ); see Table 5.2 .

5.3.1 Sustainable Business Models

This interest in social and environmental sustainability is not new. Thirty years ago the Brundtland Report called for sustainable development that meets “the needs of the present without compromising the ability of future generations to meet their needs” (WCED, p. 43). Many researchers argue that more leadership is still needed around the issue of social and environmental sustainability (e.g. Kurucz et al., 2017 ). Researchers have also stated that a narrow focus on profitability without more attention paid to social and environmental sustainability can even limit a company’s achievement of its economic goals (Kiron et al. 2013 ; Schaltegger et al. 2016 ).

Regarding the development of the sustainability-oriented innovations field, an increasing number of scholars frame it as a business model challenge (Rohrbeck et al. 2013 ). Several researchers have stated that the business model concept is a productive way to study the creation and use of sustainable innovation, both in practice and in theory (Boons et al. 2013 ). Further, researchers have called for more studies of business models oriented towards sustainable development (Boons and Lüdeke-Freund 2013 ; Boons et al. 2013 ; Breuer et al. 2016 ; Stubbs and Cocklin 2008 ; Upward and Jones 2016 ). They have proposed alternatives to the traditional business model with its focus on maximizing growth and revenues and on minimizing costs. One alternative model is sustainable business models based on the network approach or the value-net approach (Breuer et al. 2016 ; Boons and Lüdeke-Freund 2013 ; Kähkönen 2012 ; Lawson et al. 2008 ).

Boons and Lüdeke-Freund ( 2013 ) state that research on sustainable innovation is lacking conceptual consensus, which is needed to further develop the field. Based on a review of previous research, the authors propose a generic business model concept with four key elements:

Value proposition: what value is embedded in the product/service offered by the company.

Supply chain: how upstream relationships with suppliers are structured and managed.

Customer interface: how downstream relationships with customers are structured and managed.

Financial model: costs and benefits from (i–iii) and their distribution across business model stakeholders.

These four business model elements, when combined with a perspective on social and environmental sustainability, describe a sustainable business model (Boons and Lüdeke-Freund 2013 ). Organizations committed to such sustainability integrate their social, environmental and economic activities in order to create value for their customers and for society. The sustainable business model analyses not only how organizations produce and deliver goods and services but, at the same time, how they contribute to the improvement of society – environmentally and socially. A company, cooperation or other organization with a sustainable business model is often part of, to a greater or lesser extent, a community or region that highly values the sustainable society and the sustainable environment.

Because of this increased focus on social and environmental sustainability, many companies worldwide have taken a greater interest in sequential business model innovation in which they refine an existing business model or launch a new one. The business model canvas framework (Osterwalder and Pigneur, 2012 ) has been developed for companies to envision and implement sustainable business models in practice. One of the new tools promoted for this work is the strongly sustainable business model canvas (Jones and Upward 2014 ; Upward and Jones 2016 ). In practice, a stewardship style of leadership is required for use of sustainable business models in which leaders understand their role as temporary custodians of power. Such leaders are committed to achieving value for all organizational stakeholders, including society (Bocken et al. 2014 ; Harvey 2001 ).

When focusing on sustainable business models, Barth et al. ( 2017 ) have proposed that a fourth building element should be added to the previously defined building elements of business models, (i) value proposition, (ii) value creation and delivery and (iii) value capture (Bocken et al. 2014 ; Richardsson 2008 ; Osterwalder and Pigneur 2005 ), namely, (iv) value intention. Many agri-companies are owner-managed family businesses. The owners regard themselves as stewards or custodians of the company, the property and the environment, with a responsibility for living and non-living things (Ulvenblad et al. 2016 , Barth et al. 2017 ). Research regarding sustainability-oriented innovation also stresses the importance of intentional changes to the philosophy and values of the organization (Adams et al. 2016 ). Including value intention of the owner-manager in the conceptual framework could present important insights of potential trade-offs and barriers when addressing growth ambitions based on social, environmental and economic aspects (Table 5.3 ).

5.3.2 Eight Sustainable Business Model Archetypes

The research framework, which was used to address the research questions stated above, namely, (i) “How do Swedish agri-companies apply sustainable innovation practices?”, (ii) “Which sustainable business models do Swedish agri-companies use” and (iii) “How can these innovation practices and sustainable business models be understood?”, is also based on Bocken et al.’s ( 2014 ) eight SBM archetypes. In turn, they build their archetypes on the nine business model “building blocks” of the business model canvas (Osterwalder and Pigneur ( 2012 ), Boons and Lüdeke-Freund ( 2013 ) reference. Among the blocks most relevant to our study are value propositions, key activities, key partnerships and revenue streams. Building on this key tool for the analysis of business models, Bocken et al. ( 2014 ) add sustainable social and environmental activities. They (p. 44) define SBMs as follows:

Innovations that create significant positive and/or significantly reduced negative impacts for the environment and/or society, through changes in the way the organisation and its value-network create, deliver value and capture value (i.e. create economic value) or change their value propositions.

Table 5.4 presents Bocken et al.’s ( 2014 ) eight SBM archetypes. These archetypes can be used in order to identify patterns and attributes that facilitate the categorization of the business model innovations for social and environmental sustainability. The archetypes can constitute a base for the development of a common language for the development of sustainable business models in research and practice.

5.3.3 A Combined SOI and SBM Archetypes Framework

In this chapter, the framework developed by Adams et al. ( 2016 ) focusing on sustainability-oriented innovations (SOI) is integrated with the framework containing eight different SBM archetypes developed by Bocken et al. ( 2014 ) (see Table 5.5 ). The idea behind combining these two frameworks, which was developed by Ulvenblad et al. ( 2019 ), is to categorize the business model innovations and study the organizational development (the sustainability-oriented innovation practices and processes) taken by agri-companies in Sweden.

5.4 The Case of Sweden

Sweden is often categorized as a country leading sustainable agri-production in many areas such as environmental awareness, animal welfare, low use of antibiotics and access to high-quality natural resources (Bucht 2016 ). The Swedish Ministry of the Environment presented as early as 2003 a vision for sustainable development that strongly recommends all policy decisions take into account the longer-term economic, social and environmental implications (Swedish Ministry of the Environment 2003 ). This is a vision that applies to food producers in Sweden.

The OECD report regarding Innovation, Agricultural Productivity and Sustainability in Sweden (OECD 2018 ) identifies Sweden as one of the earliest OECD countries to raise awareness of environmental issues and develop environmental policies. The result has been that the negative environmental impact has decreased, although agricultural production in Sweden has remained stable. OECD ( 2018 , p. 12) states that: “Swedish legislation, which reflects consumer and citizen preferences, sets norms and standards for food safety, environment and animal welfare that is well above EU requirements in many areas of agriculture and horticulture. Swedish consumers and citizens have a high level of confidence for the Swedish agricultural and food system”. The majority of Swedish agri-companies regard social and environmental issues as part of their goals, besides economic revenue (Ulvenblad et al. 2019 ).

However, the agri-sector in Sweden is facing challenges as well. The Swedish agri-sector has undergone significant structural changes in the last 20 years. The surviving food producers have become larger through internal growth and/or mergers and acquisitions (Swedish Board of Agriculture 2018 ). Others have been forced into subcontractor roles with diminished managerial influence on production goals and activities. This power asymmetry, combined with low-quality business relationships, can lead to suboptimization of resources and a reduced capacity to identify and satisfy consumer needs (Benton and Maloni 2005 ; Schulze-Ehlers et al. 2014 ). Furthermore, some larger companies in higher positions in the food value chain may not share smaller companies’ interest in social and environmentally sustainable innovation. Even when such sustainable innovation (sometimes in response to consumer pressure) improves a product’s quality, these larger companies may be disinclined to adopt the innovations for use in their production activities, delivery systems and product portfolios. They hesitate primarily because of fear of greater logistics complexity and higher costs. In some instances, however, these structural changes in the agri-sector have resulted in more cost-effective production and distribution systems, although with survival and profit still greater concerns than social and environmental issues. Thus, many stakeholders (e.g. consumers, consumer rights organizations, the media and citizens) are asking for healthy food and more sustainable social and environmental innovation in the agri-sector.

This pressure from stakeholders combined with the situation with declining profits in spite of production efficiency and economies of scale has led many agri-companies to develop their business models towards sustainability and high-quality products. Further, many agri-companies try to advance in the agri-value chain and get closer to the final customer.

To summarize, it seems likely that Sweden, as one of pathfinders in the world regarding sustainability and innovation, can contribute in the strive towards an innovative and sustainable agri-sector. Considering the global needs and challenges, it is important to deepen the international cooperation regarding the development of sustainable business models in the agri-sector. Hence, by studying the Swedish context, we can identify barriers, challenges and possibilities that can be relevant in other countries as well.

5.5 Methodology

In this paper, I will present, discuss and analyse eight different agri-companies/agri-cooperatives connected to agriculture in Sweden. Since forestry is an integrated part of agri-companies of Sweden and often an important part from cash flow and solidity perspectives, I have also studied one organisation, a large cooperative, from the forestry sector. All the companies/cooperatives are presented in Table 5.6 .

The empirical data consists of both primary and secondary data, which have been collected by a set of different methods. The primary data consists mainly of interviews with owners/managers or other representatives of the companies and visits on the company/farm. Initially, the respondents were asked to tell their story of the companies in their own words. A semi-structured interview guide with open-ended questions was also used. It covered subjects like company history, past and current business activities, customers, partnerships, networks, goals, culture, values, sustainability, innovation and business models.

The secondary data has been gathered through document studies (official economic records, printed material and Internet pages). This multi-method approach has been used in previous research on business models (Täuscher and Laudien 2018 ; Zott and Amit 2008 ). In the study presented in this chapter, multiple methods have been used for each case, but not all methods have been used for all cases. The collected data, including the interviews, have been analysed through categorizations and content analysis (Täuscher and Laudien 2018 ).

5.5.1 Högared Milk Farm

Högared’s main business is to produce and sell milk to a large milk distributor higher up in the value chain. Currently, there are 190 milk cows at the farm. The company is owned by two brothers with their families. Besides the two owners, there are six employees at the company. The company has historically experienced few possibilities to develop and change the business model. However, during the last decade, the owners/managers have prioritized their competence building through several leadership and management courses and have now formulated a new vision for the company:

Our vision is to be a well-functioning farm for animals and humans, a modern machine station with the customer in focus. As a company, we want to build a good reputation in our district.

They have diversified their business model and activities in several directions; they have started a mechanical workshop and a custom for hire service. In the workshop, farming companies and other companies can buy services as maintenance and repair of vehicles and farming machinery. In the custom for hire service, the customer can buy services such as harvesting, applying fertilizers and pesticides, etc. Recently, the company has diversified even more, starting to sell a small fraction of its milk production directly to end consumers in their farm shop and in some of the larger groceries in the neighbouring city.

The owners have developed the sustainability focus of the company step by step. They started their journey towards sustainability according to the archetype “maximize material and energy efficiency”, which still remains as the dominating archetype. It also means that from a sustainability-oriented innovation perspective, they are focusing on operational optimization (“doing more with less”).

The development of their sustainable business model is underway. A minor part of their business model fits the archetype “deliver functionality, rather than ownership”. Further, the managers have continuously developed their stewardship role over the last years (which could be seen in the vision of the company). The company’s sustainable business model is moving towards organizational transformation (“doing good by doing new things”).

5.5.2 Gäsene Dairy

Gäsene Dairy is a dairy cooperative company owned by 28 small- and medium-sized milk farms (between 30 and 500 milk cows on each firm). The dairy’s main business is production and selling of high-quality cheese.

The dairy was founded in 1930, when milk prices were low and it was difficult for the producers to get good enough prices. Farmers in one neighbourhood developed a new business model before the concept was even conceptualized. They joined together in a cooperative association and started their own dairy, which produced and sold milk, cheese and other dairy products. The vicinity was important for the founders of the dairy, and it is still important today. All the milk are produced on farms which are situated within 25 minutes travel time from the dairy. Most of the milk and cheese are sold in groceries in southern Sweden. A minor part is sold directly to end consumers at the dairy. The quality of their products, based on sustainability and closeness, has made their brand well-known. Last year, the dairy had over 100 bus loads with visitors, exceeding 23,000 visitors. The dairy has recently decided to use biofuel for heating its premises. The surplus heat will be used for heating of the neighbouring municipality senior housing.

