Managing innovation in oil and gas companies: A proposed framework for the management of innovation at Ecopetrol S.A.

Actually, the term innovation seems to be one of the most used in any kind of business practices. However, in order to get value from it, companies need to define a systematic and structured way to manage innovation. This process can be difficult and very risky since it is associated with the development of firm´s capabilities which involves human and technical challenges according to the context of a firm. Additionally, it seems not to exist a magic formula to manage innovation and what may work in a company may not work in another, even though in the same type of industry. In this sense, the purpose of this research is to identify how the oil and gas companies can manage innovation and what are the main elements, their interrelations and structure, required for managing innovation effectively in this critical sector for the world economy. The study follows a holistic single case study in a National Oil Company (NOC) of a developing country to explore how innovation performs in the industry, what are the main elements regarding innovation management and their interactions according to the nature of the industry. Contributory literature and qualitative data from the case study company (with the use of non-standardized interviews) is collected and analyzed. The research confirms the relevance and importance of the definition and implementation of an innovation framework in order to ensure the generation of value and organize as well as guide the efforts in innovation done by a firm. In this way based on the theoretical background, research´s findings, and in the company´s innovation environment and conditions, a framework for managing innovation at the case study company is suggested. This study is one of the few, if not only one, that has reviewed the way as oil and gas companies manage innovation and its practical implementation in a company from a developing country. Both researchers and practitioners will get a photograph of understanding innovation management in the oil and gas industry and its growing necessity in the business world. Some issues have been highlighted, so that future study can be focused in those directions. In fact, even though research on innovation management has significantly grown, there are still many issues that need to be addressed to get insight about managing innovation in various contexts and industries. Studies are mostly performed in the context of large firms and in developed countries, so then research in the context of developing countries is still almost an untouched area, especially in the oil and gas industry. Finally, from the research it seems crucial to explore the effect of some innovation-related variables such as: open innovation in third world economies and in state-own companies; the impact of mergers and acquisitions in innovation performance in oil and gas companies; value measurement in the first stages of the innovation process; and, development of innovation capabilities in companies from developing nations.

The logistic risks of Finnish companies operating in China

Selvitys suomalaisten yritysten kohtaamista logistisista ongelmista Kiinan markkinoilla toimiessa. Tutkielma tuo esiin Kiinan logistiikkaan liittyvät erityispiirteet ja heijastaa niitä haastattelujen avulla suomalaisiin yrityksiin, jotka operoivat Kiinassa.

The Role of networks in the internationalization process of Finnish design companies

Finnish design has attracted global attention lately and companies within the industry have potential in international markets. Because networks have been found to be extremely helpful in a firm’s international business operations and usefulness of networks is not fully exploited, their role in Finnish design companies is investigated. Accordingly, this study concentrates on understanding the role of networks in the internationalization process of Finnish design companies. This was investigated through describing the internationalization process of Finnish design companies, analyzing what kind of networks are related to internationalization process of Finnish design companies, and analyzing how networks are utilized in the internationalization process of Finnish design companies. The theoretical framework explores the Finnish design industry, internationalization process and networks. The Finnish design industry is introduced in general and the concept of design is defined to refer to the industries of textiles, furniture, clothing, and lighting equipment in the research. The theories of internationalization process, the Uppsala model and Luostarinen’s operation modes, are explored in detail. The Born Global theory, which is a contrary view to stage models, is also discussed. The concept of network is investigated, networks are classified into business and social networks, and network approach to internationalization is discussed. The research is conducted empirically and the research method is a descriptive case study. In this study, four case companies are investigated: the interior decoration unit of L-Fashion Group, Globe Hope, Klo Design, and Melaja Ltd. Data is collected by semi-structured interviews and the analysis is done in the following way: the case companies are introduced, their internationalization processes and networks are described and, finally, the comparison of the case companies is done in a form of cross-case analysis. This research showed that cooperation with social networks, such as locals or employees who have experience from the target market can be extremely helpful in the beginning of a Finnish design company’s internationalization process. This study also indicated that public organizations do not necessarily enhance the internationalization process in a design company point-of-view. In addition, the research showed that there is cooperation between small Finnish design companies whereas large design companies are not as open to cooperation with competitors.

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.

