Rural perspectives on digital innovation:

Experiences from small enterprises in the Nordic countries and Latvia

Linda Randall, Louise Ormstrup Vestergård & Mari Wøien Meijer

NORDREGIO REPORT 2020:4

nordregio report 2020:4 1 Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia

Linda Randall, Louise Ormstrup Vestergård & Mari Wøien Meijer

NORDREGIO REPORT 2020:4 Rural perspectives on digital innovation: Experiences from small enterprises in the Nordic countries and Latvia Table of Contents Nordregio Report 2020:4

ISBN 978-91-87295-89-8 (print) ISBN 978-91-87295-90-4 (PDF) ISSN 1403-2503 DOI: http://doi.org/10.6027/R2020:4.1403-2503 1. Introduction and background...... 7 © Nordregio 2020

Nordregio 2. Digitalisation in the Nordic-Baltic rural context...... 10 P.O. Box 1658 2.1 The digital divide: Infrastructure...... 10 SE-111 86 Stockholm, Sweden [email protected] 2.2 The digital divide: Knowledge and skills...... 23 www.nordregio.org www.norden.org 3. Digitalisation in key rural sectors...... 32

Analyses and text: Linda Randall, Louise Ormstrup Vestergård & Mari Wøien 3.1 The digital revolution in the bioeconomy...... 32 Meijer 3.2 A potential blessing, a possible curse: Digitalisation and sustainable tourism...... 36 Contributors: Linda Randall, Louise Ormstrup Vestergård, Mari Wøien Mei- 3.3 Getting started on the digital journey: Digital transformation in the manufacturing jer, Anna Berlina, Jukka Teräs, Laima Engere-Levina, Elin Slätmo, Hjördis Rut sector...... 39 Sigurjonsdottir, Pontus Arledal Thunell, Eeva Turunen & Jens Grelck Cover photo: Unsplashed Maps and data: Oskar Penje & Linda Randall 4. Supporting digitalisation of small rural enterprises in the Nordic Layout: Marija Zelenkauskė countries and Latvia...... 44 Nordregio 4.1 Denmark...... 45 is a leading Nordic and European research centre for regional development 4.2 Finland...... 46 and planning, established by the Nordic Council of Ministers in 1997. We conduct solution-oriented and applied research, addressing current issues 4.3 Iceland...... 47 from both a research perspective and the viewpoint of policymakers and 4.4 Norway...... 48 practitioners. Operating at the international, national, regional and local 4.5 Sweden...... 49 levels, Nordregio’s research covers a wide geographic scope, with an 4.6 The Faroe Islands...... 50 emphasis on the Nordic and Baltic Sea Regions, Europe and the Arctic. 4.7 Greenland...... 51 The Nordic co-operation 4.8 Åland...... 51 Nordic co-operation is one of the world’s most extensive forms of regional 4.9 Latvia...... 52 collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, and the

Faroe Islands, Greenland, and Åland. Nordic co-operation has firm traditions in politics, the economy, and culture. It plays an important role in European 5. Conclusions and advice for policy makers...... 54 and international collaboration, and aims at creating a strong Nordic community in a strong Europe. Nordic co-operation seeks to safeguard Nordic and regional interests and principles in the global community. Common References...... 57 Nordic values help the region solidify its position as one of the world’s most innovative and competitive.

The Nordic Council of Ministers is a forum of co-operation between the Nordic governments. The Nordic Council of Ministers implements Nordic co-operation. The prime ministers have the overall responsibility. Its activities are co-ordinated by the Nordic ministers for co-operation, the Nordic Committee for co-operation and portfolio ministers. Founded in 1971.

The Nordic Council is a forum for co-operation between the Nordic parliaments and governments. The Council consists of 87 parliamentarians from the Nordic countries. The Nordic Council takes policy initiative s and monitors Nordic co-operation. Founded in 1952.

Stockholm, Sweden, 2020

nordregio report 2020:4 5 List of Figures 1. Introduction and background Figure 1. Digital Economy and Society Index, 2019...... 7 Figure 2. Broadband network segments...... 11 Figure 3. Next Generation Access broadband coverage/availability in 2018 (as a % of households)...... 13 In April of 2017, the Ministers responsible for availability of digital infrastructure and the Figure 4. Average municipal household coverage of fixed broadband by speed and municipality digital development in Norway, Sweden, Denmark, adoption of digital technologies. As such, this type...... 20 Finland, Iceland, Faroe Islands, Greenland, Åland, project sought to provide a rural perspective on the Figure 5. People with basic or above basic digital skills, 2017...... 23 Estonia, Latvia, and Lithuania met in Oslo and second goal: Strengthening the competitiveness of Figure 6 Key indicators tracking digital progress, EU, 2018 (% enterprises)...... 25 set an ambitious agenda for digitalisation across our enterprises through digitalisation. Specifically, Figure 7. Pyramid of digital maturity...... 25 the Nordic-Baltic Region. Their vision is to make it aimed to demonstrate how smart, sustainable and inclusive approaches to digitalisation can be Figure 8. Digital transformation and maturity of companies step by step. the Nordic-Baltic Region a digital frontrunner by used as a tool to increase the competitiveness Source: REG LAB, 2018...... 26 pursuing the following policy goals (The Norwegian Ministry of Local Government and Modernisation and attractiveness of rural areas by exploring the Figure 9. Challenges and opportunities associated with digitalisation for small rural & Nordic Council of Ministers, 2017): challenges and opportunities for small enterprises enterprises...... 30 1. Strengthening the ability for digital trans- in rural and sparsely populated areas. The project Figure 10. Applications of digitalisation in the bio-based circular economy...... 33 formation of our governments and societies, was funded by the Nordic Council of Ministers for Figure 11. The travel cycle. Source: Visit Sweden, 2019...... 38 especially by creating a common area for cross- Digitalisation (MR-Digital), the Nordic Thematic Figure 12. Industrial Revolution...... 39 border digital services in the public sector. Group for Innovative and Resilient Regions 2017- Figure 13. Omstillingsmotor - Project model...... 41 2. Strengthening the competitiveness of our 2020 and the North Atlantic Cooperation (NORA) Figure 14. SIA BALTMA - Digitisation process...... 42 enterprises through digitalisation. and included a baseline study, local workshops 3. Enhancing the digital single market in the and a webinar series. Its primary focus was the Nordic-Baltic Region. Nordic countries and Latvia; however, data is also provided for Estonia and Lithuania where possible. In fact, the Nordic countries are already at the The baseline study explored the nature of forefront of digitalisation in Europe (see Figure 1). digital transformation in rural areas and reflected List of Maps The Baltic States show a more mixed performance, on opportunities and challenges for small and but still score around or above average on the medium sized enterprises (SMEs) in rural areas Map 1. Next Generation Access Household coverage, 2018...... 14 European Commission’s annual measure of digital in each of the Nordic countries and in Latvia. The Map 2. Next Generation Access Rural household coverage, 2018...... 15 progress, the Digital Economy and Society Index study was developed through desk-based research conducted by Nordregio and a report prepared Map 3. Household access to fixed broadband at download speeds >100 Mbps, 2018...... 17 (DESI). Despite this positive development overall, by Vidzeme Planning Region which detailed the Map 4. Household access to fixed broadband based on download speed available to >50% of disparities remain with respect to digital deve- Latvian context. It provided an overall context for households, 2018...... 19 lopment within countries; with rural and sparsely the digitalisation of SMEs in rural areas including populated areas often lagging behind on the sector-specific information on the bioeconomy,

1 Connectivity 2 Human Capital 3 Use of Internet 4 Integration of Digital Technology 5 Digital Public Services

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Figure 1: Digital Economy and Society Index, 2019. Data source: European Commission, 2019f. nordregio report 2020:4 6 nordregio report 2020:4 7 manufacturing and tourism sectors. It also pro- The webinar series brought together parti- vided an overview of the policy context in each of cipants from the local workshops to present their Workshop location and theme2 Regional characteristics3 Number of participants the Nordic countries and independent territories perspective to practitioners and policy makers. and in Latvia. The baseline study was designed to Episodes were presented weekly during March Ii Municipality, Finland Northern Ostrobothnia - 6 inform the local workshops and was circulated to 2020 and were based on the following topics: predominantly rural “Digital transformation in rural enterprises” all participants in advance. ■ Webinar 1: The digital divide Local workshops were held in rural locations ■ Webinar 2: Digitalisation in the manufacturing Trøndelag County, Norway Nord Trøndelag - 5 predominantly rural; Sør- throughout the Nordic-Baltic Region, including the industry “Digitalisation of rural SMEs” five Nordic countries, Latvia and the Faroe Islands.1 ■ Webinar 3: The digital revolution in the bio- Trøndelag - intermediate region The workshops were developed and promoted in economy partnership with local stakeholders and aimed to ■ Webinar 4: Digitalisation and sustainable Ísafjörður, Iceland Westfjords - predominantly 13 provide an opportunity for local capacity building tourism rural, remote “Digitalisation: From threat to opportunity” and networking as well as a source of data. Each workshop was organised in partnership with a local This Nordregio Report presents the results of Vesthimmerland Municipality, Denmark Region Nordjylland - 10 predominantly rural stakeholder and contained several presentations these activities. It builds on the original baseline “Digitalisation of rural SMEs4“ deemed to be of relevance to the audience. This study by including practical examples and Vingåker Municipality, Sweden Södermanland - intermediate 10 was followed by a discussion guided by a series of insights from the local workshops and webinar region questions: series to provide a genuine rural perspective on “Meet the challenge of rural farming with ■ How do you currently use digital solutions in digital innovation. The report is presented in four simple digital tools” your company? sections. The first section provides an introduction Tórshavn, The Faroe Islands The Faroe Islands - 11 ■ What opportunities do digital solutions present to digitalisation in the Nordic-Baltic rural context. predominantly rural, remote in your company / sector? It is structured around the two aspects of the “Digitalisation: what are the great ■ What are the main challenges for implementing urban-rural digital divide: digital infrastructure opportunities for Faroese businesses?” digital solutions and tools in your company and digital knowledge and skills. The section Līgatne, Latvia Vidzeme Region, predominantly 18 (e.g. skills, knowledge, access to finance, poor includes a series of maps illustrating the current rural, remote “Improving bioeconomy value chains through connectivity, regulations, lack of time)? situation with respect to broadband connectivity. digitalisation” ■ What kind of support do you need for increasing It also presents a broad introduction into the digitisation within your company / industry? challenges and opportunities that rural enterprises face in the context of digitalisation. The second Table 1: Nordic-Baltic workshop locations, themes and attendance. The tailored approach in each location resulted in a section discusses the effect of digitalisation on unique constellation of stakeholders attening each small rural enterprises, shining a spotlight on event. As such, we are cautious in our interpreta- three sectors deemed to be particularly relevant tion of the data and have avoided making cross- in the rural context: bioeconomy, sustainable country comparisons or drawing strong overall tourism and manufacturing. The third section conclusions about digitalisation practice in each addresses the support structures that are region. Instead the workshop data provides a expected to facilitate the digital transition rich series of practical examples and personal for rural enterprises. It presents the ideas for experiences from Nordic-Baltic rural areas that support raised by workshop participants before illustrate (and at times challenge) the findings of describing the support structures available in the desk-based research. This provides a strong each country and independent territory. The basis for future research and is an important first fourth and final section provides the overall step in highlighting the need to include rural areas conclusions from the project, along with advice in the conversation about digital innovation. The for policy makers about how to best support locations, themes and participant numbers from rural and sparsely populated areas to make the the workshops are shown in Table 1. most of the opportunities digitalisation offers.

2 The workshop titles listed here are translations. All workshops were promoted in the local language. With the exception of Iceland and Latvia, the quotes provided throughout the report are also translations as the workshops were held in the local languages. In Latvia the workshop event was held using a combination of Latvian and English, with simultaneous translation provided for both 1 The workshop in the Faroe Islands was made possible through additional funding from NORA (Nordic Atlantic Cooperation). This languages. funding was also intended to allow for a workshop in Greenland but unfortunately this workshop was cancelled due to the outbreak 3 Based on the Eurostat urban-rural typology. of Covid-19. As such it was not possible to include results from Greenland in this Report. Nordregio hopes that this workshop may 4 Due to limited registrations, study visits to three local companies were conducted in place of the workshop. The same questions still be conducted at some point in the future. were addressed in the study visit in the form of an informal interview.

nordregio report 2020:4 8 nordregio report 2020:4 9 2. Digitalisation in the Box 1. Understanding digital DOCSIS 3.0, VDSL (Very high-speed Digital infrastructure – how fast is Subscriber Line) and other types of fast broadband (at least 30 Mbps download) fast? Nordic-Baltic rural context (European Commission, 2015). The aim was The European Commission defines three cat- that all Europeans should have access to egories of download speed (European Court 30 Mbps by 2020, however it is unlikely that of Auditors, 2018): this target will be reached (European Court ■ Basic broadband - speeds between of Auditors, 2018). In the Nordic countries, 144 Kbit/s and 30 Mbps; governments are increasingly striving for Digitalisation holds considerable potential for countries is unequal; with rural and sparsely ■ Fast broadband - speeds between 100 Mbps coverage for all households and rural areas. It allows us to overcome the challenges populated areas often lagging behind with 30 Mbps and 100 Mbps; businesses (see Box 2). associated with geographical distance, ensuring respect to the availability of digital infrastructure ■ Ultra-fast broadband - speeds above But what does all this mean from a equal opportunities regardless of where people and the adoption of digital technologies. These 100 Mbps practical perspective? Think of an internet live (Gillespie et al., 1994). This includes new modes urban/rural disparities are often referred to as connection as being like a pipe. Just as the of service provision through the emergence of the digital divide and are caused by shortcomings The upper limit of the connection speed diameter of the pipe determines how much is generally determined by the type of eHealth, distance learning and eGovernment with respect to supply (e.g. infrastructure) and liquid can pass through at any given infrastructure used (see Figure 2). Fixed-line moment, the speed of the internet solutions. It also relates to new ways of organising demand (e.g. lack of knowledge or skills to unlock infrastructure delivers the highest speeds (up infrastructure determines how much data work, for example, new business models that allow the opportunities associated with digitalisation) to 2.5 Gbps/1.2 Gbps (down/up) in the best can pass through in any given second. More a single entrepreneur to start a business with (Labrianidis & Kalogeressis, 2006). This section will case (fibre to the premises)) and wireless complex activities require more data and limited capital, opportunities for self-employment address both sides of the digital divide, beginning links deliver the lowest speeds (up to 60 thus a faster connection. For example, through the platform economy (e.g. renting with digital infrastructure before moving on to Mbps/10 Mbps (down/up) for terrestrial activities like general browsing of the out rooms though Airbnb), and remote working discuss digital knowledge and skills. wireless and 20 Mbps/8 Mbps (down/ internet or checking emails only require arrangements (OECD, 2017; Vironen & Kah, 2019). up) for satellite technology) (European about 1 Mbps, while a high-definition video Together, these developments are expected to 2.1 The digital divide: Infrastructure Court of Auditors, 2018, p. 11). Within the conference call requires at least 6 Mbps play a role in addressing many of the challenges Access to modern digital infrastructure and European Union, Next Generation Access (Federal Communications Commission, rural areas face, including population ageing, the services it facilitates is crucial for rural (NGA) is a commonly used indicator of 2020). If multiple people are using the same out-migration of young people, skills shortages, communities. This infrastructure is the foundation progress and is defined as including the connection at the same time, the capacity of following technologies: FTTH (Fibre to the accessibility challenges, and lack of labour-market for competitiveness, attractiveness, innovation, the infrastructure is divided across the users Home), FTTB (Fibre to the Building), Cable (Woodall, 2018). diversity (Interreg Europe, 2019a; Roberts et al., and economic growth (Interreg Europe, 2017; Vironen & Kah, 2019). 2019a). At the national level, the Nordic-Baltic Nordic rural communities are well placed to countries mostly perform well on measures of realise these potentials, as the region is generally digital connectivity. Taking, for example, Next considered to be at the forefront of digitalisation Generation Access (NGA) coverage, which is in a European and even global context (Alm et al, generally considered fast broadband (see Box 1), 2016; Chakravorti & Chaturvedi, 2017; European almost all countries had coverage that is better Commission, 2019c; 2019d). The Baltic States or equivalent to the EU average in 2019 (83%). show a more mixed performance, with Estonia Iceland (97%), Denmark (95%) and Latvia (93%) generally considered a frontrunner – particularly have the highest percentage of overall household in the context of eGovernance (European access followed by Sweden (86%), Norway (84%) Commission, 2019c; 2019d) – and Lithuania and and Estonia (84%). Finland (75%) and Lithuania Latvia performing around the European average (63%) are the only Nordic-Baltic countries in which (European Commission, 2019b). Despite this NGA coverage levels are below the EU average positive picture overall, digital development within (European Commission, 2019f).

