Meeting Radical Change And Regional Transition Regional Closedowns

Description
During this such a detailed illustration with regards to meeting radical change and regional transition regional closedowns.

Meeting Radical Change and Regional Transition:
Regional Closedowns and the Role
of Entrepreneurship
Yvonne von Friedrichs
Håkan Boter
The aim of this paper is to describe and analyze the e?ects of radical
changes within regions by providing an empirical base from I: Swedish
municipalities from di?erent regions. The speci?c focus of the paper
is the role of entrepreneurship, both as an opportunity-seeking activ-
ity in order to ?nd and develop new business undertakings, as well as
entrepreneurship as a perspective for supporting activities in the public
or private spheres. The results are based on interviews and surveys, sec-
ondary data, information from regional governments, municipal web-
sites and also from other public information channels. Two questions
were raised in analysing the case: (I) What types of contextual fac-
tors are of strategic importance when regions are challenged by radical
change, and what role do these factors have in a regional restructur-
ing and development process? ) What types of policy and support
measures are productive for entrepreneurial activities in regions when
adaptation to radical change is required? The results presented by the
study provide insight into how the development of local economies is
a?ected when conditions change in a region due to the closure of a
major public workplace. The paper also tries to present opportunities
through which municipalities are able to prepare for and take action
to help entrepreneurial activity face ongoing structural change and a
globalized local economy.
Key Words: radical change, regional transition, entrepreneurship,
restructure, strategies, closedowns
)vi Classi?cation: i, vII
Introduction
The business environment is always changing. Sometimes slowly and
gradually, other times very quickly and, occasionally, almost revolution-
Dr Yvonne von Friedrichs is an Assistant Professor in the Department
of Social Sciences, Mid Sweden University, Sweden.
Dr Håkan Boter is a Professor at the Umeå School of Business
and Economics, Umeå University, Sweden.
Managing Global Transitions , ): ,,–I::
Ioo Yvonne von Friedrichs and Håkan Boter
ary changes can take place. The globalization of the industrial economy,
new international workforce divisions, rapid developments in informa-
tion and communication technology and the changing roles of nation
states are some examples of the major indications of rapid and radi-
cal change in the last century. One challenge in the twenty-?rst cen-
tury will be how these changes combine with established institutional
structures in local economies. There are indications that the impact of
structural transformation processes varies in di?erent parts of the world
and that the globalization of society has made it even more important to
discuss the various regional conditions for economically sustainable de-
velopment. Increased competition between regions and the more glob-
alised economy have created an urgent need for restructuring in order to
achieve a su?cient level of innovativeness and competitiveness in di?er-
ent regions (Asheim and Isaksen I,,,). Encouraging entrepreneurship
and new business creation are often emphasized as means for creating
local development and growth in a global economy; one challenge in
the future will be how the public and private sectors are able to face
these changes and how to support entrepreneurial e?orts. Although new
business creation always precedes regional economic growth there is no
evidence that higher ?rm birth rates will guarantee economic growth
(Reynolds, Storey and Westhead I,,¡). Studies show that entrepreneur-
ship and leadership could be catalysers for economic growth, but that the
number of entrepreneurial activities varies in di?erent regions (Bygrave
and Minniti oo). It is therefore interesting to generate further knowl-
edge about the impact of di?erent contextual settings on entrepreneurial
activities and what strategies to use in order to encourage entrepreneurial
e?orts for the preservation and development of regional prosperity in
times of radical change.
In the second half of o8 the global ?nancial crisis a?ected all sectors
of the global economy. The long-term consequences will be substantial,
with considerable restructuring in some industries, down-sizing in other
industries and, probably, some established business sectors will be re-
placed by radically new types of business ventures. The massive impact
of the ?nancial collapse on society at large has also mobilized govern-
ments. They are now taking initiatives to stimulate cooperation between
private and public bodies in order to meet the current challenges and
to create awareness of the necessity of creating economic recovery and
renewal.
The purpose of this article is to elaborate on the opportunities for
Managing Global Transitions
Meeting Radical Change and Regional Transition IoI
regions to cope with radical changes in the local environment, as well as
to discuss the policy implications of such changes. Moreover, the article
starts out froma business support agency perspective and will speci?cally
study the role of entrepreneurship, both as opportunity-seeking activity
in order to ?nd and develop new business undertakings on commercial
markets, but also how entrepreneurship can be applied to study support
organizations and mechanisms in sectors involving public, semi-public
and private support agencies.
Sweden is in the middle of a process of radical change that aims to
transform its national military capabilities from a traditional domes-
tic defence force to nationally and internationally oriented smaller and
more ?exible task forces with high mobility. As there have been signi?-
cant investments in military organization (bases, equipment, personnel,
expertise etc.), this process of change is having a great in?uence on a
number of sectors in the regional community. The empirical base for
this study is linked to twelve widely distributed municipalities that be-
long to di?erent regions. The perspective of the paper is that of studying
the consequences of the closedown of twelve military bases in various
locations in Sweden. In our analysis, we raise two questions:
I. What types of contextual factors are of strategic importance when
regions are challenged by radical change, and what role do these
factors have in regional restructuring and development processes?
:. What types of policy and support measures are productive for en-
trepreneurial activity in regions when adaptation to radical change
is required?
