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Platform economy to bring a competitive advantage to Finland

A study on the opportunities of digital platforms to Finland shows surprisingly few companies planning on creating their own digital platforms.

Finnish businesses are seriously wondering if on-demand service development and delivery models like those of Apple and Uber, which have been well received by consumers, will spread to Business-to-Business markets, too. A study on the opportunities offered by digital platforms to Finland, funded by the Government and carried out by VTT Technical Research Centre of Finland together with Aalto University and the Research Institute of the Finnish Economy ETLA, shows that surprisingly few companies are planning on creating their own digital platforms and a service ecosystem that could be built on it. The report entitled 'Is Finland about to miss the platform economy train?', which was published in Helsinki on 20 April, presents a number of policy measures that could help in making platform economy a new area of expertise for Finland.

The introduction of digitalised products and services is fast revamping the traditional forms of doing business. At the same time this change shatters the prevailing borders between different branches of business both in industries and public administration. This transformation will have effects on companies based in Finland, too.

According to the report, it appears that instead of a strong leap, most incumbent firms are preparing to join business ecosystems created by others, which set the rules on operating in these ecosystems. Companies mostly settle for building their own internal, closed digital platforms.

The report notes that companies' board members, especially the chair, play an important role in encouraging the CEO to seize the opportunities offered by digital platforms before the company lags behind more agile actors.

Growth-oriented start-ups, for which the pursuit of anything new comes naturally, form an exception to the cautious approach. They are brave and embrace the opportunities introduced by the platform economy.

– If Finland wants to be among those who gain a competitive edge in the platform economy, it's important to actively remove barriers to growth companies' expansion. Growth companies could set an example for more established companies, too, notes the leader of the project, Research Professor Heikki Ailisto from VTT Technical Research Centre of Finland.

– It's alarming that not a single well-established international platform company has established its headquarters in Finland. The entire Europe lags behind in development compared to the USA and Asian countries. The gap is illustrated by the difference in platform companies' stock exchange value: European platform companies' combined stock exchange value is only about five per cent of their American counterparts', says Antti Eskola from the Ministry of Employment and the Economy, who chaired the steering group of the project.

The report presents 16 proposals for measures for decision-makers

The project group that conducted the study and analysed the situation proposes 16 measures that would help digital service ecosystems and platforms to become an area of expertise in Finland. The proposals for measures can be divided into larger policy measures, specific measures by the public authorities to promote the platform economy, and branch-specific interventions.

A workshop was also arranged in which the participants clearly emphasised that the exceedingly tight "playing safe" interpretation of rules and regulations by public authorities should be replaced by a supportive and non-restrictive practice. This is essential if we want to be among the ones in the vanguard in harnessing the business opportunities of digital platforms.

The report 'Is Finland about to miss the platform economy train?' (in Finnish) forms part of the implementation of the government plan for analysis, assessment and research for 2015. The report has been prepared by VTT Technical Research Centre of Finland, Aalto University and Research Institute of the Finnish Economy ETLA.

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