Essays on pricing of risk and international linkage of Russian stock market

Last two decades have seen a rapid change in the global economic and financial situation; the economic conditions in many small and large underdeveloped countries started to improve and they became recognized as emerging markets. This led to growth in the amounts of global investments in these countries, partly spurred by expectations of higher returns, favorable risk-return opportunities, and better diversification alternatives to global investors. This process, however, has not been without problems and it has emphasized the need for more information on these markets. In particular, the liberalization of financial markets around the world, globalization of trade and companies, recent formation of economic and regional blocks, and the rapid development of underdeveloped countries during the last two decades have brought a major challenge to the financial world and researchers alike. This doctoral dissertation studies one of the largest emerging markets, namely Russia. The motivation why the Russian equity market is worth investigating includes, among other factors, its sheer size, rapid and robust economic growth since the turn of the millennium, future prospect for international investors, and a number of important major financial reforms implemented since the early 1990s. Another interesting feature of the Russian economy, which gives motivation to study Russian market, is Russia’s 1998 financial crisis, considered as one of the worst crisis in recent times, affecting both developed and developing economies. Therefore, special attention has been paid to Russia’s 1998 financial crisis throughout this dissertation. This thesis covers the period from the birth of the modern Russian financial markets to the present day, Special attention is given to the international linkage and the 1998 financial crisis. This study first identifies the risks associated with Russian market and then deals with their pricing issues. Finally some insights about portfolio construction within Russian market are presented. The first research paper of this dissertation considers the linkage of the Russian equity market to the world equity market by examining the international transmission of the Russia’s 1998 financial crisis utilizing the GARCH-BEKK model proposed by Engle and Kroner. Empirical results shows evidence of direct linkage between the Russian equity market and the world market both in regards of returns and volatility. However, the weakness of the linkage suggests that the Russian equity market was only partially integrated into the world market, even though the contagion can be clearly seen during the time of the crisis period. The second and the third paper, co-authored with Mika Vaihekoski, investigate whether global, local and currency risks are priced in the Russian stock market from a US investors’ point of view. Furthermore, the dynamics of these sources of risk are studied, i.e., whether the prices of the global and local risk factors are constant or time-varying over time. We utilize the multivariate GARCH-M framework of De Santis and Gérard (1998). Similar to them we find price of global market risk to be time-varying. Currency risk also found to be priced and highly time varying in the Russian market. Moreover, our results suggest that the Russian market is partially segmented and local risk is also priced in the market. The model also implies that the biggest impact on the US market risk premium is coming from the world risk component whereas the Russian risk premium is on average caused mostly by the local and currency components. The purpose of the fourth paper is to look at the relationship between the stock and the bond market of Russia. The objective is to examine whether the correlations between two classes of assets are time varying by using multivariate conditional volatility models. The Constant Conditional Correlation model by Bollerslev (1990), the Dynamic Conditional Correlation model by Engle (2002), and an asymmetric version of the Dynamic Conditional Correlation model by Cappiello et al. (2006) are used in the analysis. The empirical results do not support the assumption of constant conditional correlation and there was clear evidence of time varying correlations between the Russian stocks and bond market and both asset markets exhibit positive asymmetries. The implications of the results in this dissertation are useful for both companies and international investors who are interested in investing in Russia. Our results give useful insights to those involved in minimising or managing financial risk exposures, such as, portfolio managers, international investors, risk analysts and financial researchers. When portfolio managers aim to optimize the risk-return relationship, the results indicate that at least in the case of Russia, one should account for the local market as well as currency risk when calculating the key inputs for the optimization. In addition, the pricing of exchange rate risk implies that exchange rate exposure is partly non-diversifiable and investors are compensated for bearing the risk. Likewise, international transmission of stock market volatility can profoundly influence corporate capital budgeting decisions, investors’ investment decisions, and other business cycle variables. Finally, the weak integration of the Russian market and low correlations between Russian stock and bond market offers good opportunities to the international investors to diversify their portfolios.

