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    Report on regional growth analysis version 0 94 kort version english Report on regional growth analysis version 0 94 kort version english Document Transcript

    • Reegional DDevelop pment in Arbog Köpi Kun n ga, ing, ngsör,Haallstahammmar, and Sura a ahamma A cas study in a per- ar. se y espeective o indust of trial renewal. Draft (no to be cit ot ted) 101227 M Michaël Le Duc D Av vdelningen f marknad för dsföring och IT h Akaddemin för Hållbar H Samhälls- och Teknikkutveckling Mälaardalens hög gskola Box 883 72 23 Västerås 21 tel/mo 021 10 14 02 obil michaael.le.duc@m mdh.se1
    • 1. IntroductionMdH was contacted in 2009 by Sparbankan Västra Mälardalen regarding the need fora regional analysis concerning the economy of three municipalities (Köping, Arbogaand Kungsör) as well as two neighbouring municipalities (Hallstahammar and Su-rahammar). Köping, Arboga and Kungsör are a part of the region called West Mälar-dalen. Sparbankan Västra Mälardalen contributed in the project with many contactsincluding the Sixth AP Fund and Arena for Growth with part of the Swedish Associa-tion of Local Authorities and Regions SALAR/SKL). The economic association Väs-tra Mälardalen i Samverkan (ViS; West Mälardalen cooperation) unites many differ-ent organizations for business in Köping, Arboga and Kungsör.According to the CEO of Sparbanken Västra Mälardalen, Mikael Bohman (2009a),the economy in the region has been very dominated by the manufacturing industry,which is in a restructuring phase. This means that the region’s economy needs to bebroadened/diversified including in services, housing and the experience industry.More small business organizations are also needed.A case study is being performed in the region of West Mälardalen in the context ofon-going research on innovation and entrepreneurship. Innovation and entrepreneur-ship are essential in successful business companies as well as for the development of aregion.Two previous studies carried out on behalf of the Sixth AP Fund have influenced theproject reported herein (Bergstrand et al, 2006; Fägerblad, 2009). In the previousprojects nine different regions in Sweden have being investigated with research ques-tions used in the current project. Bergstrand et al. (2006) concerns the regions ofNorrbotten, Skellefteå, Siljan, Värmland, Jönköping, Kalmar and Blekinge. Fägerblad(2009) describes and analyses the regions of Jämtland and Västernorrland, in a growthperspective. Some comparisons between with these regions and Western Mälardalenare performed, e.g., concerning the percentage of large companies among limitedcompanies. Comparisons should be cautious due to significant variations regardingnumber of inhabitants in each region and other factors.Semi-structured interviews have been performed with key respondents in the region.During meetings and telephone conversations further notes have been performed. Da-ta on companies in the region from Retriever Business have been analyzed. Datafrom Statistics Sweden is also used. The results must be interpreted and analysed withgreat caution.2
    • 1.1. Research questions and purposeThe following research questions are use in the project.What is the infrastructure in the region?Which are the regions growth areas?What is positive for growth in the region?What is negative for growth in the region (barriers)?Who are the actors in the work for growth in the region?How is business characterized in the region?What are the characteristics of the population in the region?In a larger context, these questions can be seen as providing information andknowledge to guide innovation and entrepreneurship.The purpose of the project is to perform a regional growth analysis for the WesternMälardalen region (Arboga, Köping, Kungsör) as well as Hallstahammar and Su-rahammar based on interviews and analysis of business data as well as populationstatistics.3
    • 2. Theoretical framework and previous researchConcepts that explain regional growth can be discussed in a number of sections basedon the Sixth AP Funds above-mentioned report (Bergstrand et al., 2006). 2.1. Innovation, entrepreneurship and businessGood academic overviews of innovation and entrepreneurship with high relevance forpractitioners include Bessant and Tidd (2007) and Dorf and Byers (2007). Dorf andByers (2007) is practically oriented with examples of business plans, accounting ex-amples (e.g. how the balance sheet and income statement can develop for a new busi-ness), financial calculations and a large number of checklists to support practitioners.Entrepreneurship should be related to innovation since successful companies in theshort and long term, according to extensive research, are innovative (Bessant andTidd, 2007, p. 5; Utterback, 1994). According to Bessant and Tidd (2007, pp. 24),innovation can occur in different areas, mainly products (services), process, position(market) and paradigm. Tripsas (1997) illustrates Joseph Schumpeters concept of"creative destruction" in the typesetting industry where clear technology life cyclesfollow each other. In each technology shift new skills are required, such as in digitaltechnology and software development. Meanwhile, older knowledge can become ir-relevant.Innovation can be divided into incremental and radical innovation. Radical innova-tion is significantly less frequent than the many incremental improvements that areconstantly performed on products, services and processes.Entrepreneurship occurs both in established companies and new businesses. All entre-preneurs are not interested in the growth of their company. Some people see entre-preneurship as a lifestyle, e.g., consultants, home based business and restaurants (Bes-sant and Tidd, 2007, pp. 256).A companys management team is essential for being successful. Bessant and Tidd(2007, p. 52) use a survey from 1992 concerning criteria used by venture capitalists toevaluate investment proposals from entrepreneurs. The entrepreneur/managementteam is considered very important. The entrepreneur must be able to manage risk,have demonstrated perseverance, have good market knowledge, have shown leader-ship abilities and produced good results. Other key areas are product-related factors,such as product prototype works, the product demonstrates market acceptance, theproduct is owned by the firm and is protected or can be protected. Market with highgrowth rate is also important. Similar research can be found in Muzyka and Birley(1996) as well as Zider (1998). 2.2. Growth and Sustainable DevelopmentEconomic growth is a complex and diverse area with many concepts and definitions.Gross domestic product is used at the macro level of a country (see SOU 2002:118).4
