Michael E. Porter, Professor at Harvard University in the United States defined this phenomenon in 1998, calling it the “globalisation paradox”, which means that in a globalized economy the importance of locally anchored, well established clusters will increase significantly.
In such areas, according to my observation and first-hand experience, the owners and the management are familiar with their neighbourhood and know the history and the culture. By knowing the local environment, remaining close to local people, the bonds within and among communities expand and enhance the relations of entrepreneurs, industrialists, co-workers, suppliers, politicians, media and customers. This tight cluster consequently leads to an expanding and vivid economy that sustains itself independently.
The Globalization Paradox was evident long before Porter in the county of Smaland, Sweden, particularly in the so-called GGVV (Gnosjo, Gislaved,Vaggeryd, Värnamo) -region. The Globalization Paradox could freely be translated to the “Gnosjö spirit”.
The Gnosjö spirit is a common name for how the entrepreneurs in this region do businesses. My father was a product of this spirit, having his own firm with only 5 employees. He was happy because he worked for himself.
Almost 25% of the entire Swedish population immigrated to the US in the 1850’s mostly because the land in Smaland was not fit for farming; it was dry, rocky and rough. Many of them came from Småland and they moved to Minnesota. The Smålänning in general is famous for three things. He is cost conscious. The Smålänning is also an innovator. He needed to find a new way to make a living. So he created a new industry. Finally the Smålänning dislikes too much government involvement in his life. He relies on himself and prefers to live independently.
The GGVV-region and the people living in this area are also known for doing business differently based on the Gnosjö spirit.
The most vital competitive advantage for the entrepreneurs in the GGVV region is their neutral competitive cooperation and the tight cluster between the entrepreneurs, employees, suppliers and customers. It is embedded in the culture and can’t be replicated. The Gnosjö spirit represents a culture of its own; a heritage that has been cultivated and refined over the last 200 years. The culture is a unique and competitive economic driver.
In order to maintain this competitive advantage that has been built up by generations of entrepreneurs, the Gnosjö spirit must continue to evolve:
1) It is necessary that we develop new ownership structures One of these could be to allow more employees an opportunity to have co-ownership of the company. Another possibility could be to establish a holding company structure with several, strong companies held by a cross-ownership holding company. A third one could be to create a regional investment fund to be made available to local entrepreneurs.
2) We need financially strong regional banks that actively support local expansion with low interest rates.
3) We must engage and cultivate the understanding of entrepreneurship in the community.
4) We ought to involve the youth, the next generation of the Gnosjo spirit through the educational system requiring the development of technical skills, inspiring and encouraging innovative thinking, teaching finance and international business economics at the high school level.
5) We ought to offer business opportunities to immigrants with infrastructure. Politically, we have to finance the necessary basic means for the immigrants to thrive as entrepreneurs in our community.
6) In socioeconomic terms, we have to create laws that reduce taxes, cut bureaucratic fees, and dismantle the red tape for innovative entrepreneurs.
With these actions we will continue to build a strong economic community and genuinely expanding Småland!
Think progressively!
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