dissertation in pdf-format - Aalto-yliopisto

394 J. Siikonen et al.
firms’ growth in the regional context, but there has been little research regarding the kind
of support that is needed and how it should be provided (Blakely, 1994; Klofsten and
Jones-Evans, 1996). This paper assesses the support required by fast-growth firms in
Eastern Finland. Such firms are here defined using essentially the definition of ‘gazelles’
presented by Birch (1979): “A gazelle firm has to grow at least 20% a year for four years,
from a base of at least $100.000 in revenues, thus at least doubling in size over that
four-year period”. However, in this paper the timeframe applied in the definition for
doubling revenues is different (three years). In addition, West and Farr’s (1990) broad
definition of the term ‘innovation’ is adopted: “the intentional introduction and
application within a role, group or organisation of ideas, processes, products or
procedures, new to the relevant unit of adoption, designed to significantly benefit the
individual, the group, organisation or wider society.”
This paper examines in detail the business requirements of small, high-growth
technology firms that are not fully met by regional innovation support services, to
ascertain ways in which the services should be adjusted to enhance the overall growth of
small firms, especially small knowledge-intensive technology firms in Eastern Finland. In
order to do so, the following question was addressed: What enhancements to regional
innovation support services can regional policy-makers and economic developers make
to foster the overall growth of small firms?
However, in order to answer this question, the following subsidiary questions first
had to be addressed: What are the fast growing industrial branches in Eastern Finland?
What characteristics distinguish firms in fast-growing industrial branches from those in
other branches? What do these small firms require from regional innovation support
services?
In order to address these questions, the study is organised as follows. The second
section discusses previous literature related to the role of high-growth firms and
entrepreneurship in the Finnish economy, describes distinguishing characteristics of the
identified fast growth sectors, presents background information regarding innovation
support services (ISS) targeted for small technology-intensive KIBS firms and reviews
the potential benefits they can provide. Section 3 describes the methodology and data
acquired, the results are presented in Section 4 and finally, in Section 5, conclusions and
implications of the results are discussed.
2 Supporting high-growth small firms
Ideally, policy-makers and investors should distinguish between SMEs (which are key
components of Europe’s economy) that will stay small and those that will grow, because
although entrepreneurship is a major focus of industrial policy it is rare. For example, in
Finland, the median size of new firms surveyed by Hyvärinen and Rautiainen (2006)
three years after their start-up was one, i.e., the average firm employed only the focal
entrepreneur. Further, most new firms will never employ anyone other than the founder,
and the owners of only 7% of Finnish firms surveyed by the former Finnish Ministry of
Trade and Industry wanted their firms to grow (KTM, 2004). Various studies have also
shown that most firms do not innovate in the sense of developing new products and
technologies or conquering new markets. Most businesses operate in their local market
and often focus on small-scale provision of services or trading in well-established or even