Perceptions On The Importance Of Forest Sector Innovations

New innovations are called for to renew the European forest sector into bioeconomy. Investigating perceptions related to forest sector innovations could strengthen the industry and improve societal awareness of ongoing innovation projects. By T Stern and C Mair, University of Graz, L Ranacher, Wood K plus (Kompetenzzentrum Holz GmbH), S Berghäll, M Forsblom and A Toppinen, University of Helsinki, and K Lähtinen, University of Vaasa


A creative destruction is expected to take place in the forest sector with many products maturing and factors for competitiveness changing. New innovations are clearly needed to renew the traditional wood, pulp, and paper industry sector into bioeconomy. 

The European commission blueprint underlines the importance of stimulating sectoral transition with radical innovations, structural adaptation, and increasing efficiency in material and energy use towards zero-waste production to allow sustainable market growth both within and outside the EU. 

The bioeconomy era offers many opportunities for holistic development of the forest sector through the intelligent use of biomass, as well as through developing innovations related to the entire spectrum of forest ecosystem services.

Furthermore, the involvement of the forest sector at the societal level has received much less attention, although normative issues of bioeconomy have to be discussed at the societal level before or during new-product development, if bioeconomy-related inventions are to be implemented in a welfare enhancing way. 

Importantly, understanding current perceptions on innovations is one of the key challenges that need to be overcome to reach social acceptance. Conflicting issues with bioeconomy have included ethical issues with adopting new biotechnology, land use change, biomass use for energy, or the food-fuel debate. Another example of potential conflicting issues can be found from the interdependencies of carbon storage and material efficiency aspects of wooden buildings.

Scholars also point out that more attention is needed on the European level for innovations to support better resource efficiency at the end of life, e.g., with the use of post-consumer wood waste for wood-based panels or wood pellets, utilising pulp waste for new bioeconomy products and targeting improved efficiency processes for recycling and incineration. 

For example, the recycling rate of non-hazardous construction and demolition waste management should be at a minimum of 70 percent of its weight by 2020, also inducing new innovation challenges for forest sector companies processing wood products, especially for construction purposes.

Based on a recent literature review, forest industry competitiveness is increasingly connected with various types of factors related to innovation and differentiation strategies at the firm-level. However, this report also found that cross-sectoral R&D collaboration, which is strongly advocated by national and international bioeconomy strategies, is almost completely missing in firm-level analysis of the forest sector.

To contribute to the scarce literature on forest bioeconomy from an innovations perspective, this article aim to investigate perceptions in four European Union member countries related to forest sector innovation and innovativeness.


Conceptual Background 

According to Schumpeter, innovation is a mechanism that deploys new knowledge, technology, products, or services in the market and is, in the form of creative destruction, a necessary driver for competitiveness and economic dynamics. 

He defined five different types of innovation in the introduction of a new product (1), a new method of production (2), the opening of a new market (3), discovering a new input supply (4), or a change in industrial structure (5). At the company level, innovativeness can be understood either as one’s ability to develop and utilise innovations or as the propensity to innovate, and deals with changes in products, services, processes, or business systems (i.e., administrational or marketing innovations). 

However, innovation and innovativeness are two terms that tend to be used interchangeably in both the theory and practice of forest sector innovation research, although they do not have the same meaning.

From a business point of view, innovations are needed for the diversification of forest industry business models and product portfolios, which have previously been excluded from forest-based sector analyses and practices. 

A recent study on the development of advanced biorefinery in Sweden suggests that biorefineries could act as a platform for the revitalisation of the mature pulp and paper industry. 

However, they felt that without the use of innovation policy instruments that create markets for renewable fuels and green chemicals, the diffusion beyond demonstration plants will be very slow. 

As another example, the spread of wooden multi-story construction (WMC), especially in the Nordic countries, has been claimed as the most interesting new business opportunity in the emerging forest bioeconomy.

In this study, we approach innovations in forest bioeconomy from the viewpoint of a value-added pyramid and by recognising innovation opportunities in terms of products, production processes, services, or business models. 

The bottom segment of the pyramid consists of incremental improvements in traditional pulp, paper, and wood products and wood-based bioenergy. 

The middle section is characterised by more value-added components, which could be advanced biofuels, biomaterials, and composites, or from an organisational innovations point of view, developing new marketing channels, service enhancements, or the reduction of environmental impacts. 

The top of the pyramid then includes higher-value added, niche products such as highly sophisticated system solutions (for example in the new tall wooden buildings), fine chemicals, or nanocellulose. Nanocellulose is, due to its high versatility, perhaps the most interesting new niche material discussed under the umbrella of forest bioeconomy. 

