I N S T I T U T F Ü R S O Z I O Ö K O N O M I K D E R F O R S T - U N D H O L Z W I R T S C H A F T

D I S C U S S I O N P A P E R S

Nr.: P / 2002 - 1

Innovation and EntrepreneurshipA New Topic for

Forest Related Research?

Klaus KubeczkoEwald Rametsteiner

EFI - INNOFORCE - Discussion Paper I published as

IFSPE-Discussion Paper

Institute for Forest Sector Policy and Economics University of Agricultural Sciences Vienna

Nr.: P/2002 - 1

Innovation and Entrepreneurship A New Topic for

Forest Related Research?

Klaus Kubeczko Ewald Rametsteiner

Vienna, 28.06.2002

ISSN 1605-7945 Bestelladresse /orders to: Institut für Sozioökonomik der Forst- und Holzwirtschaft Universität für Bodenkultur Wien Gregor Mendel Str. 33 A-1180 Wien Tel: 43 1 47 654 4410 Fax: 43 1 47 654 4417 e-mail: h440t7@edv1.boku.ac.at

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1 INTRODUCTION 4

2 INNOVATION AND ENTREPRENEURSHIP RESEARCH ON DIFFERENT LEVELS 5

2.1 Definitions 5 2.1.1 Innovation and Systems of Innovation ....................................................5 2.1.2 Entrepreneurs / Entrepreneurship...........................................................5

2.2 Institutional Level 6 2.2.1 Key Concepts.....................................................................................7 2.2.2 Innovation Models...............................................................................8

2.2.2.1 Systems of innovation.......................................................................8 2.2.2.2 Innovative milieu ........................................................................... 11

2.2.3 Entrepreneurship Research on Institutional Level..................................... 12

2.3 Business to Business (b2b) Level 12 2.3.1 Network Theory................................................................................ 12 2.3.2 Cluster Theory – Porter’s competitive advantage and cluster approach......... 13

2.4 Enterprise Level 13 2.4.1 The Innovation Process in an Organisation ............................................. 14 2.4.2 Enterprise Level Factors Determining Innovation ..................................... 14 2.4.3 Entrepreneurship as New Venture Creation and Corporate Entrepreneurship . 15

2.5 Personal Level 16 2.5.1 Innovation and Personal Factors .......................................................... 16 2.5.2 Entrepreneurs .................................................................................. 16

2.5.2.1 Attitudinal orientation and personality traits......................................... 17 2.5.2.2 Socio-cultural traits ........................................................................ 17 2.5.2.3 The new venture creation process...................................................... 18

3 FOREST RELATED INNOVATION & ENTREPRENEURSHIP RESEARCH 19

3.1 Institutional Level 19

3.2 Business to Business (b2b) Level 20

3.3 Enterprise Level 21

3.4 Personal Level 22 4 DISCUSSION AND CONCLUSION 22

BIOGRAPHY 24

I&E Literature: 24

Literature in Forestry: 27

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Abstract:

This discussion paper deals with innovation and entrepreneurship (I&E) theories and approaches and its applications in forest related research. It gives a short overview of I&E theories in economics, business administration and other disciplines. The approaches concentrate on different levels in their analysis and recommendations. In I&E research we distinguish the institutional – business to business (b2b)– enterprise and personal level. Systems of innovation approaches concentrate on the institutional level, while industrial cluster and industrial milieu approaches put more emphasis on the b2b level, i.e. on the relation between business units and with markets. On enterprise level and on the personal level various approaches analyse innovation behaviour, corporate entrepreneurship, entrepreneurial attitudes and business start-ups. The paper shortly describes research conducted in these areas in various relevant disciplines. It is found that I&E as a research topic has seen a considerable increase in interest in the 1990s. The paper then provides an overview on forest related I&E research. It is argued that research in forestry has been carried out on b2b-, enterprise- and on personal level using approaches from different disciplines. A lack of research is seen on the institutional level. This lack is now addressed by recently started research projects, including EFI-INNOFORCE and COST E30.

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Innovation is by definition risky business. But not to innovate in a changing world is risky too.

1 Introduction Far reaching changes are taking place in the social, political and economic systems in Europe with possible consequences on Central European forestry and its institutional arrangements, and on rural areas. This is particularly true for the further transition from planned to market based economies in the new democracies, but also the further integration of markets in Europe. Further major changes will concern the shift of activities for many forest owners from traditional professional background in agriculture and forestry to professions in industry or services, and the change from a traditional view of raw material supplier to the provider of a multitude of services. Also the developments in information technology will result in considerable organisational changes in the economic system and in administration. All these and other changes lead to lasting effects on the rules of the game for successful sustainable forest management and raises questions on the design of adequate institutional structures. The future of the people who live in rural areas from forestry will considerably depend on how individuals and institutions react in view of these changes, how forest owners and managers take up new knowledge and put it into practice in forestry, and how institutions, especially forest administration, extension services, forest research or other institutions best deal with emerging changes. Forest related policies are national competency, with the exception of some environmental policies of the EU and international conventions and agreements signed by sovereign states. Across Europe these national policies are mainly co-ordinated through the so-called Ministerial Conference on the Protection of Forests in Europe (MCPFE) and, especially for environment related matters, the EU Community for the EU 15. While forestry is not a main concern of EU-policy, some sector specific EU and national policy areas are quite relevant for forestry. These include:

• rural development policies • regional development policies • environmental policies • innovation and entrepreneurship research programmes • small and medium size enterprises (SME´s) programmes.

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2 Innovation and Entrepreneurship Research on Different Levels

In this overview we will use different levels of analysis at which innovation and entrepreneurship approaches are focussing. These approaches are not bound to analyse innovation or entrepreneurship on only one level; different disciplines or specialised research fields of disciplines analyse one or two different levels by their innovation and entrepreneurship models at the same time. We distinguish 4 levels: institutional, business to business (b2b), enterprise and personal level.

1. Institutional Level Innovation approaches that analyse actors, organisations and institutions on the macro level, such as government agencies, interest groups, legal frameworks, actors on national or international level in general.

2. Business to business (b2b) level Innovation approaches that analyse on a meso level the interaction of market and non-market relations between firm, vertically, horizontally or between sectors

3. Enterprise level Innovation and entrepreneurship approaches that analyse on the micro level the organisation of the firm, the learning behaviour or organisational innovation and entrepreneurship behaviour

4. Personal level Mainly entrepreneurship approaches that analyse the entrepreneurship behaviour of individuals.

2.1 Definitions 2.1.1 Innovation and Systems of Innovation The first important source for modern innovation theory is Josef Schumpeter (1934). In his economic analysis, Schumpeter focuses on the enterprise and the role of the entrepreneur in the economic process. Innovation in general denotes successful introductions of novelties. Schumpeter (1935) defines innovation broadly, as a discontinuously occurring implementation of new combinations of means of production. Nelson and Winter (1977), in their institutional analysis define technological innovation as a non-trivial change in products and processes where there are no previous experiences. Very often innovation is used synonymously for technological innovation. Nevertheless, modern innovation literature distinguishes two main categories if innovation, i.e. product and process innovation. Product innovation are successful changes in the output of an enterprise or organisation and can either be goods or services. Process innovation can either be technological innovations or innovations in the organisation of the enterprise or organisation. 2.1.2 Entrepreneurs / Entrepreneurship Defining entrepreneurship is not an easy task. There are almost as many definitions of entrepreneurship as there are scholar books on the subjects (Byrd 1987). To some, entrepreneurship means primarily innovation, to others it means risk-taking, and to others still it means starting, owning and managing a (often small) business.

