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Enterprise Development in Greenlandic Communities

by Henrik Herlau and Helge Tetzschner

Abstract
Who are the actors involved in the development of local business in the local communities of Greenland, and what are their strategies? Answering these research questions is essential for the success of Project Umiaq. One purpose of this project is to answer the above questions through the use of a valid, reliable, and informative analysis. By conducting a dynamic inquiry into approaches and activities of the participating local communities, the project is expected to result in the formulation of strategies for future efforts. The project is thus an action research project, and this paper addresses the initial exploratory phase. Empirically, the paper is based on field work conducted in several Greenlandic municipalities. The objective is to help promote sustainable business development.
The so-called "coupling model" is applied here to characterize local communities in terms of potential for and barriers to self-sustaining local business development, meaning that the local communities create workplaces which they deem necessary. The coupling model indicates that local business development results from three flows:
1. a flow of ideas for new production (innovation);
2. a flow of production opportunities;
3. a flow of motivated actors.
Only by coupling these three flows will new productions be realizable. It should be possible to find numerous couplings between product ideas and production opportunities, but competence and actors motivated to realize these couplings seem to be lacking.
The local communities in Greenland are characterized by massive underemployment among people of employable age. The question is whether most of the unemployed/underemployed are in fact marginalised in the labour market. Consequently, the formulation of hypotheses is based on the actor perspective, starting with the distinction between social entrepreneurs and independent entrepreneurs. But this model must be simplified to fit Greenlandic reality, where social entrepreneurs pursue territorial strategies, and independent entrepreneurs pursue functional strategies.
A trend seems to be developing, where actors representing collective entrepreneurship in the local community, such as municipalities or home rule, promote functional strategies and act themselves either as entrepreneurs, or in collaboration with other independent entrepreneurs. This approach is inherent to the traditional Danish understanding of how new production is initiated. It builds on a model of gathering rather than diffusing knowledge. However, the point is that in the case of Greenlandic local communities, there seems to be a need to diffuse knowledge.
One possible explanation for the tendencies of municipalities and home rule to utilize functional strategies may be the so-called U-effect, where two actors meet, talk, and attempt collaboration. However, their world views may differ significantly, which would lead to collaboration based on the lowest common denominator.
Enterprise development: what, why, and how
As the title indicates, this article addresses enterprise development from the perspective of the community, specifically that of Greenland. In the article, we also apply an interventionist action research perspective , both in our discussion and in our preliminary, exploratory analysis of "Project Umiaq" . Like many others, such as Johannisson (1986), Churchill and Mazyka (1994), Gartner (1994), and Johannisson (1992), the author Rosa (1992) starts by stating that the concepts "entrepreneurship" and "enterprise development" are weak and confusing. "Amongst academics, practitioners and educationalists there are divergent views and interpretations on what these concepts really mean, and over the effectiveness of policy measures when these concepts are applied." (Rosa 1992:2).
In Rosa's view, three main types of "enterprise development" are distinguishable within the British tradition, types which rest on different theoretical foundations within both the economic and socio-culture domain (Figure 1).
Rosa describes these three main types as:
1. Enterprise development as business development, ranging from the single entrepreneur working without employees to large enterprises;
2. Enterprise development as a series of personal properties and qualities important to economic progress. These properties and qualities include everything from motivation and competence to participation in innovative projects and developing corporate cultures;
3. Enterprise development as a series of personal properties and qualities important for realizing the full potential of individuals as citizens.
Only the first two types relate directly to economic progress, and hence to entrepreneurship. Nevertheless, we will claim that no matter which of the three objectives is viewed as primary, the strategy requirements for local enterprise development will be identical. Supporting creative citizens who can initiate social projects, such as developing places where neglected and maltreated children can turn, generates enterprise skills that are also applicable in the economic domain.
Even though our focus and research question concern entrepreneurship, that is, Rosa's first two main types, the strategy for local enterprise development (Figure 1) implies including the broad meaning of enterprise development when implementing the strategy. This strategy is characterized as a model for knowledge diffusion.
The case of the old people's home in Nanortalik illustrates this idea. Here, an enterprising leader has succeeded in making the tenants feel better by allowing them to come up with their own solutions to problems which were otherwise fairly insignificant. For one thing, tenants have been allowed to choose the colour of their own front doors, making it easier for them to find their own residence. Another situation was a problem involving the budget, which would only go to purchase supplies twice a week because these were bought from the shops. This was solved by buying supplies directly from fishermen and seal hunters. It sounds simple, but many aspects had to be taken into consideration, such as quality control. But in the end, the problem was resolved, and the result was that the tenants feel better and increased their activities in the domestic industry, making products that are sold in the town's tourist shop. Simultaneously, fishermen and seal hunters have improved incomes.
Our conception of the concept of entrepreneurship is in keeping with that of Churchill and Muzyka (1994:16):
"A process that takes place in different environments and settings that cause changes in the economic system through innovations brought about by individuals who generate or respond to economic opportunities that create value for both these individuals and society."
