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European Planning Studies

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Communication and Distance in Collaboration between High-technology Enterprises in Northern Finland

Katariina Ala-Rmi a a Department of Geography, University of Oulu, Oulu, Finland

Online Publication Date: 01 September 2007 To cite this Article: Ala-Rmi, Katariina (2007) 'Communication and Distance in Collaboration between High-technology Enterprises in Northern Finland', European Planning Studies, 15:8, 1047 - 1062 To link to this article: DOI: 10.1080/09654310701448212 URL: http://dx.doi.org/10.1080/09654310701448212

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Communication and Distance in Collaboration between High-technology Enterprises in Northern Finland

MI KATARIINA ALA-RA
Department of Geography, University of Oulu, Oulu, Finland

(Recieved February 2005; accepted January 2006)

ABSTRACT New technologies affect economic activities, even to the extent that some claim they have lessened the importance of geographical distance. However, collaboration in product innovation creation involves various elements; therefore the development of technologies does not make geographical proximity insignicant. In this paper a study is made of collaboration aiming to create a product innovation between high-technology enterprises in northern Finland, especially the intertwining between communication and geographical distance. The study is based on interviews with managers of high-technology enterprises. The results indicate that while email and personal meetings are seen as important, geographical proximity also has an effect on collaboration.

Introduction Innovation is rarely brought up by a single enterprise, but as a result of inter-rm collaboration (Cooke & Morgan, 2002; Lundvall, 1992, p. 9). Technological innovations have increased the capability of enterprises to act in collaboration networks with other enterprises and organizations (Sitra, 2002, p. 29). However, an increasingly rapid diffusion of ideas and innovations is escalating competition among enterprises. That leads to shorter product life cycles, which creates more pressure on companies to innovate more often (Edquist et al., 2002, p. 566; Maskell & Malmberg, 1999, p. 12). For enterprises collaboration is a learning opportunity, but also a way to save money and time (Edquist et al., 2002; Maskell & Malmberg, 1999). In this paper, a study is made of communication and geographical distance in the collaboration between high-technology enterprises in northern Finland from the viewpoint of the managers. The author has an especial interest in studying the use of modern

mi, Department of Geography, University of Oulu, P.O. Box 3000, Correspondence Address: Katariina Ala-Ra FI-90014 Oulu, Finland. Email: katariina.ala-rami@oulu. ISSN 0965-4313 print/ISSN 1469-5944 online/07/08104716 DOI: 10.1080/09654310701448212 # 2007 Taylor & Francis

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information and communication technologies and their importance to high-technology enterprises. Northern Finlandwith its large internal distance, sparse population density, and few social resources outside the functional urban region of Oulu (FUR Oulu)is a challenging region for high-technology enterprises. Do information and communication technology (ICT) make it easier to survive for these enterprises? Also discussed is the connection between distance and the use of different modes of communication. Modern ICT is known to have an impact on regions and geographical distance. The development of ICT has been seen as a question of timespace compression and economical growthsince various kind of information can be transferred in a fast and efcient way (e.g. Castells, 1996; Negroponte, 1995, Kostiainen, 2002, p. 18). Paradoxically, the high-technology industry is a highly clustered branch of activity, as the best-known cluster, Silicon Valley, indicates (Brown & Duguid 2000, p. 167; Kostiainen, 2002, p. 20). The continuing formation and imitation by many other clusters and technology parks suggest that distance has not died even where distance-cutting technology is at its most advanced stage (Brown & Duguid, 2000, p. 167). ICT has made the performance of economic activities smoother, but only in regions that provide an advanced telecommunication infrastructure, skilled labour and good airport access (Moss, 1998). Thus even for information technology enterprises, neighbourhoods and regions remain signicant (Brown & Duguid, 2000, p. 169; Graham & Marvin, 2001, pp. 334 335). Innovation and learning require specic information and continuous updating of this information. This kind of information and communication is easily received through the presence of people and enterprises within the same industrial activity, place or region, and at social events (Bathelt et al., 2004, pp. 38 39). There are terms like local broadcasting, noise or buzz to denote that there is a lot of useful information and inspiring things going on in a certain region. Such buzz depends on the networks of communication and information linkages (see Bathelt et al., 2004, p. 38; Simmie, 2001, p. 37). Different modes of communication are important tools for becoming connected to those networks and buzz. Those connections are often established within the same geographical place, but the communication between actors requires also operational or social proximity. There is not much use of the geographical proximity if there are not shared interests. In that case the needed information has to be sought elsewhere. Background: Northern Finland In this study northern Finland is dened to cover Multipolis-networks area of operation, since it is considered as a cooperation network of technology centres of northern Finland (Multipolis, 2005). FUR Oulu is a well developed and growing urban region, which has one of the biggest technology centres in Europe, including 220 enterprises (Jauhiainen et al., 2004, p. 29). FUR Oulu is often quoted as an example of visionary actors and networking in ICT in Finland (Lievonen & Lemola, 2004, p. 90). The rest of northern Finland, with an area of about 150,000 square kilometres has a population of half a million. So the area is sparsely populated, with an average of just 4.6 inhabitants per square kilometre (Statistics Finland, 2004). The majority of the other technology centres have 20 or less high-technology enterprises (Jauhiainen et al., 2004, p. 44). Moreover, technology centres are specialized in different key technologies and there exists variation in line of business within a centre. Such a heterogeneous group of enterprises poses an additional challenge to this peripheral region (Jauhiainen et al., 2004, p. 117).

