J
Ö N K Ö P I N GI
N T E R N A T I O N A LB
U S I N E S SS
C H O O LJÖNKÖPI NG UNIVER SITY
R u r a l D e v e l o p m e n t , E q u i n e
B u s i n e s s e s i n Va g g e r y d ’s
M u n i c i p a l i t y
Empirical Analysis and Outlook
Bachelor Thesis within Economics
Author: VIVIANNE LÄRKEFJORD, 860112 Tutor: PhD LARS PETTERSSON, SUPERVISOR
PhD CHARLOTTA MELLANDER, ASSISTANT SUPERVISOR Jönköping January 2010
ACKNOWLEDGEMENTS:
Thanks to all students at the horse entrepreneurial education in Vaggeryd who participated in this report.
Thanks to Swedish Board of Agriculture, Vaggeryd’s Municipality Council, Vaggeryd’s Trade and Industry Council, Fenix Kunskapscentrum and Kreativ Arena.
Thanks to all people involved in the Vaggeryd Project at Jönköping International Business School.
A special thanks to PhD Lars Pettersson, supervisor and PhD Charlotta Mellander, assis-tant supervisor as well as my discussants.
ABSTRACT
Vaggeryd is a rural municipality and wants to develop its rural areas. Therefore Vaggeryd’s municipality wants to become a cluster region within the equus industries and hence be-come an equine municipality where equestrians can live and run their businesses as well as providing for equine activities and competitions. The reason why it is interesting to create a cluster region is because it comes with benefits for the companies and it helps developing the regional economy (Enright, 1998; Porter, 2000). “Clusters lower barriers to new busi-ness formation that improve the environment for productivity.” (Porter, 1998a). One in-vestment made in 2005 in the direction of becoming an equine municipality was the start up of an Advanced Vocational Education [KY] in the region, named Horse Entrepreneur. All 23 students in this programme, year 2005 and 2006, were interviewed and it turned out that all of them wanted to start up own businesses within 10 years, but only three planned to establish their companies in Vaggeryd. Most of the students planned to move back to their home municipality. Eight students in total could, however imagine themselves estab-lishing in Vaggeryd. The students thought that this kind of education is very important for equestrians who want to start up businesses.
The students believed that Vaggeryd’s municipality will become a good and functional equine municipality and referred to the highway E4 (which runs through the municipality), the race track and the veterinary clinic. More farms with large lands are what the students think the municipality council should invest in to attract equine companies as well as to be-come an equine friendly municipality.
From the cluster analysis a similar result was found. It showed that there is no agglomera-tion in the four investigated industries over Sweden, namely horse breeding, horse compe-titions, managing race tracks and gallops courses and riding educational services and horse rents. This means that the places where the entrepreneurs choose to set up their businesses are less important; hence they can likewise set up in Vaggeryd.
However a trend was expected. The districts where most of the equine businesses in Swe-den take place are rural areas close to populated regions, so called semi-urban areas.
There are no cities in Vaggeryd’s municipality only two towns, Vaggeryd and Skillingaryd. The conclusion drawn is that if Vaggeryd wants to become an equine municipality it must invest (Enright, 1998; Malmberg, 2002). For example creating job opportunities, and build-ing farms on areas with large lands. These investments are needed to attract inhabitants and business people to their municipality before the equine companies can flourish. Invest-ments make this type of clusters attractive (Enright, 1998; Malmberg, 2002).
The cluster data revealed that there are no equine activities in Vaggeryd’s municipality to-day; however it has the possibility to become an equine municipality due to suitable condi-tion, for example land plots with lakes and the closeness to highway E4.
Vaggeryd should focus on facilitating business activities and providing with updated net-works in order for companies to gain from being clustered, according to the cluster theory advocated by von Hippel (1988) and Håkansson (1987). Vaggeryd suits for equine busi-nesses which are trading goods and services with other busibusi-nesses, hence which are not de-pendent on a location close to cities, according to Karlsson (2008) in the field of clustering in smaller regions.
TABLE OF CONTENTS
1
INTRODUCTION & METHOD ... 1
2
THEORETICAL FRAMEWORK ... 3
2.1 MARKET DEMAND FOR CLUSTER REGIONS ... 3
2.2 CLUSTER THEORY ... 5
3
THE HORSE ENTREPRENEURS’ OPINIONS ... 7
3.1 ABOUT THEIR BUSINESSES ... 7
3.2 ABOUT THE ADVANCED VOCATIONAL EDUCATION ... 8
3.3 ABOUT VAGGERYD’S MUNICIPALITIY ... 11
4
ANALYSES ... 13
4.1 QUALITATIVE ANALYSIS ... 13
4.1.1 Two Effects ... 13
4.1.2 The Effects on Society ... 13
4.1.3 The KY’s Influence on the Municipality’s Business World ... 15
4.1.4 What Strengthens the Equine Businesses in Vaggeryd? ... 16
4.1.5 Next Step ... 17
4.1.6 Suggestion ... 18
4.2 QUANTITATIVE ANALYSIS ... 18
4.2.1 Results ... 19
4.2.2 Analysis & Interpretation ... 20
TABLES:
Table 1: Geographical Concentration (G-values) for Sweden. Years 1999 and 2007 ...19 Table 2: Herfindahl Index (H-values) for Sweden. Years 1999 and 2007 ...20 Table 3: Adjusted Agglomeration Index (γ-values) and changes in γ-values for Sweden. Years 1999 and 2007 ...20 Table Appendix 1: The Interviewed People’s Age ...28 Table Appendix 2.1: ∑ si
2
values, a Part of the Geographical Concentration Calculations, for Sweden. Years 1999 and 2007 ...29 Table Appendix 2.2: ∑ xi
2
values, a Part of the Geographical Concentration Calculations, for Sweden. Years 1999 and 2007 ...30 Table Appendix 2.3: Two Industries’ Companies Arranged into Company Sizes. Years 1999 and 2007 ...31 Table Appendix 2.4: Two Industries’ Employees Arranged into Company Sizes. Years 1999 and 2007 ...32 Table Appendix 3: Group Classification needed for the Herfindahl Index ...33
1
INTRODUCTION & METHOD
The equine related industries are clearly growing in Sweden and in the European Union. In Sweden 1999 there were 1837 equus businesses, however in 2007 it had increased to 4639 (Swedish Board of Agriculture [SJV]). The equus industries come with many job opportu-nities which have economic benefits (Erlandsson, 2009). Furthermore, there is a demand for cluster regions within equine industries because clusters develop businesses, build up the rural areas and creates a regional growth (Enright, 1998; Guinet, 1996; Ohlin 1933; Por-ter, 2000). There has been a structural change within the equine industries. Historically horses were used for transportation and farming. Nowadays horses are used for leisure time and for sports. There is a connection between people getting more leisure time and the growing equine industries.