Since the dairy products create larger value for end customers than the products sold by large international processing companies, the dairy company can sell their products at higher prices. Consequently, the farms owning the dairy have larger revenues than other farms which deliver to the large international processing companies.

The business model of the company as such has not changed much since the company was founded, but the development of society has renewed it. From the start, the business model was based on economic necessity but also on the founding farmers’ stewardship perspective. A business that was regarded as out of date has now become both modern and sustainable. One of the owners says:

We have been out of fashion for 70 years, but now we are modern and in the front again.

Since sustainability became an important societal concept during the last decade, the company focuses even more on sustainability. The investment decision regarding the biofuel heater, which will benefit both the company and the senior housing, is one indication of the sustainability focus. Further, the company has changed its communication with customers and emphasized values as quality, vicinity and sustainability.

The founding and succeeding farmers have over time acted based on a “stewardship perspective”. Due to the societal change, the dairy matches the SBM archetype “repurpose the business for society/environment”. It also matches “substitute with renewables and natural processes”.

From a sustainability-oriented innovation perspective, their company has covered all three dimensions. Even though the dairy was founded in order to reach operational optimization (doing more with less), the stewardship perspective with focus on vicinity and sustainability in combination with societal change has led to organizational transformation and system building.

5.5.3 The Gudmund Farm

The Gudmund Farm is a farm charcuterie, which also conducts pig breeding and production. The company was founded in 1998 and produces high-quality sausages and other meat products. Fresh and processed meat products are sold in the farm shop, in other farms’ shops and in the groceries in the city. The meat comes from the farm or from subcontractors, farms in the neighbourhood. The company has long-term spoken agreements with the subcontractors, based on trust and a handshake. The sausages are handcrafted by old methods and have no additives other than natural spices and herbs. The company has diversified its products and activities continuously over the years. The company develops new sausage varieties and other meat products. Some of the new products have been developed by the employees of the company. Recently, the owners have also started to provide courses in sausage craftsmanship, food waste minimization and nutrition. Even though one goal of courses is to generate some revenue, the main reason is to educate customers. The company has also started a restaurant at the farm, where they serve lunch and arrange conferences. In order to get closer to the end customers and to learn their needs and expectations, the company opened a shop in the city close to the farm charcuterie, in 2005.

An important part of the business model is to develop and nurture long-lasting cooperation with customers, other companies, subcontractors and neighbours. The owner is also explicit regarding sustainability:

Our company and our farm will stay where it is. Of course, we have to take good care of our land, our employees, our neighbours and our animals. We also want to create win-win relationships with customers, sub-contractors and other companies.

The company matches three SBM archetypes: (i) encourage sufficiency, (ii) substitute with renewables and natural processes and (iii) adopt a stewardship role.

From the start, the company has been run by the owner with a clear and explicit stewardship perspective, where sustainability is a central theme. The owner stresses the importance of local and professional networks. The company was the first to apply this perspective when it started the business 20 years ago. Since then other companies have followed suit. From a sustainability-oriented innovation perspective, the company is conducting system building through the strategy of working in networks with a win-win focus.

5.5.4 Ästad Vineyard

Ästad Vineyard used to be a traditional farm, with 100 hectares of fields, meadows and pastures, producing milk and grain. The previous owner, and father of the current owners, changed to ecological milk production in the mid-1980s in order to raise the low profitability of the farm. That was the starting point for a continuous and ongoing sustainable business model development. The next step was to invite school classes with fifth graders to come and have an experience of the farming activities. It developed into a team-building concept, where companies could bring their employees to the farm and solve intellectual and practical problems together.

The current owners, three siblings, improved the old farm buildings and built some additional buildings, which they used to develop the business model with a spa integrated with the small river, a restaurant, a conference centre, a hotel and a winery/vineyard. Today, they have 15,000 vines, and the wine is sold to distributors and directly to end consumers at the restaurant. An important and explicit building block of their business model is to use and develop the resources of the farm, the small river, the buildings, the vegetables, the wine, etc. The owners claim that:

By experience we know that every challenge we meet also leads to new opportunities.

The family was conducting a traditional farm business from its inception. A desire to increase profitability and catch opportunities led to diversification and continuous business development. The sustainability aspect was based on partly an identification of the farm and land as a key asset from a business perspective and partly on a stewardship perspective. The company matches three SBM archetypes: (i) deliver functionality, rather than ownership, (ii) substitute with renewables and natural processes and (iii) adopt a stewardship role.

From a sustainability-oriented innovation perspective, this firm is at the organizational transformation level (“doing good by doing new things”).

5.5.5 Wapnö Farm

Wapnö Gård is an estate with an old history. It has been one of largest farming estates in Sweden since the fourteenth century. The current owner’s family has owned Wapnö since 1741. Today, Wapnö is organized as a limited company and has about 85 employees.

Wapnö Farm used to be an ordinary, although large, farm producing milk. The owners and management regarded the farm as a producer at the onset of the agri-food value. The milk was delivered to a large organization, which now has become an actor on the international market. Over 20 years ago, the owner and the management decided to start developing a diversified sustainable business model. They choose to advance in the agri-food value chain and get closer to the end consumer. Wapnö focused on sustainable environment and the preferences of the end customers, e.g. taste and flavour experiences. Today, the management of Wapnö talks about “sustainability into the future ” . Wapnö has been working actively towards a sustainable environment for many years. The manager states that:

the present generation should take care in using natural resources reasonably and being environmentally responsible so that we leave the environment as untouched as possible for future generations.

Wapnö is developing a circular economy with a diversified sustainable business model. Wapnö call themselves an open farm, which means that consumers can come to the farm to get a closer look at the animals, the barns and the dairy. Wapnö also has a restaurant, which uses ingredients from the farm.

The company has established a farm brewery, and the beer is brewed from the farm’s water and grain. The cattle are moving freely and never given antibiotics. The cattle are not given soy products, but rather pressed canola. Wapnö is also producing biofuel from canola oil. The milk flows directly in a tube from the barn to the dairy 30 meters away. Wapnö also has a large greenhouse, where they grew vegetables for sale in the farm shop and for the farm restaurant. The greenhouse is heated with renewable energy generated on the farm.

Wapnö farm biogas, produced from cattle manure, contributes to renewable energy in the form of electricity, heat and cooling, which is needed year-round in the food premises. Wapnö only uses manure from animals on the farm for biogas production and has cut the energy consumption with more than 90%. The biogas plant also provides fertilization, which improves the fertility and value of the farmland.

Through the development of a sustainable diversified business model, Wapnö has climbed the value chain, got closer to the end consumer and developed a very strong brand. Therefore, it is able to sell its products at a higher price, which reflects the value end customers put on the products.

As many other farms, Wapnö used to be a traditional, although large, farm business in the start of the agri-value chain. Over the last 20 years, Wapnö has developed a diversified sustainable business model, and the development is still ongoing. Today, the company matches several business model archetypes. Wapnö maximizes its resources, creates value from waste and substitutes with renewables and natural processes. Further, the company has repurposed the business for society/environment since the sustainability and circular economy are in focus. Finally, and not least, the stewardship role is very clear and articulated.

From a sustainability-oriented innovation perspective, Wapnö is a good example of a company which has developed sustainability as a process. The company has developed from operational optimization to organizational transformation: doing good by doing new things. It could also be argued that the company has developed to system building. Although the company is mainly working as an entity, the farm is large and has advanced to a form of system building, where one part of the farm is supporting – and getting support – from other parts of the farm.

5.5.6 Green Farms

In the beginning, Green Farms used to be run as a traditional farm by the current owner’s father. When the son, the current owner, took over the company, he wanted to focus on sustainability and converted it to organic production in 1989. At first, sales did not go according to plan and the cash flow was below expectations. He could not afford to feed the cattle with expensive concentrate, so he had to feed the cows with cheaper roughage, grass in different forms. This meant that his cattle grew slower and were older than normal at slaughter. The owner expected that the meat would then be of low quality and hard to sell at a good price. However, he soon realized that the meat was of very high quality. Since it also was produced in a more sustainable way than before, it could be sold to a premium price to customer wanting high-quality meat.

Twelve years later, in 2001 he started Green Farms. The business model was to create a network of farms that raised and feed cattle in the same way as the first farm. A new farm can get into the network after a trial period, if they meet the sustainable production requirements of Green Farms. The farms have to focus on animal health, sustainability and meat quality. The network members deliver their meat to Green Farms, which sells, through the Internet, and distributes high-quality meat to the end customers, restaurants, public kitchens and individuals. Green farms cooperate with around 40 sustainable cattle farms in the southwest of Sweden.

When the present owner took over the farm from his father, he wanted to transform it into a sustainable farm. He took a stewardship role from the start and substituted the production processes to more sustainable processes. From a sustainability-oriented perspective, he had developed his company through all three phases. Today, the company has developed into system building, since the company has developed a scale-up solution and engaged other companies in the system.

5.5.7 The South Forest Owners (Södra)

The farmers who owned forest began to organize themselves as a forest owner association in the beginning of the twentieth century. The southern and middle part of Sweden was almost a deforested country at that time, due to bad forest management and short-sighted profit-maximizing forest companies. In the beginning, the forest association provided advisory services regarding forest management. However, one significant issue for the small forest farmers was that the market was dominated by few large forest companies. Hence, the small forest farmers could not get fair prices for their product or for their forests. As a response to this situation, their cooperative soon developed to coordinate distribution, sales and processing of timber and other forest-based products. Over the years many small forest cooperatives merged, and the large cooperative association Södra was formed in 1938.

Today, Södra has 51,000 small forest owners as members/owners. A large majority of these forest owners are very engaged in sustainable forestry. Many of them have been engaged even before sustainability was a concept in research and regulation. In fact, over time some of the forest owners have refused to manage their forests the way the authorities required, since the forest owners believed they could manage their forests in more sustainable ways. Södra states that:

the overall mission of the owners is to secure the provision for the members’ forest raw material and promote forestry profitability through advice and support, so that the members’ forests can be managed responsibly and with sustainability and to contribute to a market-based return on the forest raw material .

The timber from the forest farms is refined in Södra’s industries for sawn and planed timber products, interior wood products, biofuel and pulp for the market in the market. Södra runs one of Europe’s largest sawmill operations and is one of the largest producers of softwood pulp. Södra also produces textile pulp of hardwood. Their three pulp mills have almost fossil-free production and generate a large energy surplus. This bio-based energy is sold, among other things, as green electricity and district heating. Södra also owns manufacturing company, which produces one-family houses. Södra claims that they are focusing in innovation in order to develop new products, based on the renewable wood raw material.

Södra is emphasizing sustainable forestry and a sustainable forest value chain. This means, among other things, that efforts are taken to ensure that members’ forestry is conducted using methods that ensure the production capacity of forest land and forests as well as conservation of ecosystem services and biodiversity. Södra mainly uses biofuels for the industrial production processes. The energy surplus is delivered in the form of electricity to the open market, district heating to places near pulp mills and sawmills and solid biofuels for heating plants. Through the industrial activities, the forest raw material contributes to the local community’s conversion to a more sustainable energy use. Efficient use of the forest raw material from a material and energy perspective creates new conditions for sustainable products.

Even though Södra is based on small-scale forestry with strong local roots and local relations, it has ascended in the forest value chain and developed to a large international actor. A large majority of the small forest farms are run by owners who regard themselves as stewards. The stewardship perspective is also clearly communicated by their large cooperative Södra. Södra is applying several sustainable business model archetypes besides stewardship, maximize, create value from waste and develop scale-up solutions. Hence, Södra’s sustainability-oriented process is covering all three steps, encompassing system building.

5.5.8 The Farmers (Lantmännen)

The Farmers in Sweden started to organize in the end of the nineteenth century, and they founded the national association in 1905. Today, it is an economic cooperative, owned by 27,000 Swedish farmers, and has grown to one of the largest actors in agriculture, food and energy in Northern Europe.

The Farmers’ focus is to provide the members with seed, fertilizer, plant protection products and feed as well as to receive, store, refine and sell what farmers grow. Other important elements of the business are sales of forest, construction and agricultural machinery. The Farmers is the largest purchaser of grain in Sweden. They claim that they protect the earth’s resources in a responsible manner and are included in the entire value chain from farm to table. Their business model strives to deliver sustainable products and new innovative solutions to customers while at the same time creating value for our owners and contributing to a viable agriculture.

The visions and goals of The Farmers are closely connected to innovation and sustainability.

