The Rise of Nokia

See discussions, stats, and author profiles for this publication at: https://www.researchgate.
net/publication/264821237
Secrets behind the Finnish miracle: the rise of Nokia
Article in International Journal of Technology and Globalisation · February 2012

DOI: 10.1504/IJTG.2012.045295
CITATIONS READS
5 4,814
1 author:
Andy Hira
Simon Fraser University
90 PUBLICATIONS 855 CITATIONS
SEE PROFILE
Some of the authors of this publication are also working on these related projects:
Community Benefits Agreement for Mining Projects View project
All content following this page was uploaded by Andy Hira on 12 September 2016.
The user has requested enhancement of the downloaded file.

38 Int. J. Technology and Globalisation, Vol. 6, Nos. 1/2, 2012
Secrets behind the Finnish miracle: the rise of Nokia
Anil Hira
Political Science, Simon Fraser University,
8888 University Drive, Burnaby, BC, Canada V5A 1S6
E-mail: ahira@sfu.ca
Abstract: By the laws of natural advantage, Finland should be a natural

resource producer. In fact, Nokia, now known as a leading manufacturer in cell
phones, started out as a wood pulp company. A combination of historical
and geographic conditions helped to set the stage for the transformation
of this once isolated economy. However, policy interventions were essential.
These interventions evolved over time. Even more important was taking
advantage of the windows of opportunity afforded by the deregulation
of telecommunications markets in the largest economies. The openness to
adjustment and learning through mistakes speaks to a strong national
determination. The coordination of state-private sector efforts towards national
goals is unmistakeable and deliberate in the case of Nokia.
Keywords: wireless technology; Nokia; Finland; industrial policy; technology

policy.
Reference to this paper should be made as follows: Hira, A. (2012)

‘Secrets behind the Finnish miracle: the rise of Nokia’, Int. J. Technology and
Globalisation, Vol. 6, Nos. 1/2, pp.38–64.
Biographical notes: Anil Hira is Professor of Political Science at Simon Fraser

University in Vancouver, BC, Canada. He is the author of 6 books and over
30 articles and book chapters, including The New Path: An East Asian
Model for Latin American Success (Ashgate, 2007). His area of research
is using industrial, technology, and energy policies to build globally
competitive industries. His current research projects include investigations of
cluster competitiveness, using the emerging science of genomics to create
comparative advantage, developing science and technology capacity in
developing countries, and renewal of corrupt and ineffective public institutions.
1 Introduction
The importance of Nokia to the Finnish economy cannot be overestimated. Nokia

represents 2/3 of the Information and Communications Technology (ICT) sector in
Finland, 1/5 of exports, and 3–4% of GDP. Nokia funds 45% of business sector R&D
(research and development), and 1/3 of national R&D; it conducts 60% of its research
in Finland. It employs 20,000 in Finland, half of whom are in R&D (Hyytinen et al.,
2006, p.66).1 The Finnish ICT cluster includes 6000 firms, of which 200 are first-tier
subcontractors of Nokia. ICT constitutes 10% of GDP (up from 4% in 1990) (Hyytinen
et al., 2006, pp.66, 67). Finnish ICT firms range from electronics and telecom production
and R&D to telecom operation and services (Sonera, Soon Communication); software
Copyright © 2012 Inderscience Enterprises Ltd.

Secrets behind the Finnish miracle: the rise of Nokia 39
and information system design and production (Fujitsu Invia, Tietoenator ja SecGo); and
Internet and new media production (TV2, Alma Media) (Schienstock et al., 1998, p.133).
Finland is an odd place for the emergence of a global competitor in IT. With a small
domestic population of 5.2 million, a relatively remote location, and a traditional
economy based on natural resources (lumber, pulp, and paper), it is probably one of the
last places one would expect to see the emergence of one of the leading high tech
companies in the world. Yet, going back to the 1970s, Finland viewed its economic goal
as becoming the Japan of Europe, that is, an agile exporter able to introduce new
products and improve productivity, leading to a major improvement in its standard of
living.
Finnish economic performance has been relatively good in the latter part of the
20th century, but with some important caveats. Growth rates have historically been high
relative to other world economies, until the marked decline from the fall of the Soviet
Union in 1989. Finland’s per capita GDP in 2005 was estimated by the OECD at
$30,266, which would put it towards the lower end of the Western European economies.
From the late 1980s, we can see declines in growth rates as the economy underwent
structural transformation from an emphasis on resources to high tech hub. Similarly,
while unemployment rates peaked in double digits in 1992, they have only gradually
diminished. According to the OECD, the standardised unemployment rate for 2006 was
7.7, which is just below the OECD average of 7.8%. However, like its Scandinavian
neighbours, according to UN Gini stats, Finland is one of the most equitable countries in
the world. The economy has also become increasingly reliant on foreign trade in recent
decades, as seen in the next table. Table 1 reinforces the structural break in Finland’s
economy that took place from the 1990s, which reflects the liberalisation of the trade and
finance, paralleling the globalisation that took place in most economies.
The story of Nokia is compelling because Finland was not the context (in regard to
natural comparative advantage) in which one would expect to see leadership in R&D
expenditures, yet that is what Table 2 demonstrates.
Finland was a relatively isolated resource-based economy, dominated by pulp and
paper. Yet, it bears mentioning that there were signs of previous Finnish capacity to
develop globally competitive products requiring high value-added and levels of skill.
For example, Finlayson is a high end textile manufacturer which began in 1820. Also,
according to Singleton, in 1916, a branch plant of the Swedish Rörstrand works became
an independent Finnish manufacturer of ‘Arabia’ porcelain. The factory was supported
by The School of Decorative Arts and the Society of Crafts and Design in Helsinki.
Finnish artists had won international competitions for their designs, spreading the renown
of their wares. In the interwar period, Arabia expanded to manufacturing insulators and
industrial porcelain. This was accompanied by the establishment in 1922 of a research
lab, which resulted in the development of new technology and the diversification
of products. Similarly, a glassware industry developed an international reputation
for design under the label Nuutajärvi. Both industries were combined under the
Wärtislä group, founded in 1938 (Singleton, 1986, pp.50, 51). Wärtislä developed out of
a saw-mill founded in 1834 and moved into ironworks in 1851. In 1908, it moved into
the steel industry. Through vertical mergers and acquisitions, the company became
a large conglomerate in metal working and shipbuilding. The company is now
a leading producer of marine engines and power plants, as well as engineering services
(Singleton, 1986, p.53).
40 A. Hira
Table 1 Openness
50–60 61–69 70–80 81–90 91–00 01–04

Argentina 7.7 8.3 8.2 10.5 19.0 21.4
Australia 19.5 21.5 23.3 27.3 39.3 45.6
Austria 23.3 33.8 49.3 60.9 75.4 97.6
Belgium 52.7 74.5 100.3 115.4 146.8 168.1
Brazil 15.0 9.7 12.9 11.8 19.2 27.1
Canada 32.8 35.8 45.6 49.9 73.5 80.8
Chile 20.0 23.7 27.9 37.0 54.1 65.2
China 10.8 11.1 17.3 41.1 43.9 50.8
Finland 23.8 29.8 37.7 42.9 60.4 76.5
France 15.1 18.4 28.0 33.2 45.1 56.7
Germany N/a N/a 29.9 37.9 52.3 71.5
Ireland 29.3 41.0 57.0 80.5 134.9 179.5
Italy 11.9 19.9 28.6 33.5 47.3 54.4
Japan 5.2 7.9 11.9 14.3 17.3 21.2
South Korea 5.2 8.3 25.3 38.2 57.7 83.2
Mexico 18.6 15.7 15.6 19.8 42.5 63.6
Netherlands 35.8 51.1 72.7 85.3 112.1 138.6
Norway 40.2 52.7 60.8 61.8 72.3 76.2
Spain 5.3 12.4 18.8 26.8 46.4 62.8
Sweden 25.4 33.2 42.9 50.5 68.3 85.2
Switzerland 25.9 33.3 44.6 58.7 71.0 86.7
Taiwan 15.7 24.6 57.1 74.1 92.9 105.7
UK 22.2 24.8 32.1 37.6 48.9 59.3
USA 6.9 8.5 11.3 14.1 21.3 25.6
Standard measure used by economists, = (exports + imports)/GDP.
Source: Penn World Tables 6.2
The shift in Finland to a high tech strategy was precipitated by the fall of the Soviet
Union in 1989. Russia accounted for some 40% of exports at times during the turn of the
century. This dependency was broken by necessity with the Russian Revolution
and World War II, as Finland began to seek Western customers. Ironically, the
Soviet Union’s demand for reparations as a result of Finnish alliance with the Germans in
World War II led to major increases in ship-building, cables, and machinery and
equipment capacity, as these goods were demanded in kind by the Soviets.2 From the
1950s, the Finns returned to a heavy dependency on the Soviets, accounting for 15–25%
of their foreign trade until the collapse of the USSR in 1990 (Steinbock, 2001, p.21).
Therefore, we can see that there were some latent national capabilities in industry, if not
high tech, in the postwar period.
Table 2 Increases in R&D spending as a % of GDP 1991–2002, selected OECD countries
Country 1991 2002 Increase

