Sources of Innovation in the Estonian Forest and Wood Cluster

The paper aims to identify the role of different sources of innovation for the Estonian wood sector. Comparing data from survey of Innovation in Estonian Enterprises 1998-2000 with similar Finnish data reveals that linkages in Estonian forest and wood cluster are relatively weaker regarding innovation sources. Universities and research institutes are the weakest part identified in the knowledge flows of the emerging Estonian wood cluster. Technological capabilities of Estonian wood and forest industries have passed the absorption phase and entered the adoption phase, but still the absorptive capacities remain relatively low, as indicated by the high importance of internal innovation sources and the low intensity of using R&D institutions and universities as innovation sources. We applied binary logit model in order to identify the role of different sources of innovation for the Estonian wood sector. 1 PhD student, Faculty of Economics and Business Administration, University of Tartu; Mail address: 4-A213 Narva Rd., 51009 Tartu, Estonia; Tel: (+372) 737 6361, Fax: (+372 737 6312); Email: [email protected] 2 Professor of International Business, Head of the Institute of Management and Marketing, Faculty of Economics and Business Administration, University of Tartu; Mail address: 4–A213 Narva Rd., 51009 Tartu, Estonia; Tel: (+372) 737 6361, Fax: (+372 737 6312); Email: [email protected] Sources of Innovation in the Estonian... 4 Suppliers are the most significant partner for innovation cooperation and also the second innovation source after internal sources. Customers are more used for innovative products and by those companies that lack knowledge about markets. The internal information of concerns is not diffused to other firms. The future development of the Estonian forest and wood cluster should be oriented towards the development of high-end production capacities in the value network. This requires joint efforts of the government and industries, as well as collaboration-oriented behaviour of Estonian companies.