In 2018, The Farmers (Lantmännen in Swedish) was named one of Sweden’s most sustainable brands (Sustainable Brand Index 2018 ). The Farmers strive after viable agriculture, greener energy and a sustainable food chain. The Farmers state that,

Together we take responsibility from land to table…. we lead the processing of arable land resources in an innovative and responsible manner for tomorrow’s agriculture… we create a viable agriculture.

The Farmers shares several aspects with Södra. Many of the small farm owners have also sustainability priorities and have stewardship perspectives. The Farmers has also developed applying several sustainable business model archetypes besides stewardship, maximize, create value from waste and develop scale-up solutions. From a sustainability-oriented perspective, The Farmers are also involved in system building.

5.6 Analysis

The eight companies and cooperatives will be positioned in the combined framework of sustainability-oriented innovations (SOI) and different sustainable business model archetypes. See Table 5.7 .

All of the companies analysed share a stewardship perspective on the business. All of them are also regarding themselves as entrepreneurs and business leaders, not only producers. Further, all of companies have over time developed and moved closer to customers in the agri-value chain. Another relevant aspect of their sustainable business models is that they have diversified their business models. Since these companies are depending on natural resources and often connected to one place, it is hard for them to develop scale-up solutions. However, one way to develop scale-up solutions is to organize themselves into larger cooperatives, like Södra and Lantmännen.

All companies are closely connected to the real estate where they are situated. The companies, all of which are owner-managed, are family businesses in which the families expect to retain ownership for the foreseeable future. As family businesses strongly rooted in their communities, the owners are not concerned solely with growth and revenues. The owners think of themselves as stewards or custodians of the company, the property and the environment, with responsibility for living and non-living things. Cooperation in network structures or cooperatives is important for these companies. Trust, common values, other-orientation and win-win perspective are crucial concepts in the network structures.

5.7 Conclusions, Future Research Avenues and Practical Implications

The research presented in this chapter builds on, and adds to, previous research regarding sustainability-oriented innovation (Adams et al. 2016 ), business model archetypes (Bocken et al. 2014 ) and building blocks of business models (Barth et al. 2017 ).

The sustainability-oriented innovation framework regards sustainability as a continuous process that is developed and achieved over time (Adams et al. 2016 ). Their study has also shown how organizations can develop to become more sustainable. Further, they suggest that the development of sustainability-oriented innovation often starts with intentional changes to the values of the organization and as a response to regulation.

The analysis based on the cases of the study presented in this chapter deepens the knowledge regarding why agri-entrepreneurs develop the sustainability aspects of their business model. This study shows that many agri-entrepreneurs have a stewardship intention and want to develop and preserve their company, relationships and environment for the future and coming generations. Some agri-entrepreneurs applied the values of sustainability even before the concept was used in literature and discourse. The agri-entrepreneurs who strive for sustainability are often ahead of, or even in conflict with, legislation and policy when they develop their sustainable business models.

The aim of the eight sustainable business model archetypes developed by Bocken et al. ( 2014 ) is to “develop a common language that can be used to accelerate the development of sustainable business models in research and practice”. In the study presented here, stewardship is a frequent and important sustainable business model archetype. The stewardship archetype seeks to “maximize the positive societal and environmental impacts of the firm on society by ensuring long-term health and wellbeing of stakeholders (including society and the environment)”. According to researchers behind such archetype, it can preferably be used in combination with other archetypes. Based on the analysis in this study, the stewardship role is of paramount importance. However, it could be argued that stewardship should not be regarded as a business model archetype. Rather, it is an explanation or an incentive for developing sustainable business models.

The frequent use of adopting a stewardship role can be explained by the unique characteristics of the agri-sector. As Cagliano et al. ( 2016 ) have shown, there is a clear interdependency between agriculture and environmental, human and physical resources. Walker 2012 and 2014 have also pointed on the awareness of the entrepreneur as a value-based driver for sustainable business models. Ulvenblad et al. ( 2016 ) and Barth et al. ( 2017 ) have elaborated on this relationship. The owners/managers regard themselves as stewards or custodians of the company, the property and the environment, with a responsibility for individuals, animals and growing things. The company is often based on a farm, which has been owned by the ancestors before. The company is depending on the resources of the land, and it is going to stay where it is. Relations to neighbours and other companies are also important and have to be managed and maintained. The stewardship perspective is important when developing sustainable business models in the agri-sector.

Barth et al. ( 2017 ) have suggested that when studying the development of sustainable business models, the building block “value intention” should be added to previously developed building elements of the conceptual business model framework: (i) value proposition, (ii) value creation and delivery and (iii) value capture (Bocken et al. 2014 ; Richardsson 2008 ; Osterwalder and Pigneur 2005 ). Sustainability-oriented research also underlines the philosophy and values of the organization (Adams et al. 2016 ). Based on the cases presented in this chapter, the value intention is an important base for a sustainable business model in the agri-sector. Hence, it seems relevant to include the value intention element into the conceptual business model framework as well. Including the value intention of the owner-manager in the future theory building could present important insights of potential trade-offs and barriers when addressing growth ambitions based on social, environmental and economic aspects.

Future research might also examine how agri-companies innovate their sustainable business models when they introduce new products and engage in new business activities. It would also be relevant to further deepen the understanding of the connection with the special challenges in the agri-sector (Cagliano et al. 2016 ), the importance of the value intention (Barth et al. 2017 ) and value-based drivers for sustainable innovation (Walker 2012 , 2014 ). The case study approach is well-suited for such studies.

Another relevant question to further investigate is a comparative analysis of the sustainable business model concept among industries. “Literature indicates that a wide range of traditional SMEs are still mostly focused on harvesting low hanging fruits by engaging primarily in incremental innovation” (Klewitz and Hansen 2014 ). The results from the agri-sector in Sweden show that there are companies in the agri-sector that optimize their operation with doing more with less, but the majority states that they focus on organizational transformation or even system building. Further, many of the owners/managers of the agri-companies adopt a stewardship perspective. Hence, many companies in other industries, and not only SMEs, can gain inspiration, insights and experiences and learn from the agri-sector.

5.8 Practical Implications

If agri-entrepreneurs and society focus on added value higher up in the value chain rather than only on efficiency at the inception of the value chain, it will be natural to emphasize the importance of agri-businesses for a sustainable society. Instead of a focus on the negative climate and environmental impact of production, focus can be on creating added value from climate and environmental perspectives.

A growing awareness and understanding of these values increases the opportunities for agri-companies to obtain higher prices for their products and/or services. Agri-companies can then focus more on how sustainable innovations can be developed. The climate and environmental perspectives will then become an opportunity and not a limitation for agri-companies and society.

Extension services focused on the agri-sector should reinforce the concept of agri-entrepreneurs as entrepreneurs instead of just producers. The efforts should focus on new, sustainable business models that encompass more links in the value chain than primary production. This means that education and counselling to businesses should focus on leadership, business development and innovation. The dissemination of knowledge should be conducted through coaching, in order to strengthen the competence and ability of the agri-entrepreneur.

5.9 Concluding Remarks

It is important for sustainable development to further emphasize the importance of innovations in the agri-sector, not only for the agri-companies themselves but also as a response to many of the challenges society faces. While social development has benefited major cities and urban centres, rural areas and agri-companies have substantial opportunities and resources to contribute to the solutions to many of our major social challenges today. These social challenges apply to several major and comprehensive issues such as:

Climate and environment

Integration, diversity and gender equality

Labour and employment

Access to housing

The degree of self-sufficiency of society

Agri-companies and agri-entrepreneurs are often situated in rural areas. They can provide solutions to these challenges. Their owners are aware that their companies are connected to a village, a place. They are aware, sometimes intuitively, that the family, the farm, the place and the company will exist in the future - even after they leave business. Therefore, they have every reason to take care of relationships, neighbours, companies, land and animals. Agri-entrepreneurs are aware of their responsibility for future generations and have opportunities to contribute to environmental and climate solutions, which are some of today’s major issues. Their mindsets and value intentions ought to be spread in society in general. These agri-entrepreneurs are stewards in the best sense of the word.

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Drive Sweden Business Model Lab – Resilience and viability

The Drive Sweden Business Model Lab has been active for a year and has had a thrilling start. With a growing set of diverse partners, a lot of new technology and services being developed, a market that has rapidly changed and an international interest in its work, the future looks promising for this enabling function for new innovation.

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The Drive Sweden Business Model Lab was founded to bridge the gap between innovation and business models – with a focus on sustainable innovation. After its first year of operation it has gathered a diverse setup of actors, ranging from small startups to academia and global companies and the work going on within the lab has attracted a large interest. Today, international partners are traveling to the workshops arranged by the lab.

Two takeaways from this successful start have been the importance to focus on the partners’ real problems and to work with actors that are willing to share knowledge and to collaborate.

“There are a lot of accelerators and incubators, but this is unique. The openness and collaboration among a diverse group of partners is staggering”, says Rami Darwish, Project leader of the Drive Sweden Business Lab and Business Model researcher at the Integrated Transport Research Lab at KTH and continues:

“It is an innovation hub that tackles the business model gap for sustainable innovations in electrification, automation, logistics and mobility as a service. The lab is a place where small and large organizations develop business models in a manner that is protected. We help the partners by exploring challenges, sharing knowledge and insights from academia and industry and by finding the right questions to focus on where collaboration is most needed on future business model projects”.

Starting up and staying resilient

Two of the objectives for the Business Model Lab is to help the partners create resilient business models and to help new innovation reaching the market. But a lot of innovation never makes it there.

“A lot of startups don’t experience their fifth year but end up in what is called the ‘valley of death’”, explains Roland Elander, coordinator of the Drive Sweden Business Model Lab and Head of Business Development and responsible for mobility at Sustainable Innovation and continues:

“A lot of times startups are successful in developing and verifying an idea and getting seed funding in one way or another. But after that, you descend into this valley where the innovation is tested on the market and most companies want to scale up, a step that the current innovation system doesn’t always support”.

Surviving this step is something that the Business Model Lab targets. By helping them to create viable business models by using the deep knowledge found within the project’s network, they can get vital tools to help startups or new innovation. Elander also highlights the importance of asking the right questions, finding the right markets and connecting the right actors.

Ongoing projects and the reshaping of a business model

The Business Model Lab is actively working with a few projects like Älskade stad (Beloved City), where actors are working together to ensure a better environment in the city center of Stockholm by a new and combined service of deliveries and waste management. They are also working with a project on terminal charging for electric distribution vehicles and a MaaS (Mobility as a Service) project. This shows the width of what the lab can work on and reflects the project’s composition of different kinds and sizes of actors.

One of the active partners within the Business Model Lab is Freelway , that recently, in dialogue with the Business Model Lab, changed their business model to meet the changes in the market caused by the covid-19 pandemic.

”Changes can happen a lot faster than you think. But we had the possibility to reshape our business model quickly to focus more on home deliveries, where we found a need that we could fill”, says Tobias Forngren, CEO of Freelway, who believes in keeping a flexibility in companies’ business models.

For Freelway, being a part of the Business Model Lab has been a good experience.

“Our expectations on becoming a partner have already been fulfilled. We have interacted and tested ideas with other companies within the lab. And the lab being a part of Drive Sweden creates an openness and a playfield with large and small actors as well as startups”, says Tobias Forngren and continues:

“Discussing with all these stakeholders give you a chance to get insights on the possibilities and limitations of existing and new business models, to network and to get new perspectives”.

The Drive Sweden Business Model Lab has been going for about a year and the number of partners keeps growing. But more perspectives and partners are welcome. If you have a need for developing business models for new innovation and an interest to collaborate with and learn from others, this is an excellent possibility to innovate the methods for reaching the market and stay on top of this fast-developing area. Don´t hesitate to reach out to project leader Rami Darwish .

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Assessing the entrepreneurial ecosystem of Sweden: a comparative study with Finland and Norway using Global Entrepreneurship Index

Journal of Business and Socio-economic Development

ISSN : 2635-1374

Article publication date: 8 July 2022

Issue publication date: 28 October 2022

This paper aims to investigate and examines Sweden's overall entrepreneurship performance (ecosystem) by applying the Global Entrepreneurship Index (GEI) while benchmarking the entrepreneurial ecosystem of Sweden with that of Finland and Norway.

Design/methodology/approach

In terms of subindices, pillars and component factors, this research analyzes the entrepreneurial ecosystem of Sweden using the GEI supplemented by the Penalty for Bottleneck (PFB) approach utile for identification of bottlenecks. In addition, the Swedish ecosystem is benchmarked against its Finnish and Norwegian counterparts drawing on data collected between 2015 and 2018.

