The Småland Spirit: How Rural Sweden Birthed Giants Like IKEA

​​Småland epitomizes the essence of Sweden. Picture ancient forests, charming red-and-white houses, and green meadows bursting with flowers and berries. Envision sparkling lakes, archipelagos, and coastlines dotted with islands. Add lively towns rich in culture, with fantastic restaurants and cafés. This is Småland – a blend of natural beauty and vibrant community, capturing the heart and soul of Sweden.

In this region, nestled in southern Sweden, you’ll find the raw, unadulterated, and utterly charming version of the country – from the scenic coast to the rugged highlands. As for the topic of this article, and as a cherry on top for us business and investing fanatics: Småland has over the centuries spawned numerous world-leading companies through its innate culture of entrepreneurship, frugality, craftsmanship, and good old-fashioned common sense.

One enabler of this success is told to be the “Småland Spirit,” or “Gnosjöandan” as it’s called in Swedish folklore, a name derived from the small town of Gnosjö in Småland where the spirit is said to have originally come from. This spirit embodies the region’s unique blend of resourcefulness, frugality, and community-driven entrepreneurship.

This local spirit has undoubtedly made its mark in the global arena. So let’s further uncover what sparks the built-in engines of the Smålandians, leading to the great successes of companies like IKEA, Husqvarna, and Nibe, all having their origins in this creativity factory disguised as a Swedish countryside.

Understanding the “Småland Spirit” requires a look several hundred years back. The name Småland means “small lands,” referring to the numerous small provinces that historically made up the region. These small provinces were largely independent during the Viking Age and early Middle Ages, each with its own laws and governance. The region became Christianized in the 1200s and was later integrated into the Kingdom of Sweden.

As a result of the region’s historically challenging living conditions, its inhabitants were forced to be innovative and self-reliant. The rocky, forested terrain of Småland made agriculture difficult, sparking a demand for alternative means of livelihood. Iron came to play an important role early on, and by the mid-1400s, the town of Jönköping in Småland was one of the main centers for Swedish iron handling.

In the latter part of the 1600s, Sweden underwent significant transformations marked by extensive military engagements and territorial expansion, establishing itself as a major European power. This period, often referred to as the “Swedish Empire Era,” saw Sweden’s involvement in several key conflicts and wars. For the people of Småland, this period brought a surge in demand for weapons, spurring local industries to excel in forging swords and bayonets. Sons from all over Småland traveled to the gun factory in Jönköping to earn a living, and upon returning to their hometowns, Gnosjö being one of the more prominent ones, they established bayonet forges, becoming the area’s first subcontractors.

Charles XII, who reigned as king of Sweden from 1697 to 1718, was a central figure in all this due to his military campaigns. In 1718, however, he was killed during the siege of Fredriksten in Norway. His death had profound consequences for Sweden, as his aggressive military campaigns had severely drained the nation’s resources. More particularly for the Smålandians, this meant that much of their weapon production was no longer needed, and they started seeking out alternative uses for the iron.

This led to the founding of several small industries, specializing in the production of everything from mousetraps, nails, and buckles, to safety pins and whisks. Wherever people met, collaboration and dealmaking flourished, giving rise to a culture where a handshake was as good as a contract. Signs of the small business culture’s network of service, goods, and capital exchange were evident. Ingenuity seemed boundless. And the people of Småland overcame obstacles like crop failure and famine, smoothly transitioning into the modern industry of the 1900s.

This attracted the attention of King Oscar II, who visited the area in 1897. He expressed his admiration in the local press:

This flywheel, initially set in motion by the weapon-makers of the 1600s, has continued to spin ever since. By the 1950s there were hundreds, if not thousands, of separate foundries in Småland. When a foundry or industry lacked a particular part or solution, it created opportunities for other entrepreneurs and innovators to start their own businesses. This fostered a thriving ecosystem of industrial development, characterized by resilience and creativity.

The people of Småland, known as Smålänningar, or Smålandians, are known for their distinctive cultural traits that, as you can understand, have been shaped by the region’s challenging terrain and historical hardships. Smålandians are often described as resourceful, hardworking, and frugal.

The frugality is one of the most notable characteristics attributed to Smålandians. They are often jokingly referred to as the “Scotsmen of Sweden” due to their reputation of being thrifty and careful with money. This frugality, combined with their industrious nature, has allowed them to thrive despite historical challenges. A quote by IKEA founder Ingvar Kamprad in the company bible written in 1976 – “The Testament of a Furniture Dealer” – explains it clearly:

The entrepreneurial spirit of Smålandians is also widely recognized. The region, particularly the Gnosjö area, has been known for its high level of entrepreneurship and low unemployment rates. This enterprising nature can be traced back to the need for diversification in economic activities due to the challenging agricultural conditions.

