This document has been downloaded from
TamPub – The Institutional Repository of University of Tampere
Publisher's version
The permanent address of the publication is
http://urn.fi/URN:NBN:fi:uta-201405301516
Author(s):
Title:
Main work:
Editor(s):
Year:
Pages:
ISBN:
Publisher:
Discipline:
Item Type:
Language:
URN:
Sotarauta, Markku; Kostiainen, Juha
Organising for futures in the city-region of Tampere : network
management and the enabling development model
e-City : analysing efforts to generate local dynamism in the city of
Tampere
Kasvio, Antti; Anttiroiko, Ari-Veikko
2005
219-248
951-44-6525-3
Tampere University Press
Political science
Article in Compiled Work
en
URN:NBN:fi:uta-201405301516
All material supplied via TamPub is protected by copyright and other intellectual
property rights, and duplication or sale of all part of any of the repository collections
is not permitted, except that material may be duplicated by you for your research use
or educational purposes in electronic or print form. You must obtain permission for
any other use. Electronic or print copies may not be offered, whether for sale or
otherwise to anyone who is not an authorized user.
Markku Sotarauta and Juha Kostiainen
Organising for Futures in the City-Region
of Tampere: Network Management and
the Enabling Development Model
Introduction1
The strategy of knowledge-based development has wide support
in Finland. Universities and other institutions of higher
education are believed to be the drivers of regional development,
the Centre of Expertise programmes have become very popular
as development tools, technology is seen as a change agent, and
every self-respecting city has built its own technology centre.
Various development agencies not only emphasise strategies and
development programmes to direct their development efforts, but
also partnership, networks and interaction to mobilise a wider
spectrum of competences and resources. In the 1990s, networks
indeed became the magic word for development activities, a
symbol of fruitful co-operation and one of the leading principles
of development activities.2
Networks have thus enjoyed wide popularity, and for a
reason. It seems quite clear that mobilising the resources of
any city-region requires the decisions, resources, expertise and
commitment of several organisations and many different people.
Promotion of economic development is, all in all, an odd world
in that the borderline between dynamic action and the repeating
of ritual-like mantras is thin and delicate indeed. Thin also is
the isthmus between the flood of memos and meetings caused
by excessive networking and genuine collaborative action.
Leadership and the ability to organise have risen into a central
219
IV Knowledge Economy
role in promotion of economic development in city-regions (see
Sotarauta 2005).
Up until the recession of the early 1990s, the regional
development system was, to a great extent, led by public
administration. Stress was laid on resource allocation on the
basis of pre-scripted criteria. The recession forced both Finnish
companies and public actors to look for new strategies and new
modes of organisation. Since then, significantly more emphasis in
promotion of regional development has been placed on strategic
planning, co-operation between firms, public development
organisations and research and educational institutions.
Consequently, new problems have emerged. Development
agencies have not always been able to improve their competencies
at the same pace as the operating environment and companies
have changed, and network-like co-operation has proven difficult
and time-consuming. It has become clear that making effective
use of new action models and strategies also calls for new
organisation forms, as well as more competent leadership and
more highly-skilled management than earlier.
In this chapter, we will look at the development activities of
the Tampere city-region, first and foremost, from the perspective
of organisation and network management. We begin with the
notion that development is about facing the unknown and
creating something new, and that a new strategic grip ought
to replace the earlier ‘bureaucratic and mechanic attitude’.
Promotion of economic development of a city-region is too often
left at the level of administering development activities. In the
background of this chapter, as well as the entire book, lie notions
of a creative, learning and informational city (see Castells 1989;
Florida 2002; Kostiainen 2002; Sotarauta et al. 2003). This
chapter aims to answer the following questions in the framework
of network management: a) how is the promotion of economic
development organised in Tampere, b) what are the advantages
220
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
and disadvantages of the organisation model, and c) why has the
promotion of economic development been organised in the way
that it has.
This chapter is based on a project entitled ‘The analysis
of the development network in the Tampere city-region’, the
findings of which have been published in the report entitled
‘Interpretative promotion of economic development and creative
cities’ (Sotarauta et al. 2003). Moreover, the findings are based
on practical experiences gained in developing the organisational
model of Tampere. One of us, Juha Kostiainen, first worked in the
1990s as the managing director of Finn-Medi Research Ltd and
then in 1997–2001 as the director of business development of the
city of Tampere. One of his most important tasks was to renew
the development model in the city-region of Tampere. Markku
Sotarauta also participated in the discussion of development
strategies and the organisational model. Therefore, the analysis
and notions in this chapter are founded on both research and
experience gained in practice. We have sought to balance our data
so that the evaluations of the functionality of the model are based
on the above-mentioned research project and, most importantly,
on the 35 interviews3 and other research material gained during
the project. The selected quotations are from the interviews, and
they represent the main observations of the study. The experiences
of Juha Kostiainen, and partly also those of Markku Sotarauta, are
used to identify and present the basic assumptions and principles
underlying the enabling development model of the Tampere cityregion.
Network management in the promotion of
economic development
Promoting economic development in a city-region is a complex
interaction process between many actors, through which
Markku Sotarauta, Juha Kostiainen
221
IV Knowledge Economy
economic development policies emerge. All actors have their
own strategies and goals, which in practice means that managing
the development process is by definition an ‘activity between
strategies and goals’. Even though Finnish city governments
often play an important role in the economic development of
their city-regions, they are in no position to direct or control the
strategies of enterprises, organisations or families, for instance.