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Webster defines an entrepreneur as "one who creates a product on his own account“ or as „a person who organises and manages a business undertaking, assuming all the risk for the sake of the profit." Entrepreneurs and entrepreneurship is generally seen as a different concept than managers and management. For Schumpeter (1934), entrepreneurs have the role of being the engines that drive economic development. They are change agents, who destroy the existing economic order to create something new. The word 'entrepreneur' originates from the French term entreprendre, which means "to undertake”. It was originally used in the Middle Ages in the sense of 'a person who is active, who gets things done' (Hoselitz 1951). The first economic theory of entrepreneurship is to be found in a work entitled Essay on the Nature of Commerce in General (circa 1730), written by a Paris banker of Irish extraction, Richard Cantillon.

Jean Baptiste Say (1816) characterised an entrepreneur as an agent "who unites all means of production and who finds in the value of the products...the reestablishment of the entire capital he employs, and the value of the wages, the interest, and rent which he pays, as well as profits belonging to himself."

Frank Knight (1921) sees the role of entrepreneurs to attempt to predict and act upon change within markets. Knight emphasized the entrepreneur's role in bearing the uncertainty of market dynamics.

Joseph Schumpeter (1934) emphasized that the role of the entrepreneur is to identify and pursue opportunity irrespective of direct control of resources. Joseph Schumpeter characterised an entrepreneur as an innovator who implements change within markets through the carrying out of new combinations of means of productions. The carrying out of new combinations can take several forms; 1) the introduction of a new good or quality thereof, 2) the introduction of a new method of production, 3) the opening of a new market, 4) the conquest of a new source of supply of new materials or parts, 5) the carrying out of the new organization of any industry. A widely used definition of entrepreneurship used in business administration today is the definition proposed by Stevenson and Jarillo (1990), who define entrepreneurship as „the process by which individuals pursue opportunities without regard to resources they currently control“. This definition was empirically tested and subsequently adjusted to read “Entrepreneurship is the process by which individuals pursue opportunities without regard to alienable resources they currently control“ by Hart, Stevenson and Dial (1995). Arzeni, following Stevenson´s definition of entrepreneurship, describes the entrepreneur as follows. “The popular image of the entrepreneur as a risk-taker, an adventurer, a capitalist or a speculator no longer reflects reality. Primarily, the entrepreneur is a achievement-driven detector of new business opportunities, marshalling finance beyond resources he can control, enjoying independence and self-reliance.” (Arzeni 1998) Entrepreneurship concepts categorised by the life cycle approach distinguishes entrepreneurship related to the creation of new organizations (Gartner, 1988) or new ventures, and entrepreneurship in established enterprises (corporate entrepreneurship). The first concept is often related to SME´s, whereas the second concept is applied in medium and large enterprises. 2.2 Institutional Level Innovation research on institutional level is mainly done by disciplines and sub-disciplines of economics like in institutional economics, political economics, and evolutionary economics as well as in economic geography and in regional sciences. These disciplines have developed several concepts, which are used in innovation research. Systems of innovation, path dependencies, tacit knowledge, learning organisation, cultural theory, network theory, governance are some of these building blocks of innovation models. These concepts very often consider the whole innovation system, dealing with questions

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important for society as a whole and the rules of the market economy (e.g. How does innovation and entrepreneurship improve employment? Which kinds of innovation exist and how do they affect the economic system? etc). In the last years several benchmarking activities related to innovation and entrepreneurship have been taking place in Europe and elsewhere. EU wide innovation surveys have been performed as well as innovation and entrepreneurship indicators and scoreboards have been published. Competitiveness of the EU and of individual member states is a major concern in EU-policy. Major research centres working on innovation are situated in Great Britain (SPRU), Denmark (CRIC), Holland (MERIT), Germany (Frauenhofer Institute), Italy (Bucconi), Norway (SPRIT), Sweden (Jönköping) and other countries. The EU stimulates and funds research, most importantly through the Framework Programmes for research, and specific research topics e.g. on Innovation and Employment, SMEs, regional development. The EU has also initiated the Innovation Scoreboard and other benchmarking activities for innovation. Entrepreneurship research currently still has a stronger research base in the US with major centres such as the Babson college. This institution, with support of the Kauffman Centre for Entrepreneurial Leadership also initiated the Global Entrepreneurship Monitoring project. However, Europe has in the last years increasingly established chairs at universities to enhance the level of teaching and research also in Europe. Major research centres working on entrepreneurship in Europe are the London Business School, the Helsinki University of Technology, and the Swedish Entrepreneurship and Small Business Research Institute (ESBRI), amongst others. 2.2.1 Key Concepts Key concepts used in research on the institutional level are ‘institutions’, ‘transaction cost’, ‘risk and uncertainty’, tacit knowledge’ and ‘trust’ to name only the most important which shall be shortly described here:

a) Institutions Institutions, in the institutional economic context, are defined as “the humanly devised constraints that structure political, economic and social interactions“ (North 1991). Another definition, describing the substantial characteristic of institutions is by Walton Hamilton (1932). He saw institutions as “a way of thought or action of some prevalence and permanence, which is embedded in the habit of a group or the customs of a people”. (Hamilton 1932 cited in Hodgson 1998) Institutions are very often used synonymously with organisation. Although, organisations can be considered as formalised institutions, i.e. the term institution includes organisations but institutions are more than organisations. The main characteristic of institutions is its permanence. In the political economic or institutional economic context some of the most important institutions are property rights, contracts, markets, law, trade regulations, governance systems, scientific education and research.

b) Transaction costs Fundamentally, transaction costs represent resource losses due to lack of information (Hodgson 1988). According to Coase transactions costs are involved when carrying out market transactions. “In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal and on what terms, to conduct negotiations leading up to a bargain, to draw up a contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on.” (Coase 1960 cited in Hodgson 1988)

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c) Risk and uncertainty

Risk and uncertainty has been introduced to economics by Frank Knight (1921) in his classic of modern economics with the title “Risk, Uncertainty and Profit”. Risky actions are those, which can be calculated from objective probability. Such risks become an element in the cost of production. Uncertainties, however, cannot be reduced to objective measurement as they involve unpredictable situations. This kind of uncertainty can not be insured and therefore not be included in the calculation of production costs. Institutions affect innovation behaviour through their influence on risks and uncertainties. They can reduce the very high risks and uncertainties in the natural economic order to a tolerable degree and are the instruments to strike a balance between the need for incentives (through some minimal risk and uncertainty) and the need for predictability (i.e. reduction of risk and uncertainty).

d) Tacit knowledge Basically, tacit knowledge is knowledge that cannot be or is not formalised and is therefore communicated in the way of learning by doing, word of mouth or other forms of informal communication. In the context of forestry tacit knowledge can be local knowledge about microclimate, soils or the functioning of informal institutions and networks. Tacit knowledge is used as argument for the importance of regional development.

e) Trust Trust is often seen as a way to reduce complexity in b2b relations. This can lead to reduced transaction costs and new opportunities as well as to conservative behaviour of systems. 2.2.2 Innovation Models Innovation models are built by the combined use of 'pre-existing' or simultaneously developed theories (evolutionary economics, development theory, systems theory,...) or concepts (systems of innovation, networks,...). The basis for some of the concepts applied already lie in the ‘Principles of Economics’ by Marshall (1990 [1920]) where he defined external economies caused by knowledge spill over by firms, specialisation and regional pooling of skills of labour force and emphasises the advantages of regional agglomerations of industrial districts (Peneder 1997). Below, we will present shortly two important innovation models among them.

