Finland

Technological Progress in Finland through Partnerships

Heikki Kotilainen
Technology Development Centre, Helsinki

INTRODUCTION
The 1980s were a very active period for science and technology policy in Finland. The energy crises of the 1970s, extensive structural change in industry and growing international competition called for increased research and development (R & D). Furthermore, favourable economic conditions in the 1980s created an environment conducive to increased spending on R & D by both the public and the private sector. Even during the recession of the 1990s, the Government has invested increasingly in R & D.

FRAMEWORK AND GUIDELINES FOR TECHNOLOGY POLICY

Finland is a country with an open market economy heavily dependent on exports. The volume of exports is nearly a quarter of its Gross National Product (GNP). Western Europe (i.e. the countries of the European Union and the European Free Trade Association) accounted for 63 per cent of Finnish exports in 1991 (figure 1).

Steady industrial and economic development over the last three decades has brought about a substantial diversification of exports (figure 2). Wood-processing and paper still accounted for 75 per cent of exports in 1960, while in 1994 the figure was only 36 per cent, already falling behind the rapidly expanding metals, engineering and electronics sector, with 45 per cent. However, the wood-processing industry still collects a large part of the inflow of foreign exchange since it uses very few foreign components.

One of the major current achievements of Finnish industrial and technology policy can be seen in the rapid growth of high-tech exports (figure 3). During the last three years the share of these exports in total exports has grown from less than 10 per cent to nearly 20 per cent, and there has been a surplus in high-tech trade.

Another determining factor for technology policy has been the small contribution C 30 per cent C of domestic sources to energy generation (figure 4). Since Finland is a major consumer of energy because of its climate, relatively large area and industrial structure, both industry and society as a whole must constantly pay particular attention to the development of energy technology.

On the basis of the framework described above, Finland has the following main goals in industrial and technology policy:
- ensuring the competitive efficiency of important branches of basic industry such as wood-processing and metals and engineering;
- creating new industry for developing technological sectors;
- reliable and economical energy generation, and efficient energy use.

All these goals include proper consideration of environmental aspects. The first two goals are often regarded as conflicting to some extent. In the Finnish context, however, this is not the case. Ensuring the competitive efficiency of basic industry demands that the latest achievements of developing technological sectors (microelectronics, new materials and biotechnology) be introduced quickly and efficiently. This in turn is possible only if Finland has its own R & D and industrial activity in these newest areas of technology. The goal is thus a fruitful marriage between high technology and basic industry.

SCIENCE AND TECHNOLOGY ADMINISTRATION

The private sector, i.e. industry, has constantly accounted for more than 60 per cent of all R & D funding. Bearing in mind that the percentage of business R & D financed by the Government in 1991 was only 5.4 per cent (5.8 per cent in 1989) C one of the lowest rates in the OECD countries C it is obvious that industry remains the driving force behind R & D in Finland, despite government activity in science and technology policy (figure 6).

With respect to the public sector, it should be noted that expenditure in recent years has been increased fairly equally between basic research, applied research and technological development, even though the last of the three has been slightly favoured.

The Technology Development Centre

Undoubtedly one of the most important aspects of science and technology policy in the 1980s was the founding of the Technology Development Centre (TEKES) in 1983. The organization, which operates under the Ministry of Trade and Industry, was assigned the following main tasks:
- initial framing of national technology policy;
- financing of applied technical research and risk-intensive industrial R & D projects;
- coordination and financing of international technological cooperation;
- provision of consulting services and information (especially for small and medium-sized enterprises).

TEKES' activities have been very well received by industry, research institutes and universities alike. The Government increased TEKES' resources steadily until 1995, when FIM 1,500 million (US$345 million) was available for financing applied technical research and risk-intensive R & D projects for industry. The central organization has a staff of 100. In addition, there are some 50 persons employed in regional consulting units in Finland and 11 industrial attachés working mainly in the Western industrial countries with some 45 employees.

The regional units help companies to plan projects, define the best sources of information and find partners to make each project a good, balanced whole. The consultancy focuses on certain features: planning and guidance of product development and the enterprise's business ideas, relevant effects of international integration and utilization of information.

TEKES' overseas representatives, i.e. Finnish industrial attachés, assist in establishing new contacts for cooperation between Finnish enterprises and research organizations and corresponding bodies abroad. Industrial attachés have had several years' experience with Finnish industry, and therefore have a good knowledge of Finnish high-technology enterprises.