The management of development efforts cannot be described
as ‘top-down’, or ‘direct and control’ models, nor is strategic
management able to easily define and implement ‘objectives to
serve the common good’. Strategy preferences are more often
than not formed and reformed by balancing different interests
and seeking third solutions. Often they emerge from dynamic
processes, and are thus also dependent on the logic of the
situation and political judgement as to what is feasible and what
is not (see Healey et al. 1995). The various development strategies
and programmes are hence not top-down policy formulations,
ready to be implemented, but arenas for discussions, battles and
quarrels. It is in these processes that new policies and development
projects often emerge to be later legitimised in the official policy
arenas. Consequently, the economic development of a cityregion cannot be controlled by a single actor, and it cannot be
founded on hierarchical power relations. In this sense, it can be
seen to constitute a more network-like activity (Sotarauta 2000,
130; Klijn & Teisman 1997, 98), often affording development
networks a crucial position in the launch and implementation of
new processes.
The term network here is simply defined as the social
relations that represent varying degrees of intensity, and that are
organised in different ways between mutually dependent actors
with the aim of promoting common interests. The emergence
of network relations demands the recognition and acceptance
of mutual dependence. A network does not rely on hierarchical
222
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
relations, but on ties characterised by loyalty, solidarity, trust
and reciprocal support. The notion of the development network
refers to the actors who through their own activities and mutual
co-operation have a strong influence on the development of a
city-region. A development network often constitutes a loosely
coupled and organised strategic network. It can be characterised
as a typical policy-network (see more Sotarauta 2001; Kostiainen
2002; Linnamaa 2004). As Kickert et al. (1997a, 6) state, policynetworks are more or less stable patterns of social relationships
among interdependent actors, and they take shape around policy
issues and/or policy programmes.
With development networks, it is not always possible to
find distinct leaders or management responsible for collaborative
activities. Rather, management can be construed as the effect
of different actors on themselves and each other, and thus in
principle, several network leaders can be identified at one time
(Kickert et al. 1997b, 167–168). This does not, however, mean
that all actors have the same amount of power in the network. In
practice, some participants may carry more weight and dominate
more than others, due to possession of important resources,
crucial information, networking skills, and so on. All in all, it is
characteristic of network management to have strong orientation
towards facilitating interaction processes, communication among
different actors, and orientating to goal-searching rather than
goal-setting.
According to Klijn & Teisman (1997), network management
may address perceptions, actors, and institutions and the relations
between them. Perceptions refer to differences and similarities in
the actors’ values, goals and perspectives on a given issue. The
inclusion of perceptions as one of the focal points in network
management is based on the fact that actors do not react directly
to reality, but to internally constructed perceptions of reality
(van der Hejden 1996; Sotarauta 2001). Contrary to what is
Markku Sotarauta, Juha Kostiainen
223
IV Knowledge Economy
often expected in Finland, management by perceptions does not
necessarily aim at a consensus, but at creating a common base
for joint decisions, while accepting and respecting the positions
and perceptions of other actors. The focus on the actors intends
to influence the individual games and combinations of actors in
the entire network (those who are included and those who are
not included) as well as the interaction between actors. Moreover,
the actors’ goals and preferences may change in the course of the
process. Thus, it is difficult for the actors to know in advance
which goals will be achieved in the process, and what will be the
results of the strategy process. Actors are required to learn from
their own and other actors’ goals and strategies in the course of
the process (Klijn 1997, 32; Sotarauta 2001).
The term institutions refers to the relatively permanent
modes of operation, rules and resources and the organisational
field which give the network its external form. When orienting
to institutions in network management, the aim is to indirectly
influence all present and future actions as the ‘architecture’ of the
network changes. So, the aim is to develop institutions so that
interaction between actors can be arranged to ensure optimal
success of development efforts (Klijn & Teisman 1997). Next, we
will discuss the ways in which the various development actions
of Tampere, and its emerging development network, have been
organised, and why. It is possible to think of the process as the
first steps in conscious network management in Tampere, with
the aim of acting in society through institutions and perceptions,
and the co-operation of various actors engaged in development
efforts.
224
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
Change in the development strategies of
the city of Tampere
Knowledge intensity has become the spearhead in the
development strategies of the city of Tampere, and the whole
city-region which comprises seven autonomous municipalities. In
the economic development strategy drawn up in 2002, the vision
of the city is to become one of the most attractive environments
for knowledge-intensive companies and living environments
for skilled people (Kyä lähtee 2002). Thus, the most recent
economic development strategy continues to highlight the aspect
of knowledge intensity, already firmly established in previous
documents. At its core lies the idea that Tampere should be
able to maintain and continue to create high-quality innovation
environments in selected fields of business and research. However,
it is also worth noting that the emergence of a knowledge base and
the development of structures and thought models supporting it
have been long processes. They have not emerged in one strategic
plan or development programme but as the outcome of several
plans and, most importantly, of individual perseverance and years
of work (see Kostiainen & Sotarauta 2003).
The birth of a knowledge-based economy in the city of
Tampere could be construed as follows: from the 1950s to the
1980s, its structures were reinforced based on the development
view of individual people along with small active groups, and
accelerated by the active co-operation of these actors. By the
end of the 1980s, the city had progressed to developing both
a knowledge-based economy and an information society,
though not using these concepts. Still, in the mid-1990s, a
certain formalisation and systemisation of the new thinking
were still missing. The general spirit of the times, as well as the
strong perceptions and interaction relationships shaped by
industrial culture and tradition, slowed down the transition
Markku Sotarauta, Juha Kostiainen
225
IV Knowledge Economy
from emphasising the traditional industry to a sharper focus
on innovation and expertise. In the 1990s, with the national
economic depression and the change in the spirit of the times
in Finland as a whole, the significance of the knowledge-based
economy began to be more broadly understood in the city.