2.2.2.1 Systems of innovation

The institutional view on innovation is reflected in the literature on systems of innovation. System of innovation is one of the main research fields in institutional economics. The main contribution of institutional economics is the view on the whole system that is fostering or hampering innovation. This systems view concentrates on the relation between the different actors in the innovation process rather than concentrating on single actors. The leading researchers in the field have, usually in the context of national innovation system research, defined a system of innovation as follows: “ .. the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies.” (Freeman 1982) “ .. the elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge ... and are either located within or rooted inside the borders of a nation state.” (Lundvall 1992)

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“... a set of institutions whose interactions determine the innovative performance ... of national firms.” (Nelson 1993) “ .. the national institutions, their incentive structures and their competencies, that determine the rate and direction of technological learning (or the volume and composition of change generating activities) in a country.” (Patel and Pavitt 1994) “.. that set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provides the framework within which governments form and implement policies to influence the innovation process. As such it is a system of interconnected institutions to create, store and transfer the knowledge, skills and artefacts which define new technologies.” (Metcalfe and DeLiso 1996) Edquist (1997) defines nine common characteristics of the systems of innovation approaches: 1. innovations and learning at the centre 2. holistic and interdisciplinary 3. a historic perspective is natural 4. differences between systems and non-optimality 5. emphasis on interdependence and non-linearity 6. encompasses product technologies and organisation al innovations 7. institutions are centre 8. conceptually diffuse 9. conceptual framework rather than formal theories Specific analyses in national innovation system research are directed to deepening the understanding of certain types of flows or structures and processes in innovation systems, especially: 1. human resource flows; 2. institutional linkages; 3. industrial clusters; 4. innovative firm behaviour. The literature on systems of innovation uses different categories to distinguish between various forms of innovation. One often found distingction is between two main types of innovation, i.e. product and process innovation (see Fig 1). Product innovations can be new material goods or new intangible services. Process Innovations can be either technological or organisational. All these types of innovation can either be continous, incremental changes or radical changes. They can be new to the market (sector) or new to the firm. An innovation process which is new to the firm, but not new to the sector, can also be called diffusion when viewed from a macro perspective.

Product Innovationmaterial goods | intangible services

Process Innovationtechnological | organisational

Figure 1: Types of innovation Edquist (1997) summarises the functions of institutions in the process of innovation in three categories: • to reduce uncertainties by providing information, • to manage conflicts and cooperation, • to provide incentives. From this, the service of an innovation system (IS) for the individual enterprise can be described as: managing conflicts and cooperation (mediation), reduction of uncertainty

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and incentives (see Fig.2). The IS shall manage the competition and cooperation necessary for a innovation friendly environment, e.g. by supporting networks and clusters. The IS shall supply knowledge for the enterprise to reduce uncertainties in the economic activities of the enterprise. The IS shall provide a structure of incentives that can make innovation profitable on the long run.

Figure 2: Services to be provided by an innovation system In practice, there are many different approaches to analysing innovation systems.

a) National Innovation System

One debate deals with the nature of National Innovation Systems (NIS), and especially the way institutional dynamics are interpreted (EDQUIST and JOHNSON 1997; LUNDVALL 1992). The innovation system is primarily defined by the national boundaries, within which the interplay of actors on the national level are analysed. Here one can find a whole range of views on the role of institutions, the opposition between technological and organisational determinism and the social and political dimensions of learning. There is a growing consensus in the NIS literature that innovation is a socio-organisational process; but there remains divergence in opinion on the relationship between technological and organisational innovation.

b) Regional Innovation System A second debate concerns the nature of the innovation process at the local and regional level. The related innovation model is called Regional Innovation Systems (RIS). Most of the contributions on the nature of innovation in the RIS refer to innovative dynamics based on technological change, organisational learning and path dependency. There are application of contemporary concepts of evolutionary economics. Organisational selection, learning processes, path dependency, networks, institutions, governance, etc. became distinct elements of the new theories (Carlson and Jacobson 1997). It is explicitly recognised by economists of innovation that learning and technological change are rooted in the structure of the economy; they are characterised by regional specificities and include strong elements of path dependency (Carlson and Jacobson 1997).

c) Sectoral Innovation System A third debate deals with the Sectoral Innovation System (SIS). This approach looks at the firm level, inter-firm level aspects as well as the institutional level aspects both of market and non-market relations. The key features of this approach are the importance of the knowledge base and the learning process, the role of non-firm organisations and institutions and the co-

Services of the Innovation System

EnterpriseInnovation System reduce uncertainty

mediation

incentives

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evolutionary process changing the sector. As described by Malerba (no year) “[a] sectoral system of innovation … is composed by a set of heterogeneous agents carrying out market and non-market interactions for the generation, adoption and use of (new and established) technologies and for the creation, production and use of (new and established) products that pertain to a sector (“Sectoral products”). The agents composing the sectoral system are individuals and organizations. These organizations may be firms (such as users, producers and input suppliers) and non-firm organizations (such as universities, financial institutions, government agencies and so on), as well as organizations at lower or higher level of aggregation (such as consumers, R-D departments or industry associations). Agents are characterized by a specific learning process, competence, structures and behaviour. They interact in a market and non-market way through processes of communication, exchange, cooperation, competition and command, and their interactions are shaped by institutions (rules and regulations).” The SIS approach distinguishes between five major examples of SIS, traditional sectors, mechanical industries, the auto industry, the computer mainframe industry and the software industry. The first type of SIS may be found in the traditional sectors, like in agriculture, forestry, wood and paper industry and is characterised by many innovators, which are geographically dispersed with no specific knowledge spatial boundaries (Breschi and Malerba 1997).