Israel 2.5 4.72 2.22
Finland 2.04 3.46 1.42
Sweden 2.89 4 1.11
South Korea 1.92 2.91 0.99
Canada 1.52 1.93 0.41
Japan 2.82 3.12 0.3
USA 2.69 2.67 –0.02
Germany 2.61 2.52 –0.09
France 2.41 2.2 –0.21
UK 2.16 1.88 –0.28
Source: Lindberg (2005, p.185)
2 Origins of the Finnish telecom sector-preconditions
The development of domestic market conditions reveals that a combination of early

regulatory decision-making and public ownership and procurement policies set the stage
for the initial build-up of capacity in the Finnish telecom sector. It is important to note
that the Finnish telecommunications market has a tradition of decentralisation that has
led to strong domestic competition. By the 1930s, there were ‘hundreds’ of private
telecom operators. However, the Post and Telecommunications Operator (PTO)
gradually expanded, so that a dual market emerged. With threats of takeover by the
public sector, private companies were motivated to adopt state-of-the-art foreign
technology (Hyytinen et al., 2006, p.61). There was also strong initial competition in
telephone equipment manufacturing, unusual for that time period (Paija, 2000, p.22).
There were traditionally (from 1920) 3 companies that provided the sources for
telecom manufacturing, Salora sold radios and tvs; Televa, a radio lab under the Min. of
Defense, produced military radio systems, and Suomen Kapelitehdas (later Nokia) sold
cables and electricity. Salora was launched as a radio manufacturing company in the
1920s. It began producing tvs as well in the early 1950s with radiophone manufacturing a
decade later. Beginning in 1945, the State Electric Works (Valtion Sähköpaja), launched
as a research laboratory of the Finnish Defense Forces in 1925, served as an industry
catalyst, changing its name to Televa in 1962 in an attempt to blur its profile as a public
sector organisation.
What is known today as Nokia was established in 1865 as a pulp mill by Knut
Fredrik Idestam on the banks of Nokia rapids. By the end of the century, a water-driven
power station had been built to service the mill. Finnish Rubber Works (FRW, Suomen
Gummitehdas) established its factories nearby in order to purchase excess power, and
began using Nokia as its brand for its galoshes, shoes and industrial products around
1904. Diversification of the company was in part a reflection of volatile business cycles,
wars, and difficulties in attaining steady finance, as the company’s exports were closely
tied to conditions in Russia (Steinbock, 2001, pp.12–14). In 1922, FRW acquired the
Nokia pulp wood mill as well as Finnish Cable Works (FCW, Suomen Kaapelitehdas),
42 A. Hira
a producer of telephone and telegraph cables, which it saw as a potential competitor in

some of its business segments.
3 Stages 1 and 2: The development of national capacity and early market

opportunities
Early Finnish telecom capacity developed as a result of a combination of unusual

circumstances leading to an external catalyst, domestic private sector cooperation, and
public procurement policies. The unusual circumstances came in 1944, when the Soviets
imposed $300 million reparations on Finland for siding with the Germans for part of
World War II; these were to be paid in kind. Part of the payment (25%) was in cable
production, thus 50% of the FCWs production went to the Soviets. Since the factory was
suffering from a lack of foreign exchange, it had to increase efficiency to meet Soviet
demands. This led to major increases in capacity, and so the need to find export markets.
Moreover, the relationship with the Soviets meant that Finland was not eligible for
Marshall Plan aid or technological transfers, thus Nokia began to develop in house
technological capacity. In 1967, with the encouragement of the government, the Nokia
Corporation, including FCW, FRW, and the original Nokia wood mill activities,
was officially launched (Hoovers, 2007, p.3). In the 1967 fusion, the electronic
and cable section was separated into its own division, and began manufacturing
telecommunications equipment (Paija, 2000, pp.24, 25).
As the domestic market developed, cooperation among key industries helped to
further spur technological capacity. In 1964, Nokia developed VHF-radio simultaneously
with Salora Oy, which later in 1971 also developed the ARP-phone. Salora obtained its
own manufacturing unit in 1972 and in 1975 began exporting its own radiophones
internationally. In 1975, Nokia and Salora agreed to coordinate and cross-market their
branding and promotion activities. Nokia would market Salora’s mobile phones under its
brand, and Salora would market Nokia’s professional mobile radio base stations and
handsets. The results were highly productive; between 1972 and 1978, Salora’s revenues
tripled. These marketing activities resulted in further cooperation between the two
companies, leading to a joint venture in 1979, Mobira Oy (mobile radio), the precursor
of today’s Nokia Telecommunications (NTC). The initial strategic objective of
Nokia-Mobira was to combine resources in order to ensure the long-term competitiveness
of the Finnish radiophone industry (Steinbock, 2001, pp.88–93).
In the 1970s, Nokia became more involved in the telecommunications industry by
developing the Nokia DX200, a digital switch for telephone exchanges. The technology
was developed through a joint venture with Televa, called Telefenno (Paija, 2000, p.26).
In 1982, Telefenno introduced the DX200 switch, the world’s first digital telephone
switch to be put into operational use. The DX200 became the workhorse of the network
equipment division. Its modular and flexible architecture enabled it to be developed into
various switching products (Wikipedia).
The military and public sector also spurred the early development of the sector
through their demands for mobile communications. In 1968, largely in reaction to the
expansion of highway traffic, the Finnish Government authorised the construction of a
national mobile network based on manual Car Mobile Telephone (CMT) technology.
Three years later, Finland’s Post, Telephone and Telegraph public agency (PTT) offered
the first mobile phone services on its CMT network, and by the later 1960s, the capacity
of VHF networks could not accommodate demand, highlighting the need for a more
effective system (Steinbock, 2001, p.96). Public efforts to address these needs culminated
in the Auto Radio Puhelin (Auto Radio Phone) network which inaugurated the first
mobile network in 1971 (Hyytinen et al., 2006, p.62).
Palmberg (2002) argues that the development of the DX200 technology reflected the
strong promotion by the PTT which lies behind Nokia’s development. He notes the PTT
itself established an R&D lab in 1932 to study transmission and switching technologies.
Because of lack of sufficient funding or a national telecom policy, the PTO encouraged
strong competition by suppliers to lower its costs. The PTT also helped to develop local
technological expertise through orders of advanced digital switching systems in the early
1970s, including the DX200.3 He states,
“Thus, the crucial role that the PTO (PTT) played in the consolidation and
clustering of technological competencies cannot be underestimated. The PTO
acted upon technological opportunities during transitional phases of
technological change, and communicated an awareness of these opportunities
through the networks of scientific and engineering communities. Through its
role as a lead user the PTO contributed frequently the successful selection and
further diffusion of key innovations (145).”
As with the case of standards (noted below), this served to not only reduce the
transactions costs for sectoral development, but also to reduce potential contingency
costs (Lawrence and Dyer, 1983, pp.9–16).
4 Stage 3: The learning curve
The Nokia Corporation became a diverse conglomerate by the 1970s, in good part
through acquisitions in consumer electronics, information systems, and other lines of
business. Nonetheless, reflecting the determination of CEO Karaimo and a cyclical
downturn in other businesses from 1977, Nokia increasingly focused on its electronics
divisions. In 1984, electronics revenues exceeded those of cable, forest, or rubber, for the
first time. In 1986, Nokia had 10 divisions, 45 business units and 180 business lines,
including being the largest manufacturer of pcs and colour tvs in the Nordic countries
and the third largest in Europe. In 1981, 77% of its electronics market was domestic,
however, that dropped to less than 40% by the next year. Much of its electronics
production went to the Soviet Union (Hyytinen et al., 2006, p.64; Steinbock, 2001, pp.18,
22–24, 44–46, Nokia).
With the state retaining a majority interest, Televa was reincorporated in 1976 as
Televa Oy. In 1977, Televa Oy and Oy Nokia AB launched Telefenno Oy, a joint venture
to coordinate marketing and R&D. Televa Oy was taken over by Nokia in 1981, who
renamed the company Telenokia Oy. At this point, Kari Kairamo became chairman of the
board, and Televa’s radiophone unit became a department of Telenokia Oy (Steinbock,
2001, p.86). In 1963, the Finnish Army put out a contract for radiophones with
challenging technical requirements. Five companies, (Televa, Kaapelitechdas, Salora,
Vaisala and Swedish Sonab) put in bids. When the Army withdrew its request, the
companies began to look for other customers (Paija, 2000, p.9). US fears about
technology transfer prevented Finland and the Soviets from developing joint ventures
with European partners; this again reinforced the need for in house development
capacity.
44 A. Hira
It took a while for Nokia to consolidate its business around mobile phones. In 1979,
Nokia and Salora created a joint 50-50 owned company, Mobira, to set up radio
telephone technology (Paija, 2000, p.26, Nokia). In 1983, Nokia took over Salora Oy,
a major Finnish company; this made it Scandinavia’s largest producer of tv sets. It then
moved to acquire Luxor AB, a Swedish state-owned electronics and computer company,
followed by the purchase of Oceanic, a French tv producer, in order to gain access to the
French and Italian markets. As a result, Nokia became the 3rd largest tv manufacturer.
The fact that Mobira revenues grew an average of 50% annually in the 1980s, with rapid
expansion into new markets, spurred rethinking at Nokia. The company was building
base stations as well as radiophones, including the Mobira Talkman, launched in 1984
(Steinbock, 2001, p.99). By 1987, electronics accounted for more than 40% of Nokia’s
sales. In the late 1980s and early 1990s, the corporation ran into serious financial
problems amidst the recession as well as heavy losses in its television division. (These
problems probably contributed to Kairamo taking his own life in 1988.) A banking crisis
peaking in 1992 related to the collapse of the Soviet Union finally shook the Finnish
economy and Nokia awake to the reality of global markets (Steinbock, 2001, p.81).
Nokia responded by streamlining its telecommunications divisions, and by divesting
itself of the television and PC divisions, which turned out to be a propitious decision.
This led to a decision to use the forestry sector as a source of cash to move towards
focusing on the wireless phone sector (Hyytinen et al., 2006, p.70).
5 Stage 4: Export promotion
5.1 Development of the Nordic market