Expectations and Experiences of International Students in Information Technology Department

Education in Finland plays a significant role. International students are becoming an essential part of Finnish Educational system. The study was meant to examine their expectations and experiences in a Finnish University. As a case, Lappeenranta University of Technology (LUT) was chosen and, in particular, Information Technology (IT) Department. The main objectives of the study were to examine students’ satisfaction of their study experiences, their evaluation of the teaching quality of courses and last but not least the cultural impact on those. Data for the study were mainly collected with the help of three Internet surveys from a sample of 50 students – currently studying at LUT or already graduated. Response rate from questionnaire to questionnaire varied, however, still close to average and was considered as good and relevant enough. The study was initially meant as qualitative, however, a number of quantitative data analysis methods were used as well. Most of students’ expectations appear to become true, majority of students are satisfied with their experiences. Results show that teaching quality in LUT is evaluated as ‘good’. Nevertheless, students prefer particular courses to the other ones. In conclusion, it can be said that culture does affect students’ expectations, experiences, perception of the world, however, cultural differences do not cause any serious problems.

Understanding the Racial Nature of Police and Immigrant Relations In Finland. The Case of Africans in Turku

The focus of this study is to examine the role of police and immigrants’ relations, as less is known about this process in the country. The studies were approached in two different ways. Firstly, an attempt was made to examine how immigrants view their encounters with the police. Secondly, the studies explored how aware the police are of immigrants’ experiences in their various encounters and interactions on the street level. An ancillary aim of the studies is to clarify, analyse and discuss how prejudice and stereotypes can be tackled, thereby contributing to the general debate about racism and discrimination for better ethnic relations in the country. The data in which this analysis was based is on a group of adults (n=88) from the total of 120 Africans questioned for the entire study (n=45) police cadets and (n=6) serving police officers from Turku. The present thesis is a compilation of five articles. A summary of each article findings follows, as the same data was used in all five studies. In the first study, a theoretical model was developed to examine the perceived knowledge of bias by immigrants resulting from race, culture and belief. This was also an attempt to explore whether this knowledge was predetermined in my attempt to classify and discuss as well as analyse the factors that may be influencing immigrants’ allegations of unfair treatment by the police in Turku. The main finding shows that in the first paper there was ignorance and naivety on the part of the police in their attitudes towards the African immigrant’s prior experiences with the police, and this may probably have resulted from stereotypes or their lack of experience as well as prior training with immigrants where these kinds of experience are rampant in the country (Egharevba, 2003 and 2004a). In exploring what leads to stereotypes, a working definition is the assumption that is prevalent among some segments of the population, including the police, that Finland is a homogenous country by employing certain conducts and behaviour towards ethnic and immigrant groups in the country. This to my understanding is stereotype. Historically this was true, but today the social topography of the country is changing and becoming even more complex. It is true that, on linguistic grounds, the country is multilingual, as there are a few recognised national minority languages (Swedish, Sami and Russian) as well as a number of immigrant languages including English. Apparently it is vital for the police to have a line of communication open when addressing the problem associated with immigrants in the country. The second paper moved a step further by examining African immigrants’ understanding of human rights as well as what human rights violation means or entails in their views as a result of their experiences with the police, both in Finland and in their country of origin. This approach became essential during the course of the study, especially when the participants were completing the questionnaire (N=88), where volunteers were solicited for a later date for an in-depth interview with the author. Many of the respondents came from countries where human rights are not well protected and seldom discussed publicly, therefore understanding their views on the subject can help to explain why some of the immigrants are sceptical about coming forward to report cases of batteries and assaults to the police, or even their experiences of being monitored in shopping malls in their new home and the reason behind their low level of trust in public authorities in Finland. The study showed that knowledge of human rights is notably low among some of the participants. The study also found that female respondents were less aware of human rights when compared with their male counterparts. This has