Figure 2: Broadband network segments. Source: European Court of Auditors, 2018.

nordregio report 2020:4 10 nordregio report 2020:4 11 All households Rural households

Malta Netherlands Iceland Luxembourg United Kingdom Belgium Ireland Portugal Latvia France Greece Germany Estonia Slovakia Hungary Denmark Cyprus Slovenia Czechia European Union Austria Norway Lithuania Photo: Andreas Dress / unsplash.com Romania Poland Spain A regional perspective on broadband coverage The maps that follow show the same two Italy The infrastructure accessibility figures cited above indicators from a regional perspective. Map 1 Croatia go someway to explaining the Nordic countries' shows NGA household coverage for all households Bulgaria reputation as digital frontrunners. It is important at the NUTS 3 level for the Nordic-Baltic Region. Sweden to note however that these figures are based on Map 2 shows the same indicator but includes Finland coverage for the population as a whole and, as only rural households. Here, rural households are such, hide the urban-rural divide. Once urban-rural defined as ‘households in square kilometres with a 0 10 20 30 40 50 60 70 80 90 100 differences are taken into account, we see that the population of less than one hundred’ (Point Topic, % of households Nordic countries actually perform fairly poorly in 2013, p. 17). This means that the map showing a European context. Using the same measure of rural household coverage only includes households NGA coverage (as a % of households) in 2018, for in areas with a density of less than one hundred Figure 3: Next Generation Access broadband coverage in 2018 (as a % of households). example, Finland and Sweden were the European houses per square kilometre. In some regions this Data source: European Commission. countries where the gap in access between rural is a very small proportion of households (e.g. Byen and urban households was the largest (see Figure København, Denmark = 0.1%), while in others it 3). Lithuania and Norway also performed below includes a substantial proportion of households the European average on this indicator. Iceland (e.g. Utenos apskritis, Lithuania = 62.4%). This and Latvia stand out as regional frontrunners is quite different to the approach that is often in this regard, both with high levels of coverage taken to urban rural comparisons, which involves overall and relatively small gaps between urban classifying a whole region or municipality as and rural households. “urban”, “rural” or “intermediate” (see for example Grunfelder et al., 2020).

nordregio report 2020:4 12 nordregio report 2020:4 13 Map 1: Next Generation Access Household coverage, 2018. Map 2: Next Generation Access Rural household coverage, 2018.

nordregio report 2020:4 14 nordregio report 2020:4 15 Considered together, Map 1 and Map 2 provide a clear demonstration of the digital divide from Box 2. National broadband the infrastructure perspective. Map 1 shows NGA targets in the Nordic-Baltic coverage for all households and presents a regional picture largely consistent with the national countries averages. Over 75% of households have access to Denmark: 100 Mbps download and 30 Mbps NGA coverage in most regions for most countries, upload accessible to all households and with the exception of Finland and Lithuania businesses by 2020 (Agency for Digitisation, 2016). where overall household coverage is below 75% in Finland: 100 Mbps providing 100 % coverage several regions. Map 2 shows the same indicator by 2025 (The Ministry for Transport and but only includes rural households and reveals a Communications of Finland, 2018). picture that is in stark contrast to the national Iceland: 99,9 % coverage of 100 Mbps for averages. In most of Finland and Lithuania, as households and businesses by 2023 (Icelandic well as many regions in Sweden, less than 35% of Parliament, 2019). rural households have access to NGA coverage. Norway: 90 % accessibility by 2020, with Norway performs somewhat better, with NGA access to at least 100 Mbps (The Norwegian access for 35-65% of rural households in most Ministry of Local Government and regions. Perhaps unsurprisingly, the countries with Modernisation, 2016) the highest level of connectivity overall – Iceland, Sweden: 100 Mbps covering 95 % of Latvia and Denmark – are also the countries with households and businesses by 2020 and a completely connected Sweden by 2025 the smallest urban-rural divides. (The Swedish Ministry of Enterprise and Innovation, 2017). A municipal perspective on broadband coverage Latvia & Lithuania: 50 % coverage of The urban-rural disparities described above can 100 Mbps by 2020 and 100 % coverage largely be explained by the market driven nature of at least 30 Mbps by 2020 (European of broadband development. Long distances Commission, 2019b). and low population density mean that, in Estonia: 60% coverage of 100 Mbps & many rural and sparsely populated areas, the 100% coverage of 30 Mbps by 2020 (The demand is insufficient to recoup the cost of the Estonian Ministry of Economic Affairs and infrastructure investment and thus broadband Communications). providers struggle to make a business case for rural expansion (Houzet, 2007; OECD, 2017). The ‘last mile’ of coverage is generally the most several municipalities where coverage drops challenging (see Box 1), but it often affects those below 60% of households (Skinnskatteberg, Berg, remote areas for whom digital access could be Strömsund, Torsås, Vansbro, Borgholm, Älvdalen, most transformative. Högsby & Nordanstig). The poorest coverage can The implications of this are best revealed by be found in Finland and parts of Norway. It should zooming in to the municipal level. Map 3 shows be noted that in some Norwegian regions, satellite the significant variation in the percentage of technology is used, as opposed to fixed broadband. households with access to a broadband connection As noted in Box 1, satellite technology is not of at least 100 Mbps. This speed has been chosen currently capable of reaching this speed so including as it is the national target in all Nordic countries this technology in the map would not affect the (see Box 2). Unfortunately, municipal level data is results. In Iceland, the poorest coverage can be not available for the Baltic States, so the map only found in the eastern part of the country and in the shows the Nordic countries. Westfjords. Outside of these areas the coverage As Map 3 demonstrates, a substantial pro- is relatively good, with at least 60% of households portion of households (>75%) have access to 100 having access to minimum download speeds of 100 Mbps in most Danish municipalities. Sweden also Mbps in many municipalities. It should be noted has relatively good fixed broadband coverage that, due to the limited availability of municipal across most of the country, though there are level data, figures for Iceland are from 2020.

Map 3: Household access to fixed broadband at download speeds >100 Mbps, 2018.

nordregio report 2020:4 16 nordregio report 2020:4 17 Åland has the highest percentage of high- broadband with minimum speeds of 30 Mbps, speed broadband availability among households in Map 4 shows the percentage of households who Finland, with 97% of all households having access have access to fixed broadband with minimum to fixed broadband with a minimum speed of 100 speeds of 10 Mbps (orange shading). Mbps. More remote municipalities fare worse, with The most striking finding in Map 4 is the small only 9% of the households in Föglö having access but significant portion of households in the Nordic to 100 Mbps and only 1% at Kökar. In the Faroe Region who do not have access to fixed broadband Islands the majority of the population (92%) have coverage with a minimum speed of even 10 Mbps. access to the internet from home and, even in the This suggests that there is substantial work to outlying islands, the connection is generally good be done if the Nordic countries are to reach the (Ministry of Foreign Affairs, Trade, and Industry broadband provision targets set out in Box 2. and Ministry of Finance, 2018). In Greenland, 83% With the exception of Samsø (Denmark, 82%), of the population have access to the internet from these municipalities are all in Finland and Norway. home (Epinion, 2018).5 In Norway, the most problematic regions appear It is important to acknowledge that fixed line to be Trøndelag (an intermediate region), and broadband of at least 100 Mbps is an ambitious the predominantly rural regions of Hedmark measure and that larger proportions of the and Oppland6 and Møre og Romsdal. In Finland, population in each municipality have access to municipalities with comparatively poor levels of some form of internet. To explore this, Map 4 coverage are scattered around the country. integrates speeds of 30 Mbps (for municipalities We compared the figures for “all technologies” where less than 50% of the population has in the Norwegian context to allow for the possibility access to speeds of 100 Mbps) and 10 Mbps that coverage in these municipalities improves (for municipalities where less than 50% of the substantially once satellite technology is taken population has access to speeds of 30 Mbps). into account. Using this method, there remains 86 Map 4 shows different speeds for municipalities municipalities where less than 50% of households based on the coverage accessible to the majority have access to minimum speeds of 30 Mbps. of households (>50%). In municipalities where over However, in all but one of these municipalities 50% of households have access to fixed broadband 100% of the population has access to 10 Mbps.7 with minimum speeds of 100 Mbps (blue shading), Notably, these figures are similar even once Map 4 presents much the same picture as Map 3. In satellite technology is removed from consideration, municipalities where less than 50% of households suggesting that the majority of these households have access to fixed broadband with minimum access these speeds using mobile technology. In speeds of 100 Mbps, Map 4 instead shows the Finland, mobile coverage is comparable to that percentage of households who have access to provided in Norway, with almost all households fixed broadband with minimum speeds of 30 Mbps having access to 4G (European Commission, (green shading). Finally, for municipalities where 2019a), suggesting that a similar result may be less than 50% of households have access to fixed obtained for Finland if the data was available.