Public sector policies were also crucial to the next step in Nokia’s evolution, the
movement to regional competitor, creating first mover technology advantages
(Steinbock, 2002, p.7). The Nordic Mobile Telephone Group (Nordisk Mobil Telefon or
NMT), including private and public partners, was established in 1969 with the purpose of
developing a new mobile telephone system. Interestingly, it began by drafting system
requirements based on market needs rather than technical parameters. According to
Steinbock, the original NMT design objectives included: fully automatic operation and
charging; system and terminal compatibility among Finland, Sweden, Norway, and
Denmark; full roaming capability among all Nordic countries; mobile-to-mobile calls
in addition to mobile-to-fixed and fixed-to-mobile; high reliability; similar use and same
facilities as conventional fixed phone; privacy protection; and open specs, with no
exclusive supplier rights. Steinbock states,
“This strategic initiative was dictated by the public service values of the Nordic
PTTs, which integrated mobile operations with the rest of their activities. With
the low price for fixed subscriptions, revenues would be highly dependent on
adequate traffic levels and cost-leadership strategies.” (Steinbock, 2001, p.96)
The role of Swedish public policy is a bit of digression here, but there is no doubt that it
was important, even though it is probably underestimated in most accounts of Nokia’s
rise. Like Finland, Sweden had a decentralised phone market that encouraged cell phone
service competition early on. The two economies have been closely tied together for
centuries, with Finland as a Swedish colony for many years. Even today, street signs in
Helsinki are often written in Swedish as well as Finnish, and more concretely, there is
direct influence through financial presence of Swedish firms. In cell phones, it was the
partnership of Ericsson and Nokia that really set the stage for the NMT. According to
analysts, the Swedish PTT realised early on that given the enormity of R&D expenditures
that would be required for mobile telephony, it began to think of exports as early as the
1970s. The Swedish Investment Bank’s support and its government’s efforts to get Spain
and Saudi Arabia to jointly develop the NMT (Beise, 2001, p.169, 179) are examples of
the key role Sweden played in helping to pry open the mobile phone windows for Nokia
and Ericsson.
By the Spring of 1977, Nordic equipment manufacturers joined the process.
Two years later, Mobira transferred the first NMT base stations to Finland’s PTT
(Steinbock, 2001, p.97). NMT thus became the world’s first multinational cellular
network. At the end of the 1990s, NMT was being used by approximately 4.5 million
people in 40 countries across Asia, Russia, and Eastern Europe (Steinbock, 2001, p.95).
Under promotion by the Finnish regulator, Mobira, a joint venture of Nokia and
Salora, began producing phones in order to compete with Ericsson. Established in 1979
as a joint venture with Salora to supply phones for Finland’s fledgling mobile phone
network, Mobira saw its fortunes soar when Scandinavian countries formed the NMT
in 1983. When Mobira became part of Nokia Corporation, Telenokia’s radiophone unit
was moved into Mobira (Steinbock, 2001, p.98). As Nordic countries began their NMT
cooperation, Nokia increased its radiophone activities accordingly. In the process,
Mobira began to invest in NMT mobile phones and base stations while harvesting
46 A. Hira
overlapping products and marketing activities. When England and Sweden launched their
first networks in 1981, Mobira entered these markets, even if its most important
customers were in Finland. Concurrently, Nokia consolidated the industry. Telenokia had
been created in 1981; a year later, Nokia purchased a minority stake in Salora and 50% of
Mobira’s stock equity through Telenokia (Steinbock, 2001, p.98).
By the early 1980s, the Nordic countries constituted the largest world market in terms
of subscribers. With revenues expected to soar, Nokia dominated the NMT business in
Finland (with the support of Televa) and began to move into Scandinavian markets
(through Salora). In 1982, Jorman Niemenen, Mobira’s senior manager, stated that NMT
was the first step to a global mobile communications system. Mobira’s marketers and top
management worked with Finnish officials, led by Finland’s Minister of Trade and
Industry, to push other European countries to adopt NMT. As early as 1983, Minister
Esko Ollila had discussed the matter with France’s Minister of Industry and Research to
create standards that would allow for an immediate Euro-wide system. Yet, Nordic hopes
faded when the larger economies- the UK, France, Germany, and Italy, all introduced
their own national standards (Steinbock, 2001, p.98). The period was capped off with the
1987 launch of the Nokia Cityman, made famous by an initial phone call to Soviet Union
Premier Gorbachev; it was the first mobile handheld phone. The phone weighed
800 grams and cost about $6000 (Nokia). A new stage in the evolution of state-business
strategies would be needed to take the next step to regional markets.
5.2 Development of the EU market

Nokia’s next stage of evolution involved both corporate and public policy strategies to
open up the European market to its products. In the early 1980s, Nokia acquired Mobira,
a Finnish mobile phone manufacturer, and in 1986 acquired Finland’s largest electrical
wholesaler. In 1988, it purchased Ericsson Group’s Data division, creating the largest IT
group in Scandinavia. This wave of activity opened up new markets for Nokia across
Europe, as well as sources of finance in Switzerland; it made Nokia a European
company. In 1986, non-Finnish investors bought over half of the new shares issued by
Nokia. In 1987, the Finnish Parliament doubled the ceiling on foreign ownership to 40%,
following the advice of Jorma Olilla, then finance director of Nokia. The main problem
was the lack of brand recognition, reflecting the fact that in the global market it was
supplying components or products sold under other companies’ names (Steinbock, 2001,
pp.48–54). The other problem was lack of European standards for the emerging wireless
industry.
The European Conference of Postal and Telecommunications Administrations
(CEPT) decided to develop a common standard for digital mobile telephony, the GSM, to
address the problem of fragmented markets. In 1982, promoted by the Nordic countries
and the Netherlands, CEPT formed a new standards group, Groupe Special Mobile
(GSM), with the mandate to specify radiotelephone systems for Europe. In 1987,
Nokia-Mobira joined forces with France’s Alcatel and West Germany’s AEG to promote
the GSM as a European standard that would become the international standard. In 1988,
the EEC adopted the GSM standard for mobile telecom. Nokia, which had accumulated
know-how in digitising radio transmissions and signaling and control software, was a
natural candidate for the project, and by 1988 had developed a national system in Finland
based on GSM. In 1990, the PTO opened competition in the domestic mobile phone
market for the first time (Hyytinen et al., 2006, pp.62–64). In 1991, Radiolinja, a Finnish
mobile operator launched the first GSM network. Thereafter, all European countries
adopted the GSM standard, and it became popular elsewhere (Steinbock, 2001, p.110).
Essentially, the Nordic countries, principally Sweden and Finland, had defeated the
initial Franco-German alliance on the strength of NMT’s proven international capability
and early adoption, thus making it more attractive as the basis for a pan-European
standard.
6 Stage 5: Development into a global producer
Nokia needed distribution in the USA, by far the largest market. Therefore, in the Spring
of 1984, it accepted Tandy’s proposed joint venture to make phones in South Korea and
distribute them under RadioShack. In the long-run, Nokia was able to learn about
overseas manufacturing activities as it was preparing to enter the Asian market.
However, the experience also showed Nokia that such alliances diminished profit
margins and did not help to establish a brand name, as well as created vulnerability to a
partner’s problems (Steinbock, 2001, p.101).
In 1992, the new CEO, Jorma Ollila, made a strategic decision to concentrate solely
on telecommunications. Olilla had been in charge of Nokia Mobile Phones division and
this became his focus. Thus, during the rest of the 1990s, Nokia continued to divest itself
of all of its non-telecommunications divisions. Nokia was in a good position to take
advantage of telecommunications deregulation in Europe in the early 1990s, proving
itself more entrepreneurial, agile, and flexible than many of the PTT monopolies that
were being privatised and usurping traditional telecom suppliers to work with emerging
entrepreneurial cellular providers such as Orange in the UK and E-Plus in Germany
(Steinbock, 2001, pp.125–127). An important breakthrough was the adoption at the 1992
World Administrative Radio Conference of a decision to allocate the 1–3 GHz band to
mobile cellular transition, pushing out utilities, railroads, and long-distance carriers who
had used that part of the spectrum for microwave relay systems (Beise, 2001, p.156).
This resolved the lack of dedicated space on the radio spectrum and was a key
breakthrough for international standards.
Movement into global production brought with it major problems. In 1996, Nokia’s
first quarter pretax profit plunged 70%, amidst the slow-down of mobile phones.
According to Steinbock, the slowdown was a natural result of “3 years of hypergrowth”.
In 1995, the company added 7000 new employees, but it had difficulty assimilating them.
Productivity slowed down amidst logistical problems with suppliers and late deliveries of
components. US regulatory delays also cut into anticipated market growth, while
analogue phone manufacturers cut prices by up to 50%. All of this led to a new focus,
shifting from business to mobile handsets for individual customers. Despite growth in
personnel by 30%, sales by 51%, and operating profit by 71%, half of Nokia’s 55,000
employees in 1998 were Finnish. Nokia entered into China in 1985, but achieving market
share there only became a central part of strategy in the late 1990s (Steinbock, 2001,
pp.127, 128, 136).
The 3G (third generation) standards war concerned Nokia-Ericsson, later joined by
Alcatel and then by the Japanese, favouring the CDMA standard vs. Qualcomm in the
USA favouring the TDMA standard.4 The EU began to promote national members to tie
new licenses with the favoured technology, eliciting US protest. The Japanese and
Europeans agreed to promote a joint third generation standard, the WCDMA that builds
48 A. Hira
upon the GSM, while US operators decided to promote the CDMA2000 (Beise, 2001,
p.198). In a 1999 ITU conference in Brazil, the major players decided to develop the
IMT-2000, which created a flexible standard that would permit the use of either
technology.
More recent moves include opening up facilities in India in order to capture markets
there, paralleling the strategy for China, and major improvements in productivity and
in the reliability and dependability of phones through process innovations (Sabel and
Saxenian, 2008, pp.72–73, 77).
7 What explains Nokia’s successful evolution?
7.1 Why traditional theoretical approaches come up short

