Foreign direct investment motives and location decision factors under economic recession: Three cases of Finnish FDI in Portugal

The purpose of this thesis was to study how uncertainty in economic conditions of the FDI host country affects location decision of an investment, and what kinds of motives are behind the investment decision to a country in economic recession, in this case Portugal. The country has attracted foreign direct investment steadily, but it is evident that most multinational firms and investors tend to be more interested in emerging economies in general. The aim was to find out also which host country specific advantages are important in this kind of cross-border investment and which factors are important for an FDI to succeed under economic uncertainty at the host country. The study was done by analyzing three Finnish case companies: a private equity and real estate investment firm Pontos Group, A wave energy technology research and development company AW Energy and NSN, Nokia Solutions and Networks, a global telecommunications company. The research was done empirically, by interviewing experts on the subject, mainly persons representing these companies. In addition relevant articles, journals and content from case companies’ web-pages is used for the desk research regarding the topic. The results of this thesis showed that the FDIs with strategic asset-seeking investments seem most profitable FDI types under uncertain economic conditions. This kind of investments aim to strengthen the company’s long-term strategy, including the time after recession. Firm-specific ownership advantages that bring competitive advantage proved out to be important under these circumstances, as well as first-mover advantages and externally created assets such as government promotional policies regarding FDI incentives. Also the location was considered suitable for resource- or efficiency seeking motives, based on the lowered price level at the host country. Problems were related mainly to financing, but as foreign companies receive financing usually from their home countries, the economic recession of the host country does not have significant effect for FDI decision, according to this study

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.

Serva ad ministrare : tjänandets ethos i vårdledarskap

Avhandlingen syftar till att ur ett vårdvetenskapligt perspektiv beskriva och upptäcka tjänandets meningsinnehåll samt fördjupa förståelsekunskap om tjänandets ethos i förhållande till vårdledarskap med en inriktning på det vårdadministrativa. Syftet är även att skapa en idealmodell som öppnar för en ny eller annorlunda förståelsehorisont för tjänandets ethos i vårdledarskap. Kunskapssökandet sker genom följande delstudier: (1) I begreppsbestämningen genomförs begreppsanalyser av tjäna och tjänst med avsikt att öppna för en grundförståelse och tankestruktur i forskningsuppgiften. (2) I det idéhistoriska spåras tjänandets ontologiska arv och idémönster fram genom tolkning av historiska källornas texter från 1900-talets första hälft i ljuset av sjuksköterskeledarskap utgående från Sophie Mannerheims, Bertha Wellins och Bergljot Larssons idéer och tankeströmningar. (3) Sökandet fortsätter i dagens kliniska kontextbas genom kvalitativa djupintervjuer med 30 deltagare (vårdledare och vårdare) från Finland, Sverige och Norge. Förförståelsen och forskningens teoretiska perspektiv har rötter i Erikssons caring science-tradition och vårdvetenskapens ontologiska grundantaganden som utvecklats vid Åbo Akademi, Enheten för vårdvetenskap i Vasa. Forskningsansatsen är inspirerad av H-G Gadamers filosofiska hermeneutik. Designen är explorativ-deskriptiv, idiografisk och implicerar ett hypotetisk-deduktivt tillvägagångssätt. Tjänandet och vårdledarskapets ethos upptäcks och tolkas genom det metodologiska närmandet: Erikssons hermeneutiska begreppsbestämningsmodell, idéhistoriska läsakt och hermeneutiska läsakt. Materialet bildar förståelsehorisonter genom den hermeneutiska dialogens successiva och oändliga rörelse. Horisonterna reflekteras mot teorikärnan för att öppna för ny förståelse av tjänandets meningsinnehåll, vårdledarskap och vårdadministration. I slutandet sker en horisontsammansmältning och en reflektiv anslutning till vårdvetenskapens teorikärna som visar hur tjänandets ethos blir evident i vårdledarskap. Resultatet visar att vårdledarskap som är tjänande för patienten och vårdkulturen synliggörs i vårdadministrationens kontext genom huvudets skärpa, handens gärningar och hjärtats visdom. Tjänandets sanna, goda och sköna tidlösa rörelse är riktad mot hälsa och helande. I dag sammankopplas tjänande inom vårdorganisationer med hälsoekonomiska förhållanden, effektivitet, produktivitet och rationalitet, vilket strider mot tjänandets värdegrund, människans värdighet och respekt för livet. Vårdorganisationernas etiska ansvar är att fungera som samhälleliga förebilder, tillrättalägga för vårdadministrationernas tjänande och stå i patientens tjänst. Gestaltningen av tjänandets ethos i vårdledarskap öppnar för nya diskurser, riktningar, visioner och handlingar i den vårdadministrativa verkligheten. Avhandlingen ger vårdvetenskapens systematiska grundforskning ett teoritillskott av fördjupad förståelse av tjänandets och vårdledarskapets historiska och samtida ontologiska evidens och ethos med applikationen på klinisk vårdvetenskap.

