The matter of locality: family firms in sparsely populated regions

ABSTRACT

This paper explores the interaction and interdependence between family firms and sparsely populated regions. Interactivity underlines the dynamics of the setting and how it changes based on activities between the firm and the context, whereas interdependence refers to how the family firm and the region become mutually reliant on one another. Five case studies show that while the firms act under similar conditions in terms of disparity, their interplay with and dependence on the region differ. The study points to how the citizenship of the family firms is fundamental and how employment is at the heart of the interdependence, while those firms interacting most strongly with the region are those expanding beyond what would be expected by a family firm in terms of traditions and risk aversion. This again indicates a complex pattern of interactivities and interdependencies between family firms and sparsely populated regions. The paper provides important dimensions to theories on family firms’ local contexts specifically related to under-researched settings of sparsely populated regions and important implications for managers, public actors and policy makers, not the least related to support to such contexts.

KEYWORDS:

• Family firm
• local context
• sparsely populated region
• interactive
• interdependence

Contextualizing family firms

The literature on family firms has emphasized how such company owners (i.e., the family) often feel strong citizenship to and integrate heavily with their local context (Adjei et al. 2018; Berrone et al. 2010; Bjuggren, Johansson, and Sjögren 2011). Meanwhile, research on sparsely populated regions describes a high dependence on firms deciding to locate in the region (e.g., Gløersen et al. 2006). This paper brings together these two streams of research – family firms’ citizenship to, and integration with, their local context, and sparsely populated regions’ dependence on firms located in the region. It does so by exploring how the citizenship and dependence, respectively, would create a mutual and potentially reinforcing mechanism between the family firm and the sparsely populated region. We use the concepts of interdependencies and interactivities between family firms and sparsely populated regions to emphasize that rather than talking about one-way dependencies or citizenship, there are combined forces of reciprocal character that come into play once studying family firms in sparsely populated regions. Interactivity in this circumstance denotes how the family firm and the region in a dynamic setting affect one another, while interdependence refers to how the family firm and the region become mutually reliant on one another.

Family firms describe companies ‘governed and/or managed with the intention to shape and pursue the vision of the business held by a dominant coalition controlled by members of the same family or a small number of families in a manner that is potentially sustainable across generations of the family or families’ (Chua, Chrisman, and Sharma 1999, 25). Sparsely populated regions refer to a local context marked by limited resources and work opportunities (Gløersen et al. 2006; Naldi, Larsson, and Westlund 2020). A family firm operating in a sparsely populated region would, from both the company’s and the region’s point of view, present conditions unlike those of the text-book large-sized firm located in an urban area, while family firms in sparsely populated regions are not uncommon.

Compared to previous research on family firms and sparsely populated regions, respectively, our argument is thus that of mutuality as incorporated in the prefix ‘inter’ (in interdependence and interactivity). The purpose of this paper is to explore the interaction and interdependence between family firms and sparsely populated regions. The context as interdependent and interactive means that each family firm faces a unique context in how it becomes the result of the interaction between the firm and the region.

The paper contributes to previous research by integrating two research streams that have previously been treated separately, while the phenomenon they represent would in real life come into play simultaneously. Family firms have been recognized to integrate with their context, while their effect on the local context or the context’s effect on the family firm is not well researched. Bird and Wennberg (2014) point out the missing perspective of family firms’ effect on their context, while Wright et al. (2014, 1255) emphasize the importance of considering the context’s effect through stating that ‘it would be useful to know if different types of family firms respond to contextual variations in ways that are similar or dissimilar’. Zahra (2016) continues by denoting that ‘context-free research can overlook the variables that really make family firms unique’. Researchers such as Härtel and O’Connors (2014) and Johns (2001) have similarly in the broader literature emphasized the importance of contextualizing research.

While Zahra (2016), Härtel and O’Connors (2014), and Johns (2001) implicitly indicate that the conditions for the family firm would differ based on the context, the family firm’s influence on that context is not well captured (Bird and Wennberg 2014). And, if taken for granted, the context would be the urban setting, rather than a sparsely populated region. The firm interacting with and being interdependent on its context, as described in this paper, brings on an ontological thought that unidirectional research on, for instance, a firm’s dependence on its context, would disregard. Furthermore, the sparsely populated region brings forth a context different to unproblematized assumptions of firms’ contexts and does so where the region would expectedly be highly dependent on the firm (Gløersen et al. 2006). The study’s practical relevance relates to the high, yet often overseen, numbers of family firms operating in sparsely populated regions.

Following this introduction, the paper presents the main theoretical components of the study: family firms and their context, and sparsely populated regions, respectively, to create overviews on previous research. Thereafter, the idea of the context as interdependent and interactive is discussed to create a theoretical framing. The method section then introduces how data was collected and analysed and is followed by the case studies constructing the empirical data in the paper. Finally, the cases are analysed, and the paper ends with conclusions, including limitations and ideas for further research.

Framing the topic of family firms and their context

Originating from the idea that a family firm is dominated by a specific group, the family, pertaining values different to other firms (Chua, Chrisman, and Sharma 1999; Howorth et al. 2010), the family firm would have a number of specific characteristics compared to non-family firms. These include a long-term orientation due to a wish to transfer ownership to the next generation (Le Breton–Miller and Miller 2006; Lumpkin, Brigham, and Moss 2010), and a strong identity overlap between the individual, the family and the business (Dyer and Whetten 2006; Villalonga and Amit 2006; Fletcher, Melin, and Gimeno 2012).

The research on family firms is dominated by perspectives focusing on the internal affairs of these firms: agency theory, stewardship, and the resource-based view are denoted as main theories related to family firms (Siebels and Knyphausen-Aufsess 2012; Debicki et al. 2009). The research focuses on those specific conditions set by internal values and family inference that forms the family firm, along with issues on the succession of operations, including selections of the party taking over the firm, how values are carried forward, and performance related to the specific conditions of family firms (Debicki et al. 2009; Grundström, Öberg, and Öhrwall-Rönnbäck 2012).

A key characteristic of family firms, as indicated by such researchers as Bird and Wennberg (2014) and Korsgaard, Ferguson, and Gaddefors (2015), is that they are strongly connected to their local contexts. The owners would often be born and raised in the region where the firm is located and would therefore feel a strong regional engagement – or citizenship – on a personal level (Adler and Kwon 2002; Block and Spiegel 2013). They would, based on values of tradition and citizenship (Berrone et al. 2010; Fletcher, Melin, and Gimeno 2012; Villalonga and Amit 2006), be expected to interact more actively with the local context than non-family firms (María De La Cruz and Suárez 2005; Block and Spiegel 2013).

The context, as described in family firm studies, is largely the social context, inferring kinship and social relations creating legitimacy and status for the family (Anderson, Jack, and Dodd 2005). On the broader definition of the context as a location, the heritage of being locally founded and the citizenship mean that the family firm would integrate with the region (Adjei et al. 2018; Berrone et al. 2010; Bjuggren, Johansson, and Sjögren 2011). Traditions and the heritage of being founded in the region would make the firm less inclined to change location, and there would be a strong dependability on local resources and individuals for recruitment, also woven into how a family firm expectedly would be risk averse and rather keep with the present and past than change company focus or location, let alone expand or internationalize.

