Silva Fennica

Fig. 1. Processing degree in mechanical wood industries combined with value creation for the construction industry. Through supplier-customer relationships, sawmills and wood element producers connect with each other through their products and services for building processes (dashed lines) (modified from Brege et al. 2014).

Fig. 2. Distribution of studied sawmills and wood element producers by number of average personnel annually.

Table 1. Financial information to assess monetary drivers and outcomes of firms-specific competitiveness, their equations, and sources of information.
Monetary information	Key ratio	Equation	Source of financial information
Ex-ante drivers of competitiveness
Material costs	Material use / Turnover	Material use / Turnover	Income statement
Employment costs	Salaries / Turnover	Salaries / Turnover	Income statement
Net value of investments	Investments / Turnover	(Change in intangible and tangible assets between consecutive years – depreciation) / Turnover	Balance sheet (assets), income statement (depreciation)
Value creation	Value-added / Turnover	= (Sales – Bought services – Material costs) / Turnover.	Income statement
Ex-post outcomes of competitiveness
Liquidity	Current Ratio	= (Inventories + Financial assets) / Short-term liabilities	Balance sheet
Solvency	Equity Ratio	= Adjusted total equity (i.e., shareholders’ equity) / (Adjusted balance sheet total – Advances received)	Balance sheet
Profitability (absolute)	Net Profit Ratio (%)	= (Net result / Turnover) × 100%	Income statement
Profitability (relative)	ROCE (%)	= (Net result + Financing costs + taxes 12 months) / Average. capital employed × 100%	Income statement and balance sheet
All the ex-ante variables are measured as euros and ex-post outcomes are ratios derived from calculations. The income statement captures the operational flow for the accounting period, while the balance sheet reflects the cumulative financial position, including retained earnings.

Table 2. Variance inflation factor (VIF) values for full models for sawmill and element producer.
Sawmills
	Ln Current Ratio	Equity Ratio	Net Profit Ratio (%)	ROCE (%)
Salaries	1.05	1.04	1.2	1.3
Materials	1.6	1.54	1.81	1.76
Investments	1.01	1.01	1.04	1.01
Value-added	1.5	1.49	1.68	1.62
Element producers
	Ln Current Ratio	Equity Ratio	Net Profit Ratio (%)	ROCE (%)
Salaries	3.13	3.12	2.68	1.09
Materials	2.09	2.09	2.02	1.44
Investments	3.24	3.27	3.05	1.07
Value-added	1.63	1.63	1.76	1.44

Fig. 3. Annual real turnover (million euros) of sawmills and wood element producers, adjusted to 2021 prices using producer price indices, products by activity, presented as industry-level distributions. The dataset includes 234 observations for wood element producers and 266 for sawmills in terms of turnover.

Fig. 4. Average number of personnel annually as full-time employment equivalents of sawmills and wood element producers, presented as industry-level distributions. The dataset includes 207 observations for wood element producers and 249 for sawmills in terms of personnel.

Fig. 5. Development of Current Ratio over ten accounting periods, grouped by industry. The figure represents the distribution of values for sawmills and wood element producers in each accounting period.

Fig. 6. Development of Equity Ratio over ten accounting periods, grouped by industry. The figure represents the distribution of values for sawmills and wood element producers in each accounting period.

Fig. 7. Development of Net Profit Ratio (%) over ten accounting periods, grouped by industry. The figure represents the distribution of values for sawmills and wood element producers in each accounting period.

Fig. 8. Development of ROCE (%) over ten accounting periods, grouped by industry. The figure represents represent the distribution of values for sawmills and wood element producers in each accounting period.