This attempt to establish a relevant, valid and reliable definition of entrepreneurship builds on research traditions leading to a characterisation based on five elements: (1) an individual, (2) who performs an act, (3) using an innovation in combination with a favourable opportunity (4), and thus builds an organisation, (5) which involves risk (Churchill and Muzyka, 1994:11). These five elements combined are to be perceived as a common denominator for traditional definitions of entrepreneurship (cf. Churchill and Muzyka, 1994). Even maintaining that these definitions are general, though hardly final, the five elements must be interpreted differently today due to societal developments. This is illustrated in Table 1.
Understanding this transformation involves both revising previous paradigms and adding new interpretations. Most important, the right side of Table 1 involves a much more dynamic, process oriented, and holistic approach. Common, strong arguments can be found in Bygrave (1989a and 1989b), Hofer and Bygrave (1992), Gibb (1986), and Davidson (1989). This is an important premise for the subsequent argument that enterprise development and entrepre neurship require actors with many capabilities and competence, and who can learn skills. It is obvious to assume that tendencies, such as globalisation and internationalisation, promote those characteristics indicated on the right in Table 1 (cf. Tetzschner 1997a and 1997b).
The theme of this article is thus how to promote enterprise development in Greenlandic communities, especially entrepreneurship, and by which strategies, taking into consideration specific contextual conditions, such as education and infrastructure. These contextual conditions are important, because in the global context, Greenland is located on the outskirts. We must even consider North Greenland and South Greenland, communities which are "on the outskirts of the outskirts."
Above we have tried to describe the aim of this task. Next, we must study why this task must be solved. A brief look at the situation common to most Greenlandic communities will answer this question. There is massive underemployment caused by unstable natural resources (fishery), an inadequate infrastructure, a deficient education system, and huge social problems, especially in the form of a fairly large group of people marginalised from the labour market (cf. Lyck 1986; 1998).
A way to resolve these problems has been suggested by Herlau and Tetzschner (1994; 1995). The process will require a kind of action research, confronting an informative, valid and reliable analysis of the structural conditions for entrepreneurship and the entrepreneurial strategies applied by actors with dynamic efforts in communities where we support ongoing entrepreneurial projects and attempt to establish more. In short, the overall purpose of the project is to contribute towards sustainable enterprise development in Greenlandic communities. This is imperative, given the employment and social situation in Greenland. Our modest contribution is based on an action research strategy.
Analytical frame of reference: the coupling model
In particular, Nordic research on entrepreneurship and enterprise development is based on a network perspective, such as Johannisson (1986; 1992) Christensen (1987), Johannisson and Spilling (1986), and Spilling (1987). The importance of the idea of networks as the foundation for understanding enterprise development can be seen indirectly in Aldrich and Zimmer (1986:4) In keeping with our above observations, Aldrich and Zimmer emphasise that many traditional studies of entrepreneurship neglect the social context of the process.
The traditional study is either
a) an undersocialised "John Wayne" model based on theories of personality which operate with independent decision makers or rational economic actors, or
b) an oversocialised model where entrepreneurs are viewed as prisoners of their cultural environments and are predestined to their roles as entrepreneurs.
Instead of this, our coupling model is based on a merging of the above two approaches. This model is founded on Hull and Hjern's (1984) argument that, in communities with great entrepreneurial competence, mediating actors play a decisive role by linking together the loose informal network of enterprises. Informal networks are thus of significant importance, and the question is whether it will be possible to stimulate this linking function. This would be extremely difficult if we were to rely on traditional education and training (cf. Gibb 1986). Therefore, the coupling model below (Figure 2) introduces development activities that can tie together informal and loose networks into a community. This approach seems feasible and should be tested, especially if we view the situation as a matter not only of identifying potential starters, but of utilising existing local networks, and of combining innovation with motivated actors and existing or potential production opportunities.
With this model, we subscribe to ideas put forward by researchers who prefer to view entrepreneurship as an interwoven network of continuous social relations, as opposed to more traditional under and oversocialised models. Aldrich and Zimmer (1986:8-9), for instance, state that complex networks of entrepreneurial relations are promoted or impeded by a merging of potential entrepreneurs (motivated actors), resources (production opportunities), and favourable potential (innovations).
The coupling model is very simple. In the person/idea perception, it is the same person who owns the innovation (product idea), finds production opportunities, gathers information, manages the firm, and often breaks her/his back in doing so. The coupling model is different!
Here, these functions are separated, and suddenly the possibility emerges that product ideas, actors, and production opportunities can be multiple, as could be potential couplings, provided that information and knowledge are shared. The coupling model breaks with traditional limitations.
The most significant message in the coupling model, and in Figures 2 and 3, is that production in communities is only realisable when an intersection occurs between innovation, production opportunities, and motivated actors. Only by merging these three flows will new productions be obtainable. Figure 2 illustrates graphically the situation in a relatively static community, where the intersection is small, there is no increase in value, and no workplaces are established. Since nothing can be accomplished by individual initiative and effort, progress is dependent on external actors. Figure 3 symbolises the extreme opposite, where a community has an intersection among the three factors, thus creating an entrepreneurial community in which the desired increase in value is realised. Applied to the Danish society, Figure 2 symbolises Lolland, while Figure 3 symbolises West Jutland.
