Katariina Ala-Rami 2007

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Communication and Distance in Collaboration betweenHigh-technology Enterprises in Northern FinlandKatariina Ala-Rämi aa Department of Geography, University of Oulu, Oulu, Finland

Online Publication Date: 01 September 2007To cite this Article: Ala-Rämi, Katariina (2007) 'Communication and Distance inCollaboration between High-technology Enterprises in Northern Finland', EuropeanPlanning Studies, 15:8, 1047 - 1062To link to this article: DOI: 10.1080/09654310701448212URL: http://dx.doi.org/10.1080/09654310701448212

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Communication and Distance inCollaboration between High-technologyEnterprises in Northern Finland

KATARIINA ALA-RAMI

Department of Geography, University of Oulu, Oulu, Finland

(Recieved February 2005; accepted January 2006)

ABSTRACT New technologies affect economic activities, even to the extent that some claim theyhave lessened the importance of geographical distance. However, collaboration in productinnovation creation involves various elements; therefore the development of technologies doesnot make geographical proximity insignificant. In this paper a study is made of collaborationaiming to create a product innovation between high-technology enterprises in northern Finland,especially the intertwining between communication and geographical distance. The study is basedon interviews with managers of high-technology enterprises. The results indicate that while emailand personal meetings are seen as important, geographical proximity also has an effect oncollaboration.

Introduction

Innovation is rarely brought up by a single enterprise, but as a result of inter-firm collab-

oration (Cooke & Morgan, 2002; Lundvall, 1992, p. 9). Technological innovations have

increased the capability of enterprises to act in collaboration networks with other enter-

prises and organizations (Sitra, 2002, p. 29). However, an increasingly rapid diffusion

of ideas and innovations is escalating competition among enterprises. That leads to

shorter product life cycles, which creates more pressure on companies to innovate more

often (Edquist et al., 2002, p. 566; Maskell & Malmberg, 1999, p. 12). For enterprises col-

laboration is a learning opportunity, but also a way to save money and time (Edquist et al.,

2002; Maskell & Malmberg, 1999).

In this paper, a study is made of communication and geographical distance in the

collaboration between high-technology enterprises in northern Finland from the viewpoint

of the managers. The author has an especial interest in studying the use of modern

Correspondence Address: Katariina Ala-Rami, Department of Geography, University of Oulu, P.O. Box 3000,

FI-90014 Oulu, Finland. Email: [email protected]

ISSN 0965-4313 print/ISSN 1469-5944 online/07/081047–16 # 2007 Taylor & FrancisDOI: 10.1080/09654310701448212

European Planning Studies Vol. 15, No. 8, September 2007

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information and communication technologies and their importance to high-technology

enterprises. Northern Finland—with its large internal distance, sparse population density,

and few social resources outside the functional urban region of Oulu (FUR Oulu)—is a chal-

lenging region for high-technology enterprises. Do information and communication technol-

ogy (ICT) make it easier to survive for these enterprises? Also discussed is the connection

between distance and the use of different modes of communication.

Modern ICT is known to have an impact on regions and geographical distance. The

development of ICT has been seen as a question of time—space compression and econ-

omical growth—since various kind of information can be transferred in a fast and efficient

way (e.g. Castells, 1996; Negroponte, 1995, Kostiainen, 2002, p. 18). Paradoxically, the

high-technology industry is a highly clustered branch of activity, as the best-known

cluster, Silicon Valley, indicates (Brown & Duguid 2000, p. 167; Kostiainen, 2002, p. 20).

The continuing formation and imitation by many other clusters and technology parks

suggest that distance has not died even where distance-cutting technology is at its most

advanced stage (Brown & Duguid, 2000, p. 167). ICT has made the performance of

economic activities smoother, but only in regions that provide an advanced telecommuni-

cation infrastructure, skilled labour and good airport access (Moss, 1998). Thus even for

information technology enterprises, neighbourhoods and regions remain significant

(Brown & Duguid, 2000, p. 169; Graham & Marvin, 2001, pp. 334–335).