5 Neither Greenland nor the Faroe Islands are included on the map due to difficulties in obtaining municipal level data. 6 Due to a regional reform which took effect on 1st January 2020, the regions of Hedmark and Oppland are now one region: Innlandet. Map 4: Household access to fixed broadband based on download speed available to >50% of 7 The only exception was Masfjorden where 99% of the population have access to minimum speeds of 10 Mbps. households, 2018. nordregio report 2020:4 18 nordregio report 2020:4 19 rural areas in recent years. While 63% of houses Applications are evaluated on the basis of the Urban Intermediate Rural and companies in rural municipalities had access following criteria: 1) Areas with no basic need; 2) to a fast connection in 2015, 81% had access in Areas with basic need, but without the need for 100 2018 (Energistyrelsen, 2018). This is compared a high-capacity broadband; 3) Cost-efficient 90 with 91% at the national level (Energistyrelsen, network development; 4) Local co-funding; 5) Plan 80 2018). Generally speaking, the companies we for sustainable operation after development, and visited in Denmark did not consider connectivity 6) Significance for local community development 70 a problem. One exception was companies which and value creation (Oslo Economics et al, 2017). 60 produce machinery for farms that are reliant on The total annual grants may differ and was in 50 access to store data in a cloud solution. Here, poor 2019 close to 250 MNOK following the increase of 40 connectivity was raised as an issue. 50 MNOK in the revised national budget in May 30 In Finland, state funded, targeted support 2019 (Norwegian Communications Authority, mechanisms aim to support rural municipalities to 2019). The upper limit of state aid for broadband 20 implement the optical fibre network. Through this development purposes are set in concordance 10 funding, the Municipality of Ii has implemented an with the GBER (general block regulations) set out 0 optical fibre network to secure broadband access by the European Commission and applies to the 10 Mbps 30 Mbps 100 Mbps across the town, including in remote localities. Just Norwegian case through the European Economic because such a network exists however, does not Area and the EFTA Surveillance Authority Figure 4: Average municipal household coverage of fixed broadband by speed and municipality type for guarantee its use, and, according to participants in (The Norwegian Ministry of Transport and Denmark, Finland, Norway and Sweden, 2018. the Nordic-Baltic workshop, uptake has been slow, Communication, 2019). Data source: National Public Telecom Agencies. particularly among older residents. Participants In Sweden, broadband development is largely also mentioned challenges for businesses when it characterised by a bottom-up approach with comes to the reliability of the network. local fibre networks operating in almost 200 In order to more clearly understand the timeframe has now been revised to 2023 (Icelandic In Norway, the Norwegian Communications municipalities and accounting for 60% of the distribution of speeds between urban and rural Parliament, 2019). Through the program, local Authority provides needs-based government total network (Svenska stadsnätsföreningen, municipalities, we looked at the average municipal governments can apply for state aid from the grants for the development of high-speed 2014). The Swedish Local Fibre Alliance (Svenska household coverage by municipality type for Telecommunications Fund. Around 5500 house- broadband. Counties and municipalities are the stadsnätsföreningen) supports local communities three speeds: 100, 30, and 10 Mbps (see Figure 4). holds and businesses had been connected in 2019, only ones eligible for funding and must go through to develop these networks, which are, in Average household coverage was substantially with approximately 1500 buildings in sparsely a public tendering process. Other public and private most cases, municipally owned and managed lower for rural municipalities than either populated areas still to be connected in order actors may participate in the planning processes. (see Box 3). intermediate or urban municipalities at all three to reach the targets. The project has a strong speeds. Perhaps unsurprisingly, the largest gaps emphasis on cost effectiveness, seeking synergies were found at the higher speeds. Intermediate with other utilities development projects wherever Box 3. Vingåker Municipality a reliable, independent assessment of the municipalities fell behind urban regions with possible (Government Offices of Iceland, 2019). reception that they then use in dialogue with respect to the two faster speeds, but a comparable Connectivity was not raised as issue in the Nordic- – One of Sweden’s smartest the operators to advocate for a more stable proportion of households have access to at least Baltic workshop held in Iceland. rural areas connection across the municipality. 10 Mbps. This suggests that, regardless of the Government policy has also played an Vingåker Municipality is proactively Vingåker is among few municipalities method of classification8, there is substantial important role in Denmark. In particular, the working towards the goal of access to fibre in Sweden that have installed a sensor evidence to support the existence of an urban- broadband fund which was a part of the strategy for all households and businesses in the network. This LoRa-WAN network covers rural divide when it comes to digital infrastructure “Growth and development in all of Denmark” municipality by 2020. It employs a standard the whole municipality and enables a vast range of applications using the Internet in the Nordic Region. (2016-2019) (Regeringen, 2015). Though deve- cost rate, ensuring affordable access to of Things. For example, the municipality lopment of digital infrastructure is principally infrastructure regardless of where in the municipality someone is located. Associations can monitor the moisture in the soil to A policy perspective on broadband coverage market-driven in Denmark, this state fund sought that own houses can apply for monetary ensure that plants are only watered when The relatively high levels of coverage in Iceland are to improve opportunities for development and compensation to connect to the fibre necessary. The investment in LoRa-WAN is largely a result of the Rural Fibre Project (Ísland growth for businesses and citizens everywhere without any extra cost. Over 300 persons expected to cut costs and transport needs ljóstengt), a Government program launched in in Denmark with an explicit focus on access in have participated in workshops about how both within the public and private sectors. 2016 which aims to provide ≥100 Mb/s internet to rural and sparsely populated areas where the to choose operators and to connect to the Vingåker participates in two regional 99.9% of households and businesses (Government telecommunication companies were not planning fibre infrastructure. WiFi-zones in the centre networks related to digitalisation. The first Offices of Iceland, 2019). The original goal was to expand (Erhvervsministeriet, 2018a). This has of Vingåker have also been installed. To is focused on municipal cooperation on to provide this coverage by 2020, however the significantly improved access to the internet in ensure good mobile-phone connectivity, the digital infrastructure (bredbandssamordnare municipality measure speeds using devices nätverk) and the second focused on coordinating digitalisation work across 8 Figure 3 determines rurality by classifying whole municipalities as urban, intermediate or rural while Map 2 classifies individual attached to the garbage trucks. Through households as rural based on the density of the surrounding area. this activity the municipality is able to make Region Södermanland. nordregio report 2020:4 20 nordregio report 2020:4 21 Alongside these municipally owned networks, and large-scale producers in the bioeconomy. 2.2 The digital divide: Knowledge and United Kingdom, Belgium, Malta and Switzerland, there are also over 1 000 associations representing Availability of Internet of things applications that skills people in cities were significantly more likely to community owned networks. In these cases, a are suitable for small-scale application is vital to Alongside the infrastructure shortcomings report having at least basic digital skills than lack of interest from both the market and the ensuring the benefits of digitalisation are shared described above, rural and sparsely populated people in rural areas or in towns and suburbs. state has resulted in communities installing equally between large-scale and capital-intensive areas also experience barriers when it comes to This relationship was evident across countries their own broadband infrastructure, either by agriculture and small-scale farms (The Swedish the knowledge and skills required to unlock the regardless of the overall level of digital skill. investing their own funds, seeking grant funding, Board of Agriculture, 2017). opportunities associated with digitalisation (ENRD, Perhaps unsurprisingly, the largest gaps among or a combination of the two. These associations A final consideration with respect to 2017; Labrianidis & Kalogeressis, 2006). Digital the Nordic-Baltic countries were evident in Finland can get support from the Village Internet Forum connectivity is that not all internet access is from competence is often found to be concentrated in and Lithuania, the countries found to have the (Byanätsforum), a national network consisting of a fixed line. In fact, mobile access is increasingly as the capital regions and other larger urban areas poorest infrastructure coverage in the previous over 400 community owned internet associations. important as household coverage and accelerating (Danmarks Erhvervsfremmebestyrelse, 2019). section. The smallest gap among the Nordic-Baltic The Swedish case is often used to illustrate the deployment of fifth-generation mobile Figure 5 is based on regional data collected countries was found in Sweden. The remainder of how the challenge of broadband expansion to systems (5G) in the Nordic countries is among as part of the European Commission’s Digital this section will consider the implications of this rural areas can be addressed through grass- the prioritised items on the Nordic Cooperation Economy and Society Index and shows the dimension of the digital divide in the context of roots action. While the work happening in agenda. The Letter of Intent from the Nordic percentage of people aged 16-74 years with basic small rural enterprises in the Nordic-Baltic Region, these communities is of course impressive, it is Prime Ministers on development of 5G in the or above basic digital skills, based on where they using the notion of “digital capital” to frame the important that the existence of such networks Nordic Region promotes the deployment of 5G live. With the exceptions of Luxembourg, the discussion (see Box 4). does not shift the focus from the responsibility technology in several sectors, including transport of the state to provide an equal level of service and energy, environment, agriculture and and infrastructure to all residents, regardless aquaculture. 5G is expected to provide considerably of where they live. Not all communities have the higher speeds than 4G, and has a theoretical resources and capacity to develop such networks maximum capacity for download speeds of up or make such investment, yet all have a right to be to 10 Gbps (European 5G Observatory, n.d.). connected. This is particularly relevant to farmers, Thus, 5G deployment has the potential to enable foresters and companies alike who may want to the development of new industries and services use sensor networks or cloud services. A study by beyond communications and provide better and the Swedish Board of Agriculture (2017) found faster connections for rural areas. At the same that unequal access to financing for new digital time, a lack of critical mass and high costs of a solutions has the potential to further exacerbate 5G system may limit its deployment to rural areas, the unbalanced power relations between small further widening the digital divide.

Photo: Nicholas Doherty / unsplash.com

Figure 5: People with basic or above basic digital skills, 2017. Source: Eurostat.

nordregio report 2020:4 22 nordregio report 2020:4 23 more than 250 employees (The Norwegian Box 4. What is digital capital? Ministry of Local Government and Modernisation, SMEs Large enterprises One way of understanding digital knowledge 2019; Statistics Norway, 2020). Ensuring and skills is through the concept of digital that these enterprises have the capacity to Exploit B2C eCommerce capital (Ragnedda, 2018). Digital capital is embrace digitalisation is vital to ensuring the Buy medium‐high cloud‐computing services defined by Ragnedda (2018) as ‘the accumu- continued competitiveness of the Nordic-Baltic lation of digital competencies (information, Region in European and global markets. Sending eInvoices suitable for automated processing communication, safety, content-creation, According to the Digital Economy and Society and problem solving), and technology’ Index (European Commission, 2019f), SMEs fall Selling online (at least 1% of turnover) (p. 2367). behind large companies on all key indicators used Digital capital is a useful concept, as it Pay to advertise on the internet to track digital performance (see Figure 6). Several infers the potential for exponential growth. explanations for this have been suggested in the >20% of workers with portable devices for business use As with other types of capital (e.g. social, literature, including: lack of knowledge about cultural, political), the more a person or Fastest broadband connection is at least 30 mbit/s group has, the more likely they are to have digital opportunities and their benefits, low level opportunities to accumulate more (Putnam, of ICT skills, limited ability to adapt to rapidly >50% of persons employed use computers & internet 2000). Put another way, those with higher developing technologies and know-how, limited Website has reference to the enterprise's social media… levels of digital capital to begin with are more access to capital and finance, lack of appropriately likely to interact with digital tools in a way tailored support structures, lack of engagement Website has some interactive functionalities that further increases their digital capital. with support structures and limited capacity to Thus, investments in digital capital develop- employ ICT specialists or professionals to direct Access to ICT specialist skills ment may have benefits that go well beyond digital strategy or drive organisational change Enterprises having a website or homepage the initial support provided. To take a simple (European Commission, 2018, 2017d; European example, a municipality may engage with Investment Bank, 2019; OECD, 2017; Interreg 0 10 20 30 40 50 60 70 80 90 100 elderly residents for the purposes of teaching Europe, 2018). % of enterprises them to use eGovernment services. The skills acquired may in turn enable further digital Although these findings are not specific to rural areas, the tendency for digital competence to interactions (e.g. skype with grandchildren), Figure 6: Key indicators tracking digital progress, EU, 2018 (% enterprises). providing an additional boost to the person’s be concentrated in urban areas may result in SMEs Data source: European Commission. digital skills as well as generating other indi- in rural areas experiencing a double digital divide. rect benefits (e.g. decreasing social isolation) Challenges that have been highlighted in the (Forsman & Nordmyr, 2017). literature as particularly relevant to SMEs in rural areas include: lack of access to information about support instruments and funding possibilities, brain drain, and insufficient innovation potential Digital capital and small and medium sized of SMEs (Interreg Europe, 2018). enterprises Several tools have been developed that aim In 2017, about 93% of all EU enterprises were to support SMEs to engage successfully with micro-enterprises with less than 10 employees and digitalisation. Figure 7, for example, provides 5.8% were small enterprises with 10-49 employees a useful framework for assessing a company’s (European Commission, 2017a; Tillväxtverket, digital maturity. It contains six levels, ranging 2018). In Sweden, the corresponding figure from no digital engagement to a situation where was 94.7% and 4.4% respectively (European technology transforms the entire business model. Commission, 2017a), while in Denmark micro According to research by the Latvian IT cluster, enterprises accounted for 88.7% and small approximately half of Latvian SMEs sit at level 2 enterprises for 9.2% (European Commission, on the pyramid (Irmeja, 2020). The next largest 2017b). Over 99% of all enterprises in Norway are groups are at level 3 (25%), followed by level 0 considered small and medium sized enterprises (15%) and level 1 (10%). Only 5% of Latvian SMEs (SMEs), with only 0.1% of all enterprises having can be considered digitally transformed based on this model (Irmeja, 2020).

Figure 7: Pyramid of digital maturity. Source: Irmeja, 2020 nordregio report 2020:4 24 nordregio report 2020:4 25 A similar model has been developed by A key distinction between the complexity levels is These models demonstrate that, much like capacity for digital innovation in rural areas. This REG LAB, in this case using the staircase as a the degree to which the business is transformed other forms of capital, the accumulation of includes building the digital capital of individuals metaphor (see Figure 8). This model is based on through the implementation of digital tools. digital capital is a gradual process. A business but can also be achieved by building digital capital research with Danish SMEs who have successfully The steps within the low complexity group may need to spend some time working at the in companies, organisations and even at a whole- undertaken a digital transformation process mostly involve the implementation of digital lower levels to generate the capital necessary of-community level (see Box 5). and aims to provide a deeper and more nuanced tools within the constructs of existing work to make the next step in their digital journey. For companies who took part in the Nordic- understanding of the key steps and drivers practices while the steps in the high complexity Further, companies may return to the lower levels Baltic workshops, a lack of knowledge about along the digital journey (REG LAB, 2018). group are more likely to require or enable with a new perspective further down the track digitalisation was a common challenge (see Figure Here the steps are grouped into high and low some form of organisational transformation (REG LAB, 2018). Such models can be useful for 9). Participants discussed feeling confused about categories based on the level of complexity. (REG LAB, 2018). companies who are not sure where to start and which solutions were best suited to their company, may also help authorities to determine the level at as well as uncertainty about how to get the best which to pitch capacity building activities (Irmeja, out of the solutions they already had access to. 2020). Although neither model is specific to rural Interestingly, some participants also spoke about areas, the notion of a step-by-step approach is a lack of knowledge in a much more fundamental quite relevant, as small rural enterprises may have way, struggling to relate to what this concept limited time and financial capital to invest in rapid of digitalisation actually means in the context digital development. of their company. Others talked about a need to change the mindsets of others as a first step Digital capital in Nordic-Baltic rural areas to truly embracing digitalisation. For example, The example of digital capital accumulation the perception that a digital meeting is a (less- given in Box 4 is, in many ways, indicative of the favourable) substitute for a physical meeting discourse surrounding digitalisation in rural rather than a genuine communication tool in its areas. Throughout the Nordic-Baltic Region, own right (see Box 6). rural populations are experiencing considerable challenges with respect to both the outmigration of young people and population ageing (Kull et I think when you say al, 2020; Stjernberg, 2020). In this context, rural digital, you often think communities are often positioned as receivers of technological solutions designed to improve about a smartphone, and then access to services for citizens while at the same some people might think, then time resulting in increased efficiency for providers digitalisation is not for me. But (Johnsen et al., 2018; Mergel, Edelmann & Haug, digitalisation is much more 2019). Where capacity building comes into focus, than that: it is about optimizing it is generally in the context of programs designed production. And that is something for those whose skills are most limited (e.g. the elderly, people with limited education), so that everybody wants. So I also they can access these digital services (Löfving, think it is about being better at Norlén & Heleniak, 2019). articulating what digitalisation Ensuring everybody has the skills required actually is. to access basic digital services is, of course, important. Equally important, however, is the Workshop participant, Vesthimmerland need for a broader focus that works to build the Municipality

Figure 8: Digital transformation and maturity of companies step by step. Source: REG LAB, 2018 (translated to English by the authors).

