Business Models of the Largest Enterprises in a Small Country Context: The Case of Estonia

Abstract

The growing use of outsourcing and the breaking up of various production functions affecting both intra-firm and inter-firm transactions and resulting in strong de-agglomeration pressures are taking place in the international economy. These processes, combined with inherent char-acteristics of small economies - and generally leading to weaknesses in their innovation sys-tem -, have become the key challenge for many small economies. The study looks at the case of Estonia, a Baltic economy in the North-East of Europe, and provides an analysis of the firm-level datasets of the 30 largest companies, both overall as well as manufacturing only. The findings suggest that the role of the largest companies in the economy is both important and increasing; that the number of those who apply advanced business models and who are connected with the local science, technology and innovation community remains limited; and that business models built around cost advantages are most severely challenged.