Forest helps micro-firms to survive

Owning forest as an entrepreneur could increase the firms’ possibility to survive in a harsh economic environment. However, the effect is only visible for men and is more vivid in rural areas.

60 000 new firms are started in Sweden each year. These new firms gives hope of rural and regional development, stronger labour market and regional economy. However, close to a third (32%) of all companies have discontinued within the first three years. A large quantity of the companies that survive, do not have enough turnover to even provide for its owner.

 

Forest assets give a more stabile business

 

One way of surviving shaky start-ups is to have forest assets. This comes from a study made within the research programme PLURAL. Non-forestry micro-firms run by forest-owners have better earnings than other firms. This implies that, for instance entrepreneurs use their forest revenues in a strategic way to maintain the firm activity. – Forest assets accesses different kinds of resources that can be used within the business, forest areas can for example be used by the tourism sector. Moreover, the forest revenues within the firm can be used as a buffer when it is economically difficult, says Katarina Haugen, one of the researchers behind the study.

 

Effect only visible on male owners

 

The firm type and the entrepreneurs age, gender and experience matter when it comes to effects of owning forest. It is particularly advantageous for private firms run by men. There is no such connection for female entrepreneurs. The researchers behind the study, Urban Lindgren and Katarina Haugen, claims the difference could stem from the difference in objective with men and women’s forest ownership. – Women and men often differ in their views of forest values and forest use. Male forest owners, for instance, tend to emphasise production, i.e. the forest economic values. This could result in them having a larger capital that in turn can be used within their firm, even firms not connected to forestry, says Katarina.

 

Businesses in rural areas perform better

 

Micro-firms with forest assets, located outside the metropolitan regions make better use of the forest and tends to perform better. – This way, forest ownership combined with entrepreneurship, could contribute to an economical development and job opportunities in for instance rural areas and less populated areas, says Katarina. It is however never harmful for a firm, regardless size or location, to own forest.

Facts

The study is based on statistical analyses of official register data with information on all micro-firms with 1-10 employees and is funded by the Swedish research council FORMAS and the PLURAL project – living and acting in several places.

Haugen, Katarina; Lindgren, Urban. (2013) On the importance of forest assets for micro-firm performance. Fennia – International Journal of Geography 191 (2), 122-142

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Katarina Haugen

Katarina is a Senior Lecturer (Associate Professor) within Human Geography and researches accessibility to every day destinations like different kinds of services, recreational activities, work, education and social relationships. Research focus has been on the physical, spatial dimension of accessibility, i.e. distance and/or proximity but also movability. This essentially entails the spatial localisation patterns for different types of destinations as well as the population settlement patterns, the spatial relationships between them and people’s accessibility strategy for bridging distance and proximity based accessibility respectively.

Urban Lindgren

Urban is a Professor in Human Geography and researches the interaction between competitiveness of businesses and the dynamics of local labour markets. Focus is on how a long-term competitiveness, assumed to spring from learning skills, can be converted into better products. Innovations often arise when people of different experiences interact. The acquired tacit knowledge is inextricably linked to the individual and interact more easily with others knowledge in limited geographical environments.


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