Some people think that markets are efficient and governments should let enterprises act freely in the market. In reality, public actors often intervene in markets and it is practically impossible to find a market that would not be guided by governments to some level. Partly, this is due to negative (e.g., pollution or addiction) or positive (e.g., education and welfare) impact of market activities that require brake or boost from public actors on a daily basis. Partly, the intervention is justified during the time of a shock, such as COVID-19 that encouraged governments to guide market action worldwide. Despite the importance of public actors shaping markets, there has not studies to develop our understanding of how public actors can shape markets, if they wish to do so.
We studied how public actors shaped three interesting markets, namely (1) the betting market in Finland, in which public actors retained the domestic monopoly: (2) the open district heating market in Sweden, in which public actors changed the competitive landscape; and (3) the peer-to-peer lending market in New Zealand, in which public actors actively set up new structures and symbolic systems to facilitate new patterns of activity. We identified twenty granular mechanisms of institutional work that public actors employed to shape markets. These mechanisms are all potentially employable in creating, maintaining, or disrupting markets. Moreover, the idea of market shaping public actors is not limited to these three unique contexts. https://www.emerald.com/insight/content/doi/10.1108/JSTP-08-2019-0176/full/html
A forthcoming special issue on renewable energy in international business initiates discussion on the theme, and consequently the role of governments in supporting (and sometimes hindering) the market development. Governments for instance create and discard incentive policies for solar energy production and consumption. While these measures can have great impact, multilateral agreements are often criticized for not leading to changes in the market to diminish the amount of greenhouse gases. https://www.emerald.com/insight/content/doi/10.1108/cpoib-08-2019-0062/full/html
In another ongoing project, we study the business implications of coronavirus. It is evident that public actors took again a large role from closing restaurants to banning exports of masks and ventilators. The crisis bought new interesting questions from ’what is essential service’ and how can public actors determine and create metrics for defining ’essential’ to the questions on what kind of legislation is needed to limit free trade and secure national interest in forthcoming crises without deteriorating international competitiveness between the crises.
By having a better understanding of how public actors shape markets, it is possible to first guide them in making more informed decisions about market shaping as well as help companies in utilizing public authorities in driving the preferred market agenda. While interventions may hurt some market actors, for others political decision-making can be beneficial. We just need to make sure that the politicians are aware of various market-shaping mechanisms, make informed decisions in employing them, and ensure that the benefits of the intervention overcome the cost in the long run.
Valtteri Kaartemo Postdoctoral Researcher, International Business D.Sc. (Econ.)
Yorkshire! I moved here in January, with the help of a Tutkijat maailmalle
-grant from Liikesivistysrahasto, to work on a project on cross-cultural
management. For an international business researcher in general and a
cross-cultural researcher in particular, this experience has already been an
eye-opener into the reality of crossing borders.
Beginning from renting an apartment, more things are different than you might first imagine. I got some good advice when I was running in open houses: touch the walls to see if the paint is wet (a big no-no in the land of the mould), check if the taps actually work (as water pressure on this island can be horrible), ask about heating costs (which are huge and not included in the rent) and city council tax (which allows you to use the bins), and so forth. Setting up electricity and water bills, finding home insurance, getting in touch with the building manager in case something goes wrong, you name it – it is more difficult, when you are not exactly sure whose responsibility everything is. Luckily my landlord is very helpful and has so far sorted out a leak and a broken oven in record time.
Everyone at the University has been very friendly. However, as people tend to live a bit further away, not many come to the office daily, which can make the place feel a bit lonely at times. Nevertheless, once a week we meet for an international business faculty coffee break to catch up on the latest on research and teaching. In addition, I have joined a paper development circuit, which is basically a series of mini seminars, as well as a qualitative research reading group, which is also basically a series of mini seminars, but explicitly focusing on qualitative studies. Cooperation with my hosts Professor Jeremy Clegg and Associate Professor Hanna Gajewska-DeMattos has been intense yet rewarding. The work is running smoothly, albeit coming up with a new theory of cross-cultural management is not the easiest thing I have attempted. I am lucky to have such innovative co-authors and mentors on my visit.