Innovation and learning require specific information and continuous updating of this

information. This kind of information and communication is easily received through the

presence of people and enterprises within the same industrial activity, place or region,

and at social events (Bathelt et al., 2004, pp. 38–39). There are terms like “local broad-

casting”, “noise” or “buzz” to denote that there is a lot of useful information and inspiring

things going on in a certain region. Such buzz depends on the networks of communication

and information linkages (see Bathelt et al., 2004, p. 38; Simmie, 2001, p. 37). Different

modes of communication are important tools for becoming connected to those networks

and buzz. Those connections are often established within the same geographical place,

but the communication between actors requires also operational or social proximity.

There is not much use of the geographical proximity if there are not shared interests. In

that case the needed information has to be sought elsewhere.

Background: Northern Finland

In this study northern Finland is defined to cover Multipolis-network’s area of operation,

since it is considered as a cooperation network of technology centres of northern Finland

(Multipolis, 2005). FUR Oulu is a well developed and growing urban region, which has

one of the biggest technology centres in Europe, including 220 enterprises (Jauhiainen

et al., 2004, p. 29). FUR Oulu is often quoted as an example of visionary actors and net-

working in ICT in Finland (Lievonen & Lemola, 2004, p. 90). The rest of northern

Finland, with an area of about 150,000 square kilometres has a population of half a

million. So the area is sparsely populated, with an average of just 4.6 inhabitants per

square kilometre (Statistics Finland, 2004). The majority of the other technology

centres have 20 or less high-technology enterprises (Jauhiainen et al., 2004, p. 44). More-

over, technology centres are specialized in different key technologies and there exists vari-

ation in line of business within a centre. Such a heterogeneous group of enterprises poses

an additional challenge to this peripheral region (Jauhiainen et al., 2004, p. 117).

1048 Katariina Ala-Rami

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Research Design and Methods

In this paper the collaboration, aiming to create a product innovation, of high-technology

enterprises in northern Finland from the viewpoint of these enterprises is discussed. In this

study collaboration refers only to collaboration which aims to achieve a product inno-

vation, which is defined here as a new or improved product whose technological properties

or intended fields of application have been significantly altered.

The research questions were:

(1) Which modes of communication are important for high-technology enterprises in

general but also in collaboration aiming to achieve a product innovation?

(2) Where are the collaboration partners located?

(3) How do high-technology enterprises see the meaning of distance to the collaboration

partner?

(4) Is there a difference in the most important mode of communication if the enterprises’

most important collaboration partner is located in the same or different municipality?

The research consisted of semi-structured telephone interviews of 131 high-technology

enterprises in different localities in northern Finland. They were located in municipalities

having a technology centre, either within such a centre or outside of it (Figure 1). The

municipalities of “others” are enterprises considered part of some technology centre,

but physically located outside that technology centre municipality. Interviews were

Figure 1. High-technology enterprises of the study by municipality and the location of themunicipality the county borders are shown in the map)

Communication andDistance in Collaboration betweenHigh-technology Enterprises 1049

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conducted between March and April 2004 and they were part of the evaluation of the

Multipolis technology enterprise cooperation programme.

The selected 131 enterprises were taken from a larger sample of 218 high-technology

enterprises that were involved somehow in the Multipolis network. Multipolis is a

cooperation network and activity between technology enterprises and regional develo-

pers in northern Finland whose purpose is to support innovations in high-technology

(Jauhiainen et al., 2004, p. 44). All 131 selected enterprises had engaged in collaboration

in order to create an innovation either in their own enterprise or in their collaboration

enterprise. If they were doing collaboration in both ways, they were asked to answer

these questions twice, considering one of their collaboration partners at a time.