Common to the communities of Upernavik in the North, and Nanortalik, Qaqortoq and Narsaq, which currently represent the empirical field of Project Umiaq, is a weak intersection of the three factors . In short, the situation is similar to that illustrated in Figure 2. There is no self-sustaining local enterprise development process. If there are periods of full employment (when those able to work are indeed working), such as in Upernavik during winter with line fishing and Greenland halibut, the reason is an intermittent availability of natural resources that can be exploited, even though the wastage rate on raw primary produce is high and productivity among workers low.
Each of the three circles in Figures 2 and 3 symbolises certain structural conditions (in time and space), whereas the intersections symbolise potential areas of action. However, the action area between potential innovations and motivated actors will remain a "discussion club" (e.g. a local business council or municipal council), debating all the "bright ideas" and "entrepreneurial opportunities" existing in the community without linking this potential to any real production. The action area between innovation and production opportunities symbolises nonrecognised/nonattempted favourable opportunities for establishing new productions. They remain nonrecognised/attempted because there are no motivated actors. The action area between motivated actors and production opportunities becomes a new "discussion club" topic where people confirm one another's beliefs that they have everything in their community (in terms of production opportunities), but only need certain individuals to realise this potential, since an entrepreneurship culture is lacking.
Only in the situation where an intersection of the three structural conditions exists will it be possible to establish new production. With the coupling model it would be obvious to combine an analysis of structural conditions for establishing new production with an analysis of action fields. It is often "easy" for researchers, consultants and other external agents to present solutions to structural conditions, but difficult to analyse potential and factual action areas. Nevertheless, this is what we must do, in part because we will not otherwise experience any enterprise development according to the coupling model. In part, this is because there are often many combinations of innovation and production opportunities, but a lack of motivated actors, especially those with competence. The latter is illustrated by the following account of the pilot projects in South Greenland and Upernavik.
It only took a few days field work in these communities to collect data and point out numerous couplings between potential innovations and favourable production opportunities. These couplings ranged from small projects in which inexperienced entrepreneurs could practice, to larger projects that would require participation from enterprise development organisations, municipalities, the Home Rule, and external partners. However, there was a demonstrable lack of motivated or competent actors to undertake and exploit these couplings.
What kind of actors did we have difficulties finding? In itself it does not matter whetherit is possible to identify actors who define themselves as entrepreneurs, that is, persons who start new enterprises. What is of critical importance is whether it is possible to identify actors who can contribute to local enterprise development. These actors may be potential entrepreneurs or enterprise owners who wish to expand their business locally, or public employees who contribute to local enterprise development because it is their job. We will address this issue in the following two sections.
Actors in local enterprise development: project makers, developers, and gate keepers
Baldersheim (1990:101) finds that a new role has been added to the traditional roles characterising local/regional enterprise development in Scandinavia.
Roles which are considered traditional are those of being the owner of the idea (projectmaker) and being the gate keeper. The owner of the idea is the person with the project, the searcher asking for support. The gate keeper is usually a bureaucrat or, in the case of larger projects, a political body. It is the task of the gate keeper to examine whether the project meets the formal requirements for receiving support. Legitimisation considerations are safeguarded by ensuring that no appropriation rules are violated... The new role emerging from the development models described is the developer, a person who does not merely take a stand on project ideas like the gate keeper, but who produces ideas. More and more decisions are being made by entrepreneurs, founders or problematic enterprises involving these specialised co-actors or "midwives". (Translator's translation).
Baldersheim (1990:102) summarises these three roles in Figure 4. His frame of reference is based on a case analysis of five attempts at local enterprise development.
Our interpretation of Baldersheim's (1990) findings, which is not necessarily identical with his, is that none of the five pilot projects ever led to sustainable new production because there were too few and too poorly equipped "developers", and because some of the projects also lacked "project makers". However, the projects had plenty of "gate keepers".
According to this viewpoint, several diverse agents or actors for collective entrepreneurship should have resumed responsibility for the role as developer, such as the Home Rule, the municipality, or enterprise development bodies.
Based on our provisional data, we advance the hypothesis that a significant barrier to local enterprise development in Greenland communities is the fact that too few assume the role as developer. In certain communities, this role is performed but hardly satisfactorily. One of the most relevant research questions for Project Umiaq concerns what actors expect of themselves and others in relation to local enterprise development, and whether divergent conceptions exist that can make a difference in the various communities.
One example of inadequate performance in the role as a developer, is the project maker who addresses the relevant employee in the municipality. In this situation, the employee is responsible for a sealskin workroom operated by the municipality as an employment project. The same employee also acts as a hunting and fishery consultant to the municipality. The project maker, a potential entrepreneur, wished to obtain access to the sewing machine in the sealskin workroom in order to produce some prototype of a new souvenir, the traditional kayaker hood made of sealskin. The municipal employee immediately turns down the request, referring to insurance problems, etc., and does not even attempt to assist the project maker in finding alternative solutions, such as by offering him the chance to produce prototypes in collaboration with the sealskin workroom.
