Close, intensive cooperation between companies, i.e. networking, has changed the operating methods of business life and economic structures in Finland. Skills and quality improve when each part of a network can concentrate on its own core area.

The inter-company network operating method became more widespread and intensive in Finland in leaps and bounds during the 1990s. According to surveys by the Finnish Confederation of Industry and Employers (TT), networking affects the whole of industry over a wide area and companies of all sizes. Almost three companies in four are involved in network cooperation.

Networking means long-term, interactive and confidential cooperation between companies. It is a partnership that benefits all parties and shares financial benefits and losses caused by fluctuations in demand.

Competitiveness improves, costs fall

A report published by TT in September shows that networking has been a strategic option which has been successful most often for private companies and has also strengthened international competitiveness. Networking has helped in achieving greater production volumes and cost benefits than operating alone would bring. The turnover and number of staff have also increased more quickly. Skills and quality improve when all the parts of a network can concentrate on the increasingly narrower core areas of know-how.

The whole economy benefits from networking. Economic structures and companies' operating methods have become more dynamic. Labour productivity and the gross domestic product have grown more quickly in Finland than the EU average.

In spite of the rapid growth in output, companies have not been troubled by a lack of capacity. On the contrary, the need for fixed investment by industry has fallen, as the capacity has been used efficiently on the networks. In particular, the full-utilization rates of the capacity at companies with fewer than 250 employees now exceed more than 70 per cent.

Sharing risks more difficult than sharing success

The period of slow economic growth in recent years has been particularly challenging for corporate networks operating in trend-sensitive areas. Sharing risks appears to be considerably more difficult than sharing success.

The TT report says there is still a need to clarify the rules of the networking game. The principal suppliers choose and assess their co-partners extremely carefully. The terms and conditions are often tough, and only those who operate cost-effectively, follow joint standards in quality and agreements, and who have complementary special skills are suitable as partners.