If we examine Porter’s diamond model, or the NIS models of competitiveness and
innovation, we would have been hard pressed in the 1980s to predict that Nokia would
become a global firm. Though having wide open spaces may have been one motivating
factor, other countries with the same situation, such as Australia and Canada did not
develop mobile phones. Porter’s famous diamond model suggests 4 key factors behind
national competitiveness:
1 Firm Strategy, Structure and Rivalry (competitive markets)
2 Demand Conditions (demanding customers)
3 Related Supporting Industries (clusters)
4 Factor Conditions (including raw materials, skilled labour, capital and
infrastructure).
Considering each of these in turn, we see that Porter cannot adequately explain Nokia’s
rise, though he might come closer to explaining its continued market presence. In terms
of the first factor, as we have noted, while there was competition within the fixed line
segment of the Finnish telephony market, in the wireless equipment market, Nokia has
enjoyed a virtual monopoly. In terms of the second condition, there are neither
economies of scale of production or consumption in Finland, nor, at least in the 1980s,
any reason to distinguish Finnish customers from other customers of economies that were
well-ahead technologically, such as Japan or Germany. In fact, fixed line penetration in
Finland was among the highest in the world by the 1980s, thus there was no pressing
demand factor (Beise, 2001, p.159). The third segment is even easier, in that we have
already related that there was no competitive telecom equipment cluster in Finland; even
today, the cluster is really a set of subcontractors that exist because of Nokia. In terms
of the final factor, while educational levels have traditionally been high in Finland, there
is no particular reason to think that a high number of engineers should lead to technology
products. If that were the case, India and Argentina would have been good candidates for
wireless manufacturing. Indeed, we have related the many disadvantages that Finland
overcame, from political and economic isolation to a limited domestic market to very
limited capital markets.
Turning to our other leading explanation, the National Innovation Systems (NIS)
approach (Nelson, 1993), we also find this literature inadequate to explain the rise of
Nokia. While innovation is clearly at the heart of this story, the NIS framework alone has
a very hard time explaining how it happened, let alone the timing. Again, there was no
evidence of conscious long-term development of technological infrastructure or
personnel around high tech manufacturing in Finland, until after cell phones took off.
In short, the conscious adoption of the NIS system took place after the rise of Nokia.
While the preconditions were there, and state support in a general sense crucial, as
discussed above, it is more accurate to say that Finland/Nokia stumbled into this system
than that it set up a system to develop a new technological product. In fact, cell phone
technology and the precursor to the GSM were invented by Bell Labs starting in the
1940s in the USA, and the Japanese company NEC developed key technologies (Beise,
2001, pp.149–152), the market that would seem to best fit both the Porterian and NIS
conditions. Yet, as is well known, the USA was one of the late adopters of wireless
technology, and still has a lower penetration rate than other countries, and Japan has had
very limited success in phone manufacturing. While Motorola is a leading equipment
manufacturer, it is not as dominant as one would expect. The absence of leading firms
from Japan, Germany, France, and the UK in the wireless manufacturing market
reinforces these points. To explain Nokia, we need to look elsewhere, with emphasis on
the nature of public-private synergy around taking advantage of a particular technological
window once they stumbled upon it.
7.2 Why firm-level explanations come up short

What explains Nokia’s success? Steinbock states
“What has made Nokia distinctive among its contemporaries is the fact that it
has consistently focused on mastering the full value chain, from operations and
new product development to marketing, sales, and service.”
This includes developing branding for the full value chain (emphasis his, 2002, p.8).
Nokia is widely known for its flexible agility (in reaction to crises) and lack of
bureaucracy (Hyytinen et al., 2006, p.66). Reflecting the wider Scandinavian context,
Fortune once called Nokia the “least hierarchical company in the world.”5
This flexibility, according to many analysts, is a reflection of visionary leader Kari
Kairamo, the managing director from 1977 and CEO from 1986–1992. Karaimo saw the
interests of Nokia and Finland as married. Steinbock states, “As far as (he) was
concerned, it was difficult to draw a line between Nokia and Finland (2002, p.35)”.
He emphasised the importance of international markets, rapid ability to change,
and a high educational level as the basis for that capacity. Karaimo also pushed
internationalisation and expansion and upgrading of personnel (Hyytinen et al., 2006,
p.65).
Nokia has also been lauded for its early adoption of niche strategies in the sector.
Nokia was an early market leader in
“designing curvy pocket-fitting designs with integrated antennas, screens with
sufficient contrast and size for comfortable reading, end-use customisation
such as exchangeable covers, downloadable ring-tones and logos, as well as
entertainment such as off and online games.”
Moreover, Nokia paid more attention to marketing and design than its competitors
Motorola and Ericsson, and focused early on handsets rather than network systems
50 A. Hira
(Hyytinen et al., 2006, p.69); this paid big dividends as Nokia anticipated the importance
of fashion/design as a demand factor for mobile phones.
As we saw, Nokia has also consistently entered into alliances with other corporations,
both domestic and international, as part of its strategy of creating first mover advantages
through standards setting. Cooperation with Ericsson lay behind the success in promoting
the NMT and the GSM standards. More recently, in 1995–1996 cooperation with
Ericsson and California company Unwired Planet (later renamed phone.com and
subsequently Openwave), led to the creation of WAP, the Wireless Application Protocol,
which provides a method of communicating across wireless networks. As Jones notes, to
encourage and facilitate cross-industry adoption of this application protocol, the three
partners also formed the WAP forum. This brought together over 25 wireless operators,
19 device manufacturers, 15 infrastructure companies, and 20 software developers, and
resulted in the release of WAP 1.0 in April 1998. It quickly became established as a
world standard; paving the way for improved services in the subsequent GPRS and 3G
networks, usurping alternative proposals including one by Microsoft (Jones, 2002,
pp.146–147). In 1994, Ericsson realised it needed partnerships to gain adoption of its
emerging Bluetooth technology for transferring information between mobile phones and
data devices. In 1997, they approached several other manufacturers. In 1998, they formed
a patent pool, the Bluetooth Special Interest Group, with IBM, Intel, Nokia and Toshiba.
In 2000, companies such as 3COM, Lucent, Microsoft and Motorola all began releasing
products using Bluetooth (Jones, 2002, p.209).
However, joint ventures in developing new technology have not had the same
positive results. For example, in 1998, Nokia teamed up with Psion, Ericsson, and
Motorola to establish a new company Symbian to develop software for 3G and lock out
Microsoft. It had turned down an offer from Microsoft earlier that year for a joint venture
along the same lines. However, Nokia was unhappy with the results and subsequently
brought research back in house (Moen and Lilja, 2005, p.365).
We have seen that previous firm-level strategies, such as the venture into tvs and the
mergers and acquisitions efforts led to disastrous results in consumer electronics.
Without public support, there is no way Nokia could have survived such disasters and
moved successfully into cell phones. Therefore, attributing success purely to firm
characteristics is clearly inadequate to explain success or failure.
7.3 Public sector’s key role in the emergence of finnish high tech
Steinbock relates a key incident that shaped state-Nokia relations. By the mid-1970s,
progressive politicians concluded that Valco, a local maker of tv tubes, could be a
national champion in electronics. RCA, Siemens, Toshiba, Philips, and 3 Finnish
companies, Salora, Lohja (Finlux) and Asa, however came to the conclusion that
investment in the company did not make sense. The Finnish social democratic Center
Party saw this is a market failure, and believed Valco a national champion that could be
located in a developing region. The state therefore became a 60% owner, along with
Finnish Salora (20%) and Hitachi (20%). The idea was to create a state-owned
electronics company. In 1977, Valco was 75% owned by the state, with the other partners
holding just 12.5% each of the shares. In 1978, despite the launching of the Imatra
factory, heralded by the prime minister, partner Hitachi pulled out its investment.
The factory closed a few weeks later, with the government acknowledging failure.
In 1981, Nokia bought 51% of its shares. As a result of its own success, Nokia became
the new state champion, and nationalisation as a strategy was abandoned (Steinbock,
2001, pp.43, 44). This is a perfect example of the overwrought state strategy leading to
failure as discussed in Chapter 1.
We have already noted that Finnish officials were vital both in terms of setting a
favourable regulatory and competitive environment, in support and technological
advance through public procurement, and in locking in first mover advantages by
promoting particular technical standards. The state was as, if not more, important to
innovation and entrepreneurship as the private sector. Palmberg makes clear that the role
of the state was unequivocally crucial in the process (2002, p.145):
“Thus, the crucial role that the PTO played in the consolidation and clustering
of technological competencies cannot be underestimated. The PTO acted upon
technological opportunities during transitional phases of technological change,
and communicated an awareness of these opportunities through the networks of
scientific and engineering communities. Through its role as a lead user the PTO
contributed frequently to the successful selection and further diffusion of key
innovations. The PTO supported in 1972 the ADS – the forerunner to the DX
200 – through a first procurement order. This was part of a long-term aspiration
to establish domestic production of digital switching systems, and avoid over
dependence on foreign suppliers… In the case of cellular network equipment
for the NMT networks, the PTO’s active role as a procurer ‘forced’ Nokia to
enter the field… (The PTO) thereby directly also contributed to the selection of
innovations with great business potential. In this respect Nokia acted as the
‘reluctant entrepreneur’ that possessed the necessary competencies but, at
crucial points in time, lacked elements of visionary strategic management.”
According to interviewees, the 1990s crisis was a watershed in re-aligning the Finnish
nation around innovation in order to “change its place in the international division of
labour”. Despite the depression, therefore, public funding to both basic and applied
research skyrocketed and continues to grow. Initial financing came from the sale of state
owned enterprises. In 1990, the Government of Finland adopted a national system of
innovation, seeking to aim “industrial policy beyond the current recession,” the Science
and Technology Policy Council stated as early as 1993 (p.13):
“The general conclusion is that, in order to develop as a democratic society and
an industrialised country, Finland must build its international position and
competitiveness on knowledge and know-how. Finland cannot compete
internationally with a low costs level, inadequate social security, lax
environmental statutes or high industrial subsidies. In the longer-run the only
way to ensure economic and social development is to rely on knowledge and
know-how.”
Nokia’s success by the late 1990s therefore cemented, rather than set, these trends. Using
a framework we have developed to examine state-company relations, I focus on several
key aspects that evolved along with the company, including finance, personnel, and
technological infrastructure that will help us to isolate the public-private partnerships
behind these variables of success.
8 Creating the basis for long-term Finnish success
The Finnish people have seen the opening of another window through their success in
Nokia – the ability to move the country as a whole onto a more stable development
52 A. Hira
platform. To complete the story, we need to explain how the state has evolved from a
role of sectoral promotion to a more long-term supportive role in a national innovation
system.
8.1 Finance
The overall coordination of the Finnish national business system was traditionally
developed around nodes of bank group-based finance systems, as noted in the case of
Nokia above. In the early 1980s, the state started to deregulate the financial market in
anticipation of joining the EU. Larger companies began to seek independent and
international financing sources, and foreign banks were allowed to open branches.
Finnish banks also then began to restrict lending and to sell shares more widely, opening
up ownership through the stock exchange (Moen and Lilja, 2005, p.368). A major
economic crisis loomed between 1990–1993, related to the collapse of the Soviet market
noted above, difficulties related to financial liberalisation and speculation, and a
downturn in forestry. As a result, the state reduced funding to favoured industrial
enterprises, and the private sector gained access to equity finance and foreign capital on a
large scale, dramatically increasing capitalisation (Ornston and Rehn, 2006, p.85). In the
1980s, over ¼ of Finnish exports went to the Soviets, though it included globally
un-competitive sectors, such as textiles, tvs, and transportation equipment. This trade
collapsed to just 2.8% of exports in 1992 (recovering at last in 2003 to 7.5%) (Ornston
and Rehn, 2006,pp.78, 79).
The resulting macroeconomic crisis of the early 1990s provided the motivation for
this shift in the economy. By 1994, unemployment was at 20% and GDP had declined by
10% over three years (Hyytinen et al., 2006, p.55). The opening of the company
to foreign finance reflected the wider repercussions for the Finnish financial system.
The Finnish system that had historically, like Germany and Japan, allowed
cross-ownership between banks and companies, was dissolved (Moen and Lilja, 2005,
pp.359, 363). Accession to the EU in 1995 marked a new opportunity to realise Finland’s
potential. Finland’s potential lay not just in the experience of global competition noted
above, but also in more specific potential for competition in ICT. Its experience as a
trading state meant sound financial institutions and policy support. Its social welfare
aspects reflect a strong social and political effort at consensus-building that translates
into policy stability, easing the possibilities for longer-term planning and collective goals.
Technological upgrading had already taken place during the 1980s in the forest sector
(Hyytinen et al., 2006, p.57). In addition, joining the EU meant that Finland had to move
to a more open economy, and lost room for independent monetary policy. It had used
devaluations in the past as a method of aiding exports (Moen and Lilja, 2005, p.366).
The loss of this tool meant that the economy had to move to a more price inelastic
production system. The new financial system allowed Nokia to overcome board
membership from bank ownership groups that had opposed its new and initially risky
focus strategy on wireless telecommunications, divesting itself of traditional and stable
lines of business. By listing on the NYSE, Nokia ironically was able to concentrate its
decision-making power within its Finnish corporate board to a greater degree than ever
before, as it substituted heavy domestic bank board presence for more diffuse foreign
investors interested more in the bottom line than in day-to-day operations.
8.2 Personnel
Finland today boasts one of the most competitive economies in the world. It has the #1
educational system in the world, with students regularly achieving the highest scores in
the international PISA examinations of literacy, science, and math. Finland’s educational
system at all levels is free for all, including tuition and a monthly subsidy, though there is
competition for places. Interviewees claim that this is why Finnish engineers are willing
to accept lower salaries than many of their European counterparts. According to
interviewees, promotion of higher education took on more of a national mission from the
1960s, when the proliferation of universities took place. New universities were started as
part of regional and societal equity concerns as well as a long-term vision of the
importance of human capital for global competitiveness. Today Finland boasts
20 universities and 30 polytechnics, an incredible figure given the population of just
5.2 million. Nokia has played a strong role in education policy, pushing for increases
in educational places for ICT and electronics students at both the university and
post-graduate levels. CEO Karaimo started Nokia University to improve relations
between academics and businesses; in Europe universities had traditionally been
neglected for corporate learning and training (Steinbock, 2001, p.67). Over time, Nokia
has also developed ties with foreign universities in Denmark, Sweden, Japan, China,
Hungary, Thailand, the UK and the USA, including MIT, Berkeley, and Stanford.
Nonetheless, in 2001, Nokia’s R&D in Finland was equivalent to 47% of total business
sector R&D there (Ali-Yrkkö and Hermans, 2002, pp.9–11, 21–22, 24). Nokia has also
pushed the Finnish Government hard to increase the number of university and post-
graduate positions in engineering and business as well as serving as a funder and partner
in R&D with universities (notably HUT, Helsinki University of Technology) and
subcontractors.
8.3 Technological infrastructure: innovation systems

