Stories of Survival: Knowledge Intensive Organisations and the Finnish 1990s Recession

The recession that hit the Finnish economy at the beginning of the 1990s has been regarded as unusually severe. Organisations’ failure to survive the recession has been researched in their various aspects. However, the reasons for why and how organisations that survived did so have been explored to a somewhat lesser extent. This study concerns organisations that survived rather than those that failed to do so, as studying successful experiences is acknowledged as an important source for learning how to counteract future failure. The thesis examines four knowledge intensive organisations, with the focus on managerial and social aspects of the crisis handling processes. The study deals with managers’ and co-workers’ stories about organisational attempts to survive, rather than seeking to identify causal relationships. Drawing upon a narrative approach and a social constructionist perspective, the crisis handling processes are treated as reconstructions and rationalisations of what happened. A primary assumption of this thesis is that we make sense of experiences in retrospect, and the aim is to describe the handling of crisis situations and the hardships related to economic difficulties, by focusing on the interviewees’ explanations of how those difficulties were dealt with. The stories are about taking control despite the threats induced by an extremely severe economic recession, remaining active, how the managers and their co-workers dealt with the uncertainty experienced, and how the organisations subsequently survived. The analysis also interrogates such issues as trust, authenticity, legitimacy, identity and nostalgia in crisis contexts.

Kilpailukykyvaltion koululainsäädännön rakentuminen : Suomen eduskunta ja 1990-luvun koulutuspoliittinen käänne

Finnish education policy, educational legislation and the entire education system changed significantly during the 1990s as part of a general restructuring of public administration. There has been a clear divergence from the former tradition of a system of regulation, founded on detailed legislation and the principle of equality. The new governance, which is based more on individual choice, efficiency and evaluation, emphasizes that the development of a high standard of education is a necessity in the light of global competition. This study explores the legislative process regarding education policy in the Finnish Parliament during the 1990s, and highlights in particular how the international discourse on education policies was restructured in the context of Finnish legislation. The research material consists of all the public parliamentary documents relating to education, including government proposals, minutes from the discussions in the chamber and archive material (final protocols, reports and statements) for the Committee for Education and Culture. The discourse on the process of drafting and passing education legislation is modelled on three interrelated policy technologies (market, management and performance), which are understood here as mechanisms connecting general political ideas to normative legislation. The changes in the regulation of education were part of a general public administration reform instigated during the mid 1980s. The research results will prove that during the left-right coalition cabinet of PM Harri Holkeri, new policy technologies affected the parliamentary discourse on education policy. This was particularly influenced by a change in the preconditions for the management of education that was created as a result of the numerous demands to deregulate and delegate decision-making authority to the local and school levels while rendering the whole education system more effective. At the turn of the decade, market-type mechanisms were more indirectly manifested in the forms of individuality and freedom of choice, which were reflected, for example, in proposals to “lower the hurdles” by separating general from vocational secondary education with a view to encouraging students to select courses from other educational establishments, in addition to relaxing the requirements for establishing private schools and abolishing a hundred-year-old strict national catchment-area system. Later, in the course of the 1990s, after the subjects, players, and methods of evaluation had been more precisely defined, evaluation based on performance would result in the active measurement of the attainment of set objectives. In the spring of 1991, from the outset of PM Esko Aho's right-centre coalition cabinet, the education budget suffered cutbacks as a result of a global recession and this influenced the legislative work of, and discourses in, parliament. Representatives of the parties in power regarded the recession solely as an external factor that was remote from the political arena. In their view, the education system should rise to the challenge by ensuring the efficient and innovative use of the resources available and by developing new forms of indicators for evaluating results. Representatives of the opposition opposed the cabinet’s standpoint as a result of the recession, criticized the measures taken by pointing out the harmful effect of constantly cutting the budget and argued that the government had made political capital out of the recession by using it as an opportunity to give more room to market, management and performance technologies within the Finnish education system. Criticism of the new education policy became even stronger during PM Paavo Lipponen's first “rainbow” coalition cabinet with critical views being expressed not only from the opposition but also from representatives within the government. Representatives from the left demanded legislative restrictions and the instigation of measures to relieve the presumed negative effects of market, management and performance in the name of educational equality. The new management by results steering method within the university sector and the introduction of commercial education services in compulsory education were fiercely criticized. The argument over “setting outer limits” including, for example, the demands for more detailed legislation and earmarked state subsidies was characteristic of Parliament’s legislative discourse in the latter part of the 1990s. Keywords: education policy, education legislation, Parliament of Finland

