Towards service-dominant thinking in the Finnish forestry service market

Abstract

Forests offer various, sometimes contradictory utilities to their owners and all other users on the global societal and ecological levels. In Finland, meeting the industrial requirements for a stable roundwood supply has defined the forestry service market, as it has been widely supported by the forest owners, the industrial buyers, and the national forest policy. Along with the changes among the owners themselves, demand for forestry services has fragmented. Recently, by introducing the new Forest Act, which gives more freedom for forest owners to choose between management practices, Finnish government has triggered a change that aims at the creation of more market-oriented distribution of forestry services. Based on the concepts of institutional transition at the market level, service-orientation as value-creation logic change, and business model thinking as the unit-level logic, the theoretical objective of the thesis is to define the ongoing renewal of the forestry service market. Using public and private owners as customers and the current forestry service organizations as service providers, the practical aim of this dissertation is to identify potential opportunities and barriers with respect to creating new services in the forestry service market. Methodologically both qualitative interview studies on forestry service organizations (n=22 and n=17) and quantitative multivariate analysis based on survey data with private (n=557) and public (n=139) forest owners are used. According to the results, there is a growing tension in the market environment accelerated by institutional transition: private forest owners are fragmented into multifaceted groups with various needs, while public owners (such as municipalities) are facing versatile user pressures on their publicly owned forests. Therefore, it seems that the traditional “roundwood supply” approach may no longer match the needs of versatile customer groups. From structural perspective, the established service market dominated by a small number of players is limiting the successful entry of new enterprises. The lack of dynamic middle-sized companies in the Finnish forest sector coupled with difficulties in adopting a more cooperative mind set is proving to be hindrance for renewal of the forestry service market despite the development of information technology, which can facilitate the use of participative methods in forest management and service marketing.