Sometime in the 1970s, Finland decided to move towards a more innovation-based
system. According to Finnish academics Hyytineen et al. (2006), the move towards a
knowledge economy was a result of a combination of potential and circumstances; “there
was no systematic plan”. In the early 1980s, amidst a recession, a state committee was set
up to assess the role of technology. The committee concluded that technology would
create more jobs than it destroys, and began to rally stakeholders around a high tech
development cluster-based strategy. The government followed up by making the decision
to begin investing more in R&D in 1982. The government created Tekes in 1983 to
finance technical research. It launched 4 technology programs, 3 in electronics and ICT.
Kari Kairamo was an early champion for the initiative. He was then head of Nokia and
Chairman of the Confederation of Finnish Industry. The government formed the Science
and Technology Policy Council (STPC) in 1986 (Moen and Lilja, 2005, pp.373, 375).
The government began to see its role as an agenda setter, facilitator, and coordinator
more than a provider of direct subsidies; more importantly, the government heavily
invested in R&D and education. Indeed, the financial crisis spurred a major re-structuring
of the economy in less than a decade, reflected in a shift in policy focus from purely
macroeconomic stability to microeconomic foundations of competitiveness, consciously
following the NIS model in creating strong policy networks among business,
government, and academics, under the guidance of the STPC (Hyytinen et al., 2006,
54 A. Hira
pp.57–59, 71). The crisis led to the Government buying then low cost shares of Nokia for
Sitra, which has become the public venture capital source as Nokia’s fortunes
skyrocketed. Yet, as one interviewee noted,
“The science and technology plans in the early 1990s were just one idea for
exiting from the economic and financial crisis. When Nokia’s success became
apparent (by the mid-1990s), we were able to focus on that strategy…luck
played a role.”
The STPC creates a triennial review that sets out a long-range national vision for
innovation policy. The 2002 report, “Knowledge, Innovation, and Internationalisation”,
discusses concerns with the need to continue to upgrade human capital and the need to
identify clusters for targeting. The document sets out clear goalposts for achievement in
the future (Finland, 2002). The Finnish government highlights information and
communication technologies related to its new wireless industries and technologies
related to traditional resource-based industries such as forestry as key areas.
It is important to note that the STPC includes private as well as public actors.
The STPC represents a general shift from public sector ownership to facilitation.
The Prime Minister chairs the STPC along with several cabinet-level Ministers. The
Council creates and coordinates national plans. Decisions are carried out principally
through the Ministries of Education (MOE) and of Trade and Industry (MTI). The MOE
oversees the Academy of Finland, which funds basic scientific research (83% of which
goes to universities), manages and funds graduate schools, and serves as a science policy
advisor. The MTI works through TEKES, the Finnish Technology Agency, which was
founded in 1983 to develop and apply technology and the Technical Research Centre of
Finland, VTT. TEKES has specific funding programs for business-academic cooperative
research, which it closely monitors. VTT carries out commercial R&D for companies;
joint projects with companies and public bodies and self-financed R&D projects, and is
headquartered in Espoo, where 70% of its staff reside. TEKES also provides funding
directly to university researchers. SITRA is the Finnish National Fund for R&D, and
reports directly to the Parliament. SITRA’s role for many years was to fund corporate
R&D (OECD, 2005, pp.88–90) and provide venture capital. According to one
interviewee, it is getting out of the financing business and moving to a more purely
advisory role. TIEKE is the Finnish Information Society Development Centre.
It promotes the development of IT clusters and projects, as well as offering IT training to
citizens (Lillrank, 2005; OECD, 2005). Interviewees point out the importance of
overlapping missions and networks in terms of the smooth functioning of the innovation
system. The following diagram illustrates the Finnish NIS.
There are a number of additional supportive institutions such as Finnfund; Finnvera,
Viexpo, and Finpro, all of which provide various aspects of export financing, guarantees
and risks, and market research; Fintra, which promotes Finnish business training services
abroad; and Invest in Finland.
According to interviewees, there are five key aspects behind Finnish NIS success.
The first is a strong network across actors of individuals who regularly communicate,
cooperate, and compromise to reach consensus on what policies are best for the nation.
STPC defines itself as a “strategy-shaping multistakeholder” institution, rather than an
independent advisory board (which is more ETLA’s role). ETLA also acts as an
independent research institute, helping to map out long-term strategy. The second is an
emphasis on institutional innovation, particularly towards applied research. For example,
interviewees noted a new program being discussed that will allow for academic
institutions to create joint ventures with entrepreneurial companies, with important
subsidisation of basic research. Another initiative being discussed is to create a
world class university through combining Helsinki School of Economics, the Helsinki
School – University of Art and Design, and the Helsinki University of Technology. We
can see the steady increases in public funding over time and its emphasis on applied
research, in Table 3.
Table 3 Government Research Funding, 1991–2005
Recipient 1991 % 1995 % 2000 % 2005 % % inc 91-05