Vaggeryd’s municipality wants to seize the opportunity of these growing industries. The hobby establishments are a large part of these industries, but there is a need for profes-sional equine businesses to make the industries more solid. Therefore Vaggeryd wants to create a cluster region and become an equine municipality where equestrians can live and run their businesses as well as providing for equine activities and competitions. One in-vestment made in 2005 in this direction was the start up of an Advanced Vocational Edu-cation [KY] in their region, named Horse Entrepreneur. The enrollment takes place on a national level and has high entry criteria.
The purpose of this paper is to identify the effects of this education after two years, and an outlook can be made to see if the municipality is suitable for becoming an equine munici-pality or not. This paper is therefore based on interviews with all the students about their business ideas, up until 2007, and what they think of the future of the municipality and the future of the education. Furthermore, it is based on a cluster analysis involving the Herfin-dahl Index, agglomeration index and geographical concentration to find out if municipali-ties in Sweden have any clusters within equine industries. This is interesting because it gives Vaggeryd an idea of their potential to become a cluster region. This study aims to answer the following questions:
• Is Vaggeryd a suitable municipality for equine companies and being a cluster region within equus industries?
• What is missing in Vaggeryd?
• What future investments should the municipality council make?
• Do the students start up their own businesses, and if so, where do they start up these businesses and will they be able to support themselves?
To be able to answer these questions, interviews have been conducted with 23 students1, the Trade and Industry Council’s executive Carl-Gunnar Karlsson, the manager of Fenix Kunskapscentrum Kristina Athlei and a local business counsellor Per-Olof Toftgård. The reason why all students were encouraged to participate was to eliminate skewness and to receive everybody’s opinions. 21 interviews took place on the telephone and two have been face to face at Kreativ Arena. The interviews were conducted in Swedish, and parts of the interviews were translated into English, by the author, for quoting purposes. The students could choose to be anonymous. The data received for the paper, hence for the quantitative research, is obtained from SJV which was used in order to produce the cluster analysis. Data from year 1999 and 2007 was chosen because there was sufficient data related to
these two years and the time span is considered to be satisfactory for detecting changes in agglomerations.
This paper is one of four research papers made in cooperation between Vaggeryd’s Mu-nicipality and Jönköping International Business School.
The delimitation on the qualitative part of the report is what effects the education and the arising companies thereof will have on the municipality, thus other equine companies within the municipality are not included in this part of the study.
Due to the fact that equine businesses might be listed as agricultural companies or animal farms (mainly dairy) there is a statistical data error to take into account. Hence, not all companies where horse activities take place were included. SJV estimated 2004 that 33% of all horses in Sweden were listed under agricultural companies. For example the statistical data excluded the Swedish National Stud placed in Flyinge (Eslöv’s municipality) since nei-ther 1999 nor 2007 have employees recorded nei-there. However, the four main industries which are connected to horses are included in this study, namely: horse breeding, horse competitions, managing race tracks and gallops courses and riding educational services and horse rents. Notice that equine equipment shops and equine healthcare are excluded. This study begins with an explanation of the theoretical framework including the theory of market demand for cluster regions and the definition of cluster theory and the effects of it. Chapter 3 contains excerpts of the interviews and quotations made with the horse entre-preneur students. The subsequent chapter presents two analyses, first the qualitative part which determines the importance of the education and the future outlook for the munici-pality based on the interviews, and the second part being the quantitative part which with a cluster analysis determines the possibility of a successful equine municipality in the area. Chapter five concludes the study.
2
THEORETICAL FRAMEWORK
This chapter will examine the theory of clusters and market demand of cluster regions. Blien, Enright, Giarratani, Hoover, Karlsson, Larsson, Lundvall, Malmberg, Markgren, Nelson, Ohlin, Porter and Törnqvist are well known researchers who have elaborated much in the field of cluster theory. The empirical study for this thesis is based upon a clus-ter analysis derived by Brakman, Garretsen, and van Marrewijk (2001). The analysis investi-gates the industry agglomeration (γ) through geographical and industry concentrations (G and Herfindahl Index (H) respectively).
The theory of market demand is partly derived from the acknowledged microeconomist Varian’s book Intermediate Microeconomics, A Modern Approach (2005). Varian (2005) describes market demand as the aggregated demand of all consumers in a market. One part of mar-ket demand, which is important for this report, is the marmar-ket demand for cluster regions.
2.1 MARKET DEMAND FOR CLUSTER REGIONS
Why is it interesting to create a cluster region? Malmberg (2002) claims that there are two types of clusters, company clusters and geographical clusters. Company clusters indicate a close re-lationship with partner companies and organisations, which does not necessarily be within a region. Geographical clusters on the other hand imply that companies interact with each other locally. However, both cluster types are signified by innovations, networks, informa-tion flow and labour skill. These effects are valuable for the regions where the companies are located in both cases (Malmberg, 2002).
These two cluster types can further be divided into two categories (Porter, 1990). These two are vertical and horizontal clusters. Vertical clusters imply that a whole product chain is present in one region or that the whole product chain has close interactions (no matter where they take action). Horizontal clusters imply that companies have common costu-mers, share same technology, uses same channels, etc. A cluster economy is defined as a region where a specific industry has increased to over its normal value (Blien & Maier, 2008). “They [Clusters] are present in large and small economies, in rural and urban areas, and at several geographic levels (for example nations, states, metropolitan regions and cities).” (Porter, 1998b). According to Porter (2000) a cluster economy comes with benefits. Cluster regions, for example, decrease the risks of transport delays and also prevent hidden costs. Cluster regions contribute with increased innovation and knowledge. Even if companies are rivals there will be information spillovers through informal interactions and contacts due to “people talk”. This happens mainly between companies in the same region (Markgren, 2001). In Porters important work, The competitive Advantage of Nations, (1990) he states the negative effects of cluster economies. High labour costs due to attractive labour force is one drawback. Further there must be a local demand for quality for companies to develop their products and thus increase their global competitive edge. If this local demand lacks, Porter thinks businesses will lose innovation efforts. Blien (2008) said that knowledge leakage, industry spying and poaching of experts (into the cluster from elsewhere) are some of the negative effects. Martin and Sunley (2003) affirmed that cluster policy has become a trend and is seen as a solution for economic problems, but many decision makers rush into applying cluster policy, the decision makers should be more cautious, they said. Martin and Sunley (2003) further stated that not even researchers have agreed upon the definition of clusters, so there is concept confusion.
A major drawback of urban agglomeration is to be found in congestion, which can arise in many different ways, such as limited physical space, limited local resources (such as water for cooling processes), environ-mental pollution (which may require extra investment), and heavy usage of roads, communication channels, and storage facilities.
