Culture and Leadership in Finland
A salient feature of Finnish society is its position between West and East. One of the prerequisites for understanding leadership and culture in Finland is to understand the historical development of Finnish society with its influences from both directions. The country's geographic vicinity to both Sweden and Russia has also had an impact on Finnish politics and the economy. A nation derives its culture from four principal sources: history, language, religion, and climate (Lewis, 1997). In the following section, a brief description of the Finnish historical background is given.
1. THE BACKGROUND AND DEVELOPMENT OF FINNISH CULTURE
Early History
The first inhabitants of Finland lived along the coast in the south and west of the country. From the Middle Ages Sweden exerted the strongest and most immediate influence. The Åland Islands (between Sweden and Finland) were inhabited around 500 A.D. by settlers from Sweden and ever since have had a Swedish-speaking population. Swedes ruled Finland for about 500 years. Finland was incorporated into Sweden in 1155 under the leadership of the Catholic St. Hendrick, Finland's first Bishop of Turku. During that period Nordic institutions and traditions, religious practices, education and public administration were introduced in Finland (Häikiö, 1992). Also, the Swedish civil and criminal codes, approved at a meeting of the Swedish-Finnish Estates in 1734, remained in force during the period of Russian rule (Häikiö, 1992).
But at the beginning of the 19th century Russia and France wanted to form an alliance against Britain, wanting Sweden to be included in that alliance. Sweden, however, refused and Russia declared war on Sweden. Finland was occupied in 1809 and became a Grand Duchy of Russia. Alexander I, the Russian Emperor, was the first Grand Duke.
In order to increase Russian influence, the capital of Finland was moved from Turku to Helsinki in 1812, and the university followed in 1828. Generally, however, Finland maintained a high degree of autonomy. Russia's leaders relied on the Finnish language and way of thinking to act as a barrier against the West (TAT Group, 2001). The Finns’ feeling of national pride grew ever stronger. The Finnish national epic, the Kalevala, written by Elias Lönnrot, was published in 1835. J. L. Runeberg became Finland's national poet and the author of the national anthem. At that time J. V. Snellman was one of the most visible statesmen and he advocated that the Finnish language should gradually become an official language alongside Swedish.
But the situation in Europe changed in the 1860s and 1870s. Russia's leaders felt the need to impose more direct control over the countries on their borders. In Poland and the Baltic countries Russian became the official language and the countries Russian provinces. In Finland the strongest Russification period occurred in 1899–1917. A long range of measures was implemented. Finns had to serve in the Russian army, and Russian became an official language in Finland. It was also planned to bring Finland's laws into line with those of Russia and that any new laws would have to be approved by the Russian Emperor. Russian opinions were published in new Russian newspapers in Finland. Many Finnish newspapers were withdrawn from circulation. Russian stamps had to be used on mail sent abroad. There were also plans to eliminate the customs border between the two countries and Finnish money (Nyberg, 1995). Under the plans Finland was to become an integrated part of Russian society. When Russification was stepped up, resistance also increased. The most serious event was the assassination of the Russian Governor General Bobrikov in 1904. Finland never became an integrated part of Russia, but 100 years did not pass without leaving a mark.
Independence
The military setbacks of the First World War led to several changes in Russian top leadership. The Russification drive in Finland ceased at the beginning of 1917 and finally Lenin and the Bolsheviks seized power. The Finns then saw their chance to gain independence and on December 6, 1917, Finland was declared independent. The Parliament approved a declaration earlier made by the Senate. Although a high point in Finnish history, the situation was unstable. There was a civil war lasting three months between a right-wing loyal to the government and a communist left-wing. The war ended in May 1918 with victory for the government troops led by General Gustaf Mannerheim. About 30,000 people died in the war and also in the executions following it (Häikiö, 1992). In 1919, Finland became a republic and K. J. Ståhlberg was elected as the first President.
Economically, Finland developed rapidly between the two World Wars. However, the positive trend was broken by the world depression at the beginning of the 1930s, but became a boom by the end of the decade. The most rapid growth took place in the paper and metal industries.
In 1939 a non-aggression pact was signed between the Soviet Union and Germany, and in November 1939 the Soviet Union invaded Finland in the so-called Winter War. After the Second World War the basis of the new foreign policy was the Treaty of Friendship, Co-operation and Mutual Assistance signed in 1948. Finland was once more integrated more closely into the Soviet Union's security sphere. However, any assistance from the Soviet Union was to be agreed upon separately and Finland could in fact be considered a neutral country. The military agreement remained in force for more than 40 years. In September 1990 the Government declared the Treaty of Paris (1947) obsolete. The Treaty imposed restrictions on the size of the armed forces and military hardware. In 1992, following the changes in the former Soviet Union, a new Treaty on cooperation between Finland and Russia was signed. This new Treaty did not contain any military provisions and the previous Treaty on Friendship, Co-operation and Mutual Assistance was rescinded.
Finland Integrates Closer Into Europe and Attains Greater Sovereignty
After the Second World War a period of stronger internationalization and orientation towards Europe started. The first steps were slow and minor. It was not until the end of the century before a real breakthrough took place. Below some of the important international organizations that Finland has joined during the last six decades are mentioned.
Finland joined the International Monetary Fund in 1948 and became a member of GATT (General Agreement on Tariff and Trade) two years later. The trend of internationalization and alignment with other countries continued and Finland became a member of the United Nations and the Nordic Council in 1956, followed by the joining of the OECD (the Organization for Economic Cooperation and Development) in 1969. Finland was recognized as a neutral country both by East and West and therefore acted as host to many large international conferences. In 1975 the Conference on Security and Co-Operation in Europe (CSCE), with 35 heads of state from Europe and North America, was held in Helsinki where the Helsinki Final Act was signed.
Rapid and perhaps most significant international integration, however, took place at the end of the 1980s and in the 1990s. In 1986 Finland became a full member of EFTA (European Free Trade Agreement, consisting of Finland, Sweden, Norway, Iceland, Switzerland, and Austria) and in 1989 the country also became a member of the Council of Europe. In 1992 Finland applied for full membership of the EU (European Union). The European Parliament voted in favor of Finnish membership two years later. The European integration continued with the European Monetary Union (EMU) at the beginning of 1999, with Euro notes and coins being introduced in 2002. From the start, eleven EU member countries (including Finland) joined EMU. As a result several positive effects of EU membership have been evident: food prices, inflation and interest rates have decreased (Torvi, 1999). Finland has also been active in European cooperation. From July to December 1999 Finland held the presidency of the Council of the EU for the first time.
To conclude, the influence of Sweden has been significant over the last eight centuries. The Russian influence was notable and had both a direct and indirect effect on the period beginning from the 19th century until around 1990. After that Western influences have held sway of Finland, mostly from Central Europe.
Finland Today
The foundations of a Scandinavian welfare state system in Finland were lain in since the beginning of the 1960s, with services being provided by public funds. Welfare and social security are guaranteed for all citizens. But welfare has also brought with it a high level of taxation. The gross tax ratio is higher than in most other OECD countries. In Sweden it was 53% in 1998, in Denmark 49.3%, in Finland 46.9% and in Norway 43.6% (Statistical Yearbook of Finland, 2000). Taxes are channeled to provide health care, social services and free education. More and more Finns become dependent on social income transfers in order to maintain their standard of living. In 1998, 28% of household incomes consisted of social benefits (Salonen et al., 2001). One of the most important parts of the social service system is the pension system. The basic national pension system guarantees everyone an equal minimum income.
Generally, the prosperity of the Finnish population has improved significantly. If 100 are used as the real purchasing power of wages in 1964, the index was 1838 in 1999 (Statistical Yearbook of Finland, 2000). The life expectancy of women is 81 years and for men 73.7 years (Salonen, Kääriäinen, & Niemelä, 2001, p.16). But in society as a whole the development has not always been as positive as outlined above. In the 1980s the unemployment rate in Finland was rather low at about 5%. However from 1991 unemployment went up very rapidly, reaching a peak of 16.6% in 1994. Since then unemployment has decreased slowly and was around 8% in August 2001.
Finland has gained a reputation in a number of areas. The country is perhaps best known today for its rally, Formula 1 drivers and the sauna (there are 1.5 million saunas in Finland, one for every four inhabitants). But Finland is also known for Lapland (as being the homeland of Santa Claus), for its architects (e.g., Eliel Saarinen), composers (e.g., Jean Sibelius), and designers of elegant fabrics, furniture, silver, ceramics, and glassware. The environment is clean. In a 122-nation study by the Earth Institute's Center for International Earth Science Information Network (CIESIN), Finland, Norway and Canada were ranked highest in environmental sustainability (CIESIN, 2001).
Industry is putting in a strong performance at the end of 1990s. Finland today is seen as a high-tech country. A scoreboard found that Finland and Sweden outstrip the U.S. and the rest of the EU in applying for patents for high-tech applications (Hargreaves, 2000). Those two countries also score highest on business expenditure on research and development as a percentage of gross domestic product (GDP)—3% percent in Sweden and just below 3% in Finland. Over the last decade the Finns have been best known for their advances in electronics and mobile communications. Nokia is recognized all over the world as the largest and most profitable manufacturer of mobile phones and Linus Torvald as the inventor of the Linux operating system. Nokia accounts for almost a fourth of Finland's exports (Annual report of Nokia, 2000, Statistical yearbook of Finland, 2000).