resulted in some of the male participants focussing more on their traditional ways of thinking by not realising that they are in a new country where there is equality in sexes and lack of respect on gender terms is not condoned. The third paper focussed on the respondents’ experiences with the police in Turku and tried to explore police attitudes towards African immigrant clients, in addition to the role stereotype plays in police views of different cultures and how these views have impacted on immigrants’ views of discriminatory policing in Turku. The data is the same throughout the entire studies (n=88), except that some few participants were interviewed for the third paper thirty-five persons. The results showed that there is some bias in mass-media reports on the immigrants’ issues, due to selective portrayal of biases without much investigation being carried out before jumping to conclusions, especially when the issues at stake involve an immigrant (Egharevba, 2005a; Egharevba, 2004a and 2004b). In this vein, there was an allegation that the police are even biased while investigating cases of theft, especially if the stolen property is owned by an immigrant (Egharevba, 2006a, Egharevba, 2006b). One vital observation from the respondents’ various comments was that race has meaning in their encounters and interaction with the police in the country. This result led the author to conclude that the relation between the police and immigrants is still a challenge, as there is rampant fear and distrust towards the police by some segments of the participating respondents in the study. In the fourth paper the focus was on examining the respondents’ view of the police, with special emphasis on race and culture as well as the respondents’ perspective on police behaviour in Turku. This is because race, as it was relayed to me in the study, is a significant predictor of police perception (Egharevba, 2005a; Egharevba and Hannikianen, 2005). It is a known scientific fact that inter-group racial attitudes are the representation of group competition and perceived threat to power and status (Group-position theory). According to Blumer (1958) a sense of group threat is an essential element for the emergence of racial prejudice. Consequently, it was essential that we explored the existing relationship between the respondents and the police in order to have an understanding of this concept. The result indicates some local and international contextual issues and assumptions that were of importance tackling prejudice and discrimination as it exists within the police in the country. Moreover, we have to also remember that, for years, many of these African immigrants have been on the receiving end of unjust law enforcement in their various countries of origin, which has resulted in many of them feeling inferior and distrustful of the police even in their own country of origin. While discussing the issues of cultural difference and how it affects policing, we must also keep in mind the socio-cultural background of the participants, their level of language proficiency and educational background. The research data analysed in this study also confirmed the difficulties associated with cultural misunderstandings in interpreting issues and how these misunderstandings have affected police and immigrant relations in Finland. Finally, the fifth paper focussed on cadets’ attitudes towards African immigrants as well as serving police officers’ interaction with African clients. Secondly, the police level of awareness of African immigrants’ distrustfulness of their profession was unclear. For this reason, my questions in this fifth study examined the experiences and attitudes of police cadets and serving police officers as well as those of African immigrants in understanding how to improve this relationship in the country. The data was based on (n=88) immigrant participants, (n=45) police cadets and 6 serving police officers from the Turku police department. The result suggests that there is distrust of the police in the respondents’ interaction; this tends to have galvanised a heightened tension resulting from the lack of language proficiency (Egharevba and White, 2007; Egharevba and Hannikainen, 2005, and Egharevba, 2006b) The result also shows that the allegation of immigrants as being belittled by the police stems from the misconceptions of both parties as well as the notion of stop and search by the police in Turku. All these factors were observed to have contributed to the alleged police evasiveness and the lack of regular contact between the respondents and the police in their dealings. In other words, the police have only had job-related contact with many of the participants in the present study. The results also demonstrated the complexities caused by the low level of education among some of the African immigrants in their understanding about the Finnish culture, norms and values in the country. Thus, the framework constructed in these studies embodies diversity in national culture as well as the need for a further research study with a greater number of respondents (both from the police and immigrant/majority groups), in order to explore the different role cultures play in immigrant and majority citizens’ understanding of police work.

Technology park as an element of innovative infrastructure- its role in internationalization support.