With the support of previous structures and institutions, more
emphasis was afforded to technology and innovation activities. In
other words, the innovation system was consciously strengthened
(more about the development of Tampere, see Kostiainen &
Sotarauta 2003; and other chapters in this volume).
After the mid-1990s, the knowledge-based economy was
institutionalised to become part of the development thinking and
development activities of Tampere through strategic planning. The
aim of the earlier strategies had been mainly to create new jobs,
whereas the new strategy, published in 1998, placed the emphasis
on the dynamic interaction between jobs and a skilled workforce.
In other words, on the fact that, particularly in sectors requiring
high-quality expertise, the provision of a skilled workforce
attracts companies and new jobs, and not only vice versa, as had
been believed earlier. In a certain sense, at that time, the City of
Tampere started to take its first steps towards building a creative
city in the Floridian spirit (see Florida 2002). What was felt to
be particularly important was that the strategy included a clear
definition of the clusters whose development should be focused
on. The Centre of Expertise Programme prepared earlier laid the
foundation for choices made in the strategy process, mechanical
engineering and automation,4 healthcare technology, information
technology and tourism were selected as focal points (Tampereen
kaupunkiseudun… 1999). The Centre of Expertise Programme
and the economic development strategy were the central forums
in selecting the clusters considered to be important from the
viewpoint of future development.
226
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
The areas of expertise selected for the Centre of Expertise
Programme received a certain local ‘strategic status’. In addition,
the programme boosted the co-operation of key actors in
the selected areas of expertise, and the Centre of Expertise
Programme has thus become one of the most central interaction
forums (see e.g. Kautonen et al. 2002; Martinez-Vela & Viljamaa
2004; Sotarauta et al. 2003). The choices made in the Centre
of Expertise Programme were also suitably complementary. In
Tampere, mechanical engineering represented the traditional area
of expertise in which internationally significant companies were
already operating. In the 1990s, information technology was in
turn starting to grow fast alongside Nokia, and with regard to
healthcare technology, the Finn-Medi Research Ltd for support
of firms in the field was about to be completed. In addition, there
was already a strong belief in the prospects of medical informatics
both in Tampere and in the whole country. The Centre of
Expertise Programme also provided a good development impetus
to the transition into cluster-based thinking, accentuating
horizontal co-operation.
Upon preparing the new Centre of Expertise Programme
in 1998, the areas of expertise introduced were information
technology, mechanical engineering and automation, medical
informatics, communication and digital and new media, and
knowledge-intensive business services (Tampereen seudun
osaamiskeskusohjelma 1998). The significant role of knowledgeintensive services had been acknowledged in some studies
after the mid-1990s.5 The first Finnish study on the topic was
conducted in Tampere in 1998 (Kautonen et al. 1998). However,
the national selection board failed to accept knowledge-intensive
services as part of the programme, even though all of the other
areas were included. In Tampere, the importance of developing
knowledge-intensive business services was nevertheless believed
in, and therefore a decision was made to continue developing
Markku Sotarauta, Juha Kostiainen
227
IV Knowledge Economy
them with local funding, without an official programme status
or government funding. Finally, in 2002, knowledge-intensive
business services were officially included among the Centre of
Expertise areas of expertise.
Making knowledge intensity the base of development
activities and raising the target level can be illustrated by
comparing the 1998 economic development strategy to the 1987
and 1990 economic development policy programmes. The central
differences in the perceptions behind the strategies are that the
1998 strategy shifted to cluster-based development and identified
those strategic clusters that needed to be developed. The earlier
programmes talked about sectors, but no choices in regard to the
focal points in the development had been made. In addition, there
is a clear difference in how the city sees its own regional role. In
the 1987 programme, the City of Tampere is seen as a ‘regional
centre’ and as a ‘location of some state functions’. In addition,
the strategy talks about the ‘label and right of an industrial city’.
In 1990 the emphasis was already on ‘know-how’, which in the
year 1998 was changed into a more clearly defined ‘knowledge
intensity’, and into developing the city into an ‘exemplary
European city of lifelong learning’ (Tampereen elinkeino-ohjelma
1987–2000; Tampereen elinkeinotoimintojen kehittämisohjelma
1990–1995; Tampereen tulevaisuus…; Kostiainen & Sotarauta
2003).
After the rise of the information society thematic into the
core of both Finnish and European rhetoric at the turn of the
year 2000, the City of Tampere started began to look for a new
approach to accelerate the development of the information
society. In Tampere, the information society was not only seen
from the viewpoint of economic development. The aim was to
develop the information society comprehensively as a driving
force that would renew the entire local community. Thus, at the
end of the year 2000, the eTampere Programme saw the light of
228
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
day. It consists of seven different sub-programmes and its budget
amounts to EUR 132 million (Kostiainen 2001; www.etampere.
fi). This large development programme has attracted broad
national and international attention. Based on the same line of
thinking, a seven-year development programme in biotechnology,
BioneXt Tampere, was launched in 2003 with a budget of EUR
100 million (for more information, see www.bionext.org).
The main significance of the new strategic thinking
established at the end of the 1990s lies in the fact that it helped:
• to establish, formalise, and systemise the development
activities built on expertise, technology, innovations
and knowledge. The collective development view was
strengthened when more and more actors saw that
development was being built on knowledge intensity. This
was especially strongly influenced by the change in the spirit
at the time in Finland towards emphasising innovation
• to continue to raise institutional thickness by establishing
new specialised development agencies to answer for the
development of the selected focal points
• to create new co-operation forums for development activities
(for engaging a wider spectrum of actors to development
activities) – interaction among key actors began to develop
step by step into a more network-like activity
• to raise the ambition level of the promotion of economic
development. The eTampere programme aimed to make the
city of Tampere a ‘world leader in the research, development
and application of the information society’, and a hub
in global networks instead of being a provincial centre.
