Reorganising adjustment: Finland's emergence as a high technology leader

Abstract

As attention has shifted to the topic of change in organised economies, Finland represents a valuable case study. The nation's leap from paper producer to high technology leader represents a unique opportunity to study restructuring within the confines of an allegedly incremental organised economy. To date, Finland's transformation has been interpreted as a product of sweeping liberal reforms in finance and corporate governance. This article, however, identifies an enduring role for collectively organised economic actors in labour market and technology policies. Cooperation in these arenas did not inhibit restructuring. On the contrary, collaborative technology policies actively facilitated the rapid redistribution of resources to an emerging ICT industry. In exploring the opportunities and constraints associated with these policies, this article not only sheds light on Finland's shift into high technology markets, but also identifies a more flexible role for coordination in the new economy.

Acknowledgements

The author wishes to acknowledge financial support from the German Marshall Fund of the United States. John Zysman, Olli Rehn, Pekka Ylä-Anttila, Jonah Levy, Nicholas Ziegler and two anonymous reviewers offered encouragement and detailed feedback on multiple occasions. Responsibility for any remaining errors or omissions rests with the author.

Notes

1. To the extent that organised economies can compete in high technology markets, analysts argue that they are limited to highly specialised and gradually evolved niches (Casper and Whitley 2004).

2. Interestingly, the CEO who launched this restructuring strategy, Jorma Ollila, was a former employee of Citibank, one of the first foreign banks to operate in Finland.

3. While wage restraint benefited emerging and traditional industries alike, wage compression represents an important exception. By boosting the wages of low productivity workers and suppressing the wages of high productivity, centralised collective bargaining benefited ICT firms like Nokia considerably. Finnish ICT professionals earned a fraction of what their American counterparts did throughout the 1990s.

4. While beyond the scope of this paper, it is important to note that collaborative ventures in other domains like education promoted restructuring. Finnish success was inconceivable in the absence of long-term investments in education during the 1960s and 1970s (Castells and Himanen 2002: 36). Moreover, close ties between industry and policy-makers facilitated a dramatic expansion of ICT training during the 1990s. Expanded intake further contributed to low ICT salaries during the 1990s (Moen and Lilja 2005: 361).

5. This shifting role was also evident in an ostensibly liberal financial system, where the state aggressively expanded public venture capital for entrepreneurs and small businesses during the 1990s (Georghiou et al. 2003: 81).

6. As an example of the limitations associated with the Finnish labour market, the share of workers engaged in part-time work (8.1%) exceeds only Greece, Italy, Portugal and Spain among the EU 15 (European Commission 2004a: 59).