But while previous literature has recognized how the family firm would carry a citizenship, remain local, and thereby create a dependability on the region, the reverse would also be assumed: The regional context would be dependent on the family firm, not the least when we talk about sparsely populated regions. Family firms have been found to be more socially responsible and pay greater attention to societal stakeholders (Dyer and Whetten 2006), and the citizenship would expectedly entail how the family firm would try to keep the region alive and decline to dismiss staff in times of financial difficulties due to a sense of pride and social pressure. As we argue in this paper, there would be mutual rather than unilateral dependencies between the family firm and the context, not the least when the context is a sparsely populated region.

The local context as sparsely populated regions

A local context refers to a geographically delimited area, which constructs a hub of direct and indirect connections among actors. As denoted by Dacin, Ventresca, and Beal (1999, 320), a local context ‘demonstrates [how] market exchange is linked with, and defined by, larger and more complex social processes’, thus underlining how the local context has to do with its actors, but also its specific way of functioning, its institutional character and traditions (Johns 2001).

Generally, the local context would consist of a municipality, including its administrative functions and business parties, and when described in most research, it would portray an urban area. Its borders to other contexts would largely follow from sensible delimitations based on flows of resources and connections among parties (Jack and Anderson 2002), where geographical proximity helps to define the local context. The local context would assume to create a sense of belonging or attachment for anyone being part of it.

Urban areas are generally characterized by a rich supply of various resources including funding, labour and information, but also business actors for demand and supply. Sparsely populated regions would, on the other hand, demonstrate local contexts marked by scarcities that could expect to affect those parties being part of the particular context (Casellas and Galley 1999; Heinberg 1970). Firms located in such regions are likely to find a limited demand for their products locally, and important resources, such as specific knowledge and competences, may be lacking or less diversified than in more populated locations. It has been shown that it is harder to find the needed human resources in more sparsely populated regions (Gnyawali and Fogel 1994). Firms may, to a great extent, become reliant upon internal resources (Davidsson and Honig 2003) and have difficulties to expand based on the lack of human resources and knowledge. A sparsely populated region would be highly dependent on those firms established or establishing themselves there (Iammarino, Rodriguez-Pose, and Storper 2019), as there is a virtuous circle where decline creates further decline in how unemployment disarms the region as inhabitants start leaving it (Gløersen et al. 2006; Maza and Villaverde 2004), decreasing any opportunity for recovery and leading to further competence decline (cf. Naldi, Larsson, and Westlund 2020).

Hence, and as argued in previous research, a sparsely populated region would be dependent on those firms located there, while family firms have – in separate literature – been described to depend on and integrate with their local context. Moving into the limited research phenomenon of family firms in sparsely populated regions and our interlinkage of the two streams of the literature of family firms and sparsely populated regions, respectively, and their unilateral arguments on dependence, turns our focus on the interdependence between the family firm and the region.

The interactive and interdependent local context

Already the descriptions of urban versus sparsely populated local contexts give at hand how various contexts would affect businesses differently (e.g., Iammarino, Rodriguez-Pose, and Storper 2019). Furthermore, there is the denoted difference between family and non-family firms in these regards, underpinned by citizenship and other values presumably making the local context particularly important for family firms. And, recent arguments have been raised on how the context needs to be understood to fully grasp what makes family firms unique (cf. Zahra 2016; Bird and Wennberg 2014; Wright et al. 2014).

When the family is described to integrate with the local context through citizenship and the like (e.g., Bird and Wennberg 2014), and this is seen in conjunction with the sparsely populated region’s activities to, for instance, foster development in the region, interactivity between the firm and the context can be understood. Interactivity denotes a dynamic setting changing based on activities of the firm and others (Anderson, Håkansson, and Johanson 1994), and marks how the firm makes up a part of the local context and thereby forms part of its setting. It would for a sparsely populated region mean that the context is formed through decisions made by its individual actors (i.e., firms and other organizations), yet how these also become affected by decisions made and activities pursued in the context. Family firms, as strongly locally rooted and their profound social structures including kinship and other values than purely financial performance ones (Adler and Kwon 2002; Block and Spiegel 2013), would create a specific type of interactivity further rooting the firm into the local context, and with assumed stronger interdependencies between the firm and the context than would be valid for non-family firms.

Interdependencies refer to how parties become mutually reliant on one another (Tomkins 2001). The interdependence forms the opportunities of a single actor, yet also its constraints, and introduces an understanding of contexts as increasingly situation and actor specific (cf. Johns 2006); with the interdependence, it follows that each party in a local context would have a different relationship to the context, and while geographically being the same region, the local context would be unique for each individual actor (Håkansson and Ford 2002). In the case of family firms in sparsely populated regions, the interdependence would consist of how the firm, based on traditions and heritage, orients heavily to the local context in terms of location and social engagement with the local society. Meanwhile, the sparsely populated region – as its actors but also as an administrative hub – would depend heavily on those firms being located there, which creates the mutual or reciprocal dependence between the family firm and the sparsely populated region.

Interactivity and interdependence would be strongly related, but bring two different aspects to front: interactivity marks the dynamics and the interplay of actors, interdependence the continuity and relative influence among them. Compared to seeing the context as only being affected by firms located there, interactivity and interdependence stress a more complex context, yet also more individual. Sparsely populated regions presumably mark a particularly strong interdependence between the family firm and the context. However, we do not know much about these issues. This paper explores the relationship between family firms and sparsely populated regions as interactive and interdependent to address this gap. The following research questions are addressed:

• How do family firms interact with their context in sparsely populated regions?

• What forms of interdependences between the firm and its context can be observed in a sparsely populated region?

• What explains differences among family firms in their interaction and interdependence related to their context in sparsely populated regions?

Method

Family firm studies are still dominated by quantitative research (Bammens, Voordeckers, and Van Gils 2011; De Massis and Kotlar 2014; Hair and Sarstedt 2014; Jack 2010), suppressing the notion of context (cf. Härtel and O’Connors 2014; Johns 2001, 2006). Qualitative studies are known to fit with the ambition to include contexts, and would the more do so if the context is seen as interactive and interdependent, where qualitative, in-depth studies provide abilities to capture relations among studied phenomena and context-specific factors. The case study design, specifically, is well suited for studying multiple facets of a contemporary phenomenon within its real-life context (Yin 2013) and for this reason, is suited for family firm research (De Massis and Kotlar 2014; Tagiuri and Davis 1992) as well as for studies focusing on the context (Jack 2010; Wagner, Lukassen, and Mahlendorf 2010).