    • At the company level, economic growth is measured in various ways such as• Number of employees• Sales• Market shares of different products and services in different regions• Assets• Share valueIn recent decades, interest in sustainable development has increased, including in thebusiness world.It is interesting to investigate which indicators for innovation and economic growthare used, or could be used by researchers as well as decision-makers in business (in-vestors etc) and government at different levels. Indicators of innovation and growthfrom the project PRIM at MdH (number of companies participating in pro-ject/programme, new companies, new jobs, new arenas for meetings, the number ofcompanies in coaching activities, etc.), Automation Region (number of new jobs,number of new companies, number of projects, number of meetings, etc.).Tillväxtanalys calculate among other indicators the number of new companies per1000 inhabitants. For 2009, for example, Köping 1.6, Västerås 2.0, Kungsör 2.3,Eskilstuna 2.2, Malmö 3.5 and Stockholm 3.8 new companies per 1000 inhabitants. 2.3. Regional development and growthA geographic location where a business and/or a family is situated is usually part of amunicipality, which in turn can be part of different types of regions. Mälardalen is awell know regional term, at least in Sweden. Bergslagen, Stockholm, Scandinavia,Europe, the Baltic, illustrate that we analyse geography in different ways, with differ-ent perspectives. From an innovation perspective, people try to relate what is not fa-miliar with what is familiar. If you want to market a town and region to potential cus-tomers it is much more costly to use a name that is not familiar as compared to a namethat is familiar. For example, the town of Arboga is both part of the region West Mä-lardalen, the logistics region Örebro, which includes the municipalities of Örebro,Hallsberg, Kumla and Arboga (Örebro, 2009), as well as the Stockholm Business Al-liance. For a person from Russia, Stockholm is a more familiar term than Arboga. Forthe concerned market segment (Russians) it is therefore easier to market Arboga aspart of the larger region that includes Stockholm than just Arboga or West Mälarda-len. West Mälardalen on the other hand, is an established term in the region itself andis being more and more recognised by people in Sweden.In a previous project (Le Duc and Sivertun, 2007) it is noted that municipalities in aregion can cooperate in the field of emergency management and civil protection, e.g.,a joint Fire and Rescue Service facility. Municipalities cooperate also in marketing theregion(s) they are part of to attract new business, to develop existing business as wellas for other purposes like attracting inhabitants to the region. If there is an inquiryabout available facilities (factory and office space) to Arboga, and they do not havethat available but Köping have the requested facilities then it is beneficial for the re-gion that the town of Arboga recommends the possibilities in the town of Köping.5
    • A regions attractiveness is about a whole set of factors in terms of infrastructure, jobs,housing, municipal services, variety of products and services, cultural and leisure ac-tivities , and so on.Firms in a region cooperate with each other in networks and clusters. To get contracts,small firms can cooperate. Large firms can cooperate with more flexible small firms.Small firms lack the resources of large firms and economies of scale, which can be abasis for cooperation. (Bessant and Tidd, 2007, p. 265)With globalisation, networks are increasingly international, highly supported by so-phisticated developments in ICT.In a scientific investigation about how people use mental maps to plan a route, re-spondents were asked to draw on paper the route they use to navigate in a town. Aperson familiar with the town uses street names like in navigation software. A personnot familiar with the town does not know the street names so much and usually navi-gates with the help of landmarks, for example a Japanese visitor to a city in Swedennavigate geography with the help of a Yamaha shop, the railway station, and the bo-tanical garden (Daimon, T., M. Nishimura, et al., 2000). This pattern illustrates nicelythe principles of Constructivism (Le Duc, 1996).Bolman and Deal (2008) suggest that in management and leadership at the companylevel, you need to combine different frames/perspectives, i.e., the structural frame, thehuman resources frame, the symbolic/cultural frame and the political perspective.Similar ideas should be possible to apply for a municipality and region. Companiesare established and managed by people who are entrepreneurs. Entrepreneurs needproper infrastructure, financial institutions, support from government (local, regional,national, international), customers, partners, employees, etc. 2.4. Clusters and networksResearch on business clusters and networks is very comprehensive with high politicalinterest at all levels. One definition from Dorf and Buyers (2008, p. 167) is relevant:“A cluster is a geographic concentration of interconnected companies in a particularfield. Clusters can include companies, suppliers, trade associations, financial institu-tions, and universities active in a field or industry”. Dorf and Buyers (2008, p. 167)mention the Hollywood cluster of firms and infrastructure cooperating in creatingmovies. There are many other famous clusters in the world such as Silicon Valley, themanufacturing clusters in China, diamond trade in Antwerp, spice trade in India andthe wine district of Bordeaux. Bessant and Tidd (2007, p. 135) mention that the townof Sialkot in Pakistan plays a significant role in the market for specialized surgicalinstruments made of stainless steel. 