Corporate social responsibility in finland origins, characteristics, and trends

Corporate Social
Responsibility in Finland
Origins, Characteristics,
and Trends

Laura Olkkonen
Anne Quarshie


Corporate Social Responsibility in Finland
“In the face of increasingly urgent sustainability challenges, the Nordics provide
inspiration. Olkkonen and Quarshie deliver a thorough and timely exploration of
the Finnish approach to business responsibility and stakeholder thinking that will
serve as a foundational building block for the growing global attention to sustainability in the Nordics. This is a must read for everyone with an interest in the
Sustainable Vikings!”
—Robert Strand, Executive Director and Lecturer, University of California-­
Berkeley, USA, and Associate Professor, Copenhagen Business School, Denmark
“From the early days of industrialization of the country to the future challenges
faced by Finnish business, Olkkonen and Quarshie nail it. Creatively mixing analysis, interviews and cases, they provide an authoritative, contextualized, complex
and compelling assessment of the state of corporate social responsibility in Finland.”
—Arno Kourula, Associate Professor of Strategy, University of Amsterdam
Business School, The Netherlands


Laura Olkkonen • Anne Quarshie

Corporate Social
Responsibility in
Finland
Origins, Characteristics, and Trends

Laura Olkkonen
LUT School of Business and
Management
LUT University
Lappeenranta, Finland

Anne Quarshie
LUT School of Business and
Management
LUT University
Lappeenranta, Finland

ISBN 978-3-030-17434-7    ISBN 978-3-030-17435-4 (eBook)
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Acknowledgments

We would like to thank all our interviewees who each provided valuable
insights on Finnish and Nordic CSR. Our special thank you goes to FIBS
network for their cooperation in this project. We further warmly thank our
editors, Madeleine Holder and Gabriel Everington, for all their practical
help and support. Two research assistants, Elina Silvola and Jaan-Pauli
Kimpimäki, deserve our thanks for prompt assistance when the process
was most intense. Furthermore, we appreciate the friendly assistance we
got from the UPM Archives. Our thanks also go out to our reviewers, colleagues, and family members, whose positive feedback has encouraged us
on with this project. Finally, Anne Quarshie gratefully acknowledges
research funding from Liikesivistysrahasto (Foundation for Economic
Education).

v


Contents

1Introduction  1
References   4

Part I Origins of Finnish CSR   7
2Finnish Paternalism at the Start of the Industrial
Revolution  9

References  15
3The Nordic Welfare State as a Backdrop for CSR 17
References  22
4The Dawn of Stakeholder Thinking in Nordic Countries 25
References  31

Part II Characteristics of Finnish CSR Context  35
5The Public Sector: Hard and Soft Regulation 37
References  42
vii


viii 

Contents

6The Private Sector: An Ongoing Transformation 45
References  49
7The Nonprofit Sector and Civil Society: Conflict and
Collaboration 53
References  60
8Media and Communication Environment 63
References  71

Part III Trends in Finnish CSR  75
9Positioning the CSR Performance of Finnish Companies 77
References  83
10Diffusion of Global CSR Trends in Finland 85
References  93
11CSR Profession in Finland 95

References 100
12Ongoing Challenges103
References 109
13Conclusion113
References 115
Index117


List of Figures

Fig. 2.1

The town of Valkeakoski was largely built for the purposes of
the factory community. In the picture are workers’ houses in
the 1950s (UPM Central Archive)
12
Fig. 4.1 Re-illustration of Eric Rhenman’s conceptualization of the
stakeholders (originally “intressent”) from 1964  in Swedish
and 1968  in English (adapted from Rhenman 1964, 1968;
Strand and Freeman 2015)
27
Fig. 4.2
Re-illustration of Juha Näsi’s conceptualization of stakeholders
as members of internal and external coalitions (adapted from
Näsi 1979, 1995b)
28
Fig. 4.3 Re-illustration of the organization chart of Yhtyneet
Paperitehtaat head offices in the 1960s (adapted from Raiskio
2012)29
Fig. 5.1