Literature Review
Numerous studies have been carried out in order to understand the rela-
tionship between a ?rm and its environment (Parker o,). Some of the
more salient results of this research are the classi?cation of the environ-
ment in terms of levels of complexity and turbulence, and the proper
managerial routines and attitudes that are suitable for di?erent envi-
ronmental settings (Lawrence and Lorsch I,o,). Strategic entrepreneur-
ship is an emerging ?eld in contemporary management research and
this approach underlines the importance of companies, as well as organ-
izations, continuously following a changing and often very dynamic con-
text. While doing this, companies must exploit the competitive advan-
tages of their existing market niches and simultaneously also work with
Volume ? · Number ? · Summer ????
Io: Yvonne von Friedrichs and Håkan Boter
innovation and newopportunities in order to continuously renewstrate-
gic behaviour (Ireland, Hitt and Sirmon o,). Smith and Cao oo,)
have examined the literature in this ?eld and found that two established
views are emphasized in the literature. The ?rst of these, the ecological
view, focuses on the importance of the business environment, its struc-
tures, processes and norms, and that the individual ?rm must develop a
good ?t for these contextual conditions in order to be successful (Han-
nan and Freeman I,,,). The second view focuses on the e?orts of com-
panies to develop e?ective routines and structural organisation in order
to manage dynamic settings. The environment is not as rigid as in the
?rst view and the ?rms are encouraged to react and adjust to changing
external conditions (Nelson and Winter I,8.
A third view, according to Smith and Cao oo,), is strongly in?u-
enced by research into core aspects linked to entrepreneurship. Accord-
ing to Kirzner (I,,,) the entrepreneur has the capability to discover busi-
ness opportunities in market segments and, with a generally alert ap-
proach, this will result in actions even when there is a relatively small ba-
sis for decision-making. In this entrepreneurial perspective the level of
analysis changes, from the population level and the ?rm level of the ?rst
two perspectives, to that of highlighting the importance of managers and
entrepreneurs within companies and organizations. This more proactive
approach among strategic actors must also be linked to the role of belief
systems and expectations as important resources for guiding sense mak-
ing, information collection, decision-making and actions (Weick I,,,).
Active roles for core actors can positively in?uence and shape the envi-
ronmental readiness to meet and act in states of emerging radical change.
Radical change processes can be linked to a major shift in market pref-
erences, or be associated with essential development stages of core tech-
nology, and consequently these types of events and processes will occur
relatively infrequently in the lifecycle of a company, organization, mar-
ket or a sector in the society. Within the ?eld of change management
an important research aim is to understand the causes that created the
changes, but also to contribute to the management of change, i. e. knowl-
edge, models and best practices of howstrategic planning will be adapted
to the need for change (Frahm and Brown o,; Dover, Lawler and Hilse
o8). Research results indicate that organizations in more dynamic con-
texts have also developed better capabilities for managing radical change
(Brown and Eisenhardt I,,,).
The mainstream de?nition of entrepreneurship is linked to private
Managing Global Transitions
Meeting Radical Change and Regional Transition Io,
companies, but there are also broader perspectives linked to the creation
of neworganizations (Gartner I,8,) and various types of entrepreneurial
activities associated with, and often within, larger companies and orga-
nizations, e. g. corporate entrepreneurship and intrapreneurship (Zahra,
Jennings and Kuratko I,,,; Antoncic and Hisrich oI; Antoncic and
Hisrich o¡). When meeting radical changes in a speci?c regional con-
text it will be necessary to mobilize a wide range of actors in order to
meet the challenges linked to the new situation. A wide set of actors
within the business community will come forward, but so will various
public organizations. Earlier studies of entrepreneurship linked to the
public sector are few, but the number is growing (Ireland, Hitt and Sir-
mon o,).
DiMaggio (I,88) asserts that the role of entrepreneurs can be under-
stood within the concept of institutional entrepreneurship, where in-
terorganizational entrepreneurs at high, middle and lowlevels in all types
of organizations are often the driving forces behind new development
projects. The need for these types of roles is obvious in private as well
as public organizations. Another understanding emanates from Morris
and Jones (I,,,) who claim that corporate entrepreneurship is in many
ways a concept well adapted to non-pro?t activities. They found many
similarities between cv and a public context, such as a strong cultural
environment and the importance of e?ective and well-developed rou-
tines for administrative control. Empirical results from studies in the
public sector presented by Bartlett and Dibben oo demonstrate that
the leadership in such organizations is not only linked to public groups
and constituencies, but that there are also ‘empowered champions’ that
are driven by their own conviction that change is necessary (Sundin and
Tillmar o8).
Johannisson and Nilsson (I,8,) indicated that public sector organi-
zations not only work with concrete entrepreneurial activities but that
their core tasks as public authorities and public service providers can be
conducted in an entrepreneurial way and in close cooperation with com-
panies. It is argued that cv involves organizational learning, and that the
advancement is driven by collaboration, creativity and individual com-
mitment and requires the integration of organisational practices (Zam-
petakis and Moustakis o,).
A large part of the literature has focused on individual aspects, such
as education, gender, and personality, but in this study it is of greater
interest to make associations with research ?ndings about geographi-
Volume ? · Number ? · Summer ????
Io¡ Yvonne von Friedrichs and Håkan Boter
cal factors, university contexts and industrial structures (Lee, Florida
and Acs o¡). More than forty years ago, Thompson (I,o,) suggested
that municipalities and cities, with the right set of resources and knowl-
edge, could attract new business activities and function as incubators.