nordregio report 2020:4 26 nordregio report 2020:4 27 To achieve this goal, the initiative Box 5. Country #196 (Valsts entrepreneurs the chance to spend some “Country#196” is engaging with Cēsis city in Box 6. Rural actors lead the time working from the unique environment #196, in Latvian) two ways. First, they have worked with the way on eLearning and remote of the Arctic. In this respect, participants In the world today, there are currently 195 municipality on their data strategy, setting working in the Isafjordur workshops discussed the officially registered Nation States. Country up working groups with the view to opening opportunity to “sell” the simpler, cleaner #196 is thus a metaphor for the digital state, up data on the city and using it in new and The Westfjords (Iceland) covers 22,271 km² lifestyle of the Westfjords, in a context a country to which we all belong. This social innovative ways. and has a population of just 6 994, almost where choosing this lifestyle does not movement was founded a year ago and is an Second, they are working with local one third of whom live in Isafjordur, the necessarily mean being shut off from the initiative from international data technology business and society to improve their region’s largest town (Statistics Iceland, world or turning ones back on outside company “Squalio”. The initiative brings capacity to work with digital tools and data 2018). The remainder of the population is opportunities. The Westfjords Development together researchers, national and local management. This work began with a large dispersed in a number of very small towns Centre has staff located all over the region government representatives, entrepreneurs conference about digital awareness which and the region is characterised by limited meaning that digital meetings between and opinion leaders to develop knowledge raised questions like: What is data? What is accessiblity, particularly during the winter staff are commonplace. The team have and tools that can be put into practice digital identity? How can I survive and know months. As a result, the people of the developed several strategies to ensure so that change can take place now. The this digital world? How can I benefit from Westfjords are no strangers to eLearning the effectiveness of online collaboration Latvian IT cluster actively participates this? Following on from this, they held a and remote working. and make sure that those outside of the in and supports this movement with its series of workshops and meet-ups with local In fact, distance learning first started in main office in Isafjordur feel included. For knowledge, experience and resources. Cēsis, entrepreneurs about how they can make the the Westfjords in 1998 when a trial program example, if one meeting participant needs which is home to just 18,300 people, was most of digital tools within their business. for training nurses was introduced by the to join via digital means, everyone joins the first place in Latvia to get involved in Finally, Riga Technical University is University of Akureyri (Peer Review Group, individually via their computers – even if the movement “Country#196” as pilot city. running the first vocational education course 2001). Today, communications technology they are sitting in the same building. This Through the movement, Cēsis Municipality on data analytics for beginners in Cēsis. is used in the region in a range of ways. helps to even out the power dynamic and hopes to discover ways in which technology The intention was to start with one group One third of the students in Isafjordur’s avoids marginalising the person who is not can be used to develop a sustainable city. of 14 students, however, after receiving secondary school are distance learners physically present. While this “smart city” concept is by no 135 applications, the program received from around the country and the Center for The diverse ways in which the means new, it does looks quite different in a additional funding from the city and instead Lifelong Learning offers online courses in communities of the Westfjords are using rural context. Here, sustainability goals are started with two groups (28 students). The Icelandic for immigrants as well as working information and communications technology primarily related to addressing outmigration, ambition is that, within 2 years, 1% of Cēsis to increase digital competence among the highlights the need for a critical perspective particularly among young people. residents will have undertaken this course. population. The University of the Westfjords when discussing the knowledge and skills The idea is that, by increasing digital The overarching idea is that, in this data offers on-campus master programs (in dimension of the digital divide. While there literacy, people can have the opportunity to driven world, understanding data flows can cooperation with the University of Akureyri) may be an overall tendency for people in stay in rural areas while at the same time be a powerful tool to support citizens of as well as eLearning. The online courses rural areas to have lower levels of digital taking advantage of global opportunities and “Country #196” to identify new opportunities benefit local students but can also be competence than those in urban areas, the markets. in their businesses, organisations and society attractive to international students who very experience of remoteness may also (Irmeja, 2020). might come to the Westfjords for only some parts of their course. Here, digitalisation has necessitate digital skill development. Here, the potential to be a driver of population the concept of “digital skills” is less about the growth by both supporting young people technology itself, and instead relates more to stay in the region and attracting new- to the ability to derive value from online comers. interactions that is equivalent to that which Importantly, there was no evidence of a not always well suited to the specific needs of Actors in the Westfjords are also can be achieved face-to-face. lack of curiosity or competence as a barrier enterprises. In the Latvian workshop, lack of trust challenging traditional models of work. According to participants in the to engagement with digitalisation. Instead, also appeared to be a substantial barrier when The Blue Bank, offers accommodation Isafjordur workshop, the limited value limited time and lack of financial resources were considering a new investment. Opportunities to and access to a coworking space to people attributed to these skills outside of rural emphasised as the main barriers. When it came participate in the provision of public services is one from all around the world. It describes itself areas means that they are currently most to time, participants clearly appreciated the long- avenue through which to support the long-term as “ a community of ideas, at the service useful in connecting actors within the term efficiency benefits of digital technologies sustainability and financial security SMEs need of the village and the world” (Blue Bank region. Participants suggested that a fairly but were often simply too busy to invest in their to prioritise investments in digital development. CoWorking, 2020). The centre is part of dramatic mind-set shift is required if digital initial adoption. From a financial perspective, This requires more equitable access to public Arctic Digital Nomads, a project funded by tools are to have the same degree of success investments in technology were perceived as procurement processes which, according to the North Atlantic Cooperation that aims in facilitating urban-rural connections (e.g. high risk, particularly if there was a long pay- workshop participants in Norway, tend to favour to inspire micro-innovation by offering through “placeless jobs”). back time. Development of tailored solutions was larger companies. found to be expensive and existing solutions were

nordregio report 2020:4 28 nordregio report 2020:4 29 A further challenge highlighted by participants They included: increased ability to brand and in traditional industries. For them, having ICT in the Finnish workshop was the older age of We have many young market local products and places, job creation professionals understand the precise nature of many local entrepreneurs. The assumption here entrepreneurs, but the and economic gain, improved efficiency, increased their work was equally important. The hope was was that younger entrepreneurs are more curious share of older entrepreneurs is still transparency in work processes, development of that this could lead to a collaborative approach and capable when it comes to engaging with higher than in fast growing cities new and better products and services, and access where the starting point was a problem to be technology. This challenge is likely to be more like Oulu… Entrepreneurs below to global markets. Interestingly, improvements solved, rather that the technology itself. In one prominent in rural areas, particularly in countries 50 years old are more capable of in efficiency were not always associated with job case, this approach was reported to have resulted that, like Finland, have a more acute experience utilising digital tools. losses, as improved ability to generate and work in the development of a tailor-made solution right of rural population ageing (Stjernberg, 2020). with data also created new roles within some there in the region. Similarly, in the Westfjords having many older Workshop participant, Ii, Finland companies. workers meant that implementing even simple A final point related to knowledge and skills digital solutions could be a long process. that has received little attention up until now is In the Faroe Islands workshop, companies rural enterprises and for rural areas in general. They the need to build the capacity of ICT professionals I’m not interested in talking whose central products had a digital character (e.g. can provide access to new markets, contribute to to collaborate with other sectors. Several to you about GPS technology but I a tech-care company and IT companies) described business growth, reduce the need for investment workshop participants expressed frustration do like driving without a map. challenges related to data management, out-of- in fixed assets (e.g. through cloud-based services), that barriers to digitalisation were framed only in date legislation, and the lack of tools like digital and generate increased interaction with customers light of the digital competence of those who work Workshop participant, Vidzeme Region, Latvia signatures and online business registration. These that enhances the quality of products and services were seen as hindering factors when trying to (Interreg Europe, 2018). In the Nordic-Baltic enter the global market. workshops, the opportunities of digitalisation Alongside the challenges, digital technologies that participants identified were more diffuse and Photo: Dan Magatti / unsplash.com also present substantial opportunities for small less concrete than the challenges (see Figure 9).

outdated legislation lack of knowledge support gaps time limited financial resources

skill gaps

improved efficiency branding & Job marketing (places) creation

branding & marketing better market (products) products access & services

1

0 3 / 0 9 / 2 0 1 8

Figure 9: Challenges and opportunities associated with digitalisation for small rural enterprises. Data source: Literature and Nordic-Baltic workshops.

nordregio report 2020:4 30 nordregio report 2020:4 31 use of forest ecosystem services (Klitkou, et al., It may also be seen in the development of 3. Digitalisation in key rural 2017; European Commission, 2019e). The second biochemicals as replacements for petrochemicals dimension pertains to the bioeconomy as part and other harmful substances (OECD, 2020). The of the circular economy, where data may aid the remainder of this section provides a more detailed sectors improvement of value chains; to reuse, recycle and description of each level, drawing on the literature repair. Data analysis generated from digitalisation as well as practical examples from the Nordic- in, for example, biorefineries or bio-based Baltic workshops. manufacturing may help identify new products emerging from what was previously defined as Dimension 1: The adoption and use of digital The previous section provided a general overview 2020, p. 144). This may have disruptive effects, waste (OECD, 2020). tools of the challenges and opportunities for rural but it may also contribute to the sustainability The third dimension is where we see In the agricultural sector, various measures areas in the context of digitalisation. While the of bioeconomy industries (Klitkou, et al., 2017). advancements in biotechnology. Data-driven at have been introduced to accelerate the digital elements described above have broad relevance Research into the effects of digitalisation on its core, biotechnology is developing rapidly due to transformation in the EU farming sector and in for all small and medium sized enterprises (SMEs) the bioeconomy suggests that digitalisation is the growing repository of information related to rural areas. In 2019, 24 European Member States in rural areas, the way that different challenges fostering transparency across value chains and biology (Investopedia, 2020a). Its application can signed a declaration of cooperation: ‘A smart and and opportunities play out varies significantly helps to monitor the compliance with given rules be seen across a variety of products and services sustainable digital future for European agriculture between sectors. For example, the challenge of and standards (Klitkou et al., 2017). From a rural such as the use of genomes for therapeutics, and rural areas’ (European Commission, 2019e, identifying the right solution looks quite different development perspective, increased use of digital personalised medicine and biopharmaceuticals. p.1). The declaration recognises the potential of for a farmer as compared to a tourism operator. technologies is expected to play a role in attracting For the farmer, considerable up-front financial a younger generation to farming and rural investment may result in pressure to select the business start-ups (European Commission, 2019e). right solution. For the tourism operator, the The relevance of this theme to the agriculture upfront investment is more likely to be time, sector was raised in the Swedish workshop as getting to know the different platforms and well as among forestry workers in the Latvian determining which provides the best service with workshop. Digitalisation charges the path for the lowest commissions. This section of the report diversifying traditional bioeconomy sectors and is is dedicated to exploring this diversity, taking an in- transforming the bioeconomy into an increasingly depth look at digitalisation in the context of three multi- and interdisciplinary skilled sector (OECD, key rural sectors: the bioeconomy, sustainable 2020). Digitalisation is changing the bioeconomy High value tourism, and the manufacturing industry. as we know it. product development The digital revolution in the bioeconomy has 3.1 The digital revolution in the at least three different dimensions. The first bioeconomy dimension sees the use of digital tools as a vehicle The bioeconomy can be described as the use of for precision-use and monitoring. For example, ‘biological resources from the land and water real-time monitoring of farming practices such for the mutual benefit of business, society and as crops and livestock brings added value through nature’ (Refsgaard et al., 2020). Refsgaard et al. saved time and costs. Similarly, in the forestry point out that the Nordic Region at large has an sector, monitoring can bring added value by DIGITALISATION abundance of bioresources, and that the conscious generating data, optimising the preservation and IN THE BIO- use and development of these hold great AND CIRCULAR potential for regional and local development. In ECONOMY 2017, approximately 17% of the Nordic working New technology demands population held employment within the bio- intellect and curiosity. System Adoption of based industries (Refsgaard et al., 2020). The [Being a farmer] is not only about optimisation digital tools majority of the bio-based jobs are in areas outside with big data the traditional bio-based sectors (agriculture, driving a tractor and sweeping forestry and fisheries) and includes sectors such floors in the stables any longer. To as services, textiles, bioenergy and nature-based be employed in a farm you need tourism (Refsgaard et al., 2020). education. Applications of digitalisation in the bio-based circular economy According to the OECD ‘the whole bioeconomy business cycle is ripe for digitalisation’ (OECD, Workshop participant, Vingåker, Sweden Figure 10: Applications of digitalisation in the bio-based circular economy.

