2011-04-08 | Press Release
What drives profitability in the environmental technology business?
Professor Anders Pehrsson at Linnaeus University has studied the expansion of Swedish businesses in the rapidly growing markets for environmental technology. His research improves our knowledge about which strategies succesfully drive profitability in expanding markets generally.
Environmental technologies deal for example with waste management, noise abatement, energy efficiency, renewable energy, air pollution and water purification. Data from Statistics Sweden (SCB) shows that the turnover of Swedish environmental technology businesses increased with 57 percent between 2006 and 2008, and that the number of companies increased by 83 percent. The corresponding figures for industrial companies in general were 7 and 3 percent.
In order to facilitate a profitable business expansion in growing markets – such as the market for environmental technology – knowledge is required about which strategies have the best economic results.
– Environmental technology is an expanding line of business which offers great opportunities for Swedish companies. But it is important to identify the relationships between different strategies and profitability, and what actions can be taken to increase a company's profitability, says Anders Pehrsson.
Studies show that customer-oriented companies – i.e. those that build customer relations and emphasize solutions to customers' problems – are likely to increase their customer base and achieve a higher profitability in an expanding market. A company may also increase profitability by broadening its product range. To a large extent, businesses in growing markets tend to adjust their strategies to their competitors' strategies. Customer-focus and product range, however, do not seem to have an effect on profitability for companies in mature markets.
– It is vital for a company in a growing market, such as the environmental technology market, to have a good understanding about its competitors and to know which competitive advantages are important for customers. With such knowledge, businesses can find a profitable strategy, continues Anders Pehrsson.
In this study, hypotheses were tested on data from 262 Swedish environmental technology businesses in growing markets, and on data from 170 Swedish businesses in mature markets. The data was collected using questionnaires, personal interviews and analyses of annual reports. So far, the research has resulted in two articles which will be published internationally by European Business Review and the Journal of Strategy and Management. This research is funded by Ragnar Söderberg’s Foundation.
For further information:
Professor Anders Pehrsson, +46 (0)73 9780126, anders.pehrsson_AT_lnu.se
Christina Dahlgren, Press Officer, +46 (0)470 708551, +46 (0)70 5722656