At the end of 1999, there were 121 personal computers (PCS) with an Internet connection per thousand citizens. Around half of all households have a PC and 78% a mobile phone (Salonen et al., 2001). In the UN Human Development Report (UNDP) for 2001, Finland is ranked as the most highly developed country technologically. As early as in 1896–1897 the Spanish Consul in Finland, Axel Ganivet, devoted an entire chapter of his book on Finland to the “excessive” interest Finns had with technology. Phones were almost as common as kitchenware. In the 1920s and 1930s there were more than 800 separate telephone companies in the country (Leonard, 2000).
Educational System
The majority of the population was already literate during the nineteenth century, and comprehensive schooling became compulsory more than 150 years ago. The first university was founded in 1640 (Häikiö, 1992). In the early 1970s a uniform system of basic education was implemented. There is a 9-year comprehensive schooling system. Children begin their formal education at the age of 7. After completing comprehensive school, there are two alternatives. Either pupils continue in a vocational school for 2 to 6 years or they attend a 3-year upper secondary school. About half of the school-leavers select vocational school and the other half, upper secondary school. A large number of those selecting upper secondary school continue at universities and polytechnics. Of the total population, 57.7% have some form of qualification other than a comprehensive school leaving certificate. In 2000, the universities had 157,000 students at different levels. In addition, there were 88,000 Open University students and 105,000 executive education students. That means that more than 10% of the active population is participating in university level education each year (Ministry of Education, 2001). In comparison with the Nordic and other European countries Finland had the most students at higher level per 100,000 inhabitants in 1994 and 1995 (Statistical Yearbook of Finland, 2000).
TABLE 4.1
Members of Different Religious Communities in Finland at the End of 1999
Religion |
Absolute Numbers |
Percentage of Total Population |
Lutheran |
4.40 million |
85.3 |
Orthodox |
0.05 million |
1.1 |
Other communities |
0.05 million |
1.0 |
No religious community |
0.63 million |
12.6 |
Note. From Statistical Yearbook of Finland (2001).
The education policy of the state is that education should be equal for all citizens, and that means that education is largely free of charge. Finland invested 5.7% of its GDP in education in 1998. In this respect Finland's position is towards the average of the OECD countries (OECD, statistics).
As already mentioned, national cultures are defined besides history, by language, climate, and religion (Lewis, 1997). These three factors are briefly discussed next.
Religion
Finland was largely Roman Catholic until the Protestant Reformation. Lutheranism became the state religion in 1593. In 1923, freedom of religion was guaranteed. Citizens were then free to found religious denominations (H. Heino, 1998). They also had the right not to subscribe to any denomination at all. The state took a neutral attitude to religion. Schools give religious education according to the confession of the majority of the pupils.
The Finns have a positive attitude towards the church; 64% of the Finns are of the opinion that the church is necessary. But the Finnish population does not take a very active part in the activities of the church. Only half of the population attends the church at least once a year (Salonen et al., 2001). Active members of the Lutheran church attend services at least once a month and vote in parish elections. The majority of Finns prefer to marry in church, have their children baptized, and have them confirmed. They also want a Christian burial for themselves and their relatives (H. Heino, 1998). For frequency distributions of the various Religions in Finland, see Table 4.1.
Although most of the population is Lutheran the Finnish society is mostly secular. Over the last 30 years the numbers of those belonging to no religious denomination have increased by almost 10% (Salonen et al., 2001).
The Finnish Orthodox church is strongest in the east of Finland, with the monastery at Valamo as its center. When Finland became independent the administrative links to the church were broken, but reestablished in 1923. In Helsinki, the Uspenski Cathedral is a monument from the Russian era. It was consecrated in 1868 and is well known and visited by Finns and foreigners even today.
Unlike most European languages, Finnish is neither a member of the Indo-European language family nor is it related to the other Nordic languages (Swedish, Norwegian, and Danish). Finnish belongs to the language family known as Uralian, whose two branches include Finnish and Estonian in the Finno group and Hungarian in the Ugric (TAT Group, 2001). Finnish is also related to several minority languages in Russia, such as Karelian, spoken along the Finland – Russian border (Gordon, 1991). About 94% of the population of Finland speaks Finnish as their main language and 6% Swedish. During the Swedish era, soldiers, officials, and priests stationed in Finland settled in the country. Swedish businessmen and artisans migrated to Finnish towns. Swedish continued to be the official language and kept its position as the language of cultural life. Swedish was used in official bodies during the 19th century. In 1902, Finnish also became an official language.
In the 1880s, more than 14% of the population had Swedish as their mother tongue (Nyberg, 1995). But emigration to Sweden in the 1950s and 1960s significantly reduced the rank of the Swedish speaking population. Traditionally there has been tension between the two language groups and there is still a Swedish party defending the rights of the Swedish-speaking Finns.
The climate in Finland is characterized by great variety. The summers are warm and beautiful, the winters often very cold. Of the world's populations, only the Finns have settled an entire population of more than five million above 60 degree N (Lewis, 1997). The mean temperature in Finland is several degrees (as much as 10°C in winter) above that in other areas at the same latitude, e.g., Siberia and south Greenland (R. Heino, 2001). The main reason for this is the airflows from the Atlantic are warmed up by the Gulf Stream.
According to Lewis (1997), the effects of the climate are that these latitudes engender sturdy, resilient people with an inordinate capacity for self-reliance and an instinct for survival. Arctic survivors need stamina, tenacity, self-dependence, and resourcefulness that the Finns are well known for (see, e.g., Laine-Sveiby, 1987; Simon, Bauer, & Kaivola, 1996). The temperature can vary between more than plus 30°C in July to minus 30°C in January. The country is large, with a surface area of 338,000 km2.
2. THE COMPETITIVE POSITION OF FINNISH INDUSTRY
The historical background and the present situation of Finland today were outlined above. In the following, attention is focused on the development of industry and economic life within the country. Systematic industrial policy dates back to 1616, when Finland was still under Swedish rule. In that year an iron foundry was built in the western part of Uusimaa (Laakso, 2000). However, the first modern factory was a cotton-spinning mill in Tampere. In the 1850s it was the biggest industrial company in Scandinavia. There was an industrial breakthrough in the 1860s and 1870s. Growth was spearheaded by the sawmill industry, and was initially slow in gaining momentum. The pulp and paper industry took off at a later stage. The wealth generated by the forest industry was reflected in society at large and propelled the development of other industries, notably textiles, metals and engineering. Finland was being changed more and more from an agricultural country to an industrial one. Järvinen, Korkala, and Åman (1978) identify the existence of three cultures in the 1800s; (a) a farming culture, (b) a trade culture and (c) an artisan culture.
At the turn of the 20th century, and in spite of her geographical and Russian connection, Finland was surprisingly international in outlook. From 1890 to Finnish independence in 1917, the eastern Baltic was one of the most international areas in the world. Helsinki, Viipuri (Vyborg) and St. Petersburg were lively centers of artistic excellence and multilingualism. In Viipuri many people spoke four languages (Lewis, 1997). In those days foreigners contributed significantly to the development of Finnish industry, including names such as Fazer (German), Hackman (German), Finlayson (Scot), Gutzeit (Norwegian), Sinebrychoff (German from St. Petersburg) (Alho, 1961).
The years since the Second World War to the beginning of the 1990s were years of continuous growth. War reparations to the Soviet Union in the form of industrial products contributed to a transformation in Finnish industry (Laakso, 2000). A strong metal and engineering industry grew up alongside the traditionally powerful forest industry. Shipyards and especially icebreakers were success stories of this period. Finland's trade with its eastern neighbor smoothed out the effects of worldwide fluctuations within the forest industry (Laakso, 2000). Metal products, textiles and clothing were exchanged for raw materials from the east. In particular, declining oil prices in the 1980s were the first danger signals of the vulnerability of Finland's trade with the Soviet Union.
A new and modern era started at the end of the 1980s with closer integration into Western Europe. The emerging positive trend was broken by the deep recession at the beginning of the 1990s. Waves of bankruptcy swept through industry; many small and medium-sized enterprises went under. The banking system was saved only by substantial government support. The national debt grew rapidly during the recession. It has since decreased somewhat, but was still 47.1% of the GDP at the end of 1999.
However, in spite of the difficulties, the process of deregulation and privatization continued both in Europe and North America. There were major regulatory changes affecting airlines, financial services, public transport, and telecommunications, to mention just a few (Lindell, 1998). One of the key events for the Finnish economy was the early deregulation of telecommunications. Competition in the mobile network started in 1990 when the Finnish firms Radiolinja and Sonera obtained licenses to build their own GSM (Global system for mobile communications) networks alongside the existing networks. Competition on long-distance calls began in 1994. Nowadays there are 13 different operators (Ahonen, 2001). According to Ahonen, all the European Union countries have followed Finland's example in the development of data communications infrastructure and deregulation of the telecommunications sector. He also argues that in these areas Finland has been, and will be, at the leading edge of developments. The globalization of markets and the drive for European unification have enlarged the market of Finnish companies and created new possibilities, but it has also increased competition and risks and stressed the need to develop new ways to respond to free competition.
The successes in the telecommunications sector are best illustrated by the success of the Finnish flagship Nokia. The group has gone through a transformation from an unfocused conglomerate to a global leader. A couple of decades ago, its product range included rubber boots, cables, lavatory paper and televisions. CEO Ollila explained Nokia's success to the Financial Times in the following way: “We were earlier than most in understanding the benefits of focusing the business portfolio in a global world, that in order to be really successful you have to globalize your organization and focus your business portfolio. We have also been able to grow and be global and maintain our agility and be fast at the same time” (Brown-Humes, 2001, p. 4). Nokia has adapted to the market more effectively than its competitors.