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Research Design and Methods In this paper the collaboration, aiming to create a product innovation, of high-technology enterprises in northern Finland from the viewpoint of these enterprises is discussed. In this study collaboration refers only to collaboration which aims to achieve a product innovation, which is dened here as a new or improved product whose technological properties or intended elds of application have been signicantly altered. The research questions were: (1) Which modes of communication are important for high-technology enterprises in general but also in collaboration aiming to achieve a product innovation? (2) Where are the collaboration partners located? (3) How do high-technology enterprises see the meaning of distance to the collaboration partner? (4) Is there a difference in the most important mode of communication if the enterprises most important collaboration partner is located in the same or different municipality? The research consisted of semi-structured telephone interviews of 131 high-technology enterprises in different localities in northern Finland. They were located in municipalities having a technology centre, either within such a centre or outside of it (Figure 1). The municipalities of others are enterprises considered part of some technology centre, but physically located outside that technology centre municipality. Interviews were

Figure 1. High-technology enterprises of the study by municipality and the location of the municipality the county borders are shown in the map)

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conducted between March and April 2004 and they were part of the evaluation of the Multipolis technology enterprise cooperation programme. The selected 131 enterprises were taken from a larger sample of 218 high-technology enterprises that were involved somehow in the Multipolis network. Multipolis is a cooperation network and activity between technology enterprises and regional developers in northern Finland whose purpose is to support innovations in high-technology (Jauhiainen et al., 2004, p. 44). All 131 selected enterprises had engaged in collaboration in order to create an innovation either in their own enterprise or in their collaboration enterprise. If they were doing collaboration in both ways, they were asked to answer these questions twice, considering one of their collaboration partners at a time. One difcult question in the organization of the research was to dene a high-technology enterprise. It is easy to dene a software house as a high-technology enterprise but, for example, enterprises dealing with data processing or production of instruments form a very heterogeneous group. There is no explicit information of the number of hightechnology enterprises in northern Finland. In this study the number of enterprises was based on a classication by Oulutech Ltd, an expert organization for different technology-related services. There were a total of 792 high-technology enterprises, picked out of the statistical data, in northern Finland in 2003. The interviewed enterprises consisted of some 80% of all high-technology enterprises in technology centres outside the FUR Oulu, and about 46% were high-technology enterprises in the municipalities with a technology centre but located outside of it. Of the high-technology enterprises of FUR Oulu only those who were attending forums which are regarded as the most important and successful form of cooperation in the region were interviewed. Since FUR Oulu has been successful in high-technologies, Multipolis-network aims to use FUR Oulu as an engine for the rest of northern Finland. Enterprises in FUR Oulu are used like a baseline for those high-technology enterprises which are dispersed around the region. Very small enterprises and also big international companies that provide some technology services, but do not have product development in the localities studied, were left out on purpose. Therefore the sample consists of more innovative enterprises than average in northern Finland. The interviewed enterprises were on average larger in terms of employees and revenue, but otherwise they represented the high-technology enterprises in northern Finland (Table 1) well. The number of enterprises classied as others regarding their principal business activities was higher because one studied technology centre is focused on media-related production. That is not a very common business activity overall in northern Finland. The questions for enterprises concerned the basic background information regarding the enterprise, the development of product innovation in the enterprise, communication and collaboration with other enterprises and organizations, including from a territorial viewpoint. Each interview by telephone took from 20 to 45 minutes. In addition, technology centre managers and other experts were also interviewed. This provided additional background information. All interviews were conducted by a small research group of which the author took part. After conducting the interviews, the material was analysed rst with Spearman correlation analysis and the differences were studied with cross-tabs. Furthermore, the written answers were compared with the codied classications. Also an interview diary was keptabout tones and extra informationthus to obtain a better understanding of the numerically codied data. A simplication was made for calculating

