Reframing Risk : A Historical Perspective on Network dynamics of Skandia Assurance & Financial Services’ International Expansion

Sammanfattning

Background: Globalization and internationalization are significant in all business cases today, especially for firms in a small country like Sweden. Yet, internationalization is nothing new, but something the Swedish insurance company Skandia have been dealing with since 1855. The immense history and success internationally within Skandia in later years came through the companies of Skandia Assurance & Financial Services, AFS. Skandia AFS’s most intensive internationalization were between the years 1978-2000. However, the underlying strategy of Skandia AFS during these years of significant global expansion also came with a significant risk when looking back. In a globalized and quickly changing world, the historical contributions from AFS can therefore be used to better analyze the processes for the modern organizations embarking on their own expedition of internationalization today. Purpose: The purpose of this study is to examine the relation between tolerable and existing levels of risk through a case study of a northern-European insurance company. This, with use of how the Uppsala model’s network perspective influences internationalization strategies locally and globally within the organization. Therefore, this study aims to contribute with a new perspective on the Uppsala model alongside a deeper understanding of the internationalization of Skandia AFS from a risk and network perspective. Methodology: This case study has an abductive research approach with a hermeneutic perspective. The empirical findings were collected through 11 interviews with 12 different respondents, alongside data collected from the annual reports of Skandia between the years 1978-2000. The other data used is collected through peer-reviewed articles. Conclusion: The case of Skandia AFS illustrates how understanding and awareness of risk often emerges in hindsight, as success and speed of expansion can cause neglect of critical reflection or lack of understanding for the consequences. The relationship between tolerable and existing risks is dynamic and could by this study be concluded as deeply intertwined with organizational learning, leadership, culture and network position. Four main aspects of considerations concerning the relation between tolerable and existing risk when internationalizing a business, to learn from the case of Skandia AFS is: First, knowledge and opportunities. Recognizing opportunities and have enough courage to realize them, implies the internationalization can go fast. However, this may also come at the cost of knowledge creation which can create enlarged existing risks and unrecognized consequences of higher tolerable risks. Second, relationship commitment. Strong local connections and tight internal connections are a strong motor to enable a fast and effective expansion. However, it can also create blind spots where different risks will not get challenged enough. Therefore, it is important to include multiple perspectives both within the organization and its network. Third, learning, trust and creation. Trust in the employees, products, direction of market expansion and leadership is of great importance for effective expansion. However, the trust based creation and learning approach needs to be complemented by risk management. This, in order for existing risks to not evolve to non-tolerable risks and for the organization to have a thoughtful, ongoing discussion about consequences of current tolerable risk levels. Fourth, the network position. It is significantly important to have someone in the network to ask the right, critical, questions. In addition to that, if the company has a credible name and monetary resources in their back when expanding, it will affect their network position and will most likely infuse the organization to tolerate higher levels of risk.