Productivity in industry has improved substantially. A productivity index that stood at 48 in 1975 had increased to 159 in 1998 (Statistical Yearbook of Finland, 2000). This is a better performance than that for the USA, Japan, Germany, France, the UK, and Sweden. Exports have become more diversified. Earlier exports consisted mainly of forest products, but in the 1970s the share of metal products increased significantly to around one-third of total exports and now telecommunications is one of the fastest growing export sectors. According to the World Economic Forum, Finland was the most competitive country in the world in 2000 (Takala, 2001).
In this section, we have described the history of Finland and some data on economic performance. This description will serve as a setting for understanding and interpreting the quantitative and qualitative GLOBE results which, are based on systematic evaluations of Finnish societal culture, organizational cultures and leadership ideals (cf. House et al., 2004).
3. THE GLOBE STUDY IN FINLAND
Sample and Procedure
A questionnaire was distributed to middle managers in the financial services, food production and telecommunications companies in Finland. In all, 438 managers in seven companies completed the questionnaire (telecommunications, 2 companies, n = 108; food production, 2 companies, n = 187; financial sector, 3 companies, n = 143). The companies chosen were all large and important in their respective industries. Although the industries chosen are central in most countries, they employed no more than about 7% to 8% of the labor force in Finland in 1999 (Statistics Finland, Labor Force Survey, 2000).
The GLOBE questionnaire measured social and organizational cultural norms and leadership concepts. The cultural norms were built around Hofstede's (1980) four cultural dimensions: Power Distance, Uncertainty Avoidance, Gender Differentiation and Collectivism. In the GLOBE study, Gender Differentiation was subdivided into Gender Egalitarianism and Assertiveness and Collectivism was subdivided into Institutional Collectivism and In-Group Collectivism (see House et al., 2004). Further dimensions were developed, namely Future Orientation, Performance Orientation and Humane Orientation. In the leadership part of the questionnaire managers responded to 112 items by rating the degree to which each listed leadership attribute facilitates or impedes “outstanding leadership.” All items were rated on a 7-point Likert-type scale that ranged from low to high. A contact person was nominated by a top manager in each participating company in order to increase legitimacy and motivation for the GLOBE research project. She or he handled the distribution and collection of the questionnaires and sent them to the researcher. Further mostly qualitative methods were used for data collection.
The following sections detail the findings of the survey of middle managers’ opinions about outstanding leader behavior and attributes and existing and ideal values in Finland. The presentation of the quantitative data is elaborated by adding qualitative data and observations relevant to the different GLOBE dimensions.
Demographics
Following, some demographic characteristics of the sample of middle managers used in this study are given:
• Gender: 74.5% of the respondents were male.
• Age: The age of the respondents varied from 25 years to 68 years, with a mean age of 42.3 years and a median of 42 years.
• Cultural background: 99.9% were born in Finland and 85.3% had not lived abroad for more than a year.
• Religious affiliation: As much as 24.2% said that they did not belong to any religious affiliation, 75% were Lutherans, 0.4% Orthodox, 0.2% Catholics and 0.2% Baptists.
• Working experience: The full-time working experience of the middle managers ranged from 0 to 43 years, with a mean of 18.8 years and a median of 18 years. The median for occupying a managerial position was 11 years. The managers had been in their current company for a long time. The median period with their current employer was 10.5 years. Around one-fourth (25.8%) had experience with a multinational corporation.
• Education: The median length of formal education was six years. Around 40% of the respondents mentioned their educational specialization. Education in business and administration accounted for 50% of respondents, 40% were educated as engineers and the remaining 10% had education in many different areas.
• Training: Middle managers that reported they had participated in formal management training of some kind consisted of 60%.
• Hierarchy: The median number of people reporting to the managers was six and the average number of subordinates was 56. There were two organizational levels between middle managers and chief executives and one level to non-supervisor personnel.
4. GLOBE RESULTS ABOUT SOCIETAL CULTURE
Table 4.2 presents the Finnish country score (mean of individual ratings) for societal culture “As Is” and societal culture “Should Be” and its rank on each dimension compared to the other 61 participating countries.
Finnish society scores highly on societal culture “As Is” in comparison with the other GLOBE countries on Uncertainty Avoidance (Rank 8, Band A)and Institutional Collectivism (Rank 10, Band A). Finnish society relies on social norms and procedures to alleviate the unpredictability of future events. Finland is a collectivist society where equality between men and women is relatively high.
Finnish society scores low on In-group Collectivism (Rank 54, Band C) and Humane Orientation (Rank 35, Band C) and medium to low on Assertiveness (Rank 47, Band B), Power Distance (Rank 47, Band B) and Performance Orientation (Rank 46, Band B). The family unit (In-Group Collectivism) ranks low by international comparison, which is contrary to the general requirement of high Institutional Collectivism. Although group behavior is generally stressed, in the family context (In-Group Collectivism) strong individualistic behavior is highly valued. Humane Orientation describes the degree to which a society encourages and rewards individuals for being fair, altruistic, generous, caring, and kind to others. Despite the comparatively low rank in Humane Orientation, Finns perceive themselves as low on Assertiveness. Also Power Distance is relatively low, which means that according to the middle managers, society mostly maintains equality among its members with respect to power, authority, prestige, status, wealth, and material possessions. Finally, low Performance Orientation means that society does not encourage or reward groups for performance improvement and excellence.
TABLE 4.2
Societal Culture “As Is” and “Should Be”
aCountry score for Finland based on mean of individual ratings.
bLetters A to D indicate the “Band” of countries Finland belongs to (A > B > C > D). Countries from different bands are considered to differ significantly from each other (GLOBE test banding procedure, cf. Hanges, Dickson, & Sipe, 2004).
cFinland's position relative to the 61 countries in the GLOBE study; Rank 1 = highest; Rank 61 = lowest.
On further two dimensions, Finland scores in the higher middle out of the GLOBE countries that participated. These are Future Orientation (Rank 14, Band B) and Gender Egalitarianism (Rank 31, Band B). Future Orientation refers to the extent to which a society rewards future-oriented behavior such as planning, investing in the future and delaying gratification. Gender Egalitarianism measures the extent to which a society minimizes gender role differences.
In terms of values (societal culture “Should Be”) the most sought-after positive changes in culture compared to the existing situation, both absolutely and relatively, were in Performance Orientation (change in ranking from 46 to 20) and Humane Orientation (change in ranking from 35 to 2). The most sought-after negative changes in ranking were found in Future Orientation (from 14 to 51), Institutional Collectivism (from 10 to 55), and in Uncertainty Avoidance (from 8 to 53). The ranking moved in a negative direction, but somewhat less, for Power Distance (from 47 to 60). A minor difference between the “As Is” and “Should Be” was observed for the three dimensions Assertiveness, Gender Egalitarianism and In-group Collectivism. We discuss the changes below in connection with the various dimensions.
Performance Orientation
The current level of Performance Orientation in the study [Mean (m) = 3.81, Rank 46] is relatively low, but Finnish managers would like to see this reversed in the future (m) = 6.11, Rank 20. The explanation for the current low level is that, although results are stressed, there are many counteracting factors, especially at the society level. There is a desire to even out differences in earnings through a re-distributive taxation system and high rates of taxes. The social security system is good and guarantees a minimum standard of living.
There is now a general desire to reduce government expenditure and that will probably mean the result for orientation will be higher in the future. Because Finland is a member of EMU, it will not be possible to use monetary policy tools such as devaluation to correct future setbacks in the economy. Therefore the pressure to achieve will be much greater in the future (cf. “Should Be” in Table 4.2). Another feature of the 1990s already mentioned is deregulation, with many state-owned companies being privatized (Kivikko, Lindell, & Naukkarinen, 1997; Lindell, 1998).
Some changes producing greater efficiency can already be observed. In an investigation of 84 large Finnish companies during the 1990s, only 5 companies produced economic value-added to their owners in 1992, when including industry risks and a 4.5% risk premium in the calculations. By 1996, the number had increased to 25 companies (Veranen & Junnila, 1997). Since 1994, unemployment has improved gradually but is still quite high. It was 8.7% in September 2001, whereas on average 7.6% in all of the other 15 EU countries.
The wide use of telecommunication aids has helped to facilitate and speed up government services. According to Kahila (2001), Finns spend less and less time trudging to government offices and dealing with bureaucrats. About a decade ago Finns made 7 million trips a year to central registry offices for things like registering address changes, filling out pension forms, and replacing lost ID cards. That figure is now down to about half a million visits. Advances in telecommunications have allowed Finland to cut its national civil service headcount while increasing the service's productivity by 3.5% per year.
Future Orientation
The absolute direction for Future Orientation is positive, with a change in the mean from 4.24 to 5.07. Managers at the middle level are of the opinion that more forward planning is required. Future Orientation is at a high level in Finnish society compared to many other countries, but planning for the future still needs to be improved. Central government ran a deficit during much of the 1990s. Government subsidies to municipalities have been cut, and this has also stressed the need for more achievement orientation but above all more future planning.
The political stability of Finland means that societal forecasts can be made. Therefore there has been a need for long-range 3-year wage agreements between employers’ associations and employees’ representatives in order to increase the ability to make reliable forecasts. On the other hand, one can argue that the increased turbulence in society in general, and the faster and more radical changes taking place, will make it perhaps less possible to plan for many years ahead. That might be one reason why the sought-after increased mean on Future Orientation is not more than 0.77.