Stock Market reaction to the CSR announcements of American fast food companies

The purpose of this study is to examine whether Corporate Social Responsibility (CSR) announcements of the three biggest American fast food companies (McDonald’s, YUM! Brands and Wendy’s) have any effect on their stock returns as well as on the returns of the industry index (Dow Jones Restaurants and Bars). The time period under consideration starts on 1st of May 2001 and ends on 17th of October 2013. The stock market reaction is tested with an event study utilizing CAPM. The research employs the daily stock returns of the companies, the index and the benchmarks (NASDAQ and NYSE). The test of combined announcements did not reveal any significant effect on the index and McDonald’s. However the stock returns of Wendy’s and YUM! Brands reacted negatively. Moreover, the company level analyses showed that to their own CSR releases McDonald’s stock returns respond positively, YUM! Brands reacts negatively and Wendy’s does not have any reaction. Plus, it was found that the competitors of the announcing company tend to react negatively to all the events. Furthermore, the division of the events into sustainability categories showed statistically significant negative reaction from the Index, McDonald’s and YUM! Brands towards social announcements. At the same time only the index was positively affected by to the economic and environmental CSR news releases.

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 impact of long-term brand development strategies on brand value of companies operating in high-technology markets

The objective of the current research is to investigate brand value generation. The study is conducted in the context of high-technology companies. The research aims at finding the impact of long-term brand development strategies, including advertising investments, R&D investments, R&D intensity, new products developed and design. The empirical part of the study incorporated collection of primary and secondary data on 36 companies operating in high-technology sector and being rated as top companies with the most valuable brands by Interbrand consultancy. The data contained information for six consequent years from 2008 to 2013. Obtained data was analyzed using the methods of fixed effect and random effect model (panel data analysis). The analysis showed positive effect of advertising and R&D investments on brand value of high-technology companies in the long run. The impact of remaining three strategies was not approved and further investigation is required.

Foreign Operation Mode Strategies of Finnish Companies in Russia

The object of this study was to examine foreign operation mode strategies used by Finnish companies in Russia. Thus, it was necessary to understand how Finnish companies have used foreign operation modes and which factors have influenced on their foreign operation mode strategies in Russia. Moreover, the purpose was also to find out that have Finnish companies switched, stretched or combined their foreign operation modes. The study's empirical part was conducted as a semi structured qualitative within-case and cross-case analysis of seven case companies that are selected to represent different industries. There are five Finnish LSEs and two Finnish SMEs as case companies. The results of this study indicated that Finnish companies have mainly used exporting as their initial entry mode to the Russian market. After they had gained understanding and experience of the Russian market, they switched from non-equity and simple foreign operation modes to more challenging and equity demanding foreign operation modes, and established wholly owned operations.

The early activities of front end of innovation in oem companies using a new fei platform as a framework for renewal

The main goal of this study is to create a seamless chain of actions and more detailed structure to the front end of innovation to be able to increase the front end performance and finally to influence the renewal of companies. The main goal is achieved through by the new concept of an integrated model of early activities of FEI leading to a discovery of new elements of opportunities and the identification of new business and growth areas. The procedure offers one possible solution to a dynamic strategy formation process in innovation development cycle. In this study the front end of innovation is positioned between a strategy reviews and a concept creation with needed procedures, tools, and frameworks. The starting point of the study is that the origins of innovation are not well enough understood. The study focuses attention on the early activities of FEI. These first activities are conceptualized in order to find out successful innovation initiatives and strategic renewal agendas. A seamless chain of activities resulting in faster and more precise identification of opportunities and growth areas available on markets and inside companies is needed. Three case studies were conducted in order to study company views on available theory doctrine and to identify the first practical experiences and procedures in the beginning of the front end of innovation. Successful innovation requires focus on renewal in both internal and external directions and they should be carefully balanced for best results. Instead of inside-out mode of actions the studied companies have a strong outside-in thinking mode and they mainly co-develop their innovation initiatives in close proximity with customers i.e. successful companies are an integral part of customers business and success. Companies have tailor-made innovation processes combined their way of working linked to their business goals, and priorities of actual needs of transformation. The result of this study is a new modular FEI platform which can be configured by companies against their actual business needs and drivers. This platform includes new elements of FEI documenting an architecture presenting how the system components work together. The system is a conceptual approach from theories of emergent strategy formation, opportunity identification and creation, interpretation-analysis-experimentation triad and the present FEI theories. The platform includes new features compared to actual models of FEI. It allows managers to better understand the importance of FEI in the whole innovation development stage and FEI as a phase and procedure to discover and implement emergent strategy. An adaptable company rethinks and redirects strategy proactively from time to time. Different parts of the business model are changed to remove identified obstacles for growth and renewal which gives them avenues to find right reforms for renewal.