Paula Jylhä, Pasi Rikkonen, Katri Hamunen. (2020). Size matters – an analysis of business models and the financial performance of Finnish wood-harvesting companies. Silva Fennica vol. 54 no. 4 article id 10392. https://doi.org/10.14214/sf.10392

Keywords: profitability; business model; business model canvas; entrepreneur; success factor; wood-harvesting enterprise

Highlights: Economic success was related to company’s size, Small companies with a turnover of less than 600 000 € a^–1 are struggling with profitability; Large enterprises continue to grow and innovate new business concepts; The competitive edge of large companies was reflected in large production capacity, efficient operations, versatile supply of services, and power in negotiations.

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The size of Finnish wood harvesting enterprises has grown, and entrepreneurs have become responsible for various additional tasks, resulting in networking with other harvesting enterprises of various sizes and suppliers of supporting services, but the profitability of the wood harvesting sector has remained low. In the present study, the financial performance of 83 wood harvesting companies in Eastern and Northern Finland was evaluated, based on public final account data from a five-year period between 2013 and 2017. The factors underlying economic success were identified based on 19 semi-structured entrepreneur interviews. The Business Model Canvas framework was applied in the analyses. In particular, the smallest companies (with an annual turnover of less than 600 000 €) struggled with profitability. They showed increasing indebtedness, suffered from poor power in negotiations, had typically short-term contracts, and faced difficulties in retaining skilled operators. Most of the small companies were subcontractors of larger wood-harvesting companies. The better economic success of larger companies was likely based on their capacity to provide wood harvesting services in large volumes and supply versatile services, power in negotiations, and more cost-effective operations. The future development of wood harvesting seems to be polarised: larger enterprises are likely to continue growing, while the size of smaller enterprises has stabilised. Enhancing business management skills and practices is required in enterprises of all size groups.

Jylhä, Natural Resources Institute Finland (Luke), Production systems, Teknologiakatu 7, FI-67100 Kokkola, Finland E-mail: paula.jylha@luke.fi
Rikkonen, Natural Resources Institute Finland (Luke), Bioeconomy and environment, Lönnrotinkatu 7, FI-50100 Mikkeli, Finland E-mail: pasi.rikkonen@luke.fi
Hamunen, Natural Resources Institute Finland (Luke), Bioeconomy and environment, Yliopistokatu 6B, FI-80100 Joensuu, Finland E-mail: katri.hamunen@luke.fi

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