The consequences of context have been convincingly demonstrated in
many studies, sometimes underlining and explaining the role of regional
characteristics, such as access to strategic resources and the quality of
support, while others have found that many contextual factors can be at-
tributed to a country-speci?c institutional context and thereby mitigate
the importance of regional uniqueness (Atherton and Frith o,).
The concept of Regional Innovation Systems (vis) has gained atten-
tion due to the increasing intensity of international competition in a
global economy (Asheimand Coenen o¡; Doloreux and Dionne o8).
The vis approach is very much linked to the in?uence of context and
proximity and consists basically of two in?uential structures, techno-
economic and political-institutional. Additionally, it is argued that the
globalized contemporary economy promotes a newunderstanding of the
institutional context, where territorially embedded socio-cultural struc-
tures have been emphasized as prerequisites for innovative and competi-
tive regions (Asheim and Isaksen I,,,). vis highlights the importance of
the region for the economic co-ordination that triggers innovation and
for the development of networking and innovative actors, i. e. ?rms and
non-?rm organizations, to enable positive development. The approach
‘emphasizes the dynamic, cumulative and social nature of the innova-
tion process as well as the network of relationships between the structure
of production and the institutional setting in which they are embedded’
(Doloreux and Dionne o8). Accordingly, innovation systems are in?u-
enced by ?rms and their support infrastructures as well as by informal
and formal institutions that facilitate or impede innovative activities. In
times of radical change in local society traditional structures, norms and
values are challenged. One example of such challenges for regions could
be when major private or public employers close down, people become
unemployed and are forced to move to where the jobs are to be found;
then the public sector has to become entrepreneurial in order to provide
basic functions and act as a motor for local development.
Therefore, in this study we use established theories about the business
environment and the strategic role of entrepreneurial behaviour in var-
ious settings, both in general and speci?cally when an organization or
a region is challenged by radical change. We also propose that the con-
Managing Global Transitions
Meeting Radical Change and Regional Transition Io,
cept of entrepreneurship should be utilized with a broader de?nition, in
order to incorporate the roles and activities linked to the private, public
and semi-public spheres. We suggest that the understanding of cv covers
both the mainstreamunderstanding of entrepreneurship, with a focus on
individual or corporate perspectives, and also the activities for exploring
the opportunities and exploitation that take place within and between
di?erent organizations.
Fostering the Entrepreneurial Mindset
As previously mentioned, it has been shown that entrepreneurship and
new business creation is vital for local development and economic
growth. It is a regularly expressed opinion that a number of nations
and regions in Europe have low entrepreneurial activity and that ‘Eu-
rope needs to foster entrepreneurial drive more e?ectively’ to cope with
increased global competitiveness (European Commission o¡). A more
global economy may cause some volatility in traditional regional struc-
tures, which may call for new and creative solutions to the problems
that arise. The European Commission’s recipe for the regions is to de-
velop a capacity for adapting to economic and social changes (European
Commission ooa). The form of such processes depends on contextual
settings and has, along with external and internal environmental trig-
gers, an in?uence on how changes are met by organisations (Ireland,
Kuratko and Morris oo). Like other scholars (e. g. Kirzner I,,,) we
argue that radical changes in society could encourage the fostering of
an entrepreneurial mindset in di?erent settings in society, along with
strategic measures that will vary according to the cultural contextual
inheritance.
Bygrave and Minniti ooo) claim that ‘the contribution of the en-
trepreneurial sector to economic growth is more than proportional to
the relative size of the sector itself ’ and that entrepreneurship is self-
reinforcing and path dependent. This means that the existence of an en-
trepreneurial history has a great impact on howthe community succeeds
in increasing entrepreneurial activity. Also, the size of the population in
a community is important for the existence of path dependency. If the
population is too small it can, in certain circumstances, be an obsta-
cle to entrepreneurial activity. Moreover, Bygrave and Minniti show that
cultural traits, along with economic and institutional characteristics, are
important for attaining positive economic development and stimulating
new business creation and entrepreneurial activities.
Volume ? · Number ? · Summer ????
Ioo Yvonne von Friedrichs and Håkan Boter
Sweden has a low degree of early stage entrepreneurial activity com-
pared to most of the countries in the study Global Entrepreneurship
Monitor (cvx) (Bosma et al. o,). In comparison to other Nordic
countries, which all have strong similarities concerning business infras-
tructures, culture, etc., only ¡.: percent of the Swedish population is in-
volved in entrepreneurial activity, while equivalent ?gures for Finland,
Norway and Denmark are o.,, o.,, and ,.¡ respectively. One possible ex-
planation for the relatively low level of entrepreneurial activity in Swe-
den could be that major parts of the Swedish economy are driven by the
public sector. Sweden’s public sector has undergone powerful expansion
during recent decades; in I,,o the public sector counted for ¡¡ percent of
total cuv while in I,,, it amounted to almost oo percent of cuv. Dur-
ing the same period the us has remained at approximately ,o percent,
which is almost the same level for a period of ,o years (Klefbom oI).
A second explanation for the relatively low entrepreneurial activity level
is the structure of the Swedish business community, where a small group
of large multinational companies is dominant and acts as the hub for
extensive industrial networks (Porter, Sölvell, and Zander I,,I). A third
reason could be risk aversion and a preference for employment over self-
employment, as well as good job alternatives (Bosma et al. o8).
