MEADOW: Digital sophistication affects companies' innovation activity

Businesses need innovation to gain a competitive edge and for national economies to innovate. Innovation refers to insights that are reflected in new products and services and the ways in which they are produced.

The MEADOW study of the TYÖ2030 program examined innovation in Finnish companies. According to the survey, more than half (52%) of Finnish companies with at least 10 employees said that they had developed a new or significantly improved product or service during the last two years amid the pandemic.

The aim of the study was also to find out the factors influencing the innovation activity of companies, as some companies produce innovations more actively than others. According to the study, innovation is mainly influenced by the company's digital development, staff participation, networking, and internationalization.

The main business accelerator for digitization

The results show that digital sophistication has the greatest impact on companies' innovation activity. Half (50%) of companies that see themselves as “trendsetters” in their digitalization have launched entirely new products or services, and almost a third (32%) have developed new or improved products or services for the company itself.

Thus, digitalization is currently even the main force for change affecting companies' business. According to the study, the “trendsetters” of digitalization differ from other companies, especially in how holistically digitalization is reflected in the company's various functions, the extent to which the company utilizes data analytics for various purposes, and how many employees use digital media in their work. “It pays to invest in digital skills. The importance of companies' digital competence will be further emphasized in the future when innovations are needed to promote the green transition of the economy, ”say Kirsikka Selander, a specialist researcher, and Tuomo Alasoini, a research professor at the Finnish Institute of Occupational Health.

Diverse networks increase innovation

In addition to digitalization, the company's innovation activity is also affected by the diversity of networks and the involvement of personnel in the development of operations. According to the study, innovation activity has a clear link to the utilization of cooperation networks, as activity in the production of new products or services increases consistently with the increase in the number of partners.

In addition to partners, employee participation also has a significant impact on companies' innovation activity. Of the companies in which at least 30 percent of the personnel regularly participate in the development of operations, just over a third (35%)say that they have launched a completely new product or service.

International companies more active than others

Export companies differ from companies operating in the domestic market in their innovation activity.

The higher the share of a company's turnover in foreign sales, the less likely it is that the company will launch new products or services.

No significant impact on company size or industry

Large companies have a higher level of innovation activity, but the results show that the size of the company is not statistically significantly related to innovation activity when other influencing factors are taken into account in the analysis.

The higher innovation activity of large companies is likely to be explained by, among other things, wider networking and digital sophistication.

A significant part of the differences between industries will also disappear when other factors are taken into account in the analysis. However, according to the study, there are many innovative companies in certain industries, such as IT and software - although the activity is not explained by the industry alone.

Based on the results, digital development, broad staff participation and the diversity of cooperation networks became key factors in companies' innovation activity.

The MEADOW report about innovation


Learn more

Kirsikka Selander, Senior Research Fellow, Finnish Institute of Occupational Healt, or tel. +358 30 4743 065

Tuomo Alasoini, Research Professor, Finnish Institute of Occupational Health or tel. +358304742577


* MEADOWstudy in brief

The aim ofthe MEADOW study carried out by the TYÖ2030 program is to produce newinformation on working life practices and their changes. The report, publishedin April, has compiled data on employers' attitudes towards teleworking. Fromthe end of autumn 2021, the MEADOW survey for employers will be part of theTYÖ2030 project, which is part of Prime Minister Sanna Marin's governmentprogram.
The Ministry of Social Affairs and Health implements the program in cooperationwith the Ministry of Employment and the Economy, as well as labor marketorganizations and other actors in working life. The Department of OccupationalHealth is responsible for the operational implementation of the program. Thesurvey examined, among many other themes, how much telework was done incompanies and public entities at the time of the survey, and what ideas theyhad about the continuation of telework after the corona pandemic.

The surveywas conducted as a stratified random sample between October 2021 and January2022 in organizations included in the register of companies and establishmentsthat employed at least 10 people. The data collection was carried out as acombination of an online survey and telephone interviews. A total of 1,478members of the organization’s management responded to the survey (response rate34). Three out of four respondents were companies and a quarter were publicentities. The picture of changes in working life produced by the employersurvey will be supplemented by an employee survey directed to the same employerunits in the spring of 2022, the first results of which are expected nextautumn.