1.2 RESEARCH PROBLEM

  The problems of the research work to be presented
are given below. 8]  The are given as they were stated
before the research was completed. 9]

   1) How can be build a model for decisions to cover
      simultaneously the assessment of trade, production,
      and financial plans in order to achieve optimal
      production, book profit, and currency risk adjust-
      ment in the multinational firm?  What are the
      technical and conceptual difficulties and how
      can the be overcome?  Tackle the following research
      task in order to find the answers:  Construct for
      an indealized multinational firm a normative model
      for optimal production, book profit, and currency
      risk adjustment by means of simultaneous manipulation
      of suitable trade, production, and financial flows
      which are deemed to be decision variables.
      Call this the normative problem.

   2) How can we predict the behavior of the multina-
      tional firm? What structure does the multinational
      firm give its various trade, production, and fi-
      nancial flows in different situations?  How does
      the multinational firm react to economic environ-
      mental changes and measures of the host or the
      home country governments?
      Call this the behavioral problem.

The emphasis in the research project was very strongly
on the normative problem.  Most of my results on the
behavioral problem can be attributed to my earlier research
efforts. 10]  Concentrating on the normative problem turned
out to be laborious enough.

8] I first stated the problems in a dissertation proposal,
which has later been published: Timo Salmi, "Joint
Determination of Trade, Production, and Financial Flows
in the Multinational Firm; A Stochastic Linear Program-
ming Model Building Approach," The Finnish Journal of
Business Economics, No. 3, 1974.

9] The reasons for this are obvious.  Although sometimes
done, particularly in non-empirical research (this dis-
sertation is non-empirical), reconstructing the research
problem after completion is contrary to the general
principles of scientific research work.  Evaluation
of the results will be more objective and the reader
will obtain a better perspective when the proper procedure
is followed.

10] Timo Salmi, The Multinational Firm: A Mathematical
Programming Model Building Approach (licentiate
thesis), op.cit., and Timo Salmi, "Monikansallinen
yritys tarkasteltuna matemaattisen optimointimallin
avulla," The Finnish Journal of Business Economics,
No. 2, 1973, pp. 119-124.  This paper has been trans-
lated into an unpublished English version: "Some
Aspects of Production and Profit Adjustment in the
Multinational Firm," which was presented at the
European Institute for Advanced Studies in Management/
Helsinki School of Economics seminar, March 14-16,
1973, in Helsinki.