300 small businesses with the support of 1500even smaller suppliers had in 1996 a 12% share of world market.Successful entrepreneurs create and sustain networks inside and outside their compa-ny/companies to implement their vision(s). For example, James Cameron (2010) crea-tor of the blockbuster movies Terminator II, Titanic and Avatar, in an inspiring speechon TED recounts his life history, what is driving him and how he successively becamemore and more successful in the movie industry. “So, what can we synthesize out ofall this? You know, what are the lessons learned? Well, I think number one is curiosi-ty. Its the most powerful thing you own. Imagination is a force that can actually man-6
    • ifest a reality. And the respect of your team is more important than all the laurels inthe world."According to Jan Sandred from Vinnova (Sandred, 2010), “The process of clusteringcan occur naturally, through many individual decision makers across companies, or-ganisations, research institutions, and public bodies making independent decisions. Inaddition, the experience of many countries and regions suggests that public clusterpolicies can be an effective tool to steer and improve the outcomes of structuralchange. Cluster initiatives can now be found everywhere around the world, and manysuch initiatives exist or are being launched throughout the EU ... Between 30% and40% of all employment is in OECD industries … concentrate, or ‘cluster’, regional-ly.” There are 1200 cluster organisations in the European Union, according to Vinno-va.Henry Chesbourough has introduced a model of open innovation where firms andother parties cooperate in all phases of innovation in flexible ways. Even large estab-lished firms can sell, license or create spin-offs from ideas generated by them if theideas do not fit in their core strategy and business model or to create a more agile or-ganization around a business by cooperating with small business. 2.5. Resource Based View and related conceptsThe resource based view (RBV) is of high interest in the field of entrepreneurship.Barney (1991, 1994) is often cited with his VRIO acronym for resource attributes atthe firm level. Resources should be valuable, rare, costly to imitate, and organised anddistribute optimally internally in the organisation (Hedman and Kalling, 2002, p. 75).Edith Penrose is influential in the RBV literature (Penrose, 1959) and is clearly relat-ed to growth, as illustrated by her influential book’s title "The Theory of the Growthof the Firm." According to Penrose (1959 in Linnskog, 2007, pp. 111) resources arenot the "input" in the production process but it is the services that resources can gen-erate that matter. For example, a companys top management is a useful resource onlywhen it develops the company so that the company is growing with good profitability.Your track record is not sufficient to succeed, which applicable both to business man-agers and the movie industry.A company to grow needs and develops resources of various kinds, e.g.  Fixed assets such as buildings, machinery and IT systems  Current assets such as inventory, accounts receivable and cash  Capital  Brand(s)  Staff  Patents and other Intellectual PropertyTo attract the best personnel is essential for a successful company. In addition, struc-tures need to be created to develop and retain the best employees. (Bolman and Deal,2008, pp. 142)Jim Andersén’s (2005) doctoral thesis deals with strategic resources, i.e., resources ofa firm that lead to long-term profitability relative to its competitors. Jim Andersén is7
    • also examining how profitable companies protect themselves against being imitated.The study included 14 small and medium-sized manufacturing companies, especiallyfrom the Eskilstuna-region. The results show that entrepreneurs who dare to thinkoutside the box and take risks are more successful than traditional small business.Successful business leaders have clearly stated objectives with their business at anearly stage. They also have a dynamic vision of the firm’s resources and their envi-ronment. The successful companies are therefore innovative which confirms Bessantand Tidd’s work is (2007) previously mentioned and the rich body of research aroundthe world on innovation. 2.6. Population and demographyThe population of a region is a very important resource. It is important to attractskilled people, including entrepreneurs, engineers and marketing professionals.It is also important to keep young people living in the region that participate in devel-oping existing business and other professional areas as well as starting new compa-nies.However, with improved infrastructure (roads, railroads, ICT), people can choosemore and more where they want to work and live.8
    • 3. MethodTelephone interviews, personal interviews and observation are performed in the pro-ject, combined with the collection and analysis of data from the database RetrieverBusiness and Statistics Sweden (SCB).The questions asked during the interviews are based on the theoretical frameworkabove, and two reports of the Sixth AP Fund (Bergstrand et al., 2006, Fägerblad et al.,2009). There are only a few questions that are quite broad to enable the respondents tospeak freely about the themes of the research project, thus enabling information andthemes to emerge. MThe selection of respondents has taken place using a relevance criterion, and accord-ing to the informants who have been willing to participate.Data have been processed in Excel, Access, SPSS and Nvivo.The results must be interpreted with great caution. We are dealing with complex is-sues and the many regions around the world cannot be compared in simple ways. Pat-terns and recommendations to decision-makers in business and governments need totake into account the history of each region, its current structure, and many other fac-tors. Some topics are more general than others. Specific topics include the industriesin the region and its history. General topics include how to promote entrepreneurshipand business growth as well as obstacles for entrepreneurship.9
