Mapping the context for transfer of Finnish workplace development practice: the case of Finland, Hungary and Romania.

Author:Csaba, Mako


One of the main economic engines both in Europe and in the Central and Eastern European countries is the small and medium-size businesses (SME) and this sector especially needs particular attention "if the Continent's nascent recovery is to gain momentum" (Anderson and Ott, 2013: 3). In this context, there is a growing interest to look at best practices in the group of countries which are outperforming the others in the field of diffusing innovation as a source of sustainable competitiveness of firms operating in the SME sector.

It is a widely shared view that the human capital is the key source of the innovation, but this works only "... if there is an appropriate environment, in particular companies and organizations that take advantage of the talent and innovative capacity of the people they employ. Designing organizations and management practices that are conducive to innovation is part of the challenge" (Green and Lorenz, 2010: 3). In relation to this it is worth mentioning the OECD Innovation strategy, which indicates the key role of diffusing practice in workplace innovation (OECD, 2010).

This size category of firms is playing a key role in all the three countries involved in this project (i.e. Finland, Hungary and Romania). For example, a great majority (more than 90%) of firms categorized as SMEs represents the highest share of jobs in these countries. Due to this core importance of the SMEs in the countries surveyed, it is a key policy challenge to develop an "innovation-enabling environment" in this sector. In creating the innovation capacity of the firm, forms of work organization and their learning capabilities have core importance. For example, according one of the best documented report on the learning and innovation in the enterprises, "... relationships exist between work organization, learning and innovation. There seem to be significant positive correlations between learning-intensive forms of work organization and innovation performance, at least at country level. Countries showing higher levels of learning-intensive forms of work organization tend to rank higher in innovation performance" (Cedefop, 2012: 7).

Comparing the innovation performance of the European countries, the best performers are the Nordic and Continental countries (e.g. Denmark, Germany, Sweden, Finland, Belgium, Luxembourg, Netherlands). Post-socialist countries belong to the "low" performer country cluster (e.g. Bulgaria, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia) (Cedefop, 2012: 45).

In addition, it is necessary to note that the innovation capacity of the SMEs is rather weak in comparison with the large firms in all types of innovations (e.g. technological and non-technological) and particularly in the field of organizational innovations (i.e. implementing new marketing methods, new business models, workplace innovations etc.). Knowing the generally observed close relation between the size-category of firm and innovation activity, it is a strategic challenge for the policy makers to improve the countries competitiveness via upgrading the innovation capacity of firms in the SMEs sector.

Due to the rather rich research experiences on technological innovations (Mako, Illessy, and Csizmadia, 2012), this report is focusing on the role of non-technological innovation, and especially on the innovative practices in the workplace. The rationale behind this approach is the general underestimation of the role of workplace innovation within the national innovation system and policy. However, workplace innovations have significant impacts on the performance both the levels of the national economy and firm. In relation to this, it is worth noting that the implementation of various forms of workplace innovation (e.g. High Performance Working Systems, HPWS) may result in 15-30 per cent performance premium in the firm. In this respect a visible divide is characterizing the countries in the European Union, when contrasted with "... the greatest lack of investment in Workplace Innovation is in South and Eastern Europe" (Dortmund/Brussels Position Paper, 2012).

Learning and transferring the experiences from the Nordic Countries, i.e. from Finland, would be conducive to increasing the awareness of this problem and improving the innovation capabilities of SMEs in the post-socialist countries (i.e. Hungary and Romania). The various waves of the Workplace Development Program in Finland (TYKE 1996, TYKES 2004-2010, TEKES 2012-2018) have an ambition to "... renew the business operation of the companies through developing management and forms of working and actively utilizing the skills and competencies of their personnel. The vision is that in 2020 Finland will have Europe's best workplaces." (Kotonen et al. 2013: 2-3).

Various forms of learning--including formal and informal ones--might be an important predictor of the firm's innovation performance, because "Innovation sometimes leads to rapid obsolescence of skills and thus calls for regular workforce retraining. This is one traditional reason to support lifelong learning . countries which are leaders in innovation are also those where companies offer more opportunities of learning and training to their employees" (Green and Lorenz, 2010: 3).

In designing the transfer of the experiences on the Finnish Workplace Development Program, instead of the mechanistic benchmarking that is widely advised and used by the policy makers, Adaptykes consortium members are using the concept of the intelligent or reflexive benchmarking, which en ables firms to learn from others, not by copying 'show cases,' but by gaining a better understanding of one's own solutions, their strengths and weakness, when seen in light of what others do and what options they see. The idea of such a policy is not to achieve homogeneity but enable learning for diversity" (Schienstock, 2012: 18). In addition, it is worth remembering the advice of Frederic Winslow Taylor who was one of the most important contributors of the "scientific management" movement or management science. According to him, implementation of a new organization or management system at the shop-floor level requires at least seven years learning process from the actors affected by the changes. Without developing the necessary competence and allocating time for learning both individually and collectively, the anticipated organizational renewal via transfer of the Finnish experiences would fail.

In relation to the methodology used in this study, both quantitative and qualitative research methods were combined, that is to say that statistical analyses of the national economies (SMEs) were enriched by the deeper insight gained from the company case studies carried out in manufacturing and knowledge intensive business services (KIBS) in Finland, Hungary and Romania.

This comparative study is divided into five parts. The first part is the introduction of the importance and key dimension of workplace innovation. The second part describes the main features of the Finnish Workplace Development Programme. The third part presents a brief overview of the national economies surveyed. In addition, the regulatory and institutional environments for the SMEs sector are described. The fourth part is focusing on the core topic: a comparison of the innovation and knowledge production practices in the three countries of the research consortium. The conclusion summarizes the main lessons of the analysis and the last part of the research report contains the key messages learnt from the comparison of the countries surveyed.

  1. A Broad-based Innovation Policy: The Finnish Workplace Development Program

    As Alasoini (2011: 23-24) noted, the Finnish innovation policy approach was characterized until the early 2000s as "... though 'systematic,' as 'narrow' in the sense that its focus was firmly on technological innovations, it concentrated on advances in certain branches and technologies, and it promoted innovation activity mainly by funding leading-edge firms and top universities and research institutes." The new innovation strategy--launched by Prime Minister Vanhanen's Government--"... is based on the idea that the focus of innovation policy should be shifted increasingly to demand and user-driven innovations and the promotion of non-technological innovation." In relation to this development it is worth presenting the main features of the Finnish Workplace Development program (TYKES). The program (2004-2010) aimed to improve both productivity at the Finnish workplaces and the quality of working life (QWL) through supporting the diffusion of new organizational practices, focusing on the SMEs sector. Within the program 1,168 projects were funded totaling over 71 million euros. The Program aimed to support the development of organizations in the following fields:

    1) the workplace development projects covered such dimensions of organizational practices as how to implement new working methods and processes in the working practice, developing management methods and, in general, diffusing new tools of HRM, improving cooperation and networking within and between firms, etc.

    2) projects focusing on the method development intended to explore and exploit new technological potential, new models of work organization (e.g. High Performance Working Systems (HPWS), project-based organization etc.), the implementation of new business models (e.g. e-business model), support for closer cooperation and interaction between suppliers and clients in the process of product and process innovation, fostering partnership and cross-sector cooperation to enlarge the knowledge pool for the SMEs and finally, to improve their position in the Global Value Chain (GVC).

    3) developing learning network represents one of the most original parts of the TYKES program which aimed to improve the collective learning/ development capacity of the social partners (i.e. universities and their...

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