A similar example of difficulties created by municipalities and their staff, including politicians and public servants, was when a certain municipality celebrated its 200-year jubilee attended by Queen Margrethe. On this occasion, gifts for high and low guests were to be presented. But in selecting these gifts, nobody thought of opting for locally produced objects. Such an occasion could have been used to develop items for potential export from the local area. Shortly after the jubilee, a development consultant from a Danish friendship municipality visited the community and commented on this. Today, attempts are being made to sell souvenirs produced from left over pieces of sealskin. This demonstrates the value of collaborating with external partners.
The cultural barriers blocking a municipality from functioning as a motivated "developer" in relation to local enterprise development seem strong. In general, municipalities as a whole, including individual municipal organisations, do not perceive themselves as problem owners in relation to the role as developer, that is, as actors appreciating these problems and being motivated to do something about it, or actually act as developers attempting to maximise product quality. This may also apply to public production or employment projects. Admit tedly, legal regulations set limits to which actions municipalities can take in relation to enterprise development. However, these regulations are not significant to the extent that they should prevent municipalities from assuming the role as developer in relation to training-based local enterprise development. In this context, it is interesting to note that municipalities have expressed a strong desire to actively influence enterprise development. This has been made possible by recent opportunities for achieving status as independent municipality.
However, these action opportunities may be restricted by the very municipal organisations themselves, including their organisational cultures. Directly to the point, in terms of structure, technology, actors, and culture, municipal organising is by no means appropriate for tackling the kind of tasks involved in local enterprise development. The municipal organisation is built as an administrative instrument, the principal task of which is to administer according to the rules. This organisational form is not suited to solving tasks characterised by great uncertainty and variability, cf. Perrow (1974). In relation to enterprise development, municipalities perceive themselves as gate keepers, the implicit effect of which is lack of motivation among municipal actors when it comes to intervening actively in local enterprise development. This barrier is generalisable, if we define a new and active role for municipalities in local enterprise development as an organisational innovation. Such an innovation will create twice as much resistance among municipal actors if it is perceived as associated with great risks for the actors, and/or if such innovation clashes with strong habits (cf. Sheth 1981). Sheth (1981:227) writes about double resistance:
"While habit is a major determinant for generating resistance to change, it is not the sole determinant. Thus, even in the absence of strong habits, resistance to change may be present due to other factors. One such factor is perceived risks associated with the innovation."
This resistance to innovation highlights a significant barrier to municipalities acting inroles other than that of a gate keeper. It is imperative to overcome this barrier, and this should be possible.
In summary, the tentative result is that it is not sufficient to simply combine potential innovation with production opportunities. Motivated actors must exist, capable of supporting projects. So far we have discussed the developer role and pointed out that variations in community competencies determine success or failure in enterprise development. This issue will be subject to further scrutinisation during the continuing development of Project Umiaq.
Project makers: independent and social entrepreneurs
Having identified potential barriers that prevent actors from realising potential combinations of innovation and favourable production opportunities, we shall now turn to project makers, both potential independent entrepreneurs and social entrepreneurs. These two ideal types are described in Table 2, using Johannisson's (1986:6) typology.
Table 2 shows that the independent entrepreneur views the community as a means to attain his own goals, whereas the social entrepreneur views development of the community as a major goal in itself. The independent entrepreneur increases his self-confidence and competence whereas the social entrepreneur uncovers and generates self-confidence and competence among other members of the community. The independent entrepreneur aspires to personal development in the role as founder and leader, while the social entrepreneur aspires to replace her/himself as leader of the community. The former places her/himself at the top of an autocratic organisation, while the latter views her/himself as a coordinating body in a federal structure.
The independent entrepreneur mobilises material, financial, and human resources in his own enterprise and views public authorities and other interest groups in society as obstacles and threats. The social entrepreneur inspires others to start their own enterprise and approaches public authorities and external interested parties as potential supporters. Many of the characteristics ascribed to the social entrepreneur in Table 2 much resemble those ascribed to managers of innovative cultures (cf. Peters & Watermann 1982). It is furthermore our opinion that a successful local strategy for enterprise development requires participation by both independent and social entrepreneurs. Based on these two ideal types , we will apply Johannisson's (1986) conceptual framework and attempt to construct our own frame of reference for two ideal typical strategies for community development, which are models for gathering and diffusing knowledge.
To expand this ideal typical framework, let us offer a few examples and illustrate that the one ideal type is not by definition better than the other. The decisive element is that they function each according to their own logic, and both of them can contribute positively to local enterprise development. The independent entrepreneur is, for example, Nuna Oil Ltd., which is close to opening a gold mine in Nanortalik municipality, provided that the results of the coming two years' investigations show that this endeavour is profitable. Another example is master artisans seeing an unfulfilled demand for services in a community.
