Staying local and flexible; compatible tasks or a contradiction in terms?

Lead Author Svein Tvedt, Johansen
Institution Contact School of Business and Economics Campus Harstad UiT - The Arctic University of Norway Phone (office) +47 77058262 Phone (mobile) +47 97529979
Co-Authors Markku Vieru, University of Lapland, Rovaniemi, Finland Lenita Hietainen, University of Lapland, Rovaniemi, Finland Ogmundur Knutsson, University of Akureyri, Akureyri, Iceland Helgi Gestsson, University of Akureyri, Akureyri, Iceland
Theme Theme 5: New Markets for the Arctic, including Trade, Tourism and Transportation
Session Name 5.3 Management of the High North: the role of context, strategies and plans
Datetime Wed, Sep 14, 2016 01:15 PM - 01:30 PM
Presentation Type Oral
Abstract text A major challenge for many northern SMEs is how to achieve flexibility to adapt to changing market conditions. Industries such as fisheries or tourism tend oscillate between strong demand and high prices and the opposite, and SMEs must align capacity and product-lines in order to make a profit or even survive.
Organizational slack is often seen as a mean to achieve flexibility, yet Northern SMEs typically have very little slack in the form of excess resources.
Northern SMEs moreover often operate out of small local communities with few alternative means of employment.
Embeddedness and long-term commitments to local communities are often seen as impediments to flexibility, yet in our paper we describe based on a study of Northern Norwegian, Finnish and Icelandic SMEs, how embeddedness and local commitments in some cases lead to more, not less flexibility.
We first describe how Northern SMEs differ in their views of as well as ways of interacting with local communities and argue that such differences affect how SMEs handle market variation and instability.
More specifically, we suggest that SMEs commitments to local communities, or what we refer to as a “build” strategy, can create greater flexibility by leading companies to adopt a longer and strategic perspective that guides investment in human capital and production facilities. Investments in human capital create a highly skilled and knowledgeable workforce, capable of alternating between different production lines. Such investments also build social capital and trust which further enhances communication and coordination between employees and employees and managers/owners.
While such investments often take the form of local improvisations or bricolage, such decisions are informed by a clear sense of identity and purpose that help ensure consistency over time and between decisions. The paper finally looks at implications for further research and practitioners.
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