The Nordic countries of Norway, Sweden, Denmark and Finland are admired for having pulled off an improbable balance of a welfare state and a market economy. Even more remarkable is how companies from these tiny countries punch way above their weight and dominate their respective industries at a global scale.
“Lego is the planet’s biggest toymaker by revenue; IKEA is its biggest maker of furniture (and, thanks to Swedish meatballs, its sixth-largest restaurant chain). The Nordics are home to leading manufacturers of everything from machinery (Atlas Copco) and telecoms equipment (Nokia and Ericsson) to seatbelts (Autoliv) and lifts (KONE). The region has also produced the world’s biggest music-streaming company (Spotify) and its largest buy-now-pay-later service (Klarna). Novo Nordisk, a Danish pioneer in weight-loss drugs, is Europe’s most valuable firm”
The article attempts to explain why this is so highlight four factors:
First, the smallness of their countries force companies to go international and build competitiveness early on:
“Nordic businessmen, like their Viking ancestors, are foreign adventurers. “Our smallness is a blessing in the sense that it makes the international outlook obligatory,” says Mr Aarup-Andersen. Among the Nordics’ ten most valuable companies for which data are available, the median share of revenues generated at home is just 2%, compared with 12% for their counterparts in the rest of Europe and 46% for those in America. Anders Boyer, chief financial officer of Pandora, the world’s largest jewellery-maker by volume, says that his firm went from a single store in Copenhagen to a global operation in seven or eight years. Today Denmark accounts for 1% of its sales.”
Second, they are quick to adopt technology:
“Data from Eurostat, a statistics agency, show that 45% of firms in the European Union that employ more than ten people pay for cloud-computing services. The average across the four Nordic countries, which top the ranking, is 73%. The Nordic fervour for technology is also visible in the region’s thriving startup scene. Among European cities, only London, Paris and Berlin attract more venture-capital funding than Stockholm, which has far fewer people. Helsinki is awash with games developers, including Rovio, maker of “Angry Birds”, and Supercell, creator of “Clash of the Clans”.”
Third, government support:
“Nordic entrepreneurs these days may find it less daunting to take risks knowing that, should they fail, they will have access to generous unemployment benefits and well-functioning public health-care and education systems.”
Fourth, long term focus helped by shareholders with a long term ownership mindset:
“According to McKinsey, a consultancy, four-fifths of large Nordic companies have long-term ownership, compared with three-fifths in Europe and only a fifth in America. Business dynasties play a prominent role in the region. Maersk and Lego are still controlled, respectively, by the founding Moller and Kristiansen families, though both firms are run day-to-day by outsiders. In Sweden the Wallenbergs, whose fortune originated in banking, own large stakes in various companies, including Atlas Copco and Ericsson. Other big Nordic firms, including Carlsberg and Novo Nordisk, are controlled by non-profit foundations.
Such arrangements have prevented foreign firms from snapping up Nordic companies, giving them more time to grow. They have also made it easier for companies to invest in their long-term success. McKinsey reckons that four-fifths of listed Nordic companies spend more on research and development than their rivals do elsewhere in the West. Lars Fruergaard Jorgensen, Novo Nordisk’s boss, has said that his main focus is how the company will look in ten to 20 years.”
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