Social entrepreneurs can be actors from the municipal organisation who fully meet the requirements for the role of developer. One example would be a school teacher who produces a series of post cards with motifs from the local area and sells them in local shops. Another example would be a local mutual fund of approximately ten members who have committed themselves to pay in between DKK 500 and 1,000 every month. The mutual trust spends the money to establish new production, especially in the settlements. One of the objectives of Project Umiaq is to clarify to what extent municipal employment projects and local enterprise development organisations function as social entrepreneurs.
But there are also individuals who start enterprises while simultaneously functioning as social entrepreneurs, inspiring others to start their own enterprises, to invest their profits in new enterprises in the community, and to encourage the development of self-respect and competence among employees. In other words, a kind of hybrid of the independent entrepreneur, where due to his connection with the community, he also acts as a social entrepreneur. This kind of social entrepreneur in Greenland communities experiences a subtle balance between earning money, and promoting human development, investing in training programs for employees.
Territorial and functional strategies
Various types of entrepreneurs apply different strategies. Johannisson distinguishes between territorial or geographical and functional strategies for implementing new production, cf. Table 3.
The first main group of strategic characteristics is made up of territorial and functional strategy. The foundation is characterised in terms of acting subject, ultimate goal, and efficiency norm. The acting subject is the community in the territorial strategy whereas it is the firm in the functional strategy.
The ultimate goal of the former strategy is to create sustainable enterprise development in the community, whereas creating profit is the goal of the latter strategy. The basis of the territorial strategy in the form of an efficiency norm is economy of scope, whereas it is economy of scale in the functional strategy. Johannisson (1986:7) points out that territorial strategy processes begin due to some "crisis awareness", and management is based on cultural heritage, whereas functional strategy processes start as a strategic choice selected by experts. The change agent is a social entrepreneur in the territorial strategy, and an independent entrepreneur in the functional.
With regard to resources and organisations, core resources used in territorial strategy are local identity, whereas it is capital and material resources in the functional. The emergent structure in a territorial strategy is based on social networks, whereas functional strategies build on production networks. Finally, external groups are attributed the role as active participants in territorial strategies, while their role in a functional strategy is that of providing the resources and setting the rules. In keeping with Johannisson (1986:7), our key message is not that the territorial strategy should replace the functional strategy in all situations, but rather that in outskirts, such as Greenland, a functional strategy alone will never be able to procure sufficient value added in communities. Therefore, it should be supplemented with the territorial strategies.
If Nuna Oil Ltd. opens a gold mine in Nanortalik, it will pursue a functional strategy. The company has no other alternative because it has to compete on an increasingly globalised market. But if the community is to secure local business, such as services and subcontractor for the eventual gold mine, a territorial strategy must be adopted. This points towards applying a model for knowledge diffusion rather than one for gathering knowledge. The mutual fund mentioned earlier is an example of a social entrepreneur deliberately pursuing a territorial strategy, focusing on increased employment for hunters and fishermen in the settlements. We shall return to this idea below.
Based on the current data, the hypothesis is that the Home Rule and municipalities to a large extent pursue a functional strategy rather than a territorial, based on social entrepreneurs. In connection with a planned plant for canned seal food in Nanortalik, the Home Rule is pursuing a functional strategy. It is only half a year before the plant is to start up, yet nobody in the community knows anything about the production or market analyses that have been conducted, nor the scope of labour needed, and with which skills.
Municipalities all too often implement a functional strategy when conducting enterprise development activities. The purpose of various municipal employment projects is allegedly to strengthen a territorial strategy, and these projects offer obvious potential for training social entrepreneurs. However, the strategy pursued in these projects is too often functional. There are examples of the opposite, but it is as if communities learn nothing from these.
If a municipality employs a functional strategy, this may clash with the interests of local social entrepreneurs, especially involving relations with those running their own businesses. Social entrepreneurs act according to a territorial strategy and expect the municipality to do likewise. This can develop into the situation where the local business council, consisting of the three most active independent tradesmen, threatens to lay down the council, because they experience lack of municipal interest.
An explanatory model: the U-effect
Concerning communication between municipality and social entrepreneurs, there exists a kind of U-effect. In general, municipalities signal great interest and proactive support for starting up regionally anchored projects. This is the top of one side of the U. There will seem to have been established service support systems that can capture and sustain any serious starting up activity. This is signalled to local actors through the media, at meetings, etc.
The basic idea is that these offers are in general aimed at supporting the development of business concepts, and at assisting entrepreneurs in applying for financial support. Municipal support systems are administered as reactive project support. This can be justified as the desire to remain a neutral actor in a liberal business sector where any financial activity must be assessed in view of competitiveness. However, this approach easily creates and maintains what can be described as the bottom of the U if the region is lacking in any considerable undercurrent of strong actors with solid project proposals. This "undercurrent" must convince those who administer support systems that these business ideas are worth investing in. They suggest and can administer projects of common local interest which can be characterised as the struggle to attract attention and ensure local support of the activity.
