POLITICAL RISK IN FOREIGN DIRECT INVESTMENT IN THE RUSSIAN ELECTRIC POWER SECTOR

Russia approved ambitious reform plan for the electricity sector in 2001 including privatisation of the country’s huge thermal generation assets. So far the sector had suffered from power shortages, aging infrastructure, substantial electricity losses, and weak productivity and profitability numbers. There was obvious need for foreign investments and technologies. The reform was rather successful; the generation assets were privatised in auctions in 2007-2008 and three European energy companies, E.On, Enel and Fortum, invested in and obtained together over 10% of the Russian production assets. The novelty of these foreign investments serves unique object for the study. The political risk is involved in the FDI due to the industry’s social and economic importance. The research’s objective was to identify and analyse the political risk that foreign investors face in the Russian electricity sector. The research had qualitative study method and the empirical data was collected by interviewing. The research’s theoretical framework was based on the existing political risk theories and it focused to understand the Russian government in relation to the country’s stability and define both macro-level and micro-level sources of political risk for the foreign direct investments in the sector. The research concludes that the centralised and obscure political decision-making, economic constriction, high level of governmental control in economy and corruption form the country’s internal macro-level risk sources for the foreign investors in the sector. Additionally the retribution due to the companies’ home country actions, possible violent confrontations at the Russian borders and the currency instability are externally originated risk sources. In the electricity industry there is risk of tightened governmental control and increased regulation and taxation. Similarly the company-level risk sources link to the unreformed heating sector, bargaining with the authorities, diplomatic stress between host and home countries and to companies and government’s divergent perspective for the profit-making. The research stresses the foreign companies’ ability to cope with the characteristics of Russian political environment. In addition to frequent political and market risk assessment, the companies need to focus on currency protection against rouble’s rate fluctuation and actively build good company-citizenship in the country. Good relationship is needed with the Russian political authorities. The political risk identification and the research’s conclusive framework also enable political risk study assessments for other industries in Russia

Internationalization of IT company: Case study of a Finnish MOOC platform

The interest to small and media size enterprises’ (SMEs) internationalization process is increasing with a growth of SMEs’ contribution to GDP. Internet gives an opportunity to provide variety of services online and reach market niche worldwide. The overlapping of SMEs’ internationalization and online services is the main issue of the research. The most SMEs internationalize according to intuitive decisions of CEO of the company and lose limited resources to worthless attempts. The purpose of this research is to define effective approaches to online service internationalization and selection of the first international market. The research represents single holistic case study of local massive open online courses (MOOCs) platform going global. It considers internationalization costs and internationalization theories applicable to online services. The research includes preliminary screening of the markets and in-depth analysis based on macro parameters of the market and specific characteristics of the customers and expert evaluation of the results. The specific issues as GILT (Globalization, Internationalization, Localization and Translation) approach and Internet-enabled internationalization are considered. The research results include recommendations on international market selection methodology for online services and for effective internationalization strategy development.