Finland’s position in innovation and competitiveness rankings
39
Fig. 10.1 Finnish companies’ estimations of the importance and resources
of CSR (FIBS 2018)
87
Fig. 10.2 Established CSR practices in Finland (FIBS 2018)
87
Fig. 11.1 CSR management practices in Finnish companies (FIBS 2018) 97
Fig. 11.2 Position of CSR expertise and CSR professionals in Finnish
companies (FIBS 2018)
98
Fig. 11.3 The job title of the person in charge of CSR in the management
team (FIBS 2018)
99
Fig. 11.4 Department or unit of Finnish CSR managers or directors
(FIBS 2018)
99

ix


List of Tables

Table 6.1
Table 7.1

Industrial structure in Finland
46
Professional associations advancing CSR and sustainability in
Finland59

Table 9.1 Ranking of the Nordic countries in sustainability-related
indices78
Table 9.2 Top five companies on the Global 100 Most Sustainable
Corporations in the World Index 2018 and all Nordic
companies’ rankings
80
Table 9.3 Top five companies on the most socially reputable companies
and all Nordic companies’ rankings
81

xi


CHAPTER 1

Introduction

Abstract  This chapter provides background information on Finland as a
country and discusses the Nordic traditions, such as the welfare state system, as shapers of the institutional and cultural context for CSR in Finland.
The three central elements of the book, origins, characteristics, and trends
of CSR in Finland are introduced. Furthermore, the meaning of CSR in
the Finnish context and in the Finnish language is shortly reviewed.
Keywords  Finland • Corporate social responsibility • Nordic countries
This is a combination that few, if any, other countries can match.
(Witoszek and Midttun 2018, p. 3)
The above quotation is a conclusion of how the Nordic countries rank in
global comparisons of economic and social prosperity. Nordic countries—
Iceland, Denmark, Finland, Norway, and Sweden—are small and remotely
located European countries (Fellman et al. 2008), yet they rank disproportionally high in terms of their corporate social responsibility (CSR)
performance in global comparison (Midttun 2018; Strand and Freeman

2015; Strand et al. 2015). Furthermore, the Nordic countries routinely
land top positions when measuring competitiveness (World Economic
Forum 2018a), trust (Eurobarometer 2017), transparency (Transparency
International 2018)—and happiness (Helliwell et al. 2018). The Nordics
© The Author(s) 2019
L. Olkkonen, A. Quarshie, Corporate Social Responsibility in
Finland, />
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L. OLKKONEN AND A. QUARSHIE

are also well known for their welfare state systems—the “Nordic formula”—that include joint promotion of social responsibility by the state,
businesses, and civil society, and characteristics such as a vibrant civil society and culturally strong traditions for collaboration (Midttun 2018,
p. 193). Furthermore, the Nordics are celebrated for their structures and
policies that support equality between genders and social groups, as well
as their top-performing public education systems (OECD 2016; European
Institute for Gender Equality 2017; World Economic Forum 2018b). For
these reasons and more, the Nordic countries serve as examples and inspiration for many.
Finland, the focus of this book, is a country with a population of
5.5  million. The neighboring countries are Sweden, Norway, and
Russia, of which especially Sweden has influenced the institutional and
cultural history. Finland is scarcely populated, as the population density
is only about a half of the OECD average, with approximately 30% of
people living in the capital area in the South (OECD 2016; Statistics
Finland 2018). The level of education is high and the average yearly
salary is approximately 43,000 EUR—with tax rates that are among the
highest in the world, the total tax revenue being 43,3% in 2017 (OECD

2018). Typically, for Nordic countries, the income distribution is among
the fairest in the world, as indicated by a low Gini coefficient
(OECD 2016).
Since gaining independence in 1917, Finland started to establish welfare policies and structures, especially through the 1960s, 1970s, and
1980s. These structures include progressive taxing, public education, universal health care, and generous parental leaves, as well as economic policies that were steered to support innovation and globalization (Karisto
et al. 1999; OECD 2017). Especially due to the welfare tradition, business
organizations have been well involved in social issues for a long period of
time in Finland, significantly longer than the clashes over environmental
issues around the 1980s that are often referred to as a starting point for a
broader global CSR discussion. However, as in many other countries,
early practices of social responsibility date even to the beginning of the
industrial era. In Finland, the first acts of social responsibility emerged as
the first industrial companies, especially in rural Finland, took active roles
in building the local communities, educating the citizens of the emerging
nation state, and offering a wide array of social benefits to secure a viable
workforce for their expanding operations (e.g., Juholin 2004a; Mäkinen
and Kourula 2014; Karonen 2004).