The above problem is apparently of fundamental significance, since it appears in an identical form in vastly divergent local regions. One approach is to analyse who has in interest in these projects, who the problem owner is in a community where enterprise development if taking place. The municipality or some other public body is often designated as the obvious problem owner when promoting local enterprise activities. It is taken for granted that political opinion in the municipality dealing with enterprise development will focus responsibility on the municipal administrative system. If applying the U-model, it could be argued that this system contains few opportunities for actors to enter into minor projects, even though legally the potential exists. It would also be difficult to determine what kind of larger projects this system could initiate without simultaneously instigating a heated competitive situation vis-à- vis local interest groups. Therefore, in general the administrative system will have to rely on the same options as the politicians, that is, to maintain the good intentions contained in the support systems. Apart from this, actors within the system must participate as passive "consultants" in the practical initiatives put forward by politicians from the municipality.
It should be noted that it is rather precarious to entrust geographically distant administrators with decisions that require the background, experience, ability and willingness to operate as strong proactive actors in enterprise development, through either direct or indirect participation. Nearly all initiatives are rooted in and supported by local actors. Even when they are in favour of a given project, it is rare to have administrators of support systems attempt to undertake the role as an actor. This seems paradoxical, since they are among the few who are actually "trained" in translating the systems.
If we are to emphasise local actors as being the problem owners, it might be argued that the difficulty is primarily caused by the fact that these actors do not appear as natural carriers of the community's need for industrial transformation and renewal. In most cases, a local actor will view the challenges of regional enterprise development from a personal perspective, that is, from the standpoint of a potential entrepreneur, which will often create conflict facing the regulating function of the municipal system. This coupling between the political system, the municipal system, and local actors seems to be a major reason for the problem, even though the interrelationship between these three groups differs greatly in the various Greenland communities.
It could be argued that, based on historical traditions, none of the actors mentioned above have ever been granted the opportunity to find their new "roles" in this "interplay". Few models have been developed that could be used to train and test collaboration. The actors are in general left to try out boundaries and potential collaboration in each individual case. There is a general tendency to expand the collaboration, and then place responsibility for its success or failure with public organisations.
Above we have argued that if there is a weak foundation of actors and concepts, it can be difficult to manage collaboration. It is predominantly left to the actors themselves to "work their way" from one end of the U to the other, which reflects a fundamental conflict. It can be difficult for a public system to promote an individual's opportunity for creating a personal (entrepreneurial) activity. On the other hand, the individual local actor will often interpret the municipality's signal as an expression of willingness to support even insufficiently motivated, but personally interesting projects. This often creates frustration among municipal actors, local actors, and their representatives, such as business councils or interest organisations.
The actors are often perceived as having a great range of possibilities for strengthening collaboration. This is true, if the numerous specific combinations in individual municipalities are related to the many potential actors and projects. Below we will attempt to analyse this scope of action.
The first model describing this scope of action - the project form
The idea of the project form implicitly underlies the beginning and formulation of entrepreneurial development activities that have received most of the municipal support in the two local regions which we have observed. In this context we disregard pure employment projects. The municipalities have typically incorporated the project form into their way of operating and solving problems to the extent that only those problems based on this model are viewed as rational and supportable.
It is considered rational for politicians within a certain space of time to set aside resources for unknown but potential new enterprise development activities. Not stating in general which activities should be promoted complies with the idea of uncertain non-recurrent activities underlying the project form. In practice, this is resolved by listing weak formulations about new enterprise activities to be promoted. Another characteristic of the project form is that problems to be resolved are formulated in the early phase, making these the objectives of activities. Based on these objectives, the project is routinely evaluated and adjusted. In most cases what we register are the procedures for goal attainment, meaning the daily processes of coupling the actors, who often operate at the bottom of the U through relatively hidden local processes. Since everybody is in principle interested in their efforts proving successful, it is often very difficult to follow a process which is characterised by many adjustments, and which has many actors and interested parties who are coupled to and decoupled from the process, depending on how much time and energy they can and want to allocate to the project. This leads to another model for describing the process.
Decision-making in loosely coupled systems
This model is described below, offering a more accurate reflection of the conditions of collaboration between actors located at the bottom of the U-model. This type of collaboration does not appear to be as rational as the project form, but is typically of the way in which many actors interact in action and decision arenas. Contrary to the project form, collaboration in loosely coupled systems is often governed by an objective which has been formulated in detail earlier in the process as a problem, but which appears as an activity of a procedural nature under diffuse goal perception where solutions look for problems.
Where the project takes on a hierarchical, bureaucratic form, work in a loosely coupledsystem often appears to be chaotic. Actors drift in and out of the action and decision arenas. Their efforts are often characterised by ad hoc methods oscillating heavily in quality and intensity. It can be very difficult to assess the work and outcome of this approach. We have already explained how difficult it is for officials working in the municipal system to collaborate and manage activities which couple these two models.
