The Nordic success lies in what we call the model’s ambidextrous nature, combining collaborative and competitive elements and skillfully navigating between them.
IDEAS: Atle Midttun and Nina Witoszek on the success of the Nordic Models
In the 21st century, Norway, Denmark and Sweden remain the icons of fair societies, with high economic productivity and quality of life.
The success of the Nordic models is often attributed to their perception as a middle road between capitalism and socialism.
Our contention is, however, that the Nordic success lies in what we call the model’s ambidextrous nature, combining collaborative and competitive elements and skillfully navigating between them.
Our reconceptualization of the Nordic model in terms of ambidexterity at different levels has been prompted by two inspirations;
- Competitive and collaborative
The first one is O’Riley and Tushman’s idea of the ambidextrous organization, which responds to the dilemma of combining two contradictory activities in one organization, in their case: efficient production and creative innovation; in our case: competitive and collaborative institutions and behavior.
O’Riley and Tushman’s point is that the two contradictory functions/tasks must be clearly separated – so as not to impede each other, but should exchange resources when necessary, through cleverly crafted strategies at higher managerial levels.
- The third wave of evolutionary biology
The second inspiration is the so called “the third wave” of evolutionary biology that has focused on how collaborative behavior may carry equal, if not stronger, weight than competition in forging social resilience and adaptability.
As argued by Wilson and Wilson, an important precondition of this resilience is that the collaborating group needs to be competitively exposed at a higher level in order to maintain its productivity.
Evolutionary biology is thus based on the principle of multilevel selection, which implies a competitive advantage of collaboration.
The Nordic Way
The Nordic combination of competitive market economy and inclusive cooperation, we argue, rests on ambidexterity implemented through an interplay between competition and collaboration at, respectively, various, micro, meso and macro levels.
The ambidextrous model may be contrasted with a neoliberal model, which features simple alignment of competition all the way through, from the micro through the meso to the macro level. It also differs from planned economy model which assumes planned co-ordination at all levels and between them. Here are some examples to illustrate our points.
Nordic work life model
Ambidexterity is clearly demonstrated in the Nordic work life model which is tailored to enhance productivity and competitive advantage in small open economies, whilst at the same time catering for distributive fairness and worker welfare.
- A prime example is the so called Front Industries Model. This is a collaborative arrangement, agreed upon by the trade unions and industry associations. It secures a sequence of wage negotiations where the sectors exposed to international competition bargain first and set a ceiling for wage levels in domestic sectors. In this way wage bargaining is calibrated to Nordic competitiveness in global markets.
Another example of ambidexterity of Nordic worklife is the so called Flexicurity Model, which combines three elements.
Firstly it enhances the competitiveness of Nordic firms, by facilitating flexible labour contracts.
- Secondly, it creates financial security for workers that cannot find new jobs. Thirdly it involves retraining to facilitate re-employment.
- Collaborative behavior (financial security and retraining) is thus used to further competitive success.
Female Participation in the Labour Market
Gender equality and high female work-participation, has been a hallmark of Nordic ability to combine competitiveness and collaboration.
The development of collaborative welfare services, such as, generous maternity leave, subsidized kindergartens, child benefits and free access to medical care has made it possible for women to work outside the home.
In return, female work participation has increased value creation and broadened tax bases, thereby increasing Nordic societies’ competitiveness.
Norway’s oil wealth
The administration of Norway’s oil wealth illustrates ambidextrous ability to orchestrate collaboration to secure the public interest, while catering for competitive breakthrough in international deep sea oil and gas exploration.
The complex tradeoffs are orchestrated through four core regimes:
- A regulatory regime – to bring petroleum resources under public control and to organize exploration and production efficiently
- An industrial regime – to secure the buildup of domestic industrial capabilities;
- A taxation regime – to secure the public share in the value-creation; and
- A wealth management regime – to secure sustainable economic development and fair distribution.