1 INTRODUCTION 

3

The early industrial history sets the background for CSR in Finland,
which is addressed in the first part of the book, along with a broader background of CSR and stakeholder thinking in the Nordic welfare states. The
second part explores the country-specific context of “doing” CSR in
Finland—the public sector and institutional infrastructures that set the
hard laws and influence soft law regulation, the private sector where several traditional industries still reign but newer startup activities and the
digitalization boom shape the game for CSR, the nonprofit sector and civil
society, which confront as well as collaborate with companies around CSR

issues, and the media and communication environment where CSR is
communicated and publicly scrutinized. The third part focuses on trends
and challenges of CSR in Finland, as it discusses the current state of
Finnish CSR performance, diffusion of global trends, increasing professionalism of CSR in Finland, and the most pressing CSR challenges for
Finnish companies now and in the future. To map the terrain of trends
and challenges, the third part draws on recent analyses and reports, most
importantly the yearly survey of FIBS (Finnish Business & Society), a leading CSR network with over 300 member organizations. Since 2013, FIBS
has surveyed roughly 200 Finnish companies yearly, focusing particularly
on practices, challenges, and future trends related to CSR. The respondents, consisting of CEOs, CSR directors, and managers, represent mainly
large and medium-sized companies, from different industrial sectors
(FIBS 2018).
While Finland and Finnish companies are parts of global (CSR and
other) initiatives, networks and systems, this book aims to identify and
address some of the characteristics that are distinctive specifically for the
Finnish context. While we readily explore the intersections of Finnish,
Nordic, and international CSR, it is worth noticing that CSR can mean
different things to individuals and organizational actors operating in different cultural, political, and industrial settings (Matten and Moon 2008).
In principle, the book follows the definition of corporate social responsibility as “the responsibility of enterprises for their impacts on society”
(European Commission 2011). However, these impacts can be understood as both negative and positive, and they can vary depending on the
industry or even depending on an organization. The cultural and political
context can further influence what is acknowledged as an impact—how
far-reaching those impacts can be—and what kind of policies, regulations,
guidelines, and expectations there are for companies to address those
impacts. Moreover, companies often actively influence the composition


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L. OLKKONEN AND A. QUARSHIE

and understanding of what CSR entails by making their own interpretations of CSR (cf. Czarniawska and Sevón 1996).
The Finnish term for CSR has traditionally been yhteiskuntavastuu
(e.g., Juholin 2004b), which translates to “societal responsibility” as
yhteiskunta means society and vastuu means responsibility. This choice of
words is perhaps not surprising, especially from the perspective of the welfare state tradition, where business is expected to take part in societal
development in active interaction with the public sector and the civil society. Interestingly, the term yhteiskuntavastuu does not entail the word
“corporation” or “company”, although it is quite commonplace to see the
term extended to yritysten yhteiskuntavastuu—companies’ societal responsibility. Notably, however, the Finnish term yhteiskuntavastuu is not limited to business actors, as it is not unusual to see the term attached to
actors such as public sector organizations, nonprofit organization, and
even individuals (e.g., Karonen 2004). Again, this use of the term can be
considered logical from the perspective of the Nordic traditions of collaboration and joint responsibilities (Midttun 2018; Midttun et al. 2015).
Although the use of CSR terms has varied over the years (e.g., Timonen
and Luoma-aho 2010), Finnish companies currently tend to talk less
about yhteiskuntavastuu and more about yritysvastuu (corporate responsibility), vastuullisuus (responsibility), or kestävyys (sustainability) (see, e.g.,
FIBS 2018).
Finnish CSR is a multifaceted and constantly evolving phenomenon
that is grounded in specific cultural and political developments. While this
book only scratches the surface of Finnish CSR, it aims to do so comprehensively by painting a picture that extends from the early industrial days
to the current pressing trends, and presents a collection of different elements that shape and define CSR in Finland. The following chapters, and
the cases and expert interviews included in them, provide insights and
takeaways on the origins, characteristics, trends, as well as possible future
developments of Finnish CSR.

References
Czarniawska, B., & Sevón, G. (Eds.). (1996). Translating organizational change.
Berlin: De Gruyter.
Eurobarometer. (2017). National reports. Finland.


