MEKON The CD of Participants reviewed papers from 18 International Conference MEKON 2016, February 3-4 MEKON 2016

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1 MEKON 2016 The CD of Participants reviewed papers th from 18 International Conference MEKON 2016, February 3-4 [i] Faculty of Economics, VŠB - TUO

2 18 th International Scientific Conference MEKON 2016 The CD of Participants reviewed papers from 18 th International Conference MEKON 2016, February 3-4 CD bylo vydáno za pomoci Nadačního fondu Karla Engliše CD was published with the financial support of Nadační fond Karla Engliše Issue: 60 pieces Composite authors Editor: Jiří Franek 473 pages Ostrava, 2016 Vysoká škola báňská Technická univerzita Ostrava, Faculty of Economics ISBN Příspěvky neprošly jazykovou korekturou, za jejich obsah odpovídají autoři. Contributions have not undergone language correction; the authors are responsible for their content. 3-4 February, 2016 [ii] Ostrava

3 Brief Content Section 1: Economics... 1 Section 2: Business Administration Section 3: Management Section 4: Marketing and Business Section 5: Law Aspects of the Economy Section 6: Finance and Accounting Section 7: Public Economy and Administration [iii] Faculty of Economics, VŠB - TUO

4 Content Title... i Content... iii Section 1: Economics... 1 Determinants Of Czech Currency An Equilibrium Exchange Rate Approach... 3 Emil Adámek Vliv relativního příjmu na mezní sklon ke spotřebě Ondřej Badura The Relationship Between Exchange Rate and EMU Exports Markéta Dolinová Fiskální politika a ekonomický růst: speciální zaměření na sociální výdaje Agata Drobiszová The Conditional Political-Tax Cycle in the Developed Countries Jan Janků Can Public Debt Dynamics Change What We Have Learnt From Endogenous Growth Model? Martin Murín Migrant Remittances Growing Phenomenon in Global Economy Jan Šulák Determinants of Corruption in Countries BRICS Lucie Szczeponková, Ondřej Jajkowicz Daňový mix a jeho vliv na ekonomický růst: případ zemí V Věra Vráblíková Dopady zdanění práce na ekonomický růst v zemích OECD Iva Vybíralová 18 th International Scientific Conference [iv] Faculty of Economics, VŠB - TUO

5 Section 2: Business Administration Comparison of COPRAS-G, TOPSIS and VIKOR Multiple Attribute Methods in Plant Performance Evaluation Jiří Franek Practical Aplication of Analytic Network Process in Rating Model of the Level of Corporate Governance Jana Klozíková Zhodnocení reorganizačních řízení v souvislosti se změnou kvantitativních kritérií k 1. lednu Jana Šnoblová Tasks of The Supervisory Boards in Polish Municipal Companies Łukasz Żabski Section 3: Management Management of Technology Transfer in Terms of Innovative Activity Stanisław Brzeziński, Dagmara Bubel, Katarzyna Szymczyk Using Advanced MCDM Methods for Employees Training and Development Kateřina Kashi Assessment of Corporate Social Performance Based on Fuzzy AHP Method Štěpánka Staňková Games in Recruitment and Selection Processes Adam Sulich The Role of People Supporting Employees Development in Commercial Organisations Aneta Szara [v] Faculty of Economics, VŠB - TUO

6 Content The Pilot Research Findings Concerning Development of Competence and Age of Employees Wojciech Wychowaniec Section 4: Marketing and Business Key Customer Value Management Based on Example of Company X Marta Kadłubek, Iga Kott, Wioletta Skibińska Factors Affecting Customers Satisfaction with Online Group-Buying: Comparison of the Czech Republic and Canada Pavlína Pawlasová Power Positioning in Commodity Procurement: a Portfolio-Based Analysis Jan Vašek, Vojtěch Klézl The Issue of Accessibility from the Point of View of Tourism Service Providers Dagmar Zorková Section 5: Law Aspects of the Economy Insurance Distribution Directive New Challenge to Polish and European Law Maciej Balcerowski Medical Malpractice Different Methods of Compensation Diana Renata Bożek State Aid for Energy From Renewable Sources in European Union: Legal Framework Magdalena Brodawka Rare Earth Elements Case and Its Indications - Monopoly Power and Protectionism in International Law Perspective Attila Endre Simay 18 th International Scientific Conference [vi] Faculty of Economics, VŠB - TUO