Of course, I was here
for Brexit day. Despite raucous parties going on in London, Leeds remained no
more pub-going than on any regular Friday. In central Leeds, according to voter
maps, most voted against Brexit. However, Yorkshire as a whole is rather rural.
The traditional business here is sheep farming. Thus, once outside the central
city area, you are more than likely to run into brexiteers. Like my cab driver,
who said he preferred a new British colonialism to a Fourth Reich. While I have
never had any trouble with anyone, you can sense the country is deeply divided.
The atmosphere reminds me of the first five minutes after a fight with a
sibling, when you think you will never be friends again. I think it will take
years for these wounds to heal.
Brexit has had so many
dates now, that people really are fed up with it. The first time around, my Yorkshire
friends were stalking up on toilet paper and food like there was going to be an
immediate shortage. When Brexit eventually happened, I heard of no-one
hoarding. It is like a never-ending story, which even now is in sort of limbo,
as we cannot yet tell what the EU-UK relationship will look like in the future.
And of course, we never know what might happen. The scariest scenarios are that
healthcare runs out of medicine and workers – which, according to some
projections, is not as far-fetched as it sounds. Nevertheless, there is much
advice available to whomever needs it. For example, the University of Leeds
hosts Brexit seminars often to give advice to foreign employees and students on
how the changing situation will affect them. Luckily, I will move back to
Finland before the transition period ends, so should be safe and sound.
There are two things I have learned since moving to Yorkshire. First, there are many, many more variations of not raining than you thought. There are the tiny droplets that fall rapidly but are so small that they do not make you wet. There are the huge droplets which fall so slowly they do not make you wet. There are the medium-sized droplets that fall at a medium speed, again not making you wet. Basically, anything short of soaking you through in five minutes flat is not considered rain. Second, I finally understand, why the call it a howling wind. My windows in Finland, no matter how much draft they tracked in, have never made such a sound. Think of a strong wind caught in a pipe. Double glazing here means a second window has been built in a bit inward from the original. The glazing layers are basically unconnected, leaving the air in between to do whatever it wills. And sometimes, it howls. Luckily there’s much tea and biscuits to be had to keep you warm. Betty’s of Harrogate, which you may know through their export brand Taylor’s of Harrogate, is apparently the place to go for afternoon tea around here. Their scones are definitely worth a try.
Postdoctoral Researcher, University of Turku
Visiting Researcher, Leeds University Business School
Our perspectives on International Business
are constantly evolving and broadening as we accept that the world is more
complex than what a narrow perspective on the ‘international success and
failure of the firm’ can explain. The global business environment is composed
of systemic force fields where events forming initial conditions can produce a
multitude of new phenomena and outcomes in very short time. It is the dynamic and complex
interconnectedness, interdependencies and interactions of political, economic,
social, technological and environmental systems, among others, that we call
globalization, which has brought to us unprecedented wealth, but also new
problems, and of course also potential solutions.
But, sitting in Finland looking out of the
window, how skewed is our perception of the big wide world really? According to
Hans Rosling’s (Rosling et al., 2018) book, Factfulness, we tend to believe
that the world is poorer, less healthy and more dangerous than it really is and
that the way we perceive global events through media biases our shared picture
of the world. One current example is the recent novel Corona Virus outbreak in
Wuhan, China. When following the news coverage and discussions in social media,
this provides a very good case of globalized systems and how events very far
away arrive, by plane or media, and affect the way we go about our daily lives,
affecting stock markets and threatening the functioning of value chains. Or a
speech of a Swedish teenager who requests to do something about a looming
catastrophe is sending shock waves around the political and corporate
establishment is another example of the interconnectedness and
However, there is an array of topics that
usually are on a blind spot, at least where we are sitting and that should
interest us as much as many other topics. We have started to discuss these
under the label ‘the dark side’ of international business, some time ago. It
consists of topics that seem very far from our perception and are nevertheless
part of the systems we live in. For instance, having recently reviewed an
article on Modern Slavery was a
revelation. According to the International Labor Organization and the Walk Free
Foundation (2017) for every 1000 people in the world 5.4 are considered victims
of modern slavery, being exposed to the effects of another person having
control over one, being in a relationship suffering structural power or
physical violence with the objective of being economically exploited. Some of
the global value chains that produce many of the products and services we might
consume daily are using questionable practices. These require more attention.
