Finland is renowned for its research and development (R&D) but has been much less successful at commercialising its innovations and growing world-beating companies. In this respect Nokia is very much the exception that proves the rule.

“R&D is like an ice hockey club,” says Mauri Pekkarinen, the minister for trade and industry. “If you bring on young players but don’t give them an opportunity to play, you lose them to the US.”

R&D represents 3.5 per cent of Finland’s gross domestic product – of which 70 per cent comes from the private sector, notably Nokia – and Finland is high in the league table of patents per capita. However, many of these innovations are either exploited abroad or the companies that develop them are soon sold to foreign owners.

The lack of a real go-getting US-style entrepreneurial culture is blamed for this state of affairs. Attention is now focused on what can be done to change individual attitudes and the Finnish environment so that more of the knock-on effects of innovation are retained inside the country.

The first problem is that few Finns are entrepreneurs and few want to be. According to a Eurobarometer survey in 2004, 68 per cent of Finns are employees, compared to a European Union average of 50 per cent.

There are a lot of small innovative technology companies but many remain niche players and struggle to win a place on the world stage. Funding is not to blame as bank finance is usually available and venture capital is developing fast after a late start. Finland also has a wide range of government funds for start-ups, though they tend to focus more on research than on helping companies grow, though this too is changing.

Instead the problem is that some Finnish companies lack even the ambition to grow in the first place, preferring to remain small fish in a small pond.

pool.“We have entrepreneurs who don’t want big success,” says Jukka Mäkinen, (umlaut on a), director of the venture capital firm Eqvitec Partners. “For us as venture capitalists we want them to be more ambitious.”

Jussi Järventaus, (umlaut on first a), managing director of the Federation of Finnish Enterprises, says a survey of his members (which are mostly small and medium-sized enterprises) showed that only 10 per cent were eager to grow, while 40 per cent said they wanted to grow only if there were opportunities. “These are not good figures,” he says.

For those that want to grow, building global sales sometimes proves an insuperable obstacle.

“They are quite good at making the first commercial steps,” says Mr Mäkinen. “At the next step they need a global sales network to sell their technology to international companies.”

Here expertise is the problem. Finns are good managers, Mr Mäkinen says, adding that he can find a new chief executive for one of his acquisitions in a month, but there is a real real shortage of sales and marketing professionals.

Given the small size of the local market, Finland’s position on the periphery of Europe and the short supply of sales professionals, many companies therefore have to seek a strategic owner in order to build sales.

This means that there are few successful medium-sized Finnish-owned companies. “We don’t see medium-sized companies that are rapidly growing,” says Mr Pekkarinen. “This is the most important issue.”

Nor do many entrepreneurs found new companies after selling their first, instead it seems they prefer to preferring to take it easy. To change attitudes and develop entrepreneurial skills, efforts are being made to reform Finland’s much admired education system.

“In our education system we have not energised young people to be entrepreneurs,” admits Mr Pekkarinen. The university system appears better at turning out researchers and technicians than entrepreneurs and marketing and sales professionals, largely because the academics have little direct experience of business.

“Doctorate studies concentrate too much on research and do not sufficiently develop the general skills needed to be knowledge workers,” says Kari Raivio, chancellor of Helsinki University.

He estimates that only 5 per cent of his postgraduates work in the private sector and less than 2 per cent work for themselves. By contrast, one third work in state research institutes and the remainder work in the public sector.

To try to tackle this, universities are beefing up their sales and marketing courses and running popular programmes where students can earn credits by learning the tools necessary to be an entrepreneur, though a scheme to fund lecturers to learn about business has had less success. The government also part finances adult education courses to become entrepreneurs.

For some critics, the reasons for the Finland’s lack of an entrepreneurial culture run much deeper and lie in the country’s generous welfare state model. “In this kind of (welfare) society you need to make a special effort to encourage people not just to be very good workers in someone else’s company but to be employers themselves,” says Mr Pekkarinen.

Risk-taking is deterred as the costs of doing so can be severe and the rewards uninspiring. “The balance between returns and risk is not good enough,” says Mr Järventaus.

There is no US-style Chapter 11 bankruptcy, though it is being considered, and until recently an entrepreneur was discriminated against if his company failed and he tried to claim social benefits.

On the return side, income taxes are heavy and dividends are double-taxed (though reform is being considered), so entrepreneurs have to give up much of the gains from their hard work and vision.

Nevertheless, as Finns become wealthier and more self-confident, attitudes to wealth and risk are beginning to change, according to Mr Mäkinen. “People have become wealthier,” he says. “They are prepared to take risks and look for quality of work.”END