Development of a New Welding Product Quality Control and Management System Model for China

The Chinese welding industry is growing every year due to rapid development of the Chinese economy. Increasingly, companies around the world are looking to use Chinese enterprises as their cooperation partners. However, the Chinese welding industry also has its weaknesses, such as relatively low quality and weak management. A modern, advanced welding management system appropriate for local socio-economic conditions is required to enable Chinese enterprises to enhance further their business development. The thesis researches the design and implementation of a new welding quality management system for China. This new system is called ‗welding production quality control management model in China‘ (WQMC). Constructed on the basis of analysis of a survey and in-company interviews, the welding management system comprises the following different elements and perspectives: a ‗Localized congenital existing problem resolution strategies‘ (LCEPRS) database, a ‗human factor designed training system‘ (HFDT) training strategy, the theory of modular design, ISO 3834 requirements, total welding management (TWM), and lean manufacturing (LEAN) theory. The methods used in the research are literature review, questionnaires, interviews, and the author‘s model design experiences and observations, i.e. the approach is primarily qualitative and phenomenological. The thesis describes the design and implementation of a HFDT strategy in Chinese welding companies. Such training is an effective way to increase employees‘ awareness of quality and issues associated with quality assurance. The study identified widely existing problems in the Chinese welding industry and constructed a LCEPRS database that can be used in efforts to mitigate and avoid common problems. The work uses the theory of modular design, TWM and LEAN as tools for the implementation of the WQMC system.

Entrepreneurial orientation in small and medium-sized enterprises during economic crisis

The economic importance of small and medium-sized enterprises (SMEs) and entrepreneurship has increased significantly in recent decades and entrepreneurial activity and SMEs are deemed vital to economic progress. Therefore, it is justifiable to study how small firms and entrepreneurs can enhance their performance and emergence in the turbulent economic environment. The concept of entrepreneurial orientation (EO) has recently attracted considerable attention in the field of entrepreneurship research. EO generally refers to a firm’s propensity to be innovative, to be proactive and to take risks. A majority of EO studies so far have found that adopting EO associated entrepreneurial behaviors will help firms to create or sustain a high level of performance. This dissertation explores the main drivers and performance implications of EO for SMEs in time of economic crisis. Hence the first objective of this dissertation is to examine the performance implications of EO and to test the role of EO on how firms are treated by the crisis at operative level. The second objective is to expand the prevailing understanding of determinants of EO by exploring the relationship between owner's work related values, attitudes, demographic characteristics, firm’s financial resources and EO. EO was found to be a significant and positive factor behind a firm’s long run growth. Hence it can be said that EO has positive implications for firm performance. But on the other hand, during a time of economic crisis the different dimensions of EO had both positive and negative effects on performance of SMEs. The performance implications varied across different stages of the crisis and were also dependent on what measure was used for measuring the performance. The main drivers of EO in SMEs were the personal work related values of the entrepreneur and his/her prior experience as an entrepreneur. The intrinsic work values related to interest, responsibility, challenge, self-development or intellectual stimulation and values related to status, power, achievement and recognition had a positive effect on the level of EO. On the other hand, extrinsic values related to high income, material possessions, benefits such as generous holidays, job security, and comfort through good working conditions decreased the level of EO