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Table 1. Characteristics of high technology enterprises in northern Finland and the study sample Characteristic Size of rms (employees) 19 10 49 50 450 Principal business activity Manufacture of other general use appliances Software house Manufacture of computers Manufacture of circuit boards, etc. Data processing Telecommunication Manufacture of TVs, radios or phones Manufacture of instruments, etc. Research Services Others (e.g. media-related production) Year rm was established Before 1984 1984 1992 1993 1998 1999 2001 2002 2004 Revenue (E) Not known Less than 200,000 200,000 399,999 400,000 999,999 1,000,000 1,999,999 2,000,000 9,999,999 10,000,000 19,999,999 More than 20,000,000 Frequency (sample) 66 49 14 5 42 3 6 7 5 3 6 4 4 46 16 26 38 31 19 16 29 21 17 17 23 5 3 Percentage (sample) 51.2 37.9 10.9 3.8 32.1 2.3 4.6 5.3 3.8 2.3 4.6 3.1 3.1 35.1 12.2 19.8 29.0 23.7 14.5 12.2 22.1 16.0 13.0 13.0 17.6 3.8 2.3 Percentage (enterprises) 82.1 13.6 4.3 12.2 44.9 4.6 6.6 4.5 2.9 2.9 3.2 5.1 3.1 10.0 6.8 21.7 33.1 29.4 15.8 13.3 53.4 8.5 10.0 6.3 5.9 1.3 1.4

the geographical location and proximity between the enterprises. The proximity was codied based on whether the enterprises were located in the same or different municipality with their collaboration partner, since one of the ideas of technology centres is to bring together enterprises and prepare the way for collaboration. Consequently, if the collaboration partner was in a different municipality, the geographical distance was explored more specically. The author of this study is aware of the situation when combining both quantitative and qualitative methods one cannot go very deep in the phenomenon studied (e.g. Jauhiainen, 1995, p. 10). This study aimed to explore communication and distance more in a general manner, giving foundation to explore these issues in forthcoming studies in which the product innovation process is to be studied. The idea of this study was to get an overview on how prevalent collaboration is aiming to create a product innovation and which issues have an inuence in forming this kind of relationship.

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Communication and Collaboration in a Collaboration Aiming to Achieve a Product Innovation by Enterprises Development of ICT has increased the general productivity in economic activities. ICT certainly boosts the innovation process by providing easy and fast access to information. Nevertheless, innovation involves creativity so there are elements in the innovation process, like tacit knowledge, which cannot be distributed without face-to-face interaction. The less codied or more difcult the information is to articulate, the more frequently face-to-face contacts are needed (Feldman, 2002, p. 54). The innovation process is also vulnerable in terms of trust. Collaboration includes the exchange of technologies and ideas, which is challenging in the terms of security. Trust becomes noticeable in the collaboration of enterprises in long-term relationships (Edquist et al., 2002, p. 566). Location has an inuence on trust in many ways. Untrustworthy behaviour is easier to determine in social contacts. Social networks also support the formation of shared norms in appropriate behaviour as well (Feldman, 2002). A common perspective assumes that codied knowledge is not space-sensitive, but if the knowledge is diffuse and tacit, proximity between actors is benecial for an enterprise (Bathelt et al., 2004, p. 32; Storper & Vernables, 2003). Tacit knowledge and interactive innovation have been central in discussions about the advantages of geographical proximity between enterprises in associated industries (Cumbers et al., 2003, p. 1691). Regarding ICT and its effects on face-to-face contacts, four types of interaction are possible: substitution, generation, modication and neutrality. Mokharian and Meenakshiundaram (1999) found that email and face-to-face meetings are the fastest growing mode of communication. The use of one mode of communication increases the use of another partly because of the increase of information about meetings, etc. (Miettinen et al., 1999, p. 214; Moss, 1998; Thrift, 1996).

