David Emanuel Andersson

My Jonkoping and JIBS connections March 22, 2009

I spend most of my time in southern Taiwan, but when I’m not here you would be more likely to find me in Jonkoping, Sweden, than anywhere else. There are several reasons for this; my parents live there, my son goes to school there, and the European cost of living makes me avoid places where I have to stay at hotels and eat out (unless I’m fully funded).

Now, my family connections would be sufficient to ensure my recurrent visits. But there is also JIBS – Jonkoping International Business School – which is an excellent resource. It happens to be our Swedish partner university; I’ve taught a total of 5 JIBS students at NSYSU. And it has one of the best economics departments in northern Europe, with a focus on empirical research in entrepreneurship, institutions, and regional economics.

This month, my school is hosting a visit by two JIBS economists, Daniel Wiberg and Anders Hogberg. They have been lecturing on Swedish economic history and Swedish financial institutions. From their lectures I learned that the largest Swedish firms have been engaging in systematic overinvestments over the past several decades (they use a method called marginal Q analysis). They also showed that all of the largest 50 firms were founded before 1970, and that a distinction between closely held A shares and openly traded B shares have enabled the leading business dynasties to endure for several generations (An A share is associated with 10 times as many votes as a B share). According to Daniel Wiberg, the empire-building of Sweden’s “financial nobility” have crowded out entrepreneurship and the service sector. More surprisingly, this has been a deliberate effect of the taxation policies and subsidy programs perpetrated by a succession of Social Democrat governments. In effect, the Social Democrats instituted corporatism in Sweden – powerful families such as the Wallenbergs were given various “empire-building” advantages in exchange for acquiescing in the government’s redistribution of incomes. There is thus a tiny group of very wealthy captains of industry at the top, and a large majority of people with roughly the same after-tax incomes working either in the public sector or for old multinational manufacturing corporations such as Ericsson, Atlas Copco, Electrolux etc. Two holding companies – controlled by the Wallenberg family and a major bank, respectively – control more than 60% of total market capitalization on the Stockholm Stock Exchange. Wiberg’s conclusion is that the collusion between Sweden’s Social Democrats and the leading business empires have reduced opportunities for entrepreneurship and Schumpeterian creative destruction, resulting in an ossified industrial structure and lower economic growth after World War II. Interesting stuff.

Both Daniel Wiberg and Anders Hogberg are associated with Per-Olof Bjuggren, one of the leading Swedish economists with an interest in law and economics and new institutional economics. Now at least three of the faculty – and several Ph.D. students – at JIBS are engaged in institutional research. Per-Olof studied with Armen Alchian and Harold Demsetz in the 1970s, and has recently been collaborating with Oliver Williamson and Dennis Mueller.

JIBS also offers students a truly outstanding library (at least from my point of view). Not only has it won architectural prizes, it is also Scandinavia’s leading library for both entrepreneurship theory and entrepreneurship studies. In fact, it’s the only library I have been to where I can count on finding books that are unavailable in even the best of Taiwan’s libraries (because of that library, I’ve had the opportunity to spend my summer break reading books by little known but highly readable economists such as Emily Chamlee-Wright or Virgil Storr).

So, all in all, I feel very privileged to divide my time between sweltering Kaohsiung and crisp Jonkoping.