Possible solutions for coupling the two models
Above we have argued that actors in the two models experience difficulties joining in collaboration that could lead to attaining a common goal, which could thereby increase local ability to jointly develop regional enterprise. We will advance the hypothesis that underlying the difficulties in establishing this collaboration is the problem that in general, both parties act on the fundamental understanding that "this is the right approach". When two systems do coordinate collaboration, success occurs, but this is often related to specific people, making it hard to deduce any general understanding.
Therefore, if collaboration between actors in the two models does not produce the expected results, we recommend turning to a common training model which is constructed in such a way that local actors, regardless of whether their point of departure is the project management model or is based on loosely coupled systems, can learn the ability to achieve an overall common goal. They themselves can be in charge of training and learning processes which can secure the regional area - the enterprise actors. This common training model for local enterprise development, which we plan to use in the action part of the Umiaq Project, is called the model for knowledge diffusion, and is an alternative to the traditional model for knowledge gathering.
Local strategies for enterprise development: the model for knowledge gathering versus the model for knowledge diffusion
The two models are summarised in Table 4. In the model for gathering knowledge, actor innovation orientation is directed towards product and/or production processes. In the model for knowledge diffusion, this orientation is directed towards growth areas with a solid cash flow over the coming years. In short, it is market-oriented, and offers the basis for sustainable local production.
In the knowledge gathering model, the one with the production idea owns it. Therefore, the motivated actor is the project owner who concentrates on his/her one brilliant idea. In the knowledge diffusion model, several people are involved and ownership is vague, facilitating information and data gathering through frequent contacts with researchers and firms in selected growth areas. The motivated actors are a combination of social innovators and potential entrepreneurs who work in concert because they create or make visible several locally based product ideas.
Individuals operating within in the knowledge gathering model are globally oriented in their search for production opportunities, that is, new production can take place in locations such as Singapore or West Lolland, Denmark. The approach is purely businesslike. The knowledge diffusion model is locally/regionally oriented. In the former model external consultants are ascribed the role as actors, whereas these roles are ascribed researchers and/or participants in the latter model. Applying the knowledge gathering model requires little time in the inventive phase, but more in the innovative phase, while the opposite is the case with the knowledge diffusion model.
Table 4 shows that the underlying strategy of the knowledge gathering model is functional, while this is territorial in the knowledge diffusion model.
This model also gives room for independent entrepreneurs who exploit opportunities by applying a functional strategy. Furthermore, Table 4 shows that the territorial strategy builds on network theory, as do many of the actor and ownership characteristics. But what is the situation if, instead of finding strong and well-developed networks, we are left with fragmentation, where lines of communication are disrupted or cut off by "black holes" which absorb all information and energy without letting anything out again?
Like many other social science concepts, "network" is used both frequently and ambiguously. In this context, we shall not discuss the advantages and disadvantages of the various defini tions. However, we shall briefly offer our definition. Our approach is in keeping with the territorial strategy on social networks, which must be activated by applying the knowledge diffusion model. What determines the success of the model is the "carrying capacity" of the network. This can be examined and assessed through a static cut which will often be quantitatively oriented. However, a more dynamic perspective is also required in many cases, yielding qualitative information about the network.
In our practical work with the action part we have recommended the Kubus® concept. This concept combines basic features of the two models. The visible objective and management ideas of the project form are maintained for the purposes of evaluation and goal direction of work. From the loosely coupled system we include responsibility for self-learning and a perspective on community, training, and responsibility.
The Kubus® concept must be understood as an intermediate stage, a grey zone between the two models' work modes. The major goal is not to turn work into the project form, not allowing the processes to continue in very loose couplings, but rather to create in the community a great potential for management and understanding of how projects can be constructed in collaboration between actors. It will often be necessary to include actors outside the regional area in the process to infuse work with the potential knowledge necessary for implementing the project. Kubus Template is a tool for collaboration (see below).
If the actors in a community work using a well-defined model for training/development, it should be possible to collaborate directly with groups that arenot physically located in the area. It is important to train local actors, but in the initial project phase, these actors will often have to draw on knowledge from outside the area. If groups outside the local areas apply the same model, project collaboration can be organised through Internet or a PC with a modem. For this purpose, the communication program Kubus Template has been developed at the Copenhagen Business School.
The purpose of this training system is the same as entrepreneur support and job creation, but the main purpose is to have several persons trained simultaneously in handling the establishment of a business. The fundamental idea is knowledge diffusion in order to ensure that neither the community nor the innovative firm loses knowledge which is often the case when the concept of person/idea is supported in close collaboration with a network of consultants. In particular, it is important for communities to learn from apparent project failures, thus opening up new business opportunities.
The plan is for Greelandic groups to work with projects which can strengthen community survival by expanding existing frameworks for business activities, thus creating increased value in communities. Project Umiaq contributes a didactic concept and supervision, and is responsible for identifying production potential and social innovation. Students in Copenhagen, who are trained in the Kubus® system, contribute to the project primarily with knowledge about market conditions.