Proximity, Innovations and Networks In innovation creation there is a specic kind of dynamic formed between different actors. Once this dynamics is formed it creates new innovations, which attract innovative people. hle & Local actors produce this unique event for the region or for the enterprise (Sta Sotarauta, 2003, p. 6). Who those actors are and the strength of their commitment to the network are crucial. An effective network is formed in relations, seen as trust and positive dependence between actors. An innovative system is build up with open and exible information and intensive communication. It consists of intra-rm organization, relationships between enterprises, the role of the public sector, the nancing sector, and the intensity and organization of R&D-activity. Innovation is also always a question of timing (Cooke, 1998; Lundvall, 1992). Previous studies suggest (e.g. Bathelt et al., 2004; Cooke & Morgan, 2002; Simmie, 2001) that it is not only concentrated skilled labour, information or suppliers which make some region or rm innovative. It is more about the communication between individuals and different institutions in the private and public sector. Many signicant innovations are originated in combining capabilities and resources of several enterprises. Geographical location is important in providing opportunities for inter-rm relationships (Howells, 2000, p. 57). According to Liebeskind et al. (1995) location may help to create social contacts but regularly organized meetings are fruitful in forming social networks

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(Feldman, 2002; Lorentzon, 2003). Face-to-face meetings are crucial for creating new contacts (Lorentzon, 2003, p. 106). Castells (2000, p. 26) suggests that the space of ows is based on the linkage between places and electronic space through a network of ows. Networks of ows are the spaces in which important activities operate in society. Municipalities are primarily local operational environments and meeting places for different networks, and not so much mere physical territories in which things are just located. The nodes of networksthe highest level of which are global citiesare centres of power, innovations and social interaction. At the logic of networks it is important to combine local and global levels (e.g. Castells, 2000, p. 19; Haarni & Vartiainen, 1996, p. 8). Local buzz is important for tacit knowledge and trust. It also creates opportunities for spontaneous situations to interact. As tacit and informal knowledge are important in innovation, location will continue to be important even in the future (e.g. Howells, 2000, p. 61). The advantages of global pipelineschannels used in distant interactionsare however essential to create new potentialities and feed local interpretation and usage of knowledge created elsewhere. The places, which are economically successful, are the places where actors have active connections with local actors but also with actors in other places (Bathelt et al., 2004).

Empirical Results: High-technology Enterprises in Northern Finland Over 90% of the interviewed high-technology enterprises were equipped with broadband connection, which were also seen as important to the enterprises. Only a few enterprises did not have a web site on the internet. ICT and fast connections are a customary part of the enterprises activities. From this perspective, a geographically peripheral location does not limit the use of new technologies in northern Finland. According to Grimes (2003, pp. 174 175), the telecommunications infrastructure in peripheral rural areas is better developed in the Nordic regions than in many regions of southern Europe, where small enterprises have more challenges regarding such infrastructure. Almost one third of the interviewed enterprises were software houses but otherwise the variation in lines of business was large (Table 1). However, the line of business did not seem to be a determining factor in the mode of communication, collaboration or proximity (see Appendix, Table A1). There was a signicant correlation between the municipality and line of business, which is pretty obvious because the technology centres are spatial clusters of certain key technologies. From the viewpoint of this study, more interesting signicant correlations were found between the location of a collaboration partner, the signicance of distance, and the most important mode of communication. There were also some differences between enterprises in FUR Oulu and outside FUR Oulu. Enterprises in FUR Oulu considered face-to-face meetings of more importance and had fewer problems with telecommunications. Most signicant difference was that collaboration partner was most likely (74%) in the same municipality for enterprises in FUR Oulu while outside FUR Oulu less than onethird (32%) of enterprises were located in same municipality with the collaboration partner. It can be assumed that accessibility in time distance (see Andersson & Karlsson, 2004) explains pretty much why enterprises in FUR Oulu regard face-to-face meetings as more important.