nordregio report 2020:4 32 nordregio report 2020:4 33 digital technologies to support the development forest ownership may be a barrier to the adoption the Bioinno-project lead by the Paper Province- of the EU's agri-food sector and rural areas in of new tools due to both the size and number of cluster in the Swedish region of Värmland, general (European Commission, 2019e). Box 7. Reducing the distance players. For small players, individual investments which focuses on supporting forestry-based Research on smart farming and food from farm to fork may be perceived as risky or beyond their financial entrepreneurs to realise their innovative ideas traceability is among the areas for cooperation Bygdens Saluhall is a member-driven means. At the same time, the large number of through open testbeds (Paper Province, 2020). outlined in the declaration, but it also mentions the digital platform in Southern Sweden that smaller players may hamper a collective approach Digitalisation also makes it possible to track promise of Internet of things and sensor technology connects small-scale local farmers with to investments. products, allowing consumers to learn more for optimising planting and yields (European consumers. The platform was first piloted about the origin of the food they eat. This idea Commission, 2019e). According to Indesmatech, in Röstånga Village in 2016. It was initiated Dimension 2: Data for systems innovation in was tested by one of the participants in the a technology company who took part in the in response to increasing consumer demand the bio-based circular economy Nordic-Baltic workshops, who placed QR-codes project9, monitoring and tracking livestock and and as an incentive to support local farmers Digitalisation in the bioeconomy also has the on their packaging that traced the lifecycle of the by shortening the food supply chain and crops optimises everyday operation through more potential to disrupt future bio-based production meat from its origin all the way to the store. The excluding intermediaries. Information about precise planning and ‘remote control’ farming. It and manufacturing, moving towards a bio-based intention was that this feature would make the producers and their products, convenient also allows for increased transparency, as data is circular economy (OECD, 2020). In this space, product more appealing and result in increased delivery dates and product prices are shared more readily across the value chain from uploaded to the platform. Food can be digitalisation relates to the optimisation of the sales. In practice, this was not the case, however fodder to dairies, abattoirs, product development ordered online and picked up once a week at supply chain, the mitigation of hazardous and the initiative was successful in creating increased and retail (Togsverd, 2020). a local food node. Transactions are organised non-harmful waste products, and data-driven transparency in the supply and value chains. This Digitalisation has also provided opportunities between the producer and the consumer opportunities for new products development. As highlights the importance of experimentation in for small-scale farmers to diversify their sales (Berlina et al., 2017). such, digitalisation can act as an enabler of circular- generating unintended positive outcomes. channels and to obtain a better price for their economy practices through the application of Support structures are important for enabling products through development of ‘alternative’ and systems thinking, digital tools, industrial symbiosis SMEs in the bioeconomy to take the digital ‘local’ food supply chains in rural areas (see Box 7). and enhanced production control through Internet leap. The strong presence of cluster networks, The use of digital tools helps to reconnect producers competing for business. Limiting oneself to a of things (see Box 8). cooperatives and local development companies in and consumers, to increase transparency, to re- single technology provider was not necessarily Digitalisation can also facilitate distributed the Nordic-Baltic Region can act as a springboard localize agricultural and food production and to seen as cost effective, however companies may manufacturing in bio-based industries (Srai et for SMEs looking to use digital tools to create build trust among food system actors. lack the financial incentive to make their products al., 2016), positively impacting the availability of higher value products in the bioeconomy and In the Nordic-Baltic workshops precision compatible with those of their competitors. different types of bioeconomy jobs in rural areas. circular economy. These companies support local farming, diversified sales channels, reduced waste Digitalisation also holds great potential One example is advances in 3D-printing using start-ups to advance their business models, often and increased efficiency were some of the main for forest-based industries. Digital tools are wood-based raw materials. Such advances are basing this on digitalisation as a tool for creating digital opportunities highlighted. Expectations impacting the management of forests across expected to decentralise production and result in added value. One such company is the Finnish connected to the increased use of sensors for Nordic and Baltic regions, enabling more control the establishment of small modular manufacturing development company Micropolis Ltd. Aiming activities like monitoring soil and water quality, over forest resources and their value chains (OECD, companies (Klitkou et al., 2017). This is evident in to boost green growth in Northern Finland, they were high, especially as the parameters for quality 2020). Apps, websites and digital platforms are support the piloting of new solutions that draw assurance are, at least for the most part, in place. furthermore bringing the consumer demands on circular economy practices, resource and Findings also show that improved animal welfare closer to the value chain (OECD, 2020). For the energy efficiency, climate action and intelligent is considered an added value, but participants individual forester, management apps have been Box 8. GreenLab Skive: solutions (Micropolis Ltd, 2020). Combining digital were cautious not to omit the importance of the developed to support their control and monitoring. Digitalisation as part of the technologies with the advancement of circular farmer's presence in animal husbandry. One example is the forestry management app ‘Din circular bio-based economy bio-based solutions is considered key to staying Participants in the Vingåker workshop stressed Skog’ developed and provided by the Norwegian competitive on the market and is the basis for GreenLab in Skive, Denmark, is an industrial the need for data security and interoperable forestry cooperative Viken Skog SA (Viken Skog energy park focusing on circular economy future strategies and plans for growth in northern systems. Data security concerns were related SA, 2020). This mobile phone app enables the principles that extend the lifecycle of raw Finland (Vuotovesi, 2020). to privacy as well as anxiety about the loss of forest owner to plan tree planting and harvests, biomass waste products by reusing them data through cyberattacks or malfunctioning provides an overview of which trees are ready for as input for energy creation. Digitalisation Dimension 3: High value extraction and novel technology. Interoperability of systems (e.g. a felling, and creates thematic maps of the forest and smart algorithms ensure resource applications tractor that is compatible with soil-based sensors) area. Mapping may also help promote young and optimisation in the industrial park, increase Biotechnology is the result of the convergence was seen as an important way of ensuring data healthier forest areas, and prepare hunting areas the green production value, and play a role in of chemistry and biology, and first emerged in was well-utilised without requiring substantial for recreational use (Viken Skog SA, 2020). energy trading. GreenLab is also home to a the 1950s (Rhodes, 2010). More specifically, it is input from farmers themselves. While this Forest-management structures across the knowledge centre that focuses on green and defined as ‘the use of biology to solve problems and intelligent energy. It is an open innovation interoperability was desirable, it was thought to Nordic-Baltic Region are diverse. In the Nordic- make useful products’ (Encyclopædia Britannica, platform providing data access which is open be difficult to achieve with so many companies Baltic workshops we observed that fragmented 2019). With the bioeconomy conceptualised as for R&D and other commercial actors to part of the circular economy, biotechnology acts draw on (Thomsen, 2020). 9 Indemsmatech presented at the workshop in Vingåker (Sweden) and in the bioeconomy webinar. as a natural extension of the traditional sectors by nordregio report 2020:4 34 nordregio report 2020:4 35 diversifying additional value creation (Refsgaard 3.2 A potential blessing, a possible to concern about the large numbers of people Nature-based tourism holds vast potential for et al., 2020). With high levels of digitalisation, curse: Digitalisation and who were visiting the site (Umhverfisstofnun, rural areas. At the same time, increasing tourism including blockchain and artificial intelligence and sustainable tourism 2019). The canyon attracted extra attention activity can threaten the natural and cultural its role in, for example, aquaculture, agriculture On a global scale, the fast-paced and large-scale after a music video by the singer Justin Bieber values that attracted the tourists in the first place. and forestry, new products and use of by- development of information and communications was filmed at the location (Marcus, 2019). This paradox, and the question of how to secure products are expected to emerge (Refsgaard, technologies have revolutionised and reshaped the Tensions between locals and tourists can a sustainable approach to tourism is a growing et al., 2020). Biotechnology is also resulting in tourism sector (Árnadóttir, 2019; Munar, 2012; Scott also emerge. Farmers in the Netherlands have concern (Øian et al. 2018) and was a central companies developing genetically modified seeds and Gössling, 2015; Wiggen and Lexhagen, 2014). experienced problems with tourists who walk into question for tourism actors who participated in the and contributing to advancements in synthetic Due to rising living standards, low-cost airlines tulip fields to take photos of themselves amongst Nordic-Baltic workshops. While companies saw biology. The overlapping role of data for research, and the development of travel planning platforms the flowers. As a result of the damage done to multiple benefits of going digital for marketing development and innovation in circular bio-based that allow individuals to compare and book flights, the tulips, frustrated field owners have put up purposes and business development, they also economy can also be seen in modern waste accommodation and tourism activities, travel fences to keep the tourists out (Boffey, 2019). In expressed concerns about the pressure increased management (e.g. use of bacteria in degradation has become increasingly accessible to a global Norway, local authorities find that tourists inflows of tourists place on the local community etc.) (Rhodes, 2010). audience (Scott and Gössling, 2015). At the same visiting iconic natural sites such as Preikestolen and the natural environment. A disconnect was Digitalisation in the bioeconomy can also time, the instant global exposure made possible and Trolltunga are not prepared for the identified between promoting a place to attract act as a driver for innovation and product through social media and other digital platforms demanding trek and changeable weather. tourists on the one hand and securing a sustainable development through the use of big data. In the has made tourists themselves important co- Consequently, the need for rescue operations and manageable flow of tourists on the other. This health sector, for example, big data is facilitating producers of tourism content. has increased, putting pressure on both the paradox between the unlimited boundaries of the promising results in biomedical research. Here, the As a result, digital platforms such as police and local search and rescue volunteers digital world and the physical limitations of the fast pace of data-driven analysis is expected to Instagram, YouTube and Facebook have become (Elmahdy et al., 2017). real world is perhaps most neatly illustrated in the lead to a greater degree of personalised medicine, important sources for inspiration and travel case of the Faroe Islands (see Box 9). therapeutics and pharmaceuticals (Rhodes, 2010). planning. An analysis by Visit Denmark, the Danish According to Investopedia (2020a), there has national destination management organisation, been an upsurge of biotech companies in Silicon showed that within three years the use of social Valley, USA, in recent years due to the emerging media as source of inspiration prior to a vacation Box 9. Closed for maintenance, applications from 25 countries in just four days. field of bioinformatics: the combination and use of in Denmark has increased from 4% to 18% among Online media was a vital factor in this ‘computational technology to handle the rapidly Danish tourists and from 9% to 19% among Open for voluntourism success with 511 news articles and 34 million growing repository of information related to international tourists (VisitDenmark, 2019a). Perhaps the most interesting illustration social media actions related to the initiative molecular biology’ (Investopedia, 2020b). The same study mapped the decision making of the tension between digitalisation and (Visit Faroe Islands, 2019). Herein lies the sustainability can be found in 'Closed for Data-driven analysis also has the potential to of Swedish and Norwegian tourists and found tension. On one hand, the campaign was maintenance, Open for voluntourism’, a result in advances in biochemistry, the sector which that three quarters chose Denmark as a travel successful in promoting a powerful message pilot project launched in 2019 by Visit Faroe about the importance of sustainable tourism, is expected to replace petrochemicals. Several destination based on information found online Islands. The project aimed to highlight the both locally and abroad. On the other hand, biorefineries work on applications using forest by- (VisitDenmark, 2019b). Digital platforms that importance of sustainable tourism by closing there is a risk that the interest the campaign products and components of wood, such as lignin, make it possible for tourists to publicly review their off 10 popular tourist sites for the weekend generated in the Faroe Islands will increase for applications in pharmaceuticals, adhesives, experiences is another way that digitalisation has and instead inviting 100 volunteers to visit the number of tourists to unsustainable fragrance, food, and additives for batteries (e.g. made tourists more powerful actors. These visitor the islands and work alongside locals to levels. Importantly, the campaign is part of the Norwegian forestry company Borregaard). reviews can have a significant effect on businesses preserve and improve the sites. In return, a broader strategy that seeks to develop In Sweden, regional actors are using organic in the tourism sector, either attracting or scaring the visitors were provided with food and tourism as an important industry for the (inedible) feedstock to produce liquid bio-oils away potential customers. accommodation for the weekend. Despite Faroe Islands while at the same time through the process of pyrolysis (the thermal having a media budget of zero, the project respecting the local community, economy cracking of organic material in absence of oxygen) Promoting sustainable tourism? was hugely successful, attracting 3528 and environment (Højgaard, 2019). (Matisons, 2019). The liquid bio-oil produced While exposure on social media provides valuable from this process is compatible with the existing opportunities for tourism destinations and fossil fuel infrastructure, such as gas turbines businesses, the exposure also presents challenges and boilers, and thus fills one of the gaps the of environmental, social and economic character bio-based economy and the petroleum-based (Elmahdy et al., 2017). Unexpected or surprising economy (Matisons, 2019). Pyrolyzed liquid bio- amounts of attention can be overwhelming oil is currently not used as a transportation for a tourist destination, putting pressure on fuel, but companies such as the Swedish the local community as well as on the natural Piteå-based SME Sunpine AB, are developing environment. In Iceland, for example, the advanced biofuels based on forest-resources Environmental Agency decided to temporarily (Sunpine, 2017). close the canyon of Fjaðrárgljúfur to visitors due nordregio report 2020:4 36 nordregio report 2020:4 37 Challenges and opportunities for rural actors spent on administrative tasks as he often needed Innovation Norway offers similar support to in the literature as routine-biased technological Alongside the broader question of whether to respond to questions that were not relevant through a course titled (Become skilled on the change (Berger & Frey, 2016; Degryse, 2016; tourism can truly be sustainable in a digital world, to his business. The financial side of digitalisation internet) which aims to give companies within McKinsey & Company, 2017; Goos, Manning & tourism actors in rural areas also face practical was also raised. For example, developing tailor- the tourism industry the skills, knowledge and Salamons, 2014). day-to-day challenges. As the number of trips that made applications was considered prohibitively inspiration to develop their digital marketing Broadly speaking, these changes have are inspired and planned online grows, tourism expensive. While the available online booking (Innovation Norway, 2019). The course explores affected the manufacturing sector in two ways. companies are becoming increasingly aware of platforms charge high commissions that transfer themes such as social media for marketing, search First, the manufacturing sector now makes up a the importance of an online presence. Despite money away from the local area. engine optimization, and how to make use of much smaller portion of the overall workforce, with this, small tourism operators in rural areas tend to pictures and videos in company operations. Prior employment falling by 30% in OECD countries lag behind with their digital development (Styvén Promoting digital skill development at the to the course, the companies receive a digital since 1980 (OECD, 2016). The Nordic countries & Wallström, 2019). Use of digital platforms and regional level check, and are presented with an assessment of have witnessed a similar decline and, while tools is limited, and many of these companies can To increase the digital skills of SMEs within the the strengths of their current webpage and areas manufacturing jobs made up almost one third of still be characterised as ‘Digital Beginners’ despite tourism sector, national and regional tourism for improvement. Nordic employment in 1970, they comprise just 8% demonstrating an awareness of both the many organisations throughout the Nordic Region Similar programs can also be found at the of jobs today (Berglund, et al, 2019). Second, the jobs possibilities digital tools offer and the necessity to have launched different projects. Visit Sweden, regional level. For example, “The Digital Step” that remain are more complex and require higher digitalise in order to not fall behind (Kvistgaard & for example, has developed a guide for nature- a project launched by the Swedish Region of level of skill than was previously the case (Autor, Hird, 2019; Tillväxtverket, 2018). based tourism companies to increase their digital Västerbotten in 2019. The project aims to help 2015; Berger & Frey, 2016; Berglund et al., 2019). Previous studies have identified several presence. The guide was developed through SMEs within the region’s tourism sector to embark These changes are relevant to manufacturing opportunities associated with digitalisation the project “Swedish nature experiences on on their digital journey, and provides digital SMEs in rural areas in several ways. Despite for SMEs within the tourism sector, including digital export” which aims to enhance Sweden’s strategists and consultations to help develop the deindustrialisation described above, better means to attract visitors, increased com- competitiveness within nature-based tourism and digital action plans, offers digital coaching, the manufacturing sector remains a crucial petitiveness, improved customer service, and increase possibilities for tourism in rural areas. The and facilitates presentations and workshops. component of the Nordic economies. Though it increasing communication with potential and guide depicts the traveller’s journey using a travel The objectives for the companies are increased makes up a smaller share of GDP than in the past, previous customers (Kvistgaard & Hird, 2019; cycle (see Figure 11) which is designed to support visibility, stronger relations to new and former manufacturing output has declined comparatively Styvén & Wallström, 2019). Similar findings were companies to direct their actions in line with customers, and increased sales. According to the less than manufacturing employment (Iris Group, evident in the Nordic-Baltic workshops, with tourists’ online trajectories. project leader, interest from the SMEs has been 2015). While manufacturing jobs are geographically participants using digital tools for marketing The Travel Cycle consists of five steps overwhelming and more courses need to be added dispersed across the Nordic countries, the highest purposes, as a way to modernise their business performed by the traveller: 1) Dream, becomes to meet the demand (Persson, 2020). shares of total employment are found outside and provide better services, and to attract visitors. inspired, 2) Plan, explores different opportunities, Beside opportunities for the individual company, 3) Book, searches for the services that fits their 3.3 Getting started on the digital digitalisation may also enable development of needs, 4) Experience, conducts the actual travel, journey: Digital transformation in the tourist destination as a whole through closer 5) Remember, shares pictures and other content the manufacturing sector collaboration between local tourism actors, both from the journey online (Visit Sweden, 2019). Digitalisation of the manufacturing sector is often private and public. discussed in the context of what is commonly Previous research has also identified barriers termed the fourth industrial revolution – or for SMEs within the tourism sector embarking on Industry 4.0. The fourth industrial revolution is their digital journey, including: lack of time, lack predicated on the inventions of the third industrial of competences, lack of interest or energy, and revolution, and is expected to be characterised by difficulties navigating in the jungle of possibilities innovations that increasingly blur the lines between and identifying the right match for their business the physical and virtual world (Schwab, 2018; see (Kvistgaard & Hird, 2019; Styvén & Wallström, Figure 12). Here, developments in information and 2019). Workshop participants emphasised communication technology are combined with similar challenges, citing limited time and resources robotisation and artificial intelligence to allow to implement digital solutions and lack of skills and more complex and integrated processes to be knowledge about how to make the most out of the undertaken by machines (Degryse, 2016). available tools as major barriers to embrace the This is having a substantial impact in many digital world. The companies that had managed sectors, particularly manufacturing which has to develop a business model incorporating digital historically included a high share of medium-skilled tools, found that they could be time-consuming. routine jobs (Berglund et al., 2019). These types of One participant described the way that the direct Figure 11: The travel cycle. jobs are particularly susceptible to automation links to potential customers created by online Source: Visit Sweden, 2019 (Translated to English due to the relative ease with which human labour Figure 12. Industrial Revolution. channels had increased the amount of time he by the authors). can be substituted by machines, a process referred Source: Encyclopædia Britannica, 2018.

