Innovating Contractor Firms in Slovak Forestry Services Sector: An Innovation System Perspective

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The study explores how contractor firms in the Slovak forestry service sector innovate, focusing on challenges, innovation barriers, and the innovation system. It highlights the low innovation activity but high potential for advancements in a market that emerged around 25 years ago. The analysis suggests the need for better resource allocation, market stability, and job opportunities to boost innovation in the sector.

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  1. Technical University in Zvolen Department of Economics and Management of Forestry Faculty of Forestry, ZvolenSlovak Republic How Contractor Firms in the Slovak Forestry Service Sector Innovate? -an Innovation System Perspective 49th Forstpolitiktreffen 6th April 2017 Martina t rbov , Jaroslav lka, Zuzana Sarva ov 1

  2. BACKGROUND Innovation processes in traditional sector harvesting, skidding and timber transport The market of forestry services in Slovakia: - relatively new and young market, originated about 25 years ago - impulse for the creation: restitution process of returning of forest property and restructuring of state-owned enterprises 49th Forstpolitiktreffen 6th April 2017 - contractor firms - micro and SME - outsourcing of major forestry operations - quality of provided forestry services plays an increasingly important role - opportunities for innovations 2 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  3. Challenges Innovation activity is LOW - limited to incremental, often only technological innovation Innovation potential is HIGH - the current mechanisation is old and worn out - the need for changes and renewal = INNOVATIONS 49th Forstpolitiktreffen 6th April 2017 INNOVATION BARRIERS lack of own financial resources dominance of state forest enterprise problematic public tenders unstable market, uncertainty and sale ability risks supply of services exceeds demand low price of provided services lack of job offers 3 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  4. Innovation system of the forestry service sector a set of different institutions, actors and their interactions influences innovation processes institutional innovation support 49th Forstpolitiktreffen should support innovation implementation 6th April 2017 3 basic functions: (i) reduction of uncertainties by providing and exchange of INFORMATION (ii) management of conflict and risk and COOPERATION between the various actors (iii) the provision of pecuniary and non-pecuniary INCENTIVES 4 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  5. How does IS of the forestry service sector looks like? 49th Forstpolitiktreffen 6th April 2017 5 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  6. AIM - to evaluate the functioning of the sectorial innovation system for innovation support 49th Forstpolitiktreffen RESEARCH QUESTION 6th April 2017 How innovation system in the Slovak forestry service sector fulfils its three basic functions for innovation support? 6 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  7. METHODOLOGY Background information - Literature review - Questionnaire survey 204 respondents - Collective case study 13 case studies the best practice technology Innovation system analysis a synthesis of the data acquired from the analyses of innovation system: 49th Forstpolitiktreffen Individual features contractor firms view 6th April 2017 - Literature review - SWOT analysis - Face to face interviews with contractors Institutional system and support institutionals view - Document analysis Register of Financial Statements of the Ministry of Finance,The RDP 2007 2013 and 2014 2020 - Interviews with experts from The Agricultural Paying Agency 7 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  8. RESULTS (i) INFORMATION EXCHANGE contractors view - lack of cross-sectoral knowledge and links - lack of information for the reduction of uncertainties - state administration not enough direct information and subsidies specialized in consultancy and knowledge transfer 49th Forstpolitiktreffen institutionals view 6th April 2017 (ii) COOPERATION - weak - mainly on an informal level - formal cluster does not exist - The Association of Entrepreneurs and Freelancers working in the Forestry Service Sector - coefficient of localization identifies the key regions suitable for the formal cluster in the sector 8 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  9. institutionals view 49th Forstpolitiktreffen 6th April 2017 The key regions for the potential clusters1 9 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector? 1 t rbov et al. (2014)

  10. THE INNOVATION STRATEGY2 Factors affecting innovation behaviour contractors view SWOT analysis 49th Forstpolitiktreffen 6th April 2017 O outweigh T W outweigh S WO - AN ALLIANCE STRATEGY COOPERATION - information and knowledge of innovations - combination of the network and the vertical production chain - cluster of suppliers-to-customers chain 10 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector? 2 t rbov et al. (2016)