The Thesis concentrates on two central terms – Technology park and the resource-based view of the organization. General attention is devoted to competencies and capabilities of organizations that operate in foreign environment. It is difficult to go abroad without any experience and support from local government, especially for small or medium company. Technology and Science parks are the main sources of competitive advantage for this kind of organizations. They provide a huge range of services as well as business consultations and financial support on different stages of companies’ development. The Thesis was made with the assistance of Technopolis Oy in Lappeenranta. During the research companies in Finland and Russia were interviewed. Based on empirical findings important capabilities for entering foreign market were identified and some recommendations for the Technology park were given.

Limits of Meritocracy. How Fields of Study and Gender Segregation Affect Social Stratification in Finland

This dissertation critically reviews the idea of meritocracy from both a theoretical and an empirical perspective. Based on a discussion of classical texts of social philosophy and sociology, it is argued that meritocracy as a concept for social stratification is best compatible with the sociological tradition of status attainment research: both frame social inequality in primarily individualistic terms, centring on the role of ascribed (e.g., gender, social background) and achieved (e.g., educational qualifications) characteristics for determining individuals’ socioeconomic rewards. This theoretical argument introduces the research problem at the core of this dissertation: to what extent can the individualistic conception of social stratification be maintained empirically? Fields of study and their interaction with educational attainment levels play a prominent role in the analysis of this question. Drawing on sociological versions of segmented labour market theory, it is assumed that fields of study may channel individuals into heterogeneous political-economic contexts on the labour market, which potentially modify the socioeconomic benefit individuals derive from their qualification levels. The focus on fields of study may also highlight economic differentials between men and women that derive from the persisting segregation of men’s and women’s occupational and educational specializations rather than direct gender discrimination on the labour market. The quantitative analyses in this dissertation consist of three research articles, which are based primarily on Finnish data, but occasionally extend the view to other European countries. The data sources include register-based macro- and microdata as well as survey data. Article I examines the extent and the patterns of gender segregation within the Finnish educational system between 1981 and 2005. The results show that differences between men’s and women’s field specializations have for the most part remained stable during this period, with particularly high levels of gender segregation observed at lower educational levels. The focus in Article II rests on the effects of gender-segregated fields of study on higher education graduates’ occupational status. It is shown that fields of study matter for accessing professional jobs and avoiding low-skilled positions in Finland: at the early career stage, particularly polytechnic graduates from female-dominated fields are less likely to work in professional positions. Finnish university graduates from male-dominated fields were more likely than their peers with different specializations to work as professionals, yet they also faced a greater risk of being sorted into lowskilled jobs if they failed to make use of this advantage. Article III proceeded to analyse the joint impact of educational qualification levels and fields of study on young adults’ median earnings in Finland between 1985 and 2005. The results show that qualification levels do not confer a consistent benefit in the process of earnings stratification. Advanced qualifications raise median earnings most clearly among individuals specializing in the same field of study. When comparing individuals with different field specializations, on the other hand, higher-level qualifications do not necessarily lead to higher median earnings. Overall, the findings of this dissertation reveal a heterogeneous effect of education for achieving social positions, which challenges individual-centred, meritocratic accounts of social stratification and underlines the problematic lack of structural and institutional dimensions in the dominant account of social status attainment.

Re-shaping the Resourcing: Recruitment in Social Media

Social media is very current topic in today’s society and organisations. In the times of economic challenges, companies are looking for efficient ways to resource workforce. In addition, there is competition of competent workforce in employment markets. Employer image plays important role in recruitment as people seek to organisations they find interesting and have a reputation as a good employer. This study concerns the discussion on utilising social media in recruitment and employer image in a corporate enterprise. I will find solutions how to utilize social media in recruitment, in which channels and methods that can be done and what these actions require from a company doing social recruitment. I bring up the discussion and challenges that relate to starting to take social media into use in an organization overall and in recruitment. The qualitative material has been gathered with interviews of eighteen persons and the material available about the topic in the enterprise intranet. According to the study, social media is seen both as an opportunity to reach large amount of people quickly and cost-efficiently, but then again it brings news aspects for controlling the employer image and communication towards the audience. Taking social media into use as part of recruiters and managers daily work requires both finding the right channels and attention to the internal communication culture and resourcing. Social recruitment requires a strategy and a proper plan to be able to work in a company. There are several social media channels that enable to reach people, but they don’t do the social recruitment alone.