Raising the ambition level has affected perceptions by
forcing people to think about their own actions in broader
contexts than earlier, and in a more demanding operating
environment. At the same time, an increasing number of
Markku Sotarauta, Juha Kostiainen
229
IV Knowledge Economy
actors have realised that these more far-reaching aims can
only be reached through co-operation.
Basic assumptions underlying the enabling
development model of Tampere
The new economic development strategy for Tampere, and the
thinking on which it was based, also required a new mode of
organisation.
In Tampere, as well as elsewhere in Finland, one of the
main problems in development activities lies in that often the
organisations (and people) engaged in developing a region look at
development at an overly general level, as a whole, and therefore
do not have much in-depth knowledge or understanding of
the dynamics and logic of the targets of development. In the
1990s, a need to deepen substance knowledge in economic
development was identified in Tampere. Consequently, Tampere
has step by step created a network-like mode of action which
aims to create innovation environments for selected clusters by
deepening substance knowledge and increasing networking skills
in development activities. In the early 2000s, the organisation of
the economic development policy in Tampere is based on what
we have labelled the enabling development model.
First of all, enabling refers to the idea that economic
development policy should employ several different resources
and channels that best suit each situation, time and place.
Enabling is implemented at two levels: a) General development
agencies enable specialised development agencies to specialise
in developing their own focus clusters. At the strategic level,
the task of general development agencies, in particular the city
of Tampere, is to steer the activities of specialised agencies by
developing the institutional structure and by acting as financiers
and strategic leaders of development activities. b) Specialised
230
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
development agencies aim to bring about the emergence of as
good an innovation environment as possible for their target
clusters, and in this way to create preconditions for enterprises
and intra-cluster co-operation.
The enabling development model is largely based on
the activities of specialised development agencies. The main
specialised development agencies of Tampere and their
specialisations are as follows:6
• Technology Centre Hermia Ltd – automation and
mechanical engineering, information and communication
technology
• Finn-Medi Research Ltd – healthcare technology,
co-ordination of the BioneXt Programme
• Media Tampere Ltd – new media and communications,
co-ordination of the eTampere Programme
• Professia Ltd – knowledge-intensive business services
• Tuotekehitys Ltd Tamlink – technology transfer
• Tampere Convention Bureau – tourism
• Ensimetri – advisory services for new business enterprises
• Sentika Partners Ltd – venture capital services for
enterprises (funds: Pikespo, Tasku)
• Innofinance Ltd – venture capital services for the seed
phase (fund: Tamseed)
• Tampere Science Parks Ltd – provision of facilities for
enterprises
If we look at the Tampere development network as a whole,
we would also need to include the Employment and Economic
Development Centre for the Tampere Region, The Council of the
Tampere Region, the University of Tampere, Tampere University
of Technology, the polytechnics, the Tampere Chamber of
Markku Sotarauta, Juha Kostiainen
231
IV Knowledge Economy
Commerce and the Regional Organisation of Pirkanmaa Private
Enterprises.
The enabling model is based on the following four basic
assumptions.
• Development is organised around clusters
Organising development activities around clusters began with
identifying the central clusters and entrusting the development of
each cluster to a specialised development agency. As mentioned
above, the strategic clusters (complemented with tourism in
the economic development strategy) have been identified in the
Centre of Expertise Programme. The aim is to gain sufficient
specialisation to deal with the strategic issues of the cluster in
question. The purpose here is to prevent the role of the general
development agencies from becoming too strong in development
activities, since this might create a danger that substance
knowledge will not develop sufficiently. On the other hand, it is
believed that the strategic responsibility for developing the cityregion has to be in the hands of the municipalities, and that it is
not possible to leave it in the hands of specialised development
agencies living, quite largely, on demand. Vision would then
remain narrow, and the needs of some clusters may be overemphasised. Therefore, the steering and strategic leadership
of the economic development policy is still kept as part of
local government decision-making, which makes it possible
to co-ordinate zoning, service provision, etc., with economic
development policy measures in the spirit of a comprehensive
development policy.
The purpose of building development activities on clusters
and specialisation is:
• development activities are based on the best possible substance
knowledge and expertise
232
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
One of the most central ideas in the enabling development model
is that economic development and business services have to be
taken as closely as possible to enterprises, or some other focus
groups, to support the development of their competitiveness. The
assumption is that only sufficient specialisation and the substance
knowledge that it enables can guarantee that development
agencies are considered as credible partners with enterprises and
other organisations. The assumption is that investing in substance
knowledge makes it possible to earn the confidence of enterprises.
Expertise-based credibility is also considered to be important
in the long run; as the economic operating environment is
globalising, the development agencies of Tampere have to be
credible actors in global forums as well.
Regional development runs a continuous risk of locking
in on old structures, thought models or, say, received benefits.
Lock-ins may prevent actors from recognising threats in the
environment and/or capitalising on new technological and
scientific knowledge (Kautonen et al. 2002, 13). A very central
question is then how it is possible to create a continuously selfrenewing dynamic development model, and thereby prevent
the lock-ins from emerging. In Tampere, the goal of making
the promotion of economic development itself innovative and
dynamic has been pursued
• by creating options and internal competition within the
enabling development model as well as by strengthening the
internal motivation of the development agencies to improve
their own expertise.
This principle has been implemented so that specialised
development agencies are independent actors that must able
to maintain profitable business operations. Thus, the aim is to
‘marketise’ the development services so that their financing is
Markku Sotarauta, Juha Kostiainen
233
IV Knowledge Economy
not exclusively public. Specialised development agencies are at
the same time both actors engaged in the economic development
policy, and independent enterprises. The basic idea is that in the
enabling development model both municipalities and enterprises
buy development services from specialised development agencies.
