Twisting arms or twisting minds? This is the choice that faces countries as they engage the rest of the world. Twisting arms is easy. You square your shoulders like George W. Bush, strut the global stage, use your military to assert your ideology and bully other countries into doing what you want.
Twisting minds is a more subtle affair. You exert influence and get what you want through a culture and set of values that other countries want to copy. In this, Sweden has been masterful. The word Sweden is a brand in and of itself, synonymous internationally with responsibility, transparency and liberalism. Other countries want to be Sweden.
Or at least they did. It is completely perplexing that Sweden is slowly destroying the jewel in its crown – its reputation. What is even more troubling is that Sweden’s leading companies are active participants in this disturbing process. In short, corporate Sweden is helping write the country’s suicide letter in weekly installments.
Let’s take a brief look at recent events. The largest money laundering scandal in recent European history? Swedbank. Bribing ISIS, the terrorist organisation? Ericsson. Bribing the daughter of Islam Karimov, the dodgy leader of Uzbekistan? Teliasonera. Ignoring money laundering guidelines for patently dubious Baltic customers? Nordea. Flying wives, children and – astonishingly – pets on private jets to flashy events around the world? SCA, Handelsbanken, Industrivarden and SSAB.
All this from a country that is ranked 5th of 180 countries assessed in Transparency International’s Corruption Perception Index, which grants the country its highly-sought-after yellow badge, meaning it is squeaky clean, virtuous and ethical.
Obviously, it isn’t. In response to the scandals mentioned above, Finland’s foreign minister leveled accusations of “moral decay”, while Sweden’s prime minister described it all as “shameful”. Sweden, it seems, is some sort of state-sized version of ‘The Portrait of Dorian Gray’, the Oscar Wilde novel about a man who stays beautiful outwardly, while his hidden portrait gets uglier and uglier with every sin he commits.
What is at risk here? If we shift our attention away from Oscar Wilde and onto Joseph Nye, the US foreign policy scholar, troubling conclusions emerge.
Professor Nye coined the phrase Soft Power, which is a lot harder than the name suggests.
Power is the ability to influence the behavior of others to get the outcomes you want. Soft power involves getting what you want by shaping the preferences of others through appeal and attraction.
A defining feature of soft power is that it is non-coercive, involving instead culture, political values and foreign policies. Soft power is obstructed when policies, culture, or values repel others instead of attracting them. ”Credibility is the scarcest resource,” Prof. Nye wrote.
It is this that is at stake. Sweden has a deserved and envied reputation as a progressive, liberal country. The reprehensible actions listed above by some of its leading companies are placing this hard earned reputation at risk. Sweden’s credibility is being undermined by the actions of its corporate elite. If you roll in recent global headlines around riots, gang warfare and Koran burning, the picture darkens considerably.
It is clear that these and other events have diluted Sweden’s Soft Power, meaning that other countries, other businesses and other people no longer want to emulate Sweden as much as they did in the past.
It is undoubted that the vast majority of Swedish companies behave in a manner that is completely in line with its global reputation. Unfortunately, the media and other information providers are hard wired to accentuate the negative. A cursory glance at recent international reporting about Sweden reveals a fascination with the so-called ‘dark side’ of the Swedish model.
Any Swedish company that does business internationally benefits from the country’s standing as a transparent and responsible country. Any Swedish business person will attest to the fact that simply being Swedish creates that most valuable of all business tools – trust.
Credible corporate governance has an impact upon the performance and allure of equity markets, which by extension affect research and development, innovation, entrepreneurship, small to medium sized company activity, talent acquisition and ultimately economic growth.
It would be tragic in future if the first things that come to mind in an international business meeting when someone says their company is Swedish is bribes, corruption, money laundering and an elite jetting around at shareholders’ expense.
The words ‘progressive’, ‘values’, ‘credibility’ and ‘responsibility’ are often dismissed as soft and somehow not part of the balance sheet precise language of ‘real’ business.
But the reality is they are as hard as nails. They are the pathway to trust, investment, premium valuations and sustainable returns. Sweden’s corporate titans are taking unwise and inappropriate risks if they keep undermining the country’s hard earned reputation. The costs will be counted across the economy.