Microeconometric Studies on Unemployment and Business Cycles

Väitöskirja koostuu neljästä esseestä, joissa tutkitaan empiirisen työntaloustieteen kysymyksiä. Ensimmäinen essee tarkastelee työttömyysturvan tason vaikutusta työllistymiseen Suomessa. Vuonna 2003 ansiosidonnaista työttömyysturvaa korotettiin työntekijöille, joilla on pitkä työhistoria. Korotus oli keskimäärin 15 % ja se koski ensimmäistä 150 työttömyyspäivää. Tutkimuksessa arvioidaan korotuksen vaikutus vertailemalla työllistymisen todennäköisyyksiä korotuksen saaneen ryhmän ja vertailuryhmän välillä ennen uudistusta ja sen jälkeen. Tuloksien perusteella työttömyysturvan korotus laski työllistymisen todennäköisyyttä merkittävästi, keskimäärin noin 16 %. Korotuksen vaikutus on suurin työttömyyden alussa ja se katoaa kun oikeus korotettuun ansiosidonnaiseen päättyy. Toinen essee tutkii työttömyyden pitkän aikavälin kustannuksia Suomessa keskittyen vuosien 1991 – 1993 syvään lamaan. Laman aikana toimipaikkojen sulkeminen lisääntyi paljon ja työttömyysaste nousi yli 13 prosenttiyksikköä. Tutkimuksessa verrataan laman aikana toimipaikan sulkemisen vuoksi työttömäksi jääneitä parhaassa työiässä olevia miehiä työllisinä pysyneisiin. Työttömyyden vaikutusta tarkastellaan kuuden vuoden seurantajaksolla. Vuonna 1999 työttömyyttä laman aikana kokeneen ryhmän vuosiansiot olivat keskimäärin 25 % alemmat kuin vertailuryhmässä. Tulojen menetys johtui sekä alhaisemmasta työllisyydestä että palkkatasosta. Kolmannessa esseessä tarkastellaan Suomen 1990-luvun alun laman aiheuttamaa työttömyysongelmaa tutkimalla työttömyyden kestoon vaikuttavia tekijöitä yksilötasolla. Kiinnostuksen kohteena on työttömyyden rakenteen ja työn kysynnän muutoksien vaikutus keskimääräiseen kestoon. Usein oletetaan, että laman seurauksena työttömäksi jää keskimääräistä huonommin työllistyviä henkilöitä, jolloin se itsessään pidentäisi keskimääräistä työttömyyden kestoa. Tuloksien perusteella makrotason kysyntävaikutus oli keskeinen työttömyyden keston kannalta ja rakenteen muutoksilla oli vain pieni kestoa lisäävä vaikutus laman aikana. Viimeisessä esseessä tutkitaan suhdannevaihtelun vaikutusta työpaikkaonnettomuuksien esiintymiseen. Tutkimuksessa käytetään ruotsalaista yksilötason sairaalahoitoaineistoa, joka on yhdistetty populaatiotietokantaan. Aineiston avulla voidaan tutkia vaihtoehtoisia selityksiä onnettomuuksien lisääntymiselle noususuhdanteessa, minkä on esitetty johtuvan esim. stressin tai kiireen vaikutuksesta. Tuloksien perusteella työpaikkaonnettomuudet ovat syklisiä, mutta vain tiettyjen ryhmien kohdalla. Työvoiman rakenteen vaihtelu saattaa selittää osan naisten onnettomuuksien syklisyydestä. Miesten kohdalla vain vähemmän vakavat onnettomuudet ovat syklisiä, mikä saattaa johtua strategisesta käyttäytymisestä.