From them, the city of Tampere and other municipalities buy
development services and implementation of certain segments
of the Tampere economic development policy. Municipalities
can, in theory at least, submit the administration of the different
sub-areas of their economic development policy to competitive
tendering among other actors too. This is assumed to provide
the possibility to intensify functions and if needed to shut down
functions that are not working or that are useless, more easily
than if they were part of municipal organisations. For enterprises,
the model provides an opportunity to find the best possible
expert help from among several different options for their own
development processes. Although specialised development
agencies are in a special position, in the long run we can see a
situation in which purely private expert enterprises also have
sufficient substance knowledge, when they too can take part in
the competition over the implementation of the projects and
programmes, in accordance with the legislation governing public
acquisitions.
Within the model, the reverse side of the overlapping of
competition and co-operation as well as the relatively broad
independence of specialised development agencies is the risk that
the activities disperse. It is therefore assumed that the economic
development strategy and the Centre of Expertise Programme
will form a backbone for the enabling development model. In
other words
• the economic development strategy steers all development
activities and the enabling development model. The Centre of
Expertise Programme in turn directs the creation of cluster234
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
specific innovation environments, and large development
programmes are used to create long-term competitive
advantage.
What is essential then is that the economic development
strategy has been prepared in co-operation with regional
development agencies, educational institutions, universities, and
business enterprises. The actual responsibility for execution and
implementation lies with either specialised development agencies,
or with other co-operation partners. In other words, developing
each cluster requires its own development strategy which should
be in line with the overall economic development strategy, and
which at the same time makes it more precise.
Behind the enabling development model lies the idea, the
wish and the aim that the promotion of economic development
would become dynamic, flexible and continuously self-renewing.
This dynamism has been further increased by the eTampere
and BioneXt programmes, both of which operate cross cluster
boundaries and increase in-depth specialisation. Although
the responsibility for their co-ordination lies with designated
development agencies, a particular management system has
been created for them in which the role of research institutes is
stronger than that in the Centre of Expertise Programme. The
logic behind the enabling development model is summarised in
Figure 1.
Markku Sotarauta, Juha Kostiainen
235
IV Knowledge Economy
Development activities are
effective and business services
are desirable
Key actors of the cluster
in question are integrated into
development activities
(researchers, investors, etc.)
Substance knowledge increases
and the level of expertice reaches
high international standards
Developing of each cluster is entrusted
to a specialised development agency
Clusters central to urban
development are identified
The current state, most important
resources and actors of urban
region are identified
Social and economic
development trends and change
agents are analysed
Figure 1. The logic behind the enabling development model of the
Tampere city-region
In the 2000s, the promotion of regional development in
Finland is clearly more network-like than in the 1980s. In
practice, however, the current mode of organisation is more or
less hierarchical and network-like simultaneously, because in
addition to the attempt to network, its action models are still
strongly influenced by the hierarchy of the national development
machinery (see Sotarauta & Lakso 2000; Virkkala 2002). Behind
the model based on buying and selling the development services,
we can see an attempt to build a development model that is based
on markets and networks.
236
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
Evaluating the functionality of the enabling
development model
Roughly speaking, the attitudes of the interviewees towards the
enabling development model can be divided into three groups:
those who think that the model is good, those who want to renew
it, and the ignorant or indifferent. In any case, the most positive
attitudes have been shown by those who have participated in
the creation of the model in one way or another, and who have
attained an understanding of the basic assumptions and principles
underlying it. In the interviews among those taking a positive
stand, as well as among those taking a less positive stand, were
some that were in any case seemingly willing to continuously
develop the enabling model which they considered not to be
optimal as yet.
In the following section we will look at the most central
factors contributing to the functionality of the enabling
development model. These are unfamiliarity with the
model, tension between decentralisation and centralisation,
specialisation and development of expertise, the relationship
between mechanicality and dynamism, and the significance of
management and leadership.
Unfamiliarity
The enabling development model of Tampere seems quite
unorganised and partly confusing to many actors. Only a few
people understand its basic principles, the network behind it and
the roles of actors belonging to it as a whole. The basic principles
of the model are understood only by those actors who through
their work look at it as a whole, or by those who are responsible
for developing the model, or a part of it. Other actors see mainly
those parts that touch the activities of their own organisation,
and all that is outside seems confusing. The largish size of the
Markku Sotarauta, Juha Kostiainen
237
IV Knowledge Economy
Tampere city-region and the largish number of actors obviously
make it difficult for many interviewees to evaluate the enabling
development model as a whole. The development activities are
by necessity dispersed, which means that different actors act in a
certain part of a network but have no ability to be involved in the
activities of the entire development network.
The basic assumptions behind the model have not been
widely discussed, and therefore these principles and assumptions,
and the practices emerging along them, are understood only
by few key individuals. To others, it appears as a series of single
events and a number of separate organisations. In practice,
there have been no vigorous attempts to make the enabling
development model in any way visible as a whole. At the same
time, it has to be noted that from the start the creation of the
model has hardly taken place consciously and it has hardly been
based on the presented basic assumptions. At the beginning,
single organisations were founded to meet some practical needs
and in the course of time a more comprehensive grip has begun
to be built slightly more consciously on the existing organisations
and action models.
Dispersion
One of the themes that have brought about the most intense
discussion is the dispersion of the model: is it already too complex
and fuzzy?
