Epsilon Archive for Student Projects

Abstract

The structural rationalization of rural firms in Sweden has led to many new creative ways of developing companies. The agriculture sector is characterized by the need of capital in form of buildings, labor and inventory. The rationalization process has led to free capacity in rural firms when new technology make buildings and inventory not longer necessary for the production process. To get a better cost coverage this free capacity can be used to start-up new business areas that help the rural firm to growth.

The study aims to identify factors that motives entrepreneurs in rural firms to develop new business areas. The purpose is also to analyze driving forces that lies behind development of rural firms and the forces that support or not support development in rural firms.

The study is built upon five cases that all can be categorized as firms with different size and orientation. All of them have starting new business areas beside their original farm activities.

The method that has been implemented to carry out the study has been of explorative nature including qualitative interviews. The results of this study show that development of new business areas is based on internal interest from the rural entrepreneurs and their access to internal resources as buildings and labour. For development to be possible the business managers have mostly chosen capital from internal sources. Managers see it as a safe way of development and growth because it is not connected with a higher risk for the company.