Luiz de Magalhães Ozorio

Valuing flexibility in electro-intensive industries: the case of an aluminum smelter

Electro-intensive industries account for a significant proportion of the total industrial electricity consumption, and these industries usually possess co-generation assets, which can supply at least part of their energy needs. However, due to price uncertainty, it may be optimal for the firm to temporarily suspend production and sell the available energy. If this strategy creates value, governments can create incentives through price signals for these firms to take their plants offline and increase the supply of electricity during times of shortage. This study analyzes the case of an aluminum plant that has the choice of temporarily suspending operations and models its managerial flexibility as a bundle of European switch options. The suspension and modeling would occur under two simultaneous situations, uncertainty and asymmetric state switching costs under the real options approach, to determine whether the changes add value to the firm. The results indicate that this flexibility can add significant value to the firm.

Financing Innovation in Brazil: Recent Achievements and Future Challenges

This article discusses some of the financing mechanisms for innovation created recently by the Brazilian Government, in particular those with participation of BNDES and FINEP. Brazil, despite having redirected its Science and Technology Policy in the late 90s and reformulated its funding mechanisms inspired in OECD countries, did not achieve satisfactory results, as shown in this study. Investments in innovation are shy, with little participation of the private sector. In recent years, the Brazilian Government has been developing a series of initiatives to broaden and make more effective its participation in financing innovation, as well as stimulate private investment. It may be observed that these initiatives seek to fill existing gaps and seem to consider some successful characteristics of foreign mechanisms, seeking a greater alignment with the interests of the market and focus on small and medium-sized companies, as well as focusing on increasing the link between academia and business, and unifying efforts among government agencies. Some improvements, however, still seem to be necessary, not only in the financing mechanisms, but also when tackling larger country issues.

Introduction: Entrepreneurship as a Learning Process and Insights from the BRICS

Capitalism in the twenty-first century is passing through changes that enhance the importance of entrepreneurship and learning processes. This chapter explains how this book was organized as a result of recent discussions on entrepreneurship and learning made by a group of researchers that study Brazil, Russia, India and China. The organizers hope that this book will contribute to increase understanding of entrepreneurial activities in the BRICS and provide lessons for other emerging countries.