One difficult question in the organization of the research was to define a high-technology

enterprise. It is easy to define a software house as a high-technology enterprise but,

for example, enterprises dealing with data processing or production of instruments form

a very heterogeneous group. There is no explicit information of the number of high-

technology enterprises in northern Finland. In this study the number of enterprises was

based on a classification by Oulutech Ltd, an expert organization for different technol-

ogy-related services. There were a total of 792 high-technology enterprises, picked out

of the statistical data, in northern Finland in 2003.

The interviewed enterprises consisted of some 80% of all high-technology enterprises

in technology centres outside the FUR Oulu, and about 46% were high-technology

enterprises in the municipalities with a technology centre but located outside of it. Of

the high-technology enterprises of FUR Oulu only those who were attending “forums”

which are regarded as the most important and successful form of cooperation in the

region were interviewed. Since FUR Oulu has been successful in high-technologies,

Multipolis-network aims to use FUR Oulu as an engine for the rest of northern Finland.

Enterprises in FUR Oulu are used like a baseline for those high-technology enterprises

which are dispersed around the region.

Very small enterprises and also big international companies that provide some technol-

ogy services, but do not have product development in the localities studied, were left out

on purpose. Therefore the sample consists of more innovative enterprises than average in

northern Finland. The interviewed enterprises were on average larger in terms of employ-

ees and revenue, but otherwise they represented the high-technology enterprises in north-

ern Finland (Table 1) well. The number of enterprises classified as “others” regarding their

principal business activities was higher because one studied technology centre is focused

on media-related production. That is not a very common business activity overall in

northern Finland.

The questions for enterprises concerned the basic background information regarding the

enterprise, the development of product innovation in the enterprise, communication and

collaboration with other enterprises and organizations, including from a territorial view-

point. Each interview by telephone took from 20 to 45 minutes. In addition, technology

centre managers and other experts were also interviewed. This provided additional back-

ground information. All interviews were conducted by a small research group of which the

author took part. After conducting the interviews, the material was analysed first with

Spearman correlation analysis and the differences were studied with cross-tabs. Further-

more, the written answers were compared with the codified classifications. Also an “inter-

view diary” was kept—about tones and extra information—thus to obtain a better

understanding of the numerically codified data. A simplification was made for calculating


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the geographical location and proximity between the enterprises. The proximity was codi-

fied based on whether the enterprises were located in the same or different municipality

with their collaboration partner, since one of the ideas of technology centres is to bring

together enterprises and prepare the way for collaboration. Consequently, if the collabor-

ation partner was in a different municipality, the geographical distance was explored more

specifically.

The author of this study is aware of the situation when combining both quantitative and

qualitative methods one cannot go very deep in the phenomenon studied (e.g. Jauhiainen,

1995, p. 10). This study aimed to explore communication and distance more in a general

manner, giving foundation to explore these issues in forthcoming studies in which the

product innovation process is to be studied. The idea of this study was to get an overview

on how prevalent collaboration is aiming to create a product innovation and which issues

have an influence in forming this kind of relationship.

Table 1. Characteristics of high technology enterprises in northern Finland and the study sample

CharacteristicFrequency(sample)

Percentage(sample)

Percentage(enterprises)

Size of firms (employees)1–9 66 51.2 82.110–49 49 37.9 13.650–450 14 10.9 4.3

Principal business activityManufacture of other general use appliances 5 3.8 12.2Software house 42 32.1 44.9Manufacture of computers 3 2.3 4.6Manufacture of circuit boards, etc. 6 4.6 6.6Data processing 7 5.3 4.5Telecommunication 5 3.8 2.9Manufacture of TVs, radios or phones 3 2.3 2.9Manufacture of instruments, etc. 6 4.6 3.2Research 4 3.1 5.1Services 4 3.1 3.1Others (e.g. media-related production) 46 35.1 10.0

Year firm was establishedBefore 1984 16 12.2 6.81984–1992 26 19.8 21.71993–1998 38 29.0 33.11999–2001 31 23.7 29.42002–2004 19 14.5 15.8