nordregio report 2020:4 38 nordregio report 2020:4 39 the capital regions (Iris Group, 2015). In addition, ahead of them and could more easily conceptualise 90% of all manufacturing companies in the Nordic their tasks within the full working chain. Box 10. Promoting peer support relevant cluster and together they develop Region have less than 20 employees (Iris Group, Breaking down this intangible concept and a program proposal. The proposal is then 2015). As such, competitiveness in manufacturing making it understandable and relatable for small through cluster organisations presented to Innovation Norway along with a relies, at least in part, on the ability of small rural production companies was found to be a vital step Digital competence for SMEs - Clusters request for funding. The funding usually goes enterprises to respond to technological change. in getting SMEs on board with the fourth industrial as partners for innovation and change towards paying the cluster for their time In the context of routine-biased technological revolution (see Box 10). For participants in the (Omstillingsmotor for short) is a program and SMEs are expected to contribute the change, the upskilling of those who remain in the Nordic-Baltic workshops, this meant ensuring from Innovation Norway which aims to build equivalent level of resourcing in the form of the digital competence of SMEs. The project rural manufacturing sector is vital to ensuring that support measures were tailored to the unique employee hours. model involves pairing SMEs with relevant competitiveness, both at home and abroad. As one needs of companies. For example, access to One example of a success story from cluster organisations who support them by the program is Flisa Printing AS, a printing webinar presenter put it: digitise or die (Sokolovs, neutral and free business counselling to help them providing expertise and knowledge on digital company that was established in 1913 in 2020). Two angles appear to be particularly understand what digital technologies exist and transformation. The program provides a the small village of Flisa (Hedmark Region). relevant here. First, the task of getting SMEs on how they can beneficially be implemented in their unique peer-to-peer learning opportunity by This company has recently used digital board with the concept of digitalisation. Second, production. Participants also stressed the need supporting cluster organisations to share tools to transform its operations from how to create an environment that promotes for funding that would allow them to conduct their expertise with SMEs from outside of a simple printing press into the largest innovation among small and medium sized initial market analysis. As noted in the first section the cluster. Through this approach, SMEs communication agency in the region. manufacturing companies. of this report, investments at this stage can be anywhere in Norway can get access to Interestingly, Omstillingsmotor now also seen as risky for companies, particularly if they the expertise of whichever of the selected includes a simpler component in the form How does digitalisation relate to me? are not yet fully aware of the potential benefits clusters is most relevant to them. of a business model innovation workshop, Given the broad and all-encompassing nature digitalisation may bring to their company in the The model (Figure 13), includes four steps focusing on how to increase competitiveness and begins with the mobilisation of SMEs. of the changes described above, it is perhaps long-term. It was also noted that the process for and growth by using digital technologies The importance of this first step should unsurprising that some participants in the Nordic- accessing such funding and support structures to meet the needs of you customers. This not be underestimated. The CEOs of SMEs component was developed following the Baltic workshops struggled to relate to the concept should be as straight forward as possible to ensure are extremely busy people and it can take finding that many SMEs were not sufficiently of digitalisation. Digitalisation was found to be a accessibilty for companies of all sizes. a substantial amount of encouragement to aware of the implications of digitalisation for buzzword – used in many contexts, but without get them to invest their time and that of their business and thus, did not yet have the ever being accurately described. For example, one I couldn’t really see the their company in a program like this. Once an motivation to invest resources in the more company reported thinking that digitalisation was relevance [of digitalisation]. SME is engaged, a match is made with the in-depth program. irrelevant to his business, as their products are It was actually about understan- custom-made and individually adjusted to each ding what we can use this for. (…) customer. As such, the production process cannot be automated, and the business owner had not These big and grand ideas that considered that digitalisation may be relevant in are shown, they need to be boiled other ways. Once this business did engage with the down to something that is easy to concept, they found that digital tools could in fact understand. be used to increase transparency in the production process. This in turn had a motivating effect for Workshop participant, Vesthimmerland employees as they knew how much work was municipality

Figure 13. Omstillingsmotor - Project model. Source: Gjester, 2020.

nordregio report 2020:4 40 nordregio report 2020:4 41 Innovation through collaboration There is a difference Regardless of the approach, it is important to One potential barrier to innovation that Digitalisation in the manufacturing sector is between digital acknowledge that SMEs will not necessarily seek was identified in the Nordic-Baltic workshops not only about automating tasks and renewing competencies and competencies out these types of collaborations for themselves. was narrow and restrictive funding frameworks processes. As in the bioeconomy, there is also In the example of North-West Smart Production that require a concrete goal to be defined in substantial potential for innovation, added to innovate. Innovation skills and (see Box 12), a key factor driving the success of the the application stage. More flexibility in the value and the creation of new products. As such, the desire to try something new project was that SMEs were approached directly programmes directed towards SMEs was opportunities to collaborate with other actors and think something new, versus by the business associations. These associations recommended, to allow companies to make to find inspiration and explore new ideas are the fact that you are good [with often had existing relationships with the SME adjustments or change path during a project vital. This may occur through existing networks technology]. representatives and were able to explain the value when new knowledge is acquired or new but can also involve joining or developing new of the program in a way that the companies could possibilities appear. New technologies and ones. Collaborations between manufacturing Workshop participant, Vesthimmerland relate to (Ringgaard Jensen, 2020). According to features are constantly being developed; a more companies and universities can be particularly Municipality the companies we met on our field trips, without flexible framework would make it possible to valuable in bringing know-how to SMEs. While this personalised approach the SMEs would not adapt projects to the fast pace of technological these collaborations will at times develop have sought out such an opportunity themselves developments. organically (see Box 11), a more formal “match- and, in turn, would not have thought about the making” approach has also been found to be relevance of digitalisation for their company. effective (see Box 12).

Box 12. North-West Smart To date, 32 companies have participated Box 11. SIA BALTMA The first step was to digitise the logistics in the project, together identifying and and planning processes by introducing the Production SIA BALTMA is a small metalworking implementing over 100 innovation activities enterprise resource planning (ERP) system. North-West Smart Production aims to company located in Valmiera, Latvia, that and creating 10 jobs (Ringgaard Jensen, Next, industrial controllers were connected support the digital transformation of has recently embarked on a project to 2020). The project has also developed to production machines to gather actual manufacturing SMEs and is a collaboration digitise elements of its production process. a new methodology for engaging SMEs data from the processes. In the future, there between Vesthimmerland Municipality, The project was a collaboration between that has been successful in attracting are plans to connect these systems, further Jammerbugt Municipality, Aalborg BALTMA, Marcus Kompononter (BALTMA’s two further municipalities to join the reducing the need for human-human and University, Foundation Autonomous, and two partner company in Sweden), KTH Royal partnership (Mariagerfjord and Thisted human-machine interactions. These digital local business associations (one from each University of Technology (Sweden), and Municipalities). The partnership approach innovations have made the manufacturing municipality). The overall aim of the project Vidzeme University of Applied Sciences is vital to the success of the project,in process more efficient. They have also is to maintain and create jobs through a (Latvia) and was funded through an particular the small number of partners increased effectiveness by making a clear targeted innovation approach that takes innovation grant provided by Valmiera with clearly defined roles. The local business overview of the production process available into account the concrete technological Municipality. The companies worked in associations facilitate the initial contact at all times. This allows decisions to be made needs and competencies of the participating partnership with students at the two with SMEs, the university and Foundation much more quickly than before. The grant companies. Companies are guided universities to develop a prototype for Autonomous provide the technical knowledge and the university collaboration were key through the entire innovation process machinery which allows the company to save and the municipalities take care of the enablers, making it possible to develop a with the help of technological consultants data from the manufacturing process and to administration. Another key success factor is tailored solution as opposed to implementing who help to identify the companies’ do real time analysis (see Figure 14). the bottom-up approach. Innovation one that was already out there. innovation potential and make plan for the actions are identified and defined by the implementation or development process. SMEs themselves and all activities take place Before: After: Future plans: The innovation is realised through a close on the company’s premises. partnership between the companies and the knowledge institutes with the purpose to develop new innovative solutions and products.

Figure 14. SIA BALTMA - Digitisation process.

nordregio report 2020:4 42 nordregio report 2020:4 43

3

0 3 / 0 9 / 2 4.1 Denmark The folowing are examples of programs within 4. Supporting digitalisation of The rhetoric on Danish businesses’ uptake of Denmark that aim to support SMEs through the digitalisation follows what can be termed a ‘jump digital transition: or lose’ logic. If businesses do not jump on board ■ Strengthened business at street level (Styrket small rural enterprises in the now, they risk being left behind by their national erhverv i gadeplan) (2018-2020) aims to increase or international competitors who took the jump growth in retail businesses at street level through Nordic countries and Latvia and made the digital transformation (Danske digitalisation and is a collaboration between four Regioner, 2017). Though most Danish firms expect municipalities: Svendborg, Faaborg-Midtfyn, that digital development will affect their business Ærø and Langeland. It is funded by the European model, only a minority of firms have actually made Social Fond and the Southern Denmark Growth the jump. According to the Business Promotion Forum (Syddansk Vækstforum)10 and includes 170 State-funded mechanisms and support structures national level by introducing supporting policies Board only one out of three Danish SMEs with local businesses who participate in networking play an important role in facilitating the up-take and programmes (European Investment Bank, 10-49 employees could be described as highly opportunities and have access to SME-consultants of digital technologies among existing companies 2019). The Interreg Europe SKILLS+ project also digitalised (Erhvervsministeriet, 2018a). to support strategy development. An evaluation as well as providing optimal conditions for new, identified different factors beyond the companies In 2017, the government decided to strengthen of the project found that participants retrieve digitally enabled, start-ups to emerge and thrive. themselves that are important for the digital Danish industry and entrepreneurship through the the most useful knowledge on digitalisation Examples of effective measures include policies development of SMEs. These include the presence agreement Together on the businesses of the future when inputs are concrete and practice-oriented that facilitate access to finance, bridge knowledge of regional level digitalisation strategies, as well (Sammen om fremtidens virksomheder) (Erhvervs- (Grøn & Rasmussen, 2019). An example of this gaps, increase competence and skills, and support as strong coordination and integration among ministeriet, 2017). The agreement includes a is the short videos that have been produced networking and peer-peer learning opportunities different regional policy actors and instruments Strategy for Denmark’s digital growth (Strategi featuring participants explaining how their (European Investment Bank, 2019; OECD, 2017; (Interreg Europe, 2018). for Danmarks digitale vækst), which allocates businesses successfully have developed through Interreg Europe, 2018). Access to finance is In the Nordic-Baltic workshops, several ideas 1 billion DKK to support digital development in the uptake and use of different digital solutions important in overcoming the challenges related to for support mechanisms were raised. The most Denmark up to 2025 (Erhvervsministeriet, 2018b, (Fremtidsfabrikken, 2020). resources discussed in the previous section. A small common was access to support to navigate p. 3; 2018a). The strategy specifically focuses on ■ Digital paths to growth – SME growth plan investment in an ICT application or support for the digital landscape. This included a desire enhancing and supporting the uptake of digital (Digitale veje til vækst – SMV vækstplan) 2018- organisational change may be all that is needed for for knowledge of the solutions that are out solutions in SMEs, a task that will be supported by 2021 is a region-wide attempt to increase growth a small enterprise to develop a product or service there but also that this support is provided in a the national program SMV:Digital (SMV:Digital, in SMEs through automation and digitalisation in that brings significant value to a rural community. tailored and individual way. That is, participants 2020). SMV:Digital does not have a specific focus Region Zealand. Funded by the Danish Government Previous research has highlighted a range of were less interested in attending a generic on rural or sparsely populated areas, but targets and the European Regional Development Fund, actions that have proved particularly effective in workshop where various digital solutions were all Danish SMEs. the project targets SMEs with significant growth bridging knowledge gaps and increasing skills and presented and more interested in one-on-one competences of small and medium sized enterprise conversations with experts who understood (or (SMEs). These include educational measures at least took an interest in) the unique nature aimd at raising awareness of the benefits of of their work. Workshop participants were also Box 13. Manufacturing divided into nine workingpackages focusing on different aspects of digitalisation, for digitalisation (e.g. training, learning platforms, enthusiastic about the concept of peer-peer Academy of Denmark example, digital manufacturing processes, guidebooks and online digital assessment tools), learning opportunities. With respect to financing, In Denmark, a non-profit organisation digital assistance tools, and organising and dedicated coaching programmes that support several workshop participants suggested that the called MADE (Manufacturing Academy digital production. MADE also has a specific the integration of digitalisation into company often time-consuming requirements of funding of Denmark) was established in 2014 section for SMEs, where they run projects development strategies (European Investment applications made it hard for SMEs to apply, let through a collaborative effort by the aiming at SMEs uptake of digital solutions Bank, 2019). Clusters and networks involving alone compete. They suggested that information industry, fonds, associations and research (MADE, n.d. b). For example, SMEs can smaller rural companies, new business support about programs and funding opportunities should institutions (MADE, n.d. a). The purpose of participate in a cluster project, where four organisations, digitalisation help desks, incubators, be provided in an accessible way, with clear MADE is to create a platform for applied to eight manufacturing companies follow networks and technological and science parks can guidelines on how to participate. research, development, and innovation in a course together where they concentrate also be an effective way of promoting peer-peer Digitalisation is high on the agenda across the Danish manufacturing companies. In 2017 on a specific manufacturing technology. the research program ‘MADE Digital’ was mentoring and support (Interreg Europe, 2018). Nordic Region, however specific approaches vary Previous cluster projects have focused launched with the purpose to accelerate Importantly, businesses must understand from country to country. The following section on 3D-printing in manufacturing, flexible the digital transformation of Danish automation solutions, and advanced surface that digital transformation requires a wide will highlight the specific national approaches manufacturing companies. The project is technology. change and integration of digital processes into to supporting the digitalisation of rural SMEs every aspect of the company. It is important in each of the Nordic countries and independent that this transformation is supported both at territories, as well as in Latvia. It gives a general company level by changes in culture, leadership, overview of the context and support structures and 10 skills and processes, as well as at the regional and highlights several relevant projects in each country. From 1st of January 2019, Syddansk Vækstforum and the five other regional growth fora have been replaced by Denmark’s Business Promotion Board (Danmarks Erhvervsfremmebestyrelse) nordregio report 2020:4 44 nordregio report 2020:4 45 potential in regional strongholds: local food, is its dual objective. On the one hand, it aimed at 4.3 Iceland and many still receive ongoing guidance from transport, bioeconomy and, in particular, the facilitating recruitment of engineers from the ICT The Icelandic regional development policy 2018- Innovation Center Iceland. The project runs construction sector (Zealand, n.d.). sector that lost their jobs as a result of the decline 2024, aims to promote digital development in outside the capital area and is funded through the ■ Digital Management Culture (Digital Ledel- in the sector in 2010. On ther other hand, it sought rural areas. Several projects in the current policy Parliamentary Resolution on a strategic regional seskultur) is a development course which aims to improve digital skills among SMEs (Interreg aim to promote digital development in different plan for the period 2018-2024. The initiative is to provide business leaders with the necessary Europe, 2019b). ways. One is to increase the number of remote based on the Scottish program Digital Boost competencies to conduct a digital transformation ■ Tempo growth programme is designed to be workplaces/stations in governmental agencies to (Business Gateway, 2018) and has been translated of their company. The project is financed by the a follow-up to Digiboosti. It is run by Business distribute state-based employment opportunities and localized into Icelandic circumstances European Social Fund and the Danish Business Finland and provides funding support to more equally across the country. Other projects (Stafrænt forskot, n.d.; Fréttablaðið, 2020). Authority and is delivered through the national Finnish startups and SMEs for accelerating are aimed more directly towards SMEs in the ■ The Radar (Ratsjáin) is a six-week regional program SMV:Digital. It targets all Danish SMEs, internationalisation (Business Finland, 2019). countryside such as Digital Advantage and The development and innovation project for tourism with local partners in each region (SMV:Digital, ■ RuralDigiServ (2015-2018) worked with appro- Radar (The Icelandic Parliament, 2018). This operators that want to expand their reach. 2018). ximately 90 farms in Kainuu Region with the policy is expected to be revised in 2020, with Under the guidance of experts, participants aim of improving the digital skills of farmers and digitalisation as one focus point of the revision. are introduced to tools that strengthen their promoting the utilisation of digital solutions in Clearer, simpler and faster public services are managerial capacity, hear about the experiences 4.2 Finland their daily work. Lack of skills and knowledge among the government's priorities during this of other companies, and learn how to better utilise In Finland, the government resolution on pro- among farmers was identified among the barriers election period (2017-2021). Digital Iceland leads digital media. moting rural digitisation was developed based for the uptake of digital solutions. To address this the work on digital development where the focus on the results of a ‘Smart Countryside’ study challenge, the project activities included trainings, is developing strong digital infrastructure and in 2017 (Antikainen et al., 2017). One of the four workshops and providing experiences on using the joint ventures in the public sector. One of the priority areas in the resolution is digitisation of online digital services, advisory services through main projects underway is the development of a rural employment and entrepreneurship. Busi- video conference tools and consultancy on the use centralised digital service portal under the brand Box 15. Digi2Market of sensors, tracking devices and cloud platforms ness Finland is the main authority fostering Ísland.is. This development is expected to facilitate Digi2Market will use digital tools to address digitalisation of businesses in Finland, supported in farm management. The project also supported improved communication with government the various challenges that companies in by the Technical Research Centre of Finland piloting, for example, ph and moisture sensors for agencies for both citizens and companies (The peripheral areas face, such as small size (VTT). Meanwhile the Ministry of Agriculture and animal feed and use of drones in farm environment Icelandic Government, 2020). of market, distance from the market and Forestry promotes the sustainable growth of planning (Interreg Europe, 2019c). The project was The folowing are examples of programs within isolation. The project seeks to support rural enterprises and rural entrepreneurship under funded by the European Agricultural Fund for Iceland that aim to support SMEs through the the international growth of companies the Rural Development Programme for Mainland Rural Development and implemented by ProAgria. digital transition in Iceland: which have business models based on the Finland (The Ministry of Agriculture and Forestry ■ Digital Advantage (Stafrant forskot), is run by biological resources of their local areas; of Finland, 2019). Innovation Center Iceland and designed to support Agri Enterprises (Food & Biomass), Marine Enterprises (Food & Health Products), The folowing are examples of programs within companies in rural areas to take advantage Engineering Enterprises (Fabrication & Agri/ Finland that aim to support SMEs through the of digital technology for growth. The program Box 14. Micropolis Ltd Marine). Activities are expected to include digital transition: offers consultancy support to SMEs in digital Micropolis is a local development company development of a marketing ToolKit and ■ Digiboosti (2015-2017) was a national prog- development and marketing, including designing which supports municipalities and companies creation of digital pathways for SMEs to ram run by the National Funding Agency for a digital strategy, advanced use of social media, to create value out of climate action, circular enter new markets including digital hubs Technology and Innovation of Finland (TEKES/ economy, resource and energy efficiency, managing content for web and social media, and and the use of immersive technologies (e.g. Business Finland) which aimed to encourage intelligent solutions and low-carbon services. using Google Analytics. The Digital Advantage virtual reality). The project is funded by the digital innovation in SMEs by supporting them to Digital solutions are one support mechanism offers both online teaching material and workshops Northern Periphery and Arctic programme hire digitalisation professionals. Approximately for carbon neutrality and, as such, Micropolis across the country. The first workshops were held (NPA) and includes partners from Iceland, 390 companies benefited from the program and has been a partner organisation for the local in February 2019 and from the beginning it was Finland, Ireland, and Northern Ireland ca 450 digitalisation experts were engaged in project DigiLeap, which aims to support obvious that such an initiative was needed. To date, (Digi2Market, n.d.). the activities. Around two thirds of the experts’ companies in Northern Ostrobothnia to be 140 companies and institutions have participated, contracts were prolonged beyond the life of the well prepared for digital structural change. project. Although there was no particular focus The project has created an open web-based digitalisation support service model which on rural areas in the programme, the beneficiaries helps companies to evaluate their readiness were rather evenly spread throughout the country for digital transformation. geographically (Interreg Europe, 2019b). An interesting aspect of this good practice example

