5.1 Finland in a changing world economy
5.2 What is the National Economy invested in?
5.3 R&D and internationalization
5.4 ICT Finland
5.5 Nokia - a big company in a small country
5.6 ICT cluster in Finland - A historical perspective
5.7 The World's most competitive nation?

5.5 Nokia - a big company in a small country

The most quickly developing agglomeration of knowledge-intensive activities in Finland is the ICT cluster formed by information and communications sector companies. The cluster includes a network of hundreds of small and medium-sized companies as well as a rapidly growing operator and service sector, but Nokia is clearly its core.

The roots of Nokia go back to 1865 and the establishment of forest industry operations in South-Western Finland by mining engineer Fredrik Idestam. The company ran a groundwood mill on the Nokia river, hence the name of the company.

Finnish Rubber Works Ltd was founded in 1898, and in 1912 Finnish Cable Works Ltd began its operations. Gradually the ownership of these two companies and Nokia shifted into the hands of just a few owners. Finally in 1966 the three companies were merged to form the Nokia corporation.

Nokia was a multi-branch company up to the early 1990s. The electronics unit was still fairly small in the 1970s. The main lines of production were cables, rubber and paper. In the early 1980s, Nokia started to strengthen its position in the consumer electronics and telecommunications market by acquiring several European electronics companies. Due to acquisitions and its historic background, Nokia had no less than eleven business lines during 1986-88.

Since the late 1980s, Nokia has gone though a comprehensive metamorphosis. The company sold and acquired several business units within just a couple of years. From a multi-branch conglomerate, Nokia has been transformed into a purely ICT company. The period of rapid divestment and acquisitions was led by a young management team under CEO Jorma Ollila. Under his leadership, Nokia has grown to become Finland's largest firm and a leader in mobile communications world-wide. Nokia's world market share in cellular phones is some 30 per cent, far beyond its main competitors, Motorola and Ericsson.

Nokia has grown to become a multi-national giant in a small country. Its contribution to the Finnish economy is significant. Nokia's exports alone are larger than that of the total paper industry - the sector that previously dominated the economy. Nokia is, of course, the major player in the ICT cluster. But it is not alone. Altogether there are some 3000 small and medium-sized companies in the cluster. Some 300 of these are direct first-tier suppliers to Nokia, known as the Nokia network.
Nokia's direct contribution to the Finnish economy can be summed up as follows:

(Source: Ali-Yrkkö - Paija - Reilly - Ylä-Anttila, Nokia: A Big Company in a Small Country (ETLA Series B 162, Taloustieto Oy, Helsinki)