What happens when external agents, new ideas and, above all, new financial resources come to an established industrial system with a strong culture of enterprise and national identity? This is no rhetorical question, but one that points to something that can actually happen quite frequently nowadays. But to understand it well, we need more than mere theories. We need experience, empirical evidence, and the input of those who have already gone through it.
We need a work like Foreign Investors as Change Agents: The Swedish Firm Experience, a study published in May under the aegis of the Swedish Royal Institute of Technology by authors Kathy S. Fogel, Wayne Y. Lee (both researchers at the University of Arkansas), Kevin K. Lee (researcher at California State University, Fresno), and Johanna Palmberg (Research Director for the Royal Institute of Technology).
The study – conducted using both theoretical and empirical approaches – is an exploration into how foreign investors can act as agents of change in corporate governance. The system taken as an example is that of Swedish industry and the impact of the arrival of high volumes of foreign capital, which made for an ideal case study given that Sweden was, for quite some time, characterised by strong “economic nationalism”.
But beyond the history and the data, the four authors discover something that perhaps few would have expected: under the influx of foreign capital, Swedish firms made a cultural shift. In their conclusions, the authors explain, “What is remarkable in Sweden is that dominant owners of Sweden’s largest firms cooperated by conceding some control rights to foreign investors, and as a result, allowed informal reforms in corporate governance that made firms leaner, more capital intensive, and more profitable.”
What may, at first glance, have appeared to be a sort of colonisation by foreign capital turned out to be an agent of change, and not just technical and financial change, but also – and above all – a change in culture.
Foreign Investors as Change Agents: The Swedish Firm Experience
Kathy S. Fogel, Kevin K. Lee, Wayne Y. Lee and Johanna Palmberg
The Royal Institute of technology, May 2013