The Federation of Private Enterprises in Sweden claim that over the
last decade Sweden has had a negative development in the number of
business owners while, on average, the rest of the original I, vu mem-
bers have experienced positive development (Företagarna oo). A gen-
eral challenge for Sweden is thus to increase entrepreneurial activity in
order to maintain or stimulate positive development in di?erent parts
of the country. The Swedish government has issued a directive for this
challenging work, ‘to increase entrepreneurship, weak by international
comparisons, the government plans to create a more competitive busi-
ness environment’ (European Commission oob). In order to achieve
this task Sweden has to consider the lack of entrepreneurial experience
in many parts of the country, which is due to a relatively stable tradi-
tion of industrialism since the end of the I,th century and the expan-
sion of the public sector since the middle of last century. The ovcu
oo,) emphasises the importance of developing models for partnership
between the public and private sectors in order to achieve positive de-
velopment. Additionally, it has been shown that this encourages e?ective
governance mechanisms at local and regional levels, integrating di?erent
economic actors in order to enhance entrepreneurial activities. ‘National
Managing Global Transitions
Meeting Radical Change and Regional Transition Io,
and transnational innovation systems are ine?ective if they are not based
on sound local innovation systems that are closer to business, higher ed-
ucation and training organisations’ ovcu oo,).
As di?erent regions bear di?erent cultural inheritances the models for
e?ective governance structures probably vary according to the external
and internal triggers for such actions. Falcone and Wilson oo8) show,
for example, that in times of change in rural or semi-rural areas alterna-
tive governance models may be of value in encouraging local economic
development. Also, positive local development can be achieved by an or-
ganization that involves di?erent cooperating actors from the public and
private sector, and the support of proactive centres for economic opera-
tion within the region has some impact on local entrepreneurial activity.
Harvey (I,8,) along with Perlmutter and Cnaan (I,,,) emphasises the
necessity of a proactive approach in the urban environment too, to pro-
vide a good business climate aimed at encouraging urban entrepreneuri-
alism in times of conditional change. Lumpkin and Dess (I,,o) show
that entrepreneurial organizations outperform non entrepreneurial or-
ganizations. As entrepreneurship and innovation are the keys to eco-
nomic growth, the concept of entrepreneurship and innovation in public
organizations has gained momentum, leading to new public manage-
ment in many countries (Kropp and Zolin o8). It is also claimed that
the environmental and contextual changes in society will ‘necessitate a
government to change the way it operates in structural design and in
terms of process’ (p. ,,,). A quest for public entrepreneurial approaches
will become increasingly important as municipalities are subject to rad-
ical change (Perlmutter and Cnaan I,,,). In order to be able to act en-
trepreneurially it seems to be vital to have an entrepreneurial orientation
in a community.
Entrepreneurial orientation may di?er between countries, regions or
communities for various reasons, such as di?erences in dynamism and
uncertainty (Kropp and Zolin o8). The choice of strategy in meeting
radical change may depend on the predomination of industrial or en-
trepreneurial orientation in di?erent contexts. The choice of strategy has
an impact on both the public and private sectors’ degree of passivity,
activity or pro-activity regarding participation and success in adaptation
processes (Porter I,,8). Sweden has a fairly strong tradition of industrial-
ism that is re?ected in the way private and public organizations perform,
as well as in the division of labour and how responsibility for develop-
ment issues are organized locally (Wigblad I,,,). Lack of entrepreneuri-
Volume ? · Number ? · Summer ????
Io8 Yvonne von Friedrichs and Håkan Boter
alism in Sweden impedes the adoption of innovative solutions for how
regions and municipalities can face ongoing radical change. Empirical
studies in this ?eld are sparse and growing environmental turbulence in
regions and communities makes it necessary to have guiding principles
regarding how to encourage entrepreneurship and innovation in order
to cope with radical changes (Kropp and Zolin o8).
Research Design
This study takes an exploratory approach and uses qualitative method-
ology (Glaser and Strauss I,o,; Eisenhart I,,I; Gummesson o,). The
collection of empirical data for this study was generated over a time span
of two years, starting in the spring of o, and ?nishing in o, (von
Friedrichs o,). The government decision to close down military bases
in Sweden between I,,, and oo involved a total of I: garrisons. The
data were collected from the I: municipalities involved. Some signi?cant
actors were chosen to provide information about how each municipal-
ity met the ongoing local transformation processes. In the early stages,
representatives from public business agencies and the Swedish Armed
Forces in two municipalities were interviewed, with the descriptive and
exploratory ambition of mapping the extent of the ‘military retreat’ in
each location, as well as learning more about the general consequences.
The relatively open approach at the beginning gradually led to a research
design that focused on a more comprehensive study of I: Swedish mu-
nicipalities that were subject to the transformation of the Swedish Armed
Forces. These I: municipalities took part in compensation programmes
established by the Swedish government in I,,, and o¡ to varying ex-
tents. The focus was on the impact of the closedowns on each municipal-
ity and the strategies used to face this by using transformation processes
in the local society.
In Sweden all :,o municipalities have established business agencies
that are owned or partially owned by the local government. Their main
task is to encourage and stimulate the development of the local economy
and to serve as mediators between private businesses and the public sec-
tor in each location. How they organise this can vary, but the business
agencies normally have a strategic role in the overall development pro-
cesses of the municipalities. The managers of the business agencies were
selected as interviewees in order to collect information from the estab-
lishment, on the implementation and outcome of the local strategies in
times of regional closedowns and transition.