These two TEKES networks contribute effectively to partnering with enterprises, universities and research establishments in other countries. The consulting units, TEKES' technological expertise and the Finnish industrial attaché network combined will provide companies with sound support and a broad range of contacts.

One-third of TEKES financing is channelled into applied technical research and two-thirds into industrial R & D projects. Half of the latter are grants and half are loans. TEKES never provides more than a part of the financing. The same financing principles are applied as in multilateral European research projects in general. National and international projects are financed from the same funds, and therefore compete with each other. Financing criteria include many aspects of partnering, especially between universities and industry. Universities are often, if not always, required to ensure that their projects have an industrial interest, while industry is encouraged to have partners from universities or research institutes. The beneficial effects of partnering are clearly seen in the evaluations of research projects and programmes.

TEKES itself is active in the field of applied technical research (pre-competitive level), planning national research programmes with industry and research institutes, and financing them. Proposals for industrial development projects (competitive level) come from industry and TEKES evaluates them on the basis of technological standard, risk and potential. The main idea is that Finnish industry itself shall determine the areas in which it seeks to develop internationally competitive products. Some of TEKES' activities are described in more detail below.

National technology programmes

With a view to industrial product development and innovation, technological programmes are aimed at effecting, supporting and promoting structural change in industry. Programmes last from three to six years and costs run to between US$5 and 80 million. There are a number of different types of programmes. Technology-based programmes are usually initiated by research organizations, while programmes for individual sectors of industry are initiated and coordinated by industry itself, although the work can be done either in industry or research institutes. The corporate grouping programmes are conducted by industry, usually looking for new technologies to be applied. All types of programmes involve intense cooperation between industries of different sizes and research establishments of different types (see figure 7).
Examples of programmes are given in figures 8, 9 and 10. They reflect the wide coverage of the different technological areas. Particular emphasis has been put on cooperation, as can be seen from the number of participants.
TEKES is responsible for coordinating programme planning and for the main financing. Planning is carried out with industry, research institutes and universities. Most research takes place in research institutes and universities. Industry representatives often play an important role in supervisory groups directing the work. Industry pays between 5 and 50 per cent of the costs of a programme. Concerted involvement by industry in programmes seeks to ensure that they serve its needs and that the benefits are rapid and effective.
Programmes have yielded much valuable experience and many useful results, and cooperation between industry, research institutes and universities has increased. A full evaluation of all completed programmes and a partial evaluation of ongoing programmes, partly by outside experts, strongly recommended continuation of basically the present approach. However, a greater role for industry was stressed, especially in setting programme goals.
International contacts within the framework of national technology programmes are based on direct contacts between researchers and research institutes. International cooperation has contributed in a very valuable way to the content and results of programmes. Specifically, contacts with United States institutions are the most frequent, and close cooperation within the Massachusetts Institute of Technology's industrial liaison programme has been very fruitful. In addition, programmes contribute effectively to European frameworks such as EU framework programme, EUREKA and COST, and bilateral programmes.

INTERNATIONAL TECHNOLOGICAL COOPERATION

SPECIAL FEATURES OF PARTNERING

Having gained experience of cooperation both domestically and internationally, TEKES has a broad picture of the features of successful partnering. There are a number of prerequisites for partnering, such as the following:
- Common interest. Partners' common interest could be business, research, marketing or any other important task. They should be committed to joint efforts.
- Complementarity. Partners should seek particular issues on which they can agree, such as technology, business, market or the like.
- Equal or comparable level of technology or skills. Major differences between partners may lead to exploitation of the other's intellectual property, which usually causes problem if it has not been agreed on from the outset.
- Common language and understanding. Mutual understanding is essential. This involves not only language itself but also understanding and respecting each other's views and ways of operating.
- Bridging cultural differences. There are differences between cultures, and in the ways of approaching and solving problems. These must be respected.
In addition, potential partners must be properly motivated. They may be seeking complementary skills or technologies, technology transfer or joint business, or seeking to share a market. Very often their motivation is to reduce the cost of development work and to secure mutual benefit through joint efforts.
The environment for partnering should also be beneficial. Attention should be paid to research infrastructure. Usually, both industry and government commitment are required. Nowadays, networking involving several players is also required. This type of networking, however, also increases the risk of failure; but careful planning will reduce the level of risk. International organizations and consulting companies can help in exploring the risky areas of a partnership. For example, EUREKA has published guidebooks for tackling the different kinds of problems created by partnership agreements.