Studies on Binary Time Series Models with Applications to Empirical Macroeconomics and Finance

This thesis studies binary time series models and their applications in empirical macroeconomics and finance. In addition to previously suggested models, new dynamic extensions are proposed to the static probit model commonly used in the previous literature. In particular, we are interested in probit models with an autoregressive model structure. In Chapter 2, the main objective is to compare the predictive performance of the static and dynamic probit models in forecasting the U.S. and German business cycle recession periods. Financial variables, such as interest rates and stock market returns, are used as predictive variables. The empirical results suggest that the recession periods are predictable and dynamic probit models, especially models with the autoregressive structure, outperform the static model. Chapter 3 proposes a Lagrange Multiplier (LM) test for the usefulness of the autoregressive structure of the probit model. The finite sample properties of the LM test are considered with simulation experiments. Results indicate that the two alternative LM test statistics have reasonable size and power in large samples. In small samples, a parametric bootstrap method is suggested to obtain approximately correct size. In Chapter 4, the predictive power of dynamic probit models in predicting the direction of stock market returns are examined. The novel idea is to use recession forecast (see Chapter 2) as a predictor of the stock return sign. The evidence suggests that the signs of the U.S. excess stock returns over the risk-free return are predictable both in and out of sample. The new "error correction" probit model yields the best forecasts and it also outperforms other predictive models, such as ARMAX models, in terms of statistical and economic goodness-of-fit measures. Chapter 5 generalizes the analysis of univariate models considered in Chapters 2 4 to the case of a bivariate model. A new bivariate autoregressive probit model is applied to predict the current state of the U.S. business cycle and growth rate cycle periods. Evidence of predictability of both cycle indicators is obtained and the bivariate model is found to outperform the univariate models in terms of predictive power.

Sosiaalipalveluja kaikille ja kaiken ikää? : Tutkimus suomalaisten mielipiteistä ja kokemuksista sosiaalipalveluista sekä niiden suhteesta legitimiteettiin

This research analyses opinions on the system of social welfare services from the point of view of clients and the public in general in Finland. The approach is quantitative, drawing on theories of the welfare-state tradition. The data used comes from the comprehensive Welfare and Services in Finland survey compiled by STAKES. While previous research on the welfare state has predominantly focused on surveying public opinion on social protection, this research focuses on social welfare services. The main focus of this research is on publicly funded care provided by municipal social welfare services. In this research, social welfare services include child day care, services for people with disabilities, home-help services, counselling by social workers and social assistance. The research considered in particular whether the clients or the population has different opinions towards social welfare services or social benefits. In addition, the research partly covers areas of informal care provided by family and friends. The research material consisted of the STAKES Welfare and Services in Finland survey. The data was compiled in 2004 and 2006 by Statistics Finland. The research comprises five articles. Additional data have been extracted from social welfare statistics and registers. Multiple approaches were applied in the survey on welfare and services the methods in this research included interviews by phone and mail, and register data. The sample size was 5 810 people in 2004 and 5 798 in 2006. The response rates were 82.7% and 83.7%, respectively. The results indicate that a large majority (90%) of the Finnish population is of the opinion that the public sector should bear the main responsibility for organising social and health services. The system of social welfare services and its personnel have strong public support 73% and 80% respectively. However, new and even negative tones have emerged in the Finnish debate on social welfare services. Women are increasingly critical of the performance of social welfare services and the level of social protection. Furthermore, this study shows that women more often than men wish to see an increase in the amount of privately organised social welfare services. Another group critical of the performance of social welfare services are pensioners. People who had used social welfare services were more critical than those who had not used them. Thus, the severest criticism was received from the groups who use and gain most from public services and benefits. However, the education and income variables identified in earlier studies no longer formed a significant dividing line, although people with higher education tend to foster a more positive view of the performance of social welfare services as well as the level of social protection. Income differences did not bear any significance, that is, belonging to a high or low income group was not a determining factor in the attitude towards social welfare services or social benefits. According to the research, family and friends still form an informal yet significant support network in people's everyday lives, and its importance has not been diminished by services provided by the welfare state. The Finnish public considers child day care the most reliable form of social welfare services. Indeed, child day care has become the most universal sector of our system of social welfare services. Other services that instil confidence included counselling by social workers and services for people with disabilities. On the other hand, social assistance and home-help services received negative feedback. The negative views were based on a number of arguments. One argument contends that the home-help service system, which was originally intended for universal use, is crumbling. The preventive role of home-help services has been reduced. These results mirror the increasingly popular opinion that social welfare services are not produced for all those who need them, but to an increasing extent for a select few of them. Municipalities are struggling with their finances and this, combined with negative publicity, has damaged the public's trust in some municipal social welfare services. A welfare state never achieves a stable condition, but must develop over time, as the world around it changes. Following the 1990's recession, we are now in a position where we can start to develop a system that responds to the needs of the next generation. Study results indicating new areas of dissatisfaction reflect the need to develop and improve the services provided. It is also increasingly essential that social welfare services pay attention to the opinions of clients and the public. Should the gap between opinions and actual activities increase, the legitimacy of the whole system would be questioned. Currently, the vast majority of Finns consider the system of social welfare services adequate, which provides us with the continuity required to maintain and improve client-oriented and reasonably priced social welfare services. Paying attention to the signals given by clients and the general public, and reacting to them accordingly, will also secure the development and legitimacy of the system in the future.