    • 10
    • Results and analysis of interviewsBelow is a selection of results from interviews. Detailed interview results are availa-ble. 3.1. Respondents The following interviews were carried out with the aid of a questionnaire with general questions.Company/organisation Respondent Position AcronymSparbanken Västra Mä- Mikael Bohman CEO MBlardalen, KöpingPromedia i Mellansveri- Kjell Johansson Director of marketing KJge ABPorthén Consulting AB, Håkan Porthén CEO HPKöping (Kolsva)Surahammars Sabine Dahlstedt Information and busi- SDmunicipality ness issuesKöpings municipalitys Pia Norstedt Director of business PN developmentHallstahammar Promot- Susanne Sedvall Project manager SSion and Sedvalls Affärs-utveckling ABVästra Mälardalen i Håkan Sterner Project manager HSSamverkanArboga municipality Göran Dahlén Director of business GD AG Annika Gus- development tavsson (same Secretary of business interview by tele- development phone)Kungsör municipality Bo Axelsson Director of business BO developmentVästerås Science Park Ann Lystedt Project Manager AL Patrik Jablonski Project Manager PJInteresting notes have been taken during meetings and telephone conversations withother informants. 3.2. Infrastructure in the region in terms of communica- tions (road, railway, air, etc.)  all respondents say that road transports are excellent  rail communications is also a strength factor  moreover, the possibilities of air transport are good  the municipalities’ geographical position is a strength factor. Arboga has been a junction since the Middle Ages  in Köping there is a deep harbor  logistics is mentioned as a growth area11
    • 3.3. The regions growth areasThe following are the main growth areas according to respondents.  housing  sustainable development  interior design  logistics  small business  manufacturing  services  experience industry 3.4. What is promoting growth?The area success factors for growth is comprehensive in the interview data. The mainfactors mentioned are.  attitudes  population o people with good knowledge and skills o good health o champions (enthusiasts)  entrepreneurship o mistakes should be allowed  flexibility  infrastructure is good  capital  municipalities play a key role o service levels o quick decisions  long-term perspective needed  marketing  networks  cooperation  small business play a central role  systematic method needed  education and training are important  Western Mälardalen has a good strategic geographic position12
    • 3.5. Obstacles to GrowthMany obstacles are opposite to the success factors mentioned above  many obstacles  attitudes  traditional industrial base  industrial town thinking  shortage of manpower with required skills  lack of entrepreneurship  lack of capital  lack of cooperation  major companies controlled and managed outside the municipality/region  education  Western Mälardalen not so well knownDuring the winter of 2010 and the winter of 2011 there have been many problemswith railway transports in several parts of Sweden, which can be seen as an obstacle. 3.6. Who are the actors in the development process of the region?Interview results were analyzed and are illustrated in the following figure.KY = Advanced Vocational EducationThe number of networks is substantial which is illustrated by making the portion ofthe figure on networks larger than the other parts.The main funding agencies/sources are indicated by stars.13
    • 3.7. What are the characteristics of business in the re- gion?Very interesting results emerged in the interviews which can be related to the dataanalysis from predominantly Retriever Business and SCB in the project.  industry needs to be broadened  manufacturing o dominates o recession o staff reductions /restructuring o manufacturing - uncertain future o manufacturing - requires specialization  service companies (growth) 3.8. What are the population characteristics in the re- gion?Main themes that have emerged in the interviews  many redundant  migration to larger cities  Western Mälardalen is a region for commuting  young people come back when they found a family  aging population  education level is lower than the national average 3.9. Information about the topics discussed by selected respondentsMikael Bohman discusses mainly that  housing is a growth area  collaboration and marketing is important for growth  Western Mälardalen is well situated geographically  that the region has industrial town traditions is an obstacleHere is a diagram from Nvivo regarding the interview transcript Mikael Bohman14
    • Håk Sterner says chiefl that kan r ly  the experience indu ustry is a ve importan area of gr ery nt rowth for th region he  sustaina develop able pment is immportant  you hav to be syst ve tematic and have a lon d ng-term pers spective  housing is a growth area g hAn N Nvivo analy illustra the inter ysis ates rview transc cript with Håkan Stern H nerSus sanne Sedva says in essence that all e t  networrking is esse ential to fost growth ter  industr town cu rial ulture is an o obstacle  you have to have the right att t titude  oration with university colleges an universiti should b develope collabo h nd ies be ed15
    • Nvi analysis of the interview transc ivo r cript Susanne Sedvall n16