Using data drawn from the GEI, Sweden manifests a strong entrepreneurial ecosystem with a GEI score of 72.7 out of 100. However, fledgling start-up skills, insufficient human capital, and slow and erratic growth undercut otherwise solid entrepreneurial aspirations drawing on well-developed institutional variables. On a macrolevel, Sweden evinces greater capacity for entrepreneurship and innovation than either Norway or Finland but, on a microlevel, several discontinuities manifest in terms of subindices, pillars and component factors to the advantage of Norway and/or Finland and, conversely, to the detriment of Sweden.

Practical implications

Policymakers should fund a mix of programs and institute regulatory reforms designed to promote entrepreneurial systemic development in Sweden by remediating entrepreneurial gaps depressing GEI scores. Crucial policy interventions are required to accrete start-up skills and human capital and engender high growth. Incremental funding of 47% over current levels budgeted to buoy entrepreneurial activity are mandated for Sweden to approach its GEI potential.

Originality/value

Insights are derived from extracting data drawn from a new methodology for gauging entrepreneurial activity incorporating individual and institutional variables into a single model that combines PFB and GEI analysis with a view to identifying, through the PFB approach and weak aspects of Sweden's entrepreneurial performance.

  • Entrepreneurship ecosystem
  • Entrepreneurial performance
  • Global innovation index
  • Benchmarking

Balawi, A. and Ayoub, A. (2022), "Assessing the entrepreneurial ecosystem of Sweden: a comparative study with Finland and Norway using Global Entrepreneurship Index", Journal of Business and Socio-economic Development , Vol. 2 No. 2, pp. 165-180. https://doi.org/10.1108/JBSED-12-2021-0165

Emerald Publishing Limited

Copyright © 2022, Ayman Balawi and Asad Ayoub

Published in Journal of Business and Socio-economic Development . Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/legalcode

Introduction

Sweden is the eighth most competitive country in the world, out of 140 countries ( Schwab, 2019 ). It is also Europe's fourth most competitive economy, and one of the best-performing economies in the world. Sweden is well-known for its excellent business climate, worldwide competitiveness, diversified language capabilities and innovation drive ( OCED, 2018 ). This is attributed in great part to the country's free-market economy and highly evolved educational system ( Doing Business, 2020 ). According to a new comparative study of entrepreneurial dynamics, published by Swedish Entrepreneurship Forum 2016 and based on Global Entrepreneurship data, 5% of Swedish adults set up new businesses. Almost 6% have invested in a company started by someone else ( Braunerhjelm et al. , 2016 ). Between 1997 and 2018, Sweden has spent more than 3% of its GDP on research and development. Sweden's average rate throughout the period was 3.38%, ranging from 3.14% in 2014 to 3.91% in 2001. In 2018, the country occupied the third place among other countries in spending on research and development ( World Bank, 2020 ).

In 2017, Sweden's GDP grew faster than the Organisation for Economic Co-operation and Development (OECD) average (3.1% versus 2.4%), while GDP per capita grew at a slower rate. According to World Bank (2020) , Sweden's GDP grew at an average yearly rate of 4.76% from $242.4 billion in 2001 to $537.61 billion in 2020, which accounts for 0.48% of the global economy. Over the last two decades, entrepreneurship policies have evolved. The entrepreneurial intervention has switched from direct engagement on the microlevel with individual entrepreneurs to indirect engagement on the macrolevel with a view to engendering an enabling environment designed to buoy entrepreneurial activity in the entrepreneurial ecosystem ( Páger et al. , 2016 ).

Measures of entrepreneurial activities, start-ups and self-employment indicate that Swedish are less active than the average European Union (EU) citizen. In 2017, 8.7% of the working population was self-employed, compared to 13.7% across the EU ( OCED, 2018 ). However, new Swedish entrepreneurs were more likely to report introducing new products or services. During 2013–2017, 32.6% of new Swedish entrepreneurs self-reported introducing new products and services, compared to the EU average of 27.6%. Approximately one-third of the youth indicated that their businesses had introduced new products or services ( OCED, 2018 ). Also, men account for 62.9% of the self-employed in manufacturing and services across all industries, while women account for 37.1%. Specifically, 9.8% of self-employed males and 3.9% of self-employed women have tertiary education ( OECD, 2020a ).

Innovative policies and entrepreneurship are the prime responsibilities of the Swedish Ministry of Enterprise and Innovation. The general aim of this ministry is to promote and strengthen Swedish competitiveness and build opportunities for more employment in growing enterprises. According to World Bank's Doing Business Survey (2020) , the country ranks 10th out of 190 economies. Young firms are more prominent in the Swedish business sector yet, in the last decade, tepid Swedish entrepreneurial activity for start-ups can be discerned. That job destruction rates for young firms have been increasing implying a declining employment share for younger firms. Moreover, most of the job creation by young firms occurs in the expanding service sector. The decline in entrepreneurial activity in Sweden has been assuaged during the last two decades; one vital explanation is the economic reforms implemented in Sweden that mitigated several hurdles to entrepreneurship ( Heyman et al. , 2019 ). Entrepreneurship policies in Sweden are devised and implemented with a mainstream approach, with the goal of fostering entrepreneurship and fostering general firm growth. National policy gives priority to innovation and growth at the level of the firm, rather than at the level of the individual entrepreneur. Individuals can be assisted during the start-up phase by means of business counseling and instruction (only marginal financial support is offered). During the 1990s and 2000s, women's entrepreneurship was heavily promoted and supported through the implementation of specialized programs. These programs have ended, and gender equality has replaced them as a pillar of regional growth agreements. Instead, the policy objectives are centered on fostering economic growth and innovation. In this regard, female entrepreneurship in Sweden has steadily increased and garnered significant attention in the Swedish economic scene. According to studies, Swedish administrations have prioritized female entrepreneurship on their political agendas and enacted a number of programs to increase women's company involvement ( United Nations Conference on Trade and Development (UNCTAD), 2011 ). In recent years, female entrepreneurship in Sweden has steadily increased and received considerable attention from the Swedish business community. Studies indicate that over time, Swedish governments have elevated female entrepreneurship on their political agenda and taken a number of steps to encourage women's engagement in the corporate world. Specifically, a number of activities, such as reform of the national budget to give financial assistance to women entrepreneurs and expenditures in education and research, have been adopted ( UNCTAD, 2011 ). It is commonly believed that the Swedish government's efforts to investigate and encourage female entrepreneurship are meant to enhance new venture development in the Swedish economy; therefore, female-owned enterprises play an essential role in society beyond job creation and economic growth ( Orhan and Scott, 2001 ). Thus, facilitating female entrepreneurial activities and aiding women in launching their own firms is regarded as one of the most effective strategies for a nation to foster entrepreneurship in general ( Global Entrepreneurship Monitor (GEM), 2001 ). It has been termed the “woman-friendly state” since Sweden is a welfare state with good child care and great gender equality.

Also, the shift in Sweden's educational system had a substantial effect on the country's high rate of entrepreneurial growth. The interest in entrepreneurship education increased. Midway through the 1990s, Sweden introduced a new education system with an emphasis on entrepreneurship education and the function of education in making Sweden more "entrepreneurial” ( Leffler, 2009 ). In the preceding two decades, this theory has gained momentum, and in 2011 it was incorporated into the curriculum with the proclamation that "the school should assist children in developing an entrepreneurial mindset” ( Lgr, 2011 , p. 6). What had been a repeating theme for more than a decade was now institutionalized as something that should be included into every element of life ( Dahlstedt and Fejes, 2017 ).

The thriving Swedish start-up culture has attracted much worldwide attention, but the nation has a long history of invention. Several factors may explain this, including Sweden's global view export is a significant driving force for Sweden, given its relatively tiny local market. Other aspects include social stability, access to government aid and a high level of equality. The Swedish government agency Vinnova plays a significant role in research. The innovation agency encourages and finances research initiatives in a variety of disciplines, including health, transportation, industrial materials and smart cities. The Knowledge Foundation (KK-stiftelsen) supports research and competence development at university colleges and new universities in Sweden in order to improve the country's competitiveness. Additionally, the Swedish Agency for Economic and Regional Growth (Tillvaxtverket) promotes competitiveness and entrepreneurship throughout Sweden (2018). Sweden fosters innovation and entrepreneurship activities through several innovation hubs, for example, the Arctic Business is the world's seventh best innovation incubator; this incubator is linked with the Lule University of Technology, with an emphasis on sustainable development, and its mission is to assist in the creation of new and innovative businesses ( Sweden.se, 2018 ). Start-ups must go through Arctic Business Incubator and a potential accelerator in order to get substantial amounts of funds. Behaviosec and BioCool are two of the most well-known examples ( Arctic Business, 2022 ). Also, Inkubera is another innovation incubator and catalyst for individuals who wish to establish creative, thriving businesses. In the previous five years, Inkubera has created forty innovative businesses that have collectively generated approximately $102 million in revenue. Yobber and BioImpakt are listed as alumni start-ups from this incubator. Each year, Inkubera admits 15 new firms without acquiring any equity or control. These businesses have full access to a network of specialists, consultants, entrepreneurs and other entrepreneurs who are willing to share their enthusiasm, expertise and experience ( Inkubera, 2022 ).

The paper is structured as follows: a literature review related to the entrepreneurial performance of Sweden. Following that, an analysis using the GEI methodology will be conducted, evaluating all pillars and then, a comparison for entrepreneurial performance with two countries (Finland and Norway). Finally, in conclusion, several recommendations are made to increase Sweden's GEI value by 10%.

Literature review

Acs and Szerb (2019) defined an entrepreneur as a person with the vision to see innovation and the ability to bring it to market. According to their definition, it is clear that most small business owners are not entrepreneurs. Entrepreneurs can work and innovate in all fields and at all levels, regardless of their knowledge, education, age and gender. It is worth noting that entrepreneurs can also convert their visions into reality and overcome any obstacles facing them during the implementation of their ideas. Moreover, it is essential to stress the relationship between entrepreneurship and opportunity; opportunity entrepreneurship positively correlates with economic growth ( Acs and Szerb, 2019 ). Entrepreneurs are considered the link between invention and commercialization. Also, entrepreneurs may be defined as those who have unique ideas that result in novel products or services, noting that the absence of sufficient funds or intellectual property may not prevent them from achieving their visions and converting their dreams into reality ( Acs and Szerb, 2019 ).

The debate on the significance and economic prospects of country-level entrepreneurship has been spurred by the trends seen in most economies over the previous decades, such as institutional reforms that support innovations and entrepreneurship and the increasing digitization of the economy ( Acs et al. , 2014 ). In their research, Lafuente et al. (2021) argue that entrepreneurship is a key factor in driving both economic expansion and new product development ( Aghion, 2016 ; Schumpeter, 2017 ). The results of entrepreneurship, however, depend on the context in which they develop ( Autio et al. , 2014 ). Therefore, the impact of entrepreneurship on economic outcomes across nations is determined more by the institutional context than by the number of entrepreneurs present in those countries ( Lafuente et al. , 2020 ).

The entrepreneurial ecosystem is defined as a novel way of contextualizing increasingly complex and interconnected social processes ( Acs and Szerb, 2019 ), noting that a system is an interactive and interdependent group of subsystems that work together to perform or achieve a purpose. An ecosystem also represents a collaborative network that involves dynamic and changing interaction systems and subsystems that have updated their relationships within a specific environment. The core concepts of the entrepreneurial ecosystem stem from well-established literature frames, including the national innovation system ( Freeman, 1995 ), the cluster-based theory of competitive advantage ( Delgado et al. , 2010 ), regional innovation systems ( Fritsch, 2001 ) and the national innovative capacity ( Furman et al. , 2002 ). In this regard, it is vital to emphasize that an ecosystem has both a living and a non-living component. Ecosystem services can be referred to as ecosystem management. Business ecosystems consist of subsystems or aggregated pillars into ecosystem systems (subindices) that can be improved to ensure ecosystem-level performance ( Szerb and Trumbull, 2018 ). The entrepreneurship literature is becoming known as an entrepreneurial theory is based primarily on the entrepreneur. Three critical elements for the analysis of business ecosystems underlie the concept of entrepreneurship systems. First, business is mainly an incentive-based activity directed by agents. Secondly, the particular measures are affected by an institutional framework condition. Third, business ecosystems are made up of many different, complicated parts that work together to make the system work ( Acs and Szerb, 2019 ).

