Social relations are the key to Finland’s competitiveness

Finns know how to make high-quality products and services. Unfortunately, social interaction is be the most important asset in the markets that are important for Finland. Finland cannot improve its competitiveness by focusing on technical expertise at the expense of social relations.

Around 85 per cent of Finnish businesses are family enterprises. This should be seen as a competitive advantage, because family is extremely important in Finland's key markets, such as in Russia and China. Local operators are likely to choose another family enterprise as their partner, because they are familiar with the form of business.

However, Finnish companies are far too business-oriented. Finland is the most business-oriented and technically-minded country in the world. The unfortunate truth is that in international markets, potential partners are not in the least interested in hearing technical presentations by engineers, at least not at the beginning. Presentations might even make them laugh. Instead, foreign companies choose a partner that treats them to a lunch and invests in the social relationship.

Socialisation more important than the quality of product

This is the case even if the Finnish product is of a higher quality, which it almost invariably is. But in the end, social interaction is what makes or breaks the deal. Social interaction is so crucial that many international operators rather buy from or cooperate with someone nice who they know personally—even if their product is not as good—than with an impersonal, reserved and modest Finn. In Finland, they teach us that modesty is a virtue, but from the point of view of international business, it certainly isn't.

In France, for example, building social relations means eating out together and showing interest in the well-being and latest news of the other person's family. In China, attending family occasions is considered hugely important. For many companies, a crucial step on the way to a new partnership has been attending the wedding of a potential client's or partner's child. Chinese families can appreciate the gesture so deeply that the partnership can last for decades afterwards. Human relations are always more important than the product, in practically every market that counts for Finland.

Building ties with other family enterprises should be easy for us Finns. We have a strong culture of family enterprises that are used to maintaining intensive social relations within the family and combining these with business. We should definitely turn social relationships into our competitive advantage. But Finns think they will succeed by having a good product and describing how its technical features surpass the competition. Meanwhile, a competitor from, for example, Canada, who might not even have a product yet, is already praising it to potential customers and buying them dinners. In short, the company is building the customer relationship. 

We should shift our focus from technical specifications to social interaction. Finnish products are already outstanding, all we need to do now is to build social relations. This alone could make Finnish competitiveness soar to record heights.

Further information:

Tanja Leppäaho, Professor, Academy of Finland Research Fellow tanja.leppaaho@lut.fi, +358 40 191 9448