Case selection

The majority of family firm studies have focused on large, publicly traded firms, and the context dimension has usually not been explicitly considered (Bird and Wennberg 2014; Wright et al. 2014; Zahra 2016). Family firms, and not the least small ones, would be key contributors to local (or regional) growth (Adjei et al. 2018; Bjuggren, Johansson, and Sjögren2011), making it relevant to focus on small family firms and related to our purpose, also based on how sparsely populated regions more rarely include the publicly traded firms. Multiple case studies allowed for contrasting cases, capturing patterns and adding dimensions, all of which are intending to theorize according to the process of emerging theory (Davidsson 2005), a method of theorizing aiming for generalization from empirical observations to theory, rather than to a population (Yin 2013). The case selection criteria were thus purposive rather than statistical.

The case companies (focal family firms) are located in a part of Sweden that is sparsely populated (cf. Gløersen et al. 2006; Naldi, Larsson, and Westlund 2020), with about 376,000 inhabitants on 36,000 km2 of land. It has a higher unemployment rate and a lower share of entrepreneurs than the Swedish mean. In contrast to many previous studies of firms in sparsely populated regions (e.g., Anderson 2000), we looked for small firms acting on international markets, that is, having to match international competition. The firms were known from a previous study conducted between 2013 and 2014 when the firms were visited for an extensive survey (made on site) focusing on small and middle-sized firms acting on international markets. The contacts facilitated access to the required information, and also meant that we had background information and some initial understanding for the firms. In line with Eisenhardt’s (1989) advice, we settled for a number of cases (five case firms) that were within the 4–10 range in order to avoid having too few or too many cases to enable theorizing while be able to present them in a way allowing for contextualized descriptions.

Data collection

Between January and February 2019, in-depth interviews were conducted with the family firms’ chief executive officers (CEOs) and representatives of regional strategic networks (RSNs),¹ and in September 2020, interviews were carried out with municipality business managers in the family firms’ respective municipalities. The use of single key informants from the case companies as the main data source could limit our understanding of the cases studied. The decision-making activities and knowledge of small firms’ strategy and operations are, however, usually centralized in the hands of a few key individuals (David and Audrey 2000), which would mean that more interviews for the sake of more informants would bring little to the understanding of the firms, and additional, relevant informants would in the cases be difficult to find. To address the issue of single informants, we used secondary data reviews (including newspaper items, annual reports and film of the firms as well as documentation from the regions) to validate data and capture the firms’ and the regions’ perspective. And, through conducting interviews with representatives of RSNs of which four of the family firms were part and representatives of the municipalities of all five firms, we could triangulate data and capture interactivities and interdependencies from dualistic perspectives. It should also be noted that the first author has a deep preunderstanding of the region based on previous research and her home base being in the region.

All but one interview with the family firms were carried out at the firms’ premises and included a short tour on the premises; the final interview (Case 2) was made using Skype for practical reasons. The interviews with representatives of the RSNs and municipality business managers were conducted via telephone (the interviews with the municipalities being performed while the Corona restrictions were in place).

Based on open-ended questions (Yin 2013), the informants were encouraged to tell their stories freely, and the CEOs were asked to reflect on their experiences of running a business in that specific local context as well as the degree and forms of interaction with other firms and organizations in it. They were only prompted by more specific questions at the end of the interview if precise details were lacking. The interviews lasted about between 1 and 1.5 hours each. They were taped and soon after transcribed for use in the data analyses process, which started directly after interview one in order to catch insights and impressions from the interview to be carried forward in further data collection. This on-going analysis resulted in some additions to the interview guide and some follow-up questions to previous informants that were handled on the phone.

As for the interviews with the RSN representatives, these were equally based on open questions, where the informants were asked to tell the story of the RSN: its history, members, present activities and future plans. These interviews lasted 45 and 65 minutes, respectively, and were taped and transcribed. The interviews with the municipality business managers, lastly, were similarly based on open-ended questions, then focusing on the region and the importance and contributions of local firms for the region. These interviews lasted 20–30 minutes each. Table 1 provides details on the data collection. The firms’ names have been left out for reasons of anonymity.

Table 1. Cases and informants

	Informant(s)	Duration of interview (minutes)	Family position of informant	Firm size – number of employees	Location	Technology
Case 1: Food products	Present and former CEO	90; 15	First and second generation	6	42 km from city with about 90 000 inhabitants	Low
Case 2: Equipment producer	Present CEO	60	Second generation	24	17 kilometres from city with < 7 000 inhabitants	Medium
Case 3: Wooden products	Present CEO	75	Second generation	60	9 kilometres from city with < 20 000 inhabitants	Medium/Low
Case 4: Machine producer	Present CEO	70	-	35	Small city with < 20 000 inhabitants (same as Case 3)	Medium
Case 5: Equipment producer	Present CEO	75	Third generation	60	Small city < 20 000 inhabitants	Advanced
Regional strategic network 1	Network coordinator	65	N/A	2	Region including 3 small cities (including cities in case 2–4) and the surrounding rural area	N/A
Regional strategic network 2	Network coordinator	45	N/A	3	Region including city in case 5and the surrounding rural area	N/A
Municipality 1	City business manager	20	N/A	N/A	Related to Case 1	N/A
Municipality 2	City business manager	30	N/A	N/A	Related to Case 2	N/A
Municipality 3	City business manager	25	N/A	N/A	Related to Cases 3 and 4	N/A
Municipality 4	City business manager	20	N/A	N/A	Related to Case 5	N/A

Data analysis

For the data analysis and the data reduction process (Coffey and Atkinson 1996; Miles and Huberman 1994), the interview data, together with data from web sites, newspaper articles and public records, were arranged into narratives but also systemized into tables for case comparison purposes. Quotes from the data were used to provide details and add voice to the text.

The data analysis started with the drafting of case descriptions, which helped us to keep an eye on the more holistic story of each family firm. In parallel with this, we approached the transcripts to code them. Codes were constructed during this analysis for any instance referring to the family firm’s context and for the RSN and municipality interviews, for any mentioning of the family firms related to the regions. The instances were coded to understand whether and how the firm depended on and interacted with the context, and whether and how regional representatives expressed any dependence or interaction with the family firms. It was thus behavioural but also relational aspects that were coded.

Overlaying the idea of interdependence and interactivity between the family firm and the sparsely populated region over the data, we next labelled each instance to see how the mutuality came across and how it was linked between the firm and the context in each case, while coding the type of interdependence and interactivity and the counterpart using empirical codes. Appendix A1 exemplifies expressions from the case firm interviews and codes developed.

Thereafter, the individual cases were compared. This helped us to capture similarities and differences among the cases. This comparison had two functions: to reduce and thereby theorize codes, and to, through background data analyses, explain differences among the cases. The reduction of codes used the constant comparative method (Silverman 2005) to search for more abstract, overarching categories that could capture groups of responses.

At the step of explaining interdependencies and interactivities, backward tracing (Jessop, 2005) helped to inform us about what caused specific dependencies or interactivities in the cases, where the interview transcript helped to find any explanation given by informants, and the secondary data guided us to understand similarities and differences among the cases in terms of background data (degree of internationalization, generation currently running the business, etc.). Based on similarities allowing literal replications, we looked for contrasts allowing theoretical replication (Eisenhardt 1989; Eisenhardt and Graebner 2007). We also acknowledged departing from the idea that while the context was the same or overlapping from a geographical point of view, the interdependence between the family firm and context constructed unique or specific settings for each firm.