1 INTRODUCTION 

5

European Commission. (2011). A renewed EU strategy 2011–14 for corporate
social responsibility. Retrieved from />EN/TXT/?uri=CELEX:52011DC0681.
European Institute for Gender Equality. (2017). Gender equality index 2017
report: Measuring gender equality in the European Union 2005–2015. Vilnius,
Lithuania: European Institute for Gender Equality.
Fellman, S., Iversen, M.  J., Sjögren, H., & Thue, L. (Eds.). (2008). Creating
Nordic capitalism: The business history of a competitive periphery. Hampshire:
Palgrave Macmillan.
FIBS. (2018). Sustainability in Finland 2018. Helsinki: Finnish Business & Society.
Helliwell, J.  F., Layard, R., & Sachs, J.  (2018). World Happiness Report 2018.
New York: Sustainable Development Solutions Network.
Juholin, E. (2004a). For business or the good of all? A Finnish approach to corporate social responsibility. Corporate Governance: The International Journal of
Business in Society, 4(3), 20–31.
Juholin, E. (2004b). Cosmopolis: Yhteiskuntavastuusta yrityskansalaisuuteen.
Helsinki: Infor.
Karisto, A., Takala, P., & Haapola, I. (1999). Matkalla nykyaikaan: Elintason,
elämäntavan ja sosiaalipolitiikan muutos Suomessa. Helsinki: WSOY.
Karonen, P. (2004). Patruunat ja poliitikot: Yritysjohtajat taloudellisina ja poliittisina
toimijoina
Suomessa
1600–1920.
Helsinki:
Suomalaisen
Kirjallisuuden Seura.
Mäkinen, J., & Kourula, A. (2014). Globalization, national politics and corporate
social responsibility. In R. Tainio, S. Meriläinen, J. Mäkinen, & M. Laihonen
(Eds.), Limits of globalization: National borders still matter. Copenhagen:

Copenhagen Business School Press.
Matten, D., & Moon, J.  (2008). “Implicit” and “explicit” CSR: A conceptual
framework for a comparative understanding of corporate social responsibility.
Academy of Management Review, 33(2), 404–424.
Midttun, A. (2018). Civilising global capitalism: Aligning CSR and the welfare
state. In N. Witoszek & A. Midttun (Eds.), Sustainable modernity: The Nordic
model and beyond (pp. 187–203). Abington and New York: Routledge.
Midttun, A., Gjølberg, M., Kourula, A., Sweet, S., & Vallentin, S. (2015). Public
policies for corporate social responsibility in four Nordic countries: Harmony
of goals and conflict of means. Business & Society, 54(4), 464–500.
OECD. (2016). OECD economic surveys: Finland. Paris: OECD Publishing.
OECD. (2017). OECD reviews of innovation policy: Finland 2017. Paris: OECD
Publishing.
OECD. (2018). Tax revenue. Retrieved from />Statistics Finland. (2018). Population. Retrieved from astokeskus.
fi/tup/suoluk/suoluk_vaesto_en.html.


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Strand, R., & Freeman, R. E. (2015). Scandinavian cooperative advantage: The
theory and practice of stakeholder engagement in Scandinavia. Journal of
Business Ethics, 127(1), 65–85.
Strand, R., Freeman, R. E., & Hockerts, K. (2015). Corporate social responsibility
in Scandinavia: An overview. Journal of Business Ethics, 127(1), 1–15.
Timonen, L., & Luoma-aho, V. (2010). Sector-based corporate citizenship.
Business Ethics: A European Review, 19(1), 1–13.
Transparency International. (2018). Corruption Perception Index. Retrieved
from />index_2017.

Witoszek, N., & Midttun, A. (2018). Sustainable modernity and the architecture
of the “well-being society”: Interdisciplinary perspectives. In N. Witoszek &
A.  Midttun (Eds.), Sustainable modernity: The Nordic model and beyond
(pp. 1–17). Abington and New York: Routledge.
World Economic Forum. (2018a). Global Competitiveness Index 2017–2018.
Retrieved
from
/>World Economic Forum. (2018b). The global gender gap report 2018. Cologny/
Geneva: World Economic Forum.