The first person to deeply analyze the phenomenon of this “spirit” was Birgitta Wendeberg, a teacher at Wendelsbergs Folk High School. In 1982, she wrote the book “Gnosjöandan – Myth or Reality,” in which she conducted ninety interviews with Gnosjö residents to define the spirit and understand what makes Gnosjö and Småland such a successful region. She wrote:

She was evidently very fascinated by Gnosjö and the spirit, and stated in the preface, “It is not entirely idyllic to be employed in Gnosjö, but almost.”

Bengt Johannisson is Sweden’s first professor of entrepreneurship. He’s also – not surprisingly – done his research on Smålandian entrepreneurship. As we’ve already touched on, he argues that the industrial traditions of Småland began in the 1700s, when several factories emerged to produce and deliver iron wire to the rifle factory in Huskvarna. This iron wire industry sparked innovation and entrepreneurship in the area, and the production was further diversified by introducing new products such as hooks, needles, bells, and grandfather clocks.

By the 1800s, the number of wire drawing workshops in Småland, Gnosjö more specifically, had increased to roughly 200 small businesses. A story about an early entrepreneurial family paints a great picture of Småland’s growth at the time.

The story begins in 1898 when J.E. Hyltén, a local industrialist, made a formal request to run an electric power line from the waterfall at Gårö Mill to his factory in Hyltan. This line, spanning approximately 1,300 meters (4,265 feet), marked the first significant step towards electrification in Gnosjö. Hyltén’s vision was clear: harnessing electricity would not only enhance productivity but also ensure the town’s competitiveness in an increasingly industrialized world.

By 1903, Gnosjö saw its first electric lighting with the construction of the bobbin factory. The factory’s need for efficient and reliable power led to the establishment of several small power plants, which supplied electricity to specific areas. This development was made possible by the formation of local companies dedicated to providing electric power, illustrating the region’s entrepreneurial mindset.

As electricity demand grew, more power plants were constructed. In 1917, two significant plants were built: one serving the communities of Sunnerbo and Bårebo, and the other supplying Mobäck and Gnosjö’s brass foundry. By 1918, additional plants were built to power Gnosjö’s railway station community and the surrounding areas. The expansion continued with the inauguration of the Lisebo (or Fägerås) power station on Good Friday, April 18, 1919, a milestone in Gnosjö’s electrification journey.

In 1925, the power from Trollhättan, a major hydroelectric facility, reached Gnosjö, further enhancing the town’s energy infrastructure. This new source of power allowed Gnosjö to connect its smaller, local power stations to a larger grid, ensuring a more stable and abundant supply of electricity.

By the 1930s, the smaller Lisebo power station was phased out and connected to the Trollhätte grid, leading to the demolition of the old station in 1931. However, the legacy of these early power plants remained, symbolized by the enduring presence of the Lisebo Dam, which still exists today.

The story of electricity in Gnosjö doesn’t end there. In 1987, Herbert Hermansson, a local enthusiast, built a new power station at the old wire-drawing dam on Kvarnaboån as a hobby project, illustrating the town’s pride in its entrepreneurial roots.

Gnosjö’s journey to electrification was part of a broader wave of modernization that swept across Sweden and other parts of the world in the late 1800s and early 1900s. Major cities like Stockholm had already begun harnessing electricity by the late 1800s, with the first electric streetlights appearing in the 1880s. However, the process was more gradual in rural areas like Gnosjö, where local initiatives and the entrepreneurial spirit played a crucial role in driving progress.

Unlike in urban centers where government initiatives often led the charge, Gnosjö’s electrification was largely community-driven. This approach not only brought light to Gnosjö but also laid the groundwork for its future as a center of industrial excellence.

According to Wendeberg, the Småland, and more particularly, Gnosjö Spirit is characterized by companies spinning off from each other. Its manufacturing industry primarily consists of small businesses, as its entrepreneurs favor small-scale operations over large-scale ones. If a company grows due to increased demand for its products or a broader range of production, encouraging an employee to start a new company is often viewed as the better option. Wendeberg further notes that most companies are family businesses passed down through generations, with entrepreneurs viewing their companies as children who are growing and maturing.

Most entrepreneurs in this area believe that it’s better for one or two people to control the company, rather than for the company to control the people. This further emphasizes the importance of small-scale operations and maintaining control over the business. Bank loans are often viewed negatively, and if an entrepreneur in this region needs to borrow money, the amount should be kept at its minimum.