Over the past years, our research interests have turned towards these less popular but hugely important issues. TSE has made business ethics and critical engagement key strategic organizational values that should partly define who we are as an organization. As a result, we have many researchers who have been investigating these kinds of topics. For instance, Salla Laasonen (doctoral defense 2012) has written about stakeholder dialogue as a tool for corporate responsibility and accountability. Frederick Ahen (doctoral defense 2015), critically examined the corporate social responsibility narrative in the context of global health urging to make responsibility a key strategic dimension rather than a public relations activity. Irfan Ameer (doctoral defense 2019) has been investigating the broader social context of institutionalized bribery in developing countries and he discussed corruption practices of Multinational firms. Emilia Isolauri (current doctoral student) investigates the sources, mechanisms and outcomes of international money laundry and Isabella Galvis (current doctoral student) researches the competing pressures under which social enterprises in different institutional contexts have to balance their goal attainments. These are just a few of many examples and we can see that critically engaged international business scholarship is an important movement, which is further taken up in numerous Masters theses and which is increasingly becoming a strong integrated part of our courses in the Bachelor and Masters programs.
The goal is to include other than mainstream topics in international business to form some of the important foundations when the next generations of graduates join the constituencies they choose to serve and eventually one day steer.
In the spring of 2018, I knocked on the door of TSE, department of International Business (IB), with my doctoral research proposal. After approval, I was able to enter the IB community. Embarking on a Ph.D. is unique, and we all take up our own paths towards accomplishments. For me, though, having previously been working on various development cooperation projects, this is where I move from. The work I did involved traveling across continents mostly between the EU and the developing world. But I will narrate a bit more about my experiences and the valuable insights I gained from it. It is from here that I intend to explore further through acquiring scientific knowledge, and IB this the right place to be. Since 2012, I have been part of international expert teams implementing and doing various development cooperation projects especially in developing countries. As you may know, project is tendered and bid for; thus, it is a game where you either win or lose. My main area of expertise is broadly in Private Sector Development tasks, that is, formulating strategies for economic growth and poverty reduction in developing countries. Perhaps before I continue narrating, it’s better that I describe in brief about the types of projects. Actually, the essence of development cooperation projects is to render support and complement efforts of developing countries to guarantee the provision of universal social basic needs of their citizens along and fundamental human rights. Development cooperation projects that are not profit-driven, but some try to seek a lower profit. Perhaps, for now, let me share with you a couple of my experiences and field missions which are synonymous to data collection as in research, but this requires onsite presence. Field missions are performed in academic research or other and consultants, as for me. Normally, before the onset of a field mission, experts are selected to implement a project with timeline. So, about a couple of years ago, we won a tender where I was admitted to an international expert team. I was on a Global Environment Facility (GEF) project funded by the African Development Bank (AfDB) and UNDP, which was to be implemented in and around communities of Lake Tanganyika in Zambia. The primary purpose of the project was to provide a baseline scenario of Lake Tanganyika, livelihoods, socio-economic, and environmental situations. So, our tasks were to examine existing strategies and constraints faced by local communities living around the Lake in pursuit of economic activities for sustaining their livelihood and income opportunities The journey to the field began early morning in order to cover 800km to Kasama town. It was indeed a long trip, tiresome but exciting as we drove through beautiful landscape, as you can see in the photograph below. I selected this photograph from my album because I find it meaningful. In the sense that our lives, careers, and just like research, are journeys with curiosity and where you can encounter the unknowns on the path to your future. But as we all know, at least I think so, staying focused on the road can guarantee a safe arrival to your destination, similarly for our undertakings. So, we arrived at our destination safely and we straight away went to doing our field activities with our first meeting in one community. While in village residents gathered, and we divided theme into groups by age and gender. As such our questionnaires had an open-ended question, for interactive discussion. Before we began the activities, we first had to pay courtesy to the village chief, for permission. Doing so is a standard protocol to get the right to interview people in the community, you may sort of call as data protection. But we needed to explain the purpose of our visit, study, why it’s needed, and the benefits it will bring to the people. Well, we managed to collect data and successfully prepared our findings with recommendations to be implemented. It was an exciting mission and our finding was that there was significant depletion of natural resources such as forests across the region. But the thing which baffled the most within our findings was that of all the communities we interviewed, about 95% of the people, had not heard about Climate Change, as of 2015. One of the main reasons was the poor outreach to rural areas and weaknesses in the institutions. In brief, our recommendation included strategies that focused on supporting conservation of natural resources, adoption of land management and support to SMEs, young men and women entrepreneurs in the fish value chain.