2.2.2.2 Innovative milieu According to Maillat (1991, p. 113): “The milieu must be envisaged in such a manner that it has a significant action on the manner of giving life to the innovation process. The milieu is not a warehouse from which one obtains supplies, it is a complex which is capable of initiating a synergetic process. From this point of view the milieu cannot be defined merely as a geographical area, it must be envisaged as an organization, a complex system made up of economic and technological interdependencies.” Literature on the milieu focuses on the specific nature and quality of transactions, alliances and partnerships between enterprises. The focus is less on ties between businesses, than the degree to which they support a collective environment for innovation (Malecki 1997). Special emphasis is also given to institutions in the research process (university, firms, public agencies, etc.) (Moulaert and Sekia 2000) The innovative milieu approach looks at innovative regions. The business enterprise is then seen rather as a consequence of a local milieu (Aydalot and Keeble 1988). The innovative milieu approach is characterised by conceptualising innovation as a collective effort with division of labour between a multitude of actors. These actors form networks, which are key sources of information and knowledge. The local characteristics of the actor network can be highly relevant, especially for tacit forms of knowledge. However, as Maillat (1991) points out, a “milieu” “...cannot be defined merely as a geographical area, it must be envisaged as an organisation, a complex system made up of economic and technological interdependencies. It groups together into a coherent whole a production system, a culture, and protagonists.” A milieu is therefore rather a socio-cultural approach. The innovative milieu approach is furthermore characterised by putting a high importance to synergies between different factors. The strength of the innovative milieu approach lies in the recognition of the role of the business environment for innovation and in the recognition of more qualitative aspects like informal, social and cultural factors, or historical structures. One of its main weaknesses lies in the difficulty to exactly define and measure what is meant by the term “milieu” (Maier and Tödtling 1995).

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2.2.3 Entrepreneurship Research on Institutional Level In an attempt to structure the very fractured field of entrepreneurship research, Bechard (1997) conducted a literature analysis on the most often quoted references in five academic journals that are mainly related to entrepreneurship research in the US and Europe. He distinguished four main areas of research - the economic forces regulating or supporting demand and supply of goods and

services - psychological forces determining personality traits and encouraging innovative

behaviour - socio-cultural forces modulating cultural traits and allowing to perceive and act on

opportunities - organisational forces provoking adaptation to pressure from competition and/or

supporting the creation of new ventures Most entrepreneurship research on the institutional level is related to standard political economic and economic policy research. From the policy viewpoint it is important to study what effects entrepreneurship has on economic growth, development and employment creation. It is likewise important to understand where entrepreneurship comes from. That determines whether and where to invest resources. If entrepreneurial skills are innate, active promotion policies have a small role to play. If certain entrepreneurial characteristics and skills can be acquired through training, active promotion policies can contribute to entrepreneurship development. This tread is again taken up in chapter 2.5. 2.3 Business to Business (b2b) Level B2b-level innovation research is performed by economics, business administration researchers, sociologists and economic geographers. The literature on business administration distinguishes between output oriented and procedural definitions of innovation. In output oriented approaches, innovation can be understood as the first economic utilisation of new products or processes. New in this context can either be defined as a first introduction in the market or to society as a whole („objective approach“) or new for an organisation or individual, irrespectively whether or not it has been introduced by others before („subjective approach“). In procedural approaches one can distinguish between general approaches in the definition of innovation, which includes all phases of a process, or a phase related definition (Corsten 1995). Mayor inputs for research and policy came from Granovetter (1973) and others on network theory and from Porter in his work on competitive advantage and clusters (Porter 1985). In general, entrepreneurship research is not specifically addressing the b2b level. 2.3.1 Network Theory Innovation models on the b2b-level use the network concept as a key-element. The district literature, the milieu innovateur, the Storper-Scott and Saxenian version of the New Industrial Spaces and the learning region use a network approach, which bypasses more or less the technocratic interpretation of the professional, technological or industry network. According to Grabher (1993) ‘network’ can be identified and characterised by the following four basic features: (i) reciprocity; (ii) interdependence; (iii) loose coupling; (iv) power. Networks are in the first instance introduced as intermediate organisational forms between markets and firms, when these fail in efficiency and efficacy. Especially trust (reliability on technical features, timing), demand or supply specificity, possibilities for co-operation, are at the basis of a choice for supplier-producer and buyer-subcontractor network relationships. Extended family networks, co-operative networks, etc. have

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formed the organisational structure of local small production systems where the market was unavailable for this type of function (Hansen 1992). In the same way, SME's in peripheral regions would often have no or limited access to advanced producer services if specialised networks - involving the public sector - were not purposely established. 2.3.2 Cluster Theory – Porter’s competitive advantage and cluster approach Porters cluster concept is based on the effects of agglomeration and the related information flows and relatively low transaction costs. It emphasises the role of competitiveness in export and the related value added for the national economy. It also emphasized the role of innovation as a remedy against mature industries in the tradition of life cycle theory. Based on competition rather than trust, specialized clusters in Porter’s “diamond” paradigm represent one source of competitive advantage for a nation within the world economy, especially through information flows and the related transaction costs. Porter’s findings and the policy implications, presented in The Competitive Advantage of Nations (Porter 1990), brought the concept and the cluster approach to the forefront, and served as the benchmark for a series of national cluster studies conducted in subsequent years. Jacobs and De Man (1996) provide a wider classification of different cluster concepts and their dimensions, where Porter’s approach is only one of three different approaches. They define three groups of cluster concepts: regionally concentrated and related agglomerations, vertically linked value chains and networks, and industry groups as outlined by Porter (1990). 2.4 Enterprise Level In innovation related business administration research the focus lies on the firm and the inter firm relations (What can be done to improve the ability to innovate? Which innovation strategy does a firm need? Etc). Schumpeter´s linear sequence of the innovation process, the “idea – invention – innovation – diffusion chain” still influences innovation research. His typology of new combination versus true invention and creative destruction and novel combination distinction lead to the presently used dichotomies of “new to the firm” versus “new to the market” innovations and to the distinction between radical and incremental innovation. Since the 1980ies, also entrepreneurship has developed into a field taught in all business schools, and since the 1990ies increasingly also in Central Europe1. The Center for Entrepreneurial Studies at Babson College holds an annual conference on entrepreneurship since 1981. The proceedings of this conferences are considered as benchmark in entrepreneurship literature. Although, most research focusing on the firm is done in business administration, social sciences also have some important contributions to make, including social science classics on entrepreneurship from Schumpeter and v. Mieses from the first part of the last century to Granovetter in the 1990ies (Swedberg ed. 2000).

1 Recently two professorial chairs for entrepreneurship were established in Austrian universities.

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2.4.1 The Innovation Process in an Organisation The process of innovation in an organisation can be categorised according to the stages in the innovation decision process (Rogers 1995): 1. Prior conditions

- Previous practice - Felt needs / problems - Innovativeness - Norms of the social system

2. Knowledge – the characteristics of the decision making unit are - Socio-economic characteristics (education, social status, economic orientation,...) - Personality variables (attitude towards education, fatalism, achievement

motivation, ) - Communication behaviour (interconnectedness, active information seeking,

change agent contact) 3. Persuasion – related to the perceived characteristics of the innovation

- Relative advantage - Compatibility - Complexity - Trialability - Observability

4. Decision (adoption or rejection) 5. Implementation 6. Confirmation Individual agents or companies can be classified according to their adoption behaviour related to innovations. One common scheme is to classify them according to the degree to which an organisation or individual is relatively earlier in adopting new ideas than other members of a social system. 2.4.2 Enterprise Level Factors Determining Innovation The firm level factors concern organisational aspects, such as organisational characteristics of the company and its size, quality of workforce, and the goals and innovation strategy of the company. Freeman (1982) distinguishes between offensive, defensive innovation strategies, imitation strategy, traditional and niche strategies and dependent satellites. The latter type does not innovate but simply produces according to specifications of the customer Rogers (1995) defines the following variables as key-features to explain organisational innovativeness (+ or – shows direction of correlation): - individual (leader) characteristics - internal characteristics of organisational structure