Brakman, Garretsen, & van Marrewijk, 2001, p. 189
Clusters can arise either from policy interventions and thus be a transplant cluster, or it can arise from nature, and thus be called an organic cluster (Enright, 1998). A combination of the two is also possible, called hybrid cluster (Enright, 1998). “Transplant strategies can help develop a regional economy rather quickly, but are limited to the investments available for attraction, are subject to imitation and destructive competition, and face the risk that poor-ly embedded facilities will eventualpoor-ly close.” (Enright, 1998).
Local suppliers, customers and society demand for cluster economies. Ohlin (1933) de-clared that local suppliers and customers will interact where there is specialised labour skills and diversification in order to become economies of scale. Clusters are dependent on la-bour force and to create a geographical cluster the industrial politicians need to provide at-tractive opportunities locally with the aim of attracting labour force (Malmberg, 2002). With the demand of local economic growth in society, R&D and educational institutions are used to develop the innovation systems (Lundvall, 1992; Nelson, 1993). With increased innovation businesses will utilise their resources in a more efficient way (Malmberg, 2002), and hence become more competitive. The most innovative companies are the ones with strongest cooperation globally, showed in an empirical analysis made by Larsson (1998). Dissimilar companies or industries located in clusters have also shown economic benefits when interacting. Malmberg (2002) states that no matter the size of the business, if they are service or goods businesses, or if they are high or low tech, they can still benefit from inte-racting.
Giarratani and Hoover (1971) stress the importance of clusters to attract customers. For example, high fashion shops are often seen in shopping centres or agglomerated shopping districts. This idea is based on bringing similar products to one place to facilitate custom-ers’ decisions.
Törnqvist (1996) acknowledged that even though the information technology improves steadily, the personal contact between people is still very important when it comes to com-plicated matters. Therefore geographical closeness is seen as an advantage and lays the foundation for innovation and knowledge.
Clusters increase productivity vis-à-vis outsourcing or vertical integration through improving access to specialized inputs and information, facilitat-ing complementarities among cluster participants, and improvfacilitat-ing incen-tives and performance measurement. More important, in many cases, is the role of clusters in improving the rate and success of innovation. Fi-nally, clusters lower barriers to new business formation that improve the environment for productivity. While traditional agglomeration econo-mies centered on cost minimization, cluster advantages rest on informa-tion, transactions costs, complementarities, and incentives as well as “public” goods that result from both public and private investments.
Porter, 1998a, p. 10
2.2 CLUSTER THEORY
In this report the Adjusted Agglomeration Index, derived by Brakman, Garretsen, and van Marrewijk (2001), is used which measures the density of clusters. The index is useful when detecting changes in agglomeration. The formulas related to the Adjusted Agglomeration Index are the Raw Measure of Geographical Concentration (G) and the Industry Concen-tration (also called Herfindahl Index, H).
Raw Measure of Geographical Concentration (G) formula:
Raw Measure of Geographical Concentration (G) which determines the level of geographi-cal concentration in relation to employment and contains of two variables Si and Xi. Si is defined as each region’s investigated industry’s employment divided by total employment of that investigated industry in all regions. Xi is defined as all employment in all industries in each specific region divided by the total employment in all regions. M is the number of re-gions.
The closer Si goes to 0, the less of that industry is located in the investigated region. The close all Si’s are to 0 the more the employment is equally spread throughout all regions. The closer Si goes to 1 the larger market share that region has of that industry. 0 ≤ si
2 ≤ 1. The closer Xi is to 0, the less of the work force is located in that region. The closer all Xi’s are to 0 the more the employment is equally spread throughout all regions. The closer Xi is to 1 the more concentrated the work force is. 0 ≤ xi
Thus, the Geographical Concentration can take on values of: -∞ ≤ G ≤ 1.
G = -∞ implies that there is no activity of an industry in an investigated region but instead all employment in all regions is concentrated to one region.
G = 1 implies that one region has whole of the market share of one industry at the same time as all employment in all regions are equally spread. (This can be true since clearly all employment does not necessarily depend on one industry.)
Industry Concentration, formula:
Above the Industry Concentration formula is showing. Zj is defined as a group consisting of a defined company size measured in numbers of employees 2 divided by the total num-ber of employees in all regions in the investigated industry. N is the numnum-ber of company sizes.
H can take on values of: 0 ≤ H ≤ 1.
H = 0 implies that there are no companies involved within the investigated industry in none of the regions.
H = 1 implies that one particular company size is solely dominating the industry through-out all the regions.
When subtracting of Industry Concentration from the Raw Measure of Geographical Con-centration and dividing it with 1 minus the Industry ConCon-centration, the Adjusted Agglome-ration Index is received. It is a useful index when detecting changes in agglomeAgglome-ration. Adjusted Agglomeration Index, formula:
If γ is close to 1 it implies that the industry has agglomeration, if γ is close to 0 or is nega-tive the industry is spread.
The theory states that high tech industries do not depend on location, thus having a γ-value close to 0 or even a negative value. Vice versa the theory states that geographically concen-trated industries tend to be low tech industries, such as extraction of salt, hence they are concentrated to the seashore and have γ-values close to 1 (Brakman, Garretsen, & van Marrewijk, 2001).
Furthermore finding out the change of γ over time shows a tendency of the investigated industries. Do they move towards concentration or spreading? A decrease of the γ-value represents a trend of spreading of the industry. An increase of the γ-value means that the industry goes towards a more agglomerated economy.
3
THE HORSE ENTREPRENEURS’ OPINIONS
In this chapter the students’ answers on the interview questions will be examined. The in-terviews were carried out in spring 2007.
Of all 23 students interviewed 21 students said they wanted to finish the education and all were convinced this education would give them a larger chance to succeed in their busi-nesses than other horse entrepreneurs who do not have a similar education. All 23 want to materialise their business ideas within 10 years.
3.1 ABOUT THEIR BUSINESSES
All the students are women between the ages of 20 to 433. 18 of the students have previ-ously had jobs within the equine industries, mostly as groomers but also as horse breakers, masseurs, trainers and instructors. The students’ high school education was primarily the Natural Resource Programme. Their business ideas are diversified due to their various in-terests and the education supports them on an individual basis. Their ideas can nonetheless be divided into three groups: horse, person or material focused groups. Examples can be: horse breeding, horse tourism, activities for disabled people and equipment shops.
In order to stay in business one factor is to have a unique idea. Therefore an interview question was: What makes your business idea special? They answered: Quality, the customers
in first place, exclusivity, complete joy experience and companies with niches. The answers that the stu-dents gave regarding quality and the customers in first place were expected, but are also es-sential to be able to run a small business. However running a business is also about having
a suitable character to run a business (Burns & Dewhurst, 1996)4. Therefore the following questions were raised: What entrepreneurial qualities do you have and what qualities would you like to have? They had qualities such as: Persistence, creativity, full of ideas, patience, do not give
up in first place and noting is impossible. And the qualities they wanted to possess were: To have
higher stress tolerance, not delay what can be done today and to be able to take more criticism.
