Embracing the Knowledge Economy
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Embracing the Knowledge Economy

The Dynamic Transformation of the Finnish Innovation System

Edited by Gerd Schienstock

In an astonishingly short period of time, Finland has developed into one of the world’s leading knowledge societies whilst retaining a comprehensive welfare state. The book traces this rapid transformation from a resource-based to a knowledge-based society. The authors describe the country’s strengths and weaknesses in the new economy and demonstrate how Finland has been able to catch-up with the leading industrial countries by exploiting new techno-organizational opportunities. Experts from different fields provide rich empirical material on Finnish industries, firms, regions and institutions, and the role they have played in the transformation process. The book also details the business and economic restructuring which was required, and explores new trends in the country's science, technology and innovation policy.
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Chapter 4: Innovation and absorptive capability in the traditional industries: The case of the Finnish wood products industry

Christopher Palmberg


* Christopher Palmberg 4.1 INTRODUCTION The exaggerated fixation on a narrowly defined set of so-called high-tech industries, both in empirical research and in policy discussion, undeservedly takes attention away from the more traditional and less R&D-intensive industries that still constitute a major sector in most industrialized countries. Finland is an interesting country in this respect, since the industrial structure underwent a rather radical transformation in the 1990s, mainly due to the emergence of diversified electronics, as well as ICT-related, industries. In statistics produced by the OECD, this transformation is reflected in the doubling of Finland’s share of total exports of high-tech products during the same period (OECD 1999). Despite this indisputably positive trend, there is more to it once we get behind the data. In particular, the role of one firm – namely the role of Nokia – in this transformation is striking. At the turn of the century, Nokia accounted for close to one third of the total R&D spending, as well as roughly one fourth of the total Finnish exports (Ali-Yrkkö et al. 2000; Ali-Yrkkö and Hermans 2002). Furthermore, when looking at the contribution of different industries to the total volume of production in the manufacturing sector, it is clear that Finland still to a significant extent relies on the more traditional industries, such as the forestry- and metals-based industries, despite the emergence of the electronics and ICT-related industries (Figure 4.1). Thus, the further fostering of the high-tech industries is not the only issue of concern in the Finnish...

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