    • 4. Results and analysis data from Business Data, Re- triever Business, Arena for growth and SCBHere data are reported on regional and municipal levels.Note that data from different databases must be interpreted. For example, a companyregistered in a municipality can encompass employees working outside the municipal-ity. Plantagen Sverige AB based in Köping has 449 employees under the registry.About 25 people work in Köping according to a telephone contact with the companyin January 2010. There are also companies registered in other municipalities thanthose surveyed who have staff located in Western Mälardalen. Volvo Powertrain AB,legally based in Gothenburg (5,486 employees 2008), for example, have approximate-ly 800 employees in Köping according to Pia Norstedt, business manager, Municipali-ty of Köping (contact 100107). Tibnor AB based in Solna has a total of 862 employ-ees (2008), of which approximately 220 are working in Köping according to Pia Nor-stedt. 4.1. Arena for Growth relevant analysesArena for growth contributes to the project with interesting analyses. Köping, Arbo-ga, Kungsör and Hallstahammar are included in the analyses.  population 1998-2008 o not the worst development, but lower than average  sales development 2003-2008 o region is similar to the average with the exception of Arboga (lower) and Kungsör (higher)  start of new businesses o low  house price development o slightly below average in the group  percentage of population highly educated o low for all the municipalities  construction of the new houses and buildings o low for all the municipalities except Hallstahammar  unemployment in the age group 18-24 years 2009 o around or above average (14.8-17.6% for Köping Arboga and Kungsör)17
    • 4.2. Tables with data from Retriever Business and SCBDate have been downloaded and analysed from Retriever Business and statistics Swe-den. 4.2.1. Number of companies / organizations per municipalityCompa- Arboga Hallsta- Kungsör Köping Sura- Sumny/organisation hammar hammarSole Trader 988 889 671 1 772 546 4866Limited company 344 394 212 652 187 1789Partnerships and 130 104 73 220 63 590limited partner-shipsAssociations 74 83 26 124 36 343(ideella fören-ingar)Housing Associa- 5 19 3 28 13 68tionsSimple compa- 19 11 10 26 1 67nies (Enkla bo-lag)Economic Asso- 11 20 5 22 9 67ciationsCommunities 5 9 4 16 2 36(housing)Branches with 2 5 6 1 14foreign ownerFoundations and 2 7 4 2 15fundsOther legal forms 3 2 1 2 3 11of companiesState and local 1 2 1 2 6companiesSource: Retriever BusinessNumber of companies > 7000. For Arboga, Köping och Kungsör approx. 5.500 com-panies.A large number of small companies are noted since sole trader companies are usuallysmall. Data for companies that are not limited (aktiebolag) is quite incomplete. Notealso that not all companies are active.18
    • 4.3. The distribution of the number of companies per turnover group (limited companies)Net sales (thousands of SEK) Number of companies Percentage>100 000 48 3.020 000-100 000 135 8.510 000-20 000 96 6.05 000-10 000 195 12.30-5 000 1115 70.2Sum 1589Companies without revenue in 159the databaseSource: Retriever BusinessThis analysis is for limited companies. In Western Mälardalen there is a higher per-centage of large companies compared to the seven regions described and analyzed inthe Sixth AP Fund Report (3% compared with 1.7% annual sales exceeding 100 mil-lion SEK; Bergstrand et al., 2006). In Western Mälardalen 70% of the companieshave a turnover between 0 and 5 million SEK compared with approximately 77% forthe seven regions.The indicators above confirm interview results.19
    • 4.4. Industries with the highest number of registered companies and employees in the region of Western Mä- lardalenBelow is a list of sectors for limited companies ranked by the highest number of com-panies in the region.Data have been processed in Microsoft Access Sector (SNI) Num- Number Rank by Rank by ber of of em- number number com- ployees of com- of em- panies panies ployeesConstruction, Design & 252 1168 1 2Fitting OperationsManufacturing & indus- 225 5511 2 1trial- 151 311 3 9Retail 121 1023 4 3Wholesale 113 806 5 5Transportation & ware- 101 502 6 7housingReal estate activities 98 566 7 6Agriculture, forestry, 62 297 8 10hunting & fishingRepair & Installation 62 216 9 12Legal services, finance 62 177 10 15& consultingSource: Retriever BusinessWe see here that the manufacturing sector employs many people in limited compa-nies, even if not all operate in the region.Manufacturing is important for Sweden. According to Statistics Sweden (2010), thefield of engineering goods represented around 442 billion SEK of export revenue, or44.3% of total merchandise exports in 2009.Many activities can be categorized as services. Some areas could also be classified aspart of the experience industry. Note that the manufacturing sector includes servicesof various kinds internally and externally at the company level.20
    • Number of companies with legal form of sole proprietorship by industry.Industry Division Number of Rank companies-- 1568 1Agriculture, Forestry, Hunting & Fishing 1113 2Construction, Design & Fitting Operations 422 3Retail 194 4Manufacturing & Industrial 187 6Repair & Installation 128 6Hair and Beauty 121 7Culture, Entertainment & Leisure 113 8Legal, Finance & Consulting 113 9Wholesale 110 10Real estate activities 104 11Health & Medical 89 12Transportation & Warehousing 84 13Hospitality (Hotels and Restaurants) 83 14Computers, IT & Telecommunications 82 15Source: Retriever BusinessWhen comparing the two tables above we note that “Agriculture, Forestry, Hunting &Fishing” is quite significant but that the sector consists of many small firms with thelegal status “sole proprietorship”, thus exposing the owners to personal financial risks.The sector contributes to the “experience industry” by maintaining the landscape inattractive ways and providing for products to be appreciated in many ways. Hospitali-ty comprises few firms but they have an important impact on the attractiveness of aregion. “Construction, Design & Fitting Operations” is important in both tables,which confirms interview results.21
