What is needed to create innovations?

Tuija Pulkkinen, Aalto University Vice President. Photo: Janne Lehtinen.

Prof. Tuija I. Pulkkinen
Vice President, Research and Innovations
Aalto University

High-growth entrepreneurship has become a policy focus, as governments have recognized that not all new firms contribute equally to the economy. Two recent studies address the impact of startups and growth companies on the national and international economy. Ruth Graham (Creating university-based entrepreneurial ecosystems: Evidence from emerging world leaders. MIT 2014) examined over 200 innovation ecosystems around global universities, and identified Aalto among the top five emerging ecosystems: ”…the formidable combination of strong leadership commitment, passionate stakeholder engagement and an effective national support system is likely to drive Aalto towards becoming a major international powerhouse for university-based entrepreneurship over the next decade.” )

On the other hand, Rannikko and Autio (The impact of high-growth entrepreneurship policy in Finland, Science Business Publishing 2015) focus on assessing the effects of the Finnish policy for high-growth entrepreneurship. The recent increase in the number of high-growth firms coincide with implementation of the Tekes NIY programme for young innovative growth companies and the Ministry of Employment and Economy VIGO Accelerator Programme connecting innovative business ideas with business professionals and finance. Companies taking part in the initiatives have gained equity funding and outperform their peers in sales. A cost-benefit analysis shows that every support Euro brings more than that in surplus sales. Public sponsorship provides buffering to support survival of young startups, boosts self-confidence that promotes growth ambitions, and provides prestige that helps startups to attract financial and human resources.

However, Rannikko and Autio recognize that rapid structural changes in the telecommunication industry (following Nokia restructuring, the Bridge Programme supported a large number of spinoff companies that utilize Nokia IP through licensing or idea release agreements), the raise of gaming industry (featuring scalable business models that are attractive to venture capital firms) and increasing interest in entrepreneurship among students (AaltoES and Startup Sauna as central actors) have also been essential in this evolution.

Thus, knowledge and capable people, funding and support are needed in order to create an ecosystem where innovative startups form and a reasonable amount of them grow to become economically significant. One thing that seems to differentiate Finland from other European countries is that we have a good culture to involve entrepreneurial experience in various stages of startup evolution, to complement the management or applied science backgrounds of the startup founders. But most important are imagination, creativity, innovativeness, enthusiasm and courage – often found in the younger generation.