  11. BB REGIONAL INNOVATION PARADOXES3 3 2.5 2 ZA BA 1.5 1 0.5 Inovation activity mil. 0 -0.5 institutional s view LQ Ltd. TT KE -1 49th Forstpolitiktreffen LQ 6th April 2017 KO ICE REGION strategic area for cluster formation, but the negative values of investment innovations TN NR PO REGION BRATISLAVA small concentration of enterprises, but high amount of capital invested into innovations 3 t rbov et al. (2014) 11 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  12. (ii) MANAGEMENT OF CONFLICTS AND RISKS4 - limited space - weak negotiating position = adaptation - problems - cutting of prices, termination of the contract contractors view CONTRACT TERMS AND CONDITIONS 49th Forstpolitiktreffen 6th April 2017 - investments into innovations - if only 50 80 % of the investment will be paid back by the contract - long-term relationships and contracts - complex service delivery - own technology park - firms history increases its reliability and credibility 12 4 Palu et al. (2015) _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  13. (iii) THE PROVISION OF PECUNIARY INCENTIVES5 Methods RDP 2014 - 2020 Document analysis Evaluation of appropriateness and effectiveness of the state intervention RDP 2007 - 2013 49th Forstpolitiktreffen Interviews with experts 6th April 2017 Expert estimations POLICY IMPACT POLICY OUTCOME POLICY OUTPUT institutionals view Changes in target behaviour The overall changes in indicators The formulation of forestry measures 13 Three levels of the evaluation of financial incentives from The Rural Development Programme 5 t rbov , lka (2016) _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  14. POLICY OUTPUT - - The RDP 2007 2013 - not focused on supporting innovations The RDP 2014 2020 - improved towards supporting innovations (non-repayable grant, risky oriented, new ideas and pilot projects, focused on the contractor firms etc.) POLICY IMPACT - contractors = not eligible applicants institutionals view 49th Forstpolitiktreffen - condition to own or use at least 10 ha of forest land 6th April 2017 - a small change in their behaviour - rent a forest land POLICY OUTCOME - only 0,01 % of total number of contractors obtained financial support from RDP 2007 2013 Financial incentives did not fulfil its function for innovation support 14 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  15. CONCLUSION: innovation processes - dominate incremental, often only technological innovations new for the firms, not for the sector in general - current equipment is outdated and has a negative impact on the environment 49th Forstpolitiktreffen 6th April 2017 - innovations are done without much institutional support - there is no one innovation system supporting innovations within the forestry service sector - institutionalisation and systemic support is needed 15 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  16. CONCLUSION The innovation system fulfils its three basic functions at insufficient level INFORMATION - the innovation system does not provide enough information for the reduction of uncertainties, conflicts and risks lack of knowhow 49th Forstpolitiktreffen - 6th April 2017 COOPERATION - - - INCENTIVES - FINANCING weak interactions formal cluster does exist informal level of cooperation 16 - financial support not focused on supporting innovations _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  17. CONCLUSION: support needs The innovation process can be fostered by: INFORMATION Cross-sectoral information, knowledge, knowhow and links Information measures The RDP 2014 2020 - professional skills COOPERATION Cluster formation the improvement and expansion of cooperation Cross-sectoral networking Long-term and clear contracts with the guarantees Providing complex service delivery INCENTIVES - FINANCING External financial support bank loans Un-bureaucratic start-up and risky oriented innovation funds Positive incentives for innovations from The RDP 2014 2020 49th Forstpolitiktreffen 6th April 2017 17 _________________________________________________________________________________ How do Innovate Contractor Firms in the Slovak Forestry Service Sector?

  18. Thank you for your attention! Martina t rbov 1,2, Jaroslav lka1, Zuzana Sarva ov 2 49th Forstpolitiktreffen 1 Department of Economics and Management of Forestry Faculty of Forestry, Technical University in Zvolen T. G. Masaryka 24, SK-96053 Zvolen, Slovak Republic martina.sterbova1@gmail.com; salka@tuzvo.sk 6th April 2017 2 Department of Forest Policy, Economics and Forest Management National Forest Centre Forest Research Institute Zvolen T. G. Masaryka 22, SK-96092 Zvolen, Slovak Republic sterbova@nlcsk.org; sarvasova@nlcsk.org 18

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