Managing Global Transitions
Meeting Radical Change and Regional Transition Io,
A questionnaire was developed and in-depth interviews were con-
ducted with the managers of the business agencies in Io of the I: munic-
ipalities. : respondents were interviewed in person, o respondents were
interviewed via the telephone, : respondents sent in written answers to
the questionnaire, I respondent refused to answer the questions and I
respondent was not available. Each interview lasted between I-: hours
and the notes that were taken during the interview were further devel-
oped in a more detailed form immediately after the interview. After the
main interviews, missing information, ambiguities in the material, and
follow up questions were taken via the telephone, in approximately Io
interviews. The questions asked were organised around issues relating to
the development of the municipality, the impact of the military trans-
formation, local business structure, strategies for coping with structural
changes in society and future challenges for municipalities in Sweden.
The results are based on the interviews and survey, secondary data, in-
formation from regional authorities, municipal websites and also from
other public information channels. The multi-methodological approach
(Yin o,) also included the extensive use of international, national and
regional reports and other material.
The data were coded, analyzed and interpreted in three steps using a
careful approach, resulting in categories that were developed as a base
for the discussion and conclusions. The ?rst step was to assemble all the
answers obtained fromthe respondents in a transcribed formand organ-
ise them in relation to the questionnaire. As a second step, the full text
material was interpreted, so resulting in the development of signi?cant
categories. The last step was to relate these categories to the information
obtained from secondary data and other public information channels.
Table I presents information about the I: municipalities and their lo-
cation in Sweden. Three are located in the northern part of the coun-
try, in a sparsely populated region. Four are located in the middle of the
country in a region that shows greater variation in population density.
Five are located in the southern part of Sweden where the population
per square kilometre is more dense.
The Case of the Transformation of the Swedish Armed Forces
Since Sweden’s entry into the European Union, the Swedish Armed
Forces have been in a process of transformation, from a large counter-
invasion defence force to a readily deployable military. Due to this ongo-
ing transformation, major public-owned workplaces like military bases
Volume ? · Number ? · Summer ????
IIo Yvonne von Friedrichs and Håkan Boter
1.niv I Regions and municipalities in the study
Region County Population/km
:
Municipality Inhabitants
North Norrbotten :.o Kiruna :,,:,8
Boden :8,oo:
Arvidsjaur o,,,I
Mid Västernorrland II.: Sollefteå ,8¡,
Härnösand :,,o8o
Jämtland :.o Östersund ,8,ooo
Dalarna ,.8 Falun ,,,,
South Örebro ,:., Karlskoga ,o,I,,
Värmland I,.o Kristinehamn :,,8¡8
Västra Götaland o¡.o Karlsborg o,88o
Gotland I8.I Gotland ,,,:,,
Skåne Io8., Hässleholm ¡,,,8I
Sweden ::.: ,,II,,:,,
have closed down in di?erent parts of the country. In several of those
places the military had a long tradition and was a major local employer.
In many cases the military also functioned as a supportive organization
in the local community, partly as an employer for local civilians, and
partly taking part in local events as volunteers. The focus of this study
is to establish what the consequences were for local economies when the
Swedish parliament decided in I,,,, and later in o¡, to close down
several military bases, as well as how local authorities met this challenge.
Sweden is known for having a dominantly tax-?nanced public sec-
tor, and most municipalities have been dependent on public workplaces
for decades. It has become evident among politicians in Sweden that
international and national business trends have a great impact on local
municipalities and enterprises. The strategy for coping with increased
international competition is focused on how to stimulate more en-
trepreneurial activities in the local community. The study shows that
in half of the I: municipalities the public sector predominates as the
major employer. The business structure in these communities does not
provide employment opportunities for local citizens, which causes mi-
gration and a loss of skills in the regions. The Swedish government has,
as mentioned above, expressed the ambition to create and support sus-
tainable development linked to local and regional needs where growth
Managing Global Transitions
Meeting Radical Change and Regional Transition III
is a central issue (Ministry of Industry, Employment and Communica-
tions oI). Therefore, the Swedish government has tried to compensate
for the loss of jobs in the regions with ‘extraordinary measures,’ such as
the transfer of national public workplaces with the aim of stimulating
local economic development. Accompanying these types of measures,
the authorities have also expressed a desire for increased entrepreneurial
activity in the various regions. However, in some municipalities these
measures have had a counteractive impact on the division of labour be-
tween the private and public sectors, meaning that the public sector has
expanded. Several municipalities have also reported that the extraor-
dinary measures have exerted an in?uence on entrepreneurial activity.
That is to say that increased attractiveness has drawn new business ven-
tures, as well as people, to the region. One respondent says: ‘the public
establishments have in?uenced attitudes and given credibility to the mu-
nicipality’s opportunities for positive development’ and, he continues,
‘with public establishments, entrepreneurial activity has increased as has
inward migration and degree of survival for the private business sector.’
