Finnish Small- And Medium-sized Enterprises Research Articles

Creating an entrepreneurs’ movement: SME associations as political actors in late twentieth-century Finland

When scholars study business power, they usually focus on big business. Small and medium-sized enterprises (SMEs), which comprise the vast majority of companies, are therefore excluded. The article looks at how Finnish SMEs have defended their interests in an increasingly corporatist country. It focuses especially on how they have managed to resolve the collective action problem, which prior theoretical studies have identified as a major issue in the heterogonous SME sector. We find that one association managed to build ‘a movement’ by underlining common threats to SMEs. We also assess the steps taken by other, smaller and less populist SME associations, arguing that that such diversity has brought some benefits, as competing associations have employed different tactics and been active in separate arenas. This article is based on the archives of SME associations and other business associations as well as earlier research, memoirs, other published works and newspaper articles.

Managerial coaching and employees’ innovative work behavior: The mediating effect of work engagement

Small- and medium-sized enterprises (SMEs) rely on each employee to be innovative, and understanding how employees can be supported in their innovative behavior is a crucial factor. This study draws on managerial coaching (MC) literature to examine the dynamics of how leadership behaviors impact employees’ innovative work behavior (IWB). In an attempt to disclose the mechanism through which MC can impact the IWB of employees, we particularly expected work engagement to mediate the relationship. Accordingly, we operationalized IWB as a four-dimensional construct to show whether MC and work engagement equally affect all of the dimensions of IWB. We collected survey data ( N = 4418) from 88 Finnish SMEs and found that MC was positively related to each dimension of IWB, and that work engagement mediated the linkages. Interestingly, the importance of MC (both directly and when mediated by work engagement) grows as the employee moves from idea exploration to implementation. This study sheds light on the mechanism through which leadership behavior can impact the IWB of employees in SMEs.

The effects of soft total quality management on the sustainable development of SMEs

AbstractThis study investigates the soft total quality management (soft TQM) dimensions that affect the environmental and social sustainability of Finnish small and medium‐sized enterprises (SMEs), considering the company‘s business, size, and possible certificates as control variables. Sustainable business has been found to be key to the success of companies, so investing in it is essential for companies. With the help of extensive literature research, the TQM dimensions covering the entire business activity were determined, from which detailed issues were identified. To ascertain the level of implementation of detailed issues, the survey was constructed and sent to 6889 randomly selected CEOs in autumn 2020. A total of 271 responses were received. Based on prior literature and studies, 10 hypotheses were proposed. The collected data were analyzed using regression analysis. The results reveal that two practices—business management systems and human resources (HR) practices—were related to environmental sustainability, while only business management system was related to social sustainability. None of the control variables affected environmental sustainability; however, the industrial sector influenced social sustainability. The study presents recommendations for company managers and the government to support sustainable development, especially in Finnish SMEs. As a practical contribution, the study demonstrates the importance of designing and implementing business management systems for enhanced sustainability. Management should also appreciate that sustainability will not automatically be set at a high level upon certification; thus, the performance of operations and processes should be monitored.

Predictors of job crafting in SMEs working in an ICT-based mobile and multilocational manner

This article extends the discussion of the predictors of job crafting to include small- and medium-sized enterprises (SMEs) working in an information and communication technologies (ICT)-based mobile and multilocational manner. Based on a survey ( N = 412) conducted in 43 Finnish SMEs, the job and personal resources-related predictors of approach and avoidance types of job crafting were analysed. From job resources, co-working, multilocality, the resources in the physical work environment, useful ICT and social support predicted the approach types of job crafting. Intrinsic motivation, relatedness and feeling competent as personal resources activated the approach types of job crafting. Drawing on background variables, being a younger firm activated job crafting. Avoidance type of job crafting was predicted positively by the resources in the physical work environment. This article suggests that knowledge about the predictors of job crafting encourages SMEs to activate this practice among its personnel.