    • 4.5. Number of companies by year of registration and in relation to populationThis analysis is available in the regional analyses previously mentioned (Bergstrand etal., 2006). We asked a respondent working in the region (Bo Axelsson) how to inter-pret the analysis. Bo Axelsson says that information about started companies must beinterpreted with caution.Number of companies by year of registration (active companies). Five municipalities Antal  företag 2008 2005 2002 1999 1996 1993 1990 1987 1984 1981 1978 1975 1972 1969 Antal företag 1966 1963 1960 1957 1954 1949 1946 1943 1935 1932 1910 1845 0 50 100 150Source: Retriever BusinessAccording to Bo Axelsson, Kungsör municipality, the figure above is very difficult toanalyse. At NyföretagarCentrum, how many businesses have been registered in a yearhas been measured, it is a very blunt measure. Many times, companies have beenstarted for strategic reasons. There are people who have do not want to end up in thelocal newspapers in the case of bankruptcy, etc. For financial and accounting reasonsthere can also be changes in companies’ legal status and geographical location.22
    • Many of the active companies in the population are recent, which can reflect the highfailure rates in new business ventures. Statistics vary, especially between differenttypes of business, e.g., restaurants vs. accounting firms, and the background of thefounders. The management team matters to be successful in business (Bessant andTidd, 2007, p. 52) That the population concerns limited companies is reflected thatrelatively many companies are between 10 and 20 years.A correlation analysis was carried out in SPSS between different industries. Numberof companies (all types of businesses and organizations in the Retriever Business forfive municipalities) that are registered each year by industry (division), positive corre-lation, 1845-2010, active companies. Business sector Pos. Cor- Pos. Kor- Pos. Pos. (Bransch huvudgrupp) rel. rel. Korrel. Korrel. Retail Manufact. CEL¤ CDF¤Banking, Finance & Insurance ,505*Industry, Employer & Occupation organi- ,622 ,812** ,448**sation ** ** **Construction, Design & Furnishings Busi- ,765 ,821 ,488 1nessComputer, IT & Telecommunications ,451* ,430*Retail 1 ,750** ,529** ,361** ** **Real estate activities ,650 ,718 ,513**Business Services ,604* ** **Hospitality (hotels and restaurants) ,667 ,501 ,783** ,465**Hair & Beauty ,534** ,377* ,269*Health & Medical ,686** ,416* ,451* ,454** ** **Agriculture, Forestry, Hunting & Fishing ,591 ,727 ,406**Law, accounting & Consulting ,679** ,634** ,391** ,416** ** **Arts, Entertainment & Leisure ,529 ,545 1 ,574**MediaMotor vehicles Trade ,719** ,486*Wholesale ,609** ,626** ,435**Advertising, PR & Market ResearchRepair & Installation ,638** ,595** ,299* ,609**Technical Consulting ,510** ,644** **Manufacturing & Industrial ,750 1 ,478** ,624**Transportation & Warehousing ,621** ,713** ,530** ** *Education, Research & Development ,574 ,431Rental & Leasing ,793**Other Consumer Services ,659** ,478** ,653****. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).¤CEL = Culture, Entertainment, LeisureCDF = Construction, Design & Furnishings Business23
    • A preliminary analysis shows that the interviews are confirmed regarding the im-portance of the sectors “Manufacturing & Industry" as well as "Construction, Design& Furnishings Business" in the economy of the region. It is likely that if business isgoing well for these industries, that benefits many other sectors. Retailing is an im-portant part of the economy which is related to the services mentioned as a growthareas by several respondents. "Culture, Entertainment & Leisure" play some role,even if the industry does not have a high turnover compared to manufacturing. "Cul-ture, Entertainment & Leisure" includes 16 limited companies with 29 registered em-ployees and a turnover of SEK 30 million in total (information about sole trader com-panies is limited).For the region, public employers are not included in the study, they are very im-portant. In the Köping Municipality website there is information about swimming,museums, libraries, boating, movies, outdoor activities, music and theater, etc. (ap-proximately 11 different categories of activities in the cultural and recreational area).A regions attractiveness is about a whole set of factors in terms of infrastructure, jobs,housing, municipal services, variety of products and services, cultural and leisure ac-tivities , and so on. Furthermore, Köping, Arboga and Kungsör are part of a largerregion than West Mälardalen where additional resources, activities and experiencesare available within reasonable distance (Örebro, Eskilstuna, Västerås, Skinnskatte-berg, Uppsala, Stockholm, etc.).It would also be interesting to analyze information about companies that are beingclosed due to bankruptcy, merger, being shut down without bankruptcy, and so on.Number of limited companies in relation to the number of inhabitants in each munici-pality Number of Number of Number of companies inhabitants inhabitants (limited) per company (limited)Arboga 302 13301 44.0Hallstahammar 348 15014 43.1Kungsör 175 8170 46.7Köping 599 24740 41.3Surahammar 170 10062 59.2 1594 71287 44.8Sources: Statistics Sweden and Retriever BusinessCompared to the seven regions in Bergstrand et al. (2006) the average for the fivemunicipalities above is slightly higher. Surahammar’s indicator is quite high whichindicates that a few large employers play a significant role in the local economy. Theindicator above for Surahammar is similar to a few small towns in Värmland county(Filipstad, Forshaga and Grums). In Surahammar 5 companies employ approx. 53%of all registered employees in limited companies (749 out of 1417) which makes themunicipality vulnerable.24