Over the last few decades Sweden has experienced the loss of sev-
eral big enterprises that have closed down plants and o?ces in di?er-
ent parts of the country. Andersson and Friberg oo,) argue that this
is a consequence of an ongoing structural transformation of society and
a result of increased global competition. This has forced many compa-
nies to improve e?ciency or to relocate production units, or the en-
tire company. When major workplaces close down or are relocated it
a?ects local economies in di?erent ways. If opportunities to ?nd new
jobs for the redundant labour force are limited in a region, individuals
are forced to move to where jobs are available. This will directly diminish
the tax base of the local economy. As Sweden has a welfare system that
is mainly ?nanced by the public sector through taxes, the migration of
people and ?rms could have a major impact on local economic devel-
opment. If the local economy depends on a publicly ?nanced social wel-
fare system, radical changes could cause problems for publicly ?nanced
services such as schools, care of the elderly, housing and local public in-
vestments. Municipalities have been forced to look for new models in or-
der to adapt to ongoing signi?cant transformation in several areas. Since
there is no general blueprint or model regarding how to stimulate en-
trepreneurship, experimentation seems to be the key (Morris and Jones
I,,,). To ?nd these new models we have to bring in more knowledge
from di?erent contextual settings. Learning from the municipalities’ ex-
Volume ? · Number ? · Summer ????
II: Yvonne von Friedrichs and Håkan Boter
perience in dealing with radical change could bring more knowledge
to such guiding models.
Results
The empirical material from this study was analyzed in the light of the
views presented in the literature section. Firstly, we argue that contextual
aspects are always of some importance in understanding the behaviour of
entrepreneurs, companies and organizations. It is necessary for the indi-
vidual actors to identify and capture these contextual factors in order to
develop e?ective management routines for functional areas of the orga-
nization. Here we drawconnections to the ?eld of strategic entrepreneur-
ship and ?nd that the challenges emerging from radical changes in the
environment can be analysed using two contextual categories: industri-
alism vs. entrepreneurialism. Our study shows that most of the respon-
dents are well aware of the ongoing structural changes in local society
and that a major hindrance in meeting these changes is the predominant
industrialism. One respondent says: ‘First it was the proprietor or mill
owner that solved all the problems that arose in the local community,
then the responsibility was taken over by the state.’ The category of in-
dustrialism represents an environmental setting that is dominated by a
manufacturing logic in which large companies are often motors for the
development of numerous small ?rms. Public organizations in health
care, education and military bases can also be important actors in re-
gions with relatively rigid structures. In the category of entrepreneurial-
ism the context is more diverse, with a mix of companies and organiza-
tions of various sizes and operations, where more dynamic processes are
driven by entrepreneurial activities. Several respondents testi?ed to weak
interest from the private sector in involvement in dynamic processes and
making contributions to regional development issues. ‘The local compa-
nies only showup if they can do business as the outcome of the meetings,
if not they do not show up,’ says one respondent.
Secondly, the companies and organizations have strategic instruments
with the purpose of surviving and developing within various environ-
mental conditions. In some organizations the strategic intentions are
relatively moderate, due to the combination of environmental setting
and strategic ambitions in the organizations. The organizations adjust to
rigid environmental conditions with reactive, sometimes inactive, strate-
gies. On the other hand, other organizations believe that they can work
in and in?uence an external context in a proactive way. The municipali-
Managing Global Transitions
Meeting Radical Change and Regional Transition II,
vicuvv I Type of context vs. strategic
behaviour E
n
t
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i
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x
t
Reactive Proactive
Strategy
i ii
iii iv
ties in our study recognise the importance of stimulating entrepreneurial
orientation as a contrast to the ‘su?ocating industrialism’ that domi-
nates most of Swedish municipalities. They also demonstrate how they
try to stimulate entrepreneurialism in di?erent ways, through establish-
ing ‘projects and training packages.’ The theme of the projects could be
changes in attitude, guidance, education and information for various ac-
tors in local society, such as sta? in the public sector, but also for in-
dividuals and businesses in general. ‘To hone the municipal treatment
of entrepreneurs’ and to ‘facilitate new ventures and established entre-
preneurs in ?nding their way into public support systems’ seem to have
top priority in most municipalities’ work in encouraging entrepreneuri-
alism.
As indicated in the methodology section, the analysis of the I: mu-
nicipalities in this study was guided by secondary documents as well as
interview material and surveys. The study also aims to cover develop-
ments over time and this approach has further strengthened the results.
The model presented in ?gure I was used to classify the I: municipali-
ties according to their main characteristics. Their general infrastructure
and the business structure (e. g. large/small ?rms, manufacturing/service
sectors, private companies/public organisations) were analyzed, follow-
ing the model presented below, in order to classify the I: municipalities
according to their main characteristics. Another important aspect of the
classi?cation was an overview of the general business culture in the re-
gions, the level of networking between ?rm constellations and the col-
laboration between the private and public sector in general.
In the ?rst quadrant (industrialism – reactive) we ?nd ?ve municipal-
ities that are all dominated by the public sector. Naturally, the military
Volume ? · Number ? · Summer ????
II¡ Yvonne von Friedrichs and Håkan Boter
investments in these regions are part of this public environment, and one
important explanation for the public pro?le, but these municipalities all
have a modern historical record of extensive public activities linked to
the health and education sectors. Additionally, in one of the municipal-
ities a large multinational company (state-owned) is very dominant in
the development of the business community, as well as the civil service
infrastructure.