However, it is interesting to note that on an international comparison the direction has been negative for Finland. Although in absolute terms the mean has increased from 4.24 to 5.07, Finland's ranking has dropped from 14 to 51. While Finnish managers believe that more emphasis should be placed on Future Orientation, when compared to the present, they act like middle managers in the other countries that took part in the study, but to a much lesser degree. The most obvious explanation for this is deregulation, the decrease in tax rates, and the objective of keeping the national budget at a relatively low level. This means that there is not much scope for large future investments at the society level.
Assertiveness
Finland scored 3.81 on Assertiveness and ranks 47th among the 61 GLOBE countries, indicating that the Finns are rather nondominant and non-aggressive in their social relationships. Lewis (1993), who has studied cultures in many different countries, has characterized Finland as a “cultural lone wolf.” According to Lewis, Finns are a warm-hearted people who long for loneliness. He stresses too that Finnish men do not speak very much and they are slow in their communication. Perhaps this is because Finland is a large, sparsely inhabited country. They admire a peaceful mentality, are introverted and tolerant. They are also truly democratic. Against the above background, we can understand the score indicating nonaggressiveness.
The “Should Be” score is 3.68 and ranks 35. This means that Finnish middle managers want to see a change toward less dominance and aggressiveness in social relationships. However, this wanted change is quite minor in comparison with many other Globe countries.
Institutional Collectivism
Finnish managers score highly on Institutional Collectivism (m = 4.63, Rank 10), which is explained by a number of factors. Firstly, Finland's centralized economy was not immediately aligned with the decentralized market economies in the immediate post-war years due to its geopolitical context (Steinbock, 1998). Instead an economy was developed largely behind protective and regulatory barriers, dominated by a few big companies. It also had influences from the east European command economies. There was strong pressure for consensus, which gave rise to conformism and intolerance toward differences of opinion. The gross taxation rate is among the highest in the Western countries, at 46.9% in 1998 (OECD, revenue statistics).
Secondly, Finland still has quite strong labor unions. The current system was established after World War II. Significant importance was placed on a stabilization agreement made in March 1968, and was largely adhered to throughout the 1970s. The period starting in 1968 is known as the “period of incomes policy” in the Finnish industrial relations system (Lilja, 1983). The labor market organizations and political forces have essentially remained unchanged to the present day. A system of exchanges between the government and interest organizations has contributed to the stability of the macromanagement of Finnish society.
Thirdly, teamwork has been highly valued throughout the 1990s, both in firms and in government bodies. Cooperation, teamwork and shared decision-making are seen as desirable (Simon et al., 1996). In fact a law exists on cooperation within companies too. Employees have the right to influence decisions affecting them, their work, and working conditions. A strong top manager is looked for only in a crisis situation (cf. the strong Finnish heads of state in history). Mutual respect, direct communication, discussions, and flat organizational structures are features of Finnish industry today.
Fourthly, Finland is a small country, which facilitates consensus. It is possible for all the influential people in different spheres of society to know each other and meet personally both in an official and unofficial capacity. The discipline of political groups is strong. Sometimes members are excluded from a political party if they vote against the party line on an important issue.
But although Institutional Collectivism is strong in Finnish society, bringing prosperity and an acceptable standard of living to most Finns, there are also signs of individuality. In particular, Finns value heroes in different areas. Finland has produced leading personalities in sport, architecture, art, and music. A long line of Finnish athletes has become world-famous figures, from Paavo Nurmi in the 1920s, to Lasse Viren in the 1970s. Among musicians, painters and architects, Sibelius, Kajanus, Saarinen, Järnefelt, Gallen-Kallela, and Alvar Aalto have assured the country's position at the highest artistic levels. The prospect of reduced Institutional Collectivism in the future supports this view; cf. the “Should Be” mean of 4.11 and rank of 55. An investigation by Salonen et al., (2001) suggests that a change took place in the middle of the 1990s in the Finns’ feeling of community and that the attitudes changed in favor of more individuality. Hofstede´s study (1980) indicated rather high individuality among Finnish managers.
Institutional Collectivism seems, at least to some extent, to go in waves. When times are good in society individuality will be stronger, and in bad times collectivism is stronger.
Gender Egalitarianism
On Gender Egalitarianism, Finland's position is situated in the middle of the GLOBE countries (“As Is” m = 3.35, Rank 31). Its score is also in the middle of the scale, but somewhat more on the masculine side. That is interesting because in Hofstede's study (1980), Finland was in the most feminine cluster. The most likely reason for this deviation would appear to be that in the GLOBE study, egalitarian aspects are stressed more, whereas in Hofstede's study the whole scale of masculinity and femininity was used. Finnish society has for a long time striven for equality between the genders and that trend has also continued since Hofstede´s study.
Universal suffrage was introduced for men in 1902 and for women in 1906. Finland was the first country in Europe to grant women the right to vote in parliamentary elections. Social justice, solidarity, and egalitarianism are valued as part of the Scandinavian way of thinking (Nurmi, 1989). Finland now has its first female President. Equality is based on history but is also enshrined in law (The Equality Act).
The emancipation of women has been moving in a more equal direction between the sexes for many decades. The share of women elected at the last General Election was 36.5%. The share of female professors increased from 14.6% in 1992 to 20.1% in 2000 (Ministry of Education, 2001). The gap in earnings between men and women has also decreased somewhat. In 1980, the monthly earnings of salaried industry employees were FIM 5,276 for men and FIM 3,210 for women. The corresponding figures in 1999 were FIM 16,633 for men and FIM 12,108 for women (Confederation of Finnish Industry and Employers, 2000).
However, it is a fact that there are still relatively few women in top positions in either society or business. Our interpretation is that the demands of domestic tasks, education of children etc., have an effect here. Although Finnish women work much more outside the home, they still perform most of the domestic tasks, which seems at least to some extent to prevent them from pursuing a career in society and business. In 1998, women made up 48% of the total work force out of 2.5 million (Statistical Yearbook of Finland, 2000). The trend is clearly in a more equal direction. But there is still some way to go. The legislation in place is appropriate, but efforts have to be made on the practical side and in terms of changing attitudes. The ideal society would require a higher feminine input (m = 4.24, Rank 45). So, Finnish society has still to be improved in terms of gender egalitarianism.
Humane Orientation
When it comes to Humane Orientation, Finland has an average ranking among the GLOBE countries (m = 3.96, Rank 35). In an investigation by the Finnish Tourist Board (1988), tourists found Finnish people friendly and ready to help.
Interestingly, Finnish managers would like to see a very significant increase in Humane Orientation: Finland scored second highest on the “Should Be” ranking (m = 5.81, Rank 2). Why this desire for more Humane Orientation? There have been cuts in social welfare, and society is not felt to be as generous as it once was. The gap between the rich and the poor has widened.
Earlier high unemployment has contributed to this perception of a less Humane Orientation. Temporary employment too is a phenomenon that increased dramatically in the early 1990s. According to an investigation of the work environment, almost one in five employees was still on temporary contracts in 1997 (Salonen et al., 2001). Since then the situation has improved but many people are still stigmatized by the past. Within 10 years, however, it has been forecast that there will be a labor shortage in Finland.
Migration from rural areas into the cities has also increased insecurity and people's ability to plan for the future. Secularization and increased stress may have added a perception that people do not matter. Idyllic rural life and large family units are mainly things of the past. The number of households on a very small annual income has increased. In 1995, 121,000 persons lived in households with a very low income. By 1998 the number of such persons had increased to 196,000 (Salonen et al., 2001). The majority of this group consisted of students and unemployed persons. Many young people who tend to move away from their parents more or less immediately after matriculation at the age of 18 or 19 naturally are on a low income when studying. These may be some of the reasons behind the desire for a radical improvement in Humane Orientation in the ideal society.
Power Distance
Power Distance in Finland is in the middle (but at the lower end of that category) compared to the other GLOBE countries (m = 4.89, Rank 47). Power Distance was found to be short in Hofstede's (1980) investigation, somewhat shorter than the GLOBE study indicates. However, the results of these studies support each other. The general trend in very many countries seems to be towards less and less distance between levels in organizations and society. In a recent study, Lindell and Arvonen (1996) found that a dominant feature of the Scandinavian management style is delegation of responsibility. The interesting point here is that in spite of the rather low ranking (Rank 47), Finnish managers would like to see a significant decrease in Power Distance (from 4.89 to 2.19, and in ranking from 47 to 60).
There was a trend toward more decentralization in society before Finland joined the EU, and before the recession at the beginning of the 1990s. There was more teamwork in society. Managers were no longer venerated as before. All members of firms and other organizations were important for the achievement of results, and managers were not necessarily the ultimate authority on every matter. Networks, project groups etc., were appreciated more and more. People were well educated, and the authority inherent in a position meant less and less. The distance between managers and their subordinates was short and communication was direct. That trend was interrupted when many decisions had to be made quickly at the center. For instance, when the entire banking system was at risk at the beginning of the 1990s and the national debt was rising steeply. A fairly large gap appeared between expectations and reality, which explains the desire for a significant improvement in Power Distance.
Recently, it has furthermore become established that Finnish governments are broad-based and that they govern for the whole term. Nowadays it is rare for there to be a mid-term change of government. It is difficult for the opposition to have any real impact on the work and decisions made by the government. The relatively strong labor unions and collective bargaining agreements lasting several years compound this trend. Membership of the European Union and the transfer of decision-making in some issues to Brussels might be perceived by the Finns as meaning more centralization. All of this might have influenced perceptions of a relatively high Power Distance.
