Public and private sector cooperative opportunities in the Finnish healthcare internationalization : views from the public sector’s perspective

Traditionally mostly publicly provided Finnish healthcare services are confronted today by the evident challenge of rising healthcare costs as the expenditure on health and social case has exceeded Finland’s national GDP growth significantly since the new millennium. While the opening of the traditional barriers through the EU’s new patient directive resulting in increasing international competition and the free flow of patients within the EU present opportunities for the Finnish healthcare services industry there are also several challenges for the existing healthcare system as proposed by the Ministry of Employment and the Economy in 2011. Due to the structure and nature of the current Finnish healthcare service system the greatest potential for internationalization is seen from a joint cooperation of the public and private sectors in an internationalization network for Finnish healthcare services. As its formation has recently also taken as a strategic initiative to be completed by the Ministry of Employment and the Economy and no earlier research exists on how this is seen in practice by the network actors, the purpose of this study is to examine the proposed solution of forming an internationalization network between the public and private sector actors in Finland in practice from the viewpoint of public sector actors. The research relied heavily on the reports by the Finnish Ministries in understanding the current situation of the Finnish healthcare services internationalization and its potential. Suitable theories were also used to build a more comprehensive view of the matter. The study applied a qualitative research approach on the explorative research problem. The data collection was achieved through expert interviews in two of the largest Finnish public healthcare service providers; the Turku and Helsinki Central University Hospitals. Expert interviews were considered as the most suitable method for data collection in order to create an in-depth understanding of the topic within the limitations of this thesis. In turn, two different public healthcare service providers were chosen to give a broader view of the field instead of focusing on a specific unit and also to allow a possible comparison between the two different organizations. The latter however was shown not to be suitable for the purposes of this study as the opinions of the respondents varied largely also within their own organizations. The conclusion is that while the actors agree on the evident internationalization of Finnish healthcare services, there are several large-scale structural challenges effectively preventing such activities while at the same time the opportunities within Finland vary, as there are several niches but no real large-scale advantages in the highly competitive industry. Interest towards cooperation between the sectors are seen especially in exploiting the advantages offered by the private sector in commercialization and marketization, yet however no clear views exist on how these activities should be governed or structured in the short-term as a larger reform of the entire Finnish healthcare service sector is needed in the long-term.

Railways, Airports and Sea Container Operators as Publicly Listed Companies – Financial Performance and Shareholder Value Creation Perspective

Logistics infrastructure and transportation services have been the liability of countries and governments for decades, or these have been under strict regulation policies. One of the first branches opened for competition in EU as well as in other continents, has been air transports (operators, like passenger and freight) and road transports. These have resulted on lower costs, better connectivity and in most of the cases higher service quality. However, quite large amount of other logistics related activities are still directly (or indirectly) under governmental influence, e.g. railway infrastructure, road infrastructure, railway operations, airports, and sea ports. Due to the globalization, governmental influence is not that necessary in this sector, since transportation needs have increased with much more significant phase as compared to economic growth. Also freight transportation needs do not correlate with passenger side, due to the reason that only small number of areas in the world have specialized in the production of particular goods. Therefore, in number of cases public-private partnership, or even privately owned companies operating in these sub-branches have been identified as beneficial for countries, customers and further economic growth. The objective of this research work is to shed more light on these kinds of experiments, especially in the relatively unknown sub-branches of logistics like railways, airports and sea container transports. In this research work we have selected companies having public listed status in some stock exchange, and have needed amount of financial scale to be considered as serious company rather than start-up phase venture. Our research results show that railways and airports usually need high fixed investments, but have showed in the last five years generally good financial performance, both in terms of profitability and cash flow. In contrary to common belief of prosperity in globally growing container transports, sea vessel operators of containers have not shown that impressive financial performance. Generally margins in this business are thin, and profitability has been sacrificed in front of high growth – this also concerns cash flow performance, which has been lower too. However, as we examine these three logistics sub-branches through shareholder value development angle during time period of 2002-2007, we were surprised to find out that all of these three have outperformed general stock market indexes in this period. More surprising is the result that financially a bit less performing sea container transportation sector shows highest shareholder value gain in the examination period. Thus, it should be remembered that provided analysis shows only limited picture, since e.g. dividends were not taken into consideration in this research work. Therefore, e.g. US railway operators have disadvantage to other in the analysis, since they have been able to provide dividends for shareholders in long period of time. Based on this research work we argue that investment on transportation/logistics sector seems to be safe alternative, which yields with relatively low risk high gain. Although global economy would face smaller growth period, this sector seems to provide opportunities in more demanding situation as well.