Table 3. Explanatory variable averages by year and industry. Standard deviations in parenthesis. The higher value of the two industries is in bold. Values in million euros.
	Materials		Salaries		Value-added		Investments
	Sawmills	Element producers	Sawmills	Element producers	Sawmills	Element producers	Sawmills	Element producers
2012	9 (6.8)	2.9 (2.8)	1.4 (1)	1.1 (1.1)	4.1 (3.2)	1.2 (1.7)	0.3 (0.4)	0.4 (0.5)
2013	8.6 (7.1)	2.5 (2.5)	1.3 (1)	1 (1)	4.1 (3.7)	1.2 (1.3)	0.4 (0.6)	0.2 (0.2)
2014	9.3 (7.7)	2.3 (2.1)	1.3 (0.9)	0.8 (0.9)	3.3 (3.4)	1 (1)	0.9 (1.3)	0.2 (0.3)
2015	10.2 (9)	2.7 (2.3)	1.5 (1.2)	1.1 (1)	4.3 (3.7)	1.1 (1.7)	3 (7.4)	0.3 (0.3)
2016	10.6 (9.1)	2.7 (3.2)	1.5 (1.1)	1.1 (1.2)	4.3 (3.9)	1.3 (2.7)	0.8 (1)	0.7 (1.4)
2017	11.2 (10)	4 (5.7)	1.5 (1.2)	1.6 (2.3)	4.8 (4.3)	1.9 (2.9)	0.7 (0.9)	1.1 (2.9)
2018	12.8 (11.6)	5.2 (8)	1.7 (1.2)	2 (3)	5.3 (4.5)	2.5 (3.9)	0.8 (1.2)	0.9 (2.7)
2019	12.8 (11.2)	4.6 (5.9)	1.7 (1.3)	2 (2.5)	5 (4.1)	3.2 (5.6)	0.6 (0.7)	0.3 (0.4)
2020	12.5 (11.2)	4.2 (4.8)	1.7 (1.3)	1.9 (2.1)	5 (4.2)	3.1 (4.1)	0.6 (0.7)	0.7 (1.2)
2021	15.8 (14.5)	6.9 (7.7)	1.9 (1.5)	2.4 (2.7)	10.3 (9.7)	3.3 (5.3)	1.1 (1.3)	0.4 (0.5)
Average	11.3 (9.8)	3.8 (4.5)	1.6 (1.2)	1.5 (1.8)	5.1 (4.5)	2 (3)	1 (1.5)	0.5 (1)

Table 4. Parameter estimates from linear mixed-effects models for sawmills, based on four financial performance indicators: salaries, materials, investments, and value-added). Intercept terms are included for reference.
	Ln Current Ratio	Equity Ratio	Net Profit Ratio (%)	ROCE (%)
	Liquidity	Solvency	Profitability (absolute)	Profitability (relative)
(Intercept)	0.66 (0.32)**	0.7 (0.27)***	0.32 (0.08)***	0.92 (0.24)***
Salaries	–3.22 (1.15)***	–0.84 (0.81)	–0.68 (0.16)***	–1.46 (0.46)***
Materials	0.27 (0.43)	–0.82 (0.37)**	–0.39 (0.1)***	–0.62 (0.32)
Investments	–0.33 (0.13)***	–0.24 (0.08)***	–0.02 (0.02)	–2.05 (0.32)***
Value-added	–0.08 (0.26)	0.27 (0.22)	0.15 (0.08)**	0.54 (0.24)**
N	241	246	247	243
R²	0.59	0.79	0.46	0.42
Significance levels: 5%, *1% level.

Table 5. Parameter estimates from linear mixed-effects models for wood construction element producers, based on four financial performance indicators: salaries, materials, investments, and value-added. Intercept terms are included for reference.
	Ln Current Ratio	Equity Ratio	Net Profit Ratio (%)	ROCE (%)
	Liquidity	Solvency	Profitability (absolute)	Profitability (relative)
(Intercept)	0.35 (0.18)	0.31 (0.11)***	0.35 (0.09)***	0.74 (0.22)***
Salaries	0.01 (0.22)	–0.08 (0.14)	–0.89 (0.1)***	–0.75 (0.32)**
Materials	–0.7 (0.26)***	–0.23 (0.16)	–0.49 (0.12)***	–1.01 (0.34)***
Investments	0.01 (0.02)	0.02 (0.01)**	–0.11 (0.01)***	–0.1 (0.33)
Value-added	–0.03 (0.12)	0.24 (0.08)***	0.19 (0.07)**	0.12 (0.16)
N	210	210	209	196
R²	0.47	0.33	0.9	0.42
Significance levels: 5%, *1% level.

Table 6. Summary of hypotheses’ outcomes and their rationale.
Hypothesis	Outcome	Rationale
H1: Profitability ratios show higher variation for wood element producers operating in an emerging industry than for sawmills.	Not rejected	According to Figures 7 & 8, there is more variation in profitability measures of element producers than sawmills
H2: Material and salary costs have a negative impact on the financial performance of both sawmills and wood element producers.	Not rejected	According to Tables 4 & 5, only negative impacts were found for Salaries and Materials on both industries’ competitiveness measures
H3: Investment costs have a negative impact on financial performance of both sawmills and wood element producers.	Inconclusive	According to Tables 4 & 5, Investments show a varying effect on industries’ Equity Ratio (negative for sawmills, positive for element producers), as well as a negative effect on sawmills’ Current Ratio and ROCE (%), and a negative effect on element producers’ Net Profit Ratio (%)
H4: Value-added has a positive impact on financial performance of both sawmills and wood element producers.	Not rejected	According to Tables 4 & 5, Value-added has a positive effect on sawmills’ Net Profit Ratio (%) and ROCE (%), and element producers’ Equity Ratio and Net Profit Ratio (%)