Middle managers rate Finnish society as low on In-group Collectivism (m = 4.07, Rank 54). The migration from rural areas to the cities has had the effect that different generations no longer live together. Dwellings are now much smaller than they had been previously in rural areas, which places a lot more pressure on families. Both parents have to work in order to maintain the family's finances and standard of living, and most children of pre-school age spend a half or full day in some kind of child care institution. Family unity has decreased.
Cohabiting partners has also become more commonplace. In 1999 there were 68.2% of couples married, 18.2% were cohabiting partners and 13.2% of families were single-parent units (Statistical Yearbook of Finland, 2000). Many marriages end in divorce. Therefore it is not at all strange that the Finns would like to see an improvement in family loyalty (“Should Be” m = 5.42, Rank 47). Family loyalty is a quality that will be more appreciated in future.
Uncertainty Avoidance
Finland scores high on Uncertainty Avoidance (m = 5.02, Rank 8). In many sectors such as banking, insurance, and food manufacturing competition has been limited. A deregulation process has started and many state-owned companies have been privatized or are in the process of privatization. But the Finns are also time-conscious and therefore punctuality and keeping appointments is important. Prior appointments are necessary for business visits. Finnish managers also like to have their responsibilities and authority well defined.
There is a substantial difference in the ideal society or “Should Be” position (m = 3.85, Rank 53). Finnish managers at the middle level are of the opinion that risks should be increased dramatically. The welfare system has been generous and living standards are at an acceptable level even for those without a job. The Government has taken steps to reward work. Income tax has been reduced by a few percentages. There has also been some reduction in social welfare. The first steps toward higher risk-taking have been taken. These actions are in accordance with Hofstede's (1980) investigation, which ranked Finland toward the middle on Uncertainty Avoidance.
Conclusions
The general observation that can be made is that a change in a more individualistic and risk-taking direction is desired and that a more rewarding society is required. Culture at the society level should be changed to make it more demanding. Deregulation seems to have had some impact here. To counterbalance this, a significant increase in Humane Orientation is desired. Finnish people should be more caring and kind to one another.
In comparison with the other GLOBE countries, Finnish society scores highly on Uncertainty Avoidance, Future Orientation, and Institutional Collectivism. That indicates that forward planning is an important feature, but working in teams is important too. The showing of a higher need for Institutional Collectivism in this investigation is interesting. In Hofstede's study (1980), Finland scored quite high on individuality, which is contrary to the findings of the GLOBE study. What is the reason for this difference? Either there has been a radical change in values since Hofstede's investigation or there are differences in the studies’ operationalization of individuality and collectivism. The more likely explanation is the latter, because the Finns rate relatively low on In-Group Collectivism “As Is” and much higher on Institutional Collectivism “As Is.” Evidence for this comes from the GLOBE validation studies, showing that GLOBE's Institutional Collectivism “As Is” scale does not correlate with Hofstede's Individualism scale (R = .15) whereas GLOBE's In-Group Collectivism scale “As Is” correlates highly (R = –.82, cf. House, et al., 2004, p. 475).
The greatest improvement sought after in the ideal society, relative to the current situation, is in Performance Orientation and Power Distance. Finnish managers feel that in the future competition will be tougher and that more efficiency and innovation will be required to meet future challenges. Finns want to see a flat societal structure and want to be involved in decisions with hardly any Power Distance. Important problems and issues should be discussed, planned, decided on, and implemented together.
5. FINNISH LEADERSHIP CHARACTERISTICS AND LEADERS
The study of societal cultural practices and values has outlined the environment in which companies operate. Below, a more detailed study is described concerning leadership characteristics central for leader acceptance and leader effectiveness in Finland. We search for answers to the question how an outstanding leader might behave in Finland and his attributes and characteristics.
Previous Research on Finnish Leadership
Finnish leadership attributes were not studied very systematically before the 1980s and 1990s. Below some of the main findings from some studies over the two latest decades are reported.
Airola, Kulla, Lumia, Nyström, and Snow (1991) concluded a study among the 250 largest industrial and trading companies in Finland. They interviewed 128 leaders. In answer to the question asking what are the three most important tasks managers had to learn in order to fulfil their role as a leader, the ranking of the five most often mentioned ones was as follows: (a) leading people, (b) capacity to cooperate, (c) the creation of a holistic vision, (d) goal-oriented business, and (e) delegation. According to the study the most important factor that a leader has to learn is how to motivate and manage people. Lewis (1993) also found that the Finns do not lead by giving orders, but by motivating and setting an example to subordinates. In order to commit Finnish managers, the following factors were important:
- Tasks which correspond to the managers’ own abilities.
- Participation in decision making.
- Loyalty between foremen and top management.
In the Airola et al., (1991) study leaders were also asked to describe “effective leaders” they know in two or three words. The ranking of the most important features was (a) goal-orientation, (b) mastering of a complex entity, (c) motivating, (d) visionary, (e) charismatic, (f) diligent, (g) experienced, (h) able to make decisions, (I) capacity to cooperate, (j) capacity to communicate, (k) controlling, and (l) delegating.
Kivistö (1989) studied the behavior of around 1,000 Finnish foremen. Four factors emerged from the data: (a) taking care of human relations, (b) performing the tasks of a foreman, (c) flexibility, and (d) manager's ethics. The two most important factors explaining 44% and 13% of the variance were the two well-know behavior dimensions relations-orientation and task-orientation (cf. for instance Yukl, 2002). Lindell and Rosenqvist (1992) question the exclusive use of task- and relations-orientation that has dominated leadership research. In a study of 439 Finnish managers, they identify a third dimension, development orientation, using confirmatory factor analysis and structural equation modeling (LISREL 7).
In a small study, Simon et al., (1996) interviewed 20 Finnish managers with international experience. They found three characteristics for Finnish companies:
- Clear and simple ways of doing business.
- Fast decision-making process.
- Fairness and responsibility in business.
Their research findings also show that Finnish leaders are characterized by traits such as integrity, energy, reliability, and straightforwardness, and foster a corporate culture of openness and respect for individuals. Apart from honesty, characteristics such as stamina, professionalism, reliability, a high level of education, and perfectionism also describe the Finns. Finnish leaders value cooperation, teamwork, and participatory decision-making. They emphasize the development of skills, creativity, and networks of collaborative relations between different organizational levels (Simon et. al., 1996).
Zandler (1997) surveyed the leadership preferences of 17,000 employees from a Swedish multinational, with a substantial sample from Finland. Zandler's results show that the Finnish results differed from the Scandinavian nations in respect of a desire for a lower frequency of interaction with superiors. This preferred interpersonal leadership is characterized by low intensity. Employees prefer their managers to focus on coaching. To make individuals and the department perform to their outmost, managers should encourage cooperation and teamwork. However, managers need not communicate frequently, unless it is about personal matters. In addition, employees have only limited interest in being empowered and supervised. Zander named the preferred profile “silent coaching.”
Aaltonen (1998) has analyzed descriptions of leaders in the national epos Kalevala and other historical books illustrating Finnish leadership. The most important features in this study were acceptance of subordinates, friendship, setting an example, and avoidance of giving more orders than necessary. A universal feature was the importance of paying attention to subordinates as human beings and individuals, and valuing their feelings and opinions.
Lewis (1996) associates Finns with many positive attributes. He states that Finns have high standards of cleanness, honesty, stamina, workmanship, reliability, hygiene, safety, and education.
Outstanding Finnish Leaders
Three people were seen as outstanding leaders in the political life of independent Finland: The Presidents Carl Gustaf Mannerheim (1867–1951), Juho Kusti Paasikivi (1879–1956), and Urho Kaleva Kekkonen (1900–1986). Can we learn something about outstanding leadership from them?
Carl Gustaf Mannerheim. Mannerheim came from a Dutch merchant family. He was ambitious and purposeful, graduating as an officer in the cavalry from a riding academy in St Petersburg. He continued to serve there for 14 years. In order to gain experience of war he volunteered for the Japanese War of 1904–1905. He attained the rank of General in 1911 and returned to Finland in 1917 (TAT Group, 2001). In 1918, Mannerheim was selected as commander-in-chief of the government troops and also stood as a presidential candidate in the election of 1919. He was unsuccessful and thereafter concentrated on civilian tasks. He was elected as President of the Finnish Red Cross and the Central Union of Child Welfare, founded in 1920. He was given the title Marshal of Finland on his 75th birthday in 1942. During World War II he was elected President and retained that position until March 1946, when he resigned owing to poor health. Mannerheim was a highly respected man in Finland (TAT Group, 2001). He had a vast all-round education and was well versed in languages. He was flexible, adaptable, diplomatic, and a political realist. He had the ability to rise above the everyday political arguments and distance himself from his original reference group. Even after Word War II he was able to refocus himself and see new opportunities, and had the capacity and flexibility to make others see things his way. He became an institution; a great man in the history of Finland.