In June 2019, I embarked on a unique field mission to Mogadishu, Somalia , to perform a feasibility study on the Business Incubation ecosystem to be supported by the European Commission (EC) for international development cooperation or Europe-Aid. This was a unique mission because it was my very first time to travel to a country that is on the recovery from decades of civil war. I spent ten days in Mogadishu, and in safe hands. The next day, I was driven to the city of Mogadishu in an armored car with my security guard, to go and conduct my first interviews at an iRise Innovation Hub. Although I was uneasy during the whole mission, I was glad that the whole mission went well. What I find more interesting was that, despite of the global news about Somalia, it was business as usual and life looked normal. In brief, our report proposed capacity building from top to down of all key actors involved in entrepreneurship ecosystem based on the context of the country. I will conclude with my recent visit to Berlin, where I attended the 18th Academy of Business in Society (ABIS) colloquium, where I presented a conceptual paper. The seminar was hosted by The European School of Management and Technology (ESMT-Berlin), the theme was Business in Society; Measuring and Creating Change. The event was exciting, with good vital speakers and panel discussions. There was a good representation from academia, corporate, and non-governmental organizations. The opening speech and panel discussion included Professor Yury Blagov, St Petersburg school of management, Dr. Ivo Matser, CEO for ABIS, Professor Tamer Boyaci ESMT Berlin, Associate Professor Lin Lerpold, Stockholm School of Economics and Katariina Stenholm, Senior Vice President, Danone Corporation among others. The debates and arguments hovered around the best practices on impact investing and mainly on the trade-off issues of social impact versus market-rate returns. In a nutshell, our homework as researchers is to investigate further how an investor can do good for society while doing well in business. On this note, I will end here. Such have been my experiences in international business, and with these, that’s the path of my research. As such, most development cooperation programs embed the theory of Change, filling in the gaps of change initiatives.
In spring 2019 I had the pleasure to visit Estonian Business School (EBS) in Tallinn, Estonia, and Josip Juraj Strossmayer University in Osijek, Croatia. During these visits I held a course, had presentations and met interesting people, but how did all this come about?
In spring 2018 I met in Turku two researchers from Osijek, who were interested in SME internationalization. Our research interests came together nicely and we decided to meet again. Next thing I got an invitation to visit Osijek in spring 2019. In early 2019 I got an email from a colleague in EBS asking about the opportunity to organize a course on qualitative research methods for doctoral students in Tallinn. Naturally, I could not resist the opportunity to talk passionately about methods to yet new victims.
Here is when the Erasmus+ Teacher Exchange stepped in. This European-level financing instrument is targeted for university teaching staff, who wish to gain more teaching experience and particularly experience in teaching in a foreign university. I had excellent time in my exchanges, and can warmly recommend this experience. But this comes with a grain of salt; the Erasmus funding application procedure and the instructions were not always the clearest and the financial support one receives may barely cover the travel, accommodation and daily allowance costs. This made me admittedly wonder during the process whether the hours spent in getting all the paperwork done at your home and the inviting institution with all the appendices before and after the visit were worth it. A lesson learned from here is that one should also apply for additional funding from other sources to make sure that after the exchange the remaining costs do not land on your own desk. This nearly happened to me.
If you are a doctoral student or a post doc in need for a CV entry, extension of your teaching skills, looking for new international experiences or wishing to meet colleagues in European universities alongside teaching, the Erasmus+ teacher Exchange could be the right choice for you. It is a good instrument for a first visit, but in case you plan to return and perhaps make your foreign visit to the target university an annual tradition, obtaining e.g. a visitor status could be advisable. This would enable you to also obtain some compensation for the teaching and course/lecture preparation you have conducted in the destination and establish your visitor status in the host institution.