nordregio report 2020:4 46 nordregio report 2020:4 47 centre. Smart Innovation Norway AS is a strategic 4.5 Sweden collaborative regional partner in Digital Norway, When it comes to promoting digitalisation among alongside the innovation companies Kongsberg Swedish businesses, the Swedish Agency for Eco- Innovation AS and Proneo AS, and iKuben – a nomic and Regional Growth (Tillväxtverket) is a Norwegian Centre of Excellence focused on major player. The agency describes digitalisation facilitating business development with a special as a unique opportunity for SMEs (Swedish Agency focus on digitalisation and sustainability. for Economic and Regional Growth, 2018). It offers The folowing are examples of Norwegian business development checks for digitalisation of projects with a regional focus: SMEs and organises Startup-Sweden for digital ■ The Digital Visibility project aims at building start-ups. Together with other authorities, the competencies in online/digital visibility and Swedish Agency for Economic and Regional strategies among small rural businesses. The Growth runs a website, verksamt.se, that offers project was initiated in Sør-Trøndelag County in a number of digital services to companies, with 2016 and was based on a series of workshops / the aim to simplify and improve the conditions for Photo: Warren Wong / unsplash.com courses within digital visibility for SMEs in rural digitalisation of businesses. areas (6 seminars x 4 hours workshops). The The Swedish Association of Local Authorities project was coordinated by the ‘business gardens’; and Regions (SKR) is also a major player on a 4.4 Norway be concerned with the improvements of services, and a local bank and Google were involved in the regional and local level. However, their focus is Digitalisation was lifted as a horizontal policy production processes or goods. SkatteFUNN is implementation. Among the concrete examples mainly directed to digitalisation of public manage- objective to overcome impeding challenges and coordinated by the Research Council of Norway of themes addressed were strategy development, ment and the provision of welfare services. generate new opportunities for Norwegian and is specifically geared towards SMEs (ibid). Google AdWords, how to trigger online traffic Another noteworthy organisation is SmåKom industry and business in the Report to the ■ Norsk Katapult is a nationally coordinated and social media. Also, businesses gardens tried (2020), a network of 69 smaller and mostly rural Parliament – White paper 27 (2016-2017) The effort to support SMEs through test-beds. By to connect SMEs with regional service partners municipalities that have been quite active when it industry – greener, smarter and more creative providing SMEs with innovation infrastructure and local bureaus (offices), so that the local comes to digitalisation and have especially focused (Meld. St. 27 (2016-2017) Industrien - grønnere, (e.g. competencies, networks, equipment and bureaus could become service partners in the on broadband provision. Byanätsforum has a similar smartere og mer nyskapende). The objective includes facilities) to aid the development and testing of future. Based on the evaluation of the pilot project, focus on infrastructure and connects over 400 skills and competence development for the future novel ideas, these test-beds aim to accelerate the initiative was prolonged in 2016/2017 and local broadband providers in rural parts of Sweden labour force and digitalisation as an enabler of the the development of new products and services. renamed to Kompetanseforum-Digital Visibility. (Nilsson, 2020). Vinnova (the Swedish Innovation green transition (The Norwegian Ministry of Trade The Katapult-centres are funded by the Research Until now, approximately 140 SMEs have attended agency) has also published several reports on the and Fisheries, 2017). The White Paper additionally Council of Norway, the Industrial Development training. In 2019 the project includes the whole of digitalisation of Swedish industry in general (See established the Digital21-project, aiming to Corporation of Norway (Siva) and Innovation Trøndelag County, after Nord- and Sør-Trøndelag e.g. Björkdahl, J., Wallin, M.W. & Kronblad, C., 2018). provide insights and recommendations for the Norway to support SMEs across Norway as a merged in 2018. The following are examples of programs within government’s digitalisation work (The Norwegian response to the rapid increase of technology on ■ Industry 4.0 Trøndelag is a spin-off of the Sweden that aim to support SMEs through the Ministry of Trade and Fisheries, 2017). Digital21 has the global market as well as the green transition Kompetanseforum-Digital Visibility project that digital transition: given recommendations with regards to industrial (Norsk Katapult, n.d.). runs from 2018 (Nasjonalparken Næringshage, ■ Develop businesses in rural areas (Utveckla and business development and emphasises the ■ Digital Norway is another national level prog- 2020b). The project was developed responding företag på landsbygderna) was the headline of an role of the government in contributing towards ramme to support and guide digitalisation of to the needs of micro- and small companies in open call by the Swedish Agency for Econo-mic and the development of broadband infrastructure businesses in Norway (DigitalNorway n.d.). It is the region which had problems utilising national Regional Growth in autumn 2019 which provided for securing value creation across the country. part a network and platform for sharing expe- programs due to lack of digital competence and funding for actions focusing on digitalisation in Digital21 also places weight on the role of access riences and knowledge through the platform high costs. Prior to the implementation of the rural SMEs. Thirteen projects received funding: to data, especially for research and innovation DigitalNorway Community, part guide to project, the digital maturity of 60 SMEs was eight projects on developing or applying digital efforts in SMEs (Digital21, 2018). understand how technology might enable business measured in order to get a better understanding models and tools and five projects on increasing The following are examples of programs within and project ideas, and part tutoring service for of the level of digital skills, maturity and needs knowledge about challenges faced by rural Norway that aim to support SMEs through the digital leadership. in the SMEs in the region. Also, the training companies. The projects do not target specific digital transition: ■ Smart Innovation Norway AS provides support programme itself has been further developed in sectors but have a special focus on micro ■ Engine for Change (Omstillingsmotor) is run by for start-ups and SMEs with networks and clusters, cooperation with business gardens, the NTNU businesses with less than 10 employees. Innovation Norway and described in detail in the encourages open innovation, and help businesses University, SINTEF and some specialised tech ■ DigiLift (Digitaliseringslyftet) is another project manufacturing section of this report. navigate the regulatory system and support companies. Industry 4.0 Trøndelag aims to provide run by the Swedish Agency for Economic and ■ SkatteFUNN is a tax deduction scheme suppor- frameworks where a business’ competence might basic training within the digital field to 400 SMEs. Regional Growth which aims to increase knowledge ting businesses by taking the edge off the invest- be lacking. Digitalisation figures as integral to It is a 3-year project with 14 million NOK funding about the possibilities of digitalisation and in- ment costs (Research Council of Norway, 2019). the development of business models by placing provided by the County Authority and Innovation crease use of digital technologies, particularly in The projects eligible for tax deductions need to the customer and the customer experience at the Norway. the industrial sector (Tillväxtverket, 2020). nordregio report 2020:4 48 nordregio report 2020:4 49 ■ Kickstart Digitalisation (Kickstart Digitalise- 4.6 The Faroe Islands 4.7 Greenland 4.8 Åland ring) provides a free program of lectures In 2015, the first national digital strategy for With generally good internet access and the Digitalisation has been present on the Government and workshops for industrial SMEs aimed at the Faroe Islands was developed through a majority of people owning a smartphone or of Åland’s policy platform for years. Digitalisation supporting them to kickstart the process of digital collaboration between the Ministry of Foreign other tablet device, the current national digital is considered crucial to both the public and the transformation in their company. The project is run Affairs, Trade, and Industry and the Ministry of strategy focus on citizens and businesses’ use of private sector. Digitalisation provides an oppor- by a collaboration between a number of industrial Finance. The aim of the national digitalisation technology (Digitaliseringsstyrelsen, 2018). Digital tunity to modernise through e-administration interest organisations (e.g. the workers union IF program is to develop the digital infrastructure competence development is considered key to and welfare services, but it also encourages socio- Metall) and financed by the Swedish Agency for and digitise public services during the period from bringing both the Greenlandic labour force and the economic opportunities for the individual through Economic and Regional Growth. 2015 to 2020 (Ministry of Foreign Affairs, Trade, labour market into the future and emphasises the digital technology (Randall & Berlina, 2019). The ■ Production2030 aims to increase competitive- and Industry and Ministry of Finance, 2018). Of way digitalisation is becoming part of everyday life. Government of Åland adopted a Digital Agenda ness amongst Swedish manufacturing companies. special importance for the Faroese enterprises As such, the strategy also positions digitalisation in 2012 and furthermore established a Digital Digitalisation and sustainability are considered key is the development of a national e-ID including a as an opportunity for business development and Council in 2016. The Digital Council launched Vision areas in this endeavour and the programme has a digital signature and of an online business register. seeks to create an attractive environment for Åland 2.0 Enklare&Tryggare in 2016, focusing on special focus on developing SMEs’ abilities through The e-ID is to be public in 2020, whilst the business digital entrepreneurship. Fisheries is the central the ways in which digitalisation enables Ålandic research projects and technical workshops (e.g. on register is currently on hold, but expected to be industry in Greenland, but there is a political focus society – by building relations and enabling a broad the use of collaborative robots in production). developed in the near future. on creating a more diversified business sector dialogue with citizens (Ålands Landskapsregering, ■ INDIGO aims to help SMEs to improve business The central business sector on the Faroe Islands is within, for example, tourism (Government of 2017). In 2017, the Government of Åland established opportunities with the help of digital solutions. The the maritime industry which includes, among others, Greenland, n.d.). a Digital Commission. The Åland Chamber of project is run by IUC (Industriella Utvecklingscentra fisheries, aquaculture, and biotechnology. However, E-learning through the project ‘the digital Commerce has previously worked on digitalisation or Industrial Development Centers, in English) and there is a focus on diversifying the industry in order to elementary school’ is an important step to- and SMEs and hosted a series of lectures on financed by the Swedish Agency for Economic and create a more robust Faroese society. Special focus is wards integrating digitalisation in society. Two digitalisation called #digitalimera during 2014- Regional Growth. on the IT sector which has expanded in recent years, Greenlandic elementary schools were provided 2015 (Åland Chamber of Commerce, 2015). ■ Digitalakademien is run by Almi (the Swedish especially due to the national digital strategy where iPADs in 2014, which in the aftermath of the pilot Åland’s agricultural sector is also seeing state-owned investment company that invests in a key focus has been to use local companies. Other proved to be important both for practical reasons constant changes in light of digitalisation, as startups and Google) has also a similar objective sectors that are expanding are financial services, and for the pedagogic nature of the tool. The they adapt and modernise to meet modern as other projects. It is focused on basic uses of the tourism and the creative industries (Føroya lands- main challenges connected to the pilot were seen production needs, and the use of digital platforms internet such as social media etc. stýri, 2019). in the poor quality of internet coverage and the and social media is expected to bring about a inability to share and exchange experiences with change in consumer behaviour (Teräs & Slätmo, a wider pool of schools. In 2018, the Greenlandic 2018). Tourism, which plays an important part in Government decided to extend and expand Åland’s economic profile, placed digitalisation, the project to include all schools in Greenland, collaboration and branding at the centre of Visit including a broadband upgrade. The project is a Åland’s action plan for 2019 (Visit Åland, 2019). response to the challenging geographic nature and In this plan, digital marketing is considered settlement structure in Greenland. It is also seen particularly important, but even projects such as an opportunity to elevate the quality standard as the use of Apps for cultural heritage expe- of education in Greenland, as the pupil’s activity riences, such as the Defence Arch-project in and development takes centre stage (Avaanaata Bormarsund, and digital maps are highlighted Kommunia; Kommune Qeqertalik; Qeqqata (Visit Åland, 2019). Kommunia; Kommuneqarfik Sermersooq; Ko- mmune Kujalleq, 2018).