In the second quadrant (industrialism – proactive) three municipali-
ties in an industrial setting are working with regional development pro-
grammes in a proactive manner. The military sector has been an all-
pervasive resource from the beginning of the twentieth century, in the
form of military bases in two of the municipalities and in the third
as a multinational armament factory owned by the state. In addition
to the military investments the business communities in these regions
have a more varied business structure, with a mixture of manufactur-
ing and service sectors. Two of these municipalities are also located in
intensive agricultural districts with a pronounced small business and en-
trepreneurial culture.
In the third quadrant (entrepreneurialism – proactive) we found
that many of the private and public initiatives originate from an en-
trepreneurial platform. One of the three municipalities in this group
is in a typical farming area with a history of small business units, like
two found in the second quadrant, but this region has also developed
into one of the most concentrated and general destinations for summer
tourism. Also typical of this category is that the entrepreneurial culture
obviously has a positive in?uence on resource sharing between compa-
nies, as well as on open and dynamic networking between companies
and actors from the public sector.
Finally, the fourth quadrant (entrepreneurialism – reactive) is an ade-
quate classi?cation for only one of the twelve municipalities being stud-
ied. This region has been strongly dominated by large companies and
a dynamic competitive extended environment. In particular, one major
international city within ,o kilometres entails extensive company net-
works, with the main head o?ces in the city, as well as public organi-
zations which are also strongly in?uenced by central o?ces, authorities
and local government in the nearby city. The municipality has all the
right conditions for entrepreneurial activities, but a relatively inactive
development process in the region is explained mainly by the nearby city,
resulting in trust for ‘big brother’ which means the indirect suppression
of various regional initiatives.
Managing Global Transitions
Meeting Radical Change and Regional Transition II,
E
n
t
r
e
p
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Reactive Proactive
Strategy
• External dependence
• Passive attitudes
• Reactive plans within rigid
structures
• Dominance of locomotive ?rms
• Planning activities started
• Actors from sectors mobilized
• Growing awareness to develop
existing structures
• Network constellations emerging
• Actions plans for development
• Wide engagement in the region
• Entrepreneurial activities in all
sectors – ?rms and public agencies
• Open and dynamic network
constellations
• External dependence
• Passive attitudes
• Rigid regional structures
• Closeness to metro-areas
vicuvv : Regional Corporate Entrepreneurship
Figure : displays a summary of the results discussed above and shows
some underlying elements in the municipalities’ environments that in-
?uence how radical change is met by regions in transition.
Discussion
The transformation of our society will force nations, regions, munici-
palities, ?rms and other organizations to adopt adaptation processes of
various kinds. It will also challenge our taken-for-granted solutions and
models for how we use and organize our businesses, as well as our pub-
licly ?nanced resources. Adaptation to the radical transformation of so-
ciety and the globalized economy will force regions into restructuring
processes, in order to be able to sustain regional prosperity and positive
development. Regions will have to face and meet radical change in the
local environment more frequently. The study shows that the di?erent
municipalities and the various contexts have developed di?erent strate-
gies for coping with radical change. It seems that the awareness of exter-
nal and internal radical change in the local economy a?ects the choice
of strategy, as do traditions and the general attitude towards how to deal
with problems that arise.
When studying the I: cases and the collected material, an overarching
analysis of the last decade’s development can be carried out. The down-
sizing of the military sector started in the I,,os, but has accelerated dra-
matically over the last ,–8 years. Generally, municipalities that were sites
Volume ? · Number ? · Summer ????
IIo Yvonne von Friedrichs and Håkan Boter
for military garrisons did not, in the early stages of radical change in
the early oos, scan the external environment in order to ?nd political,
military or economic indications and risks regarding the future disman-
tling of the national armed forces. This passive perspective was still the
prevailing viewpoint ?ve years later, even if a few municipalities indi-
cated that they had now integrated business intelligence routines into
the existing administration. Obviously the traditional long-term plan-
ning perspective, with small adjustments to the previous year’s budget, is
strongly dominant and preparedness for new elements of radical change
can be estimated as weak. One explanation for this attitude could be the
in?uence of a strong expansion phase with a good economic climate in
Sweden since the beginning of this century. This situation probably had
some impact on municipalities’ awareness of what the consequences of
the ongoing changes in the global economy could be for future local de-
velopment and prosperity.
As discussed in the theory section, several studies show that it is dif-
?cult for any organization to stand alone in the globalized economy
and that co-operation between di?erent actors is vital in most com-
petitive environments. A traditional industrial setting, with hierarchical
structures and control by top management or, in our case, local gov-
ernment, could create obstacles for a more entrepreneurial spirit in a
region. The study shows the regional dimensions of institutionalisation
and entrepreneurship policies. A general pattern of the material is that
the regions with a uniform and more rigid environmental setting, of-
ten linked to traditional manufacturing business communities, have a
public-oriented perspective. This is the case for all the regions in the ?rst
quadrant and obviously this can prevent private, as well as public, ac-
tors from taking steps away from a passive and reactive attitude, towards
a more proactive command of development programmes, reorientation
and new investments in regions faced with radical change. In the regions
with a more proactive focus for coping with their new situation, we ?nd
that ?ve out of six municipalities have a private-oriented culture. How-
ever, this latter group demonstrates that these types of proactive strate-
gies for meeting external threats can also be mobilized and developed in
regions that have traditional industrial characteristics.