The enabling development model consists of several fairly
independent organisations, and those actors who feel that the
model should be renewed view it as already too dispersed into too
many parts. Some actors stress the need to have a more clearly
articulated and structured development model (see also Kautonen
2002, 94), and according to them the promotion of economic
development should be concentrated in one organisation, and
thus form a strong organisation responsible for developing the
238
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
city-region instead of a network of several agencies. In the current
model, volume and effectiveness have, however, been pursued in
another way, by building large development programmes.
A dynamic enabling and network-based model in turn
stresses the organisations’ capability to compete and co-operate,
and their responsibility for their own operations, leadership,
individuals and teams as well as the ability to create something
new and strategically adapt to changes in the environment. The
enabling model does not pursue centralised, optimal and coordinated knowledge production. Information acquisition and the
creation of new knowledge are part of every organisation’s tasks.
Creation of new knowledge needed in promotion of economic
development is, first of all, seen as an interactive process in
which what is crucial is not the formal position but the ability to
acquire, produce and apply new knowledge. What brings tension
in the discussion is that the enabling development model is based
on the dynamic organisation mode, but in practice it is a part
of a development system of public administration that is used to
the mechanic mode of organisation. Excessive dispersion can also
be caused by model-internal competition, which is believed to
increase the dynamism of development work, but that in practice
can also further disperse activities.
There are many actors that compete for the same money. Of
course competition does ensure quality. We may still ask if it
makes sense to use an awful lot of resources to acquire money
through competition and then be left without funding in the
competition. Also, preparations have to be invested in a lot, and
then there will often be no resources left for implementation. In
other words, this development system and its efficiency should be
called into question.
Some actors in turn feel that excessive concentration of functions
would stiffen renewal, and leave the activities at an overly general
Markku Sotarauta, Juha Kostiainen
239
IV Knowledge Economy
level. Therefore the dynamism of the development activities
might suffer.
If there’s one operative actor, then it should be the business
development office . . . business development agency or a
technology centre ltd, so if everything is concentrated in it, it
follows that the activities are still more general than what they
as cluster-influenced activities would be. The closer we get to the
operations of firms, the more substance-centred the development
is. It can get to practical matters, it has operational credibility, and
it makes things move.
In the mechanic mode of organisation, the essential question
usually is ‘how well does the organisation serve the system’. In
Finnish regional development policy arenas, there is a strong
belief in the system and it is still believed that the task of many
organisations is to serve the development system. However, the
enabling model, which is based on dynamic understanding on
organisation, is also based on shared power. The roles and tasks
of the actors are only partly based on official positions, but more
clearly than earlier on people’s skills, expertise and ability to cooperate. Therefore the question becomes more and more about
how the development organisation serves the individuals and
teams that cross organisational borders – what kind of working
environment and creative problem-solving environment7 are they
able to offer to the experts of the field.
The fear of dispersion becomes concrete, as several
interviewees ended up analysing at length the role of other
organisations as part of the development system. In these
contemplations, we can see a wish to achieve as clear roles and
agreed division of labour in advance as possible, and there
is indeed a reason to take the danger of dispersion seriously.
However, the question here should not be about how the
organisation is made to serve the system, but how the network
240
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
serves the organisation, and vice versa, and in turn how the whole
that emerges from this serves the development of the city-region.
The discussion of the enabling development model is largely
crystallised in different views on a good model of organisation
arising from different perceptions over economic development
and how to direct it. Simply put, the aspects accentuating
mechanic systems, on the one hand, and the dynamic, more
organic network, on the other hand, seem to be set against each
other. From the viewpoint of the enabling development model
of the Tampere city-region, two questions emerge: a) should the
activities be concentrated in one development agency or in a
couple of development agencies, or b) should the enabling model
be made more visible, and should better leadership and network
management skills be learnt?
Specialisation and in-depth expertise
Those who think that the enabling model is good emphasised,
most of all, its built-in aim to specialise and to create
preconditions for in-depth expertise.
‘Here we have somehow understood as a centre the municipal
business development offices; in other words that they [business
development offices of the municipalities in the city-region]
attend to general local economic development policy. For sectorspecific development these specialised agencies have then been
founded, to get better expertise in each theme than what it
would be possible to get in one organisation. Exploiting them
makes it possible to speed up and increase development activity,
create efficient projects. In my opinion, this model is extremely
effective.’
‘In my opinion, this economic development policy model works
well here in the Tampere city-region, I don’t think that we could
have reached the same results by using another model.’
Markku Sotarauta, Juha Kostiainen
241
IV Knowledge Economy
The enabling development model creates the preconditions for
in-depth expertise, but the increase in expertise needed to reach
the level required by the model is a long process, and many actors’
skills and competencies are not yet developed to the level of the
organisational model. The intensity of development activities can
mainly be considered fairly good. Development activities involve
several people who take their work seriously, and who do it with
‘great passion’ and with a high level of expertise. However, what
makes the model vulnerable is the fact that the intensity and
expertise related to development activities lie with fairly few
individuals.
Recruiting adequately qualified individuals for promotion of
economic development is often difficult. The results are achieved
slowly, the activities seem slow and stagnating and in public
administration the pay cheque is usually not a competitive asset
either. One of the basic ideas behind the enabling development
model is that the specialised development agencies can create
the kinds of working environments in which professionals can
be paid the appropriate wages and offered challenging tasks.
At the same time, however, the question can be raised whether
the development model of the Tampere city-region and its
development agencies are all in all sufficiently attractive.