Monetary Policy Implementation in the Interbank Market

The liquidity crisis that swept through the financial markets in 2007 triggered multi-billion losses and forced buyouts of some large banks. The resulting credit crunch is sometimes compared to the great recession in the early twentieth century. But the crisis also serves as a reminder of the significance of the interbank market and of proper central bank policy in this market. This thesis deals with implementation of monetary policy in the interbank market and examines how central bank tools affect commercial banks' decisions. I answer the following questions: • What is the relationship between the policy setup and interbank interest rate volatility? (averaging reserve requirement reduces the volatility) • What can explain a weak relationship between market liquidity and the interest rate? (high reserve requirement buffer) • What determines banks' decisions on when to satisfy the reserve requirement? (market frictions) • How did the liquidity crisis that began in 2007 affect interbank market behaviour? (resulted in higher credit risk and trading frictions as well as expected liquidity shortage)

Essays on the Linkages Between Financial Markets, and Risk Asymmetries (summary section only)

During the last few decades there have been far going financial market deregulation, technical development, advances in information technology, and standardization of legislation between countries. As a result, one can expect that financial markets have grown more interlinked. The proper understanding of the cross-market linkages has implications for investment and risk management, diversification, asset pricing, and regulation. The purpose of this research is to assess the degree of price, return, and volatility linkages between both geographic markets and asset categories within one country, Finland. Another purpose is to analyze risk asymmetries, i.e., the tendency of equity risk to be higher after negative events than after positive events of equal magnitude. The analysis is conducted both with respect to total risk (volatility), and systematic risk (beta). The thesis consists of an introductory part and four essays. The first essay studies to which extent international stock prices comove. The degree of comovements is low, indicating benefits from international diversification. The second essay examines the degree to which the Finnish market is linked to the “world market”. The total risk is divided into two parts, one relating to world factors, and one relating to domestic factors. The impact of world factors has increased over time. After 1993, when foreign investors were allowed to freely invest in Finnish assets, the risk level has been higher than previously. This was also the case during the economic recession in the beginning of the 1990’s. The third essay focuses on the stock, bond, and money markets in Finland. According to a trading model, the degree of volatility linkages should be strong. However, the results contradict this. The linkages are surprisingly weak, even negative. The stock market is the most independent, while the money market is affected by events on the two other markets. The fourth essay concentrates on volatility and beta asymmetries. Contrary to many international studies there are only few cases of risk asymmetries. When they occur, they tend to be driven by the market-wide component rather than the portfolio specific element.

