Is it risk that one company is so dominant in its economy
?
The Impact of Nokia on the Finnish Economy
Nokia has nowadays an enormously big significance in the Finnish
economy. The economists of ETLA have calculated that in 1999
Nokia's activities contributed alone one per cent of Finland's 3,5
% GDP growth. During the same year over one fifth of Finland's
total industial exports consisted of Nokia's products, and Nokia
accounted for roughly one third of Finland's all private R&D
investments. A majority of all trade made in the Helsinki stock
exchange consists nowadays of trade with the shares of Nokia, and
the market value of Nokia is nowadays about two thirds of the total
capitalization of Finnish publicly quoted companies (this has led
into discussions about whether it does still make sense to
calculate the Hex index that is so totally dependent upon the
quotes of one single company). Nokia's share of the total
employment in Finland remains, however, much smaller; at present
the figure is a little below one per cent (Ali-Yrkkö et al. 2000,
10-14).
If we take into account also the indirect effects of Nokia on the
Finnish economy, the impact is still bigger. Nokia has for instance
been cooperating with a large number of Finnish companies, which
have been able to expand their operations and to grow international
with Nokia. As the foremost examples we could mention for instance
Elcoteq, which has become one of the world's largest electronic
product contract manufacturers. Eimo and Perlos are making mobile
phone enclosures, Aspocomp printed circuit boards, Tecnomen
enhanced network service systems etc. (for a recent study about
Nokia's relationships with its suppliers see Ali-Yrkkö 2000). At
the other end of the value chain it is important to mention also
the large Finnish telephone operators Sonera and Elisa, which are
not only Nokia's customers, but have also been developing together
with Nokia many kinds of new solutions.
Furthermore we can see that Nokia is nowadays cooperating actively
with several Finnish universities and research institutes. Such
common projects are a very good recommendation for Finnish research
teams that are trying to develop new international contacts.
Attempts to meet the recruitment needs of Nokia and other fast
growing enterprises has given effective stimuli to the
modernisation of Finnish educational institutions, and many public
authorities are prepared to utilize the information technology
solutions developed by Nokia. Some traditional Finnish business
companies have started to develop innovative products like e.g.
smart clothing, intelligent tyres and real-estate control systems -
that are mostly based on wireless solutions developed by Nokia.
Many Finnish funds, organizations and individuals have during the
last years become rich by owning Nokia's stocks, even if more than
70 per cent of Nokia's ownership is nowadays in foreign hands. The
Finnish state and some local governments have been able to collect
very good tax incomes from Nokia's giant profits.
Another side of this development is of course that Finland's whole
national economy has become exceptionally dependent upon the
activities of one single firm. Most of the effects of this
symbiosis have in recent years been highly positive, but the
situation may look different if one day the company gets into
difficulties or decides to leave the country. Many kinds of
valuable new skills have of course been developed in Finland during
the expansion of Nokia's activities, and if some day Nokia is not
able to utilize them, other corporate actors might be interested to
use that resource. But in any case it is self-evident that if any
dramatic changes happen in the development of Nokia, this would
lead into a painful adaptation process within the whole Finnish
economy.
A natural conjecture from all this is that Nokia must have very
much power in today's Finnish society. Undoubtedly the Finnish
authorities are nowadays much more dependent upon Nokia than Nokia
is upon them. On the other hand one could perhaps also say that
taking into account its potential possibilities to influence things
Nokia has maintained a fairly low profile in the Finnish political
scene. The company has not been presenting its views upon every
issue that comes on the agenda, and Nokia has not been theatening
to move its headquarters away from Finland every time it has wanted
to excert some pressure upon the authorities. There has rather been
a continuing dialogue between the representatives of Nokia and
other societal actors on many kinds of issues. They deal for
instance with telecommunication regulation, the development of
Finnish innovation policies, the educational measures needed to
satisfy the increasing demand of IT professionals, the taxation of
foreign top specialists working in Finland etc. In quite rare
occasions Nokia's representatives have publicly pressed e.g. the
Finnish government in order to get out decisions that are in line
with Nokia's interests.