Towards sustainable Iron- and steelmaking with economic optimization

The iron and steelmaking industry is among the major contributors to the anthropogenic emissions of carbon dioxide in the world. The rising levels of CO2 in the atmosphere and the global concern about the greenhouse effect and climate change have brought about considerable investigations on how to reduce the energy intensity and CO2 emissions of this industrial sector. In this thesis the problem is tackled by mathematical modeling and optimization using three different approaches. The possibility to use biomass in the integrated steel plant, particularly as an auxiliary reductant in the blast furnace, is investigated. By pre-processing the biomass its heating value and carbon content can be increased at the same time as the oxygen content is decreased. As the compression strength of the preprocessed biomass is lower than that of coke, it is not suitable for replacing a major part of the coke in the blast furnace burden. Therefore the biomass is assumed to be injected at the tuyere level of the blast furnace. Carbon capture and storage is, nowadays, mostly associated with power plants but it can also be used to reduce the CO2 emissions of an integrated steel plant. In the case of a blast furnace, the effect of CCS can be further increased by recycling the carbon dioxide stripped top gas back into the process. However, this affects the economy of the integrated steel plant, as the amount of top gases available, e.g., for power and heat production is decreased. High quality raw materials are a prerequisite for smooth blast furnace operation. High quality coal is especially needed to produce coke with sufficient properties to ensure proper gas permeability and smooth burden descent. Lower quality coals as well as natural gas, which some countries have in great volumes, can be utilized with various direct and smelting reduction processes. The DRI produced with a direct reduction process can be utilized as a feed material for blast furnace, basic oxygen furnace or electric arc furnace. The liquid hot metal from a smelting reduction process can in turn be used in basic oxygen furnace or electric arc furnace. The unit sizes and investment costs of an alternative ironmaking process are also lower than those of a blast furnace. In this study, the economy of an integrated steel plant is investigated by simulation and optimization. The studied system consists of linearly described unit processes from coke plant to steel making units, with a more detailed thermodynamical model of the blast furnace. The results from the blast furnace operation with biomass injection revealed the importance of proper pre-processing of the raw biomass as the composition of the biomass as well as the heating value and the yield are all affected by the pyrolysis temperature. As for recycling of CO2 stripped blast furnace top gas, substantial reductions in the emission rates are achieved if the stripped CO2 can be stored. However, the optimal recycling degree together with other operation conditions is heavily dependent on the cost structure of CO2 emissions and stripping/storage. The economical feasibility related to the use of DRI in the blast furnace depends on the price ratio between the DRI pellets and the BF pellets. The high amount of energy needed in the rotary hearth furnace to reduce the iron ore leads to increased CO2 emissions.

Assessment of techno-economic use cases for small-scale island grids

The main objective of the study was to define the methodology for assessing the limits for application island grids instead of interconnecting with existing grid infrastructure. The model for simulation of grid extension distance and levelised cost of electricity has been developed and validated by the case study in Finland. Thereafter, sensitivities of the application limits were examined with the respect to operational environment, load conditions, supply security and geographical location. Finally, recommendations for the small-scale rural electrification projects in the market economy environment have been proposed.

EU Strategy for the Baltic Sea Region: its added value in environmental social and economic dimensions

The European Council has invited the European Commission to present the first macro-regional strategy – the EU Strategy for the Baltic Sea Region (EUSBSR) on the 14th of December 2007, primarily to address collective challenges and opportunities of the Region and also to engender cohesion in support of an European integration policy. However, macro-regional strategies conceived to aid European integration and territorial cohesion were viewed by academics with skepticism, obscuring the strategies’ potential impact. This thesis intends to investigate and measure the added value of the EUSBSR in order to analyze its impact on regional development and its feasibility as a guide for future programs intending to strengthen European cohesion and integration. To determine the added value of the EUSBSR the thesis is organized into three sections, so as to address environmental, social, and economic concerns, respectively. The first case examines EU-Russia cooperation in an environmental context to investigate how environmental cooperation with an external neighbor could forge increased cohesion in a macro-regional setting. To figure the added cooperation that academic cooperation among universities would contribute to social dimension, the work has chosen several study results. Lastly, to measure out the added value for the economic strategy objective, the study employs the project for Improved Global Competitiveness in an example of ‘A Baltic Sea Region Program for Innovation, Cluster and SME-Networks’ as an economic plan.