Marketing first? The role of marketing capability in SME growth

PurposeThis paper aims to examine the growth rates of small- and medium-sized enterprises (SMEs) over a three-year period, the relationship between firm size and firm growth in the context of SMEs, and the effect of marketing capability (MC) on firm growth and how it relates to firm size. The theoretical framework is based on the resource-based view and dynamic capabilities.Design/methodology/approachData were gathered from Finnish SMEs (n = 214) and analyzed with Latent growth curve modeling (structural equation modeling). Respondents were chief executive officers or company owners.FindingsResults show that firm size is unrelated to the rate of change, and MC has a significant effect on both the intercept and slope parameters. Smaller SMEs have less MC than larger SMEs.Practical implicationsWhile the overall human resources level of the SME is not linked to the rate of growth, MC is. This is an important point for small business growth studies, for it shows what type of personnel is called for during rapid growth. SMEs could advance significantly and rapidly if they invest in versatile human capital, especially in the marketing area.Originality/valueMajority of the MC research involves larger corporations. This study brings new insights from SME perspective. In addition, this study suggests that it is imperative to consider different types of growth separately. This study contributes to this need by demonstrating the connection between employee growth rate and MC in SMEs.

Business model innovation for resilient international growth

ABSTRACT Our knowledge concerning the link between internationalization and business model innovation remains limited. This study investigates the change in small and medium-sized enterprises (SMEs) searching for organizational resilience. It particularly focuses on discovering how SMEs innovate their business models when seeking organisational resilience through international growth. In order to answer this research question, we conducted a multiple-case study of three Finnish SMEs. The critical sources of resilience were digitalization, strategic collaboration, customer intimacy, agile use of resources/expertise, and an improved revenue model. For all the case firms, significant business model innovation was required for resilient international growth. Based on the study findings, a new concept is proposed for future research: SME international resilience.

Corporate Social Responsibility of SMEs: Learning Orientation and Performance Outcomes

Responsibility and sustainability are today a key part of doing business globally. However, the attention of scholars and policymakers has mainly been on large multinational enterprises, with small and medium-sized enterprises (SMEs) receiving less attention. Recent studies have noted the importance of learning for SMEs to engage in corporate social responsibility (CSR), but it is not yet known how the learning orientation of SMEs impacts their CSR, and how the development impacts the internationalization and performance of SMEs, which are research gaps that recent studies have noted. Shedding light on those dynamics is also important from a practical perspective since in most countries SMEs constitute a large majority of firms in both amounts and total employment. The present study contributes by illustrating how CSR impacts different types of performance in SMEs, and how the learning orientation of SMEs predetermines their CSR. Regression analyses conducted on an empirical sample of Finnish SMEs indicate that CSR in SMEs has an impact on certain types of performance and that their learning orientation determines their CSR. Therefore, the study contributes to the literature on responsibility and sustainability in SMEs, and to that SME internationalization, by shedding light on the antecedents and outcomes of CSR for SMEs.

Job challenges are hindrances too: examining experiences of managers and employees in Finnish SMEs

PurposeThe study aims to explore job demands experienced by employees and managers in micro-enterprises and small and medium-sized enterprises (SMEs). Drawing on the job demands framework, the study discusses the experienced demands from the perspective of challenges that create opportunities for learning and achievement and hindrances that create obstacles for work. The study builds on the idea that the same demand can be perceived both as a challenge and a hindrance. That approach opens a path to responding to challenges by reformulating working practices and removing hindrances by designing, developing and crafting jobs and tasks.Design/methodology/approachThe authors analyzed open-ended survey responses (N = 306) to study experienced job demands in 50 micro-enterprises and SMEs, how the perceived demands differ between employees and managers and whether they represent challenge or hindrance demands.FindingsThe authors identified 17 job demand categories most including both challenge and hindrance demands. Time management and prioritization was the most central challenge and hindrance category for both employees and managers. For employees, sales and stakeholder relationships represented the second largest challenge category and communication and information flow was the second largest hindrance category. For managers, the second largest challenge and hindrance categories were organization and management of activities and the fragmentation of work, respectively.Originality/valueBy focusing on employee experience, the achieve a more nuanced understanding of the SME context, which has been dominated by managerial evaluations. The study also advances the discussion on job demands by extending our knowledge of demands that may be experienced both as a challenge and a hindrance.