Empowering regional solutions to radical change means that the na-
tional government has to be ?exible and sensitive regarding regional di-
versity and that contextual models for supportive structures and strate-
gies have to be developed. From the literature, we can see that strategic
Managing Global Transitions
Meeting Radical Change and Regional Transition II,
entrepreneurship can be used in studies of radical change. Primarily, the
role of strong entrepreneurship among individual companies and orga-
nizations in uncovering, and also exploiting, new business opportunities
in new market segments, comprises the absolutely basic and necessary
undertaking that must be performed in order to meet radical change.
However, the concept of entrepreneurship is also linked to belief sys-
tems, expectations and norms and, in the end, with the right informa-
tion, the decisions and actions of entrepreneurs will ultimately also shape
environmental readiness to act when the region is challenged by radical
change. The results of this exploratory study have to be further tested
on more extensive material, but we are ?nding indications that regions
with proactive attitudes and strategies also show successful positive de-
velopment. We propose that it is not only organizations in very dynamic
contexts that can develop the capacity to meet radical change, but that
this is also the case for organizations with a proactive attitude in many
types of regions and, in the end, this will result in positive trends that
build on gained experiences and circular learning.
Other studies have found that it may be necessary to mobilize a num-
ber of di?erent actors in order to meet radical changes at a regional level.
In the last decade particular interest has been shown in successful Triple
Helix constellations, where representatives from the business commu-
nity cooperate with partners from the public sector. In this study the
radical changes have not resulted in any visible cooperation of this kind
in about half of the regions involved. In the other six regions we ?nd a
wide variety of network models, spanning from feeble attempts among a
couple of actors to very intensive cooperative projects covering a number
of ?elds, involving many partners and with sustainable operations over
many years. One observation concerning the categories of participating
partners in these networks is that there seem to be some impediments
for small and medium-sized ?rms becoming involved in the cooperative
groups. The reason for their absence in this context is mainly lack of time.
The large companies in the region are traditionally well integrated in the
o?cial networks linked to local politics and infrastructural investments.
The ?ndings of other studies also indicate that entrepreneurship
within existing companies and organizations can indirectly widen the
scope for regional development. Thus, research on cv has veri?ed that
the core characteristics typical of entrepreneurs, such as speci?c strengths
and talents in risk-taking, innovative behaviour and proactive attitudes,
are also strategic factors in large organizations and the triggers for change
Volume ? · Number ? · Summer ????
II8 Yvonne von Friedrichs and Håkan Boter
and development. The material from this study exhibits a number of ex-
amples of active cv. Some of the directors of the support agencies are
strategic actors in cooperative activities, such as network construction,
responsibility for the management of strategic projects and ‘watchmen’
for the ful?lment of agreed tasks in the networks. Acouple of local politi-
cians can also be classi?ed as entrepreneurs with a proactive attitude and
a pragmatic view of how to realize the agreed development prospects.
Conclusions and Policy Implications
To use the concept of cv at a regional level and involve di?erent orga-
nizations with various attitudes towards radical changes could o?er re-
gional organisations and other stakeholders a better understanding of
the processes needed for organisational renewal. The study shows that
the regional context and the regional awareness of ongoing structural
changes in society in?uence the choice of strategy. The aimof the policies
of Swedish regional government is to empower local initiatives in stim-
ulating local entrepreneurial and innovative activities, in order to meet
radical change and a globalized economy. The municipalities in the study
show di?erent preparedness as regards how to tackle these changes. The
consequence of this is that governmental supportive structures and the
means to stimulate entrepreneurship and innovation have to take dif-
ferent shapes depending on regional cultural inheritance and business
structure.
We argue that the use of a cv approach at a regional level could serve
as a model for the development of proactive strategies in times of rad-
ical change, as cv is a process of organisational renewal. It could help
policymakers to make entrepreneurial activities happen in times of rad-
ical change when productive and supportive resources have to ?nd ways
to make new combinations. As corporate activity often demands radical
change to internal organisational behaviour patterns, the regions’ desire
for di?erent models is obvious. Previous studies may, along with the re-
sults of this study, form a basis for looking at cv from a regional per-
spective; a perspective that will leave obsolete models behind in favour
of the creation of new contemporary models that embrace a number of
actors. It seems that in order to stimulate regions to take steps towards a
more di?erentiated business structure, the public sector has to subsidize
supportive organisations and active networking arenas.
A number of policy implications can be drawn from this study. Re-
gions with a reactive, and sometimes even inactive, behaviour when con-
Managing Global Transitions
Meeting Radical Change and Regional Transition II,
fronted with a radically new context can result in situations with ‘wait-
and-see’ responses. Dependence on large organisations and on old, es-
tablished structures can produce a passive attitude, and sometimes de-
crees are established so that no one ‘rocks the boat.’ Instead, an implicit
culture recommends that they should wait for the government (and oth-
ers) to decide on subsidies, compensation and suchlike. In these situa-
tions it is important to stimulate the production of proactive strategies
that involve many partners from many categories in open networks, in
order to create a dynamic environment.
Patterns in the material indicate a slow but powerful momentum in
which old and rigid structures are slowly dissolving and being replaced
by more dynamic sets of various business actors and di?erent network
constellations. An important issue for policy makers is investment in
dynamic arenas where representatives from small and large companies,
support agencies, venture capital companies, political groups, local au-
thorities and universities can meet and cooperate.
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Managing Global Transitions

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