A Business Strategy Perspective on Economic Integration : Consequences of the European internal Market for Swedish Manufacturing SMEs

Since the mid-eighties, progress in European economic integration has contributed to changing conditions for the conduct of business in many sectors of the economies. Such is the case in Sweden, whose commitment to the formal integration process also has changed in recent years, from a free trade arrangement (EFTA) via the European Economic Area (The EFTA states' affiliation to the European Union's Internal Market), to membership in the European Union. A theoretical point of departure for this thesis was the finding that although economic integration entails strategic consequences for firms, studies treating economic integration with a general business strategy perspective were rare. Hence, the main purpose has been to achieve knowledge about the European Internal Market's strategic consequences for Swedish firms, with the focus on manufacturing SMEs. Empirically, it is examined how integration has been experienced in firms through two questionnaires, sent in earlier and later stages of the formal integration process. Although the responses indicate a limited impact from the Internal Market, they present some arguments for an increased internationalisation. There are, however, reasons to believe that factors other than political initiatives were behind such a development. In the theoretical part of this thesis, obstacles to international competition, and the corresponding competitive advantages, are seen as being central for understanding integration effects as well as for the possibilities to respond to them. An essential distinction is made between different types of obstacles, based on origin or main causes. One or other of these categories may be crucial for a firm when defending a strategic market position, or may hinder the firm from competing in other markets. Furthermore, obstacles in the different categories are in principle influenced by integration measures to a varying degree, and the survey indicated that the type of obstacle that is primarily influenced by integration measures is the one with the least perceived influence on firms' competitive strength. In the last part of the thesis, and with several different points of departure - trade and integration theory, international business, strategic management, and the Internal Market's institutional framework - a model for analysis of integration effects in business strategy terminology is developed and presented. The model is constituted by a geographic dimension and a dimension concerning the product and distribution in a broad sense. For firms with strategic positions which are affected according to the analysis, two principal strategic responses are discussed: to re-establish former competitive advantages or to adapt to the new situation by re-orienting the business.digitalisering@um