As a last step of the data analysis, we returned to the literature on family firms and sparsely populated regions, respectively, to see how our findings fitted with known phenomena and to ensure our gap and theoretical contribution. This final step helped us to position our study, as seen in its theoretical background sections.

Case presentations

Case 1: the food producer

Case firm 1 is a third-generation, low tech, family firm located in a village of less than 1,000 inhabitants, 42 kilometres from a city of about 90,000 inhabitants, where few other firms are family firms. The present owner acts as CEO, the spouse works in the firm in an operational position, and the father, the former CEO, now retired, still fills the role of an adviser from time to time.

Emotionally, the local connection for the firm is strong, which limits the location opportunities. This is expressed as a mutual dependence, where the tradition of the firm interlinks with a feeling of responsibility for the region, as in the statement, ‘[the firm] is important to the village … it can’t be moved’, not even closer to the nearby city as it is expressed how the place is the firm, as stated, ‘my heart tells me that it has to be located here. Logically, I know that it is not the best location, but it must be possible here as well!’, the CEO explains. The father nods in agreement. ‘This is us’, he concludes. The location implies reduced access to and higher costs for transportation, as transportation is only possible on certain days and at a higher price than from the city nearby. ‘Financially. it would be much better to be located somewhere else’, the CEO states. Some visiting customers have actually questioned the location, but also admired the beautiful nature and the quiet atmosphere.

The CEO feels a strong responsibility for the employees. They live nearby and, due to the lack of alternative employment opportunities in the village, have been employed for a long time and are almost regarded as part of the family. Some years ago, however, some staff had to be dismissed. That was a hard decision. The CEO waited as long as possible, ‘probably a bit too long, my heart again, hoping to be able to avoid that measure. The feeling of accountability has been passed on from generation to generation: ‘it’s sensitive, and has been for my father and grandfather as well, it may hit neighbours or relatives, and they have all worked here for such a long time.’ This restraint also makes it hard to hire new staff. Long-term employment cannot be guaranteed, but the CEO feels an implicit pressure to do so and therefore hesitates to take that step.

The firm has no major business partners in the region, and the CEO does not interact with other firm managers to any major extent socially. The firm does not give priority to any local firms in order to support the local context – no firm is suited for that – but some financial support is provided to local sports associations, like the local football club.

The CEO would like to have a speaking partner outside the family to discuss business issues with but has not been able to find one among the managers in the firms nearby. ‘I would like to have someone to talk with … I feel very lonely. I have felt this way for a long time, already before my father left the business, to have someone else to discuss thing with.’ There was a small, local, currently inactive RSN for firm managers covering the region in and around the village. The ambition was to create an arena for informal interaction, social relationship building and information exchange. The CEO took an active part in that as coordinator by trying to arrange meetings and interaction among these local managers. But they were all one-person firms, like hairdressers and various craftsmen that did not give priority to these kinds of initiatives. ‘It has been hard to generate commitment; no one takes the time … no speaking partner there either’. Furthermore, it would be easier to discuss thing with someone outside the local context, and thereby not directly or indirectly affected by the firm’s actions, ‘I would find it easier to open up to someone outside the nearby villages’.

In the city, the CEO has taken part in some educational programmes and received support in finding international customers, both events provided by Almi Företagspartner AB, a regional subsidiary of a national, public organization supporting firm development and internationalization. This has been ‘useful but has not led to any significant changes to the business’.

Case 2: the equipment producer I

Case firm 2, a medium-tech firm, is located in a village of less than 1,000 inhabitants, 17 kilometres from a city of about 7,000 inhabitants, and with many firms in the region being family firms. The CEO represents the second generation, a sibling is production manager and the founder is chairman of the board.

A photo of the landscape and a description of nature in the region are seen at the start of the presentation of the firm on its web site, but ‘we don’t want to stress how far off we actually are located’, the CEO explains. In terms of the location, ‘We are proud of offering employment opportunities here’, the CEO continues. ‘We have not discussed outsourcing or moving the firm, but I don’t think I could to that, other firms might have, but we really try to avoid it. All production shall be located here, my father finds. That’s in me too, I would find it hard to go against that.’ The firm has never dismissed an employee, despite going through some hard times a decade ago. ‘That’s a fundamental value that he [the CEO’s father] has transferred to me, that we try to avoid that. Things would really have to be bad. … . Our staff have worked for a long time with us, so even if not all of them live in the village, there we feel loyalty and a responsibility’, the CEO explains. The firm (and other family firms in the region) not considering relocating and creating stability in terms of employment opportunities are emphasized by the municipality business manager as stabilizing the region.

The CEO was one of the initiators to merging two RSNs. ‘We are all rather small firms that need the support of each other in order to develop … some are rather isolated and try to “invent the wheel themselves”. I want us to cooperate on shared challenges and learn from each other’, the CEO explicates. The CEO has, for instance, contributed by presenting experiences of developing a communication strategy in a seminar for the other RSN firms (published on the RSN web site). As an active member of this RSN, the CEO has interacted a lot with several other managers, and some have become personal friends; ‘you get to know each other and eventually become friends, which of course facilitates cooperation and leads to knowledge exchange’, the CEO explains. The CEO is furthermore very pleased with an R&D project organized by the RSN and including a university in another Swedish region, and said, ‘the knowledge level is often low in our firms, and it is hard to find time and resources for long-term oriented R&D. … This is a unique opportunity’. The municipality business manager stresses the importance of the RSN for the region: ‘That benefits the whole region, not just them. They are incredibly important to our region’. With that said, and this is echoed by the municipality business managers in the other cases, there is a preference from the municipality’s point of view to interact with networks, such as RSNs or trade organizations, as the managers lack resources to deal with individual firms. The municipalities, therefore, support RSNs and similar network constellations financially and arrange arenas for interaction, relationship building and knowledge development themselves as well, like breakfast meetings and seminars in cooperation with other public business support agencies like Almi.

The firm supports the recruitment efforts for the firms in the RSN, although the firm has not yet had this need itself. The work is seen as important for the future: ‘It’s important to be many … it is hard for a young person to imagine moving here. We want to show that there are many exciting, cooperating companies in this region’. For specific competences, knowledgeable individuals in the region have been approached, while the firm has avoided recruiting from other firms in the RSN as doing that might cause hard feelings. The municipality business manager highlights how the family firm’s stability and the initiatives of shared recruitment help keep skilled individuals in the region, not the least since the shared efforts help employees move between companies in the region rather than leave it.

For the father, who still lives in the village, it has always been very important to support the village development by offering employment, using local suppliers and sponsoring various organizations and events. The CEO, who no longer lives in the village, respects this attitude and acts much in the same way, and states, ‘to contribute to the local context was very important to my father, and I feel that way too’. However, this second-generation CEO has high ambitions for the future. The firm has grown, which means that a new logic (rational rather than emotional) has increased in importance and affected the connections to local suppliers: ‘We support them and encourage their development work, but we now only keep the ones that can grow with us and fulfil our requirements.’ There are no local customers.

