dissertation in pdf-format - Aalto-yliopisto

Developing innovation support services 395
‘old-fashioned’ products (Hyvärinen and Rautiainen, 2006). In Finland, only about
5–10% of new firms can be considered innovative (Rouvinen and Ylä-Anttila, 2004).
However, many studies have shown that growing firms are essential to regional
development because of their high overall contribution to job and value creation
(Davidsson and Wiklund 2000; Keeble, 1997; North and Smallbone 2000; Storey, 1994).
The economic importance of small, growing firms and their founding entrepreneurs
cannot be understated. Therefore, governmental and local development organisations
need to target innovation support services towards ventures with high growth potential in
order to increase the efficacy of job creation; there is a real need to support these
high-growth firms that actually generate employment to promote local and national
growth.
2.1 Growth entrepreneurship in Finland
According to data from the Finnish Trade and Industry Ministry and Statistics of Finland
(2007), around 237,000 firms are currently operating in Finland, of which only ca. 7%
(16,600) are growing (in terms of salaries and/or sales). Further, rapidly growing firms
(‘gazelles’) account for just ca. 0.2% (n = 473) of the total national firm population in
Finland. This frequency of gazelle firms is similar to the proportion reported in a
previous study (Autio et al., 2000) of the economic impact of gazelle firms in Finland
during 1994 to 1997.
In previous growth studies the exclusion of some branches of industry, notably
services and trade, has been one of the most severe shortcomings, since services currently
seem to be the most important components of the economy in most developed countries.
Further, venture capitalists typically include such businesses in their portfolios since they
are thought to have high growth and success potential. However, the proportion of such
companies which successfully obtain venture capital is very low (2–5%) and their
regional distribution is often biased in favour of the most developed regions. Thus, more
high growth businesses are likely to be based in urban than in rural areas (Virtanen and
Heimonen, 2007).
One of the sub-objectives in this study is to obtain detailed understanding of a
specific, fast-growth sector (services, here and hereafter including KIBS), by using
publicly available data and case studies to compare characteristics of firms operating in it
to those of firms operating in other branches of industry in Eastern Finland. The study
appraises the role of existing service businesses in contemporary contextual economic
development. Further, the study increases empirical knowledge regarding existing
fast-growth KIBS firms, which have been largely neglected in growth-focused
entrepreneurship research in Finland and elsewhere. A large proportion of previous
performance studies have concentrated on the development of new ventures from start-up
during early stages of their growth. However, even if the establishment of new start-ups
is important, it could be argued that the development of any region is highly dependent
on the growth and success of existing businesses within it (Virtanen and Heimonen,
2007).
2.2 Growth in the KIBS sector
Small firms are widely regarded as promoters of economic growth, regionally, nationally
and internationally (Westhead and Storey, 1994). The positive impact of these firms is