Cultural sensemaking of corporate social responsibility: A dyadic view of Russian–Finnish business relationships

International Management (IM) needs a better understanding of how managers of small and medium-sized enterprises (SMEs) make sense of cultural differences in international business relationships, especially regarding corporate social responsibility (CSR) in relationships between firms from emerging and developed countries. We address this lacuna by uncovering how dyads of Russian and Finnish SME managers, engaged in mutual international business relationships, construct their understanding of CSR. The findings indicate that conceptualizations of CSR are embedded both in SME managers' cultural backgrounds and in the contextual environment. This extends previous research on the role of CSR in IM and respond to calls to study the microfoundations of CSR and internationalization, adding to the sparse knowledge of CSR in cross-cultural SME settings.

Service innovation and internationalization in SMEs: antecedents and profitability outcomes

Both innovating and internationalizing can hold the key to survival and growth among small- and medium-sized enterprises (SMEs). Service innovation in particular is highly relevant in the increasingly digitalized and high-technology global trade. However, there have been until now few studies on service innovation in international entrepreneurship. Thus, in an effort to illuminate its role in entrepreneurial internationalization, the present study examines the profitability impact of service innovation in SME internationalization, while also outlining the differing impacts of entrepreneurial orientation and human capital as the antecedents of both. The empirical data were collected via an online survey of Finnish SMEs in the information and communications technology (ICT) industrial sector, the final sample comprising 104 companies. The data were analyzed through structural equation modeling. The results indicate, first, that entrepreneurial orientation underlies both degree of internationalization and service innovation, yet different dimensions of entrepreneurial orientation have distinct impacts on the two outcomes. Second, we find that the level human capital also determines the level of service innovation in as an antecedent and third, international expansion, but not service innovation, has a negative impact on profitability. We discuss the implications of these results, which imply that SMEs may face an internationalization-innovation paradox in that engaging in both activities may not be a feasible strategic option for them, and that prioritizing internationalizing in favor of innovating may incur costs and result in lower profitability.

SMEs’ Support Functionality Analysis Based on Statistical Analysis

Industry 4.0 is developing constantly enabling the use of new technologies in various manufacturing applications, including factory floor and production system connectivity and digitally enhanced production processes. The correct use of Industry 4.0 tools improves especially the productivity and transparency of production. However, the use of Industry 4.0 demands knowledge and knowhow. It has been noted that small and medium-sized enterprises (SMEs) lack the knowledge to enable and implement different areas of Industry 4.0. The digitalization level of Finnish SMEs is surveyed in this study, along with a review of the potential support structure for improving the level of implementation of digital processes. A support structure matrix is created to assist the next steps of the SMEs towards Industry 4.0. The support structure matrix created helps SMEs to increase their profitability and competitiveness by introducing Industry 4.0 methods in their operations.

Business model innovation in international performance: the mediating effect of network capability

Networks and business models are two critical defining factors in the internationalisation of small- and medium-sized enterprises (SMEs). Although scholars have recently suggested that business model innovation be linked to dynamic capabilities, there has been limited research interest. This study aims to do so by linking business model innovation with dynamic networking capabilities and examining their role in SME internationalisation. Using a sample of 210 internationally operating Finnish SMEs and conducting regression and mediation analysis, we find that: 1) network capability predicts business model innovation in SMEs; 2) business model innovation predicts higher international performance; 3) business model innovation mediates the relationship between network capability and international performance. The study thus contributes by establishing network capability as an antecedent of business model innovation in achieving international performance.

Business model innovation in international performance: the mediating effect of network capability

Networks and business models are two critical defining factors in the internationalisation of small- and medium-sized enterprises (SMEs). Although scholars have recently suggested that business model innovation be linked to dynamic capabilities, there has been limited research interest. This study aims to do so by linking business model innovation with dynamic networking capabilities and examining their role in SME internationalisation. Using a sample of 210 internationally operating Finnish SMEs and conducting regression and mediation analysis, we find that: 1) network capability predicts business model innovation in SMEs; 2) business model innovation predicts higher international performance; 3) business model innovation mediates the relationship between network capability and international performance. The study thus contributes by establishing network capability as an antecedent of business model innovation in achieving international performance.

