Micro and small enterprises play an important role in the vitality of regions’ business and economy – investments in entrepreneurial competence should be made as part of education

Regional demographic and economic polarisation poses challenges to the welfare society. Small enterprises and a significant number of micro-enterprises have strong potential as producers of innovations, jobs and growth companies in different regions. The economic and employment impacts of small enterprises are particularly emphasised in rural, remote and restructured municipalities. At the same time, support is needed particularly by young people for the creation of new businesses.
Katariina Ala-Rämi, Ossi Kotavaara ja Matti Muhos

Regional differences in business start-up activity, growth and export activity are significant. More than 92% of Finnish companies consists of micro-enterprises which provide almost a quarter of all jobs in companies. In addition to agriculture, forestry and fishing, the most common sectors of micro-enterprises are construction, trade, services, logistics and manufacturing. In the Central Ostrobothnia region, primary production is a particularly emphasised sector among micro-enterprises.

As a whole, most of the Finnish exports are in the hands of large companies, but, in the category of small micro-enterprises, Finland is a weak exporter in comparison to many other reference countries. However, when looking at the regional picture of exports of goods and services to Europe, exports by micro and small enterprises may be regionally strong and significant. When exports are in proportion to the size of the population base in the region, many rural areas are key export regions. In the Central Ostrobothnia region, Toholampi is Finland’s 12th best export municipality for micro and small enterprises when the export of goods and services to the EU is examined in proportion to the population. The export from Toholampi’s micro and small enterprises mounts to approximately EUR 1 900 per person. If the exports of the entire small business sector in Finland were at the same level, this would mean an income stream of EUR 10.5 billion.

As a whole, Finland is lagging behind in its start-up activity compared to the reference countries in Europe. Regionally, Central Ostrobothnia relies strongly on local SMEs. However, there has been a decrease in the number of enterprises actively engaged in economic activities in the Central Ostrobothnia region. In order to grow new companies and entrepreneurs, it is worthwhile to strengthen entrepreneurial education and offer opportunities for business experiments as part of education programmes. It would be important to channel young people’s entrepreneurial intentions into practical business experiments more effectively. This requires new investments in practical measures that support the setting-up and early development of businesses.

Students’ entrepreneurial skills should be developed extensively. We can recommend the straightforward operating model of the Student Inc. business accelerator. The business accelerator, based in Southwest Ireland, operates in cooperation with upper secondary institutions and universities, business development organisations and companies. A programme focused on students, independent of their field of education, was established in connection with the traditional business accelerator. Students can apply for a scholarship and start experimenting with entrepreneurship, for example, as a summer job. The model emphasises practical support in the early stages of entrepreneurship.

The competence gained by the students and their practical understanding of how to start and run a business will be very useful throughout their working life. At the same time, the cooperation between educational institutions, business developers and companies has also been strengthened, for example, through various exchange programmes. The Student Inc. business accelerator offers excellent cooperation opportunities to increase the vitality of companies and regions. One example could be business incubator activities offered in conjunction with education, with the aim of creating a new generation of entrepreneurs to renew Finland.

Ossi Kotavaara, PhD, Research Director
Katariina Ala-Rämi, PhD, Senior Researcher
Matti Muhos, DSc (Tech), Professor, Director
University of Oulu Kerttu Saalasti Institute

This text was originally published in the printed version of the Keskipohjanmaa newspaper on 18 December 2022.