Juho Kusti Paasikivi. Juho Kusti Paasikivi was quite the opposite of Mannerheim. He was the son of a farmer and his mother died when he was only 4 years of age. After his mother's death his father moved to Lahti where he founded a draper's shop. The father wanted his son to continue with the shop and sent his son to school. Juho was a brilliant pupil and moved on to high school. But his father had financial problems and quite soon after he too died. In spite of that, Juho Kusti succeeded in graduating with the highest grades and went on to university, where he studied languages, literature, philosophy, and law. Even at school he was interested in Russian history and its impact on the historical development of Finland. He made several trips to Russia early on and got a thorough picture of the country from a grass-root perspective complemented later on with the perspective of diplomats and politicians. During World War II Paasikivi was involved in the political negotiations between the Soviet Union and Finland. In 1944, Paasikivi was elected Prime Minister of Finland, although he was already 74 years old, and 2 years later President. Paasikivi was a pragmatist. He understood that politics are the art of the possible and that recognition of the facts is the beginning of all wisdom (Vihavainen, 2000). He realized that Finland was powerless to confront the military superiority of the Soviet Union. For a very long time the Treaty of Friendship, Cooperation and Mutual Assistance signed in 1948 was one of the cornerstones of Finnish foreign policy. Paasikivi was one of the chief architects of that agreement.
Urho Kaleva Kekkonen. In his early days, Kekkonen showed gifts both as a writer and a sportsman. He realized that sports could be a strength, which could be used to unite and strengthen the country, a political potential to be used. He felt strongly for the Finnish language, and that colored his actions both in sports and politics. He obtained his PhD in Finnish Law in 1936. Kekkonen was elected President on March 1, 1956, and continued as President for 25 years. Kekkonen was very popular among the country's citizens. The presidential term is normally 6 years. However, in 1973 Kekkonen was “selected” for a further 6 years by special legislation, which required a two-thirds majority in Parliament.
Finnish foreign policy became more active. One of the fundamental insights of Kekkonen's policy was the “Finnish paradox”: the closer Finland's relationship with the Soviet Union, the freer it was to develop relations with the West (Vihavainen, 2000). Kekkonen and others took the initiative of declaring the Nordic countries a nuclear weapon-free zone. In 1975 Finland hosted the Conference on Security and Cooperation in Europe. Soviet archives have shown that the initiatives were developed in cooperation with representatives of the Soviet Union (Vihavainen, 2000).
Kekkonen used his power and possibilities to influence very actively. He controlled the composition of governments and the appointments of high officials. He also intervened in labor disputes. He sent letters to other politicians and important people in order to influence their decisions and opinions.
In summary, all of the above-mentioned leaders were strong, but in different ways. They were appropriate for the situation in Finland at the time. When Finland was struggling for its independence and was involved in several wars, a President with a military background was needed. Mannerheim was head of the Finnish armed forces in the World Wars I and II. He had a military eye. After the wars it was important for Finland to build up and regain the confidence of the Soviet Union. Both Paasikivi and Kekkonen were both appreciated for their foreign policy and good relationships with Soviet politicians although they were different as leaders. Their foreign policy approach is called the Paasikivi-Kekkonen line and centered on: (a) good relationships with the Soviet Union, (b) cooperation with the Nordic countries, (c) economic connections with the Western market economies, (d) work within the United Nations.
Without any doubt Mannerheim had a military strategy competence, Paasikivi a more social competence, whereas Kekkonen was an individualist who could handle the political game. To summarize this review of outstanding Finnish leaders, we could say that the political leaders acted differently, but were outstanding in particular situations and were able to understand the demands of the surrounding environment. Linna (a very well known author in Finland) wrote literary classics in which Finnish leaders are portrayed. He strongly suggests that leaders are respected solely on the basis of their own achievements rather than because of their title or position. Thus independence may be valued over deference. This short review also indicates that little systematic evidence is yet available regarding distinctive Finnish attributes.
6. GLOBE STUDY ABOUT LEADERSHIP IN FINLAND
A comprehensive questionnaire was used to collect data for this study on Finnish leaders’ behavior and attributes (cf. House, et al., 2004). In total, 438 completed questionnaires were received from three industries: food production (n = 187), telecommunications (n = 108) and the financial sector (n = 143). The respondents were asked to evaluate people (outstanding leaders) who are exceptionally skilled at motivating, influencing, or enabling themselves and others. A 7-point scale was used, 1 indicating behavior or characteristics that greatly inhibit a person from being an outstanding leader, and 7 behavior or characteristics contributing greatly to a person being an outstanding leader. Results for Finland are summarized in Table 4.3, which lists the country's scores for each dimension from the highest to the lowest.
GLOBE Leadership Dimensions
On four leadership dimensions Finns scored very highly, both in absolute and relative terms (in comparison with the other GLOBE countries): Integrity, Inspirational, Collaborative Team Oriented and Visionary. Most of these features are elements of transformational leadership, especially the “charismatic” factor, but also to some extent the “individualized consideration” factor (cf. Bass, 1985; Burns, 1978).
Integrity. The Finns value integrity; an outstanding leader should be honest, sincere, just, and trustworthy. A good leader means what he or she says. The proverb “honesty is the best policy” is valid for outstanding leaders. Honesty seems to be a feature of a good leader in many cultures. Tollgerdt-Andersson (1996) conducted a European-wide investigation and found that honesty is also a very important attribute for leaders in Germany and the UK.
21 First-Order GLOBE Leadership Dimensions |
Score |
Rank |
Integrity |
6.52 |
4 |
Inspirational |
6.42 |
6 |
Collaborative Team Oriented |
6.35 |
3 |
Visionary |
6.29 |
9 |
Performance Orientation |
6.04 |
35 |
Decisive |
5.97 |
23 |
Team Integrator |
5.54 |
27 |
Diplomatic |
5.4 |
40 |
Administrative Competency |
5.32 |
55 |
Modesty |
4.52 |
53 |
Self-Sacrificial |
4.22 |
59 |
Autonomous |
4.08 |
18 |
Humane |
4.06 |
54 |
Status-Conscious |
3.15 |
60 |
Conflict Inducer |
3.10 |
60 |
Procedural |
2.87 |
60 |
Autocratic |
2.11 |
52 |
Nonparticipative |
2.08 |
57 |
Face Saver |
2.05 |
61 |
Self-Centered |
1.55 |
61 |
Malevolent |
1.47 |
59 |
Note. Country scores are listed from highest (contributes outstanding leadership greatly = 7, somewhat = 6, slightly = 5, via no impact = 4) to lowest (inhibits outstanding leadership slightly = 3, somewhat = 2, greatly = 1).
Inspirational. An outstanding Finnish leader should also inspire his or her subordinates, i.e., be enthusiastic, positive, encouraging, and build confidence. In addition he or she should encourage and give advice and support, provide feed-back on successful work and show confidence in subordinates. An outstanding Finnish leader generates energy in the organization and cooperates with subordinates in order to attain goals at an even higher level.
Collaborative Team Oriented. Outstanding Finnish leaders have to be good team integrators, i.e., be able to build teams, integrate and coordinate teams, and communicate within them. Teams are considered to be responsible for their own tasks and therefore a leader is expected to be able to integrate and cooperate. As Lewis (1997) stresses, the Finns like the idea of profit centers and accountability. However, creating a good team demands a lot of the leader because there may be tension between teamwork and individuality. Laine-Sveiby (1987) found that the Finns are keen on spontaneity and value consensus at the society level, but individuality at the personal level. Therefore there should also be scope for individuality in teams. Lewis (1997) says that when working with Finns one should set clear goals, define objectives, and appeal to the inner resources of individuals to achieve the task within their own team and to be fully accountable for it.
Visionary. Besides being inspirational, a good Finnish leader is also required to be visionary, i.e., to have foresight, be intellectually stimulating, and plan ahead. Visionary leadership does not resort to orders or coercion. The more subordinates are aware of the vision, the less external supervision is needed. Visions generate creativity, motivation, and thus efficiency.
In summary, it is worth noting that integrity, inspiration, collaborative team orientation, and vision are all features that apply to good leaders universally (House et al., 1999), not only to Finnish leaders. In addition to these four attributes, two other attributes received high scores internationally: “performance orientation” and “decisive.” The scores by Finnish middle managers were average by international comparison: “performance orientation” (m = 6.04, Rank 35) and “decisive” (m = 5.97, Rank 23).
There were also several leadership features on which the Finns score very low, both in absolute and relative terms, compared to the other GLOBE countries. They are Malevolent (i.e., hostile, dishonest, vindictive, irritable, cynical etc), Self-Centered, Face Saver, Nonparticipative, and Autocratic. Aaltonen (1998) characterizes poor leaders as being unable to put themselves at the level of the subordinates, get close to them, or understand them. Good leaders, on the other hand, interact with their subordinates and employees, tell them where the organization is going, encourage subordinates in their tasks, and build up a working team and organization structure. Good leaders also seem to create both a positive climate and positive values in the organization. As argued above, the Finns have a high level of education and are good on innovation and technology. That means that subordinates are knowledgeable people and hence the leader cannot be the one with the best knowledge in all issues. It is up to him or her to support subordinates and inspire them in order to bring out their best. For Finnish firms this is extraordinarily important because Finland is very dependent on exports and international trade. The competence of the employees of companies must be utilized in order to be internationally competitive. The previously mentioned factors are attributes, which are not connected with outstanding leadership internationally.