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Modes of Communication In the interviews, businesses were asked about the importance of different modes of communication, rst in general in the enterprises activities, andmore specicallywith the partner which they collaborate to achieve a product innovation. All modes of communication were at least of some importance (Figure 2). Fax and xed-line phones were the least important, and one-third of the interviewed enterprises argued that they are not important. Email with attachments and mobile phones have substituted them to a great extent (see also Lorentzon, 2003, p. 100). Respondents felt that new technologies like mobile phones, email and internet were very important. Furthermore, more than 90% of the enterprises saw face-to-face meetings as at least rather important. When asked the importance of different modes of communication with collaboration partner, the proportion of those who considered email and mobile phone important was very high, but meetings were also still seen as important (Figure 3). Face-to-face contacts, both formal and informal, were not important for only some 10% of the cooperating enterprises. Other more traditional modes of communication were considered notably less important. Besides the importance of all the different modes of communication, respondents were asked to point out which of these was the most important. The result was rather predictable: email (41%) was mentioned most frequently, but informal (17%) and formal meetings (18%) together were almost as important as email while mobile phone was most important for 15% of the respondents. From the viewpoint of the innovation creation, it was interesting that in the creation of an enterprises own product innovation, informal face-to-face contacts were more often regarded more often as the most important mode of communication than formal face-to-face contacts. However, in the creation of another enterprises product innovation formal meetings were thought to be more often the most important mode of communication than informal meetings. Maybe when it is a question about own learning, receiving tacit knowledge and trust, meaning of the informal dealings are recognized better.

Figure 2. Importance of different modes of communication for the high-technology enterprises in northern Finland (N 131)

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Figure 3. Importance of different modes of communication with the existing collaboration partner (N 176)

Several interviewed enterprises argued that it is not possible to determine what the most important mode of communication is since they saw face-to-face-contacts equally important as email. It seems that the modes of communication are not substitutive to each other (see Kwan, 2002, pp. 477 489). More than three out of four of those who said that email or mobile phones are important also saw face-to-face meetings as important. Over 80% of the enterprises that felt that face-to-face meetings were important said that email and mobile phone are also important. New technologies are used for fast and more routine communication and transfer, but new ideas, creation of contacts and trust require personal contacts (see Jonsson, 2002, p. 711; Lorentzon, 2003). Other studies (e.g. Lorentzon, 2003, p. 97) have also discovered that the function of ICT between new technologies and traditional forms of communication is more complementary than substitutive.

Signicance of Geographical Distance in Collaboration The interviewed enterprises were asked where their most important collaboration partner is located. They were also asked whether the distance to this other enterprise is signicant. There was a clear duality: about a half of the enterprises (53%) argued that the distance has no signicance while a third (32%) declared it to be of great importance. The rest (15%) thought proximity has some importance. A closer look at the answers gave the impression that proximity is more important than is admitted in such simple answers: The nearest enterprise in this sector of business. Distance is no advantage or disadvantage. No essential signicance. It is at the right distance. No signicance. We have managed to create a contact from the startat that time proximity had an effect. As most of the enterprises studied are located in municipalities that have a technology centre, in these few cities in particular, it is clear that a collaboration partner was often