Nurses’ Acceptance of an Internet-Based Support System in The Care of Adolescents with Depression

The overall goal of the study was to describe nurses’ acceptance of an Internet-based support system in the care of adolescents with depression. The data were collected in four phases during the period 2006 – 2010 from nurses working in adolescent psychiatric outpatient clinics and from professionals working with adolescents in basic public services. In the first phase, the nurses’ anticipated perceptions of the usefulness of the Internet-based support system before its implementation was explored. In the second phase, the nurses’ perceived ease of computer and Internet use and attitudes toward it were explored. In the third phase, the features of the support system and its implementation process were described. In the fourth phase, the nurses’ experiences of behavioural intention and actual system use of the Internet-based support were described in psychiatric out-patient care after one year use. The Technology Acceptance Model (TAM) was used to structure the various research phases. Several benefits were identified from the nurses’ perspective in using the Internet-based support system in the care of adolescents with depression. The nurses’ technology skills were good and their attitudes towards computer use were positive. The support system was developed in various phases to meet the adolescents’ needs. Before the implementation of the information technology (IT)-based support system, it is important to pay attention to the nurses’ IT-training, technology support, resources, and safety as well as ethical issues related to the support system. After one year of using the system, the nurses perceived the Internet-based support system to be useful in the care of adolescents with depression. The adolescents’ independent work with the support system at home and the program’s systematic character were experienced as conducive from the point of view of the treatment. However, the Internet-based support system was integrated only partly into the nurseadolescent interaction even though the nurses’ perceptions of it were positive. The use of the IT-based system as part of the adolescents’ depression care was seen positively and its benefits were recognized. This serves as a good basis for future IT-based techniques. Successful implementations of IT-based support systems need a systematic implementation plan and commitment from the part of the organization and its managers. Supporting and evaluating the implementation of an IT-based system should pay attention to changing the nurses’ work styles. Health care organizations should be offered more flexible opportunities to utilize IT-based systems in direct patient care in the future.

Fundraising and investor relations in social enterprise: Marketing your way out of the pioneer gap in African off-grid renewable energy

Social enterprises apply the best of business for the pursuit of social or environmental mission while also generating revenues. Globally, nearly 1,3 billion people lack access to electricity, as well as another billion having access to only low quality and infrequent electricity. Off-grid renewable energy, like solar, will increasingly have a key role in the solution of the energy access issue. The pioneer gap in off-grid renewable energy consists of financing (or funding) gaps and capacity gaps, to do with both the early stage of the enterprises in question, as well as the early stage of the whole industry. The gaps are emphasised by specific characteristics of off-grid renewable energy business models and the requirements of operating in bottom-of-the-pyramid markets. The marketing perspective to fundraising is chosen to uncover the possible role enterprises themselves have in bridging the pioneer gap. The purpose of this thesis is to study how social enterprises operating in off-grid renewable energy in Africa utilise marketing activities in their investor relations in bridging the pioneer gap. This main research question is divided into the following sub-questions:  How does the pioneer gap affect fundraising for these enterprises?  How are the funding needs for these enterprises characterised?  How do these enterprises build trust in their investor relations? The theoretic framework is built on relationship marketing and investor relations, with an emphasis on creation of trust. The research is conducted as a thematical case study. Primary data is gathered via semi-structured interviews with six solar energy companies and two accelerators. According to the findings, the main components affecting trust-creation are diminished information asymmetry and perceived risk, mission alignment as well as a personal fit or relationship with the investor. Therefore, an enterprise can utilise e.g. the following marketing activities in their investor relations to bridge the pioneer gap: ensuring investor material, the enterprise story and presenting of them is clear, concise and complete to “package” the enterprise as an investment; taking investor needs and motivations into account as well as utilising existing investors as ambassadors.

