Mythology as a key to historical ways of thinking

Kirjallisuusarvostelu

Future at risk: A study on the Club of Rome

Sustainability, in its modern meaning, has been discussed for more than forty years. However, many experts believe that humanity is still far from being sustainable. Some experts have argued that humanity should seek survivable development because it is too late for sustainable one, since 1990s. Obviously, some problems prevented humanity from becoming sustainable. This thesis focuses on the agenda of sustainability discussions and seeks for the essential topics missing from it. For this purpose, the research is conducted on 21 out of 33 books endorsed by the Club of Rome. All of these books are titled ‘a report to the Club of Rome’. The Club of Rome is an organization that has been constantly working on the problems of humankind for the past 40 years. This thesis has three main components: first, the messages of the reports to the Club of Rome, second, academics perceptions of the Club, and third, the Club member perceptions of its evolution, messages and missing topics. This thesis investigates the evolution of four aspects in the reports. The first one is the agenda of the reports. The second one is the basic approaches of the Club (i.e., global, long-term and holistic). The third one is the ways that the reports treat free market and growth ideology. The fourth one is the approach of the reports toward components of the global complex system (i.e., society, economy and politics). The outline of the thesis is as follows. First, the original reports are briefly summarized. After this, the academic perceptions are discussed and structured around three concepts (i.e., futures studies, sustainability and degrowth). In the final step, the perceptions of the experts are collected and analysed, using a variation of Delphi method, called ‘in-depth interviews’, and ‘quality content analysis’ method. This thesis is useful for those interested in sustainability, global problems, and the Club of Rome. This thesis concludes that the reports from 1972 up to 1980 were cohesive in discussing topics related to the problems of humankind. The topics of the reports are fragmented after this period. The basic approaches of CoR are visible in all the reports. However, after 1980, those approaches and especially holistic thinking are only visible in the background. Regarding the free market and growth ideology, although all the reports are against them, the early reports were more explicitly expressing their disagreement. A milestone is noticeable around 1980 when such objections went completely to the background. However, recent reports are more similar to those of 1970s both in adopting a holistic approach and in explicitly criticizing free market and growth ideology. Finally, concerning the components of global complex system, the society is excluded and the focus of the reports is on politics, economy and their relation. Concerning the topics missing from the debate, this thesis concludes that no major research has been conducted on the fundamental and underlying reasons of the problems (e.g. beliefs, values and culture). Studying the problems without considering their underlying reasons, obviously, leads to superficial and ineffective solutions. This might be one of the reasons that sustainability discussions have as yet led to no concrete result.

Improving reporting and internal control with process thinking - case study in a multinational corporation

The aim of this Master’s Thesis is to find applicable methods from process management literature for improving reporting and internal control in a multinational corporation. The method of analysis is qualitative and the research is conducted as a case study. Empirical data collection is carried out through interviews and participating observation. The theoretical framework is built around reporting and guidance between parent company and subsidiary, searching for means to improve them from process thinking and applicable frameworks. In the thesis, the process of intercompany reporting in the case company is modelled, and its weak points, risks, and development targets are identified. The framework of critical success factors in process improvement is utilized in assessing the development targets. Also internal control is analyzed with the tools of process thinking. As a result of this thesis, suggestions for actions improving the reporting process and internal control are made to the case company, the most essential of which are ensuring top management’s awareness and commitment to improvement, creating guidelines and tools for internal control and creating and implementing improved intercompany reporting process.