PART I

Origins of Finnish CSR


CHAPTER 2

Finnish Paternalism at the Start
of the Industrial Revolution

Abstract  This chapter introduces the roots of Finnish CSR in the start of
the industrial revolution. Some of the distinctive characteristics of Finnish
industrialization are presented, such as the long coexistence of agrarian
and industrializing societies, the simultaneous building of an independent
nation state, and the strong role of the emerging forest industry especially
in the rural areas. Furthermore, the industrialization phase is discussed as
the era of the owner-managers that were central figures in the emerging
factory communities. Especially in these roles, the owner-managers
engaged in some of the earliest activities of social responsibility that provided the communities of workers with housing, schools, hospitals, libraries, and public infrastructure.

Keywords  Industrialization • Paternalism • Factory communities •
Forest industry • Owner-managers
Industrialization is often taken as the starting point of modern business
practices, as it was a revolution that shaped societies profoundly both economically and socially. In many ways, Finland has followed other European
countries in their early economic development and industrialization.
Before industrial manufacturing, the most influential companies in Finland
were often run by merchant families or artisans that did not employ significant numbers of people, whereas the industrial revolution brought
© The Author(s) 2019
L. Olkkonen, A. Quarshie, Corporate Social Responsibility in
Finland, />
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L. OLKKONEN AND A. QUARSHIE

about a previously unseen scope of business influence on communities and
social structures (Karisto et al. 1999; Karonen 2004). However, the industrial revolution started later in Finland than in many other European
countries and it was a relatively slow process (Karisto et al. 1999; Karonen
2004). Furthermore, industrialization in Finland was tangled in the country’s process of becoming an independent nation state, which makes
Finland somewhat unique even in the Nordic context.
While the industrial revolution was in full speed in many parts of Europe
already in the early 1800s, it was not until the 1820s that Finland witnessed the establishment of the first factories that utilized industrial production rather than artisanship such as in the ironworks of the seventeenth
and eighteenth centuries (Karisto et al. 1999; Karonen 2004). The gradual progress of industrialization—driven predominantly by the forest
industry—took until the turn of 1860s and 1870s to reach a scale that
started to significantly shape the way of living in Finland (Karisto et  al.
1999). Masses of people started to move from the countryside to the first
urban cities, but the agrarian ways of living co-existed in Finland for
unusually long alongside industrialization. This meant that people could

choose between a life in the city and a life in the countryside—especially as
the forestry industry needed plenty of local mills and saws in the rural
areas, and provided extra income for the farmers who sold wood to the
factories (Karisto et al. 1999).
As the agrarian communities remained vibrant, the earliest industrial
factories had to genuinely attract workers by offering them benefits. This
applied both to the factories that were established within the emerging
cities, as well as to the factories of the burgeoning forestry industry in rural
areas, strategically located near a continuous supply of wood and water
(e.g., Juholin 2004; Karisto et al. 1999; Mikkilä et al. 2015). Rather than
the vicinity of urban infrastructures, the quickly expanding forest industry
relied on lakes, rivers, and rapids, which was why the history of several
Finnish cities starts from somewhat isolated communities that first consisted of factory workers, and then started to attract services needed by
both the industry and the communities (Tuuri 1999). Typically, the factories attempted to recruit workers from close by peasant servants who were
seeking a more independent position than what was offered by the agrarian landowners (Alapuro 1994).
It was especially in the rural settings of gradually industrializing Finland,
where some of the first social activities of factory owners emerged. In practice, the owner-managers of (often) family-owned companies—and heads of


2  FINNISH PATERNALISM AT THE START OF THE INDUSTRIAL REVOLUTION 

11

the rural factory communities—voluntarily organized and paid for their
workers’ living arrangements, often extending the benefits to the workers’
family members (Alapuro 1994; Juholin 2004; Mikkilä et al. 2015; Tuuri
1999). This approach has been defined as paternalistic or patriarchal management, which includes aspects such as protecting and “fatherly” caring,
as interaction between the factory owner and the workers was often based
on very personal relations (Nielsen 2000; Karisto et  al. 1999; Koiranen
2003). Paternalistic arrangements played an important role especially in

rural industrial communities, as the workers relied on the factory owners
on virtually all aspects of their lives: housing, health care, schools for their
children, hospitals, libraries, and public infrastructure such as roads—even
police and fire departments could have been organized either partly or
entirely by the factories (Karonen 2004; Mäkinen and Kourula 2014).
Viewpoint 2.1 presents an example of social responsibility practices from
the early history of UPM, which is currently listed as the third most successful company in Finland (measured by net profit, see Kauppalehti 2018).
Viewpoint 2.1 Factory Communities in Rural Finland