The word “ecosystem” became widely used in a social science context rather than an ecological one when Moore (1993) emphasized the business ecosystem as the firm's external environment. Entrepreneurial ecosystems are comparable to industrial districts, hubs and innovation systems in that entrepreneurs and spin-offs are present but not as central as they are in entrepreneurial ecosystems ( Stam and Spigel, 2017 ). Acs et al. (2017a , b) argue that entrepreneurial ecosystems evolved from the literature in both corporate strategy and regional development. Further, Cavallo et al. (2021) have created a mechanism to measure entrepreneurial environments. In particular, the authors investigated how to measure value creation and value capture techniques from the perspective of a single actor and at the level of an ecosystem using a strategic value network-based methodology. They demonstrate that value-based measurements on entrepreneurial ecosystems give a comprehensive method to assess how ecosystems function, which may aid policymakers, entrepreneurs and all other entrepreneurial ecosystem players in making strategic decisions.

Scholars emphasize the importance of accommodating relationships between institutions and economic players within and across borders since institutional contexts, such as the environment governing entrepreneurship, are defined by the presence of multiple overlapping stakeholders ( Ács et al. , 2014 ; Lafuente et al. , 2020 ; Isenberg, 2010 ). As a result, the concept of an “entrepreneurial ecosystem” has been gaining a lot of attention. Crucial conceptual and methodological discrepancies may be seen between the literature and entrepreneurship, which has been mostly viewed as a side issue. The entrepreneurial ecosystem approach can help bring these disparate schools of thought together by highlighting the importance of “location” and giving a fresh perspective on how the interplay of many actors can effect change at the regional level.

Ecosystems for start-ups are not to-do lists. While there is consensus within the academic literature regarding this ecosystem in terms of describing and identifying its components (e.g. Ács et al. , 2014 ; Spigel, 2017 ), the discussion on the mechanisms underpinning the ecosystem is still ongoing. In light of this, it is crucial to disentangle the theoretical link between the entrepreneurship ecosystem and economic outcomes, as well as the mechanisms governing the coordination between the various essential components of the ecosystem, in order to appreciate the value of the analysis proposed in this study. The determinants of the entrepreneurial environment (i.e. the social, economic and institutional determinants) do not function independently of one another; therefore, assessing them separately would not be fruitful. The creation of new businesses is not the most important component of becoming an entrepreneur. Instead, spatial heterogeneity, such as institutions and entrepreneurial activity ( Brown and Mason, 2017 ; Prieger et al. , 2016 ), explains the formation of alternative configurations, the efficacy of which can also be case specific, alluding to the networked linkages that determine the ecosystem's configuration.

In regards to entrepreneurial measurements, Lubbadeh (2019) analyzed Japan's entrepreneurial development in relation to that of other developed nations in the area, primarily Hong Kong and Taiwan. The author used the GEI methodology found in the Global Entrepreneurship Index. His research indicated that Japan's entrepreneurial performance is moderate. Institutional elements such as country risk are where Japan's entrepreneurial profile shines, while individual variables account for the profile's precariousness (e.g. population perception and motivation).

Besides, Bate's (2021) research provides light on the under-discussed topic of comparing and contrasting the entrepreneurial ecologies of the BRICS club nations, with a specific emphasis on South Africa, Brazil and India. The entrepreneurial ecosystems of different nations are compared using indicators like GEI, the Global Competitiveness Index (GCI) and the Index Economic Freedom (IEF). In his findings, the 2018 GEI and Global Competitiveness Index (GCI) both rank China as the leader among the BRICS countries in terms of economic development and the availability of opportunities for start-ups. Contrarily, when compared to Brazil and India, South Africa's entrepreneurial environment does well on Legatum Prosperity Index (LPI), IEF and GEI. While the former two are superior and on par with one another, South Africa fares low in start-up skills. This demonstrates that, in comparison to India and Brazil, higher education in South Africa is less successful in preparing the public to be entrepreneurs due to low skill perception. In contrast, Brazil and India rank dead last when it comes to opening their business sectors to foreign competition and absorbing new technologies, respectively ( Bate, 2021 ).

Methodology

This paper draws on data from the GEI in evaluating Sweden's entrepreneurial performance in the context of the country's entrepreneurial ecosystem. Acs et al . (2019) defined entrepreneurial ecosystems as dynamic institutionally embedded interaction between entrepreneurial attitudes, abilities and aspirations by individuals, which drives the allocation of resources through the creation and operation of new ventures. The GEI consists of 14 pillars. These pillars contain individual and institutional variables corresponding to entrepreneurship's macro and micro aspects ( Bosma and Schutjens, 2011 ; Acs et al. , 2017a , b ). GEI is a breakthrough advanced composite indicator in measuring the quality and dynamics of entrepreneurship ecosystems at two levels, national and regional. Also, the GEI consists of several level indices, variables, pillars, subindices and superindex ( Ács et al ., 2014 , 2017a , b ).

Attitudes: this index is related to how the countries think about entrepreneurship.

Abilities: this index is related to how entrepreneurs conduct entrepreneurial ventures in terms of required skills to accomplish the work and the extent to which these required skills are available.

Aspirations refer to the endeavor to establish new businesses capable of generating income and being scaled.

Using an innovative and cutting-edge technique, the GEI amalgamates institutional and individual variables. Besides, the GEI methodology permits the comparison of Sweden with Finland and Norway regarding entrepreneurial performance ( Szerb and Trumbull, 2018 ). Finland and Norway share several similarities with Sweden, including geographic location, level of development, and GDP per capita ( World Bank, 2020 ). Data from GEI provide a basis for identifying the strengths and weaknesses of a country's entrepreneurial performance. In addition, bottleneck methodology (PFB), with the input of GEI data, enables identification of entrepreneurial weak points against which resources can be allocated to achieve remediation.

GEI is an advanced methodology; it focuses on the qualitative aspect of entrepreneurship, while the GEM focuses on the quantitative side. GEI focuses on the quality of enterprises and how such enterprises can add value to the society and country in which they exist ( Acs et al. , 2017a , b ). Moreover, GEI, an advanced tool that considers both the individual and institutional aspects of entrepreneurship, provides a very accurate assessment of the status of the performance of the entrepreneurial ecosystem in any country ( Szerb and Trumbull, 2018 ). With reference to the latter index, the PFB methodology features a mechanism designed to analyze and assess the entrepreneurial ecosystem as aid to identifying the worst performance pillars, which are called bottlenecks ( Ács et al. , 2014 ). In helping to identify the weakest points in the system with a view to allocation of resources requisite to improve them, the PFB methodology, if employed correctly, provides a roadmap to improve the overall performance of entrepreneurship in a country. The GEI technique also offers significant advantages in numerous policy-making phases, starting from analysis, planning, implementation and support processes to strengthen particular nations' entrepreneurial capacities. The GEI methodology helps policymakers better (1) understand the nature of entrepreneurship at the national and supranational (EU) levels and (2) identify important frameworks for entrepreneurial policy. Therefore, the GEI outcome reflects the quality of the entrepreneurial environment of the involved nations.

Sweden's entrepreneurship performance vis-à-vis that of the rest of Europe

This section of the article uses the GEI dataset to evaluate the entrepreneurial ecosystem of Sweden. In the beginning, the elements of the entrepreneurial ecosystem in Sweden are examined in detail with a view to evaluating the entrepreneurial strengths and weaknesses of the country.

Table 1 reveals the value of GEI position for the top 17 European countries, among 73 countries with the three subindices scores.

According to Table 1 , Sweden has ranked sixth among 73 countries and third among 17 European countries behind the United Kingdom and Switzerland. The highlighted countries in gray are other Nordic countries (Norway and Finland) that share some similarities and common factors with Sweden. More specifically, Sweden leads these two countries with a GEI score of 72.6, Finland holds the tenth position with 67.4 and Norway, the 19th with a GEI score of 55.8.

Furthermore, Figure 1 below juxtaposes GDP per capita with the value of GEI for Sweden; in regressing the former, as a dependent variable, against latter, as an independent variable, a significant positive coefficient of determination ( R 2 ) manifests confirming Balawi (2021) 's assertion that entrepreneurial ecosystems are critical components of economic success. Further, Sweden's ecosystem performs excellently on all three GEI subindices. Its performance stands above the global trend line in all of the graphs given that the GEI value of Sweden is above the trend lines.

Table 2 below provides additional details regarding the three subindices (Attitudes, Abilities and Aspiration), the 14 pillars, in addition to their scores. Upon observation, institutional variables show very high performance ;12 out of 14 are among the top 25% of counties compared with the individual variables where only 5 pillars out of 14 show high performance. Such results comport with what is expected from a highly developed and innovative country like Sweden to encourage and support entrepreneurship activities ( Draghici et al. , 2014 ).

With respect to the majority of the 14 pillars, Swedish performance is exemplary with 10 of the 14 pillars ranking in the top 25% of nations, while the remaining four pillars (start-up skills, risk acceptance, rapid growth and risk capital) have performed less well but remain in the top 50–75% of countries. In this regard, it is worth noting that no pillar lies below this level. The start-up skills and risk acceptance pillars are lower than the other subindex pillars for the attitude subindex. Additionally, it is worth mentioning that the individual variables for the pillars of starting skills (0.41) and cultural supports (0.48) exhibit weak performance. They rank in the bottom 25% of nations.

For the abilities subindex pillars, all have demonstrated superior performance in both institutional and individual variables, except for the human capital pillar, which manifests lower performance in both institutional and individual variables than the other abilities' pillars ( Khalilov and Yi, 2021 ). As for the aspirational subindex pillars, all have shown high performance (top 25% of countries) with the exception of high growth and risk capital. Moreover, the individual variable of process innovation (new technology) and high growth (Gazelle) companies evince lower performance among 25–50% of countries.

Comparative entrepreneurial ecosystem performance: Sweden versus Finland and Norway

For Sweden, Norway and Finland, a 14-pillar benchmarking is carried out in this section. Prefatorily, it behooves to explain the rationale behind choosing these two countries as benchmarks of comparison with Sweden in terms of entrepreneurial performance. These countries are Nordic with similar political economies evincing a high value of GDP per capita: $46399 (Sweden), $64008 (Norway) and $39300 (Finland) ( Ács et al ., 2011 ).

The three economies evince a high level of development with a strong focus on innovation. The average GEI score for Sweden was 72.7, whereas the average GEI score for Norway was 55.8. Out of 73 countries, Finland came in tenth place with a GEI of 67.4. The benchmarking shows that Sweden's GEI (2015–2018) value is higher than these two countries. In particular, Sweden has exceeded these two countries in 6 out of the 14 GEI pillars. Sweden evinces outstanding institutional entrepreneurship variables where the vast majority of these variables are within the top 25% of countries.

From Figure 2 , it is demonstrable that Sweden has a high performance in opportunity perception, opportunity start-up and technology absorption surpassing Finland and Norway in technology absorption, human capital, competition, product innovation, process innovation and internationalization. On the other hand, the start-up skills and high growth evince the lowest performance among the 14 pillars in Sweden.

In contrast, Finland transcends Sweden and Norway in terms of start-up skills, networking and high growth while trailing the latter two countries in terms of competition and internationalization. The high performance of start-up skills in Finland stems from its high level of education (institutional variable of start-up skills), which reached an optimal value of 1.0. Nevertheless, Norway ranks first in opportunity perception, opportunity start-up, cultural support and risk acceptance but ranks second in internationalization and product innovation.

The role of policy and governance in fostering entrepreneurial activity

Stam (2015) observes that many nations are transitioning from entrepreneurship policies to policies for entrepreneurial economies often in the guise of ease of doing business in a country. The latter policy framework recognizes that the setting and context in which entrepreneurship takes place may substantially aid or hinder its success. In assessing ease of doing business, World Bank uses the metric of the time required to register and create a new business; the longer that time, the greater the level of deterrence impeding entrepreneurial endeavors.

To put this in perspective, the Doing Business (2020) report rates all Scandinavian economies in OCED in the world's top 25 ( World Bank, 2021 ). For example, the Scandinavian region has one of the lowest corporation tax rates in the EU. According to the World Bank's Doing Business report for 2020, Sweden ranks 10th out of 190 economies in terms of ease of doing business. Entrepreneurship in Sweden receives a fillip from a coterie of several efficient mechanisms to facilitate business creation and operation, including online complaint systems for registration, taxes, property transfer and permits. For instance, Sweden allows a full tax deduction for interest and does not have specific regulations governing thin capitalization ( World Bank, 2021 ).