Applications of Treatment Effects Models and Semiparametric Estimation

This thesis is composed of an introductory chapter and four applications each of them constituting an own chapter. The common element underlying each of the chapters is the econometric methodology. The applications rely mostly on the leading econometric techniques related to estimation of causal effects. The first chapter introduces the econometric techniques that are employed in the remaining chapters. Chapter 2 studies the effects of shocking news on student performance. It exploits the fact that the school shooting in Kauhajoki in 2008 coincided with the matriculation examination period of that fall. It shows that the performance of men declined due to the news of the school shooting. For women the similar pattern remains unobserved. Chapter 3 studies the effects of minimum wage on employment by employing the original Card and Krueger (1994; CK) and Neumark and Wascher (2000; NW) data together with the changes-in-changes (CIC) estimator. As the main result it shows that the employment effect of an increase in the minimum wage is positive for small fast-food restaurants and negative for big fast-food restaurants. Therefore, it shows that the controversial positive employment effect reported by CK is overturned for big fast-food restaurants and that the NW data are shown, in contrast to their original results, to provide support for the positive employment effect. Chapter 4 employs the state-specific U.S. data (collected by Cohen and Einav [2003; CE]) on traffic fatalities to re-evaluate the effects of seat belt laws on the traffic fatalities by using the CIC estimator. It confirms the CE results that on the average an implementation of a mandatory seat belt law results in an increase in the seat belt usage rate and a decrease in the total fatality rate. In contrast to CE, it also finds evidence on compensating-behavior theory, which is observed especially in the states by the border of the U.S. Chapter 5 studies the life cycle consumption in Finland, with the special interest laid on the baby boomers and the older households. It shows that the baby boomers smooth their consumption over the life cycle more than other generations. It also shows that the old households smoothed their life cycle consumption more as a result of the recession in the 1990s, compared to young households.

Arrested Drunk Drivers : Trends, social background, recidivism and mortality

The aim of this study was to examine the trends, incidence and recidivism of drunken driving during a 20-year period (1988 - 2007) using the data on all suspected drunken driving in this period. Furthermore, the association between social background and drunken driving, and the mortality of drunk drivers were studied by using administrative register data provided by Statistics Finland. The study was completely register-based. In 1989 - 1991, every year 30,000 drivers were suspected of drunken driving, but the number fell to less than 20,000 by 1994, during the economic recession. The changes in the arrest incidence of the youngest age groups were especially pronounced, most of all in the age group of 18 - 19-year olds. Even though the incidence among youth decreased dramatically, their incidence rate was still twice that of the general population aged 15 - 84 years. Drunken driving was associated with a poor social background among youth and working-aged men and women. For example, a low level of education, unemployment, divorce, and parental factors in youth were associated with a higher risk of being arrested for drunken driving. While a low income was related to more drunken driving among working-aged people, the effect among young persons was the opposite. Every third drunk driver got rearrested during a 15-year period, whereas the estimated rearrest rate was 44%. Findings of drugs only or in combination with alcohol increased the risk of rearrest. The highest rearrest rates were seen among drivers who were under the influence of amphetamines or cannabis. Also male gender, young age, high blood alcohol concentration, and arrest during weekdays and in the daytime predicted rearrest. When compared to the general population, arrested drunk drivers had significant excess mortality. The greatest relative differences were seen in alcohol-related causes of death (including alcohol diseases and alcohol poisoning), accidents, suicides and violence. Also mortality due to other than alcohol-related diseases was elevated among drunk drivers. Drunken driving was associated with multiple factors linked to traffic safety, health and social problems. Social marginalization may expose a person to harmful use of alcohol and drunken driving, and the associations are seen already among the youth. Recidivism is common among drunk drivers, and driving under the influence of illicit and/or medicinal drugs is likely to indicate worse substance abuse problems, judging from the high rearrest rates. High alcohol-related mortality in this population shows that drunken driving is clearly an indicator of alcohol abuse. More effective measures of preventing alcohol-related harms are needed, than merely preventing convicted drunk drivers from driving again.