Revenue (E)Not known 16 12.2 13.3Less than 200,000 29 22.1 53.4200,000–399,999 21 16.0 8.5400,000–999,999 17 13.0 10.01,000,000–1,999,999 17 13.0 6.32,000,000–9,999,999 23 17.6 5.910,000,000–19,999,999 5 3.8 1.3More than 20,000,000 3 2.3 1.4


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Communication and Collaboration in a Collaboration Aiming to Achieve a Product

Innovation by Enterprises

Development of ICT has increased the general productivity in economic activities. ICT

certainly boosts the innovation process by providing easy and fast access to information.

Nevertheless, innovation involves creativity so there are elements in the innovation

process, like tacit knowledge, which cannot be distributed without face-to-face interaction.

The less codified or more difficult the information is to articulate, the more frequently

face-to-face contacts are needed (Feldman, 2002, p. 54). The innovation process is also

vulnerable in terms of trust. Collaboration includes the exchange of technologies and

ideas, which is challenging in the terms of security. Trust becomes noticeable in the col-

laboration of enterprises in long-term relationships (Edquist et al., 2002, p. 566).

Location has an influence on trust in many ways. Untrustworthy behaviour is easier to

determine in social contacts. Social networks also support the formation of shared

norms in appropriate behaviour as well (Feldman, 2002). A common perspective

assumes that codified knowledge is not space-sensitive, but if the knowledge is

diffuse and tacit, proximity between actors is beneficial for an enterprise (Bathelt

et al., 2004, p. 32; Storper & Vernables, 2003). Tacit knowledge and interactive inno-

vation have been central in discussions about the advantages of geographical proximity

between enterprises in associated industries (Cumbers et al., 2003, p. 1691). Regarding

ICT and its effects on face-to-face contacts, four types of interaction are possible: sub-

stitution, generation, modification and neutrality. Mokharian and Meenakshiundaram

(1999) found that email and face-to-face meetings are the fastest growing mode of com-

munication. The use of one mode of communication increases the use of another—

partly because of the increase of information about meetings, etc. (Miettinen et al.,

1999, p. 214; Moss, 1998; Thrift, 1996).

Proximity, Innovations and Networks

In innovation creation there is a specific kind of dynamic formed between different actors.

Once this dynamics is formed it creates new innovations, which attract innovative people.

Local actors produce this unique event for the region or for the enterprise (Stahle &

Sotarauta, 2003, p. 6). Who those actors are and the strength of their commitment to the

network are crucial. An effective network is formed in relations, seen as trust and positive

dependence between actors. An innovative system is build up with open and flexible

information and intensive communication. It consists of intra-firm organization, relation-

ships between enterprises, the role of the public sector, the financing sector, and the intensity

and organization of R&D-activity. Innovation is also always a question of timing (Cooke,

1998; Lundvall, 1992).

Previous studies suggest (e.g. Bathelt et al., 2004; Cooke & Morgan, 2002; Simmie,

2001) that it is not only concentrated skilled labour, information or suppliers which

make some region or firm innovative. It is more about the communication between indi-

viduals and different institutions in the private and public sector. Many significant inno-

vations are originated in combining capabilities and resources of several enterprises.

Geographical location is important in providing opportunities for inter-firm relationships

(Howells, 2000, p. 57). According to Liebeskind et al. (1995) location may help to create

social contacts but regularly organized meetings are fruitful in forming social networks


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(Feldman, 2002; Lorentzon, 2003). Face-to-face meetings are crucial for creating new

contacts (Lorentzon, 2003, p. 106).

Castells (2000, p. 26) suggests that the space of flows is based on the linkage between

places and electronic space through a network of flows. Networks of flows are the spaces

in which important activities operate in society. Municipalities are primarily local ope-

rational environments and meeting places for different networks, and not so much mere

physical territories in which things are just located. The nodes of networks—the highest

level of which are global cities—are centres of power, innovations and social interaction.