Academy of Finland 75.6 9 77.1 9 153.8 12 223.5 14 196
Tekes 156.5 20 243.9 27 390.8 30 448.4 28 187
Universities 226.3 28 220.4 25 346.4 27 416.7 26 84
Research Institutes 209.9 26 194.6 22 215.8 17 259.4 16 24
Other 131.5 16 158 18 189.1 15 248.7 16 89
Total 799.8 894 1295.9 1596.7 100
Current prices, euro millions.
Source: STPC (2006, p.17) author calculations
It is remarkable that funding through AF and Tekes almost doubled over a 6 year period,
surely a unique event in terms of science & technology funding globally! In 2008, Tekes
received 526 million euros, VTT 79 million, and the Academy of Finland 297 million.
We can see from this table the overall level of increase towards research funding, as well
as the absolute prioritisation on applied research funding. Finland is indeed an unusal
country in terms of research and funding priorities in applied areas. Funding is
increasingly competitive. Whereas 27% of all funding was competitive (as opposed to
73% basic institutional) in 1992, 46% was in 2008.
The third is the emphasis on long-term planning and accompanying consistency
in policies and state support. Interviewees noted that the state subsidises research only in
areas where there are preconditions for success, where there is too high a risk owing to
long-term payoffs for private sector interest, and where the research will lead to concrete
applications. The NIS works to identify strategic clusters, both existing, and with future
potential. As one interviewee put it, “We do not believe in subsidising declining
industries. We look to the future”. By necessity given the size of the Finnish economy
and population, NIS decision-makers have wisely chosen to focus on developing global
expertise in just a few clusters: forest products, chemicals, metals and equipment, and
wireless. Some government documents include health, IT, energy, and environment as
areas of interest, but so far they are not focal points for global competitiveness. There are
increasing attempts to find ways to conduct joint research with European partners.
Interviewees noted that there is a strong emphasis throughout Finnish society of studies
of the future. Publications such as Finnsight (2015) are parts of ongoing efforts by the
NIS to engage Finnish society into thinking about Finland’s long-term future. That
support is reflected in the relatively new (from 2002) Millenium Technology prize, which
Finland created as an equivalent to the Nobel Prize, but in applied technology research.
The prize is 1.1 million euros, and part of Finland’s broader effort to create a global
identity as a leading technology innovator.
56 A. Hira
The fourth is the strong level of public and private cooperation. Companies work
hand-in-hand with public authorities and academics to shape the educational system.
Academics are an important part of the peer review process for basic research, and
private experts and consultants for applied research. The state maintains integrity through
hiring foreign experts to review basic research and programs. Applied research proposals
are kept in house for proprietary reasons, but there is an internal peer review process with
high levels of transparency and cross-checking across personnel before funding decisions
are made. Along with this cooperation is an emphasis on creating national champions.
This meant all out promotion and through mergers the use of a dominant position in the
domestic market to test out products for global competition, similar to the policies carried
about by East Asian countries (Hira, 2007). As one interviewee put it, “We did not
expect any significant foreign investment, and we still can not rely upon it”. Another
said, “It is a state of mind. You have to be self-standing”.
The level of cooperation found in Finland is not an easy feature to replicate. Finland’s
system emphasises equal opportunity, as reflected in its relatively equal universities, and
free education system. Interviewees conclude that this allows Finland to maximise its
human capital capacity, helping to explain why a small nation is able to produce a
disproportionately high number of engineers. Moreover, the high levels of taxes are
accepted as they provide collective goods not only in terms of a social safety net but also
as a source of pooled capital, kind of a national investment, in the innovation system. It is
egalitarianism, probably, that is at the heart of the ability to reach consensus and
coordination in the case of Finland.
What are the origins of the high level of egalitarian social capital in Finland, perhaps
the most difficult aspect to replicate? Some authors suggest the transformation to a
knowledge economy was helped by the corporatist structures in place as well as high
levels of trust in institutions (Korhonen and Seppala, 2005, p.14) that have deep
historical roots (Alapuro, 2005, pp.388, 389). The harsh climate and low fertility of
Finnish soil pushed for cooperation, as Kirby (2006, p.23) states:
“Wresting a livelihood from the wilderness, whether fishing, hunting,
or the planting and harvesting of grain, necessitated cooperation and
teamwork…communally owned mills were not uncommon…Many of the
seasonal tasks of the farming community, such as harvesting, were shared
efforts. These strong traditions of working together for the common good
underpinned the producers’ cooperatives that took form at the beginning of the
twentieth century, and provided a readily understood basis for the great
upsurge of the associational activity…of the 19th century.”
As alluded to earlier, Finnish corporatism goes back to the turn of the century, when
Finnish business associations were created to cooperate on export markets according to
national trade policies. Foreign direct investment was also highly restricted. This also
meant a lack of competition in domestic markets. National industrial relations followed
the German model, with cross-ownership between banks and companies. While the level
of bank ownership was restricted to 10%, bank managers were ever present in corporate
boards. In the case of Finland, there were just a few dominant banks, including the
Kansallis Bank, KOP, and the Union Bank of Finland, SYP. As the state owned a number
of major companies (still relying on bank finance), it was natural to cooperate with the
financial and industrial spheres (Ojala and Karonen, 2006, pp.101–117). Economic
planning can be traced back to the early (1955) formation of the Economic Council,
which included representatives of the main economic interests groups with the idea of
creating a national economic plan (Bobacka, 2001, p.6). The collaboration of the NIS
partners and labour associations within the STPC reflected a more focused effort towards
cooperation on innovation. For example, the historical existence of employer associations
at the national and sectoral levels allowed the state to easily channel resources to promote
inter-firm cooperation. Revenues from privatisation were re-allocated to long-term
education and public R&D expenditures, and the development of Tekes and Sitra as
public counterparts to work with the private sector on innovation in horizontal fashion
(without favouring particular companies, products, or technologies). Strong levels of
trade union cooperation also supported the shift, and worked hand-in-hand with the state
and the private sector partners. Labour support includes investment, support for more
flexible working conditions including hours, wage restraint, and re-training programs.
This also helps Finland to promote rapid technology diffusion, adoption and adaptation
(Ornston and Rehn, 2006, pp.91–93). Cross-sectoral and public-private coordination
remain the essential features of the Finnish national business system, even after the
financial and trade liberalisation of the early 1990s. Nokia pro-actively supports
horizontal linkages with Finnish companies, public research institutes, and universities.
Table 4 demonstrates that the absolute level of Tekes direct support of Nokia steadily
increased until 2000, though its relative importance declined over time. Still, its
contribution during the transformational phase of the company in the 1980s seems
undeniable.
Table 4 Tekes Funding as a % of Nokia’s R&D funding
% of Nokia’s R&D
Year Nokia’s R&D exp % of total sales Tekes funding exp
1969 9 1.6 0.2 2.1
1970 12 1.6 0.9 7.8
1971 15 1.9 0.8 5.3
1972 20 2.3 1.6 8
1973 29 2.7 2.5 8.5
1974 38 2.3 2.9 7.7
1975 47 2.8 2.4 5.1
1976 55 3.1 2.4 4.4
1977 55 2.9 5 9
1978 59 2.3 4.1 6.9
1979 72 2.3 4 5.6
1980 95 2.1 25 26.3
1981 172 3 25 14.5
1982 212 3.3 10 4.7
1983 267 3.8 17 6.4
1984 355 3.8 28 7.9
1985 456 4.1 8 1.8
1986 539 4.5 23 4.3
1987 581 4.2 26 4.5
58 A. Hira
Table 4 Tekes Funding as a % of Nokia’s R&D funding (continued)
% of Nokia’s R&D
Year Nokia’s R&D exp % of total sales Tekes funding exp
1988 795 3.6 36 4.5
1989 950 4.2 18 1.9
1990 1164 5.3 30 2.6
1991 933 6 47 5
1992 1113 6.1 57 5.1
1993 1472 6.2 73 5
1994 1900 6.3 64 3.4
1995 2531 6.9 65 2.6
1996 3514 8.9 62 1.8
1997 4560 8.7 74 1.6
1998 6838 8.6 79 1.2
1999 10442 8.9 108 1
2000 15375 8.5 47 0.3
Finnish Marks, Millions.
Source: Ali-Yrkko and Hermans (2002, p.8)
Tekes and government support generally were crucial to Nokia surviving the financial