    • 4.6. PopulationPopulation 2004-2008Population 2004 2005 2006 2007 2008 2004-2008Arboga 13406 13380 13391 13369 13301 -105Hallstahammar 15038 14955 15042 15040 15014 -24Kungsör 8287 8303 8211 8219 8170 -117Köping 24677 24646 24659 24646 24740 63Surahammar 10249 10196 10109 10122 10062 -187 71657 71480 71412 71396 71287 -370Source: SCBWe see in the population data above that there have not been dramatic changes in re-cent years. On the other hand the demographic chart below is quite clear.The age structure of the region (five municipalities) 2009 95+ 85‐94 75‐84 65‐74 55‐64 45‐54 Kvinnor 35‐44 Män 25‐34 15‐24 5‐14 0‐4 0 1000 2000 3000 4000 5000 6000A notable difference with some of the seven regions of the Sixth AP Fund Report byBergstrand el al. (2006) is the age group 25-34 years. For the Skellefteå region in-cluding Umeå there is not a deviation in the graph as above, but if we remove Umeåthere is a dent. The Siljan Region, Värmland County, Jönköping and Kalmar com-prise also a notable pattern in the age group 25-34 years which is not the case for Ble-kinge County. The researcher noted this pattern and verified in Bergstrand el al.(2006) as noted in that report, e.g. pages 16-17. For Western Mälardalen the notch isrelatively deep. In relation to Sweden as a whole the age group 55 to 64 is relativelylarge compared to the other age groups in the region (SCB, 2009).25
    • 4.7. GIS, geographical correlations and cluster analysisHere are a few samples on visualization and analysis that can be performed with GIS.First there is correlation matrix that can be related to the GIS maps.Correlation Matrix for the number of companies per zip code based on the industry isan idea of the author. Based on the matrix, the following possible clusters are ob-served. Business sector Pos. Korrel. Pos. Korrel. Pos. Kor- Pos. Kor- (Bransch huvudgrupp) Retail Manufact rel. rel. CEL¤ CDF¤Industry, Employer & Occupation organisation ,777** ,419** ,415** ,448**Construction, Design & Furnishings Business ,268 ,624** 1Computer, IT & Telecommunications ,824** ,414**Retail ,770** ,361**Real estate activities ,662** ,513**Health & Medical ,441* ,454**Hair & Beauty ,691** ,195Hospitality (hotels and restaurants) ,369 ,465**Agriculture, Forestry, Hunting & Fishing ,406**Law, accounting & Consulting ,557** ,416**Arts, Entertainment & Leisure ,478** 1 ,574**Media 1 ,268Wholesale ,467* ,538**Advertising, PR & Market Research ,776**Repair & Installation ,653** ,435** **Manufacturing and Industry 1 ,478 ,624**Transportation & Warehousing ,519** ,530**Rental & Leasing ,797** ,594* ,793**Other Consumer Services ,296 ,653****. Correlation is significant at the 0.01 level (2-tailed).*. Correlation is significant at the 0.05 level (2-tailed).¤CEL = Culture, Entertainment, LeisureCDF = Construction, Design & Furnishings Business"Construction, Design & Furnishings Business" is available in many areas, thus con-firming the interview results. "Manufacturing and Industry" does not seem to existwhere consumer sectors are present, such as retail. An interesting note is that there arecompanies in the "Culture, Entertainment & Recreation" in some of the areas wherecompanies in the "Manufacturing & Industry" are located. We can also observe that“Manufacturing and Industry” is present where there is “Wholesale” business but not“Retail”, “Hair & Beauty”, “Hospitality”, “Media” and other sectors that are more“downtown” than factories.26
    • Nummber of organizations per postcode area (all companies and organisa p de c a ations). Da ataon c companies a organiz and zations: Retr riever Businness. Maps: DPS and N Navteq.27
    • Sele ected busine sectors in Arboga, n ess i number of companies (all types) b zip code. c ( byData on compa anies and or rganizations Retriever Business. Maps: DPS and Navteq s: M S q.The map of Arb e boga above confirms t correlati analysis For examp where e, the ion s. mple,ther is a large concentrati of retail businesses, there are relatively fe manufactur- re ion l r ew28
    • ing companies. In the coun . ntryside, the is more agriculture, forestry, h ere hunting andfish hing. Where there is sig gnificant ma anufacturing business, there are als businesses in g t soconstruction, d design and fuurnishing, a well as re estate activities. as eal ected busine sectors in Köping, NSele ess i Number of companies, Selected se , ectors relate to edMannufacturing (with or wi ithout positi correlat ive tion, sectors of significa s ance regarddingcorr relation patt terns and relative impoortance of nu umber of co ompanies)29
    • The map of Kö e öping above confirms t correlati analysis In the sou Byslätte e, the ion s. uth, ensindu ustrial area (post code 731 36), ma 7 anufacturing is located together wi construc g ith c-tion design and furnishing real estate activities as well as wholesale bu n, d g, e w usiness.Dow wntown we can see tha retail busi at iness is posi elated with h and beauty itively corre hair(pos code 731 32 West of Torggatan) although not everyw st f ), where, e.g., p code 73 post 3130 b the hospi (Köping Lasarett) . For post code 731 32 there is alm no com by ital gs c most mpa-ny i Transport in tation and Warehousin There are quite a nu W ng. e umber of com mpanies inagriiculture, hunnting and fishing regist tered in the urban area of Köping, which illus s-trate that the s es sector ranks high in the total numb of companies regist e ber tered in thestud region as a whole. However, t mention sector is not statisti died the ned s ically relate to edthe other sector in the ma Post Cod 731 98 in the South (by Norsav rs ap. de n vägen) is in theoutsskirts of the urban area of Köping, where ther is very lit retail bu e , re ttle usiness butman companies in Agricu ny ulture, Huntting and Fis shing, Construction and Design, Man- d Mufaccturing, Rea Estate wa well as Tr al as ransportatio and Ware on ehouse.30
    • Sele ected busine sectors in Kungsör (same secto and map legend as t map abo ess i ors p the ovefor K Köping)The patterns in this town are similar t the two other towns above. The map discon e n a to o n-firm somewha the interv ms at view with th municipa he ality. The sector of cons struction, de e-sign and furnishing is important for th municipa n he ality.Agr riculture, Fo orestry, Hun nting and Fi ishing, Num mber of com mpaniesIt is not surpris s sing to note that most c companies in the area of agricultur forestry, n o re,hun nting and fis shing are loc cated outsid the urban areas of th municipa de n he alities.31
    • Num mber of employees (primarily limi ted companies), all sectors p i i n c32