Summary
Finnish economic development is characterised by a strong
belief in knowledge, technology and universities, as well as in
the network-like mode of action. In the city of Tampere, the
knowledge-based economy began to be developed with, more
or less, a clear goal in mind several decades ago, but only in the
1990s were knowledge intensity, cluster-based development
of innovation environments, and an action model based on
specialised development agencies formalised and systemised as a
242
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
central part of the development strategies. What was significant
in this was the Centre of Expertise programme, which in 1994
provided the selected clusters a certain strategic status, and which
has been central all along. In 1998, the aim of the economic
development strategy was to improve the competitiveness of
the city-region, not to create new jobs as such, for example. At
the same time, attention was paid more clearly than before to
the dynamic interaction between the workplaces and the skilled
workforce. The aim of the eTampere programme and other
strategic development programmes has been to raise the target
level and ambition of the development activities. Raising the
target level was a message sent to the people and organisations
acting in Tampere and to those outside the city. A new time calls
for larger and more efficient measures as well as more intensive
co-operation than earlier among universities, enterprises and
public development agencies.
The form of what we here have labelled the enabling
development model first took shape partly on its own. Later it was
more consciously developed into a network-like mode of action,
where specialised development agencies play a central role. These
are mainly public or semi-public companies that are specialised
in developing certain clusters and that have the municipalities of
the Tampere city-region among their main clients and directors
of activities. The idea is that specialised agencies also have other
clients and that they thus are also market-based actors.
The enabling development model of the Tampere cityregion is mainly considered to be good, but the point with most
criticism in it seems to be the dispersion of the model. From
the mechanic organisation point of view, the enabling model
is indeed dispersed and blurred. From the viewpoint of the
dynamic model, dispersion and lack of clarity may, with the right
leadership and management, be factors of innovativeness and
dynamism. At the moment, these are not the aims, the model as
Markku Sotarauta, Juha Kostiainen
243
IV Knowledge Economy
a whole not being known well enough, and the new management
and leadership skills being still to emerge. The arguments of those
considering the model to be good and of those who take a more
critical attitude towards it, are based on a relatively narrow view
on the enabling model and its good and bad sides. Therefore,
what is once again needed in Tampere is an open debate on the
future, and on how to organise the development activities for
the future emerging in front of our eyes every day. The enabling
model, based on continuous self-renewal, thus sets entirely new
requirements for management, because it cannot be managed
by direct command relationships. The enabling model requires
leadership, conscious management of networks and continuously
open channels of communication among the development
agencies and other actors. If there is wide awareness of the
basic assumptions and principles of the model, there is a good
chance that it will develop into an as dynamic and continuously
self-renewing model as hoped for. If it remains foreign to even
those organisations that are part of it, it is very likely that the
functionality of the model suffers and it also remains fuzzy among
the partners (e.g. enterprises).
With good management and strong leadership, it might be
possible to combine sector-specific substance knowledge, creation
of general-level competitiveness and new strategic openings
with each other. Because the model is heavily specialisationoriented and manifold, its co-ordination is still relatively
difficult if the capabilities of the City of Tampere and other
key leading network actors do not develop to meet the new
requirements. In management emphasis should not be laid only
on understanding the whole cognitively, but also particularly
on communication skills and social skills. The ability to create
a believable interpretation of the future, the ability to create
an inspiring vision and energise the actors with continuous,
rightly-timed communication and the ability to create trust
244
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
relationships between fairly different actors. The whole cannot be
‘under control’ in a traditional sense either, and therefore certain
uncertainty just has to be tolerated. The model also easily causes
conflicts of interest and makes organisations and actors seek their
own interests. To counterbalance the trust relationships, a strong
ethical vision and ability to tackle problems are needed as the
activities are ultimately financed through public funding.
References
Castells, M. (1989) The Informational City: Information Technology, Economic
Restructuring, and the Urban-Regional Process. Blackwell Publishers.
Florida, R. (2002) The Rise of the Creative Class: And How It’s Transforming
Work, Leisure, Community and Everyday Life. New York: Basic Books.
Healey, P., Cameron, S., Davoudi, S., Graham, S. & Madani-Pour, A. (1995)
Introduction: The City - Crisis, Change and Invention. In P. Healey, S.
Cameron, S. Davoudi, S. Graham & A. Madani-Pour (eds.) Managing
Cities. Bath: John Wiley & Sons, Bath, 1–20.
Hejden van der, K. (1996) Scenarios: The Art of Strategic Conversation. John
Wiley & Sons.
Kautonen, M., Schienstock, G., Sjöholm, H. & Huuhka, P. (1998) Tampereen seudun osaamisintensiiviset yrityspalvelut [Knowledge intensive
business services in the Tampere urban region]. Työraportteja 56/1998,
Work Research Centre, University of Tampere.
Kautonen, M., Kolehmainen, J. & Koski, P. (2002) Yritysten innovaatioympäristö: Tutkimus yritysten innovaatiotoiminnasta ja alueellisesta
innovaatiopolitiikasta Pirkanmaalla ja Keski-Suomessa [Innovation
environment of firms: A study on the innovation activities of firms and
regional innovation policy in the Tampere Region and Central Finland]
TEKES, Teknologiakatsaus 120/2002. Helsinki.
Kickert, W., Klijn, E-H. & Koppenjan, J. (1997a) Introduction: A Managment
Perspective on Policy Networks. In W. Kickert, E-H. Klijn & J.
Koppenjan (eds.) Managing Complex Network. Strategies for the
Public Sector. Sage Publications.
Kickert, W., Klijn, E-H. & Koppenjan, J. (1997b) Managing Networks in the
Public Sector: Findings and Reflections. In W. Kickert, E-H. Klijn &
Markku Sotarauta, Juha Kostiainen
245
IV Knowledge Economy
J. Koppenjan (eds.) Managing Complex Network. Strategies for the
Public Sector. Sage Publications.