Diakoniatyön paikka ihmisten arjessa

This study examines the diaconia work of the Finnish Evangelical Lutheran Church from the standpoint of clients. The role of diaconia work has grown since the early 1990s recession, and since it established itself as one of the actors along with other social organizations. Previous studies have described the changing role of diaconal work, especially from the standpoint of diaconia workers and co-operators. This research goes back to examine, beyond the activities of the diaconia work of everyday practices, its relations of ruling which are determining practices. The theoretical and methodological framework rises from the thinking of Dorothy E. Smith, the creator of institutional ethnography. Its origins are in feminism, Marxism, phenomenology, etnomethodology, and symbolic interactionism. However, it does not represent any school. Unlike the objectivity-based traditional sociology, institutional ethnography has its starting point in everyday life, and people s subjective experience of it. Everyday life is just a starting point, and is used to examine everyday life s experiences of hidden relations of ruling, linking people and organizations. The level of generalization is just on the relations of ruling. The research task is to examine those meanings of diaconia work which are embedded in its clients experiences. The research task is investigated with two questions: how diaconia work among its clients takes shape and what kinds of relations of ruling exist in diaconia work. The meanings of diaconia work come through an examination of the relations of ruling, which create new forms of diaconal work compared with previous studies. For the study, two kinds of data were collected: a questionnaire and ethnographic fieldwork. The first data set was collected from diaconal workers using the questionnaire. It gives background information of the diaconia work process from the standpoint of the clients. In the ethnographic study there were two phases. The first ethnographic material was collected from one local parish by observing, interviewing clients and diaconal workers and gathering documents. The number of observations was 36 customer appointments, and 29 interviews. The second ethnographic material was included as a part of the analysis, in which ruling relations in people s experiences were collected from the transcribed data. Close reading and narrative analysis are used as analysing methods. The analysis has three phases. First, the experiences are identified with close reading; the following step is to select some of the institutional processes that are shaping those experiences and are relevant for the research. At the third stage, those processes are investigated in order to describe analytically how they determine people s experience. The analysis produces another narrative about diaconia work, which provides tools for examining the diaconal work from a new perspective. Through the analysis it is possible to see diaconia as an exchange ratio, in which the exchange takes place between a client and a diaconia worker, but also more broadly with other actors, such as social workers, shop clerks, or with other parishioners. The exchange ratio is examined from the perspective of power which is embedded in the client s experiences. The analysis reveals that the most important relations of ruling are humiliation and randomness in the exchange ratio of diaconia work; valuating spirituality above the bodily being; and replacing official social work. The results give a map about the relations of ruling of diaconia work which gives tools to look at diaconia work s meanings to the clients. The hidden element of humiliation in the exchange ratio breaks the current picture of diaconia work. The ethos of the holistic encounters and empathic practices are shown to be of another kind when spirituality is preferred to the bodily being. Nevertheless, diaconia appears to be a place for a respectful encounter, especially in situations where the public sector s actors are retreating on liability or clients are in a life crisis. The collapse of the welfare state structures imposes on diaconia work tasks that have not previously belonged to it. At the local level, clients receive partners from diaconia workers in order to advocate them in the welfare system. Actions to influence the wider societal structures are not reached because of lacking resources. An awareness of the oppressive practices of diaconia work and their critical reviewing are the keys to the development of diaconia work, since there are such practices even in holistic and respectful diaconia work. While the research raises new information for the development of diaconia work, it also opens up new aspects for developing other kinds of social work by emphasizing the importance of taking people s experiences seriously. Keywords: diaconia work, institutional ethnography, Dorothy E. Smith, experience, customer, relations of ruling.

Taloustilanteen heikkenemisestä johtuvat muutokset asuntosijoittamiseen pääkaupunkiseudulla 2008