- centralisation (-) - complexity (+) - formalisation (-) - interconnectedness (+) - organisational slack (+) - size (+)

- external characteristics of the organisation - system openness (+)

A key for understanding innovation / innovation diffusion is to identify why many companies are not innovating, and the impediments faced by those who wish to innovate, or to increase their level of innovative activity. Related to markets as a whole, a significant body of research has investigated the relationship of industry structure to industry entrance by and success of new firms, relying heavily on Porter’s five forces

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model (Porter 1985). Barriers to entry are in his view the creations of industry competitors. Related to new products or product modification, significant less theory-based research has been conducted. Most surveys on innovation use a list of possible external and internal factors, which might include, e.g. laws/statutory requirements, lack of know how or personnel, ease of imitation, high costs or risk, lack of capital, market risk. Studying the diffusion of innovation Rogers (1995) also highlighted the specific role of change agents. A change agent is an individual who influences clients´ innovation-decision in a direction deemed desirable by a change agency (ibd.). A change agent usually seeks to secure the adoption of new ideas, but he or she may also attempt to slow the diffusion process and prevent the adoption of certain innovations with undesirable effects. Change agents fulfil seven roles in the process of introducing an innovation (ibd.): - to develop a need for change - to establish an information-exchange relationship - to diagnose problems - to create an intent in the client to change - to translate an intent to action - to stabilise adoption and prevent discontinuance - to achieve a terminal relationship by developing a self-renewing behaviour 2.4.3 Entrepreneurship as New Venture Creation and Corporate Entrepreneurship An entrepreneurial firm is a firm „…that engages in product-market innovation, undertakes somewhat risky ventures, and is first to come up with pro-active innovations.“ (Wiklund 1998). Literature on entrepreneurship on firm level distinguishes between entrepreneurship as new venture creation and corporate entrepreneurship. Institutions or organizations often go through distinct phases. These phases have been studied by researchers, inter alia, on organizational evolution, organizational psychology and sociology. Katz and Gartner (1988) and others have defined specific phases, from a stage of potentiality, to becoming existence, survival, success, takeoff and resource maturity. The first stage of organizational growth is assumed to begin with the initiative of an entrepreneur. Entrepreneurship as new venture creation is a specific field of study. New ventures and young firms face risks which are typically greater than those encountered by more mature firms. New tasks and roles must be learned. Conflict exists between the invention of new roles and constraints on capital and creativity, exacerbated by a lack of an informal information structure. Stable links with clients, supporters or customers are yet to be established and there is a demand for initial resource stocks. This first stage is defined by Shepherd and Crouch (1995) a new venture. Corporate entrepreneurship is fostered within a pre-existing, often mature, organizational setting; such an organization provides support for the development and exploitation of one or more innovations, which are considered important for the competitiveness of the company. These organizations are structured to facilitate the development, creation, and implementation of innovative processes, concepts, products, or services. Corporate entrepreneurship (or intrapreneurship) can be seen as an umbrella term for concepts and strategies to improve the competitive advantage of established medium and large size companies. Corporate entrepreneurship refers to activities involved in creating and exploiting new resource combinations of existing enterprises. It denotes conscious efforts to instil entrepreneurial practices within corporations are intended to enhance the ability of the firm to (a) produce or acquire new products (goods or services)

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and (b) manage the innovation process. It includes managerial efforts aimed at the identification, development and exploitation of process and product innovations and on effective new venture management in the context of large corporations in manufacturing as well as in service industries. 2.5 Personal Level 2.5.1 Innovation and Personal Factors Innovation or diffusion of innovation on firm level often depends on the attitudes of the individual agent. This is especially true for small or medium size companies, like forest holdings. Here the forest owner or the manager of the forest holding will, in most cases, be the individual agent deciding on innovations. Individual agents can be classified according to their adoption behaviour related to innovations. One common scheme is to classify them into (Rogers 1995): - innovators – the venturesome - early adopters – the respected local opinion leaders - early majority – the deliberate followers - late majority – the sceptical - laggards – the traditional Rogers (1995) summarises the results of existing literature on the characteristics of adopter behaviour into the following categories (sub-categories denote some aspects where a majority of studies found support for differences in adopter behaviour categories): - socio-economic characteristics

- attitude towards credit, education, commercial orientation - personality values

- favourable attitude towards education and science, change, ability to cope with uncertainty, rationality, non-fatalism, higher aspirations, intelligence

- communication behaviour - interconnectedness with the social system, more active information seeking,

change agent contact, cosmopolitness, opinion leadership, exposure to interpersonal communication channels, knowledge of innovations

2.5.2 Entrepreneurs In entrepreneurship research it is hard to distinguish research on firm level and on personal level, as most concepts include both aspects. Apart from marketing most personal level - entrepreneurship research is done in micro-sociology and psychology. A popular approach to the study of new ventures is through the attitudes, characteristics and skills of their founders, called entrepreneurs. Timmons (1990) and others offer advice on new venture initiation and development with a primary focus on the initiator of the venture. In fact the approach has been so attractive as to provide the foundation for studies of entrepreneurial characteristics.

A widely shared perception was that entrepreneurship is a personal feature, either a person is or is not an entrepreneur. According to this perception entrepreneurial traits, such as the need to achieve, the willingness and ability to taking risk, self-esteem and internal locus of control, creativity and innovative behaviour etc. are all inborn. Therefore, policies directed specifically towards promoting the development of entrepreneurship would not help much since those characteristics cannot be acquired by training.

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2.5.2.1 Attitudinal orientation and personality traits

Researchers summarise attributes of entrepreneurs into entrepreneurial attitude and behaviour. An entrepreneurial attitude or orientation refers to the "willingness of an individual or organisation to embrace new opportunities and take responsibility for effecting creative change" and entrepreneurial behaviour is doing whatever it takes to move an idea through to implementation” (Morris 1998). A description of entrepreneurs by the identification of clusters of attitudes has been described by Robinson et al (1991), based on an “Entrepreneurial Attitude Orientation” scale. Results indicate that entrepreneurs are ranked higher than owners or managers on the attitudinal scale of following dimensions: - Innovation - Achievement - Personal control - Self confidence Timmons (1994) found that a consensus emerged around six dominant themes of desirable and acquirable attitudes and behaviours. These are: commitment and determination, leadership, opportunity obsession, tolerance of risk, ambiguity and uncertainty, creativity, self-reliance and an ability to adapt, and the motivation to excel. He describes entrepreneurial activity as a "human creative activity" (ibd.). It involves "building a team of people with complementary skills and talents; of sensing an opportunity where others see chaos, contradiction and confusion, and of finding, marshalling and controlling resources to pursue the opportunity" (ibd.). A wealth of different constructs and related research has been undertaken to better determine the key personality traits of entrepreneurs. Shaver and Scott (1991) developed an entrepreneurship model of personality traits, which is based on four constructs: achievement motivation, locus of control, risk perception, and creativity. Achievement motivation has been singled out as the most prevalent construct to explain entrepreneurship (Johnson 1990), mainly based on the works of McClelland (1961). During the 1960s research by McClelland and others dealing with the relationship between achievement motivation and entrepreneurship offered considerable promise (McClelland, 1965). Yet as the review by Bird (1989) attests, the follow-up to these initial successes was sporadic and, even on occasion, not particularly fruitful. Nevertheless, several lines of research on the linkage between personality and entrepreneurial success continued, e.g. by Bellu (1988). One problem with prior research appears to be that it tends to assume only one type of personality underlying successful entrepreneurship. Subsequent research has specified two types — a personal achiever type, and a real manager type. Miner (1996) proposes four types and claims that different personality patterns of an entrepreneur exert a dominant influence on the subsequent success of the entrepreneur’s venture. This view moves beyond prior formulations with its emphasis on multiple types of entrepreneurs.