FUTURES OF FINNISH FOOD SYSTEM BY 2050. The perspective of resilience

Modern food systems face complex global challenges such as climate change, resource scarcities, population growth, concentration and globalization. It is not possible to forecast how all these challenges will affect food systems, but futures research methods provide possibilities to enable better understanding of possible futures and that way increases futures awareness. In this thesis, the two-round online Delphi method was utilized to research experts’ opinions about the present and the future resilience of the Finnish food system up to 2050. The first round questionnaire was constructed based on the resilience indicators developed for agroecosystems. Sub-systems in the study were primary production (main focus), food industry, retail and consumption. Based on the results from the first round, the future images were constructed for primary production and food industry sub-sections. The second round asked experts’ opinion about the future images’ probability and desirability. In addition, panarchy scenarios were constructed by using the adaptive cycle and panarchy frameworks. Furthermore, a new approach to general resilience indicators was developed combining “categories” of the social ecological systems (structure, behaviors and governance) and general resilience parameters (tightness of feedbacks, modularity, diversity, the amount of change a system can withstand, capacity of learning and self- organizing behavior). The results indicate that there are strengths in the Finnish food system for building resilience. According to experts organic farms and larger farms are perceived as socially self-organized, which can promote innovations and new experimentations for adaptation to changing circumstances. In addition, organic farms are currently seen as the most ecologically self-regulated farms. There are also weaknesses in the Finnish food system restricting resilience building. It is important to reach optimal redundancy, in which efficiency and resilience are in balance. In the whole food system, retail sector will probably face the most dramatic changes in the future, especially, when panarchy scenarios and the future images are reflected. The profitability of farms is and will be a critical cornerstone of the overall resilience in primary production. All in all, the food system experts have very positive views concerning the resilience development of the Finnish food system in the future. Sometimes small and local is beautiful, sometimes large and international is more resilient. However, when probabilities and desirability of the future images were questioned, there were significant deviations. It appears that experts do not always believe desirable futures to materialize.

FUTURES OF FINNISH FOOD SYSTEM BY 2050. The perspective of resilience

Modern food systems face complex global challenges such as climate change, resource scarcities, population growth, concentration and globalization. It is not possible to forecast how all these challenges will affect food systems, but futures research methods provide possibilities to enable better understanding of possible futures and that way increases futures awareness. In this thesis, the two-round online Delphi method was utilized to research experts’ opinions about the present and the future resilience of the Finnish food system up to 2050. The first round questionnaire was constructed based on the resilience indicators developed for agroecosystems. Sub-systems in the study were primary production (main focus), food industry, retail and consumption. Based on the results from the first round, the future images were constructed for primary production and food industry sub-sections. The second round asked experts’ opinion about the future images’ probability and desirability. In addition, panarchy scenarios were constructed by using the adaptive cycle and panarchy frameworks. Furthermore, a new approach to general resilience indicators was developed combining “categories” of the social ecological systems (structure, behaviors and governance) and general resilience parameters (tightness of feedbacks, modularity, diversity, the amount of change a system can withstand, capacity of learning and self- organizing behavior). The results indicate that there are strengths in the Finnish food system for building resilience. According to experts organic farms and larger farms are perceived as socially self-organized, which can promote innovations and new experimentations for adaptation to changing circumstances. In addition, organic farms are currently seen as the most ecologically self-regulated farms. There are also weaknesses in the Finnish food system restricting resilience building. It is important to reach optimal redundancy, in which efficiency and resilience are in balance. In the whole food system, retail sector will probably face the most dramatic changes in the future, especially, when panarchy scenarios and the future images are reflected. The profitability of farms is and will be a critical cornerstone of the overall resilience in primary production. All in all, the food system experts have very positive views concerning the resilience development of the Finnish food system in the future. Sometimes small and local is beautiful, sometimes large and international is more resilient. However, when probabilities and desirability of the future images were questioned, there were significant deviations. It appears that experts do not always believe desirable futures to materialize.