Moreover, innovation in Sweden benefits from judicious public sector investment in emerging industrial sectors of the economy. The government invests aggressively in biotechnology and food processing industries to spur growth. The government is supportive to trade and aims to help emerging markets such as the Baltic states. The country's primary exports are petroleum products and vehicles. In terms of overall innovation, Sweden consistently scores high on major indices of innovation including Global Innovation Index, the European Innovation Scoreboard, and the Bloomberg Innovation Index.

The government fosters innovation and growth through various agencies and infrastructural expenditures. Sweden spends more than 3% of its GDP on research and innovation and is very active in supporting cross-border technological collaboration. Swedish companies have made significant inroads in pharmaceutical development, biotechnology technologies and digital tools in the global market. Additionally, the country holds industrial niches in biomaterials, orthopedic implants, medical imaging and visualization, and regenerative medicine ( Hall and Wagner, 2012 ; OECD, 2020b ).

Policy recommendations

Several bottlenecks in the entrepreneurial ecosystem of Sweden have been identified in this paper that need immediate intervention and extensive funding to address. The recommended policy initiatives that hold potential to enhance Sweden's GEI by 10% are summarized in Table 3 .

In employing the PFB approach, an essential feature of GEI, the most vulnerable links in the ecosystem can be laid bare with a view to targeting enhancements in entrepreneurial pillars that hold a promiser to reap increasing returns to GEI scores for a given level of investment. The approach assumes that entrepreneurship performance depends on the weakest (poorest performance) pillars ( Ács et al. , 2011 ). The table below shows Sweden's bottleneck pillars and the quantum of improvement needed, in terms of allocated resources, to attain an increase in the GEI value of the entrepreneurial pillars in Sweden's ecosystem.

According to Table 3 , salient bottleneck pillars congregate around start-up skills, human capital, high growth and risk capital. To increase the GEI of Sweden by 10%, the following actions are needed:

The start-up skills pillar consists of skill perception and education. The values of these variables are (0.47) and (0.75), respectively. Acs and Szerb (2019) describe start-up skills as “the perception of start-up skills in the population and weights this aspect with the quality of education” (p. 28). This pillar can be improved in Sweden by promoting postsecondary education. That can be achieved by designing curricula to improve entrepreneurial skills among would-be entrepreneurs. A premium should be placed on hiring qualified trainers who, having themselves entrepreneurial experience, can transfer their best practice to these new entrepreneurs ( Karlsson and Moberg, 2013 ).

Furthermore, the human capital pillar consists of the labor market and educational level. The values of these variables are 0.65 and 0.81, respectively. Taking this into consideration, it is proposed that additional resources be directed to the labor market due to its low value, albeit the institutional variable of the labor market has two components (labor freedom and staff training) ( Karlsson and Moberg, 2013 ; Acs and Szerb, 2019 ), one of which, labor freedom, cannot be ameliorated purely by additional resources.

However, Sweden can invest more in the training of the national labor force to endow all workers with technology-driven skills since that, perforce, impacts business development and innovation. To further facilitate new business formation, the state ought to streamline and simplify the regulatory environment through the simplification of the laws that control the activities of entrepreneurship and the introduction of new laws that contributes to the transparency in the implementation of legislation. Furthermore, it is critical to repeal any laws that are no longer relevant or necessary. In this regard, insisting on extensive use of IT to lessen administrative burden in regulations relating to entrepreneurship activities is critical.

The high growth pillar consists of finance and strategy and high growth “Gazelle” companies ( Acs and Szerb, 2019 ). The values of these variables are 0.93 and 0.50, respectively. The Gazelle variable is the percentage of high-growth enterprises that expect to hire at least ten people and develop at a rate of more than 50% in the next five years ( Acs and Szerb, 2019 ; Balawi, 2021 ). Concerning this, the score on Gazelle is low and that depresses the total value of the high growth pillar. Lastly, the risk capital pillar consists of the depth of capital and informal investment. The values of these variables are 0.90 and 0.72, respectively. Informal investors, such as family members, friends or private investors, contribute to start-up company financing. In this context, more support and resources are to be allocated to encourage people involved in informal investment to increase the value of this type of business, which can be done through providing suitable education to those investors and simplifying the laws which govern such types of investment. That will improve the performance of this individual variable and, consequently, will enhance the performance of the risk capital pillar.

According to the conducted comparison between the three countries, many lessons can be learned from Norway and Finland. It is noteworthy that each of these countries has an advanced rank according to the GEI index, and they also surpassed Sweden in some pillars. Finland has a high score in start-up skills and networking pillars, and it surpassed the other two countries in these previously mentioned pillars. Finland is a safe place to start a business. It is an attractive place to put innovative technology to the test. Finland has highly educated and tech-savvy individuals, a reliable testing infrastructure and the best digital technology knowhow ( Business Finland, 2022 ). On the other hand, Norway has high scores in the risk acceptance and cultural support pillars. There are numerous advantages to doing business in Norway, including the high level of education, excellent productivity and a long-standing innovation culture ( Oslo Business, 2022 ). Norway's economy is among the most powerful in the world. The people who make up an entrepreneurial ecosystem, as well as the culture of trust and collaboration that allows them to work together successfully, are at the heart of it. As well, a wave of Norwegian enterprises has penetrated local and worldwide markets, aided by a healthy ecosystem of coworking spaces, accelerators, incubators, hubs, investors and support funds. Entrepreneurs in Norway can rapidly locate what they need at each stage of growth due to an ecosystem that allows for the free flow of people, information and resources. The most vital things are knowledge development, innovation, technology and keeping the economy going ( Road, 2022 ). Norway should focus on the integration of market orientation and globalization into the heart of the business model. This is essential for providing better business development skills and facilitating the expanding availability of high-quality public and private risk capital ( Frimanslund, 2022 ). Also, the increasing availability of resources and assistance, and inspiring and supportive ecosystems, networks, and communities for entrepreneurs to boost their businesses ( Startup Universal, 2021 ).

With a view to identifying where immediate policy intervention is warranted, this paper overviews the entrepreneurial ecosystem of Sweden in terms of its present condition within the framework of the GEI. The GEI presents a multidimensional encapsulation of entrepreneurship by integrating individual and institutional factors in order to determine the ecosystem's strengths and limitations. Particularly from a policy-making perspective, the PFB technique provides added insight to GEI by identifying a country's weakest pillars; for Sweden, these gap areas span start-up skills, human capital and high growth. Ranked sixth on the GEI, Sweden boasts a GEI score of 72.7. That its GEI score and subindices substantially exceed global average scores elevates Sweden to the ranks of the most innovative economies.

In terms of GEI pillars, Sweden ranks highest in 9 out of 14, establishing the nation among the top countries in each. However, subindex bottlenecks in start-up skills serve as a drag on its overall GEI. Furthermore, the GEI performance level varies according to institutional and individual characteristics. Sweden does better on institutional measures than on individual measures with the average value for institutional variables at 0.90 as compared to that of 0.69 for individual variables. Individual factors within the entrepreneurial attitudes subindex, including skill perception and career status, are the primary issue areas that require the government's undivided focus to increase the country's overall entrepreneurial capabilities. These findings suggest that greater return to scale in public investment can be realized by targeting individual rather than institutional characteristics in programs of improvement.

Comparing Sweden's performance to that of the other two countries in the Nordic region (Norway and Finland) revealed notable discontinuities. After analyzing the 14 pillars of GEI, it was found that Sweden surpassed both countries in 6 out of the 14 pillars. In contrast, these two countries shared performance superiority in other pillars. In more detail, Sweden is a market leader in internationalization and technology absorption. Opportunity perception and opportunity start-up are the best performing pillars in all the countries. Still, process and product innovation are the poorest performing pillars in Norway, and competition is the worst performing pillar in Finland. Nevertheless, all three nations continue to face substantial bottlenecks in terms of human capital and high growth. By and large, Norway lags behind comparable average performers in the category of innovation economies.

In conclusion, policy intervention must address current bottlenecks, most notably increasing human capital. Above all, the Swedish government must incrementally invest in augmenting performance in start-up skills at 47% of the resources allocated. Other areas earmarked for investment yielding increasing returns to entrepreneurial activity range from 17% for high growth, 6% for human capital and 2% for risk capital. In addition, that Sweden must undertake a range of structural changes to strengthen it’s an entrepreneurial environment to host and attarct entrepreneurs ( Hessels et al. , 2008 ).

As a limitation, the GEI data included in the analysis span only a limited range of years, 2015–2018. More temporally extensive data would be utile particularly in a gauging ex ante / ex poste effects of policy changes instituted as well as the effects of sustained public investment designed to enhance one or more pillars.

business model research sweden

GDP per capita against the GEI scores and the subindices of Sweden

business model research sweden

Pillar level comparison of Sweden, Finland and Norway's pillar values

Sweden’s GEI ranking among 17 European countries

The bottleneck pillars

Source(s): Author's creation based on GEI average dataset

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Corresponding author

About the authors.

Ayman Balawi, PhD Candidate in Business Administration at the University of Pécs (Hungary); Master's in business administration from Birzeit University, Palestine. Bachelor of Electronics Engineering with a minor in physics from Palestine Polytechnic University, Palestine. His research interests include investigating the relationship between transformational and transactional leadership and their impacts on innovation. Also, he is interested in entrepreneurship, HRM and social media marketing.

Asad Ayoub, PhD candidate in Business Administration at the University of Pécs (Hungary). Master's in business administration from German Jordanian University, Jordan. Bachelor of Electrical Engineering with a minor in communication and electronics from Jordan University of science and technology, Jordan. His research interests include the relationship between emotional intelligence and job performance and job satisfaction.

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Lessons from Sweden in sustainable business

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There is an increasing trend among companies across the globe to report on their sustainability. As well as information on the company’s economic performance, this includes information on how it is handling social, ethical and environmental concerns. It is a trend driven by customers, suppliers, employees and banks in recognition that these are just as important elements of any business.

Often, the level of information provided by companies is criticised for being inadequate. But my recent research into Swedish companies shows that the quality of information does appear to be increasing. It also shows what areas are in need of further improvements to make this practice worthwhile.

For years Swedish companies have been regarded as among the best in corporate communication – in general and in sustainability reporting in particular. Their excellence in disclosing information on their performance on the sustainability arena is confirmed in both academic research and comprehensive reports like major accountancy firm KPMG’s on global sustainability trends.

Until recently, whether or not a company reported on its sustainability was voluntary in most countries. But from the financial year 2017, a new EU directive requires every so-called “public interest entity” to report on the social and environmental impact of its business model.

Having recently studied sustainability reports from the 30 largest listed Swedish companies over the period 2008-2015, there’s a lot to be learned from them. It includes household names like retailer H&M, telecomms company Ericsson and car maker Volvo. It makes clear that big and profitable companies can be more accountable when it comes to sustainability reporting.

business model research sweden

None of these companies is perfect. My research shows that they too are learning all the time when it comes to their sustainability reporting. Over the seven-year period that I looked at, the information goes from being quite brief and general to more elaborate and detailed.

This is an increasingly important part of demonstrating business ethics. In these sustainability reports companies communicate how they take responsibility for their impact on society. This is done by disclosing their efforts to integrate social, environmental and ethical concerns into their business practices.

Most importantly, my research shows that Sweden’s biggest companies have started to integrate sustainability into their business models. Volvo’s business model is built on three pillars: economic, social and environmental. This holds true for large companies that you may not have heard of too. Take Assa Abloy – it’s the world’s largest lock manufacturer and has a market cap of US$22.6 billion. In its business model , sustainability is accentuated in all processes from innovation and product development to logistics and sales.

The more recent reports show that several companies have also started relating their sustainability goals to risk management. They increasingly see how things like climate change and environmental issues will impact on their bottom line. For example, Sandvik, SEB, and Volvo are good at relating their sustainability goals to risk management. They highlight risks throughout the value chain and sometimes also discuss how these are being managed.

Room for improvement

There is, of course, room for improvement in all the companies. In some, this integration of sustainability into their business models is more tentative. It is clear that this is a new process for them and they are still working on efficiently integrating sustainability at the heart of their business model.

In particular, I found there were many that failed to realise how engaging in various sustainability activities can help their bottom line. Instead, sustainability is seen as more of a corporate social responsibility exercise. But relating sustainability to the bottom line is critical for any company – not least because shareholders often use this against their company having a focus on sustainability goals.

