The Scandinavian Democratic Governmental Support Model for Start-Ups and Innovations (SDeGMSI)

Abstract

Regional and national development has always been impacted with the synchronisation of the public and the private sector. The growth of privately owned enterprises contributes significantly to the national economy, employment and prosperity, but also to the national pride, brand name and reputation for further investments to be made in a country. Therefore the support of the public sector to the development of the private sector is mandatory for the public sector to keep its private sector and avoid a catastrophic brain drain. Scandinavia is one of the regions with remarkable achievements in innovation, science, technology and economy compared to its size, as league of nations and population with other countries or regions. This paper attempts to identify the main elements of the unique Scandinavian government business policy formula for innovation startup success, particularly in Sweden and Finland, which has been key in creating a region with an incredibly high density of “unicorns” (BN$ companies per capita), second to Silicon Valley.The paper has used a research methodology which is based on primary research taking the form of interviews and surveys, along with secondary research based on existing academic literature.The research conducted in this paper identifis and analyses tax structures, government favors, human resource bases, public private partnerships, social safety nets, venture capital and investment infrastructures, R&D investments, and business support systems available to entrepreneurs of the Scandinavian countries. Having identified such key elements, the paper propose a more globally applicable public sector model for the support and encouragement of startups, and business innovation. The model named Scandinavian Democratic Governmental Support Model for Start-Ups and Innovations (SDeGMSI) is based on the practices of Scandinavian governments, while also accounting factors such as cultural values, performance of local economies, and demographic characteristics. The democratic concept in the development of this model is supported by the Company Democracy Model, another Scandinavian innovation management model, and is critical for the fair and unbiased support of the government to all the organizations and startups that can demonstrate significant and valuable intellectual capital for the economy and the society. SDeGSISM is characterized by its triple-pyramid for public support of startups and Innovation and can be used to help develop more internationally competitive economies through the establishment of a series of publicly enforced innovation supports and changes to the business environment. The three interrelated pyramids of the model represent the levels of support provided by the government to start-ups (reversed pyramid 1), the types of organisations across which said support is distributed (pyramid 2), and the impact that support, once applied to start-ups, should have on an economic level (reversed pyramid 3). The pyramids, organised by volume of support provided, disruptive potential of businesses, and scale of impact, respectively, provide an indication and an assessment on how governments are aligned with the Nordic model for entrepreneurial support.Furthermore, structures, practices and metrics available in the model support the creation of more dynamic economies which favor market development and disruption over the continued market dominance of incumbents. The “market-favoring” economies which this model seeks to both encourage and foster are more conducive to economic dynamism and create greater opportunities for investors, as cycles of market disruption increases the potential for widespread returns.The paper indicates limitations on the proposed model and identifies areas of further research for future development and applications.

Keywords: Innovation, Startup, Government, Public Sector, Scandinavia, Management, Leadership, Democracy, Research and Development, Technology, Business.

DOI: 10.54941/ahfe1001528