Leadership Perceptions in Different Industries
In Table 4.4, the similarities and differences in leadership dimensions between the three industry sectors, Finance, Food, and Telecommunications, are described. Generally, the results for all three sectors mirror quite closely the results for all sectors together. The most important attributes for an outstanding leader are still integrity, inspirational, collaborative team oriented, and visionary. Behavior styles to be avoided in all sectors are malevolent, self-centered, face saver, autocratic, and nonparticipative. However, some significant differences do exist between the three sectors. These differences seem to be caused by industry-specific factors more than by culture factors. In the finance sector customer-orientation and external effectiveness are stressed, while in food production and telecommunications internal efficiency is of greater importance. Against that background it is not at all strange that integrity and a leader's capacity to inspire and function as a collaborator and team-builder are emphasized more in finance than in the other two sectors. Similarly, bad attributes such as malevolent, self-centered, autocratic, and procedural are rated even lower than in the other two sectors. Therefore, the industry context as well as the country culture seems to have quite a strong impact on leader behavior too.
TABLE 4.4
Leadership Scores in Different Industry Sectors (Test of Differences, One-Way ANOVA)
7. QUALITATIVE RESULTS ABOUT LEADERSHIP
To deepen our understanding of the characteristics of Finnish leaders, two additional studies were performed media analysis, several interviews, and focus group discussions.
Finnish Leadership Behavior Based on Media Analysis
In the media analysis a sample of data was taken from the leading Finnish daily financial newspaper Kauppalehti and the leading Finnish weekly financial magazine, Talouselämä. The first period was in May 1996 and the second in May and June 1997. The magazines and newspapers were read in full. Extracts were selected which illustrated what leaders do, but also how they are evaluated. Our aim was to locate verbs and adjectives describing leaders who influence others in an organizational and societal context. A total of 163 text extracts were selected. The important verbs, adjectives, and phrases relevant to leadership were highlighted. The highlighted phrases were typified with one word which best described their content. The following characteristics were derived from the texts and the frequency at which they were used is expressed a percentage (see Table 4.5).
TABLE 4.5
Leadership Attributes: A Brief Description
| Theme | Description | Relative Frequency |
| Visionary | Describes a leader as far-sighted, or as being able to project the future position of the company several years ahead, or a picture of the company or unit several years ahead | 17.7 |
| Performance | Ideas about how to improve performance, | 12.9 |
| Oriented | results, and efficiency | |
| Action Oriented | A leader who undertakes actions, e.g., making decisions, giving speeches, communicating, making changes | 12.9 |
| Organized | A leader who demonstrates good administrative skills and order | 9.5 |
| Clear | A leader who is explicit and clear about rules, values, and policies in the company | 9.5 |
| Cooperative | Networking, cooperation between companies and leaders | 8.2 |
| Decisive | Strong statement by the leader what is to be done, and how to behave in the firm | 7.5 |
| Team Oriented | Team builder, team creator, organizes projects | 4.8 |
| Self-Developer | Activities through which he or she develops him or herself mentally or physically | 3.4 |
| Inspirational | Leader encourages, rewards his or her subordinates, is enthusiastic | 2.7 |
| Sensitive | Leader shows his or her feelings | 2.0 |
| Risk-Avoiding | Leader avoids risky steps or positions for his or her company | 2.0 |
| Communicator | Leader communicates his or her ideas and/or creates good conditions for meeting with subordinates and customers | 1.4 |
| Autocrat | A leader dictatorial and not open to criticism | 1.4 |
| Others | 4.1 |
The most frequent leadership issue mentioned in Finnish business publications analyzed was “visionary.” The notion that managers are forward-looking is not at all strange. The very deep recession at the beginning of the 1990s followed by continuous growth for many years meant that speculating about the future and one's company's position in the market had a high priority.
A second frequent theme was performance and action oriented. A recurrent issue was how to improve the efficiency of companies by means of investments, for example. The link between results and methods of rewarding people was also often discussed and stressed. More generally, the importance of a healthy financial structure and cash flow was underlined. The speed of change seemed to be increasing continuously. Therefore leaders had to be very active and appear to be undertaking some form of initiative at all times.
Leaders were organized; they had ideas about what a good organization should be. Organizing comprised decentralization, participation, teamwork, and flexibility, and creating networks and an open organizational climate. Finns want to work in small groups or individually; compare the quantitative study. Nurmi (1989) states that Finns are satisfied with their work when their entitlements and responsibilities are defined and they can work undisturbed. Their self-discipline is high, and they dislike being closely monitored or ordered about. Thus they are happy to enjoy their independence in a structure that gears their work to the objectives of the organization or society at large. This characteristic of the Finns may explain the many references to organizing.
Another strong feature in the media analysis was clear. Leaders knew how to be successful in their sector and what values to project to their subordinates. They seemed to govern more through values than through orders. Therefore they were also decisive. They followed principles that were critical for development of their company.
Finally cooperation and networking were words that characterized Finnish managers in many articles. For Finnish firms, which are small internationally, cooperation and sometimes also acquisitions and mergers were a necessity. Cooperation was mentioned much more often than competition, competitiveness, and competitive advantage. All in all these features seem to indicate a low organizational structure that is held together with values and visions.
Of the leader attributes identified in the media analysis, several are also included in the GLOBE questionnaire, such as visionary, performance oriented, administratively competent (organized), decisive, team oriented, inspirational, and autocrat. However, there are also several attributes with no equivalent dimension. These are action oriented, clear, cooperative, self-developer, sensitive, communicator, and avoids risks. There are several reasons for the differences identified. One is that the leader attributes identified in the media analysis were characteristic of leaders in general, and not only outstanding leaders. Another reason might be that not all important leader attributes are included in the GLOBE questionnaire. Finally, a third reason could be that some of these attributes might be emic Finnish attributes.
Interviews and Focus Group Discussions
The second part of the qualitative research was to conduct six interviews and two discussions with focus groups on what is understood by the terms leader, manager, competent manager, and outstanding leader, with particular emphasis placed on the characteristics of outstanding leaders and their behavior. All the interviews were tape-recorded and the transcripts analyzed in full. The interviewees comprised three men and three women aged between 30 and 60. All had at least profit center responsibility and therefore management experience. The interviews lasted an average of 1½ hours and were conducted in an office environment.
The focus groups were of two different types. The first consisted of middle managers at a large insurance company, six women and two men aged between 40 and 50. The second was a group of managers participating in an 8-week management education course. There were 15 managers in that group with varying positions and functions, several presidents of their companies. All the managers were from different companies and aged between 40 and 60, most of them men. Both focus group discussions lasted 2 hours.
In the interviews Finnish managers were characterized as people who do not easily give in. They are hard-working. Work has been, and still is, a central value for the Finns. This obviously stemming from Finnish roots in the agrarian society, when hard work was a necessity to survive, earning a living from the land. Finnish Manager's ideas may be questioned and decisions are increasingly being taken at lower levels in organizations. Finns are also quite good at improvising.
It also emerged that Finns experience difficulty in showing their feelings. Their ego tends to be vulnerable and they are below average when it comes to small talk. They are serious, somewhat “gray,” and reserved. They are not good at establishing close personal relationships with customers in other countries, which in some parts of the world is considered very important. They are more authoritarian than Swedish managers. Swedish mangers are better able to discuss, and want to establish contact by talking first about other things than business. The Finns tend to go straight to the matter at hand during meetings.
As regards to competent managers, in particular it was stressed that they have a thorough knowledge of their own areas and build on that. They communicate their ideas to subordinates, that is, they mediate, inform, and translate the ideas of top management in an understandable form to employees. Competent managers are above all task managers. They implement the strategies of the firm, supervise, and ensure that things get done. They work in teams and therefore also have to be people oriented. They select subordinates and have to rely on them. They give feedback and can, if necessary, also change their own views.
Compared to the Swedes, the interviewees thought the Finns to be more flexible and able to improvise. In Sweden it is important to have clear rules, norms and systems. Hierarchies are lower in Finland and it is hoped that they will be even lower in the future. In comparison with Central European managers the interviewees thought the Finns to be more specialized. Central European managers were thought to have a broader humanistic education.
The features that characterized outstanding Finnish leaders in the interviews and focus discussions are shown in Table 4.6. The marks indicate in which interviews and focus discussions, and how often the different behavior traits and features were stressed. In some interviews and focus discussions the same feature was encountered several times, but the number of times within an interview or a focus discussion is not specified.
The three most important personal characteristics raised in the interviews were to get subordinates involved and develop their “self-esteem,” “integrity and honesty,” and “ability to make fast decisions.” An outstanding Finnish leader should be honest, just, reliable, trustworthy, and enthusiastic, but also be able to make decisions fast. The first group of characteristics has to do with commitment and development of subordinates, together with personal features and behavior traits of the leader. The second important group of qualities concerns especially relations with subordinates: “good listener,” “gets people to do more than expected,” “inspires the subordinates,” “has communication skills,” and “gets people to follow him or her.” An outstanding Finnish leader should above all have excellent skills in handling relationships with his or her subordinates.
The ability to make fast decision is an interesting feature. Especially in comparison with the Swedes, Finnish leaders are known for making decisions faster and more individually (cf. Laine-Sveiby, 1987). Finnish society has previously been quite authoritarian. Finland has been involved in two world wars and one civil war. Many of the military leaders in the wars subsequently became managers of companies. Källström (1995) argues that Finnish business leadership is characterized by a military culture that was formed during the two world wars. In many sectors of industry officers and noncommissioned officers were supervisors, which had an effect on the style of management and organization. The former CEO of the Swiss-Swedish industrial group ABB, Percy Barnevik, also gives quite an authoritarian picture of Finnish management. He said in an interview (Källstrand): “When you arrive in Finland, you are expected to say how things should be, the employees like to know where they are going and what the top manager wants, because the manager makes the final decision.” (p. 141) But this authoritarian picture has gradually changed over the last two decades. As one interviewee said: “We try to get people to understand that everyone is a specialist in his own area, and that he has to present his own ideas and thoughts about the work that is very important for the firm. Subordinates may question the way things are done; indeed it is their duty to do that”.