In relation to regional enterprise development, the Kubus® concept has been tested in Slagelse and North Sealand, Denmark, in Northern Ireland, in London, and in a densely populated area around Luleaa in North Sweden (cf. Herlau 1995; Herlau & Tetzschner 1995). In North Sweden, the goal was to develop the ability to create jobs in small isolated communities without any particular industrial tradition. To some extent, the situation in these communities resembles that in Greenland. These pilot projects have all been evaluated and have yielded good results in terms of new jobs. The fundamental question regarding the project is not whether the system works, but whether it is applicable to Greenlandic culture, the geographically difficult conditions, and as a purely distant training concept.
The dynamic action oriented part of Project Umiaq is based on Kubus®, which is most easily described as an innovative start up culture that can be used for project generation, as well as development of the ability to head the start up of innovative projects. The goal of the Kubus® concept is to train local initiators in how to take charge of job creation. The advantage of the concept is that it offers instructors and participants the possibility of following and controlling the course of the training process. By using the concept, the participants acquire a concise "language" and common "human software" which can describe processes that otherwise are inexplicable, such as how managerial competencies and sustainable concepts are developed.
Kubus® is a general innovative working method. The appropriate aspects to focus on will vary greatly and depend on the nature of the community. If Project Umiaq should be applied to Ilulisat, it would make more sense to strengthen ongoing activities related to tourism. Collaboration with organisations and actors within this area would have to be established. It would be of particular interest if project activities could result in active international networks. If applied to Maniitsoq, the project should be geared towards support of the existing Greenland entrepreneur culture. Here, two activities would be of primary interest: 1) supporting the expansion of existing activities in current firms, that is, export, innovation, new business areas and their management; 2) establishing new independent business activities/areas. The major goal would be to establish export/innovation networks, and encourage collaboration with target groups.
The success criterion is whether the project promotes and supports the local abilities and intentions to train actors who can secure and support the future self-organising of enterprise transformation and renewal. Training activities related to implemented projects should be evaluated. Another important success factor is whether it can be documented if the area has been infused with new knowledge from the outside, which through local management and processing becomes transformed into implemented activities. Regarding the relationship to Johannisson's (1986) actor and strategy models, it can only be said that applying the knowledge diffusion model, and hence Kubus®, in local areas presupposes a deliberate territorial strategy. The knowledge diffusion model will also in many cases leave more room for independent entrepreneurs to unfold a functional strategy with strong usage of the knowledge gathering model.
Research perspectives and hypotheses
Since the study on which this article is based is exploratory, no conclusion can be drawn as yet. However, we can summarise the perspectives and hypotheses which Project Umiaq raises. The overall purpose of the project is to identify a strategy for sustainable local enterprise development in Greenlandic communities. It is our opinion that this requires action research with dynamic efforts in the community, thus establishing data that can be analysed from the coupling model. This is the most important perspective, but almost of equal importance is building a broader foundation for enterprise development, beginning by analysing the facts in various communities from a holistic understanding of the significance of social networks. Therefore, the point of departure must be enterprise development rather than the more narrow concept of entrepreneurship.
This explorative analysis indicates numerous couplings between innovation and potential opportunities for local production. But motivated and competent actors are lacking, and it is our hypothesis that it is especially difficult to find actors who can fill the role as developer. Variations in community ability to fulfil this function are assumed to be decisive factors in determining whether undertaking any given local enterprise development will be appropriate. We also point out the necessity of analysing the presence of and relationship between independent and social entrepreneurs. Based on these two ideal types, the emergence of hybrid forms and their effects on local enterprise development must be analysed.
According to preliminary data, the hypothesis is that the Home Rule and the municipalities to a great extent pursue a functional strategy and act as independent entrepreneurs rather than applying a territorial strategy based on social entrepreneurs. We have presented a model of understanding, the so-called U-effect, which explains some of the difficulties encountered when coupling various actors and their different strategies. This interpretation, which so far is nothing but an interpretation, substantiates the strategy of Project Umiaq of using the Kubus® concept to operationalise the knowledge diffusion model. No matter what the outcome of the project will be in relation to these hypotheses, during the process it will be possible to examine to what extent the knowledge diffusion model is applicable. We may possibly have to improve the Kubus® concept in relation to the Greenlandic community in order to meet its overall objectives. Then again, we may learn that the concept is not applicable, thus pointing out the necessity for further research.
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Figure 1. Enterprise Development. Source: Rosa (1992)
entrepreneurship
Figure 2. The coupling model in a static community
Figure 3. The coupling model in an entrepreneurial community
Figure 4. Elements of regional-industrial complexes (RIC). Source: Baldersheim (1990:102)
Table 1. Transformation of the five core elements of the concept of entrepreneurship
Table 2. The Independent Entrepreneur and the Social Entrepreneur - a Comparative Analysis. Source: Johannisson:1986:6, table 1.
Table 3. Two Generic Strategies for Business and Job Creation. Source: Johannisson 1986:7, table 2.
Table 4. Model for knowledge gathering versus model for knowledge diffusion (ideal types)