Explaining the Shifts of International Trade in Pulp and Paper Industry

The pulp and paper industry is currently facing broad structural changes due to global shifts in demand and supply. These changes have significant impacts on national economies worldwide. In this paper, we describe the recent trends in the pulp and recovered paper (RP) production, and estimate augmented gravity models of bilateral trade for chemical pulp and RP exports with panel data. According to our results, there is some variation in the effects of the traditional gravity-model variables between pulp grades and RP. The results imply also that, in comparison to export supply, import demand plays a larger role in determining the volume of exports. Finally, it is evident that Asia, particularly China, is the most important driver of chemical pulp and RP trade: China is hungry for fiber, and must import to satisfy its growing needs. Moreover, the speed of China’s growth in chemical pulp and RP imports has been driving the increased significance of planted forests in the exports of hardwood pulp (BHKP) as well.

Social class as a factor for the construction of a musician’s identity : The Musician’s social background and identity questionnaire (MSBIQ) – a cross-sectional comparative quantitative online survey research study of music students at two higher education institutions in Finland

There is currently little empirical knowledge regarding the construction of a musician’s identity and social class. With a theoretical framework based on Bourdieu’s (1984) distinction theory, Bronfenbrenner’s (1979) theory of ecological systems, and the identity theories of Erikson (1950; 1968) and Marcia (1966), a survey called the Musician’s Social Background and Identity Questionnaire (MSBIQ) is developed to test three research hypotheses related to the construction of a musician’s identity, social class and ecological systems of development. The MSBIQ is administered to the music students at Sibelius Academy of the University of Arts Helsinki and Helsinki Metropolia University of Applied Sciences, representing the ’highbrow’ and the ’middlebrow’ samples in the field of music education in Finland. Acquired responses (N = 253) are analyzed and compared with quantitative methods including Pearson’s chi-square test, factor analysis and an adjusted analysis of variance (ANOVA). The study revealed that (1) the music students at Sibelius Academy and Metropolia construct their subjective musician’s identity differently, but (2) social class does not affect this identity construction process significantly. In turn, (3) the ecological systems of development, especially the individual’s residential location, do significantly affect the construction of a musician’s identity, as well as the age at which one starts to play one’s first musical instrument. Furthermore, a novel finding related to the structure of a musician’s identity was the tripartite model of musical identity consisting of the three dimensions of a musician’s identity: (I) ’the subjective dimension of a musician’s identity’, (II) ’the occupational dimension of a musician’s identity’ and, (III) ’the conservative-liberal dimension of a musician’s identity’. According to this finding, a musician’s identity is not a uniform, coherent entity, but a structure consisting of different elements continuously working in parallel within different dimensions. The results and limitations related to the study are discussed, as well as the objectives related to future studies using the MSBIQ to research the identity construction and social backgrounds of a musician or other performing artists.

Digital content and making it viral in social media

Tutkimuksen tavoite on selvittää digitaalisen sisällön ominaisuuksia, jotka vaikuttavat ryhtyvätkö kuluttajat jakamaan, tykkäämään ja kommentoimaan sitä sosiaalisessa mediassa. Tällä pyritään auttamaan yrityksiä ymmärtämään paremmin viraalisuutta, jotta he pystyisivät tuottamaan ja julkaisemaan nettisivuillaan ja sosiaalisessa mediassa parempaa sisältöä, jota kuluttajat jakaisivat enemmän. Tutkimus toteutetaan muodostamalla hypoteeseja mahdollisista ominaisuuksista kirjallisuuden perusteella ja testaamalla niitä regressioanalyyseillä empiirisessä osiossa. Tulokset paljastavat yhdeksän piirrettä, jotka lisäävät viraalisuutta: kiinnostavuus, neutraalisuus, yllättävyys, viihdyttävyys, epäkäytännöllisyys, artikkelin ja Facebook julkaisun pituus, eri sisältö taktiikoiden käyttö (erityisesti blogit ja kuvat lisäävät viraalisuutta) sekä kun mielipidevaikuttaja tai kuuluisuus jakaa sisällön.