Another area for improvement is what gets included in sustainability reports. It is evident that developing valid and reliable measures of sustainability is tricky. Often concrete targets and time frames for achieving a sustainable goal are simply left out, leaving vague statements such as an aim to decrease CO₂ emission and waste.

This also proves problematic when it comes to comparing the sustainability performance of different companies. Even where there is sophisticated reporting, the lack of a universal system of measures makes it difficult for investors to assess which companies are better.

Despite these shortcomings, the growth in sustainability reporting in recent years is significant. It shows that companies are thinking about and forcing themselves – as well as others – to act in a way that profits wider society as well as their financial earnings. And Swedish companies offer inspiration to others that there is a business case to put ethical concerns on the same plain as economic ones.

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Drive Sweden Business Model Lab

Purpose and goal.

The purpose of the Business Model Lab (BML) project is to support Drive Swedens´s work to tackle sustainability challenges that our society and businesses are facing by accelerating the implementation and use of automated, connected, autonomous and shared mobility. The goal is to achieve this by identifying opportunities and removing obstacles to the business model innovation that is necessary for these technical solutions to break through commercially, both in Sweden and abroad.

Expected results and effects

In previous years, Business Model Lab´s work has resulted in a project portfolio with a budget of over 10 million SEK per year. The projects that we help to generate and develop, as well as our other activities linked to knowledge development and knowledge dissemination, contribute in general to a broad accelerated technical transition and to concrete results in the form of new collaborations, innovations and commercialisation. We expect to continue delivering these results and to improve our work and support by constantly developing our knowledge of business model development.

Planned approach and implementation

During the year, Business Model Lab will contribute to Drive Swedens theme area meetings on business models. These are followed up by four quarterly workshops that Business Model Lab arranges with the aim of generating and developing new business model-oriented research and innovation projects. To go from idea to reality, support is offered for business modell development, ecosystem analysis and match-making to find project constellations and forms of cooperation to test new business models in concrete project. These project are supported with research and project management.

External links

The project description has been provided by the project members themselves and the text has not been looked at by our editors.

Last updated 16 November 2023

Reference number 2023-03738

business model research sweden

Research in Sweden

Investment in research pays off. swedish innovation is ranked in the world top..

Sweden ranks among the world’s most innovative nations and investment in research is among the highest in the world in relation to GDP. The government invests heavily in education, and more than 3 per cent of Sweden’s GDP goes towards research and development.

Sweden’s long-term focus on education and research has a major impact on the country’s capacity for innovation.

Lund in the lead

At Lund University, the European Spallation Source – planned to be fully operational by 2027 – will use the world’s most powerful neutron source to provide insights into everyday materials. europeanspallationsource.se

Also connected to Lund University, the MAX IV Laboratory puts Sweden at the forefront of materials and nanotechnology research. maxiv.lu.se

Leading research areas

An active research policy approach has enabled Sweden to acquire a leading position in several areas. One is environmental technology, another life sciences. Sweden also has a high level of expertise nanotechnology, with applications in a wide variety of research fields – from medicine to sustainable energy.

The bulk of the research taking place in Sweden – around 70 per cent – is privately financed. These investments have helped companies such as ABB , Ericsson , Sandvik and the Volvo Group become leaders in their fields. The remaining 30 per cent of the research is publicly financed.

The need for research

The challenges we are facing today are complex and global. They demand action, but the prerequisites for sustainable development, growth and prosperity are changing. It’s clear that research and innovation are important factors for tackling societal issues. We need knowledge to find the right solutions. And we need to ensure we have the correct tools to implement them.

Sustainability is at the top of the Swedish government’s agenda and Sweden aims to be a leader in the implementation of the  2030 Agenda . When it comes to research and development (R&D), Sweden aims to be one of the most R&D-intensive countries in the world, with both broad and specialised research.

Major investments in R&D

As a rule, Sweden invests more than 3 per cent of the country’s GDP in R&D. The business sector contributes, with around 70 per cent of Sweden’s research being financed by private companies, as mentioned above.

Research at universities also plays an important role in fostering innovation. Which, in turn, contributes to economic growth. Public funding of research generally amounts to around 0.8 per cent of GDP. This is one of the highest rates in the world.

Government funding for research and third-cycle education is allocated in a number of ways: through direct government funding; through external funding bodies, such as government agencies and research councils; as well as through municipalities, county councils and public research foundations.

The material graphene, similar to graphite, consists of a single layer of carbon atoms arranged in a hexagonal pattern, which makes it extremely strong, yet lightweight and flexible. There is intense research on various applications for the material, for example at Chalmers University of Technology in Gothenburg.

Graphene flagship

Graphene is a super-strong form of carbon that forms atom-thin layers. The research initiative is Europe’s biggest ever. It is coordinated by Chalmers University of Technology in Gothenburg.

graphene-flagship.eu

Research-funding agencies

For research at universities and university colleges, the government is the largest source of funding, primarily through these four government bodies:

  • The Swedish Research Council  ( Vetenskapsrådet ) – allocates funding for research in the natural sciences, technology, medicine and health, humanities and social sciences, among other fields.
  • Formas , a government research council for sustainable development – allocates funding for research in environment matters, agricultural sciences and spatial planning.
  • Forte , the Swedish Research Council for Health, Working Life and Welfare – allocates funding for research in labour market issues, work organisation, work and health, public health, welfare, social services and social relations.
  • Vinnova , Sweden's innovation agency – allocates funding for, primarily, research in technology, transportation, communication and working life.

Foundations

There are five state-funded foundations that allocate funding for research in Sweden, thus offering an important complement to direct government funding:

  • SSF , the Swedish Foundation for Strategic Research
  • Mistra , the Foundation for Strategic Environmental Research
  • The Knowledge Foundation – funds research and competence development at Sweden’s university colleges and new universities
  • The Foundation for Baltic and East European Studies – supports research related to the Baltic Sea Region and Eastern Europe
  • STINT , the Swedish Foundation for International Cooperation in Research and Higher Education

Riksbankens Jubileumsfond , an independent foundation financed by the Swedish Central Bank, is another major source of funding.

Private organisations such as the  Knut and Alice Wallenberg Foundation  also make significant contributions to research funding.

Last updated on 8 February 2022

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Press Release

Stamford, conn., november 13, 2023, gartner forecasts worldwide public cloud end-user spending to reach $679 billion in 2024, business needs and emerging technologies including genai drive cloud model innovation.

Worldwide end-user spending on public cloud services is forecast to grow 20.4% to total $678.8 billion in 2024, up from $563.6 billion in 2023, according to the latest forecast from Gartner, Inc.

“Cloud has become essentially indispensable,” said Sid Nag , Vice President Analyst at Gartner. “However, that doesn’t mean cloud innovation can stop or even slow. The tables are turning for cloud providers as cloud models no longer drive business outcomes, but rather, business outcomes shape cloud models.”

“For example, organizations deploying generative AI (GenAI) services will look to the public cloud, given the scale of the infrastructure required,” said Nag. “However, to deploy GenAI effectively, these organizations will require cloud providers to address nontechnical issues related to cost, economics, sovereignty, privacy and sustainability . Hyperscalers that support these needs will be able to capture a brand-new revenue opportunity as GenAI adoption grows.” 

All segments of the cloud market are expected see growth in 2024. Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2024 at 26.6%, followed by platform-as-a-service (PaaS) at 21.5% (see Table 1).

Table 1. Worldwide Public Cloud Services End-User Spending Forecast (Millions of U.S. Dollars)

BPaaS = business process as a service; IaaS = infrastructure as a service; PaaS = platform as a service; SaaS = software as a service Note: Totals may not add up due to rounding. Source: Gartner (November 2023)

Another key trend driving cloud spending is the continued rise of industry cloud platforms . Industry cloud platforms address industry-relevant business outcomes by combining underlying software-as-a-service (SaaS), PaaS and IaaS services into a whole-product offering with composable capabilities. Gartner predicts that by 2027, more than 70% of enterprises will use industry cloud platforms to accelerate their business initiatives, up from less than 15% in 2023.

“GenAI adoption will also support the growth in industry cloud platforms,” said Nag. “GenAI models that are applicable across diverse industry verticals might require significant customization, affecting scalability and cost-effectiveness. Public cloud providers can position themselves as partners in the responsible and tailored adoption of GenAI by building on the same approaches applied to industry clouds, sovereign clouds and distributed clouds.”

Gartner clients can learn more in “Forecast: Public Cloud Services, Worldwide, 2021-2027, 3Q23 Update.”

Gartner IT Infrastructure, Operations & Cloud Strategies Conference Gartner analysts will provide additional analysis on cloud strategies and infrastructure and operations trends at the Gartner IT Infrastructure, Operations & Cloud Strategies Conferences taking place November 20-21 in London , December 6-8 in Las Vegas and December 12-13 in Tokyo . Follow news and updates from these conferences on X using #GartnerIO .

About Gartner for High Tech Gartner for High Tech equips tech leaders and their teams with role-based best practices, industry insights and strategic views into emerging trends and market changes to achieve their mission-critical priorities and build the successful organizations of tomorrow. Additional information is available at www.gartner.com/en/industries/high-tech .

Follow news and updates from Gartner for High Tech on X and LinkedIn using #GartnerHT. 

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Navigating the New Risks and Regulatory Challenges of GenAI

  • I. Glenn Cohen,
  • Theodoros Evgeniou,
  • Martin Husovec

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What leaders need to know now to protect their companies.

The use of generative AI promises to continue to grow rapidly. Consequently, leaders must understand the risks and challenges of this new technology and develop policies and practices to guide its usage. This article explains the areas of concern and offers guidance in addressing them.

The rapid rise of generative AI, including large language models (LLMs) such as OpenAI’s ChatGPT/GPT-4 , is creating new risks and regulatory challenges for business. Although it is still early days, companies cannot afford to delay developing policies and practices regarding the use of these technologies.

  • I. Glenn Cohen is a deputy dean, professor of law, and faculty director of the Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School.
  • Theodoros Evgeniou is a professor at INSEAD and codirector of the INSEAD executive education program Transforming your Business with AI. He has been a member of the OECD Network of Experts on AI, an advisor for the BCG Henderson Institute, and a World Economic Forum academic partner for artificial intelligence, and is a cofounder of Tremau, a technology company for digital regulations.
  • Martin Husovec is an associate professor of law at the London School of Economics and Political Science.  He is a member of the European Copyright Society, a group of prominent European copyright scholars, and a book reviews editor at the I nternational Journal of Law and Information Technology . He is also a cofounder of the European Information Society Institute.

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Everyone's talking about OpenAI's Q*. Here's what you need to know about the mysterious project.

  • A mysterious new OpenAI model known as Q* has got the tech world talking.
  • The model is said to have sparked concern at the startup that led to the resulting chaos.
  • AI experts say the model could be a big step forward but is unlikely to end the world anytime soon.

Insider Today

As the dust settles on the chaos at OpenAI, we still don't know why CEO Sam Altman was fired — but reports have suggested it could be linked to a mysterious AI model .

The Information reported that a team led by OpenAI chief scientist Ilya Sutskever had made a breakthrough earlier this year, which allowed them to build a new model known as Q* (pronounced "Q star.") The outlet reported that the model could solve basic math problems.

Sources told Reuters that this model provoked an internal firestorm , with several staff members writing a letter to OpenAI's board warning that the new breakthrough could threaten humanity.

This warning was cited as one of the reasons that the board chose to fire Sam Altman, who returned as CEO on Wednesday after days of turmoil at the company, Reuters reported.

The ability to solve basic math problems may not sound that impressive, but AI experts told Business Insider it would represent a huge leap forward from existing models, which struggle to generalize outside the data they are trained on.

"If it has the ability to logically reason and reason about abstract concepts, which right now is what it really struggles with, that's a pretty tremendous leap," said Charles Higgins, a cofounder of the AI-training startup Tromero who's also a Ph.D. candidate in AI safety.

He added, "Maths is about symbolically reasoning — saying, for example, 'If X is bigger than Y and Y is bigger than Z, then X is bigger than Z.' Language models traditionally really struggle at that because they don't logically reason, they just have what are effectively intuitions."

Sophia Kalanovska, a fellow Tromero cofounder and Ph.D. candidate, told BI that Q*'s name implied it was a combination of two well-known AI techniques, Q-learning and A* search.