Tutkielman tavoitteena on selvittää miten taloustaantuma vaikutti asuntosijoittamisen kiinnostavuuteen ja asuntomarkkinoilla käytävään keskusteluun vuonna 2008. Tuolloin Suomen talous taantui voimakkaasti ja nopeasti yllättäen myös ennusteita laativat asiantuntijat. Ekonomistien lausunnoista puuttui yhdenmukaisuus ja tarkkuus. Ne myös saattoivat muuttua merkittävästi lyhyellä aikavälillä. Taantumassa sijoitusviestintä on varovaista ja tarkasti muotoiltua. Sijoittajat uskovat mielellään muiden sijoittajien mielipiteitä ja käsityksiä vaikkei niiden taustalla olisikaan aina todennettua faktatietoa. Asiantuntijoiden tilastoihin halutaan uskoa vaikka niitä kohtaan koetaan epäilyksiä. Toisaalta asuntosijoittamisen kannattavuuteen ja taloudelliseen tuottoon halutaan uskoa vaikka asiantuntijat voisivat todistaa toisin. Tutkimus toteutettiin kvalitatiivisena tapaustutkimuksena jota analysoitiin Greimasin aktanttimallia mukaillen. Tutkimusaineisto koostui 14 Helsingin Sanomissa julkaistuista asuntosijoittamiseen liittyvistä artikkelista sekä 13 Taloussanomien keskustelupalstalla julkaistusta mielipidekirjoituksesta. Viestien merkityksiä käytiin läpi semioottisesti määrittelemällä eri aktanteille rooleja. Tarinassa sijoittajasubjektin objektina on asunto, jonka avulla pyritään saavuttamaan mahdollisimman suuri rahallinen tuotto. Lähettäjiä ovat muun muassa tilastojen laatijat ja sijoitusneuvojat. Kaikki optimaalisen sijoituspäätöksen tekemiseen vaikuttavat aktantit käydään tarkemmin läpi tutkimuksen loppupuolella.

Emerging bioenergy business at Finnish independent industrial sawmills

Finnish forest industry is in the middle of a radical change. Deepening recession and the falling demand of woodworking industry´s traditional products have forced also sawmilling industry to find new and more fertile solutions to improve their operational preconditions. In recent years, the role of bioenergy production has often been highlighted as a part of sawmills´ business repertoire. Sawmilling produces naturally a lot of by-products (e.g. bark, sawdust, chips) which could be exploited more effectively in energy production, and this would bring more incomes or maybe even create new business opportunities for sawmills. Production of bioenergy is also supported by government´s climate and energy policies favouring renewable energy sources, public financial subsidies, and soaring prices of fossil fuels. Also the decreasing production of domestic pulp and paper industry releases a fair amount of sawmills´ by-products for other uses. However, bioenergy production as a part of sawmills´ by-product utilization has been so far researched very little from a managerial point of view. The purpose of this study was to explore the relative significance of the main bioenergy-related processes, resources and factors at Finnish independent industrial sawmills including partnerships, cooperation, customers relationships and investments, and also the future perspectives of bioenergy business at these sawmills with the help of two resource-based approaches (resource-based view, natural-resource-based view). Data of the study comprised of secondary data (e.g. literature), and primary data which was attracted from interviews directed to sawmill managers (or equivalent persons in charge of decisions regarding bioenergy production at sawmill). While a literature review and the Delphi method with two questionnaires were utilized as the methods of the study. According to the results of the study, the most significant processes related to the value chain of bioenergy business are connected to raw material availability and procurement, and customer relationships management. In addition to raw material and services, the most significant resources included factory and machinery, personnel, collaboration, and geographic location. Long-term cooperation deals were clearly valued as the most significant form of collaboration, and especially in processes connected to raw material procurement. Study results also revealed that factors related to demand, subsidies and prices had highest importance in connection with sawmills´ future bioenergy business. However, majority of the respondents required that certain preconditions connected to the above-mentioned factors should be fulfilled before they will continue their bioenergy-related investments. Generally, the answers showed a wide divergence of opinions among the respondents which may refer to sawmills´ different emphases and expectations concerning bioenergy. In other words, bioenergy is still perceived as a quite novel and risky area of business at Finnish independent industrial sawmills. These results indicate that the massive expansion of bioenergy business at private sawmills in Finland is not a self-evident truth. The blocking barriers seem to be connected mainly to demand of bioenergy and money. Respondents´ answers disseminated a growing dissatisfaction towards the policies of authorities, which don´t treat equally sawmill-based bioenergy compared to other forms of bioenergy. This proposition was boiled down in a sawmill manager´s comment: “There is a lot of bioenergy available, if they just want to make use of it.” It seems that the positive effects of government´s policies favouring the renewables are not taking effect at private sawmills. However, as there anyway seems to be a lot of potential connected to emerging bioenergy business at Finnish independent industrial sawmills, there is also a clear need for more profound future studies over this topic.