Scandinavia’s Home Market: The World

Throughout our trip, there has been one approach to operating a business in Scandinavia which seems much different from the average start-up in the United States. The approach we are referencing is rooted in the business attitudes of operating internationally. For example, a start-up in the United States may have only domestic plans for the long-term, and would likely not hit a saturated market for a very long time due to the 350 million domestic populace, however, a Swedish firm that does not have plans to operate internationally would saturate its market much quicker with only 9.5 million people living in the domestic market.

As such, Scandinavian countries have developed a business culture that almost immediately requires plans for international expansion and operations. This is not a new trend though, as Ericsson, founded in 1876, was already operating large international sales in Russia, Britain (26%), other Nordic countries, New Zealand, Australia and China by the turn of the century.

Today, we have seen this business attitude is backed up by the education system in Sweden, where both Swedish and English are required languages in school that students must be proficient in upon graduation. Additionally, students start to learn a third language in their equivalent of the United States’ seventh grade. This highly enables entrepreneurs to plan and operate outside of Sweden’s borders more capably.

Early on in our trip, the topic of this business attitude was broached by the internet payment company Klarna, who mentioned that Sweden made a strong test market, due to its relative population density in its major cities and its tech savvy citizens. However, the population size itself limited potential revenues and thus, international expansion would be necessary.

In order to exhibit how important this attitude is to the Scandinavian business model, we look to our visit with Chalmers Innovation in Gothenburg. Chalmers Innovation serves as an incubator for a few Swedish start-ups each year. It is founded around the technical college of Chalmers, which is based in Gothenburg as well, and derives its knowledge and capabilities from the relationship with the campus. There are several requirements and criteria which a candidate start-up must meet in order to be selected as one of the companies in the incubator each year, however the must important one for our focus is that the “company must have significant international focus.” This signifies a connection between the academic world and the real business world in realizing that a company, which is domestically focused only, will likely not have a sufficient scale of operations to become a large business relative to the size of businesses elsewhere in the world.

Even in Denmark was this idea present, as we visited a commercial bank, Nordea. Here, Nordea was founded on the basis that banks in the Nordic countries should not be isolated to operating within their own domestic borders, but should have more expansive multinational operations within the theorized shared culture of the region. As such, Nordea ties together a banking structure in Norway, Finland, Sweden, Denmark and Poland (though operations in Poland are being divested), realizing that there is opportunity for a multinational bank in the region.

This Scandinavian business attitude seems to differ drastically from that of American start-ups due to the distinct barrier of domestic market size. That is not to say that some American start-ups don’t immediately have international expansion or operations drawn up, however, it is not the norm the way that it is with these Scandinavian businesses. For Americans, it often may just seem more logical, easier and safer to first try to saturate domestically before looking to expand into international operations and possibly over-extend the organization.