What Kind of Companies Grow in Finland?

Jyrki Ali-Yrkkö, Mika Pajarinen, Petri Rouvinen and Ilkka Ylhäinen

No 168, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract Growth in employment and productivity is concentrated in private equity-backed business groups and, to a lesser degree, in foreign-owned ones. No corresponding impact is observed for domestic ownership. Given that both private equity and foreign ownership are relatively uncommon, it is crucial to account for selection effects – that is, whether these investors are simply adept at picking superior targets. Nevertheless, our analysis indicates that these ownership changes themselves cause growth. This points to the role of active and engaged ownership, driven by exceptionally skilled individuals with strong financial incentives to pursue growth. When developing Finland’s business finance ecosystem, greater emphasis should be placed on the quality of ownership, not merely on capital availability or the number of owners. In light of these findings, policies that incentivize business angels and private equity investors, as well as those that foster the accumulation of private wealth and its channeling into high-growth enterprises, appear prudent.

Keywords: Firm growth; Corporate finance; Equity finance; Ownership structure; Private equity (search for similar items in EconPapers)
JEL-codes: G24 G32 G34 L25 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2025-11-10
New Economics Papers: this item is included in nep-ent and nep-sbm
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