crisis of the early 1990s. Public support during this crucial period was competitive and
favoured technology clusters and collaboration. Ornston states,
“At the height of the recession the Council (STPC) resolved to increase support
for R&D, even as expenditures were cut in virtually all other areas. The extra
revenue came from the privatisation of state enterprises, reflecting a shifting
rather than diminished state role in the economy. By the end of the decade,
support from Tekes and related agencies had touched virtually all of Finland’s
largest high technology firms and over a third of its small and medium
enterprises.” (Ornston, 2006, p.793)
Government support and faith in the STPC, the expert body, solidified it as the main
strategic visionary for the economy. STPC, then allowed for the fluid and productive
development of an innovation system guided towards measureable results.
9 Conclusion
Nokia’s success clearly is related to timing and the initial favourable factors of the
Finnish and Nordic markets that promoted early development of the wireless industries.
There is also no doubt that talented and dedicated management and engineers have been
the principal forge of Nokia’s success. And, to be sure, Nokia’s success is by no means
permanent as it was initially based in part on favourable timing and first mover
advantages in technology and marketing. As a niche producer of mobile telephony, it
relies on cooperation from service providers, and may be vulnerable to new technological
breakthroughs or applications that fall outside its niche of expertise. That is why it has
been making great efforts to incorporate Internet and convergence aspects into its new
product lines. It will also have to deal with new low labour cost competitors such as
China and has been stepping up its outsourcing to reduce labour costs, while maintaining
significant R&D work in Finland. Finland’s SITRA and the Academy have also stepped
up cooperation efforts with India.
Having a sound NIS does not guarantee success; Nokia’s R&D is moving abroad as it
has set up international research labs in China, the USA (MIT and Stanford), and
elsewhere. There has to be a fit between the configuration of the NIS and the
potentialities of global sector development timing. For example, Finnish efforts in recent
decades to develop a biotech sector have failed so far, for unclear reasons. Moreover, like
every other strategy, the Finnish NIS one has some potential downsides. These include a
small domestic economy, a highly focused niche strategy, an insular orientation that is
not particularly open to immigrants or external input into decision-making, and the
requirement for consensus in order to move forward. The system is oriented towards
long-term success, but one can see that the Finnish machine might have difficulties in
terms of a sudden downturn in Nokia’s fortunes and/or the wireless industry’s.
A 2008 analysis by Sabel and Saxenian suggests that a more decentralised innovation
structure, perhaps one that downgrades capturing an entire sector to a subsector, might
make more sense in a globalising production system. They suggest further that Nokia’s
past success might be blinding policymakers to the need to allow for fluidity, or what
they term “a more varied ‘ecology’”, including numbers of small to medium flexible
firms to allow for innovation to succeed in this new environment, and the possibility of
entering into new product lines in dynamic response to changes in markets. The lack of
development of a strong cluster outside of Nokia thus reflects a vulnerability to changes
in global markets (15, 18 & 118). Globalisation also raises doubts about just how much
Nokia’s success will translate into employment in Finland, as the share of national to
global jobs in the company has been shrinking, and the need for outside financing grows
increasingly important (75 & 116). The tight control of process in Nokia might therefore
stifle needed innovation, particularly in terms of linking with content and application
providers in the competition with iPhone and Google operating systems and applications,
as illustrated by the failure of the N Gage gaming device (81 & 101).
Indeed, Finnish decision-making seems clubby, potentially leading to an inability to
recognise internal factions or minorities or objectivity and comprehensive vision in a
broader sense. Moreover, the public portion of the NIS is geared towards a broad vision,
and may miss the follow through needed for success at the micro level where a national
champion in the private sector is not already present, as may have happened in biotech,
and could potentially happen if Nokia changes its strategy. Egalitarianism in innovation
is a breadth, but may not always lead to depth in excellence (Georghiou et al., 2003,
p.64), or willingness to take major long-term risks. The policy of regional equality might
not make sense in the long-run, given that ½ of all R&D takes place in Helsinki, and 80%
in just four regions (Georghiou et al., 2003, p.78). For example, free education leads to
equal opportunity, but also may mean an oversupply of capable but not world class
researchers. There are hints in Finland that world class researchers are leaving the
country for better compensation elsewhere. Despite these potential weaknesses, one has
optimism given that Finns seem remarkably open to outside criticism and discussion as
reflected in their policy transparency and use of external reviews.
What we can conclude is that the miraculous transformation of the Finnish economy
in one short decade can be understood as a reflection of private-public partnership
60 A. Hira
towards a common aim. The preceding analysis demonstrates that at the critical points
of company evolution, to regional and global success, and in terms of supporting
technological development, the public sector role has been crucial.6
As Hyytinen et al., state:
“Overall, the case of Finland is a good example of the interaction of several
intertwined growth-generating factors. The Finnish model probably cannot be
replicated as such. One thing, however, is sure: the long-term strategic
perspective of education and innovation policies has been integral to Finland’s
emergence as a wireless player. These policies were relatively consistent over
the long term and were not dictated by short-term cyclical or political
considerations. Finland’s favourable position when the wireless opportunity
arose had nothing to do with luck (my emphasis).” (Hyytinen et al., 2006, p.75)
The key difference between Finland’s and other state interventions is the evolutionary
and dynamic nature of its efforts. As one Finnish policy review (Georghiou et al., 2003,
p.63) states,
“The main lesson from the policy description and analysis is that policies need
to be tightly connected to the current stage of industrial development and to
react flexibly to changes in the environment.”
By evolution, we do not mean a gradual and clear trajectory, but rather one that reacts
flexibly with changes in the innovation and product cycle. A deep study of Finnish
companies from 1945–1998 states,
“The main findings of this thesis suggest that there are noticeable variations in
innovation processes and characteristics of innovations during different phases
of economic development. These variations are more related to phase in the
development of manufacturing than a continuous, gradual change.” (Saarinen,
2005, p.182)
Our four parameters: the state intervention has an evolutionary pattern; that the timing
and nature of such intervention depends on the product cycle and other particularities of
the sector, and that both strong handed intervention (i.e., ownership) and inadequate
intervention (e.g., financial sector meltdown) fail are all confirmed. The main
conclusions of this case are that the state plays a crucial and evolving role in helping its
private sector champions to change competitive firm advantage; that the role of the state
should vary in both intensity and nature as the company succeeds in moving from
domestic to global production, and that building longer-term competitive advantage
requires a gradual movement of policy emphasis from direct aid to a company to indirect
upgrading of related factors and linked companies. Moreover, the development of
consensual institutional links among the NIS actors is essential for long-term success.
Thus, the case of Nokia suggests the changing role of the state from focusing first on
enabling competitive advantage of firms and secondly on developing further comparative
advantage of nations. This role goes well beyond the sum total of public resources
expended for promotion of a sector to a deeper cooperation to help domestic companies
in their learning curves to develop globally-competitive products and to capture public
benefits, such as value-added linkages, and employment creation. While no one can
replicate Finish history or corporatism, comparing this case with the Korean one reveals
that a high level of informal as well as formal state-firm cooperation is needed to take
advantage of technological windows. As reflected in the perseverance of Finns
throughout their difficult history, it requires a sense of national determination and