She said this suggested the new model could combine the deep-learning techniques that power ChatGPT with rules programmed by humans. It's an approach that could help fix the chatbot's hallucination problem .

"I think it's symbolically very important. On a practical level, I don't think it's going to end the world," Kalanovska said.

"I think the reason why people believe that Q* is going to lead to AGI is because, from what we've heard so far, it seems like it will combine the two sides of the brain and be capable of knowing some things out of experience, while still being able to reason about facts," she added, referring to artificial general intelligence.

"That is definitely a step closer to what we consider intelligence, and it is possible that it leads to the model being able to have new ideas, which is not the case with ChatGPT."

The inability to reason and develop new ideas, rather than just regurgitating information from within their training data, is seen as a huge limitation of existing models, even by the people building them .

Andrew Rogoyski, a director at the Surrey Institute for People-Centered AI, told BI that solving unseen problems was a key step toward creating AGI.

"In the case of math, we know existing AIs have been shown to be capable of undergraduate-level math but to struggle with anything more advanced," he said.

"However, if an AI can solve new, unseen problems, not just regurgitate or reshape existing knowledge, then this would be a big deal, even if the math is relatively simple," he added.

Not everyone was so enthused by the reported breakthrough. Gary Marcus, an AI expert and deep-learning critic , expressed doubts about Q*'s reported capabilities in a post on his Substack .

"If I had a nickel for every extrapolation like that—'today , it works for grade school students! next year, it will take over the world!'—I'd be Musk-level rich," wrote Marcus.

OpenAI did not immediately respond to a request for comment from Business Insider, made outside normal working hours.

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Watch: Sam Altman moves to Microsoft after OpenAI fires him as CEO

business model research sweden

Spain's Iberdrola to invest $15 bln in Britain through 2028

Illustration shows Electric power transmission pylon miniatures and Iberdrola logo

[1/2] Electric power transmission pylon miniatures and Iberdrola logo are seen in this illustration taken, December 9, 2022. REUTERS/Dado Ruvic/Illustration Acquire Licensing Rights

  • Iberdrola SA Follow
  • Enel SpA Follow

MADRID, Nov 27 (Reuters) - Spanish renewable energy giant Iberdrola (IBE.MC) said on Monday it would invest nearly 14 billion euros ($15 billion) in Britain through 2028 in grids and renewable projects.

The plan is in line with the company's broader investment strategy, which has seen a growing focus on networks, whose returns tend to be predictable, and a more selective approach to renewable projects, favouring those yielding higher returns.

It adds some 8 billion euros to the investment Iberdrola had already pledged in Britain for the period between 2023 and 2025.

Some of Europe's energy giants have turned more cautious on renewables, as the sector faces high interest rates and rising debt costs.

Additional investment in grids are necessary to strengthen the system given the increased role played by intermittent electricity production from renewables.

Italian energy group Enel (ENEI.MI) has adopted a similar script, with a new investment plan that will focus on power grids while being more cautious on renewable energy projects.

Iberdrola said transport and distribution networks would get roughly two-thirds of the planned investment, including more than 3 billion euros for a subsea cable able to transport enough renewable energy to power two million households.

The construction of the cable, Eastern Green Link 1 (EGL1), will start early next year.

The Spanish firm also pledged to invest in solar and wind projects, including the offshore wind project off Britain's eastern coast known as East Anglia 3, as well as in green hydrogen.

The overall investment - which came alongside several others announced by the UK government - may rise with further opportunities in offshore wind, Iberdrola said.

"With stable and predictable regulatory frameworks in the United Kingdom, we are more committed than ever to continue promoting our investments in networks and renewables to continue promoting the energy transition and the achievement of the country's climate objectives," Executive Chairman Ignacio Sanchez Galan said in a statement.

($1 = 0.9168 euros)

Reporting by Pietro Lombardi; Editing by David Latona and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

Carbon dioxide storage tanks are seen at a cement plant and carbon capture facility in Wuhu

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IMAGES

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  2. The Swedish Model

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  3. Sweden SWOT Analysis Market Research Report

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  4. (PDF) Business models for product-oriented house-building companies

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  5. Business Model Generation PDF/ePUB download e-bok svenska på nätet

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  6. 859th Conference on Economics and Business Research, 2020, Sweden

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COMMENTS

  1. Unpacking sustainable business models in the Swedish agricultural sector- the challenges of technological, social and organisational innovation

    Business model innovation Sustainable business model Archetypes Agriculture Agri-food NUTS Sustainability 1. Introduction 1.1. Background The agricultural sector has a key role to play in addressing many of the global challenges identified in Agenda (2030).

  2. Business Model Innovation

    Stockholm University. Find courses and programmes. While technology innovation, product/service innovation and even process innovation are often taught; it is business model innovation that is driving the growth or many enterprises. Leading companies such as McDonald's, Microsoft, Xerox, GE, Amazon, H & M, Dell, eBay, Lego, Federal Express ...

  3. An overview of sustainable business models for innovation in Swedish

    This paper examines how Swedish food producers use sustainable business models to innovate their businesses. The empirical data comes from a telephone survey with 204 companies and from case studies of 4 companies.

  4. Development of Sustainable Business Models for Innovation in the

    5.1 Introduction This chapter focuses on the development of sustainable business models for innovation in the Swedish agri-sector. This is important for several reasons. At the global level, many of society's challenges are linked to social, environmental and economic aspects of agriculture.

  5. Full article: Evaluation of Digital Business Model Opportunities

    Lina Linde is a PhD candidate in entrepreneurship and innovation at Luleå University of Technology, Sweden. Her research interests include servitization, digitalization, business model innovation, and strategic management. ... Business model generation: a handbook for visionaries, game changers, and challengers. New York: John Wiley & Sons.

  6. Drive Sweden Business Model Lab

    The Drive Sweden Business Model Lab was founded to bridge the gap between innovation and business models - with a focus on sustainable innovation. After its first year of operation it has gathered a diverse setup of actors, ranging from small startups to academia and global companies and the work going on within the lab has attracted a large interest.

  7. An analysis of business models in Public Service Platforms

    Business models in 14 Swedish cases are examined. ... Shafer, Smith, and Linder (2005) studied the business model definition, Pateli and Giaglis (2004) proposed an E-business model research framework, and Shafer et al. (2005) identified and synthesized business model components as the four categories of strategic choice, Value Network, ...

  8. Global analysis

    Business Sweden's global analysis is focused on the macroeconomic and commercial conditions and forecasts that are vital to Swedish companies' strategic decision-making and operations abroad. While providing insights in the intercept of macroeconomics, trade and investment policies and international business based on well recognized data sources, Business Sweden's global analysis also ...

  9. Swedish research creating sustainable growth

    RISE Research Institutes of Sweden. RISE is Sweden's research institute and innovation partner. Through our international collaboration programmes with industry, academia and the public sector, we ensure the competitiveness of the Swedish business community on an international level and contribute to a sustainable society. Our almost 3300 ...

  10. Assessing the entrepreneurial ecosystem of Sweden: a comparative study

    This paper aims to investigate and examines Sweden's overall entrepreneurship performance (ecosystem) by applying the Global Entrepreneurship Index (GEI) while benchmarking the entrepreneurial ecosystem of Sweden with that of Finland and Norway. Design/methodology/approach

  11. An overview of sustainable business models for innovation in Swedish

    This paper examines how Swedish food producers use sustainable business models to innovate their businesses. The empirical data comes from a telephone survey with 204 companies and from case...

  12. Barriers to business model innovation in the Swedish urban freight

    Table 1 presents a review of research on urban freight transport in which the business model is the analytical unit or barriers to business model adoption are discussed. The focal point of each paper (e.g., technology or service), identifiable barriers associated with the development or implementation of a business model (infrastructure, offering, customers and finance) and the analytical ...

  13. Lessons from Sweden in sustainable business

    Most importantly, my research shows that Sweden's biggest companies have started to integrate sustainability into their business models. Volvo's business model is built on three...

  14. Business modeling under adversity: Resilience in international firms

    2.1 Business model research in international contexts. The BM concept has gradually shifted from being a popular buzzword that emerged from business jargon rooted in the dot-com boom of the 1990s ... Sweden, Denmark, Poland, Estonia, Germany, Spain, Italy, United Kingdom. Co-founder 1, January 21, 2020; 51 min.

  15. (PDF) Business model innovation of international new ventures: An

    Business model innovation of international new ventures: An empirical study in a Swedish context Authors: Jan Abrahamsson Umeå School of Business and Economics Håkan Boter Umeå University...

  16. Solar business models from a firm perspective

    The business models of 241 solar firms in Sweden were mapped and analyzed. • Policymakers must understand solar business models from a firm perspective. • Customers and their needs are central in the business models of solar firms. • Capabilities are determinant in the design of solar business models. Abstract

  17. Business models for dedicated container freight on Swedish inland

    What follows is an overview of the business model concept and its application in intermodal and IWT research. The third section presents the method used in this work, which consists of case studies of Swedish IWT and business model evaluations conducted using the multi-actor multi-criteria analysis (MAMCA) process.

  18. Innovation in Sweden

    Education and research. Sweden's long-term focus on education and research has also had a major impact on the capacity for innovation. In 1842 the country introduced compulsory schooling for 7- to 13-year-olds (today for 6- to 15-year-olds). This was a game-changing move, as it raised the overall level of education among the people, and ...

  19. Drive Sweden Business Model Lab

    The purpose of the Business Model Lab (BML) project is to support Drive Swedens´s work to tackle sustainability challenges that our society and businesses are facing by accelerating the implementation and use of automated, connected, autonomous and shared mobility. The goal is to achieve this by identifying opportunities and removing obstacles ...

  20. (PDF) Barriers to Sustainable Business Model Innovation in Swedish

    Although research shows that sustainable business model innovation (SBMI) contributes to the creation of sustainable businesses and to the development of a sustainable society, Swedish...

  21. A framework for characterizing business models applied by forestry

    The research process also identified which questions are critical to capturing the relevant content of the included business model components. The adapted framework was tested by interviewing forestry service market experts in Sweden, Finland, Scotland and Ireland about the business model characteristics in their respective countries.

  22. Research in Sweden

    The business sector contributes, with around 70 per cent of Sweden's research being financed by private companies, as mentioned above. Research at universities also plays an important role in fostering innovation. Which, in turn, contributes to economic growth. Public funding of research generally amounts to around 0.8 per cent of GDP.

  23. Business models for sustainability and firms' external relationships—A

    Increased focus on sustainability has made firms' value creation increasingly boundary spanning and complex. This begs the question of how business model research describes firm's external relationships, motivating us to undertake a systematic literature review.

  24. A Model of Behavioral Manipulation

    A Model of Behavioral Manipulation. Daron Acemoglu, Ali Makhdoumi, Azarakhsh Malekian & Asuman Ozdaglar. Working Paper 31872. DOI 10.3386/w31872. Issue Date November 2023. We build a model of online behavioral manipulation driven by AI advances. A platform dynamically offers one of n products to a user who slowly learns product quality.

  25. Gartner Forecasts Worldwide Public Cloud End-User Spending to Reach

    Business Needs and Emerging Technologies Including GenAI Drive Cloud Model Innovation. Worldwide end-user spending on public cloud services is forecast to grow 20.4% to total $678.8 billion in 2024, up from $563.6 billion in 2023, according to the latest forecast from Gartner, Inc. "Cloud has become essentially indispensable," said Sid Nag ...

  26. Navigating the New Risks and Regulatory Challenges of GenAI

    The rapid rise of generative AI, including large language models (LLMs) such as OpenAI's ChatGPT/GPT-4, is creating new risks and regulatory challenges for business.Although it is still early ...

  27. Japan's TSE starts market maker trial in carbon credit market

    TOKYO, Nov 27 (Reuters) - Japan's Tokyo Stock Exchange (TSE) said on Monday it has launched a market maker mechanism on a trial basis in the newly-launched carbon credit market to boost liquidity.

  28. Everyone's Talking About OpenAI's Q.* Here's What You Need to Know

    Here's what you need to know about the mysterious project. Sam Altman is back as OpenAI CEO after several days of chaos at the company. A mysterious new OpenAI model known as Q* has got the tech ...

  29. Iberdrola to invest 14 bln euros in Britain through 2028

    MADRID, Nov 27 (Reuters) - Spain's renewable energy giant Iberdrola said on Monday that it will invest nearly 14 billion euros ($15.27 billion) in Britain through 2028 in grids and renewable projects.