eThesis - School of Business electronic theses

This Master's thesis focuses on the role of the public sector in the growth of International New Ventures in the context of Finland. Governments grant many types of subsidies of capital and other nature to private enterprises, but surprisingly little research has been conducted on the effects of these subsidies on International New Ventures. Due to the specific needs of the companies, as they often have to operate with limited resources, there could be a place for public sector involvement if that could be justified. Following the theoretical background of previous research, there seemed to be a basis for a government to address resource shortages of International New Venture caused by market failures. Typically these types of market failures from the perspective of International New Venture were associated with the resource availability to these companies. These firms tend to systematically suffer from resource shortages in both human resources and capital resources. These rapidly growing companies generally tend to lack in the managerial experience, due to the fact that the people running the company in its establishment phase generally don't have long backgrounds in international business, and the knowledge of international markets. What companies also lack in human resources is the network of connections to facilitate entry into foreign markets. It was found in the study that when an International New Venture receives support from the government in the form of managerial training, this has a positive impact on the development of sales revenue for these companies, making this an attractive investment also from the governments perspective. As International New Ventures are often quite R&D intensive and due to larger macro level positive influences on the society as whole from R&D spending, it was interesting to investigate what sorts of impacts did the government R&D support have on the International New Ventures. It was found out that government support on R&D did actually increase the R&D spending of International New Ventures in proportion to their sales revenue, achieving the desired results from the governments perspective. The third focus of the research was to investigate the effects of direct financing support on International New Ventures. This topic is interesting since financing their operations is a major challenge for these types of companies and it seems like an area were governments could step in to cure the market failure here. The results from this indicated that there was a negative relationship between the extent of government financing that the company received and its average net profit during the past three years. This is well supported by the existing research as a rapidly growing company with a relatively secure financing situation can focus on building the business without having to worry too much about the working capital situation, expediting the process of becoming a true Born Global.