In sum, like Case firm 1, firm 2 operates in a small village, and emotional ties in relation to the local context affect firm operations and strategy, although with a decreasing amplitude. There is not the least a wish to be perceived as a good employer, which affects the possibility of making decisions on the basis of financial logic, a standpoint that is passed on from generation to generation. Unlike Case 1, however, the CEO in Case 2 has had the opportunity to find speaking partners and support by engaging in and developing an RSN. By taking part in the RSN, the CEO has developed connections to several other managers, and knowledge is shared in both seminars and informal conversations during various types of meetings, but also in the R&D project. Notably, the RSN efforts supported by the CEO are not only intended to support the specific firm. The recruitment efforts have until now not been needed by the firm, but the CEO nevertheless takes part in this initiative as it strengthens the attractiveness of the local context as a whole. Likewise, the R&D project makes a difference to the region, not just the firm, as the skills provided by the university were previously not regarded as within reach in the local context.

Case 3: the wooden products producer

Case firm 3 is a medium/low-tech, second-generation family firm producing wooden products. It is located in a village of less than 1,000 inhabitants, 17 kilometres from a city of less than 20,000 inhabitants, and as with the previous case, many other firms in the region are family firms. The majority owner acts as CEO. Two siblings are passive shareholders.

The firm location is described by the CEO as ‘a bit “off”’, but it is still seen as advantageous due to the presence of a key supplier nearby. Relocation has not been considered; ‘this is where I live, I make the best of it’, the CEO explains, and the stability created from not relocating is described as positive for the region by the municipality business manager. The firm does not need much advanced, specific competences so hiring new staff is rarely a problem. The technical demands are not very high; ‘it is rather a matter of developing efficient production methods and an attractive brand’. The CEO believes that the needed competences are present in-house and that they, together with the competences available through suppliers and customers, are sufficient for developing the firm. Employees have been dismissed over the years, but this has not been seen as a problem. ‘It’s part of the game. I feel a responsibility for the well-being of the municipality, but the future of the firm has to be given priority’, the CEO explains.

Case firm 3 is part of the same RSN as Case firm 2 (and 4) and has a representative who takes part in meetings, but the CEO, who previously used to attend, has largely left this engagement, and states, ‘I did not much benefit from taking part, just very little.’ The participation is mainly intended to support the initiative and the region (the firm, like all members, pay a membership fee to the RSN); it does not aim to benefit the firm per se. He also does not interact much with other firm managers in the region: ‘I am not actively building a network, but I have of course got to know some people over the years’ and ‘it is easy to call someone for help on various matters’. The CEO feels that the family firm acts in a niche that is rather unique compared to the other firms in the region, which reduces the benefits of interaction with those firms. Instead, he finds the needed advice and support in relationships with customers, suppliers and other individuals in other regions. The firm has only a few insignificant local customers and suppliers, except for the key supplier in the region, and no specific intention to support local firms. However, it supports sports associations and events when employees are involved.

In sum, like Cases 1 and 2, the present family firm is located in a village, but in much closer vicinity to a small city. The presence of the city and thus other employment opportunities nearby (based on the firm not requiring technically-advanced staff) implies that there are less emotional and social restrictions at hand if the firm should need to reduce the number of employees. The location can then be judged on practical and financial reasons (‘This is where I live, I make the best of it’ and the presence of a key supplier), rather than on emotional commitment to the location. The CEO, like the CEO in Case 2, has developed informal connections with other firm managers that facilitate access to various forms of support. In contrast to the CEO in Case 2, however, relationships with other firms in the region are of much less importance (except for the key supplier). Since the technical demands of the current firm are lower than those of the firm in Case 2, the local context does not imply any restrictions in that regard, and the CEO is therefore not that interested in the RSN activities, which implies that when the technical demands increase, so does the dependence on resources and attractiveness of the local context and consequently the incentives to engage in developing this context.

Case 4: the machine producer

Case firm 4 is a medium-tech firm located in a city of less than 20,000 inhabitants, with many family firms being part of the region (this is the same city as in Case 3). The CEO is externally recruited, while the owner (and founder) acts as the chairman of the board, and his children work in managerial positions in the company and on the corporate board. He was born in the city and so was the owner, ‘so of course, we have feelings for this city. The CEO appreciates the beautiful surrounding nature, and states, ‘we continuously invite key customers and suppliers and show them our surroundings. They always go home excited, which helps when they present us in trade shows.’ The location is overall not seen as a problem, as the CEO notes, ‘There are disadvantages but also advantages. There is a lack of specific competences that we need to handle. But the employee turnover, rents, wages, etc. are lower than in large cities, and the local government is very supportive’. Furthermore, he states, ‘this is a small city, so after a while, I knew most other firm managers and an informal cooperation developed. It is very useful, one can call and get help in dealing with various matters, and there is access to good competences.’ He is also very pleased with the support of the local municipality, declaring, ‘we cooperate tightly with the municipality … The business climate is good. Many events are arranged … in arenas where managers can meet’.

A few dismissals have been necessary in the past during reorganizations, but not to a degree that the city has been affected. The financial logic governs, and the CEO states, ‘of course, we want to support the region, we wish to be able to conduct our business here, but we can’t let that affect business-related decisions.’ The city where the firm is located experienced a crisis when a major firm closed its operations there. Wishing to contribute to a more positive development for the city and the region, the CEO was one of the initiators to the RSN described in Cases 2 and 3, with the CEO being a leading actor. ‘If the firm is to succeed, I need to contribute to strengthening the region.’ The extended network received funding from the three municipalities and other public actors for supporting the 24 member firms that wished to cooperate on recruitment efforts. A coordinator was hired who started to arrange trainee programs, offer degree projects for students of civil engineering at universities and set up study visits and summer jobs for university students.

For the municipality, the RSN is a source of information and guidance for the business development work: ‘Actually, it’s they [the RSN] that supports us. They know what needs to be done and push us in creating the right conditions.’ When the municipality business manager presently considers measures to handle the closure of a large factory in the neighbouring town, she turns to the RSN. ‘When I consider how this closure affects the firms in our region … I call the RSN coordinator, who can put the question to the member firms’.

Engaging in this RSN has for the family firm been a means to deal with employee and competence issues. Not only CEOs but also other employees take part in RSN activities, including the procurement manager, who, as expressed in a filmed interview from the RSN web site, is very pleased with a seminar on project management, headed by two other RSN firms (filmed interview on the RSN web site). Students have realized that the region has a lot of exciting work opportunities to offer, and the firms in the RSN help one another on recruitment issues: ‘We decided not to compete for employees but rather increase the inflow to the region as a whole by cooperating. Thus, when I look for new employees, I present the other firms as well. It is more interesting for potential employees to move to a region with many employment opportunities. There is furthermore often an accompanying spouse who needs a job and some of the other firms may offer such opportunities.’ There are no major customers and suppliers in the region, and no specific aim to specifically support local firms, but there are sports associations and events where employees are involved and receive support.