Each of these regimes have strong public interest based collaborative arrangements, but they also systematically expose the main actors to competitive challenges. To cite but one example, the taxation regime secures public appropriation of the ‘resource rent’, to the collective benefit of the population, yet the regime is calibrated to leave sufficient commercial incentives to attract international actors to expose Norwegian industry to competition.
Ambidextrous combination of competitive and collaborative arrangements can also be given from the environmental field, where the Nordic countries show a high willingness to participate in both domestic, and international collaborative environmental initiatives, but take pragmatic, commercially motivated positions with respect to implementation, to preserve industrial competitiveness.
The combination of strong climate policy to benefit future generations, with competitively exposed green growth is an example.
Nordic adoption of CSR
One of the more intriguing mixes of competitive and competitive organization comes from the Nordic adoption of CSR (Corporate Social Responsibility).
The CSR tradition originated in a neoliberal, Anglo- American context, and emphasizes corporate discretion, voluntarism and market- based policy solutions.
In a Nordic welfare state tradition - based as it is on universal rights and duties, extensive state engagement in the economy, and negotiated agreements to regulate labor relationships - one would think that adopting CSR would be a tall order.
Yet building on the shared goals, the Nordics – and Sweden and Norway in particular – have found commercially based CSR to be an interesting tool in their international policies, while leaving the domestic economy to be ruled by traditional welfare state means.
In their struggle for international influence, the Nordics have therefore adopted a pragmatic attitude, where they engage intermittently in an ambidextrous way, both in commercial and political arenas, to further their cause, sometimes even engaging in crossover governance innovation. The result has been what we have called a partnered governance with industrial corporate social responsibility (CSR) supplemented by civil society organizations.
The ambidextrous mélange of government, industry and civil society engagement for social and environmental upgrading of the global economy has allowed the Nordics and like- minded countries creatively attempt to expand governance beyond their national borders. By doing so under the CSR label, they may legitimately transcend the lock- in to the territorial limitations of the nation- state, and thereby gain far greater international outreach.
Nordic Resilience: The Role of the Cultural Tradition
Can collaborative arrangements forged in the second half of the 20th century– the time of industrial mass production and strong labor movements - survive in the 21st century, under digitalized flexible specialization?
Even with extensive institutional changes of the 21st century, the resilience of Nordic collaborative–competitive ambidexterity remains its defining characteristics. This, we argue, is due to the fact that the Nordic countries have been able to build a more extensive social contract and deeper levels of collective engagement and responsibility than many other societies.
We have shown how this capacity draws on a deeply rooted and shared cultural tradition which has consistently flaunted and replicated values of prosociality, trust and cooperation. It is thanks to these shared values that the Nordic countries are able to come up with institutional and strategic responses to new competitive challenges: responses that include collaborative mobilization and solidarity at one level, but competitive edge at another. At their best, they combine teamwork with pragmatism which yields extraordinary resilience under stress.
Furthermore, the Nordics have also been able to engage offensively to promote their values on international arenas by capturing and tuning neoliberal CSR agenda to a partnered governance approach in order to “civilize capitalism”.
Witoszek, Nina and Midttun, Atle (2018) “Sustainable Modernity: The Nordic Model and Beyond” Routledge. London.
Witoszek, Nina (2013) The Origins of the Regime of Goodness: Reapping the Norwegian Cultural History. Norwegian Univesrity Press. Oslo
O’Rielly, Charles A. and Tushman, Michael L (2004) “The Ambidextrous Organization” Harvard Business Review.
Wilson , D. S. , and Wilson , E. O. (2007) Rethinking the Theoretical Foundation of Sociobiology.The Quarterly Review of Biology 82 : 327 – 348 .
Midttun, Atle (2008) “Partnered governance: aligning corporate responsibility and public policy in the global economy” Corporate Governance Journal vol. 8 no. 4.
This popular science article is written for BI Busisness Review.
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Text: Professor Atle Midttun, BI Norwegian Business School and professor Nina Witoszek, University of Oslo.