Modeling Energy Futures Returns With Markov Regime Switching Model

Financial time series have a tendency of abruptly changing their behavior and maintain this behavior for several consecutive periods, and commodity futures returns are not an exception. This quality proposes that nonlinear models, as opposed to linear models, can more accurately describe returns and volatility. Markov regime switching models are able to match this behavior and have become a popular way to model financial time series. This study uses Markov regime switching model to describe the behavior of energy futures returns on a commodity level, because studies show that commodity futures are a heterogeneous asset class. The purpose of this thesis is twofold. First, determine how many regimes characterize individual energy commodities’ returns in different return frequencies. Second, study the characteristics of these regimes. We extent the previous studies on the subject in two ways: We allow for the possibility that the number of regimes may exceed two, as well as conduct the research on individual commodities rather than on commodity indices or subgroups of these indices. We use daily, weekly and monthly time series of Brent crude oil, WTI crude oil, natural gas, heating oil and gasoil futures returns over 1994–2014, where available, to carry out the study. We apply the likelihood ratio test to determine the sufficient number of regimes for each commodity and data frequency. Then the time series are modeled with Markov regime switching model to obtain the return distribution characteristics of each regime, as well as the transition probabilities of moving between regimes. The results for the number of regimes suggest that daily energy futures return series consist of three to six regimes, whereas weekly and monthly returns for all energy commodities display only two regimes. When the number of regimes exceeds two, there is a tendency for the time series of energy commodities to form groups of regimes. These groups are usually quite persistent as a whole because probability of a regime switch inside the group is high. However, individual regimes in these groups are not persistent and the process oscillates between these regimes frequently. Regimes that are not part of any group are generally persistent, but show low ergodic probability, i.e. rarely prevail in the market. This study also suggests that energy futures return series characterized with two regimes do not necessarily display persistent bull and bear regimes. In fact, for the majority of time series, bearish regime is considerably less persistent. Rahoituksen aikasarjoilla on taipumus arvaamattomasti muuttaa käyttäytymistään ja jatkaa tätä uutta käyttäytymistä useiden periodien ajan, eivätkä hyödykefutuurien tuotot tee tähän poikkeusta. Tämän ominaisuuden johdosta lineaaristen mallien sijasta epälineaariset mallit pystyvät tarkemmin kuvailemaan esimerkiksi tuottojen jakauman parametreja. Markov regiiminvaihtomallit pystyvät vangitsemaan tämän ominaisuuden ja siksi niistä on tullut suosittuja rahoituksen aikasarjojen mallintamisessa. Tämä tutkimus käyttää Markov regiiminvaihtomallia kuvaamaan yksittäisten energiafutuurien tuottojen käyttäytymistä, sillä tutkimukset osoittavat hyödykefutuurien olevan hyvin heterogeeninen omaisuusluokka. Tutkimuksen tarkoitus on selvittää, kuinka monta regiimiä tarvitaan kuvaamaan energiafutuurien tuottoja eri tuottofrekvensseillä ja mitkä ovat näiden regiimien ominaisuudet. Aiempaa tutkimusta aiheesta laajennetaan määrittämällä regiimien lukumäärä tilastotieteellisen testauksen menetelmin sekä tutkimalla energiafutuureja yksittäin; ei indeksi- tai alaindeksitasolla. Tutkimuksessa käytetään päivä-, viikko- ja kuukausiaikasarjoja Brent-raakaöljyn, WTI-raakaöljyn, maakaasun, lämmitysöljyn ja polttoöljyn tuotoista aikaväliltä 1994–2014, siltä osin kuin aineistoa on saatavilla. Likelihood ratio -testin avulla estimoidaan kaikille aikasarjoille regiimien määrä,jonka jälkeen Markov regiiminvaihtomallia hyödyntäen määritetään yksittäisten regiimientuottojakaumien ominaisuudet sekä regiimien välinen transitiomatriisi. Tulokset regiimien lukumäärän osalta osoittavat, että energiafutuurien päiväkohtaisten tuottojen aikasarjoissa regiimien lukumäärä vaihtelee kolmen ja kuuden välillä. Viikko- ja kuukausituottojen kohdalla kaikkien energiafutuurien prosesseissa regiimien lukumäärä on kaksi. Kun regiimejä on enemmän kuin kaksi, on prosessilla taipumus muodostaa regiimeistä koostuvia ryhmiä. Prosessi pysyy ryhmän sisällä yleensä pitkään, koska todennäköisyys siirtyä ryhmään kuuluvien regiimien välillä on suuri. Yksittäiset regiimit ryhmän sisällä eivät kuitenkaan ole kovin pysyviä. Näin ollen prosessi vaihtelee ryhmän sisäisten regiimien välillä tiuhaan. Regiimit, jotka eivät kuulu ryhmään, ovat yleensä pysyviä, mutta prosessi ajautuu niihin vain harvoin, sillä todennäköisyys siirtyä muista regiimeistä niihin on pieni. Tutkimuksen tulokset osoittavat myös, että prosesseissa, joita ohjaa kaksi regiimiä, nämä regiimit eivät välttämättä ole pysyvät bull- ja bear-markkinatilanteet. Tulokset osoittavat sen sijaan, että bear-markkinatilanne on energiafutuureissa selvästi vähemmän pysyvä.