In sum, like Case 3, this firm is very connected with the location, finding advantages that compensate for the disadvantages. It is evident that even in small cities, there is support available from managers nearby and much less preoccupation than in the countryside with how the reaction will be if someone has to be dismissed. Nevertheless, the CEO is clear that the future of the firm is dependent on the future of the region and engages in efforts that aim to support other firms in the region. Acting together in the RSN, the firms present not only their individual business, but also an attractive region, when looking for new employees.

Case 5: the equipment producer II

Case firm 5 is a high-tech, global leader within its product niche, located on the outskirts of a city of less than 20,000 inhabitants, and with many firms in the region being family firms. The CEO is a representative of the third generation, a sibling works in the administration, and another is a passive owner.

The CEO is pleased with the firm’s present location. ‘We believe in this location. It should be possible to run a business from here, but we need to be efficient.’ The CEO tries to turn the firm location into an advantage by arranging outdoor activities for visiting customers to create an impression and show the benefits of the location. Transportation is not seen as a problem, and the fact that there is a number of firms active in similar businesses in the local context is seen as a great advantage. As stated by the CEO, ‘there is knowledge locally, and we can cooperate on transportation, etc., but we sometimes try to hire the same people.’ This latter aspect, though, also facilitates recruitment. ‘On the other hand, there are knowledgeable individuals available locally. Furthermore, someone from another region might hesitate to move to this region and become dependent on the presence of one employer only, but if things do not work out, there are other firms that need the same kind of competences’. Some specific competences are more abundant in large cities, the CEO admits, but the competition for these competences would likely be stiffer in such cities since there are more firms as well. ‘Once we hire them, they tend to stay for many years, likely longer than in large cities’, the CEO argues. The employee turnover rate is very low, ‘perhaps a bit too low, but it is hard to see it as a problem, the employees are very loyal’, the CEO explains. The firm has grown rapidly for several years and has never dismissed any employees. There is a pronounced reluctance to dismiss staff: ‘the firm must be able to survive, but no one would be fired until other measures had been tried, perhaps a general wage reduction’.

The CEO takes part in various local cooperation initiatives. A group of firms in the same industry cooperates on various competition-neutral issues in order to cut costs, for instance, regarding contracts for transportation, electricity and rental cars. The firm also cooperates on sales with some local firms as they can offer complementary products. It has no aim to specifically select local customers or suppliers, but several local events and sports associations receive financial support, especially if an employee is involved.

The CEO also takes part in a network for CEOs that is run by the municipality in order to stimulate cooperation and knowledge exchange. However, the most important arena is an RSN that was formalized in 2012 when the city where the firm is located faced difficulties as two large multinational firms closed their facilities, and more than 450 people lost their jobs. In the small city, this created a feeling of crisis that made this firm, as well as other firms in and around the city, reconsider their previous ways of working and aim for further cooperation in order to secure, and hopefully even increase, employment opportunities. The resulting RSN now encompasses 19 firms, with a core of firms within related industries. The RSN is basically a firm initiative funded by membership fees, but the municipality is one of the members and provides some additional financial support. In cooperation with schools in the region, the firms try to increase the interest among students for working in their industries. They also arrange trainee programs, study visits and run an R&D-project (funded by a public fund provider) together with a Swedish university from another part of Sweden.

The coordinator of the RSN sees the network cooperation as a necessity for being an attractive partner for R&D cooperation with universities or large firms (which they now have established). He underlines that the RSN has an established, useful brand. ‘These types of firms in traditional industries tend to think that a good product will sell itself; they don’t develop their brands … now they use our brand and can thereby also increase the value of the location.’ The municipality business manager underlines how RSN initiatives are important for the region in terms of employment as well as for knowledge-development efforts. The CEO appreciates the various forms of support provided by the municipality and finds that taking part in cooperation-initiative work is linked to relationship development and resource access for the firm: ‘After having met on several occasions, it becomes easy to get in touch regarding various issues … we can act as speaking partners to each other’. In addition, by taking part, the CEO feels that the firm supports the region since, in crafting a creative and supporting context, they contribute to the support of other firms – and thus to the well-being of the region as a whole.

In sum, and especially in comparison with Case 1, this final case suggests how the location in a small city, compared to a small village, can make a huge difference, especially when firms in the same industry are present. Transportation and the presence of many, in this case, also similar firms nearby facilitate mutual support, cooperation initiatives and recruitment. By joining forces, firms in the region have been able to develop their business context in various ways. Notably, however, a negative development in the local context was an important spark to this development. The importance attributed by the local municipalities to this type of cooperation among small firms is shown in the support provided to RSNs and other arenas intended to facilitate interaction, cooperation and knowledge exchange.

Analysis

Table 2 summarizes the cases in terms of traces of interdependence and interaction between the family firms and the sparsely populated regions they are part of.

Table 2. Interdependences and interactivities in the cases

	Dependence on context	Activities with context	Context’s dependence on firm	Context’s activities
Case 1: The food producer	The firm is the context – the heritage and the branding of the firm	Attempts to not dismiss staff – expression of citizenship and social responsibility that runs through generations Avoidance to employ – due to risk of needing to dismiss; social liability Not moving – despite more lucrative and economical to be more centrally located Previous activity in local RSN – social purpose mainly Support to local sports association Sum: activities and dependence to region as a place, not to its firms	The firm is important to the village – limited work opportunities and mainly non-growth service firms in the region	Creation of RSN – to stimulate interaction among firms in region Local support from ALMI Other firms (non-family firms) not interested to interact even socially
Case 2: The equipment producer I	Branding of firm as located in the village Emotional attachment running through generations	Would not leave the village Avoidance of dismissing staff – value base inherited through generations Initiative to form new RSN and interaction for R&D purposes in the RSN Recruitment efforts for other firms as shared activity – attract to region Avoidance of recruiting from other firms in region Sponsorships of organizations and events, though decreasing as growth ambitions Local suppliers (but not customers)	Inhabitants’ dependence on firm for employment	Staff remains loyal with firm RSN members cooperating University engaging in R&D Municipality supports RSN financially Close cooperation with municipality
Case 3: The wooden products producer	Dependence on key supplier – importance to cherish relationship Raw material from region	Local supplier – based on business decisions rather than emotions Firm has adjusted assortment to key supplier Local recruitment – though due to specific competences not needed Supports local sports and events when employees are involved RSN only to support region Region used in branding – creates trustworthiness	The firm is one of the large firms in the region creating dependence	RSN support from municipality
Case 4: The machine producer	Recruitment base (though partly helped by RSN) Dependent on the region for the future of the firm	Informal networking with firms in region, helped to find competences Leading actor in RSN – giving back to the region Support of sports events and associations where employees are active Sum: Support and give back to region	Employment opportunities Development of region dependent on firm’s engagement for other firms and in the RSN	Informal cooperation among firms Municipality provides business support University helps in R&D
Case 5: The equipment producer II	Cooperation with other firms and their presence in the region important to keep infrastructure” Knowledgeable staff available due to other firms’ location in region	Activities to show benefits of region to customers Reluctance to dismiss staff Active in regional cooperation initiatives including RSN and to cut costs Support local events and sports associations	Employment opportunities	Local firms cooperate with the company to reduce costs Municipality support Formation of RSN University engagement with RSN

Albeit all firms are family firms, and despite them all being located in sparsely populated regions, there are differences among the cases in the interdependencies and interactivities (Anderson, Håkansson, and Johanson 1994; Tomkins 2001) described. This comes across based on different background variables (cf. the context being unique, Iammarino, Rodriguez-Pose, and Storper 2019) that are referred to by the informants. It is expressed as various types of interdependencies and interactions, along with whether the dependences and activities are really reciprocal, or mean that the family firm, for instance, acts vis-á-vis the region, while the region responds to these activities or create separate activities related to the family firm. The following section compares the cases firstly in terms of how interdependencies and interactivities can be understood from them, and secondly, in what explains these and also the relation between the interdependencies and interactivities.

