Internal obstacles restraining productivity improvement in small Finnish industrial enterprises

Abstract

There was a deep depression in the early 1990s in Finland, during which the number of jobs in Finnish industry decreased. By improving productivity, we can increase the price competitiveness of Finnish products and create the necessary conditions for increasing our standard of living. Although productivity improvement is important, it does not always succeed. A firm may have a real intention to improve productivity, but there are many things which restrain their ability to achieve this aim. The factors which make the efforts to improve productivity ineffective, or even prevent improvement operations can be called obstacles to productivity improvement. These obstacles can be classified into three categories: internal, external and general obstacles. In this paper an attempt is made to analyze the internal obstacles. The main reason for this kind of treatment is the fact that internal obstacles form the only category of obstacles which is clearly under the control of the firm. Thus, by identifying and eliminating these obstacles we can improve the actions of the whole firm. In the present paper, the possible obstacles, especially internal obstacles are discussed and classified on the basis of the theory. A study is presented which aims to establish the most significant internal obstacles for productivity improvement in small industrial firms on the basis of two different sets of regional data.