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(42%) found in the same municipality. There was also the idea to study if the technology centres have managed to get potential collaboration partners together. Very seldom the same premise was seen as an inuential factor for collaboration. The most important issue is that the collaboration partner has to offer resources that the own enterprise do mi, 2005). not have, that is most often the complementary know-how (Ala-Ra According to Lorenzen (1998), there is a connection between geographical proximity between the partners and the amount of their formal contracts. When two enterprises are located close to each other, information about other enterprises as collaborative partners is transmitted easily though conversation and advice from other entrepreneurs (Edquist et al., 2002, p. 566). This is understandable also in localities studied where the actors are few in numberslike one of the interviewees argued here everybody knows everybody so we know who has the right kind of know-how. The enterprises might not consider this as a question of distance, because it was understood strictly as a physical distance. After all, most enterprises interact within the same operational spaceutilizing the local buzz. Other studies have shown that when collaboration involves an exchange of information through more informal modes, geographical proximity favours collaboration (Doloreux, 2004, p. 184). The knowledge needed in a high-technology enterprise is increased best through interpersonal contacts, which most easily take place in geographical proximity (Malecki, 2000, pp. 108, 111). Only 7% of the enterprises collaborated remotely and argued that distance is a problem. However, cooperation at a distance was necessary because of the branch of mi, 2007). Some reported that distance or their business or existing contacts (Ala-Ra location causes problems of credibility for the activities of the enterprise, which demonstrates that it is difcult to earn trust and get into local buzz from a distance (Malecki, 2000, p. 112). Respondents outside FUR Oulu often expressed that administrative or regional borders limited collaboration activities, at least in projects that have some public nancing. As it was felt that distance mattered more than it was recognized, those 68 enterprises that were cooperating with an enterprise from a different municipality and argued that distance did not matter were studied in more detail. The collaboration partner was found in the neighbouring municipality in 15 cases (22%) and in 28 cases (41%) the enterprises collaboration partner was located over 400 kilometres away. The majority of them were in the metropolitan area in southern Finland but some were also abroad (Figure 4). Helsinki and Espoo were most frequently mentioned as locations of distant collaboration partners, which is logical because most high-technology enterprises in Finland are located there. The rest 25 (37%) enterprises were collaborating mostly within the study area and mostly were geared towards FUR Oulu. The connections to southern Finland and other countries serve as global pipelines. Some enterprises reported that they were aiming to create more international contacts since it is the only way to be competitive in the future. For other enterprises it is benecial to collaborate with enterprises with already existing international or national linkages, which is seen in contacts with FUR Oulu and southern Finland. Previous studies suggest that long distance connections are important also for local buzz; the more information about markets and technologies that is received through these pipelines the more local actors benet, since the amount of information strengthens the local buzz (Bathelt et al., 2004, p. 41).

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Figure 4. Location of collaboration partner for high technology enterprises in northern Finland

Geographical Distance in Collaboration and Modes of Communication The correlation analysis suggested a connection between geographical proximity and the most important mode of communication (see Appendix, Table A1). The most important mode of communication can be expected to be related to the physical distance the enterprise has to overcome. The most important modes of communication were separated into two groups; email and mobile phone (new technology) and face-to-face meetings. New technologies were more often (78%) the most important mode of communication for those enterprises that cooperated with enterprises in other municipalities, and face-toface meetings were more important between partners in the same municipality (62%). Those who had their collaboration partner in the same municipality thought that distance had some importance in most cases (72%), while less than a third (31%) of those enterprises which had their collaboration partner in different municipality thought so. However, face-to-face contacts were important in general. Thus, the new technologies are not substituting face-to-face contacts, but they are helpful in transferring information, particularly when there is an extended geographical distance between the collaborating high-technology enterprises (Massard & Mehier, 2005). Other studies have discovered that new technologies are used frequently especially in those cases in which a long geographical distance between collaboration enterprise partners exist (Lorentzon, 2003, p. 97). Innovation creation is not merely a technical, but a much more complicated issue, where geographical proximity is widely admitted to be an advantageas social