Klijn, E-H. & Teisman, G. (1997) Strategies and Games in Networks. In
W. Kickert, E-H. Klijn & J. Koppenjan (eds.) Managing Complex
Network. Strategies for the Public Sector. Sage Publications.
Kostiainen, J. (2001) eTampere – Generating Growth through Collaboration, in
Kasvio et al. (eds.) People, Cities and the New Informational Economy.
Materials from an International Conference in Helsinki 14.–15.
December 2000. Helsinki: Palmenia-kustannus.
Kostiainen, J. (2002) Urban Economic Policy in the Network Society. Helsinki:
The Finnish Association of Graduate Engineers.
Kostiainen, J. & Sotarauta, M. (2003) Great Leap or Long March to Knowledge
Economy: Institutions, Actors and Resources in the Development of
Tampere, Finland. European Planning Studies 10 (5).
Kyä lähtee – Tampereen elinkeinostrategia. (2002) Tampereen kaupunki [The
urban economic development strategy of the City of Tampere].
Martinez-Vela, C. & Viljamaa, K. (2004) Becoming High-Tech: The
Reinvention of the Mechanical Engineering Industry in Tampere,
Finland. MIT IPC Local Innovation Systems Working Paper 04-001.
Raunio, M. (2001) Osaajat valintojen kentällä. Helsingin Tampereen, Turun,
Jyväskylän, Porin ja Seinäjoen seutujen vetovoimaisuus virtaavassa
maailmassa [Experts in the field of choices: The attractiveness of the
Helsinki, Tampere, Turku, Jyväskylä and Pori regions in the flowing
world]. University of Tampere, Research Unit for Urban and Regional
Studies, Sente-julkaisuja 11/2001.
Sotarauta, M. (2000) Kaupunkiseudun ydinkompetenssien kehittäminen
[Developing the core competencies of an urban region]. In J.
Kostiainen & M. Sotarauta (eds.) Kaupunkiseudut innovatiivisina
toimintaympäristöinä [Urban regions as innovative environments].
Helsinki: The Finnish Association of Graduate Engineers.
Sotarauta, M. (2001) Network Management and Information Systems in
Promotion of Urban Economic Development: Some Reflections from
CityWeb of Tampere. European Planning Studies No. 6.
Sotarauta, M. (2005) Shared Leadership and Dynamic Capabilities in Regional
Development. To be published in I. Sagan & H. Halkier (eds.)
Regionalism Contested: Institution, Society and Territorial Governance.
Ashgate.
246
Markku Sotarauta, Juha Kostiainen
IV Knowledge Economy
Sotarauta, M. & Lakso, T. (2000) Muutoksen johtaminen ja luova jännite:
Tutkimus Kainuun kehittämistoiminnasta [Management of change
and creative tension: A study of development work in Kainuu Region].
Association of Finnish Local and Regional Authorities, Acta series 132.
Helsinki.
Sotarauta, M., Linnamaa, R. & Suvinen, N. (2003) Tulkitseva kehittäminen
ja luovat kaupungit: Verkostot ja johtajuus Tampereen kehittämisessä
[Interpretative promotion of economic development and creative
cities: Networks and leadership in the economic development policy
of Tampere]. The Finnish Association of Graduate Engineers and the
University of Tampere, Sente-julkaisuja 16/2003. Tampere.
Tampereen elinkeino-ohjelma 1987–2000 [Urban economic development
programme of Tampere 1987–2000] (1987) City of Tampere.
Tampereen elinkeinotoimintojen kehittämisohjelma 1990–1995 [Urban
economic development programme of Tampere 1990–1995] (1990)
City of Tampere.
Tampereen informaatioteknologian historia [History of information technology
in Tampere] (1999) Tampere Technology Centre Ltd. Unpublished
project report.
Tampereen kaupunkiseudun seutusuunnitelma ja elinkeinostrategia [Urban
economic development strategy of Tampere urban region] (1999)
The municipal governments of Kangasala, Lempäälä, Nokia, Pirkkala,
Tampere, Vesilahti and Ylöjärvi.
Tampereen seudun osaamiskeskusohjelma [Centre of Expertise programme of
Tampere Region] (1994) The Council of Tampere Region & the City
of Tampere.
Tampereen seudun osaamiskeskusohjelma 1999–2006 [Centre of Expertise
programme of Tampere Region 1999-2006] (1998) The Council of
Tampere Region & Tampere Technology Centre Ltd.
Tampereen tulevaisuus on tiedossa. Kaupunkipolitiikan suuntaviivat 2000luvulle. Elinkeinostrategia [The future of Tampere is in knowledge: The
outlines of urban policy for 21st century] (1998) City of Tampere.
Virkkala, S. (2002) Kumppanuus alueellisen kehittämisen hallintana [Partnership as governance of regional development]. Reports by the Chydenius
Institute No. 42. Kokkola.
Markku Sotarauta, Juha Kostiainen
247
IV Knowledge Economy
Endnotes
1
This chapter is translated from Finnish by Ms Marjukka Virkajärvi.
2
On networking in Finnish urban development, see e.g. Linnamaa 2004.
3
Interviews were conducted by Reija Linnamaa. The authors of this chapter
claim responsibility for interpretations made of the data.
4
During the first programme period automation was removed from the focal
point of information technology and linked to mechanical engineering.
5
See e.g. Miles et al. (1995).
6
Specialised development agencies are typically owned by public sector
bodies like City of Tampere, local universities, Tampere Region Hospital
District and national development agencies SITRA and Finnvera Plc. In
Oy Media Tampere Ltd and venture capital companies ownership is mostly
private.
7
See Raunio (2001).
248
View publication stats
Markku Sotarauta, Juha Kostiainen
Juha Kostiainen