Entrepreneurship in the Green Transition: through Small–Large Firm Collaboration

By: Debadrita Panda and Johan Frishammar

Introduction

Northern Sweden is undergoing one of the largest industrial transformations in Europe. Major industrial actors have committed to large-scale decarbonization which are already underway (High North News, 2023).

One example is the HYBRIT initiative, where SSAB, LKAB, and Vattenfall are working together to replace coal-based steelmaking with hydrogen-based, fossil-free production. This technology shift alone has the potential to eliminate up to 10% of Sweden’s total CO₂ emissions (SSAB, n.d.). In parallel, LKAB is moving from traditional iron ore pellets to carbon-dioxide-free sponge iron. In parallel, in Boden, Stegra is constructing a large-scale plant for production of so-called “green steel”. The facility aims to start production around 2026 and deliver steel with up to 95% lower CO₂ emissions compared to conventional blast furnace production routes (Stegra, n.d.). These projects signal a fundamental shift in northern Sweden’s industrial landscape, but they are not the only ones. Luleå harbour is being rebuilt, and major investments have also been announced by incumbent process industries in pulp-, paper and other industrial sectors.

These large investments do not happen in isolation. They require new suppliers, new technologies, and new service solutions in for example energy systems and supplies, materials, digitalization, logistics, maintenance, and process optimization. These changes bring about business opportunities for startups and SMEs that can contribute complementary technologies, services, products, or niche expertise. This is particularly important in the Nordic context, where SMEs generate more than half of total value added and play a key role in economic development and innovation (OECD SME Outlook, 2022). Sweden’s position as one of the EU’s leading innovation ecosystems underscores the relevance for such collaboration (European Innovation Scoreboard, 2023).

But what are these opportunities for SMEs? We conducted a workshop to explore how these large-scale industrial investments for sustainability can be translated into collaboration and business opportunities at the intersection between regional startups and large companies.

The workshop brought together SMEs from diverse sectors like material innovation, communication agencies, nature- reservation based enterprises, R&D, consultants, and science parks. Through two simple, hands-on exercises, participants worked on identifying where and how their solutions – existing or to be developed - could create value for large industrial actors. The key insights are presented below.

Key insights

Exercise 1: How Large Firms’ Sustainable Investments Create New Business Opportunities?

The first exercise had participants to reflect on a central question:
“When large companies make significant investments in new sustainable technologies, what business opportunities or implications do SMEs see?”

Despite their varied backgrounds, their reflections converged on three opportunity categories:

New product creation opportunities arise when large firms adopt new materials, clean technologies, or stricter sustainability requirements. Participants noted that fossil-free production, fleet electrification, and the phase-out of hazardous inputs open new product niches. One example was turning mining road dust into a high-value industrial input, illustrating how waste streams can be converted into valuable resources.

Process and operational improvement opportunities were highlighted by startups with technical, operational, or digital capabilities. As large firms integrate electrified fleets, advanced filtration systems, or regenerative production routines, they also need support in redesigning workflows, establishing monitoring routines, and adapting supply-chain interactions. Participants identified opportunities in environmental data reporting, operational digitalization, emissions verification, and resource tracing. One idea centered on helping large firms validate climate-positive actions, such as local carbon compensation or biodiversity enhancement, reflecting a rising need for credible, data-backed sustainability practices.

Sustainability advisory and consultancy opportunities formed the third category. Startups specializing in sustainability communication, strategy, and organizational change observed that large firms often struggle with interpreting regulations, aligning internal teams, or communicating transition efforts transparently. Participants emphasized a growing demand for impact verification, stakeholder engagement, storytelling, and cross-functional coordination, areas where agile, creative SMEs can provide new types of business value.

In summary, Activity 1 revealed that sustainability-driven investments in large companies open three actionable opportunity spaces, new product design, process innovation and digitalization support, and sustainability-oriented consultancy services. These insights created a foundation for exercise 2, where participants examined which of their ideas offered the greatest profitability potential.

Exercise 2: Turning Hidden Potential into Profitable Sustainable Business Ideas

The second activity invited participants to ideate around the concept of “hidden potential”, i.e. the unused ideas, dormant capabilities, patents, underutilized data, or overlooked knowledge that exist within every organization (Axelson, 2020). Participants were asked to identify and refine ideas with high profitability potential, while keeping environmental and/or social sustainability in focus.

Several high-potential ideas and concepts emerged. For example, one startup explored the creation of a carrier platform for the transportation sector, aimed at enabling unbroken value chains and seamless coordination among logistics actors, a solution increasingly relevant as the region electrifies transport and strengthens regional supply chains. Another startup explored nature-based climate compensation solutions tailored to industrial clients, enabling companies to support local environmental restoration while meeting regulatory or voluntary climate commitments.

Across these ideas, a common theme emerged: profitable sustainability innovations rarely exist in isolation. Instead, they rely on the combination of capabilities, data, infrastructure, and testing environments across multiple actors, including universities, science parks, municipalities, R&D institutes, and large industrial partners. Many ideas required validation in controlled environments, alignment with industrial requirements, and integration with existing operational practices. Profitability depends on navigating complexity, building trust, and designing business models that work alongside large-firm procurement logic and decision structures.

Most importantly, participants realized that their hidden potential could be unlocked more effectively when they firmly understood the needs of large firms, not only in terms of technology but also timeliness, risk tolerance, certification needs, and scale. Seeing their ideas through the lens of large-firm industrial applicability helped startups refine their value propositions toward realistic market entry pathways.

Conclusion: What SMEs Must Keep in Mind When Collaborating with Large Firms

The workshop clearly demonstrated that northern Sweden’s sustainability transition presents major opportunities for SMEs, but turning these opportunities into profitable collaborations requires strategic awareness and realistic expectations. Based on the discussions and the experiences shared across both exercises, three concluding insights are important for SMEs to keep in mind when aiming to work with large companies undergoing green transformation:

1. SMEs need to specify value in the customer’s terms.
   Large companies do not adopt innovations simply because they are sustainable or technically advanced. They look for risk reduction, operational fit, cost-effectiveness, and reliability. Startups must frame their offering in terms of measurable value for the industrial customer.
2. SMEs need to fully comprehend the real complexity of solving problems for large companies.
   Even simple solutions require extensive integration, validation, compliance reviews, and internal alignment within large organizations. Understanding procurement logic, safety routines, and long decision chains is crucial for collaboration.
3. SMEs need to prepare for the long, non-linear journey of scaling.
   Moving from pilot to site-wide or multi-site deployment requires capability development, documentation routines, data processes, customer support structures, and long-term resource planning. Scaling in industrial ecosystems is slow, non-linear, and resource-intensive.

References:

• Axelson (2020). Hidden potential - Creating innovative businesses.
• High North News (2023).
• SSAB (n.d).
• Stegra (n.d).
• European Innovation Scoreboard (2023).
• OECD (2025). Unleashing SME Potential to Scale Up.

Acknowledgement: This workshop was conducted by Debadrita Panda and Johan Frishammar as a knowledge dissemination event in collaboration with Piteå Science Park and was funded by the Kamprad Family Foundation.