Impact of Word-of-Mouth on consumer decision-making: An information processing perspective in the context of a high-involvement service

This doctoral study conducts an empirical analysis of the impact of Word-of-Mouth (WOM) on marketing-relevant outcomes such as attitudes and consumer choice, during a high-involvement and complex service decision. Due to its importance to decisionmaking, WOM has attracted interest from academia and practitioners for decades. Consumers are known to discuss products and services with one another. These discussions help consumers to form an evaluative opinion, as WOM reduces perceived risk, simplifies complexity, and increases the confidence of consumers in decisionmaking. These discussions are also highly impactful as WOM is a trustworthy source of information, since it is independent from the company or brand. In responding to the calls for more research on what happens after WOM information is received, and how it affects marketing-relevant outcomes, this dissertation extends prior WOM literature by investigating how consumers process information in a highinvolvement service domain, in particular higher-education. Further, the dissertation studies how the form of WOM influences consumer choice. The research contributes to WOM and services marketing literature by developing and empirically testing a framework for information processing and studying the long-term effects of WOM. The results of the dissertation are presented in five research publications. The publications are based on longitudinal data. The research leads to the development of a proposed theoretical framework for the processing of WOM, based on theories from social psychology. The framework is specifically focused on service decisions, as it takes into account evaluation difficulty through the complex nature of choice criteria associated with service purchase decisions. Further, other gaps in current WOM literature are taken into account by, for example, examining how the source of WOM and service values affects the processing mechanism. The research also provides implications for managers aiming to trigger favorable WOM through marketing efforts, such as advertising and testimonials. The results provide suggestions on how to design these marketing efforts by taking into account the mechanism through which information is processed, or the form of social influence.

International Entrepreneurship in Bottom of the Pyramid Markets – Overcoming institutional constraints

Bottom of the pyramid (BoP) markets are an underserved market of approximately four billion people living on under $5 a day in four regional areas: Africa, Asia, Eastern Europe and Latin America. According to estimations, the BoP market forms a $5 trillion global consumer market. Despite the potential of BoP markets, companies have traditionally focused on serving the markets of developed countries and ignored the large customer group at the bottom of the pyramid. The BoP approach as first developed by Prahalad and Hart in 2002 has focused on multinational corporations (MNCs), which were thought of as the ones who should take responsibility in serving the customers at the bottom of the pyramid. This study challenges this proposition and gives evidence that also smaller international new ventures – entrepreneurial firms that are international from their birth, can be successful in BoP markets. BoP markets are characterized by a number of deficiencies in the institutional environment such as strong reliance on informal sector, lack of infrastructure and lack of skilled labor. The purpose of this study is to increase the understanding of international entrepreneurship in BoP markets by analyzing how international new ventures overcome institutional constraints in BoP markets and how institutional uncertainty can be exploited by solving institutional problems. The main objective is divided into four sub objectives. • To describe the opportunities and challenges BoP markets present • To analyze the internationalization of INVs to BoP markets • To examine what kinds of strategies international entrepreneurs use to overcome institutional constraints • To explore the opportunities institutional uncertainty offers for INVs Qualitative approach was used to conduct this study and multiple-case study was chosen as a research strategy in order to allow cross-case analysis. The empirical data was collected through four interviews with the companies Fuzu, Mifuko, Palmroth Consulting and Sibesonke. The results indicated that understanding of the wider institutional environment improves the survival prospects of INVs in BoP markets and that it is indeed possible to exploit institutional uncertainty by solving institutional problems. The main findings were that first-hand experience of the markets and grassroots levels of information are the best assets in internationalization to BoP markets. This study highlights that international entrepreneurs with limited resources can improve the lives of people at the BoP with their business operations and act as small-scale institutional entrepreneurs contributing to the development of the institutional environment of BoP markets.