A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises

As an organisational failure may teach more than an organisational success, this article describes the failed foreign investments of two Finnish stateowned enterprises (SOEs), namely Sonera and Stora Enso. In 2000, Sonera acquired a mobile phone licence in Germany and Italy for USD 4,000 million. Tw...

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Autor principal:	Kari Liuhto
Formato:	article
Lenguaje:	EN RU
Publicado:	Ассоциация независимых экспертов «Центр изучения кризисного общества» (in English: Association for independent experts “Center for Crisis Society Studies”) 2018
Materias:	foreign investment finnish state-owned enterprises organizational failure state control sonera stora enso fortum International relations JZ2-6530
Acceso en línea:	https://doaj.org/article/35ffeb843bf64d098f9c58f22b668d95
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spelling	oai:doaj.org-article:35ffeb843bf64d098f9c58f22b668d952021-11-07T14:45:01ZA Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises2542-02402587-932410.23932/2542-0240-2018-11-1-185-200https://doaj.org/article/35ffeb843bf64d098f9c58f22b668d952018-04-01T00:00:00Zhttps://www.ogt-journal.com/jour/article/view/277https://doaj.org/toc/2542-0240https://doaj.org/toc/2587-9324As an organisational failure may teach more than an organisational success, this article describes the failed foreign investments of two Finnish stateowned enterprises (SOEs), namely Sonera and Stora Enso. In 2000, Sonera acquired a mobile phone licence in Germany and Italy for USD 4,000 million. Two years later, it turned out that the licence was worthless. In turn, Stora Enso acquired an American paper firm for USD 5,000 million in 2000, but seven years later Stora Enso sold this US unit at a loss of USD 2,000–3,000 million. These two cases reveal that the major reason for these failures was the inability of SOE management to predict business development. Other major reasons for failure were the conflicting motives of the management and the company (the main shareholder), and inadequate state control. Passive control of the state may encourage SOE management to exercise adventurous investment policies and take major risks. In Sonera’s case, unrealistic risk taking led to serious financial difficulties, and finally, to a forced sale of the entire group to Telia, the Swedish telecom company. Stora Enso’s stronger financial position saved it from an organisational failure. A lesson to policy-makers: a responsible minister and the minister’s subordinates should exercise a more active ownership policy and keep the political interests of his/her party subordinate to the strategic interests of the state. Recent public discussion on SOE governance in Finland reveals that the Finnish Government still experiences difficulties in fully digesting the wisdom of the OECD Guidelines of Corporate Governance of StateOwned Enterprises.Kari LiuhtoАссоциация независимых экспертов «Центр изучения кризисного общества» (in English: Association for independent experts “Center for Crisis Society Studies”)articleforeign investmentfinnish state-owned enterprisesorganizational failurestate controlsonerastora ensofortumInternational relationsJZ2-6530ENRUКонтуры глобальных трансформаций: политика, экономика, право, Vol 11, Iss 1, Pp 185-200 (2018)
institution	DOAJ
collection	DOAJ
language	EN RU
topic	foreign investment finnish state-owned enterprises organizational failure state control sonera stora enso fortum International relations JZ2-6530
spellingShingle	foreign investment finnish state-owned enterprises organizational failure state control sonera stora enso fortum International relations JZ2-6530 Kari Liuhto A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
description	As an organisational failure may teach more than an organisational success, this article describes the failed foreign investments of two Finnish stateowned enterprises (SOEs), namely Sonera and Stora Enso. In 2000, Sonera acquired a mobile phone licence in Germany and Italy for USD 4,000 million. Two years later, it turned out that the licence was worthless. In turn, Stora Enso acquired an American paper firm for USD 5,000 million in 2000, but seven years later Stora Enso sold this US unit at a loss of USD 2,000–3,000 million. These two cases reveal that the major reason for these failures was the inability of SOE management to predict business development. Other major reasons for failure were the conflicting motives of the management and the company (the main shareholder), and inadequate state control. Passive control of the state may encourage SOE management to exercise adventurous investment policies and take major risks. In Sonera’s case, unrealistic risk taking led to serious financial difficulties, and finally, to a forced sale of the entire group to Telia, the Swedish telecom company. Stora Enso’s stronger financial position saved it from an organisational failure. A lesson to policy-makers: a responsible minister and the minister’s subordinates should exercise a more active ownership policy and keep the political interests of his/her party subordinate to the strategic interests of the state. Recent public discussion on SOE governance in Finland reveals that the Finnish Government still experiences difficulties in fully digesting the wisdom of the OECD Guidelines of Corporate Governance of StateOwned Enterprises.
format	article
author	Kari Liuhto
author_facet	Kari Liuhto
author_sort	Kari Liuhto
title	A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
title_short	A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
title_full	A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
title_fullStr	A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
title_full_unstemmed	A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises
title_sort	lesson from two failed foreign investments: the foreign (ad)venture of two finnish state-owned enterprises
publisher	Ассоциация независимых экспертов «Центр изучения кризисного общества» (in English: Association for independent experts “Center for Crisis Society Studies”)
publishDate	2018
url	https://doaj.org/article/35ffeb843bf64d098f9c58f22b668d95
work_keys_str_mv	AT kariliuhto alessonfromtwofailedforeigninvestmentstheforeignadventureoftwofinnishstateownedenterprises AT kariliuhto lessonfromtwofailedforeigninvestmentstheforeignadventureoftwofinnishstateownedenterprises
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A Lesson from two Failed Foreign Investments: the Foreign (Ad)Venture of two Finnish State-Owned Enterprises

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