    • 5. ConclusionsOne conclusion of the project is that the scope of the project, the method and the re-sults can be developed much further. It would for instance be interesting to performone or more surveys based on the interview results. Furthermore, the present reportcan be viewed as part of a case study or action research. Students and Ph.D. candi-dates can carry out interesting projects and use the methods developed in this project.A key conclusion from the project is that it is important to establish reliable indicatorsof entrepreneurship and regional economic development. There are many differentindicators that are used by researchers, government and investors to compare and rankdifferent business sectors, municipalities, regions, and specific companies. Some indi-cators are more reliable than others. For example, the number of new business estab-lished in a town is uncertain indicator for the economic situation.Interviews have been performed with key people in the region. It would require manymore interviews to clarify the knowledge that has been developed in the current pro-ject. In addition, each municipality should be described and analyzed in more detail.By analysing the various sources of information and types of analysis, it is possible toconfirm and make more precise each source of information. Descriptive statistics,correlation analyses, examining the GIS maps and interview data can be related todescribe and analyse the business structure of the region, opportunities, obstacles, thepopulation, and many other factors.Some preliminary conclusions are noted here with caution.The region has a favourable location with very good infrastructure (road, rail, air,ship/boat, etc.), although problems are noted regarding railway communications dur-ing 2010 and 2011 (winter season). Western Mälardalen is a hub. Surahammar is a bitfurther away from the highway E18, but has many assets.Growth areas that clearly emerge from the interviews, but that also are visible in datafrom Retriever Business are housing, logistics, services and the experience industry.The manufacturing industries must develop positively. However jobs related to theproduction of simple components and products are likely to move to low cost coun-tries. The experience industry is hoped by many to create employment but you needto be business minded which includes that companies are profitable and have goodknowledge of the market. Some entrepreneurs see business as a lifestyle but compa-nies must be profitable. Furthermore, owners and employees should be able to earn adecent living in any business.The location of growth areas are not much discussed in the interview material. How-ever, GIS visualisation and analyses can provide very detailed information. In addi-tion, the data we have with all businesses in the region can be further analyzed withdatabase routines and with Excel.Factors that are favourable to growth include attitudes, even if there are obstacles inthat area. People need to have adequate knowledge and skills. Companies may realizeit difficult to find people with the right skills. The researchers experience in the con-33
    • struction industry and other industries is that employers want to avoid having to trainnew staff too much. Staff in high demand has several years of professional experi-ence. This is a major barrier for young people. The infrastructure is good in the re-gion which is favourable to growth.Networks foster entrepreneurship and growth. Small companies can be stronger andcreate new business opportunities by participating in networks, e.g., in the construc-tion industry. Collaboration between municipalities and enterprises and between en-terprises of different kinds and sizes is also crucial. For example, large companies’resources come in handy for small businesses working with large companies. Theflexibility of small firms is an asset in this type of cooperation.The main obstacles to growth are probably a lack of capital and attitudes. The indus-trial culture and traditions (bruksandan) make it hard to think as entrepreneurs andmanagers. Furthermore, an obstacle is that companies cannot find employees with theproper knowledge and skills even if there is unemployment in the region.There are many actors who are involved in growth issues. Western Mälardalen hasmany networks mentioned in the interviews in comparison to the Sixth AP Fundsmaterial (9 regions). One reason may be that the project reported in the Sixth APFunds materials has been based on regional growth programs, which illustrates thevalue of performing interviews.In the area of funding Almi, banks and the EU are the most important players. Mu-nicipalities are key agents on many levels illustrated by the interviews. Collaborationwith university colleges and universities in the region could be developed significant-ly. For example, business students examine case studies from the U.S.A. when thereare very interesting enterprises in the region to learn from. University colleges anduniversities can contribute with knowledge to business if the contributions are not tootheoretical.The population has not changed dramatically in recent years. The regions populationis aging. Young people move to education and work in larger towns, but some moveback when they found families. Western Mälardalen is part of a dynamic regionwhere commuting is constantly developing.Based on the analyses performed by Arena for growth (Surahammar is not included) itis noted that entrepreneurship is low relative to comparable municipalities. There arerelatively few university graduates in the region. The prices of housing (villas) arecomparable to the average, but the construction of new houses is not a strong area forthe region.The region has more than 7,000 companies registered. Many companies are small buta few large companies employ many people. The dominant business sector is Manu-facturing & Industrial. Construction, Design & Fitting Operations is also important asshown by data and interviews. The service industry is significant. Among new com-panies services are significant.34
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