Caroline Wigren, professor of entrepreneurship, categorizes the businesses of this region into three categories:

• Family businesses: Passed down through generations, sometimes taken over by cousins if none of the owners’ children are available.

• Acquired family businesses: Initially owned and operated as family businesses, later acquired by a single owner. Modern examples of these are Swedish serial acquirers such as Bergman & Beving, Indutrade, and Lifco, as well as foreign ones such as Constellation Software and Heico.

• Externally owned companies: Increasing in number, often sold to external Swedish or foreign owners, expanding the addressable market but risking local disconnection and loss of the Småland spirit.

Further reading:

• Indutrade: Growing Through Strategic Acquisitions

• Constellation Software: Acquiring and Empowering

Småland has, not surprisingly, gained a reputation for its remarkable entrepreneurial success, producing several globally recognized companies and fostering unprecedented innovation and business-mindedness. While there are hundreds – if not thousands – examples of these successful companies, a few stand a bit taller than the rest. Below, we’re going a bit deeper into two of them.

Map of Småland: The Swedish province that has spawned numerous world-leading companies.

Map of Småland: The Swedish province that has spawned numerous world-leading companies.

Having been around for more than 330 years, Husqvarna is a living testament to the entrepreneurial spirit that has defined the Småland region for centuries. Founded in 1689, Husqvarna started as a manufacturing company of musket pipes beside the powerful waterfalls of Huskvarna in Småland, a location chosen for its abundant hydropower. As we’ve already covered this was a wartime period for Sweden, and Husqvarna was right in the middle of it, arming the nation’s military forces.

Being Smålandians, Husqvarna didn’t stop there. As the demand for weapons began to wane, the company started diversifying its production into a wide range of other products. In 1872, the company dipped its toes into the sewing machine market, and just five years later, it added hunting weapons to its portfolio.

Over the next few decades, the company expanded its product range even further to include wood stoves, mincing machines, typewriters (the first Swedish typewriter), and bicycles. Each of these new ventures was like a new chapter in Husqvarna’s long and storied history, showcasing its ability to pivot and adapt to the changing needs of society. It’s as if Husqvarna – a hallmark of the Småland spirit – throughout history always looked at every challenge and said, “What else can we try making with our skills and tools?”

By the early 20th century, Husqvarna had become a household name, not just in Sweden but increasingly around the world. In 1918, the company acquired Norrahammars Bruk, adding boilers and manual lawnmowers to its ever-growing list of products. Just a year later, Husqvarna began manufacturing its own engines, laying the groundwork for its future success in the outdoor power equipment market.

Then came the chainsaw era, a defining period in Husqvarna’s history. In 1959, the company launched the Husqvarna 90, its first chainsaw, which boasted noise levels half that of its competitors. It was the quiet genius of chainsaws, speaking volumes through its performance rather than its decibels. This marked a turning point, and by the 1970s and 1980s, Husqvarna had become a global leader in chainsaws, trimmers, and other outdoor power tools.

Husqvarna’s story is also one of global expansion. In 1995, the company acquired Flymo, a British garden equipment manufacturer, and in 2007, it added Gardena, a German garden tools company, to its portfolio. These acquisitions were strategic moves that allowed Husqvarna to bring its innovative approach to a global audience.

Today, Husqvarna is a global powerhouse, with a presence in over 100 countries and a network of 25,000 dealers worldwide. The company continues to push the boundaries of innovation, focusing on battery-powered products and smart garden solutions.

In many ways, Husqvarna exemplifies the Småland spirit – resourceful, resilient, and always ready to adapt to the times. Whether it’s making muskets in the 1600s or robotic lawnmowers in the 2000s, Husqvarna remains a shining example of what can be achieved when tradition meets innovation.

So the next time you see a Husqvarna product, remember that it’s more than just a tool; it’s a piece of history, a testament to over three centuries of ingenuity, and a proud representative of the enduring Småland spirit.

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This multinational company known for its affordable, stylish, and functional furniture, has grown from humble beginnings in the rural town of Älmhult in Småland into nothing short of a global powerhouse. The IKEA story is not just about business success but also a reflection of the entrepreneurial spirit, frugality, and practicality that characterize the Småland region.

The story of IKEA began on July 28, 1943, when 17-year-old Ingvar Kamprad founded the company in Älmhult, Sweden. The name IKEA is an acronym that reflects its deep connection to Småland—derived from Ingvar Kamprad’s initials (IK), combined with the first letters of Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. What started as a small mail-order business selling items like pens, wallets, and nylon stockings quickly evolved when Kamprad added furniture to the product line in 1948. This move was inspired by the local craftsmanship of the forests surrounding his home, where skilled artisans were creating furniture with both function and form in mind.

