Firm as a Nonmarket Actor in Regulatory and Governance Setups:Perspectives on Risk and Capabilities in the Changing Mining Industry

The author has not given permission for Aaltodoc -publishing.In this thesis, I deal with nonmarket risk referring to those issues which are anything that do not fall under the purview of market economics - demand, supply, and pricing. In particular, I tackle social, environmental, and political issues. My take on things is from the perspective of mining firms and how by managing their nonmarket environment well, they can build capabilities that are hard to replicate and can generate competitive advantage for firms in the long run. Further narrowing down the scope of investigation lead me to two setups – regulatory and governance environments of the firm. This was done so as to sharpen the investigation on nonmarket risk and bring in the systemic notion. Nonetheless, although the thesis focusses on the nonmarket environment, it considers market driven parameters as part of the contextual setting primarily because market forces are the reasons why firms are in business in the first place. Against this backdrop, the overarching research question is "How do mining firms tackle - regulate and govern - nonmarket risk?" And in relation to this, I launch an investigation, both from the perspective of a firm's internal risk capabilities as well as from the standpoint of its activities in the external stakeholder environment.Essay 1 throws light on the evolving efforts at risk management, both from an academic literature standpoint as well as from an industry guidelines perspective and finds the gap that extreme event risks are not well accounted for and that existing market-based risk techniques have to be broadened and expanded to solve nonmarket risk problems. Extreme events are of special value to understand gaps in risk science because they push the limits of fundamental research. Taking this forward are the other two essays - Essay 2 and 3, where the empirics examine extreme events thereby throwing light on the business continuity of a firm. Essay 2 argues for embeddedness of self-regulation within the regulatory state and firm's subsequent role of subsidiarity wherein the firm follows the broad level mandatory public regulations yet undertakes voluntary standards which are under the light surveillance of the state. I empirically situate the activities of juniors (smaller mining firms who are usually involved in exploration) and established players (big miners), in the regulatory permitting environment of Sweden and Finland. Essay 3 focusses on mining trusts, funds, and foundations (FTF), and capabilities developed by a firm in setting up these FTFs immediately following a disaster and then governing/overseeing their medium-long term administration. Firm involvement in design and influence of risk governance administrations highlights the prominence of nonmarket strategies. To sum it up, all the three essays look into systemizing nonmarket risk management activities