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The Finnish experience in the 1990s represents one of the few examples of how knowledge can become the driving force in economic growth and transformation. The country's industrial structure that was previously raw material-, energy-, and capital-intensive changed in less than a decade to primarily a knowledge-intensive on. During the first year of the 21st century Finland has topped the list in various competitiveness rankings and is also number one in OECD's PISA studies of youth's learning skills and educational attainment. The aim of this paper is to discuss the nature and role that industry policy has played in these developments, with an explicit focus on the specificities and recent shifts in policy thinking and implementation in Finland. We discuss the emergence of new industrial policies in Finland in the early 1990s, the main policy initiatives and measures, present the organisational landscape of these new policies, and conclude with a partial assessment of the success of policies and future challenges.

This study focused on two primary areas: 1. To determine what can be learned from biotech and drug development companies that suffered from financial problems and ultimately failed at the beginning of the 21st century. 2. To determine how intellectual capital developed in accordance with such companies and its fate following business failure. We examined six failed Finnish biotechnology companies and two major venture capital companies that have invested in Finnish biotechnology companies. We strongly emphasize that this research is only a case-based and very limited feasibility study. Nevertheless, the results were surprising. We found that intellectual capital was indeed created in the companies and that various aspects of this capital could be identified. To a certain extent, we were also able to follow the post-company steps of intellectual capital and the continuity of its value-creation in novel companies. The study was designed to involve only failed companies, but in four cases we found ourselves interviewing leaders of companies that had been created based on the IC of failed companies. It appears that important knowledge has vested by learning from earlier mistakes, and this learning period has created important intellectual capital that has already been exploited by various companies. Research-intensive companies typically operate in fields where failure is an inherent risk. Governments typically support emerging industries based on high-technology because of their growth potential. The combination of high-intensity R&D and high risks creates a problem for all investors. The created value is primarily in the form of intangible assets, which are not captured in traditional accounting and for which no well-established alternative metrics exist. Consequently, in the case of a company failure, most of the created value added is considered lost. This loss not only complicates the justification of government support policies but typically leads to high initial expectations of the sector that are unfortunately often followed by subsequent disappointments. We think that the present concept of failure may be profoundly misleading.