Entrepreneurship in Finland

When the post–World War II group retires, Finland’s labor shortage will not be met by its own younger generation. Luckily, Finland is a very attractive country from the perspective of occupational immigration. Its advantages include excellent working conditions, a high

standard of living, employment security, and a reputation as a safe country.

1.1.1 Entrepreneurship in Finland

Statistics Finland’s business register (2016) shows 283 563 companies, excluding ones in agriculture, forestry and fishing. 1,4 million persons working in these companies generate tax revenues. These are used to cover services for all of the citizens in Finland, which are quite generous compared to those in many other countries. 264 519 companies (93,3%), employ fewer than 10 persons. Since the beginning of the 21st century, all new jobs in Finland have been created by small- or medium-sized businesses. From 2001–2016 such businesses created new jobs for more than 119 000 persons. More than 80 000 of those jobs were created by companies employing fewer than 50 persons. They deliver 385 billion in revenue, more than half of which (59%) comes from small- or medium-sized businesses. The number of the former is 15 725 companies (5,5 %) and the latter 2 728 (1,0 %), with 591 large companies (0,2 %). 4 315 cooperatives were registered in the trade register at the end of 2016 (Paperless blog 2017). At the moment, one new co-operative enterprise starts up every working day of the year.

According to Statistics Finland’s UTH-research (2014) the number of entrepreneurs or members of a family of entrepreneurs in the age group 15-64 who are of foreign origin in Finland is 14%, almost on the same level as persons who are from Finland or were born in there (13%). It was very difficult to find information on the number of businesses established by immigrants. The assumption behind the available data is that entrepreneurs who choose English as their language when establishing their companies are of foreign origin.

Entrepreneurship has been proven to be more common for men than women. This information is valid both with persons who are of foreign origin (men 17%, women 10%), and persons who are Finnish (men 17%, women 9%).

Several issues encourage immigrants to become entrepreneurs when they arrive in a new country. Entrepreneurship can give them the possibility to have a better income and to achieve

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more social and economic independence. It may also give them the respect of society. When immigrants or refugees arrive in Finland and get a work permit, they may be forced to work in a field that does not correspond to their education (if they are lucky enough to get a job).

UTH Research 2014, Statistics Finland, presents that the entrepreneurship of foreign-based and Finnish-based entrepreneurs differs, depending on the division of industry.

Approximately one fourth (24%) of foreign-based entrepreneurs operate in the

accommodation and catering sector, whereas only two percent of Finnish-based entrepreneurs do so. Of the latter group, about one in five (21%) worked in agriculture or forestry, whereas the number of foreign farming and forestry entrepreneurs was miniscule.

When taking another perspective omitting primary production, entrepreneurs' share of

Finnish-based employment would fall to 11%, remaining at 14% with foreign backgrounds. In 2014, entrepreneurship was particularly common among the workers from the Middle East and North Africa. As many as 23% of them were entrepreneurs, and less than half of this number were employer entrepreneurs, more than half of total entrepreneurs. Workers with Latin American and Eastern European backgrounds were quite often self-employed (13%), but only a few percent were employed by the labor force. Asian-based employers'

entrepreneurship was almost as common (9%) as that of people from the Middle East and North Africa, so their entrepreneurship was equally rare. In 2014, the number of refugee employees included slightly more entrepreneurs (18%) than other foreign nationals. (Due to the small number of findings, however, the result is only indicative.)

Although immigrants’ lower educational level limits their employment possibilities, it also motivates them to start as entrepreneurs (Lith 2018). What distinguishes immigrant

entrepreneurs from Finnish citizens is that they often have very strong ethnic connections, not only between the members of their ethnic group in Finland but even with people remaining in their country of origin, and they often use their networks when collecting the initial capital for entrepreneurship. Many of the immigrant entrepreneurs in Finland may have already been entrepreneurs in their country of origin.

According to Lith’s article, immigrant entrepreneurs who are married to Finnish citizens use their networks most frequently. Closer connections to Finnish society via marriage make it easier to get information about local possibilities when planning business financing and considering other possibilities. Because many immigrants live between one or several

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cultures, it can help them to develop their businesses in new areas and to find unique business ideas that may not be sensitive to competition from businesses serving more primary

populations. Still, learning the new culture via normal employment in the beginning of immigration may ease the way to start as an entrepreneur later.

Boigu’s report (2014) presents how it is to be as an immigrant entrepreneur in Finland.

Entrepreneurship is a choice for an immigrant only if he/she gets information about it and knowledge of Finnish labor market and entrepreneurship. In addition, close contact to working life already in early phase helps the immigrants to set their targets and support to learn the language and profession. In practice it stands for a certain period of familiarization with the work as a part of acculturation and training in skilled labor. It also exhibits

knowledge of entrepreneurship as a relevant skill for being employed. The report demonstrates that many entrepreneurs in Finland lack knowledge of all the pertinent information available, even if they have already started in business. Yet their survival may depend on small things about which a local entrepreneurial support service could share advice. In the worst cases, it can take even 8 to 10 years from their arrival in Finland for immigrants to have a normal working life. The longer they stay in the margins, the more difficult it is for them to succeed in their new lives.

Boigu’s report also addresses a potential conflict between a welfare society and

entrepreneurship, in that supportive actions delivered by a welfare society may discourage people, not encourage them to be entrepreneurs. Yet actions targeted to supporting immigrant entrepreneurship have produced positive results. Finland has an excellent entrepreneurship infrastructure. Experts are available, but their experience is not utilized in full at the moment.

Becoming a successful entrepreneur who is optimistic for the future happens when support is available. Networking is a precondition, for nobody is an entrepreneur alone. Actions should target sustainable entrepreneurship, not only establishing a company.

Finland uses common business models (e.g., limited companies and sole traders), and many immigrants who were entrepreneurs before their arrival know how these principles work. In addition to the normal business models is the co-operative one, which is suitable for persons not wanting to establish their own company (even though co-operatives are an independent legal entity). These are quite similar to limited companies, but they owned by the

co-operative, and its members do not own shares of the company. Even though the main purpose

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of a co-operative is to support its members, it must have the same conditions for profitable business as the other business models. If a person is working in a co-operative, he/she is still allowed to apply for social benefits if the business cannot produce enough to make a living.

This aspect may be why it is a very popular form of business in Finland.

Mayo (2014) states that in Finland co-operative enterprises are a prevalent force in the nation’s economy. In his opinion, short summers and long, hard winters in a country with a low population density creates a situation in which working for the common interest comes naturally. Accordingly, there are more member-owners of co-operative enterprises in Finland than there are people, and the average Finnish adult is a member of two co-operatives.