Competence Development as a Leadership and Governance Practice in Micro and SMEs: Observations from EK Inno Workshops in South Karelia, Finland

Abstract

Micro, small and medium-sized enterprises (SMEs) are central to regional innovation and economic resilience, yet their competence development is increasingly constrained by skills shortages, environmental uncertainty and the cumulative demands placed on entrepreneurs. Earlier studies show that competence development in micro and SMEs is often informal, fragmented and strongly dependent on individual owner-managers, with limited integration into leadership and governance practices (Taipale Erävala, Muhos & Ala Rämi, 2021; Wallo & Coetzer, 2026). These conditions restrict firms’ ability to predict future competence needs, use customer knowledge systematically and sustain entrepreneurial well-being. This empirical paper presents observations from competence development workshops conducted in 2026 with micro and SMEs in South Karelia, Finland, within the EK Inno project. The workshops approached competence development as an everyday leadership and governance practice embedded in managerial work rather than as a distinct training activity. Analysis of the workshop discussions and facilitated exercises found four recurring and interrelated competence-related challenges. First, skills shortages were experienced primarily as difficulties in accessing relevant ability rather than as recruitment problems, highlighting the importance of flexible, ecosystem-based and shared competence solutions beyond firm boundaries (Soomro, Memon & Soomro, 2025). Second, future-oriented competence development was hindered by limited time and resources for systematic foresight. Facilitated reflection supported entrepreneurs in linking technological, regulatory and market changes to concrete competence needs, reinforcing learning-oriented leadership under uncertainty (Wallo & Coetzer, 2026). Third, although firms reported close customer relationships, customer knowledge was often tacit and person-dependent; structured customer mapping enabled clearer alignment between competence development and evolving customer needs (Taipale Erävala et al., 2021). Fourth, entrepreneur well-being appeared as a foundational condition influencing the capacity to learn, reflect and lead innovation processes. The paper offers practical insights into how competence development can be supported as a collective, leadership-driven and ecosystem-based practice in regional SME contexts. The findings are relevant for practitioners and policymakers looking for low-threshold, human-centred approaches that integrate leadership, governance and entrepreneurial resilience.