TABLE 4.6
Features of the Outstanding Finnish Leader
For older generations that are more used to the authoritarian era it has not always been easy to adapt their behavior and way of thinking. Nowadays delegation is strongly encouraged.
In conclusion it can be said that the quantitative and qualitative studies produced fairly similar results. Integrity and charisma were emphasized in both types of studies. An outstanding Finnish leader is inspirational and instills a positive and creative climate in which to work. She or he sets an example and selects the right people. Nurmi (1989) stresses that failure in this figurehead role makes leaders also appear untrustworthy in their other roles. The “visionary” factor was supported strongly both in the media analysis, focus group discussions and the quantitative studies. The term team integrator was mentioned in the qualitative study, but not emphasized as strongly as in the quantitative part. One reason for this could be that the interviewees were mostly managers at the middle level who do not work with the “charismatic,” “visionary” top leader on a daily basis. Also the “team integrator” factor is quite a complicated concept with many different dimensions of team working. The qualitative studies indicate that an outstanding Finnish leader works in a group, selects the right employees, utilizes the ideas of the team, and blends them with his or her own ideas to produce good proposals and plans.
8. EFFECTIVE FINNISH LEADERSHIP, IMPLICATIONS FOR CROSS-CULTURAL PRACTICE AND RESEARCH
In summary, the personal features of outstanding leaders are integrity, inspiration, team integrator, and visionary. An outstanding leader stays at a high ethical level, encourages his or her subordinates, is good at coordinating the efforts of different teams and is future-oriented. Authority can be delegated, creating the conditions for positive and creative work. Ken Olsen, the founder and CEO of Digital Equipment Corporation, illustrates some of the behavioral qualities of successful leaders (Savage, 1990): “From our point of view, the companies that will survive are going to move from an environment of management control to one that allows a large number of people, all using their creative ability, their education, and their motivation, to take part” (p. 72).
According to House, Wright, and Aditya (1997), Americans appreciate two kinds of leaders. They seek empowerment from leaders who grant autonomy and delegate authority to subordinates. But they also respect bold, forceful, confident, and risk-taking leaders as personified by John Wayne. That seems to be very much the case for Finnish employees also. They want both autonomy and authority at the same time. Leaders have to be some sort of figurehead and be in the forefront. Such as in wars, the top leader has to make the risky and final decisions. But outstanding Finnish leaders bring forth energy in to the organization and cooperate with subordinates.
The implementation of ideas and plans is decentralized to the middle and lower levels. The actions and behavior of an outstanding leader at those levels will be to select good employees, inspire subordinates, set an example to them, get them involved and get them to follow the leader, pay attention to the subordinates and be a good listener, develop subordinates’ self-esteem, get them to go beyond the call of duty, and finally, to implement ideas by being receptive to others’ ideas and motivating subordinates. At the lower levels of organizations, outstanding Finnish leaders are good at managing people and have superior social skills. Issuing orders and direct supervision are to be avoided since Finns expect to have freedom in their tasks.
The quantitative questionnaires did not catch all the central emic Finnish characteristics. In the qualitative studies the poor communication capability was emphasized several times. However, in the questionnaire there was only one item about communication ability.
Finnish Leadership Between West and East
The history of Finland has very clearly placed the country borderline between the west and east. Finnish societal culture has been influenced, and to some extent created, by the culture of Sweden. The Swedish and Nordic influence has been very strong lasting over more than 800 years. Finns have moved especially to Sweden, but also moved back again. There has been an intensive interaction between Finland and Sweden. But the influence of the east should not be neglected. This influence was direct over more than 100 years before World War I. After World War II, the influence was more indirect up until the 1990s. The Finns had to take into consideration the opinion of Soviet leaders. After the disintegration of the Soviet Union relations have been normalized. Nowadays Russian tourists are one of the largest visitor groups to Finland. But what has the effect been of Finland's position between Sweden and Russia, between West and East?
The figures from the quantitative study in the GLOBE project indicate larger differences between Finland and Russia than what exists between Sweden and Finland. For instance, checking the figures for society “As Is,” Future Orientation is very low, Uncertainty Avoidance is also very low, Power Distance is higher, and Collectivism higher in Russia than that for both Finland and Sweden. The very significant differences might have to do with the large changes going on in Russian society.
The dilemma for Finns is that they have Western values but an Asian communication style (see next paragraph). Lewis (1997) stresses that the Finns’ strengths lie in their values and code of behavior, not in their expressiveness. The two are in a sense incompatible. European values are determinate, logical and often Hegelian (idealistic). In Northern Europe in particular, the values tend to be “black and white.” Asian values are less cut-and-dried, and are more ambiguous. The communication style is more Asian in character. Nurmi (1989) describes it as follows:
“Finns do not think aloud as much as in Anglo-Saxon cultures, they are less open and slower to communicate, and they are relatively more synthetic than analytic in their thinking. What is communicated is meant to be more certain, serious and reliable than in more fluent cultures.” (p. 12 ff)
Why are the social skills of Finns perhaps weaker than those of Nordic and European leaders? Nurmi (1989) emphasizes that a decade ago Finland was a relatively closed country on the European scene. One other factor is the Finnish language. It is very different from almost all other languages except Estonian, which can be understood at least partly by Finnish speakers. Language has been one reason for the historical isolation of the Finnish-speaking Finns. Another explanation is that Finland is a relatively large country with a small population (the surface area of Finland is 338,000 km2, and the population density is 15 persons/km2). The large area and small population contributed to a situation where remote settlements lived in isolation with little contact with people from other countries.
In Table 4.7 a summary from Lewis (1997) work about the values and communication styles used in the West, the East and in Finland is given.
Practical Implications
What should a foreign leader expect and how should s/he behave when dealing with Finnish leaders? Foreign leaders should find employees hard-working if they are correctly motivated. They are honest, reliable, punctual, quite modest, and have the ability to take initiatives. But their social competence is at a lower level.
The Finns are quite individualistic. In most Finnish companies the culture is open and individuals are respected. The distance between leaders, managers and subordinates is short. Many firms have open-plan offices, which facilitate direct communication. Finns are well educated and do not like close supervision. Finnish managers and subordinates want to have their responsibility and authority well defined. Simon et al. (1996) point out that Finnish managers will be committed if they receive work tasks according to their own capabilities, they are involved in the decision-making, and if there is a loyalty between the top management and management at lower levels in the organization. However, Finns are also able to work in a team, but the teams are to combine teamwork and individuality. Lewis (1997) stresses that you should try to appeal to the inner resources of individuals to achieve the task under their own stream and to be fully accountable for it.
Leaders should state clear goals and generate visions, but let the subordinate find the means of how to reach those goals. The leader should discuss the decisions with the subordinate, but the leader makes the decisions and is also responsible for them. The decision making should be fast. Status and hierarchy mean less than in many other Central and Latin European counties.
TABLE 4.7
Finnish Values and Communication Style
U.S.A./Western EU Values |
Finnish Values |
Asian Values |
Democracy |
Democracy |
Hierarchies |
Self-determinism |
Self-determinism |
Fatalism |
Equality for women |
Equality for women |
Males dominate |
Work ethic |
Work ethic |
Work ethic |
Human rights |
Human rights |
Inequality |
Ecology |
Ecology |
Exploits environment |
Western Communication Style |
Finnish Communication Style |
Asian Communication Style |
Extrovert |
Introvert |
Introvert |
Forceful |
Modest |
Modest |
Lively |
Quiet |
Quiet |
Thinks aloud |
Thinks in silence |
Thinks in silence |
Interrupts |
Doesn't interrupt |
Doesn't interrupt |
Talkative |
Distrusts big talkers |
Distrusts big talkers |
Dislikes silence |
Uses silence |
Uses silence |
Truth before diplomacy |
Truth before diplomacy |
Diplomacy before truth |
Overt body language |
Little body language |
Little body language |
Note. From Lewis (1997, p. 4). Copyright 1997 by Lewis and The Institute of Cross-Cultural Communication. Adapted and modified by permission.
The managers have usually taken great responsibility for their employees. However, during the most recent years the globalization of many branches and introductions to the international stock exchange market have forced the Finnish companies to stress more the financial results than has been known earlier. Internationalization has increased significantly during the 1980s and 1990s. The Finnish managers are positive towards the European Union markets. The strategic goals are customer oriented and are based on good technology and a high quality level (Simon et al., 1996). Generally Finns are quite technology and innovation oriented but perhaps are somewhat weaker on the marketing.
Källström finds the national culture stronger in Finland than in Sweden. Therefore it is harder for Swedish leaders, for example, to be leaders of Finns.
Limitations and Suggestions for Future Research
This is a research project investigating the perceptions and views of middle managers in Finnish firms. The results might be somewhat different when investigating CEOs in Finnish organizations, because the tasks are different and the view of a CEO is more holistic and usually also more global. Also their experiences as managers are different. One could expect that culture differences might be somewhat less pronounced at the highest level. Managers at the highest level travel widely and have been influenced by many cultures. Their understanding of other cultures might be greater.
Our study did not cover all of the significant industries in Finland. The paper and metal industries are two of the largest employers in the country. There is a need for further research in order to gain a complete picture of Finnish management behavior and Finnish culture and outstanding leadership in Finland.
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