For the students to be doing well it is significant that they believe in their product and have realistic, but bright future estimation (Burns & Dewhurst, 1996). When asked what they expected to accomplish within 10 years, all the students wanted to have established their businesses and 18 of them expected to earn enough profits to be able to rely solely on their businesses. All of them want to have colleagues or cooperating partners and they plan businesses from 1 to 10 employees, hence small companies.
The place of establishment is a crucial question for Vaggeryd’s municipality. Companies are most likely to bring highest revenues to their local municipality and the place can of course be a central factor for the rural areas, since where the entrepreneurs settle down and start their businesses contributes to the development of those rural areas. Hence, the students who settle down in Vaggeryd’s municipality are hopefully the ones who can contribute to the development of Vaggeryd’s municipality and bring the highest revenues thither.
From the interviews it was evident that three students plan to live in Vaggeryd’s municipal-ity, seven in Jönköping’s county, three plan to live outside Jönköping’s county and three
3 Please see Appendix 1 about the students’ age division.
4 Burns and Dewhurst (1996) say that entrepreneurs often are characterised by: Doers, “sweat”,
overextend-ing themselves, venturoverextend-ing out on their own, style and grace. As well as the weak characteristics of beoverextend-ing control freaks and quirks.
students have not decided yet where they want to live in the future. 17 students want to move back to their home municipalities when they have graduated and run their businesses from there.
Regarding when the students plan to start up their businesses, the answers were much af-firmative. Of the 23 interviewed students, seven have already started up their businesses, seven will start up within a year and the remaining 9 want to start companies in the future. This is a positive result since the idea with the entrepreneurial education is to form equine businesses. These numbers can be compared to other KY educations’ where 80% of all participants got employed after their education (Värnamo Nyheter & Jönköpings-Posten, 2005, p.5).
The 9 mentioned people who want to start companies in the future are a bit unsure when this will happen. These 9 want to start off bit by bit with the company as a part time occu-pation. One of these students can also imagine herself working as a harness race trainer, in-stead of being self employed.
A long term goal is of course to become sustainable economically and 18 plan to support themselves solely through their businesses which they are developing through this horse entrepreneurial education.
Another goal they said is to keep in touch with their social contacts and networks to be able to find out if new opportunities arise, to deepen the equine related knowledge and to be able to rationalise the company. Keeping contacts and gaining new knowledge is impor-tant when it comes to stand the market and avoiding bankruptcy (von Hippel, 1988; Håkansson, 1987). The students are creating an internet page where they can ask questions amongst each other and give tips to one another regarding their businesses. With such a network, all businesses have a greater chance to survive.
A student comments the class mates’ knowledge and helpfulness: “I get new ideas from my class mates… We have high diversity of horse knowledge; therefore there is always some-one I can ask for help.” (Student 1, personal communication, 20075). Another student comments on her goals for her company: “My goal is to have activities which are suitable for children and disabled people. Chariot driving, part-time tourist activities, and maybe some breeding and taming colts... my goal is to support myself through my business.” (Stu-dent 2, personal communication, 2007).
3.2 ABOUT THE ADVANCED VOCATIONAL EDUCATION
The students think the education gives a good base to stand on as future entrepreneurs and they think that the education has opened up new opportunities for them. 18 students have in the interviews stated that the education actively has developed their business ideas. Stu-dents would like to receive more support from the education’s management when it comes to starting up their companies. Below are some quotes about what the students think about the education. “I believe it makes a difference to have taken the education, I have learnt ex-tremely much about enterprising, I enrolled in the education with no prior knowledge but now I can a lot compared to earlier. I have learnt a lot.” (Student 3, personal communica-tion, 2007). “I would have probably continued to work at Lidl, but I would not have en-joyed life as I do now, this gives new possibilities and opens up doors.” (Student 4, per-sonal communication, 2007). “...the education addresses somewhat larger companies,
maybe with 50 employees, but most of us (the students) are sole proprietors.” (Student 5, personal communication, 2007).
The following interview question was if the education has satisfied their expectations or not. The students’ opinions differ about it. The education has generally satisfied the stu-dents’ expectations concerning the quality of the courses offered, but there were several students who had higher expectations about the organisation of the education. The ex-cerpts below give an understanding of the varied opinions among the students. “No not really. I thought it would have higher standards. I hoped it would have been better organ-ised. I thought I would gain more from my fellow students.” (Student 6, personal commu-nication, 2007). “Yes, to a certain extent, but to a certain extent not. In the beginning I was only positive. The economic courses where all excellent the first term. Then there was a term which was not as good. The contents were good; it was more the structure of the courses which were inadequate. It felt a bit sloppy, so to speak.” (Student 7, personal communication, 2007). “Not all but some. I would have liked more assistance with starting up my company. Because the education is to great help if you already have a business, run-ning it and developing it. But it lacks so far with hands on help with our start ups.” (Stu-dent 8, personal communication, 2007). “Yes, I suppose it has. I did not really have any expectations. I do not think I dared to hope too much. But for sure, it has so far been very good. Of course there might be some flaws but nothing I can come up with right now.” (Student 9, personal communication, 2007). “Yes, I think so. I have learnt the contents in the courses. Much of that information I did not know before-hand.” (Student 10, personal communication, 2007).
When the students responded to what advantages the education brings them, the main findings were that the education develops their business ideas, gives access to business con-tacts (both formal and informal), gives them a certification and legitimation and promotes legal establishment. These factors are what the students declare distinguish them from other horse entrepreneurs who do not have a similar education. Below are elaborations on these factors.
Firstly, the importance of the business ideas’ development will be examined. 18 students announced that the education helped to develop their business ideas. Three of them pro-claim that the education has helped them to come up with a business idea. These three people’s ideas are expressed below.
1. Student 11’s idea to launch a website for equine companies arose from a conversa-tion with programme manager Carola Sedin6, who said that there currently was no such website available.
2. Student 5 got her idea when attending a lecture held by Ingvar Fredriksson, which the education had arranged for during the event Hästens Dag7.
3. Student 12 had a vision of selling accessories for lapdogs and for other small dogs, but could not come up with how it should be made profitable. She then got an idea from Caroline Wigren8 to sell her products as a shelf to already existing pet shops.
6 Programme manager and contact person for Advanced Vocational Education in Vaggeryd, Horse
entrepre-neur.
7 A yearly upcoming event located at the Vaggeryd race track, involving seminars, activities and meetings. 8 A former teacher.
Secondly, business contacts received with help from the education will now be looked into. This help has been valuable for the students and several of them have mentioned specific contacts they have received from people involved at the school, as well as contacts received from their internships called “Lärande I Arbete” 9
[LIA], which may give the students great opportunities in their future working life. An example is Student 5, whose idea is to have loose housing for colts, mainly imported horses from the Netherlands. She encountered this kind of horse on her LIA and she also got the opportunity to travel with her supervisor to the Netherlands and meet local breeders. This gave her valuable contacts for the future. Another example is Student 13 who got in touch with a former student at the school who has contacts within India’s manufacturing, which suits Student 13 perfectly since she wants to sell equine products, mainly made of fabrics.