The Pay-Off Method as a Tool for Evaluating the Risk and Profitability of Public Real Estate Investments

Real option valuation, in particular the fuzzy pay-off method, has proven to be useful in defining risk and visualizing imprecision of investments in various industry applications. This study examines whether the evaluation of risk and profitability for public real estate investments can be improved by using real option methodology. Firstly, the context of real option valuation in the real estate industry is examined. Further, an empirical case study is performed on 30 real estate investments of a Finnish government enterprise in order to determine whether the presently used investment analysis system can be complemented by the pay-off method. Despite challenges in the application of the pay-off method to the case company’s large investment base, real option valuation is found to create additional value and facilitate more robust risk analysis in public real estate applications.

The effect of environmentally differentiated port fees to shipping companies’ environmental investments

The pressure has grown to develop cost-effective emission reduction strategies in the Baltic Sea. The forthcoming stringent regulations of the International Maritime Organization for reducing harmful emissions of shipping in the Baltic Sea are causing increasing expenses for the operators. A market-based attitude towards pricing of economic incentives could be seen as a new approach for a successful application for the additional emission reduction of nitrogen oxides (NOx). In this study the aim is to understand the phenomenon of environmentally differentiated port fees and its effects on shipping companies’ emission reduction investments. The goal is to examine empirically the real-life effects of the possible environmental differentiated port fee system and the effect of environmentally differentiated port fees on NOx reduction investments in the Baltic Sea. The research approach of this study is nomothetical. In this study research questions are answered by analyzing the broad database of the Baltic Sea fleet. Also the framework of theory is confirmed and plays an important role in analyzing the research problem. Existing investment costs of NOx emission reduction technology to ship owners are estimated and compared to investment costs with granted discounts added to the cash flows. The statistical analysis in this study is descriptive. The major statistic examination of this study is the calculation of the net present values of investments with different port fee scenarios. This is done to investigate if the NOx technology investments could be economically reasonable. Based on calculations it is clear that the effect of environmentally differentiated port fees is not adequate to compensate the total investment costs for NOx reduction. If the investment decision is made only with profitability considerations, sources will prefer to emission abatement as long as incomes from the given subsidy exceeds their abatement costs. Despite of the results, evidence was found that shipping companies are nevertheless willing to invest on voluntary emission abatement technology. In that case, investment decision could be made with criteria of, for example, sustainable strategy or brand image. Combined fairway and port fee system or governmental regulations and recommendation could also function as additional incentives to compensate the investment costs. Also, the results imply that the use of NPV is not necessarily the best method to evaluate environmental investments. If the calculations would be done with more environmental methods the results would probably be different.

The obstacles for cross-border transmission network investments in the Nordic electricity market: Case South-West link

The Nordic electricity market is often seen as an example of how to create a working, developed and integrated electricity market. Nevertheless, this thesis studies the obstacles of transmission network investments and the market integration challenges in the Nordic electricity market. The main focus is in the Nordic Transmission system operators (TSOs), which have a key role in grid development. This study introduces a case study of cancellation of South-West link, Western part, which was seen as essential grid investment in order to improve the Nordic electricity market functioning but ended up with cancellation in 2013. This study includes semi-structured theme interviews of the experts among Nordic electricity industry stakeholders. Despite the political will to create more equal prices for electricity in the Nordic market, the differing national regulation, mixed incentives created by bottleneck income and the focus moving from Nordic integration to European integration may create challenges to the Nordic electricity market integration in the future.

Analyzing the Effects of the New Renewable Energy Policy in Russia on Investments into Wind, Solar and Small Hydro Power