2.5.2.2 Socio-cultural traits Research that tries to explain, by personal traits and/or other social aspects, why certain individuals become entrepreneurs, has not yet produced convincing results. Another field of research studies whether some cultures or some social groups are more conducive to entrepreneurial behaviour than others. According to this view, the factors that contribute to the supply of entrepreneurs are an inheritance of entrepreneurial tradition, family position, social status, educational background and the level of education. Yet, also here, no common view has emerged as to the influence of these factors.

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One strand of cultural theory, originating from cultural anthropology (Michael Thompson et al. 1990), studies the influence of culture based approaches of individuals explicitly taking attitudes towards the environment into account (Douglas and Wildavsky 1982, Thompson 1994, Price and Thompson 1995) . Individuals are characterised in 4 groups according to two characteristics. One criteria is the asymmetry of transaction, the other criteria is attitude towards the environment. The 4 cultural types are called: Hierarchists, Egalitarians, Entrepreneurs and Fatalists. Each cultural type represents a different rationality of the individual. Cultural theory is also used in market research (Karmasin and Karmasin 1997) to categorise consumer behaviour. It has been used to investigate the risk perception (Marris et al. 1996, Marris et al. 1995) and the attitudes of individuals toward nature. This has resulted in research on alpine communities (Price and Thompson 1995) and in forest policy (Schanz 1997). The culture-nature interaction is especially interesting for innovation research related to sustainable forest management, as this interaction is what might be the missing link for innovation research in the primary sector.

2.5.2.3 The new venture creation process

Over the last decade research and theory development in the field of entrepreneurship has increasingly studied integrated models of entrepreneurship as a process (Hills et al 1997). Olson (1986) separates this process into four main stages: - Identification – becoming aware of a market opportunity - Design – evaluating the market opportunity - Selection – making a choice concerning the course of action - Implementation – converting the potential innovation onto a reality Research on entrepreneurship seems to have increasingly focused on opportunity as the heart of the entrepreneurial phenomenon. Kirzner (1973) argued that the discovery of opportunities is the core issue of entrepreneurship. According to Kirzner, entrepreneurs find and exploit opportunities by taking advantage of economic disequilibria by knowing or recognizing things that others do not (ibd.). Christensen, Madsen, and Peterson (1989) defined opportunity recognition as, “either a) perceiving a possibility to create new businesses or b) significantly improving the position of an existing business, in both cases resulting in new profit potential.” Long and McMullan (1984) proposed a model for the opportunity identification process with four stages including pre-vision, point of vision, opportunity elaboration and decision to proceed. Hills and Lumpkin (1997) identified five implications for entrepreneurship education, based on opportunity recognition perception and behaviour research. These include 1) the opportunity recognition process can be applied to any business or industry, but, 2) it is most fruitful when it has a problem-specific application; 3) teaching creativity skills can enhance opportunity recognition; 4) experimentation and continuous learning are essential to opportunity recognition; and, 5) social networking enhances the opportunity recognition process.

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3 Forest Related Innovation & Entrepreneurship Research

Forest related research has, as any other discipline, contributed to the development of new products and processes for the sector over decades, and in some regions even centuries. Such research assisted innovation initiatives aim to address the evolving needs and demands by consumers and the public to provide goods and services from forests. Ample research exists and is undertaken on specific new products, such as introduced trees and the development and marketing of new non-wood products and services, including specific conditions and possibilities for recreational and environmental services. Similarly, much research has been undertaken on improving specific technological and organisational processes in forest management. Research addressing specific issues related to the introduction of new products or processes by one specific institution, public or private, is certainly comparatively well established. Research of this kind, however, will not be considered in detail. This attempt to map the current landscape on innovation and entrepreneurship research in contemporary forest related research instead focuses on research conducted to better understand the conditions, processes and outcomes of innovation and entrepreneurship activities in the forestry sector, especially in Central Europe. 3.1 Institutional Level Until now no specific research on the institutional level using the approaches that have been presented in the first part of this paper seems to have been performed in forestry in Europe2. However, some research projects or publications analyse specific aspects, such as actors or processes related to innovation on the institutional level. Several international research projects, especially funded through the fourth EU Framework programme on research address aspects that are directly and indirectly related to aspects of innovation in the forestry sector addressing issues on the institutional level. Many of these project are related to wider questions of rural or regional development and the contribution of forestry. These research projects are, inter alia, „Niche Markets for Recreational and Environmental Services (RES)“, „Multifunctional Forestry as a Means to Rural Development (MULTIFOR.RD)“, the “Forest Resources for Work Opportunities And Regional Development” (FORWARD) project of the European Forest Institute and COST actions. A EU project on “Evaluating Financing of Forestry in Europe (EFFE) analyses forestry funding policies and programs in Europe to evaluate, inter alia, the allocation and the effectiveness of use of rural development funds. In a dissertation at the University of Agricultural Sciences Vienna, R. Eder (1989), on “Die Rezeption von Innovation in der Forstwirtschaft” (The Uptake of Innovation in Forestry), analysed some of the aspects relevant in today’s approaches on institutional and enterprise level. Eder analysed the innovation behaviour of forest holdings and the role of different actors in - what we now call – an institutional system. Although, the new aspects of innovation research, i.e. the interplay between the actors and institutions were not analysed. In 1990 a workshop on “Innovative Forstwirtschaft” (Innovative Forestry) was held at the University of Agricultural Sciences Vienna, leading to a publication (Glück ed. 1991) that included various institutional aspects of innovation. This workshop considered contents of innovation, sources of innovation as well as communication on and diffusion of innovation.

2 For the woodworking industry a masters-thesis was done dealing with cooperation and innovation in the woodworking industry of a region in Austria (Schenker 2000) using some of the concepts.