Then came the 1950s, which became a turning point for IKEA, as the company began to shape what would become its global identity:

• The IKEA Catalog (1951): Kamprad launched the first IKEA furniture catalog, which would become an iconic marketing tool, bringing IKEA the experience into homes across Sweden and eventually the world. The first cover featured a wingback chair, reportedly one of Kamprad’s favorites, symbolizing both quality and comfort.

• The Showroom Experience (1953): Two years after releasing the first catalog, Kamprad introduced the first IKEA showroom in Älmhult, allowing customers to see, touch, and experience the furniture before purchasing – a revolutionary concept at the time. It would eventually prove to be so successful that it became a cornerstone of IKEA’s retail strategy, with immersive store environments, complete room setups, and lifestyle displays.

• The Flatpack Innovation (1956): Perhaps IKEA’s most significant innovation was the introduction of flatpack furniture. This concept not only reduced costs and made transportation easier but also empowered customers to assemble their furniture at home. This design was born when an early IKEA product designer, Gillis Lundgren, suggested removing the legs of the classic “Lövet” table to fit it into his car. This practical idea, combined with Kamprad’s frustration over rising shipping costs, led to the creation of the now-iconic flatpacks. Over the years, these flatpacks have saved IKEA and its customers billions of dollars.

In the 1960s, IKEA began its journey beyond Swedish borders:

• Norway (1963): The first store outside Sweden opened in neighboring Norway.

• Denmark (1969): A store followed in Denmark, signaling the start of IKEA’s expansion in Europe.

The 1970s and 1980s saw IKEA’s rapid international growth, with stores opening in countries as far-flung as Australia, Canada, Germany, and the Netherlands. Like a Smålandian always ready to seize new opportunities, IKEA adapted its business model to fit different cultures and markets, while maintaining the core values that had driven its success. You may wonder what Kamprad was up to during this time. A story from the book “Breven Berättar,” Swedish for “The Letters Tell,” penned by his former right-hand-man, Staffan Jeppsson, offers us a revealing glimpse:

IKEA’s success can be attributed to several key factors that are deeply rooted in the Småland way of thinking:

• Democratic Design: IKEA’s approach to product development is grounded in five dimensions – price, quality, function, form, and sustainability – ensuring that good design and quality are accessible to make “a better every day for the many people.”

• Cost Efficiency: True to Småland’s frugal spirit, IKEA keeps prices low through high turnover, direct sourcing, and efficient logistics. The company’s commitment to low prices without sacrificing quality has made it a favorite among cost-conscious consumers worldwide.

• Customer Experience: IKEA stores are more than just retail spaces—they’re destinations. With everything from fully furnished room setups to in-store restaurants serving Swedish meatballs, IKEA offers a shopping experience that’s as enjoyable as it is practical.

In essence, Kamprad was ahead of his time in the 1940s by implementing the concept of scale economies shared, a strategy that would later be popularized by investors like Nick Sleep and Qais Zakaria in their Nomad Partnership letters. He understood early on that by passing on cost savings directly to IKEA’s customers, he could offer high-quality products at lower prices, compensating for the reduced profit margin through high sales volumes which enables lower purchasing costs. This approach was similarly embraced by Sam Walton at Walmart in the 1960s, Sol Price at Price Club, and Jim Sinegal at Costco in the 1970s, and later by Jeff Bezos at Amazon in the 1990s.

IKEA’s journey from a small mail-order business to the world’s largest furniture retailer is a testament to the power of innovation, clear vision, and the enduring Småland spirit. Like the region it hails from, IKEA embodies a blend of resourcefulness, humility, and a relentless drive for continuous improvement. As Kamprad said it himself, “Most things still remain to be done.”

It’s quite remarkable how, in one of Sweden’s historically poorest areas, a unique business culture has flourished, gaining recognition both locally and globally. When farming on infertile lands couldn’t sustain families, the people of Småland turned to alternative livelihoods like wire drawing, which by the mid-1700s was widely traded.

Over time, a strong community spirit developed, focused on the belief that “helping each other brings greater rewards than competition.” This cooperative mindset is credited as a key driver behind the region’s industrial success. Local entrepreneurs emphasize that success depends not just on what they produce, but on how they produce it, with a focus on cutting-edge technology to stay competitive.

Småland’s unique blend of natural beauty and vibrant community, coupled with its deep-rooted culture of entrepreneurship, has made it a region unlike any other. It remains a shining example of how resourcefulness, resilience, and a strong community spirit can drive innovation and prosperity. Whether you’re wandering through its picturesque landscapes or studying its industrial achievements, Småland offers an inspiring lesson in the power of perseverance and ingenuity.