Entrepreneurship in Technological Systems - The Development of Mobile Telephony in Sweden Bengt G Molleryd Akademisk Avhandling Som for avlaggande av filosofie doktorsexamen vid Handelshogskolan i Stockholm framlagges for offentlig granskning Tisdagen den 19 oktober 1999 kl.10.15 i sal Ragnar Handelshogskolan, Sveavagen 65. Entrepreneurship in Technological Systems - The Development of Mobile Telephony in Sweden ~ STOCKHOLM SCHOOL OF ECONOMICS "':,;, EFI, THE ECONOMIC RESEARCH INSTITUTE EPI Mission EFI, the Economic Research Institute at the Stockholm School of Economics, is a scientific institution which works independently ofeconomic, political and sectional interests. It conducts theoretical and empirical research in management and economic sciences, including selected related disciplines. The Institute encourages and assists in the publication and distribution ofits research findings and is also involved in the doctoral education at the Stockholm School of Economics. 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Internet: www.hhs.sejefij Telephone: +46(0)8-736 90 00 • Fax: +46(0)8-31 6270 • E-mail [email protected] Entrepreneurship in Technological Systems - The Development of Mobile Telephony in Sweden Bengt G Molleryd • STOCKHOLM SCHOOL OF ECONOMICS \:f;; EFI, THE ECONOMIC RESEARCH INSTITUTE Dissertation for the degree of Doctor of Philosophy (PhD) in Business Administration (filosofie doktor) Stockholm School of Economics 1999 © EFI and the author ISBN 91 - 7258-523-4 Keywords: Entrepreneurship Innovation Mobile telephony Mobility Technological system Users English styling: George Cook Graphic design: Graffoto AB Cover: Graffoto AB Distributed by: EFI, Ekonomiska Forskningsinstitutet Stockholm School of Economics Box 6501, 113 83 Stockholm Tel +46 (0)8 736 90 00 www.hhs.se Elanders, Gotab, Stockholm 1999 Ackn Qwledgement This book is the outcome ofa process that started back in 1990 when I began working at the Center for Marketing, Distribution and Industry Dynamics, at the Economic Research Institute (EFI), at the Stockholm School of Economics. It was Associate Professor Staffan Hulten who made it possible for me to join the department and who guided me into the world ofresearch. We collaborated extensively in laying the foundation for this study and Staffan has maintained an active interest throughout in my research for which I am deeply appreciative. Professor Lars-Gunnar Mattsson has consistently supported me in my research endeaV01.lr in the area ofmobile telephony and entrepreneurship. I would thank him for his invaluable help to me in finalisiI1g this study. Lars­ Gunnar Mattsson and Staffan Hulten were joined on my supervisory committee by Professor Bengt Stymne to whom I am grateful for his valuable suggestions for the completion ofthis book. Anders Lundgren has been instrumental in providing resources for my research in his role as project leader for the group pursuing telecom-related research at the department, which later became the Center for Information and Communication Research (CIC). I would like to thank him for that and for so closely involving me in the International Telecommunication Society's Conference in Stockholm in 1998. Professor BertH Thorngren laid the foundation for the telecommunication project in his management role at Swedish Telecom/Telia and consistently promoted our research group, and has over the years been an important inspiration to my research. The financial support for this study, which is gratefully appreciated, has been kindly provided by KFB, Kommunikationsforskningsberedningen, (Swedish Transport and Communications Research Board), Swedish Telecom/Telia and Ruben Rausings Fond During my tin1e at the department I have had the pleasure ofsharing an office with Dimitrios Ioannidis, facilitating lively discussion with an international flavour and an interchange ofideas stemmiI1g, in part, from our readings ofthe FT. My interest in issues on distribution is the result ofa fruitful collaboration with Per Andersson. This study has benefited immensely from numerous seminars and discussions and I would like to express my appreciation to my research colleagues: Gunnar Alexandersson, Monica Alfredsson, Karolina Brodin, Ann-Charlotte Edgren, Vlf Essler, Magnus Hagberg, Karl-Olof Hammarkvist, P-G Holmlov, C-F Helgesson, Susanne Hertz, Michael Acknowledgement I 5 Kaplan, Stewart Kowalski, Karl Oskar Kallsner, Hans Kjellberg, Anders Liljenberg, Mia Liss, Lena Nordenlow, Anna Nyberg, Jaana Simila, Ivan Snehota, Kristoffer Strandqvist, Susanne Sweet, Magnus Soderlund, and Mats Vilgon. A special thought goes to our late colleague Torbjorn Flink. Colleagues abroad have also contributed to the thesis. I am happy to count Professor Jurgen Muller as my friend and he opened possibilities to collaborate with fellow researchers in Central and Eastern Europe. Professor Karl-Ernst Schenk arranged a stay at the University of Hamburg in 1996 that were conducive in my explorations into standardisation problems. This study would not have been possible to accomplish ifthe many persons contacted in the mobile telephone industry had not given so generously oftheir time to talk to me and support my research. It has been a privilege to meet with the "founding fathers" of Swedish mobile telephony - Ake Lundqvist, Torbjorn Johnson, Carl-Gosta Asdal, Osten Makitalo, only to mention a few. A Telia financed research project on the role ofthe users provided unique opportunities to look into the role ofusers in shaping mobile telephone technology - a thanks to Jonas Storakers. Telefonaktiebolaget LM Ericsson and Telia Mobile kindly sponsored the printing and graphic design ofthis book. Assistant Professor Ivo Zander acted as opponent in an internal seminar and I am grateful to him for contributing constructive suggestions enabling me to improve the final text. I would like to express my gratitude to George Cook who transformed my text into readable El1glish, and to Graffoto for the graphic design. My thoughts go to my parents who unfortunately are not able to read these lines which they would have done with happiness. I would like to thank my sisters Gerd, Britt and Gun and my brother Alffor being so encouraging. My two daughters Astrid and Majken have seen this book emerge but it would never have been completed without the constant support from my Lotte. Stockholm September 1999 Bengt G Molleryd 6 I Acknowledgement CONTENTS 1. Introduction 12 Interaction and network approaches -41 1.1 Sweden in the forefront 12 The significance of users -42 1.2 Forces behind the development 14 1.3 The impact of entrepreneurship 15 User-producer approach -43 1.4 Network technology To sum up on systems -44 - technological system 16 4·3 Innovations · .. ··· .. · .. -44 1.5 Course of events divided What is innovation -44 into three phases 16 Four categories of innovations .. -45 1.6 Research question 17 Science and innovations -48 1.7 Positioning and contribution 19 4.4 National System of Innovation .. -48 1.8 Research within entrepreneurship 20 National differences 51 1.9 The scope of the study 20 Effect of localisation 51 1.10 Disposition 21 Co-evolution 53 Summing up on innovations 54 2. About mobile communications 22 4.5 Entrepreneurship theory 2.1 Terms used 22 and research 55 2.2 Several systems 22 Different approaches 1.3 The significance of to entrepreneurship 56 mobile telephony 24 Schumpeter's theory 1.4 Projections 25 of entrepreneurship 57 1.5 Standards 25 Austrian theory of entrepreneurship 59 1.6 The basis of mobile telecommunication 26 The distinction between entrepreneurship and 1.7 Legal requirements 26 entrepreneurs 60 3. Methodological framework 28 Individual entrepreneur 62 3.1 The case study methodology 28 Entrepreneurial teams - collective entrepreneurship .....62 3.2 Outcome of case studies 30 4.6 Th ree so urces 3.3 The rationale of entrepreneurship 63 for using case studies 31 The individual as entrepreneur 64 3.4 Sources and interviews 32 The company