Internationalisation of knowledge and innovation activities in Finnish innovative SMEs

This publication presents the results of a research project on the internationalisation of innovation activities in Finnish SMEs. We claim that understanding of the internationalisation of SMEs' knowledge and innovation (K&I) activities is a complex task requiring a holistic and interdisciplinary approach. Therefore the study consists of three main blocks of research: statistical micro data analysis, sector surveys and a qualitative case study. The study concentrates on five industry sectors: biotechnology, medical devices, metal products, consumer electronics and technical services. A major premise of this study is that companies rely increasingly on knowledge created outside of them (external knowledge). The growth and competitiveness of companies largely depend on their ability to take advantage of the international arena for innovation. Thus, the ability to absorb, reconfigure and exploit relevant knowledge is increasingly recognised as a key to a company's overall business strategies, especially to its knowledge and innovation activities. Even large multinationals recognise that they cannot rely on their in-house research and innovation capabilities. The pilot survey reveals that approximately 40% of innovative SMEs have co-developed innovations together with their foreign partner. Taken as a whole, 60% of SMEs stated that they had collaborated in some manner for innovation with a foreign partner. Foreign suppliers and affiliates are the most important cross-border knowledge sources for the SMEs under consideration. With respect to foreign knowledge sourcing channels, strategic partnerships, public services, project-based knowledge exchanges and purchases of market surveys and technological information are also seen as important. The Community Innovation Survey (CIS) data suggests that collaboration within the value chain (vertical) and with competitors (horizontal) increases the companies' ability to bring new products to the market, as well as the companies' economic returns to innovation (the share of turnover from products new to the market). Furthermore, we found that SMEs' innovation capabilities increase with the overall (previous) inflow of employees from MNEs. Innovation capabilities increase the companies' overall attitudes towards innovation activities (selection equation) and the companies' capability to commercialise products new to the market (outcome equation). The inflow of employees from national groups does not, however, have an effect.