The Estonian Success Model of Entrepreneurship?

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The Estonian Success Model of Entrepreneurship? The Estonian success model of entrepreneurship? By Antti Ainamo Professor (International Business), Entrepreneurship and International Business Research Group, Dept of Business Administration, School of Business and Governance Tallinn University of Technology [email protected] TalTech Entrepreneurship Academy, MEKTORY, Tallinn January 23, 2020 Introduction • Generally, research on internationally competitive business in many countries has traced to a given startup, industry, and type of specialization, e.g.: - The U.S. model in large is based on the assembly line of Ford Motor Company (Abernathy 1978; Utterback & Abarnathy, 1975) - The French model of haute couture luxury fashion is characteristic of French entrepreneurship (Djelic & Ainamo, 1999; cf. Djelic, 1998) - In Estonia, the whole system of corporate can be said to have organized around Hansapank as a creditor (Ainamo & Cardwell, 1998) - However, Hansapank was not a model for TalTech students when I asked them… - Tallink was more understandable to the students… What kind of national success models of entrepreneurship exist in other countries than Estonia ? What about Estonian ones? Italian exemplar of entrepreneurship made famous by Michael E. Porter • Italians entrepreneurs have and build initially local business, around their family, friends, neighbors, making “art” even of ceramic tiles. Armani -- Italian entrepreneur https://www.moodiedavittreport.com/nuance-watson-hk-opens-worlds-first-giorgio-armani-airport-boutique-at-hong-kong- international-airport-100509/ https://www.moodiedavittreport.com/nuance-watson-hk-opens-worlds-first-giorgio-armani-airport-boutique-at-hong-kong-international-airport-100509/ Entrepreneurship in Italy (below) vs. in most countries (above) Techno- Market logical change change DOMINANT Inter- Inter- VISION pretatio pretatio n n INDUSTRY NEW Inter- VISION Inter- pretatio pretatio n n RADICALCIRCLE Source:A. Ainamo, C. Dell’Era & R. Verganti, work in progress. Bernard Arnault, a French entrepreneur • The French have historically been better than Italians at entrepreneurship from the top-down or hierarchically – for example, in haute couture, the French model of luxury fashion. French entrepreneurs – hierarchy and rules https://frenchcorporategovernance.wordpress.com/the-french-model/ Ralp Lauren, U.S. entrepreneur • Many U.S. entrepreneurs believe in the benefits to market exchange • Sometimes U.S. entrepreneurs outsource to an extent that little else is internalized in the enterprise than the product brand and a(n real or mythical) entrepreneur. “I don’t design clothes, I design dreams.” Erling Persson, Swedish entrepreneur • Swedes have made large "market investments" rather than investments in production capacity, so that the fashion brand has risen to the fore. • Erling Persson started H&M as a retail store Erling Persson Finnish entrepreneurs have been notable exceptiosn to dominant national vision of "business as usual” (e.g. Ainamo, 2003; Ainamo, 2005; Djelic & Ainamo, 2005) Armi Ratia, founder of Marimekko Jaakko Pöyry, founder of Pöyry Kari Kairamo, CEO of Nokia The Estonian model? • What might be the Estonian model of entrepreneurship? Estonians on average are better at math than are those in the Nordics, the U.K., or France https://www.nytimes.com/2016/12/06/upshot/what-america-can-learn-about-smart-schools-in-other-countries.html EstoniaInnovation is innovative, performance andcompared convergence trends to otherin innovation EU27 in the EU27countries, and other countries behind only Nordic countries, Germany, and the UK EU27 average growth rate in 2005-09 0.750 0.700 CH Denmark, Finland, Germany, Sweden, Innovation leaders UK 0.650 SE FI 0.600 DE Austria, Belgium, Cyprus, Estonia, UK France, Iceland, Ireland, 0.550 DK AT LU Luxembourg, Netherlands, Slovenia BE Innovation followers FR 0.500 IE EE CY NL IS EU27 innovation performance in 2009 0.450 SI CZ 0.400 NO PT ES Czech Republic, Greece, Hungary, Moderate innovators GR Italy, Lithuania, Malta, Norway, 0.350 IT PL MT Poland, Portugal, Slovakia, Spain HU SK 0.300 LT RO HR LV 0.250 TR BG Innovation performance (SII 2009) performance(SII Innovation 0.200 Catching up Bulgaria, Croatia, Latvia, Romania, Serbia, Turkey 0.150 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% Average annual growth in innovation performance Note : colour coding matches the groups of countries: green are the Innovation leaders, yellow are the Innovation followers, orange are the Moderate innovators, blue are the Catching-up countries. Average annual growth rates as calculated over a five-year period. The dotted lines show EU27 performance and growth. 