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Outside Europe especially Canada and Australia have recently established explicit programmes to foster forestry development through innovation, with research components attached. British Columbia has set up the Forestry Innovation Development Programme that invests into the development and adaptation of ideas. For Canada recently a special issue on “Innovation, Science and Technology” was published that includes i.a. articles on innovation in the forest sector (Schaan and Anderson 2002), and on the innovation system of Quebec (Côté 2002). Some forest related issues are at least touched upon in research on rural innovation or rural entrepreneurship related research. However, the main focus by far in this type of research approach is agriculture, such as in Ellwein (1980). Several research initiatives have addressed innovation in rural areas, including COST Action A12 on “Rural Innovation”. An overview of innovation related research in Europe is currently being made available from this recently concluded Action, additional to SEED (1997). In the US the “Rural Entrepreneurship Initiative” was founded in 1999 to address rural development aspects by supporting initiatives and research. Macke (2000) and Gladwin (1989) provide an overview on research related to rural entrepreneurship in the US. Compared to direct innovation research a wealth of research exists on institutional systems and structures in the different countries, such as the description of the institutional framework of forest policy in Switzerland by Schmithüsen and Zimmermann (1999), or in Austria (Glück 1995). A further field of research related to institutional structures and forest policy concerns the contribution of forestry to rural development, analysed, e.g. by Glück (1999), Koch and Rasmussen (1998) and Glück and Weiss (1998). Schmidthüsen and Schmidthauser (1999) analyzed financing of sustainable forest management in public forests in Switzerland. Kasper (1989) analysed the influence of the Swiss forest policy on the development of the forestry sector in a Swiss canton. With a more broad approach Peck and Descargues (1997), amongst others, analysed the policy context for the development of the forest and forest industries Sector in Europe. Ample research also exists on the range of infrastructural, non-marketed or non-marketable benefits, functions or values of forests for society. Examples in Austria include Glück (1998) as well as Mayer (1997), Wildburger (1997) and Schrems (1998) for various aspects in Austria, Weck-Hannemann (1994) and Blum (1994) in Switzerland. An EU-funded research project “Recreational and Environmental Services from Multiple Forest Production Systems” (RES) (Mantau et al. 2001) used a variety of research approaches, i.a. property rights legal and political aspects of land-use, transaction cost approach, as well as new organisational bodies for producers and consumers. A further topic of research relates to forest policy in Countries in Transition, and EU accession issues, e.g in Glück et al. (1998). Recently research activities on institutional level addressing innovation and entrepreneurship directly have started or are being shaped for future research. The recently established EFI Regional Project Centre INNOFORCE is now concentrating on an innovation systems approach in sectoral and regional contexts to describe the relation and interaction between the different actors (Rametsteiner 2000). COST E 30 “Economic integration of urban consumers` demand and rural forestry production” is starting later in 2002. It also explicitly addresses innovation and entrepreneurship issues. 3.2 Business to Business (b2b) Level On b2b level much research has been undertaken in recent years related to supply chain logistics and related aspects (Sjoström 2001). Finland has put a major research effort in further deepening research based on the forest cluster approach. The objective of the

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Finnish Forest Cluster Research Programme (Wood Wisdom 1998-2001) is to raise the competitiveness of forestry and the forest industry. However, the programme covers mainly pulp and paper production and mechanical wood processing. Three projects deal with forest related services (Wood Wisdom 2002). Finland’s forest cluster is analysed by Reunala et al. (1999). On EU level Hazley (2000) in his analysis of the forest-based and related industries found that an EU forest cluster exists as a series of ‘industrial districts’, ‘clusters’ and ‘agglomerations’, which are found in many regions of Europe. These are found both localised in certain districts or regions and sometimes dispersed at the national level but the vast majority are comprised of SMEs. Viitamo (2001) discusses progress on cluster research with a specific emphasis on forest-based industries. Recently, he also applied the cluster approach to accession countries and countries in transition (Viitamo and Bilas 2002). The Austrian forest cluster was analysed by Bayer et al (1993). Hutschenreiter et al. (1996) analysed the diffusion of knowledge in the Austrian forest cluster. On the background of a very fractured ownership of forests in Central Europe, considerable emphasis was also put on research related to co-operation between forest owners. Schwarzbauer (1983) analysed forms of co-operation by small forest owners in the marketing of wood. Price (1990) analysed mountain forests as common-property resources using the Swiss Alps as one example. Rapp (2000) analysed potentials for developing forest owner co-operations in Baden-Württemberg. 3.3 Enterprise Level As indicated in the introduction to this chapter a multitude of research projects exist on international, national and sub-national levels that investigate into different aspects of introducing new specific products or processes in markets. In many of these projects forest holdings are directly involved in the research. Private forest owner research and small-scale forest owner research is a mayor issue in forest policy research. In recent years structural changes in the ownership of forests has increased research related to the differences between traditional, farm based forest management and the non-/forest management of so-called urban forest owners. Kvarda (2000) provides an overview of this kind of research in Europe. Also the previously mentioned RES-project includes various aspects of innovation on the enterprise level, like marketing strategies, contracts. However, little evidence exists on research that more generally analyses the conditions under which forest holdings introduce new products or services, and how. Entrepreneurship as a topic seems to be virtually unknown in forestry related research in Europe. Some research explicitly addressing entrepreneurship has been identified in Nordic countries. In a dissertation on “Strategy and Innovation Model for the Entrepreneurial Forest Owner” M. Kajanus (2001) works on strategic planning of forest owners of small holding as strategic business units (SBU) of their rural enterprise. The core of his model is the process of creating an idea and the generation of alternative business strategies in the space of opportunities opened by the multiple functions of forests and other rural SBUs.

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3.4 Personal Level Personal level research it is often hard to distinguish from research on firm level, as many research approaches include both aspects. Apart from marketing most personal level research is done in micro-sociology and psychology. Personal level related innovation research as such is again largely absent. Like in the other research areas discussed here, a range of findings, however, exist on key parts of innovation, such as information and knowledge diffusion. For example, Pregernig (1999), on the “Evaluation of the Socio-Political Acceptance of Scientific Recommendations”, aims to trace the "paths of knowledge" and tries to find out the most essential determinants of the human intention to take measures to restore degraded forest ecosystems. He partly based his quantitative research on the work of Roger (1995) on diffusion of innovation. As examples of relevant, yet not specific innovation research, Glück (1987) analysed the value system of forest owners in Austria and Sekot (1989) analysed motives for economic behaviour of forest owners. Cultural Theory, which allows to relate individual's rationality to their view of nature, has been introduced to forest policy by Schanz (1997). However, cultural theory, as defined by Thompson (1990), has not established itself as a distinguishable research field in forest related research. It is, however, paramount for sustainable forest management to take this individual’s relation to nature and their risk behaviour into account.