Case 1 depicts a family firm’s dependence that follows from family values rather than business contracts, where the dependence leads to activities of the firm aimed not to lose its social contract with the region. This constrains the development of the firm in terms of risk taking (cf. Sirmon and Hitt, 2003), while also meaning that it would not substitute the caring for staff for profit optimization. The caring for employees, in turn, made the region dependent on the firm, not only based on it providing job opportunities but also based on how it did so in a way creating security and stability; the social responsibility of the family firm mattered, thus imprinting family values (cf. Chua, Chrisman, and Sharma 1999; Howorth et al. 2010) into the region. The reassurance created through the firm vis-à-vis the region meant that while the region is dependent on the firm, it did not extensively work to create further interaction with the firm, and while feeling emotionally connected to the region, the family firm considered the region as a place rather than as a resource base.

Case 2 demonstrates a similar situation as Case 1: The family firm has an emotional tie to the region, which affects its feel of dependence and activities. There is the responsibility for keeping staff as in Case 1, but the citizenship (cf. Adjei et al. 2018) expressed in interactivities goes further through promoting the region to raise its attractiveness and make people move into the region. This again results in an interactivity with other firms and the municipality as an organization in terms of shared efforts to raise attractiveness of the region, but also development of the firms (through the R&D project engaging also a university). Similar to Case 1, the region depends on the firm for employment opportunities, but the more interactivities (compared to Case 1) become a means to deal with such dependencies while strengthening the ties between the firm and the region not only as a place but also as those other firms and organizations being part of it.

Case 3 describes a family firm that is much more dependent on the region for its business than the previous two cases. Emotions are not emphasized as much as in the previous cases, while the interdependence (cf. Tomkins 2001) on the level of business becomes more heightened. The interactivity becomes more business connected, while also somewhat social in terms of activities to support the region.

Case 4 reflects a family firm with a high dependence on the region for competences. Hence, the firm has a business dependence (rather than one based on heritage and citizenship only, cf. Berrone et al. 2010). However, the business dependence has grown out of a feel of citizenship for the region and demonstrates how the firm continues – similar as in Case 2 – to work for the attractiveness of the region. Thus, it describes a family firm that not only feels a responsibility to remain in the region but also engages in raising the attractiveness of the region. While the region’s dependence (cf. Iammarino, Rodriguez-Pose, and Storper 2019) on the firm again is one of ensuring employment opportunities, the interactivities go well beyond employments. It includes the mutual engagement in the development of the firms in the region and the inclusion in R&D projects.

Lastly, Case 5 refers to a family firm embedded in the region for business reasons; it depends on the presence of other firms to keep infrastructures working and maintain access to skilled staff. Similar to the other cases, this is rooted in a feeling of citizenship for the region (Adjei et al. 2018; Berrone et al. 2010; Bjuggren, Johansson, and Sjögren 2011), that has developed into a quite complex business dependence, that – as opposed to Case 3 – is not about the dependence on a specific firm but the dependence of a large enough number of firms being in the region. This creates an interdependence (Tomkins 2001) between the family firm and the region based on those parties being there; the region is not just a place, but those firms and organizations being present there. As with Cases 2 and 4, the family firm in Case 5 works to increase the attractiveness of the region while working to raise the interactivities in it and in shared projects work to develop its firms.

The five cases suggest how the family firms all express citizenship (cf. Adjei et al. 2018; Berrone et al. 2010; Bjuggren, Johansson, and Sjögren 2011) for the regions of which they are part. This citizenship is again rooted in family traditions, as would be expected based on previous literature (e.g., Adler and Kwon 2002; Block and Spiegel 2013). However, it has for some of the firms developed into a business dependence (cf. Håkansson and Ford 2002), while the regions’ dependence on the firms is much that of employment opportunities, a consequence of the regions being sparsely populated. The dependence of employment opportunities also stretches into competence development, issues much facilitated by the family firms, and cooperation and development initiatives of them (including the RSNs).

Different to expectations from studies on family firms (Dyer and Whetten 2006; Villalonga and Amit 2006; Fletcher, Melin, and Gimeno 2012), some of the case companies have expanded their interactivities with the region beyond social and possibly business interaction, to include activities aimed at increasing the attractiveness of the region. While most literature on family firms emphasizes how these keep with tradition and maintain rather than develop operations based on risk aversion (Chua, Chrisman, and Sharma 1999), our findings indicate ambitions for expansions and restructuring a region marked by decline. This would follow from the region being sparsely populated and results in interactions motored by family firms to promote the region as an attractive place and establish interactivities for R&D development among firms in the region.

Hence, family firms in sparsely populated areas depict the expected citizenship of the family firms (e.g., Berrone et al. 2010) and the dependence of the region on firms in it (e.g., Gløersen et al. 2006). In addition to this, family firms in such regions may thus work to try to solve the issues of the region, and do so in manners that increase interactivities and interdependencies, while making the family firms acting out of character through addressing expansions, development and risk taking. Our cases suggest that one of the deal-breakers for such a behaviour is whether the family firm sees the region as a geographical place only (leading to a keep with traditional behaviour) or as the firms and organizations being in the region (leading to taking on responsibilities to create a more attractive region while developing firms in it).

Conclusions

This paper explores the interaction and interdependence between family firms and sparsely populated regions. In response to the calls for contextual aspects of family firms (e.g., Backman and Palmberg 2015; Wright et al. 2014), this study started out by focusing on how individual family firms relate to their context when the context is a sparsely populated region. Previous literature on family firms and sparsely populated regions, respectively, has pointed out how each would manifest strong dependence on the region and firms, respectively, something that we translated into the framing of interdependencies and interactivities (Anderson, Håkansson, and Johanson 1994; Tomkins 2001) between the region and the firm.

This paper concludes that there are certain characteristics of dependence that could expect to apply to all family firms in sparsely populated regions: the citizenship (cf. Berrone et al. 2010) and the region’s dependence on the firm for employment opportunities (cf. Casellas and Galley 1999; Heinberg 1970). At this lowest level of dependence, the family firm views the region as a geographical place, and activities are quite separated: the family firm engages in social activities only and traditions emphasize the setting.