At the logic of networks it is important to combine local and global levels (e.g. Castells,

2000, p. 19; Haarni & Vartiainen, 1996, p. 8).

“Local buzz” is important for tacit knowledge and trust. It also creates opportunities for

spontaneous situations to interact. As tacit and informal knowledge are important in inno-

vation, location will continue to be important even in the future (e.g. Howells, 2000, p. 61).

The advantages of “global pipelines”—channels used in distant interactions—are however

essential to create new potentialities and feed local interpretation and usage of knowledge

created elsewhere. The places, which are economically successful, are the places where

actors have active connections with local actors but also with actors in other places

(Bathelt et al., 2004).

Empirical Results: High-technology Enterprises in Northern Finland

Over 90% of the interviewed high-technology enterprises were equipped with broadband

connection, which were also seen as important to the enterprises. Only a few enterprises

did not have a web site on the internet. ICT and fast connections are a customary part of the

enterprises’ activities. From this perspective, a geographically peripheral location does not

limit the use of new technologies in northern Finland. According to Grimes (2003, pp.

174–175), the telecommunications infrastructure in peripheral rural areas is better devel-

oped in the Nordic regions than in many regions of southern Europe, where small enter-

prises have more challenges regarding such infrastructure. Almost one third of the

interviewed enterprises were software houses but otherwise the variation in lines of

business was large (Table 1). However, the line of business did not seem to be a determin-

ing factor in the mode of communication, collaboration or proximity (see Appendix,

Table A1).

There was a significant correlation between the municipality and line of business, which

is pretty obvious because the technology centres are spatial clusters of certain key technol-

ogies. From the viewpoint of this study, more interesting significant correlations were

found between the location of a collaboration partner, the significance of distance, and

the most important mode of communication. There were also some differences between

enterprises in FUR Oulu and outside FUR Oulu. Enterprises in FUR Oulu considered

face-to-face meetings of more importance and had fewer problems with telecommunica-

tions. Most significant difference was that collaboration partner was most likely (74%) in

the same municipality for enterprises in FUR Oulu while outside FUR Oulu less than one-

third (32%) of enterprises were located in same municipality with the collaboration

partner. It can be assumed that accessibility in time distance (see Andersson & Karlsson,

2004) explains pretty much why enterprises in FUR Oulu regard face-to-face meetings as

more important.


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Modes of Communication

In the interviews, businesses were asked about the importance of different modes of com-

munication, first in general in the enterprise’s activities, and—more specifically—with the

partner which they collaborate to achieve a product innovation. All modes of communi-

cation were at least of some importance (Figure 2). Fax and fixed-line phones were the

least important, and one-third of the interviewed enterprises argued that they are not

important. Email with attachments and mobile phones have substituted them to a great

extent (see also Lorentzon, 2003, p. 100).

Respondents felt that new technologies like mobile phones, email and internet were

very important. Furthermore, more than 90% of the enterprises saw face-to-face meetings

as at least rather important.

When asked the importance of different modes of communication with collaboration

partner, the proportion of those who considered email and mobile phone important was

very high, but meetings were also still seen as important (Figure 3). Face-to-face contacts,

both formal and informal, were not important for only some 10% of the cooperating enter-

prises. Other more traditional modes of communication were considered notably less

important.

Besides the importance of all the different modes of communication, respondents were

asked to point out which of these was the most important. The result was rather predict-

able: email (41%) was mentioned most frequently, but informal (17%) and formal meet-

ings (18%) together were almost as important as email while mobile phone was most

important for 15% of the respondents. From the viewpoint of the innovation creation, it

was interesting that in the creation of an enterprise’s own product innovation, informal

face-to-face contacts were more often regarded more often as the most important mode

of communication than formal face-to-face contacts. However, in the creation of

another enterprise’s product innovation formal meetings were thought to be more often

the most important mode of communication than informal meetings. Maybe when it is

a question about own learning, receiving tacit knowledge and trust, meaning of the infor-

mal dealings are recognized better.