In other words, the students commend the education’s ability to help them to tie valuable contacts. Each and every one of them agreed that the education expands their individual network. They also agreed upon that they have each other as important contacts, and some want to do business with their classmates and continuing to cooperate.
Thirdly, certification and promoting legal establishment is a strong point in educational programs such as this one, because there is an apprehension that quite a few equine related businesses are somewhat illegal on the market, where services are exchanged, instead of proper payments (taxable activities). This of course is in an upscaled manner illegal. Where a significant amount of illegal activities are present they will affect the local region nega-tively (Öberg, 2005). These illegal activities are an incentive to conduct an education such as this KY education in Vaggeryd in order to create legal and certified equine businesses. The students consider that the education is working in the right direction concerning pre-venting illegal equine businesses, since the students now complement their knowledge within the equine field with knowledge in running a business. They have said that many of them have sufficient equestrian knowledge, but far from all of them have knowledge in running a business. They said that they learnt professional skills that they can make use of in their working life.
It is when a business is legal it can support society the most, that is why it is so significant that the education points out the importance of legal equine businesses and support them in the process, and hence also support the business world regarding the equine industries. Two students explain why the education is valuable for them. “...I believe it is a good edu-cation if one wants to start up a business, as well as if one wants to penetrate the [equine
]
sector because one learns accountancy and how to promote ones business.” (Student 14, personal communication, 2007). “... to show my customers that I have a suitable education is very valuable for me...” (Student 2, personal communication, 2007).
So far the education’s situation has been examined. Now the students got to answer what they think of the outlook of the KY education. According to the students, the future pros-pect can be both good and bad. The students experience that the education has “children's disease”. They mean that since the education is new it brings with it issues which did not appear in theory, but became visible in real life. Therefore it has been difficult to forecast them and do something about them. An example of children's disease has been delay of es-sential information concerning the students. The students agree that the idea behind this education is good. Student 8 believes that within 10 years the education will have higher competition.
They said that the education’s managing team gives good feedback and encourages busi-ness ideas, but wishes that the team should listen more to the students solutions regarding the quality of the education. They thought that would be very important for the education when considering its future. Below are some constructive criticisms from a student.
Yes, they should see us more as customers than students, since the edu-cation profits from having us as students. And they win on if we give them good rumours. Yes, and they win on having students who do well after the education. So it should be more in their interest to listen to us. That is my opinion.
Student 15, personal communication, 2007 Some improvements she would want to see in the future are the following:
I have been a bit unsure if I really should dare to start up an own com-pany, because it is a big step. And if I then trough this education as well could get help with the start up, which we today do not get, it would be very good. ’I study an education, I get help with it, I study two years and after that I have my company up and running with professional help’. That would have been perfect!
Student 15, personal communication, 2007
Lastly the students got to answer if they would recommend the education to their friends, in order to evaluate if they are overall satisfied with the education or not. 13 students could recommend the education to their friends. Many of them added that it would depend on whether the friend is interested in starting up a company and whether they were interested in horses. A couple of students said they would not recommend the education to their friends based on how the education looks today. They meant that an improvement of the education must happen before they would promote the school. The remaining students said they could not imagine recommending the education to their friends.
3.3 ABOUT VAGGERYD’S MUNICIPALITIY
Many of the students think that Vaggeryd’s municipality is a cozy municipality which is suitable for horses and its location is advantageous since it is next to highway E4. They ap-preciate the yearly event Hästens Dag, which includes interesting shows, seminars and the possibility to meet a great variety of equestrians. At the same time others say that Vaggeryd is too far from other large horse countries in Europe, in contrast to Skåne municipality, which is located in south of Sweden. The longer distance results in extra costs regarding transportation of horses as well as extra time and more planning.
What is missing in Vaggeryd? The eight students who answered that they could imagine themselves moving to Vaggeryd got to answer this question. Many were already satisfied with the municipality as it is, but others had further requirements. “…if I would find the farm I want to have…” (Student 15, personal communication, 2007). “If only the farmers would lease parts of their land…” (Student 12, personal communication, 2007). “…[If Vaggeryd] builds a better riding arena, eventing course, and such, then I believe it will be-come a big equine centre and when equestrians who seriously have considered to establish in Vaggeryd will do that it will create job opportunities.” (Student 4, personal communica-tion, 2007).
Therefore it is crucial for the municipality council to actively participate in attracting horse entrepreneurs and horse interested people to have a bright future of being an equine muni-cipality.
Further the students elaborate on the future of the municipality. The students said that they think Vaggeryd’s future as an equine municipality looks bright because of the investing made at the race track, the yearly event Hästens Dag and the location along the highway E4. The students said that the municipality has a fair chance of becoming a good equine municipality and stress that the race track is a good beginning, even though it yet is not at its full capacity. They look forward to the planned veterinary clinic and to other invest-ments too. Eva says it is positive that the municipality dares to invest. Investinvest-ments make transplant clusters attractive (Enright, 1998). The overall impression is that the students think Vaggeryd has good potential as an equine municipality.
4
ANALYSES
This section firstly contains a qualitative analysis of the horse entrepreneurs’ opinions and the second section is a presentation of a quantitative analysis. For the quantitative analysis the data was received from Statistics Sweden [SCB] and SJV.
4.1 QUALITATIVE ANALYSIS
In this subchapter the answers from the interviews are qualitatively analysed. The analysis is drawn upon how the students themselves expect their future to be, as well as how they be-lieve that the education’s and the municipality’s future will be.
4.1.1 Two Effects
There are two noticeable effects of the KY on the local agricultural development. The first is that the education inspires students and graduates to establish in Vaggeryd, which could enhance profits to Vaggeryd if the students’ newly established companies will be located in the municipality (Blien & Maier, 2008). The second is that the education can offer LIA-internships within the municipality, where the students have various tasks (one being to perform a contemporary social and environmental analysis, as to develop their LIA-company) which hopefully develops Vaggeryd’s rural areas in the long run. Hence, because this education is run in the municipality, the municipality can look forward to these effects.