Nanocellulose has the most promising applications in light-weight fibre-based packages and composites with excellent strength properties and potentially some added functionality, the modification of rheological properties of liquids and suspensions in various industrial fields, transparent films as barrier materials, substrates for printed electronics and electronic displays, hydrogels for medical applications, and aerogels for filtration and insulation.


Challenges In Forest Bioeconomy

One of the core challenges in forest bioeconomy is to successfully materialise the move from bottom low added to top high value added, where volumes of products and services tend to be much smaller in terms of market demand. 

Scholars have advocated that in future biorefineries, the economics of scope inevitably mean moving away from large-sized cost-efficient processes making bulk products into more customised and innovative products and specialised uses of resources, which means changing the dominant industry logic. In order to understand this change process better, it is necessary to further elaborate on the dynamic aspects in forest-based bioeconomy innovations.

Technology hype cycle models have mainly been developed and utilised for the purpose of the early identification of new and convergent technologies and of forecasting potential social change. 

In particular, supported by the development of bibliometric methods, attempts to analyse hype cycles through quantitative analytical approaches and to utilise their results in forecasting have been developed. Among technology cycle models, Gartner’s hype cycle model has become popular due to its explanatory power.


Using Data Collected With Online Questionnaire

In order to overcome the challenges and making the survey on perception of the forest sector of a larger Europe, we need collect data via multichannel. 

The survey was available online and advertised via e-mail (e.g., industry e-mail lists, including different stakeholder groups, as well as forestry students), social media, and online forums, with the purpose of reaching both people involved and not involved in the forest sector. 

The majority of the respondents originate from four forestry rich European countries namely, Austria, Finland, Germany, and Slovenia. Thus, respondents were selected through convenience sampling aiming at as rich participation as possible. However, no conclusions can be drawn on the opinion of national populations. The data gathering was implemented during May–September 2015.

In contrast to other topics covered, the part of the survey reported in this paper focused on the range of forest sector innovation. For the survey, a questionnaire consisting of three modules was developed. 

The first module was designed to investigate how respondents perceived forest sector companies’ past performance (since the year 2000) related to 13 forest-bioeconomy-innovations (wood construction materials, paper products, composite materials fabricated with wood or paper materials, nanocellulose, biofuels made from forest resources, service enhancements in forest management, production processes, material substitution with wood, developing recognised brands, developing or utilising new marketing channels, reducing the environmental impacts of forestry, reducing the environmental impacts of processing and manufacturing, and building systems with wood). 

The second module was designed to measure the considered importance of the 13 forest-bioeconomy-innovations for societal and sustainable development over the next 20 years. For all cases, a five-point Likert-scale (1 = Strongly disagree, 3 = Undecided, 5 = Strongly agree), including an additional “I don’t know” option, was used. In module 3, respondents were asked about how often they purchased forest sector products and services.

The questionnaire was pre-tested in native languages prior to the implementation of actual data gathering and then back translated. In all four countries, a pre-test was conducted in April 2015 (with n = 20) to make sure that the questions could be understood, and based on it, some changes were made to the questionnaire. 

In addition to inquiring about an extensive list of various potential areas of innovations, questions about the socio-demographic characteristics of the respondents were included in the fourth module (e.g., age, gender, education, residential area, employment status, and involvement in the forest sector through formal education, profession, or forest-ownership).

Altogether, 218 valid responses were received on the perceived current and future state of forest industry innovativeness using 13 forest-bioeconomy-innovations. Of the 218 respondents, 37 percent, 32 percent, 23 percent, and 8 percent were from Germany, Slovenia, Austria, and Finland, respectively. A slightly lower share were women (47.6 percent) and 51 percent were between 21 and 41 years old. Slightly over one half (53 percent) of the respondents stated that they lived in urban areas.

Overall, it must be stated that the sample is not representative of any of the country populations, and instead it portrays perceptions of a more limited set of persons with or without forest sector involvement, but interested in industry performance. 

It is assumed that some of those who participated in the survey did so for a specific reason, such as familiarity either with the topic, or the involved research institution. It likely attracted respondents interested in forestry and forest issues even when not formally involved in the sector. 

Thus, the existence of a response bias must be considered. In order to deal with the most obvious bias in the sample, the potential sector involvement by employment, education, or ownership was considered in the survey and analysis. Due to an uneven number of respondents from the four countries, we will make no attempt to analyze country-level differences.


Importance Of Different Innovations

Respondents were in the strongest agreement that the forest sector has, since the year 2000, produced innovations for wood building systems, construction materials, and composites. 

The lowest image of innovativeness since the year 2000 was perceived to be associated with the organisational side: the development of new marketing channels and recognised brands, as well as forestry services. Another area perceived as being less innovative was paper products.