Figure 2. Importance of different modes of communication for the high-technology enterprises innorthern Finland (N ¼ 131)


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Several interviewed enterprises argued that it is not possible to determine what the most

important mode of communication is since they saw face-to-face-contacts equally import-

ant as email. It seems that the modes of communication are not substitutive to each other

(see Kwan, 2002, pp. 477–489). More than three out of four of those who said that email

or mobile phones are important also saw face-to-face meetings as important. Over 80% of

the enterprises that felt that face-to-face meetings were important said that email and

mobile phone are also important. New technologies are used for fast and more routine

communication and transfer, but new ideas, creation of contacts and trust require personal

contacts (see Jonsson, 2002, p. 711; Lorentzon, 2003). Other studies (e.g. Lorentzon, 2003,

p. 97) have also discovered that the function of ICT between new technologies and tra-

ditional forms of communication is more complementary than substitutive.

Significance of Geographical Distance in Collaboration

The interviewed enterprises were asked where their most important collaboration partner

is located. They were also asked whether the distance to this other enterprise is significant.

There was a clear duality: about a half of the enterprises (53%) argued that the distance has

no significance while a third (32%) declared it to be of great importance. The rest (15%)

thought proximity has some importance. A closer look at the answers gave the impression

that proximity is more important than is admitted in such simple answers:

The nearest enterprise in this sector of business. Distance is no advantage or disad-

vantage.

No essential significance. It is at the right distance.

No significance. We have managed to create a contact from the start—at that time

proximity had an effect.

As most of the enterprises studied are located in municipalities that have a technology

centre, in these few cities in particular, it is clear that a collaboration partner was often

Figure 3. Importance of different modes of communication with the existing collaboration partner(N ¼ 176)


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(42%) found in the same municipality. There was also the idea to study if the technology

centres have managed to get potential collaboration partners together. Very seldom the

same premise was seen as an influential factor for collaboration. The most important

issue is that the collaboration partner has to offer resources that the own enterprise do

not have, that is most often the complementary know-how (Ala-Rami, 2005).

According to Lorenzen (1998), there is a connection between geographical proxi-

mity between the partners and the amount of their formal contracts. When two enter-

prises are located close to each other, information about other enterprises as

collaborative partners is transmitted easily though conversation and advice from

other entrepreneurs (Edquist et al., 2002, p. 566). This is understandable also in

localities studied where the actors are few in numbers—like one of the interviewees

argued “here everybody knows everybody so we know who has the right kind of

know-how”. The enterprises might not consider this as a question of distance,

because it was understood strictly as a physical distance. After all, most enterprises

interact within the same operational space—utilizing the “local buzz”. Other studies

have shown that when collaboration involves an exchange of information through

more informal modes, geographical proximity favours collaboration (Doloreux, 2004,

p. 184). The knowledge needed in a high-technology enterprise is increased best

through interpersonal contacts, which most easily take place in geographical proximity

(Malecki, 2000, pp. 108, 111).

Only 7% of the enterprises collaborated remotely and argued that distance is a

problem. However, cooperation at a distance was necessary because of the branch of

business or existing contacts (Ala-Rami, 2007). Some reported that distance or their

location causes problems of credibility for the activities of the enterprise, which demon-

strates that it is difficult to earn trust and get into “local buzz” from a distance (Malecki,

2000, p. 112). Respondents outside FUR Oulu often expressed that administrative or

regional borders limited collaboration activities, at least in projects that have some

public financing.

As it was felt that distance mattered more than it was recognized, those 68 enterprises

that were cooperating with an enterprise from a different municipality and argued that dis-

tance did not matter were studied in more detail. The collaboration partner was found in

the neighbouring municipality in 15 cases (22%) and in 28 cases (41%) the enterprises’

collaboration partner was located over 400 kilometres away. The majority of them were

in the metropolitan area in southern Finland but some were also abroad (Figure 4).

