Change in the Extent and Form of Internationalization-The Finnish Forest Industry from the Mid-1980s to 2000

Article excerpt

ABSTRACT

This paper presents an analysis of the internationalization processes of the four (currently three) largest Finnish forest industry companies. The longitudinal analysis of the increased international involvement of the companies utilizes a game-playing metaphor as its starting point. Based on the game-playing metaphor, a new analytical framework for the analysis of internationalization processes is developed and its usefulness tested. Central to the approach presented in this paper is that it takes an action-oriented strategic view of the internationalization phenomenon, something which has been lacking, and sees the actors as intentional players performing competitive moves against each other within the forest industry playing field.

Through the analysis utilizing the game-playing perspective, the strategic internationalization processes of the companies are outlined and compared to form a holistic picture of the overall development within the industry. The analysis of the overall development of the industry shows that the mid-1990s formed for the companies a watershed in their strategic behavior relating to growth. The change is shown to be closely linked to the major changes in the global competitive arena of the industry. The analysis further shows the overall internationalization development of the case companies can be divided into distinctive phases.

INTRODUCTION

It is an oft-repeated fact-to the point of becoming a cliche-that Finland is a nation dependent on its forest industry. This reality still holds true today. While the industrial base of Finland has broadened over the past half a century, and especially during the last two decades, according to recent statistics, 28.7 percent of Finnish exports are still forest products (Statistics Finland, 2000). The centrality of the forest industry in the Finnish economy is further accentuated if attention is paid to the role of the whole Finnish forest cluster, which is made up by the forest industries together with related and supporting industries (Lammi, 1994, 1995).

Notwithstanding the rise of the basic metal and engineering industries, and especially the rise of the electronics industries, it is obvious that the forest-based industries are and will remain an important part of the Finnish economy. It is thus well worth exploring the processes through which the previously four and now three remaining Finnish players in the forest industry playing field: Enso-Gutzeit (later Enso, currently Stora Enso), Kymmene, Metsa-Serla (currently M-real) and United Paper Mills (currently UPM-Kymmene after the merger with Kymmene) increased their international involvement and were able to establish positions for themselves within the world top ten of globally competitive paper and board companies. Measured by production capacity, Stora

Enso currently occupies the second, UPM-Kymmene the third, and M-real the tenth spot in the world top-ten ranking. The largest paper and board company is the US-based International Paper (Paperinfo, 2001).

Further, since the nature of competition within the industry has been characterized as fierce (Dreher, Cote & Hunley, 1998; Hameri & Lehtonen, 2001), it is interesting to find out through which kinds of processes were such initially small and remotely located companies able to rise among the major players in this globally competitive field.

AIMS OF THE PAPER

This paper aims at presenting an analysis of the strategic processes involved in the internationalization of the three (previously four) major Finnish forest industry companies. Internationalization is seen in accordance with the definition given by Welch and Luostarinen (1988) as process of increasing involvement in international operations, although also the possibility of decreasing involvement is considered. In addition, the paper aims at incorporating a pronouncedly strategic viewpoint into the study of internationalization processes and providing a fresh and dynamic approach for the examination of the phenomenon. …