4 Discussion and Conclusion The overview has shown that much research has been undertaken on innovation and entrepreneurship in general, especially over the last decade. Both concepts have attracted high levels of attention due to their existing or perceived role in fostering economic growth and employment. Innovation research seems to have successfully established sub-disciplines of social sciences on different levels, some of which were reviewed in this discussion paper. Entrepreneurship research is a comparatively “younger” topic of renewed interest, especially in Europe. Since the turn of the century studies of entrepreneurship have been carried out within a number of disciplines like business administration, economics, sociology, psychology, economic history, and economic anthropology. No competent survey, which covers all of these, seems to exist. It is also difficult to find surveys of what has been accomplished in the individual social sciences, except for economics (Swedberg ed. 2000). A widely accepted view in relation to entrepreneurship is the following: while personal characteristics as well as social aspects clearly play some role, entrepreneurship and entrepreneurs can also be developed through conscious action. The critique, most often brought forward, related to innovation and innovation diffusion research is the pro-innovation bias. Its implication is that an innovation should be adopted by more, more rapidly, and that an innovation should neither be re-innovated nor rejected (Rogers 1995). Similar observations can be made for entrepreneurship research, where emphasis is sometimes placed on individuals as larger than average figures, or is very much biased towards attitudes of male entrepreneurs (Bandhauser-Schöffmann 2002) Given the small size of the forestry sector compared to the European economy, and its position in a seemingly mature primary sector, research in forestry on innovation and entrepreneurship is much less pronounced. While innovation is certainly no brand new subject, specific research on innovation related aspects in forestry is very scarce and

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often undertaken in relation to other subjects, such as rural development research, or from a raw-material-sourcing perspective in forest cluster related research. Due to the fractured nature of forest ownership, enterprise level and personal level research in forestry is often indistinguishable. In both areas explicit innovation or entrepreneurship research is likewise virtually inexistent. However, relevant research exists for specific components of innovation and entrepreneurship concepts. In general research efforts seem to correlate with the overall importance of the forest sector in a country’s overall economy, which is relatively higher in the Nordic countries, especially Sweden and Finland, and in Austria. But also in these countries the forestry sector seems to suffer from the same syndromes as other sectors, namely a sector structure of fractured small scale enterprises with basically no research spending and thus comparatively little internal knowledge creation. This situation makes the sector especially vulnerable to changes driven by external forces as some of those currently on-going, and dependent of others, such as governments, who traditionally have had a close hand over the sector’s activities. This situation has also led to research on vertical and horizontal co-operation. In order to make a step closer to securing a sustainable future for the forestry sector, and thus to ensure ample provision of goods and services from forests including the environmental services, it seems quite crucial to better understand, under which conditions forest owners and managers are able to introduce new products or processes or to start new businesses. Economically viable, and thus sustainable forest management will depend on the ability of forest owners to identify new opportunities and their capability to exploit such opportunities. Other institutions not directly managing forests or further processing forest goods should have a vital interest in establishing conditions that allow creation and application of knowledge ultimately improving income, economic growth and employment.

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Literature in Forestry:

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Blum, André (1994): Zur Marktfähigkeit infrastruktureller Leistungen des Waldes - Schlussfolgerungen einer Analyse des Stadtforstamtes Baden/Schweiz; Arbeitsberichte 94/4 des Chair Forest Policy and Forest Economics, Swiss Federal Institute of Technology, ETH, Zurich.

Côté M.-A. (2002): The innovation system in Quebec’s forest sector; The Forestry Chronicle vol. 78, no.1

Eder R. (1989): Die Rezeption von Innovation in der Forstwirtschaft; Dissertation, Universität für Bodenkultur Wien, Austria

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Glück P. ed. (1991): Innovative Forstwirtschaft; Schriftenreihe des Institut für Forstliche Betriebswirtschaft und Forstwirtschaftspolitik Band 11, Universität für Bodenkultur Wien, Austria

Glück, P. (1987): Das Wertesystem der Forstleute; Centralblatt für das gesamte Forstwesen, 104, 1, 44-51

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Glück, P. (1999): Der Beitrag der Forstwirtschaft zur Funktionsfähigkeit des ländlichen Raums; in: Wytrzens, H.K. (Hrsg.): Funktionsfähigkeit des ländlichen Raumes; Österreichische Gesellschaft für Agrarökonomie, Wien, 73-85..

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Kajanus, M. (2001): Strategy and Innovation Model for the Entrepreneurial Forest Owner; The University of Joensuu, Faculty of Forestry, Finland

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Kasper, H. (1989): Der Einfluss der eidgenössischen Forstpolitik auf die forstliche Entwicklung im Kanton Nidwalden in der Zeit von 1876 bis 1980; Chair Forest Policy and Forest Economics, Swiss Federal Institute of Technology, ETH, Zurich.

Koch, N. E., Rasmusen, J. N. (eds.) (1998): Forestry in the context of rural development: Danish Forest and Landscape Research Institute, Aas, Denmark

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Macke, D. (2000): Entrepreneurship in Rural America; Presentation at the National Governor´s Association State Policy Academy on Entrepreneurship, November 2000

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Price, Martin F. (1990): Mountain forests as common-property resources - Management policies and their outcomes in the Colorado Rockies and the Swiss Alps; Chair Forest Policy and Forest Economics, Swiss Federal Institute of Technology, ETH, Zurich

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Schenker Th. (2000): Kooperation und Innovation in der Holzwirtschaft des Mostviertels; Diplomarbeit, Universität für Bodenkultur Wien, Austria

Schmithüsen, F. (1997): Wald und Waldbewirtschaftung in einem sich verändernden gesellschaftlichen Umfeld; in: Forstwirtschaft im Konfliktfeld Ökologie-Ökonomie. Rundgespräche der Kommission für Ökologie der Bayerischen Akademie der Wissenschaften, Bd. 12: 17-27, Verlag Dr. Pfeil, München

Schmithüsen, F., Zimmermann, W. (1999): Forests, Forestry and Forest Policy in Switzerland. Basic Information and Institutional Framework; Arbeitsberichte 99/1, Chair Forest Policy and Forest Economics, Swiss Federal Institute of Technology, ETH, Zurich

Schmithüsen, F.; Schmidhauser, A. (1999): Entwicklung der Finanzierung einer multifunktionalen Waldbewirtschaftung in den Forstbetrieben öffentlicher Waldeigentümer im schweizerischen Alpenraum; in: Schweizerische Zeitschrift für Forstwesen 150 (1999) 11: 416-428.

Schrems, J. (1998): Die Sicherheitskompetenz der Forstwirtschaft in Österreich. Meinungen und Einstellungen der Öffentlichkeit zur Forstpolitik im Gebirgswald; Dissertation an der Universität für Bodenkultur Wien, Austria

29

Schwarzbauer, P. (1983): Gemeinschaftliche Holzverwertung aus dem Bauernwald: eine Form der Kooperation in der österreichischen Forstwirtschaft; Dissertation an der Universität für Bodenkultur Wien, Austria

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Viitamo E. (2001): Cluster Analysis and the Forest Sector – Where Are We Now? IIASA Interim Report IR-01-016, International Institute of Applied Systems Analysis, Laxenburg, Austria

Viitamo, E. and Bilas, O. (2002): competitiveness of the Forest Sector in the EU Candiate Countries – Cluster Analysis?; IIASA Interim Report IR-02-12, International Institute of Applied Systems Analysis, Laxenburg, Austria

Weck-Hannemann, H. (1994): Was ist der Wald uns wert? Eine Einschätzung aus ökonomischer Sicht; in: Schweiz. Z. .Forstwes. 145 2: 95-110

Wildburger, Ch. (1997): Die Naturschutzkompetenz der Forstwirtschaft in Österreich. Die Interessen politisch relevanter Akteure in bezug auf Naturschutz im Wald und ihre Einstellungen zur Forstwirtschaft als Anbieter von Naturschutzleistungen; Dissertation an der Universität für Bodenkultur Wien, Austria

Wood Wisdom (2002): Final Report of the Wood Wisdom Research Programme; Finnish Forest Cluster Programme (1998-2001), Finland