Helsinki and Espoo were most frequently mentioned as locations of distant collaboration

partners, which is logical because most high-technology enterprises in Finland are located

there. The rest 25 (37%) enterprises were collaborating mostly within the study area and

mostly were geared towards FUR Oulu.

The connections to southern Finland and other countries serve as “global pipelines”.

Some enterprises reported that they were aiming to create more international contacts

since it is the only way to be competitive in the future. For other enterprises it is beneficial

to collaborate with enterprises with already existing international or national linkages,

which is seen in contacts with FUR Oulu and southern Finland. Previous studies

suggest that long distance connections are important also for “local buzz”; the more infor-

mation about markets and technologies that is received through these pipelines the more

local actors benefit, since the amount of information strengthens the “local buzz” (Bathelt

et al., 2004, p. 41).


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Geographical Distance in Collaboration and Modes of Communication

The correlation analysis suggested a connection between geographical proximity and the

most important mode of communication (see Appendix, Table A1). The most important

mode of communication can be expected to be related to the physical distance the enter-

prise has to overcome. The most important modes of communication were separated into

two groups; email and mobile phone (new technology) and face-to-face meetings. New

technologies were more often (78%) the most important mode of communication for

those enterprises that cooperated with enterprises in other municipalities, and face-to-

face meetings were more important between partners in the same municipality (62%).

Those who had their collaboration partner in the same municipality thought that distance

had some importance in most cases (72%), while less than a third (31%) of those enter-

prises which had their collaboration partner in different municipality thought so.

However, face-to-face contacts were important in general. Thus, the new technologies

are not substituting face-to-face contacts, but they are helpful in transferring information,

particularly when there is an extended geographical distance between the collaborating

high-technology enterprises (Massard & Mehier, 2005). Other studies have discovered

that new technologies are used frequently especially in those cases in which a long geo-

graphical distance between collaboration enterprise partners exist (Lorentzon, 2003,

p. 97). Innovation creation is not merely a technical, but a much more complicated

issue, where geographical proximity is widely admitted to be an advantage—as social

Figure 4. Location of collaboration partner for high technology enterprises in northern Finland


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interaction is still mostly organized around geographical places (Castells, 2000, p. 20;

Cooke & Morgan, 2002, p. 34; Feldman, 2002, p. 51; Edquist et al., 2002, p. 565;

Graham & Marvin, 2000, p. 72; Tuomi, 2001, p. 29).

There were slight differences in the portraits of enterprises. Software houses seldom

experienced distance to be of some importance. As mentioned, new technology was

more important than face-to-face meetings for those enterprises which collaborate with

a partner in another municipality. Also, while there were only slight differences

between enterprises in FUR Oulu and outside FUR Oulu when it was a question of differ-

ent modes of communication in general, in collaboration the differences were more signifi-

cant. As noted earlier, that is the question of time-space accessibility (see Massard &

Mehier, 2005). The modes of communication do not determine the choice of collaboration

partner, but the location of an existing collaboration partner has an influence on the use of

modes of communication.

Discussion

Technology brings enterprises many new possibilities, such as exchanging information

remotely, which is particularly important in large, sparsely populated areas like northern

Finland, the case study area. In this study the empirical evidence suggests that face-to-face

contacts and geographical proximity do matter in the collaboration aiming to create a

product innovation between high-technology enterprises. Even though new technology

was considered to be very important, it did not seem to make face-to-face contacts less

important with the collaboration partner. As modes of communications, email and per-

sonal meetings were regarded almost as important.

New technology and face-to-face contacts were more complementary than substitutive

to each other. Many enterprises claimed that they cannot really name the most important

mode of communication, since they need both new technologies and face-to-face contacts

in their activities (Table 2).