This thesis presents an analysis of recently enacted Russian renewable energy policy based on capacity mechanism. Considering its novelty and poor coverage by academic literature, the aim of the thesis is to analyze capacity mechanism influence on investors’ decision-making process. The current research introduces a number of approaches to investment analysis. Firstly, classical financial model was built with Microsoft Excel® and crisp efficiency indicators such as net present value were determined. Secondly, sensitivity analysis was performed to understand different factors influence on project profitability. Thirdly, Datar-Mathews method was applied that by means of Monte Carlo simulation realized with Matlab Simulink®, disclosed all possible outcomes of investment project and enabled real option thinking. Fourthly, previous analysis was duplicated by fuzzy pay-off method with Microsoft Excel®. Finally, decision-making process under capacity mechanism was illustrated with decision tree. Capacity remuneration paid within 15 years is calculated individually for each RE project as variable annuity that guarantees a particular return on investment adjusted on changes in national interest rates. Analysis results indicate that capacity mechanism creates a real option to invest in renewable energy project by ensuring project profitability regardless of market conditions if project-internal factors are managed properly. The latter includes keeping capital expenditures within set limits, production performance higher than 75% of target indicators, and fulfilling localization requirement, implying producing equipment and services within the country. Occurrence of real option shapes decision-making process in the following way. Initially, investor should define appropriate location for a planned power plant where high production performance can be achieved, and lock in this location in case of competition. After, investor should wait until capital cost limit and localization requirement can be met, after that decision to invest can be made without any risk to project profitability. With respect to technology kind, investment into solar PV power plant is more attractive than into wind or small hydro power, since it has higher weighted net present value and lower standard deviation. However, it does not change decision-making strategy that remains the same for each technology type. Fuzzy pay-method proved its ability to disclose the same patterns of information as Monte Carlo simulation. Being effective in investment analysis under uncertainty and easy in use, it can be recommended as sufficient analytical tool to investors and researchers. Apart from described results, this thesis contributes to the academic literature by detailed description of capacity price calculation for renewable energy that was not available in English before. With respect to methodology novelty, such advanced approaches as Datar-Mathews method and fuzzy pay-off method are applied on the top of investment profitability model that incorporates capacity remuneration calculation as well. Comparison of effects of two different RE supporting schemes, namely Russian capacity mechanism and feed-in premium, contributes to policy comparative studies and exhibits useful inferences for researchers and policymakers. Limitations of this research are simplification of assumptions to country-average level that restricts our ability to analyze renewable energy investment region wise and existing limitation of the studying policy to the wholesale power market that leaves retail markets and remote areas without our attention, taking away medium and small investment into renewable energy from the research focus. Elimination of these limitations would allow creating the full picture of Russian renewable energy investment profile.

Legitimacy Building in Public Disclosures on Strategic Energy Investments

Renewable energy investments play a key role in energy transition. While studies have suggested that social acceptance may form a barrier for renewable energy investments, the ways in which companies perceive and attempt to gain the acceptance have received little attention. This study aims to fill the gap by exploring how large electric utilities justify their strategic investments in their press releases and how do the justifications differ between renewable and non-renewable energy investments. The study bases on legitimacy theory and aims at contributing to the research on legitimation in institutional change. As its research method, the study employs an inductive mixed method content analysis. The study has two parts: a qualitative content analysis that explores and identifies the themes and legitimation strategies of the press releases and a quantitative computer-aided analysis that compares renewable and non-renewable energy investments. The sample of the study consists of 396 press releases representing the strategic energy investments of 34 electric utilities from the list of the world’s 250 largest and financially most successful energy companies. The data is collected from the period of 2010–2014. The study reveals that most important justifications for strategic energy investments are fit with the strategy and environmental and social benefits. Justifications address especially the expectations of market. Investments into non-renewable energy are justified more and they use more arguments addressing the proprieties and performance of power plants whereas renewable energy investments are legitimized by references to past actions and commonly accepted morals and norms. The findings support the notion that validity-addressing and propriety-addressing legitimation strategies are used differently in stable and unstable institutional settings.

The Performance of European Small Cap Equity Funds

The thesis examines the risk-adjusted performance of European small cap equity funds between 2008 and 2013. The performance is measured using several measures including Sharpe ratio, Treynor ratio, Modigliani measure, Jensen alpha, 3-factor alpha and 4-factor alpha. The thesis also addresses the issue of persistence in mutual fund performance. Thirdly, the relationship between the activity of fund managers and fund performance is investigated. The managerial activity is measured using tracking error and R-squared obtained from a 4-factor asset pricing model. The issues are investigated using Spearman rank correlation test, cross-sectional regression analysis and ranked portfolio tests. Monthly return data was provided by Morningstar and consists of 88 mutual funds. Results show that small cap funds earn back a significant amount of their expenses, but on average loose to their benchmark index. The evidence of performance persistence over 12-month time period is weak. Managerial activity is shown to positively contribute to fund performance

Capital investments planning and life cycle simulations for the new valves manufacturing facility in Russia

The focus of the research is on the derivation of the valid and reliable performance results regarding establishment and launching of the new full-scale industrial facility, considering the overall current conditions for the project realization in and out of Russia. The study demonstrates the process of the new facility concept development, with following perfor-mance calculation, comparative analyzes conduction, life-cycle simulations, performance indicators derivation and project`s sustainability evaluation. To unite and process the entire input parameters complexity, regards the interlacing between the project`s internal technical and commercial sides on the one hand, and consider all the specifics of the Russian conditions for doing business on the other hand, was developed the unique model for the project`s performance calculation, simulations and results representation. The complete research incorporates all corresponding data to substantiate the assigned facility`s design, sizing and output capacity for high quality and cost efficient ferrous pipe-line accessories manufacturing, as well as, demonstrates that this project could be suc-cessfully realized in current conditions in Russia and highlights the room for significant performance and sustainability improvements based on the indexes of the derived KPIs.