In addition to the aforementioned, the teacher exchange can also result in something more. My visit to Osijek supported and strengthened a research collaboration that is still ongoing, and at EBS I have been asked to organize the course again next spring. And as a bonus, I was humbled at EBS by the Best Visiting Lecturer award in 2018-2019 academic year. Importantly, on top of these, you have also the great opportunity to meet new people, make new contacts, visit new places, see new things and broaden your network. Private flights and tiny airports, missing and eventually found luggage, birds sitting on your lunch, and getting lost in a changed city may also characterize your exchange, but that is another story.
To conclude informatively, the University of Turku university services and international office offers further information (and they reply to emails rather swiftly) and the websites on staff mobility and Erasmus collaboration give instructions for the practicalities and guidelines for application.
Many Post-Doctoral Scholars in Finland dream of being funded by the Academy of Finland. The Academy can provide the luxury of focusing on your research without massive teaching or admin burden. But while you enjoy your freedom of research, you are forced to do a part of it abroad. In brevity, without official invitations from foreign research institutions and clear plans of international mobility, you have zero chance of being funded by the Academy. This can cause challenges for post-docs and their families. In addition, the Academy of Finland’s costs are eventually paid by tax payers. This raises an interesting question to both researchers and tax payers: are international research visits really worth it?
I was priviledged to receive three-year post-doc research funding from the Academy of Finland in 2018. As a part of my research project, I had agreed to visit the University of Auckland Business School in early 2019. This took me an my family (wife and three children) to New Zealand for 2.5 months. While the research visit during the New Zealand summer was a good experience for the whole family, I would particularly emphasize the academic benefits of visiting foreign research institutions.
First, research visits deepen established relations. Typically, you know at least one or two researchers in the university you are going to visit. That was also the case when I visited the University of Auckland. With some I had already co-authored an article, with others I had papers in process or had laughed a lot in conferences. During the visit, we were able not only to continue laughing but finalize a paper that had been waiting for submission for some months before my visit. In addition, I was happy to start new paper projects with old acquintances. I would argue that none of these projects would have otherwise been initiated. When you meet people more often and are present all the time, you just start discussing more, which leads you create new ideas.
Second, research visits allow meeting new faces in the target university. While I knew many researchers In Auckland, there were still people who had similar research interests but whom I had not met before. I was really fortunate to meet these great minds that think alike, and plan for collaboration for years to come. Meeting new people is challenging if you are just staying at your home university. In conferences you can meet some people but typically it is the same people that go to the same conferences. Therefore, it is good to go and visit other universities to see who else is working with your colleagues.
Third, research visits enable serendipity for creating new opportunities. This is something that you cannot by nature plan ahead. For instance, during my visit there were other European scholars visiting the Business School. I was able to meet them and discuss potential collaboration. One of these meetings led to an opportunity to write a chapter in a book published by a highly-ranked publisher. In another occasion, I was able to meet a researcher in another university in Auckland after randomly seeing her doctoral thesis sharing the basic idea of my research project. And this is the beauty of research visits. You never know who you meet in local online forums, bus stops or crafts shops. These encounters can lead to friendships, new business opportunities or research ideas. While you never know what’s there to come, you can be certain that this would not happen by just staying at home.
In the end, I would say that international research visits are worth the researcher’s effort and the public money. I can admit it takes a toll from the family before the visit with the stress about getting everything organized, and the life abroad is not necessarily always smooth. Often, there is also uncertainty whether there is enough money for the visit. It is expensive to travel across the world and live with a family in large (and expensive) university cities. Further, while travelling abroad, scholars still have to cover the costs of keeping the home they are soon returning. Thus, a part of this toll could be diminished by ensuring that researchers and their families are well-funded. In fact, I’d argue that for the funders international research visits cost relatively little compared to the investment that families need to make as well as the benefits of research visits. Spouses taking unpaid time off from work and the children living without friends in a new (sometimes stressful) environment. The money is often not enough to cover the costs of taking the whole family abroad, and for many living several months away from family each year of the multi-year research project is simply not an option. There have been suggestions to raise the funders’ budget for the costs of international research mobility. I support that initiative and consider that, particularly if international research mobility remains mandatory in the future, the money needs to be enough to cover all costs of the visit.