Renewable energy market SMEs: antecedents of internationalization

PurposeThe purpose of this study is to provide a foundational understanding of the internationalization of small- and medium-sized enterprises (SMEs) operating in the context of renewable energy markets. The focus is on exploring and identifying the managerial-, firm- and environmental-level antecedents to their international expansion, which also furthers the understanding of the distinct SME’s internationalization context within the renewable energy market.Design/methodology/approachThe study adopts a qualitative multiple case study approach in a Finnish SME context and identifies the antecedents’ relative prominence at the managerial, firm and environmental levels.FindingsThe findings indicate that, although internationalization antecedents of renewable energy SMEs differ owing to market forces such as trends, networks and changing regulatory policies, they share antecedents similar to those of SMEs in other industries.Research limitations/implicationsThe main limitation of this study is its single-country home market empirical context. Future studies should expand analysis to different regulatory and regional environments.Originality/valueTo the authors’ knowledge, there are few studies that explore the antecedents of SMEs’ internationalization, especially in the renewable energy market context. Hence, this study contributes to the international business and entrepreneurship literature by illustrating the fundamental managerial-, firm- and environmental-level antecedents to the internationalization of SMEs operating in the renewable energy business. In addition, it highlights the peculiarities of renewable energy SMEs’ internationalization, suggesting that extant research on SMEs’ internationalization has not adequately captured the intricacies present in the internationalization of renewable energy enterprises.

Innovations and Growth: Evidence from Finnish SMEs

The purpose of this study is to clarify the factors that affect the ability of small and medium-sized enterprises (SMEs) to create innovations that promote firm growth. Studies regarding the relationship between research intensity and growth have typically produced mixed results, revealing a modest or non-existent influence of innovations on sales growth. These studies have typically used patents as indicators of innovation. We directly asked firms whether their innovations had affected their growth, and we regressed the results over several variables, covering a wide range of dimensions related to (1) personal factors, (2) firm-related factors (including questions that reflect a firm’s innovation strategies), and (3) regional factors. Our analyses of Finnish SMEs revealed that trust, innovation activities and networking are essential components of firms’ ability to create innovations that contribute to high firm growth. A multinomial logistic regression analysis also provided support for the assumption that age, technological level and firm location affect firm performance.

Business model innovation and entrepreneurial orientation relationships in SMEs: Implications for international performance

Academic research is increasingly emphasizing the critical role of business models (BMs) and business model innovation (BMI) in the international entrepreneurship (IE) domain, yet empirical studies on the topic are quite limited. This study demo0nstrates the role of BMI and entrepreneurial orientation (EO) in the internationalization of small-and medium-sized enterprises (SMEs). Specifically, we explored the mediating role of BMI in the relationship between EO and international performance among internationalizing SMEs. Drawing on a cross-industrial sample of 95 international Finnish SMEs, we empirically test the hypothesized relationships by developing a confirmatory factor analysis measurement model with subsequent application of ordinary least squares multiple regression. The results suggest that BMI positively and significantly mediates the relationship between EO and international performance. In addition, EO has a positive and significant effect on SMEs’ BMI. Thus, the findings of the study imply that both BMI and EO are important drivers of international performance for internationalizing SMEs. The study contributes to the IE literature by illustrating the dynamics of BMI and providing evidence of the linkages between strategic orientations and BMI in the international performance of SMEs.

Institutional environment and network competence in successful SME internationalisation

PurposeThe purpose of this paper is to examine the impact of institutional environment on the international performance of small- and medium-sized enterprises (SMEs) and how this relationship is influenced by network competence.Design/methodology/approachThis study uses a quantitative approach. In total, 119 internationally operating Finnish SMEs from five industry sectors are sampled via a cross-sectional survey. Data are analysed through regression modelling.FindingsThe international performance of SMEs is influenced directly and indirectly by institutional drivers. The results show that network competence mediates the positive relationship between institutional drivers and international performance.Research limitations/implicationsNetwork capability development can help SMEs leverage more or less favourable institutional environments for successful internationalisation. Perceived institutional drivers directly result in higher performance, but the effect can be partially mediated by dynamic capabilities. The limitations of the study include its single-country context and the cross-sectional nature of the data.Practical implicationsSMEs should take their home countries’ institutional environments into account, but for long-term success, they should develop the ability to manage their business networks. A conducive institutional environment may help develop competence, which in turn can enable more successful internationalisation in terms of scale, scope and satisfaction.Social implicationsDecision-makers may benefit from knowing that, in addition to capabilities, an institutionally conducive environment that drives domestic SMEs towards international markets may be an antecedent of successful internationalisation in the SME sector.Originality/valueThis is one of the few studies to illustrate how network capabilities can mediate the influence of institutional factors on entrepreneurial internationalisation. It combines institutional theory and the dynamic capabilities view to explain successful SME internationalisation.

