Innovations in Wood-based Process Industries in Transition: Management & Policy Implications

EXTENDED ABSTRACT As any mature industry the forest industries have gone through many transformations and structural changes. Historically, forest industries in the Northern hemisphere (North America and Northern European countries) have been rather successful by moving forward in the value chain in order to avoid market decline or raw material shortage (Hylander 2009). From timber exports and charcoal in the 17th-18th century; sawmill products in the 19th century; pulp and papermaking transformed by using sawmill residues in the early 20th century for production of graphic papers; and by inventing chemical pulping technologies in the early 20th century particularly for hygiene products and stronger paperboard which expanded in the mid-20th century. However, in recent decades the pulp and paper industries located in the Northern hemisphere are confronted by manifold challenges while the incumbents has got stuck into its " big is beautiful " paradigm. Most of these challenges are connected to global transformation pressures, due to digitalization and multimedia (i.e. decline of printed media), competition from fast-growing economies in the Southern hemisphere, uncertain energy supplies, and environmental challenges (not least climate change) which increase the pressure on resource intensive process industries such as the pulp and paper industries in Western industry nations (UNECE/FAO 2009/2011). In this short paper I will concentrate on the nature of innovation in pulp and paper industries (P&P), the largest biomass infrastructure on earth, and its implications for management and policymakers. The point of departure is the academic discourse on disruptive innovation followed by industry specific cases in order to explain the nature of innovation in process industries. Clayton Christensen (2000) settled an important distinction between disruptive and sustaining innovations. A disruptive innovation is an innovation that generates a new market and value chain, and finally disrupts an established market and value chain by shifting trajectory or replacing earlier technologies. A sustaining innovation may be looked upon as either incremental (or evolutionary) or a more radical innovation. The incremental innovation contains gradual upgrading that improves a product in an existing market by means that customers are expecting, while the more radical innovation contains a major shift and