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-YrkkÃ¶ 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-YrkkÃ¶ 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.