4.1.2 The Effects on Society
In Vaggeryd’s municipality there are 13 000 inhabitants living (Vaggeryd Municipality Council, 2009) and there were 663 companies in 2008 (SCB, 2010). The municipality stretches over 830 square kilometers. In Jönköping’s county there was 12 300 horses and 2 500 equus establishments in 2004 (SJV, SCB)10. Where educations are located there is seen regional development (Cassel, 2008). Running a horse entrepreneurial education in Vaggeryd is therefore likely to have effects on the society. The education and the students who move to Vaggeryd are so far an important fraction of the expansion of the equine municipality. After the education 17 students answered that they wanted to move back to their home municipalities. All students plan to start up businesses within 10 years. Where they decide to set up will be valuable for that municipality since these horse entrepreneurs have both knowledge in equine industries and in running businesses. The 13 horse oriented companies would contribute to competition between breeding and competitions with horses and may contribute to make their region more attractive, for example for advanced trainers and coaches. The seven personrelated companies may improve people’s fitness by the exercises and may contribute to personal development for disabled people (Bertoti, 1988) in the region where they start up their businesses. The tourist companies and the re-habilitation centre want to provide active hobbies and relaxation. The three product oriented companies want to provide equestrians with equipments, pet dogs with accessories and want to seize the demand for team clothing. These effects are those which the students expect their companies to supply.
From chapter 3.1, the section about establishment, one can notice two interesting results. Firstly that eight equine companies might establish in Vaggeryd’s municipality, and second-ly, that there is a strong tendency that graduates move back to their home municipalities. This second finding has a depressing effect on Vaggeryd’s development. If development
should increase in larger scales, Vaggeryd needs to become more attractive, claims the eight who can consider living in Vaggeryd. (Please see Chap. 3.3 about what is missing in Vag-geryd).
Other effects related to having a new education in an area are newly created job opportuni-ties at the school, and since the employees and the students use train services, restaurants, shops, and so forth, they indirectly have a positive effect on Vaggeryd’s infrastructure.11 The education’s effects on the local economy within the equine industries are as follows. The education strengthens the business contacts and networks amongst equine businesses both locally and nationally. This they do through developing the students’ business ideas, seeing new opportunities on the equine market, improving the students’ competence within hippology and introducing legal equine businesses into the market as well as non-students trough Hästens Dag. The education has given options for students in order to consider whether it would be profitable to establish in Vaggeryd or not. The education becomes a cluster of business ideas which in turn results in competition within the local equine indus-try which results in effectivity and development (Malmberg, 2002).
Each individual student also has an effect on Vaggeryd’s municipality. During the educa-tion the individuals are largely involved in the municipality, through consumpeduca-tion, com-muting or by living there. If the students own horse/s and bring them to Vaggeryd they need housing, feed, bedding and so forth, which have their effects on the municipality through consumption and presence.
The effect on the society and the locals will be of importance, such as the effects on the disabled people when they participate in handicap activities. Student 2 says her passion for handicap activities grew when she worked as a personal assistant and noticed that direct contact with animals had positive outcomes for children. If it is true that these individuals would benefit from her activities then her municipality has much to benefit.
The municipality can only make a profit from the economic activities from the companies either located in Vaggeryd, have costumers from Vaggeryd or have cooperation with other companies located within the municipality.
Therefore here are the eight students presented who have answered that they could im-agine themselves setting up in Vaggeryd’s municipality. They have these business ideas;
• Retailing trendy accessories at horse shows, competitions and on the Internet as well as lodging for horses and trading horses.
• Retailing rider’s equipment/club clothes for i.e. riding clubs.
• Importing competition horses, helping customers find suitable horses, have educa-tional courses in the arena, plus some breeding and training of horses (but this on hobby level).
• Keep-fit activities and massage for horses. • Retailing equipment mainly for lapdogs.
• Breeding big, strong cold blooded horses for forestry work and driving. • Breeding western horses and train Natural Horsemanship.
• Working as an A-trainer in trotting.
11 For quantitative information about Vaggeryd’s infrastructure please see David Palmér’s report: Mätbar
The first three ideas belong to students already situated in the municipality. The two first affect the local area through providing locals with equipment and accessories and may spare the customers the travel to Jönköping where the nearest equine equipment shop “Charlies Häst & Hund” is located. The first idea wants to meet the demand for fashion equipment and the second wants to sell quality products where high standards are required from the suppliers. The third aims to provide activities in her arena in Skillingaryd as well as helping riders to find a perfect horse.
If the other five decide to start up in Vaggeryd they would also affect the municipality. These five would give mostly individual effects. The keep-fit company would give a posi-tive effect on the horse, but also for the riders/drivers who would worry less for the horse and can keep veterinary costs low since these kinds of treatments aim to detect injuries as early as possible. Accessories for horses and lapdogs give the owner the opportunity to spoil their animal. Forestry work done by strong workhorses may often facilitate the far-mers’ work and at the same time leave a smaller carbon footprint than a machine/tractor would do. The student who plans to sell Natural Horsemanship-trained horses believes that people want to purchase well behaving horses and the future A-trainer wants to focus on allround training for accomplishing best competition results.
4.1.3 The KY’s Influence on the Municipality’s Business World
The fact that a horse entrepreneurial education is running in the municipality influences the development of equine businesses and may make them efficient through the LIA coopera-tions. The education’s purpose and goal is to deliver competitive companies which are strong enough to support themselves. The students claim it is very important with this kind of education since they think many existing equine businesses which lack entrepreneurial education are not quite as competitive.
How can the KY support the development of the rural area’s business world? If a larger number of the farms available in the municipality are used with a business purpose then the rural area business world may develop even faster. The KY education wants to seize the opportunity that the number of equine farms is increasing in Sweden whilst the number of cattle farms is diminishing. In Sweden 1999 there were 1837 equus businesses, however in 2007 it had increased to 4639 (SJV). For year 2004 there were 7072 dairy companies in Sweden, however in 2007 it had decreased to 5465 companies (Swedish Dairy Association). Therefore there exists a local consultancy of residences and farms for sale by the manage-ment consult Toftgård, who has knowledge about the municipality. “The students get to know if a farm is for sale before it even reaches the market” said Toftgård (2007) in an in-terview.
For this equine municipality to function two groups have been observed. The first being detecting what equus companies are missing in the municipality and the second being the students’ practical necessities for working businesses (Chap. 3.3). Therefore it is important to support these two groups. The education can support the business world in the munici-pality by providing the students with an individual education and guidance. The education can further point out business ideas which would gain the municipality if a student started a company with that idea. The municipality council ought to continue to build up trust and cooperation within companies through networks and events. Development of networks re-sults in regional growth (Guinet, 1996). If the cooperation between companies is done effi-ciently, with i.e. policy intervention, it may result that sooner or later the gap between a po-tential and a prosperous cluster will be filled (Felsenstein & Taylor, 2001), in Vaggeryds case this would mean the gap between a potential and a prosperous equine municipality.
This became clear from the interviews. For example that feed producers would need prac-tical guidance from the education whilst a manager for a veterinary clinic would need theo-retical support. The students declared the importance of networks, which the education and municipality council may provide for.
Promotion of Vaggeryd as an equine municipality reaching out to equestrians nationally could possibly attract equus businesses to the region. The KY and Vaggeryd race track are two very important components for the business activity within the municipality regarding public awareness. By working actively to get public attention the education supports the equine companies in Vaggeryd.