willingness to continually learn and adjust, rather than an exact road map.
Interviews
Interviews were conducted in Helsinki from June 7–13, 2008 and included the following
individuals:
• Kai Husso, STPC
• Pekka Ylä-Anttila, ETLA
• Erkki Hietnenan, Tekes
• Paavo Löppönen, Academy of Finland
• Ritta Vanska, Nokia
• Raimo Loivo, Helsinki School of Economics
• Andrée Cooligan, Canadian Embassy
Acknowledgements
I gratefully acknowledge interviewees’ generosity in providing me additional insights

into Finnish innovation. In order to protect them, I have agreed to anonymise attributions.
I wish to thank Brian Wixted, Hannah Wittman, Lea Johnson, Jean Francois Godbout,
Steve McBride, David Laycock, Steve Weldon, Taymaz Rastin, and Paavo Löppönen for
helpful comments, and Patty Hira for help in editing. Field research was facilitated by
assistance from Finnish foreign affairs officer Matti Aalitola.
References
Alapuro, R. (2005) ‘Associations and contention in france and finland: constructing the society and
describing the society’, Scandinavian Political Studies, Vol. 28, No. 4, pp.377–399.
Ali-Yrkkö, J. and Hermans, R. (2002) Nokia in the Finnish Innovation System, ETLA Discussion
Paper no. 811, ETLA, Helsinki.
Beise, M. (2001) Lead Markets: Country-Specific Success Factors of the Global Diffusion of
Innovations, Physica-Verlag, Heidelberg.
Bobacka, R. (2001) Corporatism and the Myth of Consensus: Working Hours Legislation in
Finland in the 1990s, AshgateDartmouth, Burlington, VT.
Finland (2002) Government of Knowledge, Innovation and Internationalization, Science and
Technology Policy Council, Helsinki.
Finnsight (2015) www.finnsight2015.fi (accessed May 2008).
Georghiou, L., Smith, K., Toivanen, O. and Ylä-Anttila, P. (2003) Evaluation of the Finnish
Innovation Support System, Ministry of Trade and Industry, Helsinki, 5/2003.
Hira, A. (2007) An East Asian Model for Latin American Success: The New Path, Ashgate,
Burlington, VT.
Hoovers (2007) Nokia Corporation, Company report, 4 December, Austin, TX.
62 A. Hira
Hyytinen, A., Paija, L., Rouvinen, P. and Ylä-Anttila, P. (2006) ‘Finland’s emergence as a global
information and communications technology player: lessons from the finnish wireless cluster’,
in Zysman, J. and Newman, A. (Eds.): How Revolutionary Was the Digital Revolution?
National Responses, Market Transitions, and Global Technology, Stanford University Press,
Stanford, pp.55–77.
Jones, T. (2002) Innovating at the Edge: How Organizations Evolve and Embed Innovation
Capability, Butterworth Heineman, San Fransciso.
Kirby, D. (2006) A Concise History of Finland, Cambridge University Press, NY.
Korhonen, J. and Seppala. N. (2005) ‘The strength of a high-trust society’, in Habisch, A.,
Jonker, J., Wegner, M. and Schmidpeter, R. (Eds.): Corporate Social Responsibility Across
Europe, Springer, NY, pp.13–22.
Lawrence, P.R. and Dyer, D. (1983) Renewing American Industry, The Free Press, NY.
Lillrank, P. (2005) ‘The evolution of organizational structures in a networked society: the case of
Finland’, in Soduh, O. (Ed.): Digital Economy and Social Design, Springer-Verlag, Tokyo,
pp.167–183.
Lindberg, U. (2005) ‘Aiming at the barcelona target: best practices and national performances. The
EASAC perspective’, in Quadrio Curzio, A. and Fortis, M. (Eds.): Research and
Technological Innovation The Challenge for a New Europe, Physica-Verlag, Heidelberg,
pp.185–199.
Moen, E. and Lilja, K. (2005) ‘Change in coordinated market economies: the case of Nokia and
Finland’, in Morgan, G., Whitley, R. and Moen, E. (Eds.): Changing Capitalisms?
Internationalization, Institutional Change, and Systems of Economic Organization, Oxford
University Press, NY, pp.352–379.
Nelson, R.R. (1993) National Innovation Systems: A Comparative Analysis, Oxford, NY.
OECD (2005) Finland, OECD Territorial Reviews, OECD, Paris.
Ojala, J. and Karonen, P. (2006) ‘Business: rooted in social capital over centuries’, in Ojala, J.,
Eloranta, J. and Jalava, J. (Eds.): The Road to Prosperity: An Economic History of Finland,
Suomalaisen Kirjallisuuden Seura, Helsinki, pp.93–126.
Ornston, D. (2006) ‘Reorganising adjustment: Finland’s emergence as a high technology leader’,
West European Politics, Vol. 29, No. 4, pp.784–801.
Ornston, D. and Rehn, O. (2006) ‘An old consensus in the ‘new’ economy? Institutional
adaptation, technological innovation, and economic restructuring in Finland’, in Zysman, J.
and Newman, A. (Eds.): How Revolutionary Was the Digital Revolution? National Responses,
Market Transitions, and Global Technology, Stanford University Press, Stanford,
pp.78–100.
Paija, L. (2000) ICT Cluster – The Engine of Knowledge-Driven Growth in Finland, ETLA
Discussion Paper No. 733, Helsinki.
Palmberg, C. (2002) ‘Technological systems and competent procurers – the transformation of
Nokia and the Finnish telecom industry revisited?’, Telecommunications Policy, Vol. 26,
pp.129–148.
Saarinen, J. (2005) Innovations and Industrial Performance in Finland, 1945–1998, Doctoral
Dissertation. Dept. of Economic History, Lund University, Stockholm.
Sabel, C. and Saxenian, A. (2008) A Fugitive Success: Finland’s Economic Future, Report No. 80.
SITRA, Helsinki.
Schienstock, G., Kautonen, M. and Koski, P. (1998) ‘Escaping path dependency: the case of
Tampere, Finland’, in Cooke, P., Heidrenreich, M. and Braczyk, H-J. (Eds.): Regional
Innovation Systems: The Role of Governance in a Globalized World, Routledge, NY,
pp.127–153.
Singleton, F. (1986) The Economy of Finland in the Twentieth Century, University of Bradford,
Bradford, UK.
Steinbock, D. (2001) The Nokia Revolution: The Story of an Extraordinary Company that
Transformed an Industry, Amacom, NY.
Steinbock, D. (2002) Finland’s Wireless Valley: Domestic Policies, Globalizing Industry, TEKES
Technology Review, Helsinki, 138/2003. November.
STPC (Science and Technology Policy Council) (2006) Science, Technology, and Innovation,
STPC, Helsinki.
Zysman, J. and Newman, A. (Eds.) (2006) How Revolutionary Was the Digital Revolution?
National Responses, Market Transitions, and Global Technology, Stanford University Press,
Stanford.
Notes
1
One interviewee cites 25,000 and 60%.
2
The World War II period also brought with it the resettlement of 277,000 refugees from the Soviet
takeover of Karelia (Singleton, 73-4).
3
According to Nokia, the DX200 finally went into production in 1982.
4
CDMA = Code Division Multiple Access; TDMA = Time Division Multiple Access;
WCDMA = Wideband CDMA
5
Justin Fox, “Nokia’s Secret Code,” Fortune May 1, 2000.
6
Palmberg and Bohlin note the crucial aspects of the partnership between Ericsson and the PTT in
Sweden as a parallel case.
Website
Wikipedia, Nokia entry http://en.wikipedia.org/wiki/Nokia, accessed July 2007.
Bibliography
Amsden, A. (1989) Asia’s Next Giant: South Korea and Late Industrialization, Oxford University
Press, NY.
Arnold, E., Boakholt, P., Deico, E., de la Mothe, J., McKibbon, S., Simmons, P. and Stroyan, J.
(2002) Innovation Structure and Strategy: International Best Practices, PRIME- U of Ottawa,
Ottawa & Technopolis- Amsterdam & Brighton.
Bjorksten, N. and Merluoto, L. (2004) ‘Getting on the map of the global economy – the case of
Finland’, in Poot, J. (Ed.): On the Edge of the Global Economy, Edward Elgar Publishing,
Northampton, MA, pp.224–245.
Etzkowicz, H. (2003) ‘Innovation in innovation: the triple helix of university-industry-government
relations’, Social Science Information, Vol. 42, No. 3, pp.293–337.
Gerschenkron, A. (1962) Economic Backwardness in Historical Perspective, A Book of Essays,
Belknap Press of Harvard University Press, Cambridge, Massachusetts.
Häikiö, M. (2002) Nokia: the Inside Story, Pearson, Toronto.
Hamel, G. and Prahalad, C.K. (1994) Competing for the Future, Harvard Business School Press,
Boston.
Johnson, C. (1982) MITI and the Japanese Miracle: The Growth of Industrial Policy, Stanford
University Press, Stanford, pp.1925–1975.
Nokia (2007) www.nokia.com, Links used: “Story of Nokia” (accessed on 18 December, 2007).
Palmberg, C. and Bohlin, E. (2006) ‘Next generation mobile telecommunications networks:
challenges to the Nordic ICT industries’, Info, Vol. 8, No. 4, pp.3–9.
64 A. Hira
Porter, M.E. (1990) The Competitive Advantage of Nations, The Free Press, NY.
Sorge, A. (2005) ‘Systemic perspectives on business practices and institutions. A plea beyond
comparative statics’, in Morgan, G., Whitley, R. and Moen, E. (Eds.): Changing Capitalisms?
Internationalization, Institutional Change, and Systems of Economic Organization, Oxford
University Press, NY, pp.110–136.
STPC (Science and Technology Policy Council) (1993) Towards an Innovative Society:
A Development Strategy for Finland, STPC, Helsinki.
Vernon, R. (1966) ‘International investment and international trade in the product cycle’, Quarterly
Journal of Economics, Vol. 80, May, pp.190–270.
Wade, R. (1990) Governing the Market: Economic Theory and the Role of Government in East
Asian Industrialization, Princeton University Press, Princeton.
Ylä-Anttila, P. and Palmberg, C. (2005) The Specificities of Finnish Industrial Policy- Challenges
and Initiatives at the Turn of the Century, ETLA Discussion Paper No. 973, ETLA, Helsinki.
View publication stats

The Rise of Nokia

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

The Rise of Nokia

Uploaded by

Copyright:

Available Formats

See discussions, stats, and author profiles for this publication at: https://www.researchgate.

Secrets behind the Finnish miracle: the rise of Nokia

Article in International Journal of Technology and Globalisation · February 2012

Community Benefits Agreement for Mining Projects View project

The user has requested enhancement of the downloaded file.

Secrets behind the Finnish miracle: the rise of Nokia

Abstract: By the laws of natural advantage, Finland should be a natural

Keywords: wireless technology; Nokia; Finland; industrial policy; technology

Reference to this paper should be made as follows: Hira, A. (2012)

Biographical notes: Anil Hira is Professor of Political Science at Simon Fraser

The importance of Nokia to the Finnish economy cannot be overestimated. Nokia

Copyright © 2012 Inderscience Enterprises Ltd.

50–60 61–69 70–80 81–90 91–00 01–04

Table 2 Increases in R&D spending as a % of GDP 1991–2002, selected OECD countries

Country 1991 2002 Increase

2 Origins of the Finnish telecom sector-preconditions

The development of domestic market conditions reveals that a combination of early

a producer of telephone and telegraph cables, which it saw as a potential competitor in

3 Stages 1 and 2: The development of national capacity and early market

Early Finnish telecom capacity developed as a result of a combination of unusual

4 Stage 3: The learning curve

5 Stage 4: Export promotion

5.1 Development of the Nordic market

5.2 Development of the EU market

6 Stage 5: Development into a global producer

7 What explains Nokia’s successful evolution?

7.1 Why traditional theoretical approaches come up short

7.2 Why firm-level explanations come up short

8 Creating the basis for long-term Finnish success

8.3 Technological infrastructure: innovation systems

Table 3 Government Research Funding, 1991–2005

Recipient 1991 % 1995 % 2000 % 2005 % % inc 91-05

Table 4 Tekes Funding as a % of Nokia’s R&D funding

Table 4 Tekes Funding as a % of Nokia’s R&D funding (continued)

throughout their difficult history, it requires a sense of national determination and

I gratefully acknowledge interviewees’ generosity in providing me additional insights

View publication stats

You might also like