In January this year, I became painfully aware of the strange limbo existence between finishing research and finishing my PhD. I had a clear vision of my ready thesis in my head, yet I had nothing concrete to show for it. In a way, my PhD seemed at the same time finished and nonexistent – kind of like Schrödinger’s fabled cat.
It is a uniquely stressful stage of the PhD journey, knowing that you are almost done, but at the same time facing possibly the biggest challenge along the way: convincing others that your work is worthwhile. Writing the actual dissertation is a rollercoaster ride on its own. The euphoria of finishing this chapter, that idea, the whole manuscript, is contrasted by the complete panic slowly setting in regarding whether your supervisors will reject your ideas, whether the pre-examiners will dismiss the whole as complete nonsense, and whether you have actually achieved anything in the past four years or so. Luckily for us in IB at TSE, we have an amazing support system. Our supervisors are brilliant, encouraging, and supportive, our colleagues are amazingly helpful, and our fellow doctoral candidates a constant source of peer support. It is the community around us that gives us hope in times of despair and lifts us even higher in times of triumph. And that support, in my experience, has become increasingly important in the final stages of the doctoral journey.
When I had just begun my research, I certainly thought about when I might finish up, when I might have my public defense, and how it might feel. But as these things creep closer, I am constantly finding new things to worry about, new steps along the way. From writing down four years’ worth of learning and ideas to handing the manuscript in, from how to type the manuscript to which printer to choose, the final stage of the doctoral journey is a mix of academia and bureaucracy. It is a blessing, if during that time there is also something else to occupy the excruciating times of waiting to hear the verdict.
For me, an exceptionally useful and pleasurable diversion was the Three Minute Thesis competition. I had thought about entering the year before but struggled to pinpoint what I wanted to tell the audience. And I was right to do so: I believe this exercise is most beneficial when you already have a grasp of what your findings are. During the 3MT coaching sessions I learned many useful tips on how to make your message compelling, be it at a pep rally or an academic conference. I quite like the idea that even as academics attending conferences where people presumably share our ideas and interests, we should aim to provide our viewpoint in a clear, concise, and engaging manner. Moreover, it is likely much easier and takes way less preparation for most academics to speak about their research for an hour than for three minutes. Therefore, I encourage everyone, doctoral candidate or professor, to try to fit your passion into three minutes of speech. I promise you there will be several benefits; really getting to know what the key points in your message are, understanding what you yourself are most excited about, and finding out your own strengths and weaknesses in speaking to large audiences.
I am happy to say that for me, 3MT was a success. In a competition designed to measure your skills in pitching, the audience voted my pitch their favorite. As the whole point of the competition is engaging the audience, I secretly (well, not so secretly anymore) kind of consider this the first prize, whatever the judges have to say. Check out my pitch below and stay tuned to see me sweat at my public defense in the autumn. Could this stage be called Doctor in spe in spe – in the hope of being in the hope of becoming a Doctor?
We recently completed an exploratory study to understand how FINNVERA in particular, and Export Credit Agencies in general, affect the survival and growth of international firms. One major conclusion was that, for some industries, and major Finnish firms, the work of FINNVERA is an essential part to sustain in global competition. FINNVERA’s traditional role is to assume certain risks, such as country risks and commercial risks, to moderate Finnish firms’ internationalization. However, over the past few years the global business environment has changed and to some extent redefined the role of FINNVERA. Here are a few reflections on what has changed that makes FINNVERA, more than ever, strategically important for some Finnish Multinationals:
# A changing world. From the late 1980s to recently – we see diminishing abilities of MNCs in general to: (a) Use institutional ‘deficiencies’ across the globe to their advantage (e.g. transition and developing economies closing institutional gaps; international cooperation to reduce spaces to allow this kind of opportunism, etc.). (b) Utilize arbitration advantages – in a model in which MNCs optimize internal division and integration of work internationally – many previously important location advantages have been changing (e.g. China). For instance, instead of cheap labor we see that now technology is gaining importance. Arguably, in the longer run, when technology takes over to define competitiveness, then costs are likely to fall in general, while labor cost are generally likely to rise when economies grow. That means also that for many production locations the competitiveness might be more critically determined by other factors, e.g. infrastructure, market seeking or resource seeking motivations – shifting bases of location advantages.