Another important component is counselling. Kreativ Arena is part of Science Park Jönköping which provide people in Jönköping’s county counselling and opportunities of establishments. The horse entrepreneurs’ business ideas should also have the opportunity to go through Business Incubator and Business Growth, maybe in a horse specialised way before the company is ready to stand on its own.
Another question is how the KY can strengthen the growth of Vaggeryd’s business world. The education not only focuses on people with business ideas, but also on already estab-lished equine businesses, since the education believes that even these have much left to learn. Vaggeryd’s business life may with more effective and more thoroughly managed equine businesses expect an upturn in its economy.
The KY generates not only job opportunities, but also a hobby for equestrians i.e. through riding schools. According to Eriksson (2007) having an activity gives one better health both physically and psychologically and one can perform better. Another result Eriksson’s study showed is that when a person is healthy he or she will, which strengthen the business world through his or her daily work.
4.1.4 What Strengthens the Equine Businesses in Vaggeryd?
Both students and the municipality council share the view that when equine companies and equestrians establish in Vaggeryd they will trigger further establishments of other compa-nies in Vaggeryd. Increasing the number of yearly events and activities would spread the news of Vaggeryd being an equine municipality. The existing race track strengthens and at-tracts more equine businesses into Vaggeryd according to the theory advocated by Giarra-tani and Hoover (1971). The race track’s goal is to have one trotting race a week and build an equine centre around the race track with veterinary clinic, retail stores and service com-panies. Larger competition meetings would create demand for bed and box12 and horse fields. Horse boxes already exist at the race track, which are available for rent during com-petitions.
What more is needed in Vaggeryd? According to Athlei (2007), manager for Fenix Kuns-kapscentrum, more farriers, trainers, professional equine businesses, transporters, feed producers and a veterinary clinic are needed locally. Feed and straw only exist regionally today. Further Athlei says that Vaggeryd has the advantage of being located next to the E4-highway which is widely used for horse transports which are on their way north, and this, she claims, creates a demand for pauses with fields and camping areas/bed and box so that drivers and horses can get some rest. She also has an idea of combining conferences at i.e. manor houses, with riding tours within the municipality.
Residences with fields are needed. The municipality council says that there are plenty of sites; one only needs to build on them. The council wishes to see a structural change from farming and cattle fields towards horse fields in the rural areas. According to the municipal board’s chairman Dahlqvist, the house prices are relatively low within the municipality as of 2005 in comparison to two neighbour municipalities, Jönköping and Värnamo municipali-ty. The goal is to build around 50 new houses on a yearly basis. Student 16 (personal com-munication, 2007) says that one horse generally needs one hectare of field.
Relating to the interviews it became clear that an equine centre where equine products are sold and where equestrians meet, for example at the race track in Vaggeryd, is expected to be required in the future. Partly because it is already difficult to find suitable premises in Vaggeryd, which gives an incentive to build an equine centre, and partly because customers would benefit from all products being in one place and hence would attract many custom-ers (Giarratani & Hoover, 1971), suggested Student 13 (pcustom-ersonal communication, 2007). A centre would, according to the economic gravity model, have larger turnover than separate stores (Giarratani & Hoover, 1971).
4.1.5 Next Step
The underlying source for why the students move back to their home municipalities is be-cause the majority of them are firmly rooted there bebe-cause of family and friends they said. People want a sense of security where they live. In order for one to leave family and friends one needs probably an equally good or better option. To be rooted in a foreign place often takes time, sometimes longer than 2 years, thus longer than this education. To be able to keep the students, who can imagine themselves living in Vaggeryd’s municipality, the muni-cipality needs to invest in giving the graduates new opportunities within the munimuni-cipality which are better than the options they would get at home.
Given these effects stated above, one can ask how the education, in cooperation with the municipality, could fulfill the requirements which the students who stated that they could consider moving to the municipality, have raised in order for them to deliberately think this option over. What can Vaggeryd’s municipality and the KY do for the graduates? With the purpose of attracting rural based companies the municipality could build farmhouses, nego-tiate with the existing farmers to let the entrepreneurs rent some land for the purpose of having horse fields and to make sure that riders and drivers get suitable training opportuni-ties and sufficient fields. Student 3 (personal communication, 2007) claimed that there were farms for sale, but they did not have enough land connected to the property. Student 17 said there were two riding clubs, but small chances for private training. There are not any elite ranked trainers (Swedish Equestrian Federation, 2007) and not so many elite ranked competitors, there are mostly amateurs here, said Athlei (2007). There is also demand for a larger scaled inside arena, according to several students.
Regarding the enrollment, the education’s managing team would enjoy if more men would want to enroll in the education and the students suggest that representatives should visit more upper secondary schools for example agricultural schools, in order to enroll new stu-dents. One student thought this education would fit for students who soon will take over their family’s farm. They often already have the company which they will take over and are already rooted somewhere with contacts and equine knowledge. Further the education’s managing team says that they do not want to force the students to establish in Vaggeryd since it applies a national enrollment system, but it would be a bonus if they did.
4.1.6 Suggestion
As Student 8 and Student 15 said in chapter 3.2, it would be an idea to combine the educa-tion with supervisory help to start up the companies and to get help continuously to run the business, thus follow up the establishing process until the company is up and running, and not just giving directions. A suggestion would be to improve the education so that it gives both a degree and job opportunities such as renting farms with sufficient land, which the education together with the municipality makes possible.
The municipality can for example offer the graduating students further cooperation for ex-ample renting farms or premises to students instead of the students buying their own, or the municipality could simply subsidise part of the costs through EU-support LEADER, which is a rural structural reform made by the European Union13. With agricultural support the students will be able to build up their business on a cheaper basis as well as their local network, which would then be in Vaggeryd. If, let say, the tenancy agreement would be for five years, then the local network can expand and the company will become more and more rooted. And after five years the students might have the economy to buy an own farm or premise. Since the graduate during this time lives in the municipality she or he can get support and consultation from the education’s managing team, if the graduate wants this.
This offer should concern students who yet have not decided where they want to live in the future, and the students who can imagine themselves living and working in Vaggeryd. This solution would certainly entail that the graduates would not be dependent on a home loan, which would give them larger span of financing for their business ideas instead. Then the municipality can hope that the graduates do not get an equally good or better option and move away from Vaggeryd.
4.2 QUANTITATIVE ANALYSIS
An analysis of regional agglomeration drawn from the theory presented in chapter 2.1 has been made for four industries for both year 1999 and 2007 across Swedish regions. These four being horse breeding14, managing race tracks and gallops courses15, horse competi-tions16 and riding educational services and horse rents17. Year 1999 and 2007 was chosen because there was sufficient data related to these two years and the time span is considered to be satisfactory for detecting changes in agglomerations. The data was received from SJV and SCB.
13 LEADER: Focuses on improving the competitiveness of the agricultural and forestry sector; the
environ-ment and the countryside; and the quality of life in rural areas as well as encouraging diversification of the rural economy.
