So, I decided to blog about the second issue that has been on my mind recently (regarding previous blog post). Not the lightest of things for a Friday evening blog post though. I’ve been thinking about the structure of the Finnish economy for a while and it did actually surprise me a bit that we’re still very heavily reliant on large corporations. No wonder they’re all over the press and smaller companies get rarely the visibility.

According to the Confederation of Finnish Industries (EK), 61% of the Finnish labour force is working in the largest companies (more than 250 employees). Only 3% of the labour force is working the micro companies of the economy (less than 10 people), even though the micro companies count for 47% of the Finnish companies out there. There aren’t very many countries like this in Europe. Other countries that have a similar structure in their economy are the Netherlands, Germany and UK.

So what is the problem with this?

The problem I see with this is that our economy is not prepared for a long tail of companies – something that I believe the shift will be towards in the future. By the long tail of companies I’m referring to the structure of the economy regarding companies. If you look at Europe in general, there are around 19 million companies in the old continent. 99% of these are micro-, small- and medium-sized employing more than 70% of the European work force. Also, the most common European company is a micro-sized company employing less than 10 people.

I’m not stating that Finland will, in 10-20 years, become a country flushed with micro companies. However, the shift in the future will be towards smaller company sizes. This has already happened with many of the largest companies in Finland – many are moving labour overseas as they are competing in bulk product markets where cost management is a key competitive factor.

If Finland’s competitive advantage in the future is to rely on creative and knowledge intensive industries, many of those companies are small and medium-sized. This in turns means that our politics must change their attitude to better support the ambitions of smaller companies.

This is a huge change that many politicians have yet to realise. I’ve been working with small companies my whole career. There are many incentives that can be created on a national level to incentivise smaller companies. This will, in the future, have a huge effect on the possibilities of employing people and thus creating wealth as well as true welfare for our economy.