Photo: Dessy Dimcheva / unsplash.com nordregio report 2020:4 50 nordregio report 2020:4 51 4.9 Latvia Other relevant Government strategies include: ■ Science, Technology Development, and Innova- Support instruments in Latvia are planned and Digitalisation of SMEs and ICT development has ■ National Development Plan for 2014 - 2020. A tion Framework 2014-2020. The Guidelines carried out at national level. As such, there is no been one of the hot topics in Latvia in recent years. national comprehensive medium-term planning implement a new horizontal approach to the special digitalisation support instrument available More and more companies are becoming aware document to facilitate balanced and sustainable science and innovation policy, linking research and only for SMEs in rural areas. It is the task of public of the importance of digitalisation in terms of development. The aspects relating to digital industrial sectors into a single system. The main organisations and stakeholders of the industry increasing competitiveness. National policies and entrepreneurship include an increase in R&D components for a successful development of to support SMEs in rural areas to understand regional development plans are being taken into efforts in the defined priority scientific areas, Latvian innovation system are the following: 1) the the importance of digitalisation and digital skills consideration and concrete support instruments reduction of obstacles for entrepreneurs, ensuring development of the potential of scientific activity; development for future growth. Events and and activities to support digitalisation are being a high-speed connectivity throughout Latvia, 2) the development of the platform for long-term informative campaigns are organised in regions to developed, but still research shows that Latvia is as well as the development of digital content, cooperation between researchers and enterprises; encourage SMEs to take up digital solutions. lagging behind the EU average. product and e-services to expand the use of digital 3) the support of the development of innovative ICT and digitalisation is one of the smart Latvia has good IT infrastructure and technologies in the economy and in the population. enterprises. The aim of the STI Guidelines is specialisation areas in Vidzeme Region and it broadband internet, which provides a good ■ Operational Programme “Growth and Employ- to raise the global competitiveness of Latvian is stated that special focus will be devoted to base for digital development. There are also ment 2014 - 2020”. Its aim is to promote a science, technology and innovation, satisfying digitalisation in the bioeconomy field. Wood good innovation support instruments for digital business-enhancing environment that is based the development needs of Latvian society and product manufacturing and food product technology development and implementation on available information (data), integrated ICT economy. One of Latvia's “Regional innovation manufacturing are one of the key industries of within SMEs, including educational programs to solutions for both the public and private sector strategy for smart specialisation” (RIS3) policy VPR and these are also part of bioeconomy, so improve the digital skills of employees. Despite and full inclusion of Latvia in the single European priorities is “Modern ICT” and specialisation area more and more informative events will be set up this, SMEs, and especially SMEs in rural areas, digital market. The policy promotes eSkills among is “Information and communication technologies”. to reach these SMEs. The overall tendencies within lack the understanding of the possibilities of both the public sector and the private economy ■ The Policy Guidelines for the Electronic Commu- SMEs in terms of digitalisation in rural areas is that digitalisation and lack informative support. As and shall contribute to provide anyone with nications Sector of the Republic of Latvia the main focus is still on digitising the business, but such, it is important to organise educational the opportunity to make the best use possible 2011-2016. Provide for a task for the Ministry more and more companies are also interested in campaigns and inspirational events in the region of modern ICT solutions. The policy is therefore of Transport to draw up a concept for the digitalising their businesses and find new business to encourage SMEs to digitalise. In addition, there aligned to Latvia's goal to improve the quality of development of the next generation broadband models. Digital transformation often happens in is lack of information about the actual situation of life by contributing to national competitiveness, electronic communications network in order to SMEs which are located in larger towns. SMEs in terms of digitalisation, especially in rural increasing economic growth and accelerating achieve the objective laid down in the strategy areas. job creation. The implementation of the policy Europe 20201 – to improve access to fast and The most important document for digitalisation instrument therefore needs to be optimised ultra-fast internet for European citizens. is the Information Society Development Guide- to make sure that SMEs in rural areas make lines 2014 – 2020 which aims to provide an full use of the available opportunities and that opportunity for anyone to use ICT, to create financed interventions lead to durable impacts a knowledge-based economy and to improve to the benefit of Latvia's overall economic the overall quality of life by contributing to the competitiveness. national competitiveness, and increasing economic ■ National industrial policy guidelines for 2014 growth and job creation. Special attention in the - 2020. Aims to promote economic structural Guidelines is devoted to the implementation of an changes, increase the production of goods open data principle in the public administration and services with high added value, including and simplifying delivery of public services, by strengthening the role of industry, allowing means of efficient and effective eServices and modernisation of industry and services, as well interoperable information systems. By reducing as expanding exports. As the key directions we the administrative burden, it is expected to can mention – availability of financing; increase increase the number of those entrepreneurs of capacity of innovation; promotion of exports. (especially SMEs), which until now have been In 2017, a review of the guidelines is planned, deterred from commencing their businesses or including assessing the need for the guidelines to official registration due to the complexity and include the policy objectives and provide business unwieldiness of bureaucratic procedures. action for digitisation.

nordregio report 2020:4 52 nordregio report 2020:4 53 At the same time, it should not be assumed These recommendations are relevant in all 5. Conclusions and advice for that all companies are immediately aware of the sectors in different ways. Within the bioeconomy, relevance of digitalisation to their business. For the re-framing of the conversation was the most many, digitalisation has become a buzz word which central point. Here, it is important to recognise policy makers conveys little meaning. As such, it is important to that the adoption of digital tools is not an end frame digitalisation in a way that small enterprises in itself and instead focus on the development in rural areas can relate to. One potentially useful potential digitalisation presents. This potential approach is to put less focus on the digital tools is multifaceted and includes the creation of new themselves and more focus on the outcomes products, services and even industries. Though This project aimed to provide a rural perspective on that may be achieved or the risks associated with based on rural resources, these opportunities may digital innovation, with a focus on the challenges Box 16. Summary of inaction. Importantly, these outcomes and risks require new types of collaboration that strengthen and opportunities faced by small and medium are likely to vary by sector, geography and even urban-rural linkages. The digital transformation sized enterprises (SMEs) in rural and sparsely recommendations between individual businesses. of the bioeconomy also has the potential to make populated areas. It did so in the context of one 1. Continue to work towards broadband Given this diversity, it is necessary to take jobs in traditional bioeconomy sectors appealing of the goals set by the Ministers responsible for infrastructure provision targets until an individualised approach that generates a to a broader cross-section of people. This could every last household is connected. digital development in the Nordic-Baltic countries dialogue between technical experts and experts result in job opportunities in rural areas for young 2. Acknowledge the stage companies are at and autonomous territories: Strengthening the in traditional industries. This may mean rethinking people with high levels of education and may also in their digital journey. competitiveness of our enterprises through the challenge at hand. Perhaps it is not only make these sectors more appealing and accessible 3. Frame digitalisation in a way that small about traditional industries getting on board to women. digitalisation. The project included a baseline enterprises in rural areas can relate to. study, workshops held in rural locations around the 4. Take an individualised approach that with digitalisation, but also about people with In the tourism sector, digital media has Nordic-Baltic Region, and a webinar series. generates a dialogue between technical digital expertise getting better at working within become increasingly powerful in shaping tourist This report has brought together the results experts and experts in traditional a diverse range of sectors. This may involve visi- choices while at the same time creating a range from this work. It explored the urban-rural industries. ting farms and production sites and getting to of new business opportunities. Small enterprises digital divide from the perspective of both digital 5. Develop locally-anchored initiatives to know the people behind the processes. These generally found it easy to relate to the concept infrastructure and digital competence, highlighted support SMEs in rural areas to engage interactions are vital in developing trust, which of digitalisation but required guidance on how to the key challenges and opportunities for small with digitalisation. may be an important step in getting companies use digital tools and determine which ones were enterprises in three key rural sectors, and provided 6. Focus on the development potential to take the leap into unknown digital ground. best for their purposes. At the same time, tourism digitalisation presents. an overview of support structures in the different These interactions can also help to breakdown actors recognised an inherent tension between 7. Work collaboratively with the local countries. This final section reflects upon the key communication barriers, providing an opportunity the infinite potential of digital reach and the finite community to address the implications of themes of the report to provide some conclusions to develop a common language through which to capacity of the natural environment and the local increased digital media attention for collaboratively explore the potential for digital communities. Thus, while growing the tourism and advice for policy makers. These conclusions tourism sites. may also be relevant for practitioners working 8. Take a company-centred approach and innovation in different sectors. sector may promote economic development in with business development at the national, promote mutually beneficial Alongside the need for tailor-made approaches rural areas, it is important that this development regional and local levels. The advice is summarised collaboration. within different sectors, it is crucial to develop is consistent with the capacity of the local area to in Box 16 and described in detail below. 9. Create opportunities for cross-border locally-anchored initiatives to support SMEs in receive tourists. Digital infrastructure is the foundation collaboration between participants in rural areas to engage with digitalisation. While the To address this, those responsible for for digital innovation and, as such, ambitious successful locally-driven digitalisation overall goals may be set at the regional, national promoting tourism at the different levels should broadband connectivity targets have been set by initiatives. or even supranational level, the strategies to get work collaboratively with the local community all countries in the Nordic-Baltic Region. Progress there should be developed through a dialogue to address the implications of increased digital towards these targets has been good overall. with the relevant local actors (e.g. local business media attention at tourism sites. This may Disparities remain however, with households in that they are less likely to have implemented associations). These actors play a vital role in include developing an understanding of what rural and intermediate areas less likely than their digital tools than larger companies and their getting local businesses on board with the need improvements might be necessary to protect a urban counterparts to have access to a high-speed geographic location means that they are less likely for change. For example, the biggest challenge natural site in the event of larger visitor numbers broadband connection. Ensuring equal access to have access to people with high levels of digital that most workshop participants reported facing (e.g. designated paths, signage, toilet facilities). It to infrastructure for all is a crucial step towards competence than SMEs in urban areas. Addressing was unequivocally a lack of time. This meant that may also include working with local residents to bridging the urban-rural digital divide. Thus, it is this is complex, and begins with the need to they were unlikely to seek out support related to explore potential business opportunities that may vital that all countries continue to work towards acknowledge the stage companies are at in their digitalisation unless they had a specific reason emerge in light of increased tourist numbers. broadband infrastructure provision targets until digital journey. For example, a workshop on how to to do so. On the other hand, when approached For small manufacturing companies, a central every last household is connected. digitally transform your business model is unlikely by a trusted local actor, these same companies challenge was understanding how abstract With respect to digital knowledge and skills, to appeal to a company that is yet to employ were much more open to collaborating with public concepts like digitalisation and industry 4.0 relate small and medium sized enterprises in rural areas digital tools beyond basic internal administrative actors, universities and other experts to explore to their business. Getting over this hurdle requires face a double digital divide. Their size means processes. the opportunities that digitalisation might hold. initiatives that take a company-centred approach

nordregio report 2020:4 54 nordregio report 2020:4 55 and promote mutually beneficial collaboration. connection between the business and a university Partnerships between companies or between abroad. This suggests an untapped potential for companies and universities can be a particularly collaboration and knowledge sharing that could References important driver of innovation, providing small boost digital progress in the region. Importantly, companies with access to knowledge and such collaboration should still respect the Agency for Digitalisation, 2016. A stronger and Sea Region (Nordregio Working Paper), 7. expertise that may otherwise be out of reach (e.g. principals described above and be anchored at the more secure digital Denmark. The Digital Nordregio: Stockholm. ISSN 1403-2511;2017:7 if they had to employ a consultant). It is important local level. strategy 2016-2020. [WWW Document] URL Berglund, T., Dølvik, J.E., Rasmussen, S. & however, that those providing the expertise are Given this, a good first step could be to create https://digst.dk/media/16165/ds_singlepage_ Steen, J.R., 2019. Changes in the occupational prepared to meet the company where they are, opportunities for cross-border collaboration uk_web.pdf (accessed 4.30.20) structure of Nordic employment: Upgrading or both physically (by visiting their production site) between participants in successful locally-driven Alm E, Colliander N, Deforche F, et al., 2016. polarization?. Working Paper, Fafo: Oslo. URL: and metaphorically (by acknowledging where they digitalisation initiatives. These opportunities Digitizing Europe: Why Northern European https://fafo.no/images/pub/2019/Nfow-wp2. are at on their digital journey). could be a valuable source of knowledge sharing frontrunners must drive digitization of the pdf (accessed: 4.14.20) Finally, it is important to highlight the and inspiration. They would also provide the space EU economy. Boston Consulting Group, Björkdahl, J., Wallin, M.W. & Kronblad, C., 2018. opportunities for Nordic-Baltic cooperation for cultural exchange, initiating a dialogue that Stockholm. [WWW Document] URL: https:// Digitalisering – mer än teknik Kartläggning that exist within this space. Though the data may in time inform a shared understanding of www.bcg.com/en-nor/perspectives/36553 av svensk forskning och näringslivets behov collected does not allow for robust cross-country what exactly constitutes digital progress in the (accessed: 4.28.20) [Digitalisation – more than technology. A comparisons, it is interesting to note that similar Nordic-Baltic Region. Providing a place for rural Antikainen, J. et al., 2017. Smart Countryside. mapping of Swedish companies and private challenges were raised in the different countries. actors in such a dialogue is vital to ensuring an Maaseudun palveluiden kehittäminen ja sector needs]. Vinnova [Swedish Innovation At the same time, support structures appear to be inclusive approach to digitalisation in which no one monipuolistaminen digitalisaatiota ja kokeiluja Agency]. ISBN: 978-91-87537-73-8. nationally driven and do not tend to incorporate is left behind. When the benefits of digitalisation hyödyntämällä [Smart Countryside. Better Blue Bank Co-working, 2020. Coworking outpost: cross-border learning opportunities. The one are evident across all segments of society, the services in rural areas by using digitalisation Join a creative community at the edge of example that we came across of cross-border Nordic-Baltic Region can truly lay claim to the title and experiments] Prime Minister’s Office the world. [WWW Document] URL https:// collaboration came about through a personal of digital front runner. [WWW Document] URL http://tietokayttoon. coworking.blabankinn.is/ (accessed 4.23.20) fi/julkaisu?pubid=16602 (accessed 4.30.20) Boffey, D., 2019. 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ISBN 978-91-87295-89-8 (PRINT) ISBN 978-91-87295-90-4 (PDF) ISSN 1403-2503 DOI: http://doi.org/10.6027 R2020:4.1403-2503 nordregio report 2020:4 68