Investment in research, development, and innovation (RDI) is increasing in Finland. Finnish companies are planning to increase their RDI investments significantly over the next five years, and they intend to carry out a significant part of the development work in Finland. Research and development is seen as a very important factor for the competitiveness of companies.
“Companies are willing to invest but afraid to do so. Only a small part of the planned RDI investments concern completely new initiatives. In terms of competitiveness, new initiatives would be exactly what Finland needs. We are giving a big head start to other countries and their companies competing in the same markets with Finns,” says Kaisa Hernberg, Senior Director of Public Affairs & Communications at Business Finland.
The small number of completely new initiatives has been a visible trend in Finland for a long time, and this weakens Finland’s competitiveness. Particularly micro and small enterprises are planning to increase their RDI investments significantly. It would be essential for Finland’s economic growth and wellbeing that large companies would also invest more in their RDI activities.
The war in Ukraine has not had a major impact on companies’ future RDI plans so far. The Covid-19 pandemic has even impacted positively on companies’ development activities. A third of the companies that responded to Business Finland’s survey had increased their RDI activities during the pandemic. The pandemic also forced companies to reform, as 75% of the companies that responded to the survey had made changes to their business.
“Business Finland’s funding has also reflected the interest in development. In 2020, we granted EUR 487 million of innovation funding, which was an all-time record,” Hernberg says.
In addition to money and courage, a small country needs talent. The availability of both domestic and international talent is a major bottleneck for companies’ RDI activities.
“The larger the company, the more pronounced the shortage of talent. The availability of funding and talent also has the greatest impact on whether the RDI activities are carried out in Finland or elsewhere,” Hernberg says.
In Finland, the implementation of investment plans is significantly influenced by policy measures, which are expected to bring stability, while policy makers are also expected to commit themselves to an increasing level of public RDI funding.
“In order for the projected increase in RDI investments to materialize, policy makers need to take firm action. Finland must invest in education, make it easier for experts from abroad to settle in Finland, and provide long-term, predictable public RDI funding that encourages companies to come up with bold new initiatives,” Hernberg urges.
Business Finland’s funding for leading companies has been particularly important for companies with new initiatives. Currently, there are 12 leading projects underway by large companies involving hundreds of other enterprises.
The majority of the companies that responded to the Business Finland survey say that their RDI activities are guided by sustainability at least in the development of individual products or services. For more than a quarter of the companies, sustainability is a key part of their business strategy.
“Companies investing in sustainability are also more willing to increase their RDI investments,” says Hernberg.
Customers and owners have the greatest influence on sustainability choices. The role of the board of directors was greater in large and medium-sized enterprises, while personnel played a more prominent role in small enterprises.
In May/June, Business Finland commissioned a survey on its customer companies’ RDI investment plans. The aim of the survey was to identify companies’ future plans concerning RDI investments, the preconditions for their RDI investments and the factors preventing RDI investments over the next five years. The survey’s response rate was 13%, and a total of 210 companies operating in Finland responded. The survey was conducted by T-Media.
Senior Director, Public Affairs & Communications, Business Finland
kaisa.hernberg (at) businessfinland.fi