For the next 20 years, it was perceived that the forest industry should continue to focus on wood construction-related innovation efforts. The development of wood-based biofuels and paper products gained the lowest level of support. 

Regarding nanocellulose, it is notable that over one-third of the respondents were incapable of evaluating past as well as future innovation activity, indicating that they lacked awareness regarding this innovative material. 

When comparing the mean values of respondents for past innovation performance and future expectations on innovativeness, it was evident that the respondents have higher expectations for future innovativeness, with the only exception of biofuels (significant decrease at 1 percent level). Other t-tests (with the exception of paper and composites) were significant and showed that respondents attributed higher values to the future than to the past.

Applying the same data to a performance importance grid using the variables of the past developments as performance indicators, and the variables on future requirements as importance indicators, additional information can be extracted. 

Construction materials, wood building systems, and composites can be all found in the top right quadrant of the grid. Those innovation areas can be therefore considered as top performers, and they are considered as important, as well as already successful, in terms of awareness among the respondents. 

However, it is important to keep in mind that all 13 items were rated as relatively important and no major differences exist.

Within all innovations covered, wood-based biofuels represent the greatest anomaly. It is the only innovation for which the future importance is perceived to be clearly lower than the performance in the past. In contrast, paper-related innovations were generally rated at a relatively low level when focusing on the past 15 years, but appeared to demonstrate a slight increase for the future. 

In the case of nanocellulose, the future importance and the past performance were almost equal; however, as stated before, over 30 percent of the respondents were not able to provide a rating in this case. Of the top performers, the smallest increase between past and future ratings was perceived among respondents in the case of wood-based composites.

Following the logic of performance-importance analysis, the innovations in the top left quadrant are those which should receive additional attention in the future since their performance is relatively low in relation to their future importance. 

Brand development, forestry services, environmental impacts of the industry, and process innovations would therefore qualify for the focus of increasing activities when considering the perceptions of these respondents. 

In addition, developing marketing channels, addressing better environmental impacts of forestry, and material substitution with wood all form a virtual second line of future potential focus in the industry innovation agenda.


Results from Hype Cycle Curves

In applying the concept of hype cycle curves to the observations made in this study, the positioning of the different innovations remains generally vague with a few potential patterns. 

Hence, the purpose of this illustration is to highlight differences between innovation expectations for these products arising from the data, but their placement on the curve is naturally not meant to be exact. 

Biofuels, for example, seem to have passed the peak of inflated expectations, reaching the trough of disillusionment. Building systems, construction materials, and composites may be considered on the slope to enlightenment towards the plateau of productivity. 

This may also apply to paper-based innovations, although on a much lower level. It seems that this category was likely assessed from the conventional pulp, paper, and paperboard products point of view.

In contrast, the whole concept of nanocellulose was probably too far away from market application to allow for a proper consideration by the respondents without earlier exposure to forest sector innovation agendas. Hence, in the hype cycle model, nanocellulose may be placed at the very front end, and actually be placed even before the technology trigger.

When interpreting the results in light of the hype cycle modelling approach, all other innovations considered in this study may be placed on the slope towards the peak of inflated expectations, as indicted by the importance ratings outperforming the satisfaction values. 

However, the position of these items remains a matter of personality. While respondents with sector involvement can be in favour of process innovations, brand development, and forest services, the ones not involved may prefer innovations reducing environmental impacts. 

This seems understandable considering the commercial relevance of the first group over the societal relevance of the second group. Although it would be an obvious assumption, the results do not suggest that the involved persons recognise innovations earlier and rate them generally as more important in comparison to persons who are not involved. 

In conclusion, observed variation in perceptions of forest sector innovativeness calls for strengthening of both firm-level R&D activity and more national or regional level functioning of the forest bioeconomy innovation system. 

In addition, there is impetus for improving the forest industry image and acceptability among the general public by more effectively stewarding sustainability of resources, products, and manufacturing processes. 

Building higher general awareness on the emerging new products, such as nanocellulose, abreast with producing information, and communicating on the issues affecting their acceptability, is a prime example here. 

Furthermore, the perceptions of forest sector innovativeness may not only measure the “image” of the sector, but also how much the respondents in their role as end-users have been engaged in co-creative innovation activities. 

The observed variation in perceptions among the respondents on forest sector innovativeness calls for strengthening industry R&D, as well as improving societal awareness on ongoing innovation projects by better communication. Regarding future research needs, there is clearly room for improving the methodology, especially in addressing the drawbacks of the non-random sampling method used. 

Additionally, acknowledging possible cross-country effects resulting from differences in terms of respondents' prior awareness with industry or firm-level innovation agendas in respective countries merits further work.

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