Corporate Social Responsibility in SMEs: Implications on Competitive PerformanceDate submitted: October 12, 2017Revised version accepted after double blind review: December 15, 2018

This study explores the relevance of corporate social responsibility (CSR) in the context of small and medium-sized enterprises (SMEs). The role of CSR in SMEs has so far been scarcely researched, and the relationship between internationalisation and CSR development in SMEs, in particular, could do with the further study. Since it has been found that organisational capabilities and CSR both impact SME performance, we illustrate these relationships and differentiate between the domestic and internationalised SMEs. The empirical part of the study is based on the survey data from a sample of 141 Finnish SMEs. Results obtained via linear regression modelling show that network competence plays a part in contributing to CSR, which in turn positively affects the SME’s competitive performance, but only in internationalised SMEs. CSR is found to mediate the relationship between network competence and competitive performance. The study thus contributes both to the literature on CSR as well as that on SME internationalisation and argues for the importance of the former as a true predictor of enhanced SME competitiveness.

Towards sustainability? Forest-based circular bioeconomy business models in Finnish SMEs

In line with the Sustainable Development Goals of the UN 2030 Agenda, the circular bioeconomy concept is gaining greater political momentum and research interest. A circular bioeconomy implies a more efficient resource management of bio-based renewable resources by integrating circular economy principles into the bioeconomy. These ideas have been well received at industry level since they are deemed to foster cost reductions, innovation and competitiveness. While recent scientific literature has dwelt on sustainability-related circular business models, empirical research on company-level implementation is only just emerging. Our study contributes to addressing this research lacuna by seeking answers to two questions: 1. How do small and medium-sized enterprises (SMEs) propose, create and deliver, and capture value through circular bioeconomy business models?; and 2. What are the business challenges and opportunities related to the operationalization of such business models? To this end, we employed content analysis on interview data gathered from managers in Finnish SME companies from the field of packaging, textiles, composite materials, cosmetics and pharmaceutical products. We outlined the main business model archetypes, and identified the key characteristics that enable value capture and delivery for various stakeholders. The contribution of this study is duly two-fold. From the perspective of a theoretical contribution, we expand and refine the conceptualization of sustainable circular bioeconomy and related business models. In addition, based on our findings, we provide insights and recommendations for researchers and policy-makers to advance the sustainability transition to a circular bioeconomy in the context of the forest-based industry, and for the management of SMEs to reflect on company viability and growth.

Firm Performance among Internationalized SMEs: The Interplay of Market Orientation, Marketing Capability and Digitalization

The ability to internationalize has become a competitive necessity for many firms, and one important for survival and growth in the era of globalization. At the same time, digitalization is transforming the locus of entrepreneurial opportunities and entrepreneurial practices, thus offering new perspectives on internationalization. Internationalization requires marketing capability as well as market orientation. However, there is a gap in the literature exploring the interplay of digitalization, market orientation and marketing capability in the internationalization process. The objective of the present study is to improve our understanding of (1) the impact of market orientation, marketing capability and digitalization on firm performance among small- and medium-sized enterprises (SMEs) and (2) the differences in this impact between internationalized SMEs and SMEs operating only in domestic markets. The data were gathered from 101 Finnish SMEs in the wood-product industry, and analyzed with AMOS using path analysis. The results show that marketing capability mediates the effect of market orientation on firm performance. For internationalized firms, market orientation and marketing capability are crucial to their success in foreign markets. However, digitalization has no effect on firm performance with internationalized firms. With other firms, the effect is direct and significant.