# Business models. In many industries, we see post 2008 a change in the business models which generate greater value. Until then it was challenging for local firms (especially in smaller economies) to overcome traditional MNCs’ (a) monopolistic advantages (e.g. in form of immaterial rights, IPR, brands, etc.) and even harder for local firms to develop (b) scale and scope economies to match MNCs in a liberalizing global trade landscape. Comparing the largest firms (by market capitalization as the shared understanding of future promise and growth) 10 years ago and now – the top 10 list of most appreciated firms looks rather different. What do these firms do differently? They shifted the game from economies of scale to network economies. That requires an ecosystem, where firms’ immaterial rights are entered into a larger system of value creation and the more actors enter that ecosystem the higher the potential (and thus the realized) value these ecosystem drivers can produce.
This has started to have implications also for the typical Finnish firm (industrial markets, global tech leaders in their niches). Business models are also shifting for them and for their typical linear value chains. To stay in the lead, firms need to build cooperative networks attracting partners who enter their capacities into a larger pool and these ecosystems might subsequently compete with other networks of firms on global scale. These new business models run under many labels, focusing on slightly different perspectives, including ecosystems, networks, solution business approaches, service innovation approaches, open innovation arrangements, etc. But they have some core items in common that relate to the question of how value is generated, and given the trend to converging industry approaches through technological advance (i.e. the industry 4.0 catch phrase), – it is a cooperative effort within ecosystems of specialized partners who need to bring in their specific capabilities and mechanisms.
# FINNVERA’s role. In many important industries, for Finland, FINNVERA has de-facto been an ecosystem partner. There is no subscription to a membership, it evolves through adaptations to dynamic environments and is largely defined by actions rather than ex-ante designed structures. FV is the partner firm needed to compete in certain global markets. Without their contributions to some ecosystems it would be rather impossible to build high tech (or any) large ships in Finland; it would be difficult to develop and commercialize state of the art power plants for onshore energy generation; difficult to sell 4G, 5G networks (even to some Western partners); or to build major state of the art pulp mills, to name some examples.
# Concluding. This sheds an interesting light on the issue of international finance and how Export Credit Agencies, like FINNVERA, are performing strategic functions with Finnish MNCs, in some industries. Their function is to help Finnish Multinationals’ customers to manage enormous international risks; they provide the enabling mechanisms by which Finnish firms’ customers and their banks can put together long-term financing, on the back of Finland’s appreciated credit ratings. At the same time, FINNVERA, as a necessary competitive factor to enable international finance of large projects, is in ‘regulated competition’ with other Export Credit Agencies around the world, without which major Finnish firms would have fewer options ‘to play’. For our discipline of International Business, this implies that we need to review our frameworks and models and widen the scope. The ‘international success and failure of the firm’ is not only determined by necessary conditions found inside the firm and based on firms’ choices (e.g. locations and governance), but by a functioning ecosystem, that includes strategic partners like FINNVERA. They enable many major firms to enter into international competition to start with.
[Exploratory impact studies have been undertaken in cooperation with FINNVERA in two stages, between 2016 and 2018. Project members have been Prof. Beth Rose from Leeds University, UK; Prof. Stephané Lhuillery from Université de Lorraine, France, and researchers at the University of Turku, International Business – Mr. Majid Aleem, Dr. Johanna Raitis and Dr. Peter Zettinig]
For many decades there has been discussion on the power relationships between states and multinational corporations. Claims have been proposed that the power of MNCs is growing, and that states are losing their power in global affairs. Babic, Fischer and Heemskerk (2017) defines this process: “The transnationalisation, or de-nationalisation, of production and finance has created new and growing opportunities for firms to shift production, participate in complex global value chains that are difficult to regulate, and circumvent state attempts to regulate and tax corporate activities”
However, there are possibilities to better understand and improve these relationships. Rahim (2010) emphasizes that “these relationships are not a zero-sum game but one of ‘complex governance’ where all actors have to be considered to understand the changes in the international system”. And further, “the increasing power of TNSs does not mean the inevitable decline of the power of countries – countries still remain the ones that have to enforce the norms or use the instruments proposed, if not respected by TNCs.”
