Internal obstacles restraining productivity improvement in small Finnish industrial enterprises

There was a deep depression in the early 1990s in Finland, during which the number of jobs in Finnish industry decreased. By improving productivity, we can increase the price competitiveness of Finnish products and create the necessary conditions for increasing our standard of living. Although productivity improvement is important, it does not always succeed. A "rm may have a real intention to improve productivity, but there are many things which restrain their ability to achieve this aim. The factors which make the e!orts to improve productivity ine!ective, or even prevent improvement operations can be called obstacles to productivity improvement. These obstacles can be classi"ed into three categories: internal, external and general obstacles. In this paper an attempt is made to analyze the internal obstacles. The main reason for this kind of treatment is the fact that internal obstacles form the only category of obstacles which is clearly under the control of the "rm. Thus, by identifying and eliminating these obstacles we can improve the actions of the whole "rm. In the present paper, the possible obstacles, especially internal obstacles are discussed and classi"ed on the basis of the theory. A study is presented which aims to establish the most signi"cant internal obstacles for productivity improvement in small industrial "rms on the basis of two di!erent sets of regional data. ( 2001 Elsevier Science B.V. All rights reserved.