Metla Project 3315

The regional concentration of forest and woodworking SMEs in Finland: benefits for development and employment?

[  Suomeksi  |  Objectives  |  Results  |  Project leader  |  Researchers  |  Publications  |  Metla Research  ]

Duration: 2001-2003   Keywords: competitive advantage, embedded firm, employment, forest and woodworking SMEs, formal networks, industrial districts, institutional learning, learning regions, national forest programme , proximity, social sustainability

Objectives

Sub-project a) Forest sector growth and it effects on regional employment (Pertti Elovirta)To monitor the realisation of the employment objectives of the National Forest Programme, as well as to examine, on the basis of Myrdal's theory of circular and cumulative causation, the relationship between the efficient use of regional natural (forest) resources and employment in the forest sector. Sub-project b) Inter-firm co-operation as a success factor in woodworking SMEs (Ashley Selby & Leena Petäjistö) Finnish forest and woodworking SMEs have yet to benefit from the synergies which can be derived from inter-firm co-operation. Recent research has shown that where inter-firm co-operation has been practised, the experience has generally been found to be positive and the firms intend to continue such co-operation. Research has demonstrated that a key element in SME success is inter-firm co- operation, and especially the creation of industrial districts, i.e. geographical concentrations of woodworking firms. The advantages of the geographical proximity a firms in a given branch of industry include increased formal inter-firm co-operation which results in reduced transaction costs, shared development costs (external economies), ease of information exchange, etc. The proximity effects of such industrial districts also effect the social and cultural milieu, which develops to support the branch in question. Despite the fact that in Finland woodworking SMEs tend to be regionally dispersed, there are several incipient geographical concentrations of certain branches. Thus, the aim of the sub-project is a) to determine how firms co-operate and what forms of co-operation are considered to contribute to a firm's success; and b) does the current inter-firm co-operation constitute a basis for a strengthening of specialist, regional production structures (agglomerations)?

Results

The investigation concerned inter-firm co-operation between woodworking SMEs in the province of Etelä-Pohjanmaa. The results indicate that woodworking SMEs do have the opportunity to co-operate: the entrepreneurial atmosphere in the area is good and two thirds of the enterprises interviewed practised sub-contracting in some form or another. Informal co-operation was practised by every fifth enterprise. Entrepreneurs had negative experiences of inter-firm co-operation, but despite these experiences they continued to have faith in the benefits of co-operation. Many entrepreneurs mentioned that pre-conditions for successful inter-firm co-operation are that it should be well organised and that the expected benefits should be apparent already at the planning phase.

Inter-firm cooperation that is binding on firm's financial resources requires that firms should provide statements on their financial status. This information is required for business management as well as for creating trust between the cooperating firms. Nevertheless, half of the entrepreneurs in the investigation regarded their firm's financial status to be confidential. This attitude could affect the development of inter-firm co-operation in the future, as trust is a key factor in creating mutually supporting systems of firms.

The entrepreneurs who were interviewed in the study considered that from their point of view co-operation with local officials had not been particularly successful. Criticisms were levelled at officials' attitudes towards small-scale entrepreneurs and their businesses in general, as well as towards the inflexibility of public sector support- and information organisations. This result demonstrates the importance of creating and developing societal structures, both administrative and educational, that support enterprise and entrepreneurship in a locality.

The material for the investigation to be acquired by postal questionnaire, but for a number of reasons, the entrepreneurs in question were not willing to cooperate. In the event, data was collected by telephone interviews.

Project leader: Selby, Ashley
The Finnish Forest Research Institute, Helsinki Unit, Unioninkatu 40 A, 00170 Helsinki
Phone: +358 10 211 2228 Telefax: +358 10 211 2104
E-mail: ashley.selby@metla.fi

Other researchers: Elovirta, Pertti, HE (2001-03), Koskela, Terhi, HE (2001-02), Petäjistö, Leena, HE (2001-03)


Top of page

Updated 30.12.2006
Comments