In today’s world, political development seems to have great impact on the business environment. The current and best known cases are the ‘Brexit and Trump phenomena’. The global warming challenge is basically dependent on political decisions, but creates both risks and also new opportunities for companies.
It seems that the globalization is facing major setbacks and national interests are emphasized in political decisions. In the big picture, major political powers like the US and UK are isolating themselves from global and EU communities. Russia’s decision to annex Crimea to itself and start military operations in the Eastern region of the Ukraine forced the EU and US to establish economic sanctions against it. Gradually, these sanctions and the trade war between the US and China will have a major influence on business activities, and is decreasing global economic growth.
From the companies’ point of view, the political environment is one of the least predictable elements. Makhlouf (2017) writes that: “Current literature does not give sufficient emphasis to the ways to increase the shared interests and contain the conflicts of interest between nation-states and multinational corporations”
Indeed, MNCs can today be considered as quasi-governmental institutions having much power over social and societal life in general. The big challenge for MNCs is that they have to interact with many national governments, which all have their own policies. No doubt, situations arise in which there are real conflicts between MNCs and nation-states. Examples of MNCs actions increasing conflicts of interest are: tax avoidance and tax evasion, profit shifting, endangering workers’ health and safety, disrespecting local cultures. Examples of government policies increasing conflicts of interest are: excessive taxes and fees imposed on foreign-owned businesses, discriminatory government procurement policies, restrictions on repatriation of profits and surplus capital.
These questions are at the core of my new research project aiming to publish a book in the foreseeable future.
“Que será, será
Whatever will be, will be
The future’s not ours to see
Que será, será
What will be, will be”
This popular award winning song by Jay Livingston and Ray Evans was introduced in 1956 in the Alfred Hitchcock film ‘The Man Who Knew Too Much’ but its message seems very true still today. Even with all the big data collected on us humans, with more information than ever just a few clicks away, and with all the accumulated scientific knowledge published in numerous books and journals, it seems that we certainly don’t know too much, not even enough, about the future.
Indeed, as a Nobel Prize winner physicist Niels Bohr (1885-1962) once said, ‘Prediction is very difficult, especially about the future’. This holds true also for the future of International Business (IB). For instance, at the turn of the millennium, Sheth and Parvatiyar (2001) predicted the end of international and its reincarnation into global, along the emergence of a borderless world characterized by regional integration, ideology free world, technology advances and borderless enterprises. In this borderless world, differences between cultures, countries and regions were considered diminishing, suggesting that the global markets could be served by standardized marketing mix tools with less and less need for international adaptations.
For more than a decade, this prediction seemed to hold true. We even started to take the globalization development for granted. We do have technology advances and borderless enterprises, but otherwise, the course of history has taken unanticipated turns: instead of ideology free world, we got the rise of strong nationalistic and religious fundamentalist movements, instead of increasing regional integration we got Brexit, and instead of the triumph of globalization and free trade, we got Trump and increasing protectionism.
So, what kind of future is there for those studying to become International Business professionals? This question was dealt with our master’s level students on a new foresight course ‘TULEVA’ launched this autumn. With the future research methods they had learned during the course, teams of students were asked to create different future scenarios on what their professional field might look like in 2050. The scenarios were presented to audience with posters, videos or other types of presentations on computer screens at the course closing fare at Mercatori in October.
The future scenarios of teams with IB students recognized a number of possible development paths and their likely effects on international business. For instance, digitalization and the development of artificial intelligence are likely to effect also the work of international marketers as routine tasks will be automated; increasing world population and climate change might cause drastic changes on our consumption patterns and international logistics and trade; and the political tensions and conflicts between countries may lead to new sanctions and protectionist measures that eventually would slow down world trade. At the first glance, this latter scenario certainly doesn’t seem as a positive one for IB professionals. If this is to happen, will we be needed in the future?
Even in the scenario of diminishing world trade and shrinking global markets, the students didn’t see the future for IB professional overly gloomy. Instead, they envisioned that in such a world, global trade requires strong competences of people specialized in international business.
Hence, whatever will be, will be, but even in the darkest future scenarios, international contacts between people and global trade will remain, and therefore, the skills of IB professionals will still be needed. And let’s remember that future is not entirely given, it is also what we make of it!