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interaction is still mostly organized around geographical places (Castells, 2000, p. 20; Cooke & Morgan, 2002, p. 34; Feldman, 2002, p. 51; Edquist et al., 2002, p. 565; Graham & Marvin, 2000, p. 72; Tuomi, 2001, p. 29). There were slight differences in the portraits of enterprises. Software houses seldom experienced distance to be of some importance. As mentioned, new technology was more important than face-to-face meetings for those enterprises which collaborate with a partner in another municipality. Also, while there were only slight differences between enterprises in FUR Oulu and outside FUR Oulu when it was a question of different modes of communication in general, in collaboration the differences were more signicant. As noted earlier, that is the question of time-space accessibility (see Massard & Mehier, 2005). The modes of communication do not determine the choice of collaboration partner, but the location of an existing collaboration partner has an inuence on the use of modes of communication. Discussion Technology brings enterprises many new possibilities, such as exchanging information remotely, which is particularly important in large, sparsely populated areas like northern Finland, the case study area. In this study the empirical evidence suggests that face-to-face contacts and geographical proximity do matter in the collaboration aiming to create a product innovation between high-technology enterprises. Even though new technology was considered to be very important, it did not seem to make face-to-face contacts less important with the collaboration partner. As modes of communications, email and personal meetings were regarded almost as important. New technology and face-to-face contacts were more complementary than substitutive to each other. Many enterprises claimed that they cannot really name the most important mode of communication, since they need both new technologies and face-to-face contacts in their activities (Table 2). Innovation requires human and social processes. ICT aids the innovation process by providing easy and fast access to information that can easily be digitized. However, innovation involves elements such as tacit knowledge, which cannot be transferred without face-to-face interaction.
Table 2. A summarizing table of the conclusions, observations and insights New technology but also face-to-face contacts are important in cooperation with existing collaboration partner Most collaboration partners are located close to each other Long-distance collaboration contacts are mostly to metropolitan area of Finland or abroad A half of the rms argued that distance has importance Even most of those who said distance did not matter thought that face-to-face contacts are important Face-to-face contacts are most important if the collaboration partner is located in the same municipality New technologies are most important if the collaboration partner is located in the different municipality Different modes of communication are complementary to each other ICT is a good aid to overcome some of the (space-time) challenges of territorial characteristic of northern Finland but it does not make location insignicant

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Also, the increase of information has accelerated competition and shortened product life cycles, which creates pressures to achieve new innovations through collaboration. Moreover, the more easily codied knowledge is available to everyone, the more important tacit knowledge is to an enterprise. The knowledge needed in high-technology enterprises is increased best through interpersonal contacts, which most easily takes place in geographical proximity. Geographical proximity to the collaboration partner was seen as important in this study too. Half of the interviewed high-technology enterprises claimed it has an effect on collaboration. Even though the other half of the enterprises argued that distance is of no importance, most of them reported that face-to-face contacts are of some importance. Face-to-face meetings are crucial for creating new contacts. Locally generated and expressed tacit and informal knowledge are important in innovation. Many studies suggest that enterprises need a mixture of local, regional, national and international connections to maintain their competitiveness and innovativeness (see Bathelt et al., 2004; Doloreux, 2004, p. 186). It is important to manage the action of local buzz but also global pipelines so that new information and new potential are attainable for local actors and networks of enterprises. This is especially crucial for high-technology enterprises located in more peripheral regions such as northern Finland, at least in geographical terms. The region of northern Finland, with its challenging characteristicslong distances, sparse population density and few social resources (especially outside FUR Oulu) would gain in terms of economic activity and innovation if the physical distance could be made less important. Physical distance may not lose its importance, but with the appropriate use of new technologies enterprises have a chance to tackle the geographical disadvantages. Most of the high-technology enterprises studied have already found the means to get along with physical distance and accepted the limitations it may cause. Acknowledgements The author wishes to acknowledge the nancial support from the Academy of Finland research project 200771. Also the author would like to thank other members of the research group, especially Professor Jussi S. Jauhiainen, for their comments and suggestions for the article as well as two anonymous referees for their helpful recommendations for improvements to the article. References
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Appendix

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Table A1. Correlations Location of collaboratorion partner 2 0.283 0.005b 96 0.073 0.479 2 0.038 0.718 95 1 96 Meaning of distance 0.088 0.388 99 2 0.067 0.511 2 0.074 0.467 98 2 0.452 0.000a 96 1 99 Most important mode of communication 2 0.003 0.975 98 2 0.033 0.745 0.066 0.519 97 2 0.352 0.000a 95 0.417 0.000a 98 1 98

Polis or not Correlation Coefcient Signicance (two-tailed) N Correlation Coefcient Signicance (two-tailed) Correlation Coefcient Signicance (two-tailed) N Correlation Coefcient Signicance (two-tailed) N Correlation Coefcient Signicance (two-tailed) N Correlation Coefcient Signicance (two-tailed) N 1 . 131

Line of business 0.282 0.001a 131 1

Year established 2 0.008 0.924 130 0.119 0.177 1 130

Spearmans rho

Polis or not

Line of business Year established Location of collaboratorion partner Meaning of distance Most important mode of communi-cation

Highly signicant. Signicant. Italics represent essential correlations used in this study.
b