UPM is one of the largest Finnish forest industry firms, currently
employing more than 19,000 people in 12 countries (UPM
Corporate Website 2018). The corporation is a result of a large
merger in 1995, but the origins of the company extend to about one
hundred previously independent companies that have been fused
together in different phases (UPM 2015). The first factories of the
corporation were established in the early 1870s, during the golden
and heavily expanding era of industrialization in Finland (UPM
2015). In various locations in rural Finland, UPM’s companies were
involved in forming factory communities that turned into towns and
some eventually into cities. Valkeakoski, currently a small town in
southwest Finland, is an example of an area that was virtually born
after the establishment of a factory that attracted not only workers,
but also different services for the factory and the workers (Fig. 2.1).
In 1883, the factory opened a school for the workers’ children, and
eventually organized many different forms of childcare for the workers families, such as clubs, playschools, and summer camps (Raiskio
2012; Tuuri 1999). In 1898, the community witnessed the start of
a health care system for the workers and their families, with a significant proportion of funding from the factory (Tuuri 1999). The


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L. OLKKONEN AND A. QUARSHIE

Fig. 2.1  The town of Valkeakoski was largely built for the purposes of the
factory community. In the picture are workers’ houses in the 1950s (UPM
Central Archive)

workers services further included an element of social security as
those workers that would become unable to work due to illness or an
accident would receive a daily allowance that equaled to half of their
salary (Tuuri 1999). The paternalistic management tradition lasted
for exceptionally long in Valkeakoski—until the 1960s—and social
issues were well-integrated into the company’s formal management
system for several decades (Raiskio 2012).

In practice, the factory owners often needed to build both the factories
and the local communities to secure the success of their business (cf.
Nielsen 2000). As a result, Finnish factory owners became very central
figures in their communities, commonly referred to as “masters” (Mäkinen
and Kourula 2014) or “patrons” (in Finnish, patruunat) that often acted
as representatives of their communities—unofficially as spokespersons or
officially as selected representatives in  local or state politics (Karonen
2004). Especially in formal representative positions, the factory owners


2  FINNISH PATERNALISM AT THE START OF THE INDUSTRIAL REVOLUTION 

13

influenced the development of their surrounding societies and acted as

caretakers of the local communities that had legitimized their positions
(Karonen 2004). While they were perceived as philanthropists in the sense
that they advanced the wellbeing of the communities in actions that were
external to their business endeavors, the patrons also benefitted from the
representative roles, as they were able to seek political support and benefits
for their own ventures (Karonen 2004). However, the actions were also
very engaging—they were not philanthropic donations to have someone
else take care of the workers’ issues, but actions organized firsthand by the
company and often also well integrated into company structures (Mikkilä
et al. 2015; see also Chap. 4).
While the benefits offered by early industrial companies were much
broader than what was obliged based on existing Finnish laws or regulations, they did not necessarily secure proper living or working conditions.
Moreover, the paternalistic management practices have been criticized for
their sense of superiority and control (Karisto et al. 1999; Koiranen 2003).
While personal relations between management and workers meant that
the owner often knew each employee by name, it also meant that terms
and wages were often negotiated individually, and that the masters’ influence extended well beyond professional relations (Karonen 2004).
Moreover, the motives to provide social benefits might, in reality, deal not
that much with human caring but with securing one critical component of
production—a viable workforce (Nielsen 2000). In practice, people lived
in small houses or apartments and worked for long days, sometimes in
dangerous working conditions (Karisto et  al. 1999). As the number of
people working in industrial jobs started to rapidly increase in the late
nineteenth century, the living and working conditions became, as in many
other countries, the topic of the first responsibility-related debates in
Finland. The workers started to demand better working conditions and
shorter daily work and, importantly, started to organize into labor unions
and associations (Karisto et al. 1999).
Notably, the early industrial period in Finland was a time of establishing
an independent nation state. Between 1809 and 1917, Finland was an

autonomous Grand Duchy of the Russian empire, after which Finland
declared independency from Russia in conjunction to the Russian revolution. Therefore, Finland makes an exception among the Nordic countries,
as the national movement in Finland resembled rather Eastern European
than other Northern European examples, yet with a distinction that
Finland was politically but not economically dependent on the ruling


