Production Intensity of Finnish Manufacturing Companies

Abstract

Traditionally, manufacturing has been acknowledged as the cornerstone of national economies and societies. However, over the course of the past few decades, the main focus of research has shifted from pure manufacturing to manufacturing processes and technologies. Moreover, intangible assets monopolize the discussion, even when it comes to manufacturing and production, whereas tangible assets do not receive the same atten-tion. The above have inevitably, led to a stagnation on novel results regarding manufacturing, limiting the current theories to mainly value added and smile curve concepts. The main motivation of this thesis, and the starting point of this research was to examine whether this stagnation is justifiable or if manufacturing is still a relevant and important factor in the modern economies. In order to do that, the thesis focused on the estimation of pro-duction intensity, which constitutes an important to production index. More specifically, the thesis targeted the Finnish manufacturing industry. Three different, but complimentary, re-search questions were raised. In particular, it was examined (1) whether tangible assets re-main an indispensable element of value creation, (2) what is the production intensity of vari-ous Finnish manufacturing companies, and finally (3) whether the production intensity re-sults of said companies are in accordance with the smile curve and value added theories. In an attempt to provide the most accurate results possible, an extensive experimental evaluation was conducted using data focusing on 580 Finnish manufacturing companies. Strong focus was given to various parameters that include, among others, tangible and in-tangible assets, EBIT and operating revenue. Taking into consideration as many parame-ters as possible, enabled the better understanding of both the question asked as well as the possible answers. Among the main findings of this thesis were the estimations of production intensity regard-ing various subsectors of the Finnish manufacturing industry. Moreover, the fact that tangi-ble assets are still a very relevant and important factor when it comes to manufacturing companies was demonstrated. Most importantly, though, the results of this thesis ques-tioned the established theories of value added and smile curve and implied that it is of great importance to both re-think and re-evaluate both theories.