14 The Swedish name being: 01.228 Hästuppfödning m.m.
15 The Swedish name being: 92.614 Drift av trav- och galoppbanor. 16 The Swedish name being: 92.622 Tävling med hästar.
4.2.1 Results18
Raw Measure of Geographical Concentration, formula:
TABLE 1: GEOGRAPHICAL CONCENTRATION (G-VALUES) FOR SWEDEN. YEARS
1999 AND 2007.
Industry 1999 2007 Change
Horse breeding 0,220961716 0,039051763 -0,181909953
Managing race tracks and gallops courses 0,057328664 0,033620708 -0,023707956
Horse competitions 0,024783226 -0,005281395 -0,030064621
Riding educational services and horse rents 0,041178952 -0,013877679 -0,055056631
Source: SJV
Si=1 for Horse breeding, denotes the number of employees within the first municipality’s horse breeding industry divided by the total numbers of employees within horse breeding in Sweden.
Xi=1 denotes all employment in all industries in the first municipality divided by the total employment in Sweden.
These calculations are made for each municipality in Sweden for the above industries, for both 1999 and 2007.
M is the number of regions (here 290 Swedish municipalities).
The calculations for these industries result in eight G-values. Glancing at the Change col-umn it is obvious that the geographical concentration is decreasing. This means that all four equine industries in Sweden are declining.
Industry Concentration, formula:
For the estimation of the industry concentration the Herfindahl Index (H) is determined. From SCB information for numbers of companies and numbers of employees is received. Unfortunately the ideal data was not available. Until now statistics with finest industry data have been used, with SNI-codes of five numbers. SCB could only provide with SNI-codes of two numbers for this statistical analysis. The two necessary industries SCB provided for are Agriculture and service companies for the agriculture and Facilities for recreation,
ture and sport. The horse breeding industry is a fraction of Agriculture and service compa-nies for the agriculture. Managing race tracks and gallops courses, Horse competitions and Riding educational services and horse rents are fractions of Facilities for recreation, culture and sport, and consequently these three industries have the same Herfindahl Indices as shown below. The mentioned error is evaluated as negligible since the industries are still the investigated industries but with additional sub-industries involved.
TABLE 2:HERFINDAHL INDEX (H-VALUES) FOR SWEDEN.YEARS 1999 AND 2007.
Industry 1999 2007 Change
Horse breeding: 0,000920095 0,000841646 -0,000078449
Managing race tracks and gallops courses: 0,004351757 0,003460478 -0,000891279
Horse competitions: 0,004351757 0,003460478 -0,000891279
Riding educational services and horse rents: 0,004351757 0,003460478 -0,000891279
Source: SCB
Adjusted Agglomeration Index, formula:
When the raw measure of geographical concentrations (G) and the industry concentrations (H) are calculated the industry agglomeration (γ) is easily computed.With the purpose of detecting changes in industry agglomeration the value of 1999 is subtracted from the γ-value of 2007. There are negative trends in all industries concerning agglomeration in Swe-den meaning that all four industries go towards spreading nationally.
TABLE 3: ADJUSTED AGGLOMERATION INDEX (γ-VALUES) AND CHANGES IN γ-VALUES FOR SWEDEN.YEARS 1999 AND 2007.
Industry 1999 2007 Change in γ
Horse breeding 0,220244 0,038242 -0,182
Managing race tracks and gallops courses 0,053208 0,030265 -0,02294
Horse competitions 0,020521 -0,00877 -0,02929
Riding educational services and horse rents 0,036988 -0,0174 -0,05439
Source: SJV and SCB
4.2.2 Analysis & Interpretation
For the γ-values which are close to 0 (all except for industry horse breeding in year 1999, 0,220244), implies that neither the horse breeding, (in year 2007), managing race tracks and gallops courses, horse competitions, nor riding educational services and horse rents, have
agglomeration in Sweden. This means that the places where the companies set up are less important, hence suitable for Vaggeryd.
However horse breeding had agglomeration in year 1999. These municipalities where Upp-lands-Väsby, Vallentuna, Österåker, Värmdö and Järfälla. That the horse breeding industry had cluster in 1999 is interpreted as it being historically an “older” industry, compared to the three other industries, according to the theory that states that geographically concen-trated industries tend to be low tech industries (Brakman, Garretsen, & van Marrewijk, 2001). For example the old industry of extracting salt, hence is concentrated to the sea-shore (Brakman, Garretsen, & van Marrewijk, 2001). Since the horse breeding industry had relatively high concentration in geography in 1999 it can be assumed that it was a low tech industry, and the other three industries have been high tech throughout history, since these are not depending on location. During these eight years the breeding industry has gone from agglomeration to spreading, thus now suitable for other municipalities too, such as Vaggeryd.
In general, highly specialised educations and businesses, such as this KY-education, have spreading of employees over Sweden (Brakman, Garretsen, & van Marrewijk, 2001). For example the market desires no more than one veterinary clinic in a location.
One important factor for why the results show spreading is that the classification of the re-gions is municipality based. If calculations would have been made for a different territory classification, for example with three regions, urban, semi-urban and rural areas, the results would have shown agglomeration. A report made by the SJV in 2004 showed that 80-85% of equine related businesses are located in semi-urban areas; hence the equine industries are clustered there. Hence, the market demand for equine cluster regions is a function of closeness to urban areas. The reason why this report chose to investigate municipalities in-stead of other territories is because it is interesting for Vaggeryd’s municipality to know if there are clusters in any of Sweden’s municipalities.
Since the equine industries are growing in Sweden there is a clear demand for equine busi-nesses (Erlandsson, 2009). The demand for equine busibusi-nesses can either be located in semi-urban areas where hobby equestrians have access to them, or they can be located where they can benefit from networks and information spillovers from other equine companies (Markgren, 2001; Törnqvist, 1996).
From the quantitative analysis it was evident that Sweden has low γ-values regarding the equine industries, as well as the γ-values are declining mean that the industries are becom-ing more and more spread in Sweden. Thus, the equine businesses are not dependent on which municipality they belong to.
This is both good and bad news for Vaggeryd. It is good news that horse entrepreneurs in Sweden are not dependent on which municipality they set up their business in. Therefore it is likely that entrepreneurs seek their way to Vaggeryd as well. It is bad news because the equine industries are going towards a spreading in Sweden, which implies, in theory, that horse entrepreneurs do not have incentives to set up their businesses in a cluster municipal-ity. In reality though, it is more probable that existing equine businesses are not interested in moving their businesses because they are rooted in their operational area and that they enjoy clusters in semi-urban areas (SJV, 2004). For example a race track cannot change lo-cation physically. Further it is also more probable in reality that new equine businesses es-tablish where the entrepreneurs believe is suitable for his or her operation, and not because it seeks for a non-cluster area. The choice depends on, according to the interviews (Chap.