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L. OLKKONEN AND A. QUARSHIE

empire (Alapuro 1979). While under the Russian rule, Finland had its
own currency which was less volatile than the Russian ruble, and the legislations and institutions that were set under the preceding Swedish rule
remained intact (Fellman 2008). Especially the economic independence
has been considered as one of the key reasons why the process of declaring
independence was an exceptionally steady process for Finland—although
the internal clashes between unequal social classes resulted in a civil war
right after (Alapuro 1979).
What becomes important for the early stages of industrialization in
Finland is that issues such as building a strong manufacturing sector and
raising the level of education were matters of national interest and identity
during the nineteenth century, and they specifically aimed for building an
independent state (Harle and Moisio 2000; Juholin 2004; Karisto et al.
1999). The political and cultural tradition originated from the Swedish
rule and they did not change significantly during the autonomous era,
which resulted in an unusual form of nationalist mobilization: the upper
class, among them factory owners, were typically Swedish speaking, while
the peasants and the factory workers were typically Finnish speaking—
while neither identified themselves with the empire that ruled them
(Alapuro 1979). In addition, Finland witnessed some very advanced political developments—although not yet an independent country—namely

being the first European country to give women a right to vote and run
for the parliament in 1906.
Due to the untypical situation as a duchy of the eastern empire of
Russia, but with simultaneously strong Nordic traditions, the upper classes
had a key role in initiating nationalism in Finland, known as the Fennoman
movement. Many early business leaders were involved not only in local but
also in national politics, and they supported Finnish language and culture,
for example, by donating funds to associations, libraries, churches, schools,
universities, and museums (Karonen 2004). The public role of factory
owners could even exceed their role as business leaders, as due to their
high political engagement, business managers “were by and large patrons
of culture, great philanthropists, farmers, and in some cases even politicians” (Karonen 2004, p. 350). As such, early factory owners often had
multiple roles and influence that extended well beyond their factory walls.
After Finland gained independence, the nature of business leadership
started to change. Specifically, personal wealth and elite background were
no longer the predominant routes for becoming a manager, but leadership
positions became more commonplace and ownership was separated from


2  FINNISH PATERNALISM AT THE START OF THE INDUSTRIAL REVOLUTION 

15

management—a development which also happened relatively late in
Finland compared to many other Western countries (Karonen 2004).
Together with the emergence of labor unions, paid managers marked the
end of paternalistic, personal employee-employer relations, which became
matters of tripartite regulation between employee unions, labor unions,
and the state, a distinct characteristic of Nordic welfare states (see Chap.
3). Moreover, as the Nordic welfare model rests on providing universal

public services, many tasks that were previously taken by (paternalistic)
employers, became central tasks for municipalities and the state, which
significantly changed the expectations and the practices of CSR in Finland.

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L. OLKKONEN AND A. QUARSHIE

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Chapter 3

The Nordic Welfare State as a Backdrop
for CSR

Abstract  This chapter discusses the Nordic welfare state as a specific context that influences CSR in Finland. After gaining independence, the state
of Finland took full control of social and economic policies, and started to
introduce welfare systems such as public healthcare and equal opportunities to education. Setting up strong public institutions meant high and
progressive taxes that turned the role of companies from providers of

social benefits to taxpayers that supported the society by offering employment and making investments. While CSR in Finnish companies has traditionally been rather implicit, especially domestically, CSR became
important early on from the point of view of Finnish state-level goals on
competitiveness and innovation.
Keywords  Nordic welfare state • The Nordic model • Nordic CSR •
Implicit CSR
After gaining independence, the state of Finland was able to take full control of policies and legislation that guide national social and economic
practices. Especially after the world wars, the Finnish welfare state started
to develop fast. As in other Nordic countries, the industrial boom was
soon accompanied with ethos of care and partnerships, which can be
explained by the countries’ small size, low hierarchy, and a certain type of
Nordic humanism that has its origins in a pragmatic and cooperative
© The Author(s) 2019
L. Olkkonen, A. Quarshie, Corporate Social Responsibility in
Finland, />
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