NATO as a market disruptor: How Finland and Sweden joining NATO reshapes competition and emerging needs in the Nordic defence market

Abstract

This master’s thesis studied the impacts of Finland and Sweden joining NATO in the Finnish and Swedish defence markets. The definition of the region’s defence market was built on an applied Porter’s Five Forces model, comprising current rivalry, threat of new entrants, and buyers’ bargaining power. Additionally, emerging needs produced by the NATO accessions were studied alongside policy changes in defence expenditure and transnational cooperation between the Nordic countries, European NATO allies, and the United States.

The topics were studied by carrying out an extensive literature review and expert interviews. A qualitative research method was deemed as the best solution due to the topic’s recency and complexity. The sensitivity and recency of the topic slightly restrained the study; however, the eventual data quality was qualified as good. The interviewees were representatives of Finnish and Swedish defence administrations and industry, all with decades of experience in their respective fields.

The key findings of the thesis indicated that the NATO accessions of Finland and Sweden will not significantly impact the region’s defence market in terms of existing rivalry, risk of new entrants, or buyers’ bargaining power. Instead, they will create a number of emerging opportunities for the defence industry by requiring the newcomers to develop some key capabilities, such as airlift, alongside general integration work required to make Finland and Sweden fully NATO compatible across domains such as intelligence, networks, space, and multidomain operations. Furthermore, it was confirmed that joining NATO is not a driver of increased defence expenditure and capability development activities. Instead, these developments are driven by changes in the global security environment and threat levels.