Innovation requires human and social processes. ICT aids the innovation process by

providing easy and fast access to information that can easily be digitized. However, inno-

vation involves elements such as tacit knowledge, which cannot be transferred without

face-to-face interaction.

Table 2. A summarizing table of the conclusions, observations and insights

† New technology but also face-to-face contacts are important in cooperation with existingcollaboration partner

† Most collaboration partners are located close to each other† Long-distance collaboration contacts are mostly to metropolitan area of Finland or abroad† A half of the firms argued that distance has importance† Even most of those who said distance did not matter thought that face-to-face contacts are

important† Face-to-face contacts are most important if the collaboration partner is located in the same

municipality† New technologies are most important if the collaboration partner is located in the different

municipality† Different modes of communication are complementary to each other† ICT is a good aid to overcome some of the (space-time) challenges of territorial characteristic of

northern Finland but it does not make location insignificant


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Also, the increase of information has accelerated competition and shortened product life

cycles, which creates pressures to achieve new innovations through collaboration. More-

over, the more easily codified knowledge is available to everyone, the more important tacit

knowledge is to an enterprise. The knowledge needed in high-technology enterprises is

increased best through interpersonal contacts, which most easily takes place in geographi-

cal proximity.

Geographical proximity to the collaboration partner was seen as important in this

study too. Half of the interviewed high-technology enterprises claimed it has an effect

on collaboration. Even though the other half of the enterprises argued that distance is of

no importance, most of them reported that face-to-face contacts are of some importance.

Face-to-face meetings are crucial for creating new contacts. Locally generated and

expressed tacit and informal knowledge are important in innovation.

Many studies suggest that enterprises need a mixture of local, regional, national and

international connections to maintain their competitiveness and innovativeness (see

Bathelt et al., 2004; Doloreux, 2004, p. 186). It is important to manage the action of

“local buzz” but also “global pipelines” so that new information and new potential are

attainable for local actors and networks of enterprises. This is especially crucial for

high-technology enterprises located in more peripheral regions such as northern

Finland, at least in geographical terms.

The region of northern Finland, with its challenging characteristics—long distances,

sparse population density and few social resources (especially outside FUR Oulu)—

would gain in terms of economic activity and innovation if the physical distance could

be made less important. Physical distance may not lose its importance, but with the appro-

priate use of new technologies enterprises have a chance to tackle the geographical disad-

vantages. Most of the high-technology enterprises studied have already found the means to

get along with physical distance and accepted the limitations it may cause.

Acknowledgements

The author wishes to acknowledge the financial support from the Academy of Finland

research project 200771. Also the author would like to thank other members of the

research group, especially Professor Jussi S. Jauhiainen, for their comments and sugges-

tions for the article as well as two anonymous referees for their helpful recommendations

for improvements to the article.

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Appendix

Table A1. Correlations

Polisor not

Line ofbusiness

Yearestablished

Location ofcollaboratorion

partner

Meaningof

distance

Mostimportantmode of

communication

Spearman’srho

Polis or not Correlation Coefficient 1 0.282 20.008 20.283 0.088 20.003

Significance (two-tailed) . 0.001a 0.924 0.005b 0.388 0.975N 131 131 130 96 99 98

Line of business Correlation Coefficient 1 0.119 0.073 20.067 20.033Significance (two-tailed) — 0.177 0.479 0.511 0.745

Year established Correlation Coefficient 1 20.038 20.074 0.066Significance (two-tailed) — 0.718 0.467 0.519N 130 95 98 97

Location of collabora-torion partner

Correlation Coefficient 1 20.452 20.352

Significance (two-tailed) — 0.000a 0.000a

N 96 96 95Meaning of distance Correlation Coefficient 1 0.417

Significance (two-tailed) — 0.000a

N 99 98Most important mode

of communi-cationCorrelation Coefficient 1

Significance (two-tailed) —N 98

aHighly significant.bSignificant.

Italics represent essential correlations used in this study.

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