16 Estonian tend to be cynical pessimists General building blocks of Estonian entrepreneurship? • Good at math • Innovative • Social restrained (not willing indulge; not good at small talk ) Estonian particularly noteworthy SUCCESS STORIES • In this presentation, based on work in progress on Estonian startups from the 1960s until present day, initial findings by 130 students reached by Taltech’s International Business course are presented • Tallink • Alexela • LVH • Playtech • Nortal • Skype • Transwerwise • Bolt • Starship Technologies • Sorainen Law Alexela • The fuel retail company fuel retailer AS Alexela Oil was established in 1993. • In 2002, a petroleum product terminal was opened in Paldiski, Estonia, and in 2007 in Sillamäe, Estonia. • In March 2006, Latvia, and Lithuania, thanks to funding from Kazakhstan… • Collaboration with Tallink • Highly advanced IT solutions. Sorainen – ”connected law firm” • Established in 1995 by the Finn Aku Sorainen, this law firm has e.g. ”advised venture capital fund Startup Wise Guys on investing in Lithuanian transport management system developer GoRamp.” -- Deals & Cases / 21 January 2020 • ”Launching innovative services and technologies? Looking to have your existing services verified for legal compliance? We connect the region’s legal expertise to help you succeed – no matter whether you are an international tech and telco giant or a local startup. Our integrated resources and natural curiosity about tech guarantee we actually understand your technology before we give you legal advice.”-- Technology, Media & Telecommunications • https://www.facebook.com/SorainenLawFirm/videos/334790127144786/?v=334 790127144786 Sorainen Law • By 2020, ”the firm has more than 80,000 cases on its track record, along with over 1000 M&A transactions to date.” • ”With 33 partnersa fully integrated regional business law firm with offices throughout the region, in Estonia, Latvia, Lithuania, and Belarus”. ” Sorainen employs modern legal technologies & AI… a cloud-based legal software platform for automating contracts and know-how… artificial intelligence technology which streamlines M&A due diligence processes…” LHV • Founded in 1999 as investment bank AS [ Rain ] Lõhmus, [Toin] Haavel & [Andres] Viisemann by Hansapank founders of the these surnames • Acquired Danske Bank’s operations in 2019, to further consolidate position as leading Estonian bank Playtech • Playtech was founded in 1999 by the Israeli entrepreneur Teddy Sagi in Tartu, Estonia, with partners from the casino, software engineering and multimedia industries. • Playtech launched its first casino product in 2001, and since then it has grown to become the world’s leading and largest international designer, developer and licensor of web and mobile application software to the digital gaming industry. Skype Skype was founded in 2003 by the Swede Niklas Zennström and the Dane Janus Friis, in cooperation with Ahti Heinla, Priit Kasesalu, and Jaan Tallinn, three Estonians who had earlier developed the backend for the music-sharing application Kazaa. Transferwise • TransferWise is a British online money transfer service founded in 2011 by Estonians Kristo Käärmann and Taavet Hinrikus and is based in London. • The company supports more than 750 currency routes across the world including GBP, USD, EUR, AUD and CAD, and provides multi-currency accounts Bolt • Bolt (then called Taxify) was founded by Markus Villig (then only 19 years old, a high-school student) in 2013, with a vision to aggregate all Tallinn and Riga taxis into one platform. • The service was launched in August 2013 and in 2014 it went on to foreign shores. Starship Technologies • Founded in, 2014, headquartered in San Francisco, with engineering operations in Tallinn, Starship Technologies is developing small self- driving robotic delivery vehicles, having trials with logistics firms Synthesis of the students’ initial findings • that the Estonian entrepreneur would be marked by a hybrid or mix of two kinds of particular competences: those related to • "logistics” (Tallink, Alexela, Sorainen, Starship Technologies, Transwerwise, Bolt – all but LVH, Playtech, Nortal, and Skype) • "digitalization” (Tallink, Alexela, Sorainen, LHV, Playtech, Nortal, Skype, Starship Technologies, Transwerwise, Bolt – all 10 firms) • Traces its origin to ”international” from startup (Tallink, Sorainen, LHV, Playtech, Skype, Starship Technologies, Transwerwise, Bolt – all but Alexela and Nortal) ESTONIA http://www.gvpartners.com/web/pdf/WEF_EE_Full_Report.pdf Implementing the concept of entrepreneurial ecosystems in Estonia July 4, 2018 Merli Reidolf, Aleksandr Michelson, Helena Rozeik, Merle Küttim, Marianne Kallaste What is the Estononian success model? • Generally, it has been considered that entrepreneurs are drawn to and, inextricably bound together, with other core entrepreneurial actors in close geographic, institutional and relational proximity (Brown and Mason, 2017; Reidolf et al., 2018/201), within the local entrepreneurial environment (Mason and Brown, 2014). Geographical unit of analysis Spatial Non-spatial • nested geographies • global production • national level system • regional level • economic sector • urban level / urban • startup region Weaken x Resilient x Strengthening x Nascent x Dream Plan Act Explore Antti comments 15.2.2019 Alternatives to Dream-Plan-Act-Explore include “AIDA” (as a cycle?).
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