Moving into when the family firm interacts with its context for business purposes – including customers, suppliers or firms with which it shares needs for infrastructures – interdependences rise as do the interactivities constructed with a view on the region as being those firms and organizations part of it. Such a view further means that the interdependencies and interactivities form among organizations, rather than as a caring about the region only. Actual business opportunities but also citizenship would explain the family firm’s behaviour in these cases.

Additionally, there are the family firms acting based on the sparsity of the region through trying to increase employment opportunities in it and developing firms as part of it. These firms view the region as its firms and organizations, while taking a social responsibility to create attractiveness and development, head networking activities, and establish engagement among other firms. Such family firms are the most responsive to the region as sparsely populated while breaking with expected family-firm traditions of keeping-as-it-is (cf. Berrone et al. 2010; Fletcher, Melin, and Gimeno 2012; Villalonga and Amit 2006) to work with expansion and taking risks. The citizenship is seen in how the firms try to help others, while this is the circumstance where the sparsity of the region is most clearly acknowledged.

Together, these different types of interdependences and interactivities show that there is no one way family firms and sparsely populated regions are interdependent or interact. In fact, it stresses whether values expected from family firms or characteristics of the region are the most predominant.

The theory section raised three questions: How do family firms interact with their context in sparsely populated regions? What forms of interdependences between the firm and its context can be observed in a sparsely populated region? What explains differences among family firms in their interaction and interdependence related to their context in sparsely populated regions? Below we provide responses to these questions.

The family firms interact with the context only socially, based on business arrangement spurring from citizenship, or with the ambition to recreate the region and raise its attractiveness.

The forms of interdependences appear as quite separated when the interaction is only social: the region is dependent on the firm for employment opportunities, while the firm depends on the region based on heritage and traditions. As soon as the firm interacts for business purposes and thereby views the region as its constituents, interdependences become those of resources and of the firms in the regions creating a critical mass. Interestingly here, the more the firm interacts with its context for business purposes, the more dependent on it the firm becomes, while the business interdependence, as noted in our interviews, means that the firm representatives talk less about traditions and values.

The differences among the firms relate to the firms’ focus on traditions or expansions, for themselves and for the region. It also connects with their resource needs and whether these can or need to be found in the region; such resources then need fulfilment being linked to business interactions. Table 3 summarizes the conclusions as a means to theorize the interdependence and interactivities among family firms and sparsely populated regions.

Table 3. Interdependences and interactivities between family firms and sparsely populated regions

Interactivity	Interdependence	Link between interactivity and interdependence	The region as …	Dominating values	Goals
Social	The region depends on the firm for employment opportunities The firm on the region based on traditions (emotional)	Dependence leads to activities. The firm and region acts quite separately from one another, emphasizing dependences and activities rather than interdependences and interactivities	A geographical place	The family	Follow heritage and traditions onwards
Business	Among firms	Interactivities form further interdependencies	Other firms and organizations	The family and the region	Keep business and region going
Shared R&D activities with other organizations for shared goals or developments	Interdependence to enable business and development	Interdependencies lead to interactivities	Other firms and organizations	The region	Try to attract more firms to the region and expand those present there

Contributions

This paper contributes to previous research by linking the literature on family firms with that on sparsely populated regions, and empirically addressing the connections between family firms and such regions – a circumstance well known in practice but with a lack of coverage in the literature.

Through combining family firms and the context as sparsely populated, we do not only manage to empirically describe those specific conditions expected to apply to family firms in sparsely populated regions; we also address the interdependence and interaction between the family firm and the region. And, we theorize about the link between the interdependencies and the interactivities, let alone different types of interdependencies and their resulting interactivities. More precisely, we conclude dependence as being social or business based, where it is only the latter that creates an interdependence concerning similar issues from the region’s and the firm’s point of view. We also notice an emphasis on employment following from the region being sparsely populated and addressed as employment opportunities and competences, respectively. Furthermore, we notice a relation between interdependencies and interactivities, in how increased interactivities create more interdependencies. And, we point out how the characteristics of the family firm (as risk averse, tradition based, etc.) may be replaced by those of growth and development and thereby coloured or even replaced by an orientation to the issues of the region.

The idea of social, business and shared dependencies, the division into family values or regional issues carrying the most importance and meaning ‘giving up’ behaviours expected, and the interlink between the type of interdependencies and the interactivities (see Table 3), help to theorize family firms in sparsely populated regions.

Limitations and further research

Notably, the findings of this paper are based on a sample of Swedish family firms. The context of Sweden could be seen as specific. Our case sample, amounting to five cases, means that further empirical studies of family firms in various types of contexts and in relation to interactivities and interdependencies are needed. These may quantitatively test those findings elaborated on in this paper, be comparative among regions and countries, or among family and non-family firms.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Regional strategic networks refer to cooperation among firms. They are sometimes supported by representatives of a municipality, aiming to increase collaboration among firms or increase the focus on research and development (R&D) (cf. Lundberg and Johanson 2011).

Appendix A1.

Coding of interviews, examples

Table

	Quote from interview	Counterpart	Interdependence/interactivity	Type of dependence/activity
Case 1: Food producer	We support local sport clubs and some events.	Geographical place	Interactivity	Social
	I’ve taken part in a local network of firms, trying to create some interaction and mutual support, but it has been hard to generate commitment, no one takes the time.	RSN	Interactivity	Social
Case 2: Equipment producer	We avoid recruiting from other firms in the RSN, doing that could cause some hard feelings.	Other firms	Interdependence	Business
	I put a lot of commitment into the RSN. We are all rather small firms that need the support of each other in order to develop. The R&D and recruitment efforts are important for the future.	RSN	Interactivity	Social
		Other firms	Interactivity	Developing the region
	For my father, it has always been very important to support the village development by offering employment, using local suppliers and sponsoring various organizations and events. I feel that way too.	Other firms/The geographical place	Interactivity	Social and business
	The municipality takes part in the RSN and supports it financially.	RSN	Interactivity	Support
Case 3: Wooden product producers	The location is advantageous due to the presence of a key supplier nearby.	Other firms	Interdependence	Business
	We’re part of an RSN but our participation is mainly intended to support the initiative and the region.	Geographical place	Interaction	Social
Case 4: Machine producer	We cooperate tightly with the municipality. The business climate is good. Many events are arranged … arenas where managers can meet.	Municipality, other firms	Interaction	Social
Case 5: Equipment producer	That’s great, there is knowledge locally and we can cooperate on transportation etc., but we sometimes try to hire the same people.	Other firms	Interdependence	Business
	On the other hand, there are knowledgeable individuals available locally and being many firms in related industries facilitates recruitment from other regions.	Other firms	Interdependence	Business/Responsibility for others
	We’re part of several network settings within the region, thereby supporting both ourselves and the other firms – and the region.	Other firms	Interactivity	Business/Responsibility for others – developing the region
	We can act as speaking partners to each other.	Other firms	Interactivity	Business/Responsibility for others developing the region