3.1 Rapid growth and recession
3.2 Forests and brains as natural resources
3.3 Change in corporate structure
3.4 Internationalization
3.5 From tar to printing paper
3.6 A small, open economy
3.7 Standard of living

3.3 Change in corporate structure

The lifespans of large Finnish companies indicate how corporate activities have adapted to social and economic changes, while firms have participated in changing society at large.

Most of today's large industrial corporations were established in the late nineteenth or twentieth century. Finland's 30 biggest industrial companies are over a century old on average. The oldest, Fiskars, was established in 1649, followed by Hackman in 1790.

Few major corporations have, however, remained in their original business sectors or locations. All have changed significantly as the result of acquisitions, entering new fields or exiting from old ones. Many industrial companies were originally established by trading houses. Finland's industrialization was financed by capital generated through domestic and foreign trade.

In the late nineteenth century, a company operating in a small town had to set up its own shop, mill, brewery, sawmill and brick works to order to operate and expand. This is the root of the branching out into many sectors that was so typical of Finnish industrial companies until the 1980s and early '90s.

Another reason for this diversification was acquisition of forests. Wood processing companies bought iron works that owned large areas of forest, and which were developing or developed into machine shops. Forest companies also set up manufacturing facilities to make use of their by-products or to ensure their supply of chemicals for paper manufacture. This gave birth to both the multi-branch conglomerates and the entire national forest industry complex.

Table: 10 biggest industrial companies in 1999 (by personnel)

The 1980s ended the growth of these giant multi-sector corporations. Amid a wave of mergers, companies shifted from broad diversification to concentrated core operations. There was much disassembly of structures that were still being built up in the 1960s and '70s, when the forest industry companies were strengthening their machine shops and even moving into completely new areas.

In the 1980s and '90s companies were trimmed, incorporated, taken over or merged at an unprecedented level. Finland's corporate structure experienced a basic upheaval, which continues in the new millennium. The forest industry, for instance, is controlled by three large corporations: UPM-Kymmene, StoraEnso and Metsäliitto, which all have grown into multi-nationals.
While the forest products companies have become bigger and fewer, the textile and apparel companies have disappeared from the list of major corporations. In the early industrialization and post-war years, they played a significant role in Finland's industrial structure.

The number of banks rose rapidly in the late nineteenth century and the period between the wars. The banking sector has undergone bigger upheavals than others. Recent developments have led to strong concentration, with the merger of the nation's two biggest banks and the birth of a Nordic bank.