Organization of Knowledge and Innovation: The Case of Finnish Business Services

Abstract

This empirical study examines knowledge creation activities in business service firms. Using survey data of 167 Finnish knowledge‐intensive business service firms, I explore hypotheses about the organization of learning and innovation. Results from an exploratory factor analysis combined with regression analyses suggest that, first, collective application of knowledge is more likely to lead to significant improvements in services than individual application of knowledge. Second, external sourcing of knowledge, particularly from customers and competitors, is more conducive to new service introductions than local and incremental learning on the job. Broad information sourcing and internal cooperation to mobilize knowledge thus support the renewal of knowledge‐intensive business services. More significant service innovations are also supported by highly educated employees, but the role of R&D investments is not significant.

Keywords:

• Knowledge
• innovation
• business service firms
• Finland

Acknowledgements

This research was supported by the Innovation Networks research program of SITRA, the Finnish Foundation for R&D. Both funding and substantive comments by the program participants are greatly appreciated. The remaining errors are the author's alone.

Notes

Service industries in the Finnish Community Innovation Survey included energy utilities, wholesale trade, land transport, water transport, telecommunication services, financial intermediation, insurance, auxiliary financial services, computer and related services, and technical services (architecture and engineering).

According to Statistics Finland (www.stat.fi), for instance, the service sector excluding construction produced 62 percent of the GDP and employed 40 percent of the available workforce in Finland in 2001.

For example, do not participate in the targeted industries, have merged, or have gone out of business. Service subsidiaries of manufacturing corporations were also excluded.

This average number of employees of the surveyed firms, 29, is different from that in Table 1 because the Statistics Finland data is a few years older.

Industrial design refers here to services contributing to aesthetic, ergonomic, and functional aspects of new products. These services are to be distinguished from more technologically oriented engineering design and less product development oriented graphic design. However, overlapping areas of activity and expertise also exist.