7 Role plynových zásobníků v EU a národní energetické politice: bezpečnost dodávek zemního plynu Martin Švec Section 6: Finance and Accounting The Maturity Analysis of Claims and Liabilities in Health Sector of Slovak Republic Mária Braunová, Monika Jančovičová, Lucia Jantošová Crisis-Robust Portfolio Optimisation with Sampling Methods Mateusz Dzicher Optimal Efficient Partial Hedging Strategy of Shortfall Risk Haochen Guo Alternative Methods to Estimate Returns of A Large Scale Portfolio Selection Problem Nourredine Kouaissah Kombinace reálných opcí a teorie her při investičním rozhodování Ondřej Mikulec Variance Analysis of a Company in Energy Sector Barbora Ptáčková Wavelets Coefficients Distribution Analysis Jaroslav Schürrer Availability of Foundations Annual Reports in the Czech Republic Andrea Valentová [vii] Faculty of Economics, VŠB - TUO

8 Content Section 7: Public Economy and Administration Cybercrime in Public Administration Jiří Ardielli, Eva Ardielli, Jan Stankovič Relation of The E-Government Development and Public Administration Maturity in EU Countries Eva Ardielli, Roman Vavrek Optimum Currency Area Criteria Results for the EU s Member States Vendula Beránková Hierarchical Resonance Framework for Regional Competitiveness Estimation Roman Guliak Výdaje na výzkum a vývoj a jejich vliv na ekonomický růst ve Španělsku, Portugalsku a Francii Jana Hlawiczková Sharing Versus Grey Economy Jana Kalabisová, Josef Vlček Evaluation of the Effectiveness of Selected Health Centres in the Czech Republic Robert Michalík Local Taxes as a Tool of Local Social Policy Ladislav Poliak Vybrané projevy na trhu práce v regionech České republiky Jaroslav Urminský Veřejná podpora výzkumu a vývoje v České republice, Dánsku a na Slovensku Dominika Žůrková 18 th International Scientific Conference [viii] Faculty of Economics, VŠB - TUO

9 Section S1 Economics Honorary Chairman: prof. Ing. Václav Jurečka, CSc. Guarantor: Ing. Jan Šulák [1] Faculty of Economics, VŠB - TUO

10 Section S1: Economics 18 th International Scientific Conference [2] Faculty of Economics, VŠB - TUO

11 DETERMINANTS OF CZECH CURRENCY AN EQUILIBRIUM EXCHANGE RATE APPROACH Emil Adámek VŠB-Technical University of Ostrava, Faculty of Economics, Department of National Economy, Sokolská tř. 33, Ostrava 1, Czech Republic Abstract There exist a lot of determinants of development of exchange rate. The aim of this paper is to find which factors influence the development of the Czech currency (measured as real bilateral exchange rate compared to euro area CZK/EUR expressed in real terms) and to assess periods with overvalued and undervalued exchange rate. This approach defines variables that cause changes in the level of the exchange rate and assess its effect on Equilibrium Exchange Rate (EER). In the case of empirical analysis, there exist a lot of econometric methods that can be used. This article is based on the (Johansen) cointegration analysis. Since principal of EER is to find lung run equilibrium, Vector Error Correction Model (VECM) is constructed. A long run relationship among exchange rate and others variables has been found using quarterly data for 2000Q1 2015Q3 periods. Keywords: Equilibrium Exchange Rate, the Czech Republic, Cointegration, Balassa- Samuelson effect JEL: C22, E52, E58 Advisor: doc. Ing. Zuzana Kučerová, Ph.D. [3] Faculty of Economics, VŠB - TUO

12 Section S1: Economics 1 Introduction Komárek and Motl (2012) declare four reasons why central bank should monitor estimates of equilibrium exchange rate. The first one is to gather knowledge for monetary policy implementation. The second motive is that knowledge of EER level helps central banks to set policy instruments. The third reason is that exchange rate is a key factor for evaluation the competitiveness of whole economy. The last reason, which is very important especially in the case of the Czech Republic, is that information about EER is a crucial factor when setting central parity or conversion ratio before joining a common monetary union. The aim of this paper is to find which factors influence the development of the Czech currency (measured as real bilateral exchange rate compared to euro area CZK/EUR expressed in real terms) and to assess periods with overvalued and undervalued exchange rate. Firstly, there are mentioned theoretical and empirical backgrounds of EER. Then, there are described used methods and data. In the next part, the results are presented. Conclusions and discussion remain the last part of this paper. 2 Theoretical and empirical backgrounds 2.1 Determination of exchange rate and concepts of equilibrium exchange rate One of the oldest theories, explaining the development of exchange rate, is the Purchasing Power Parity Theory (PPP). PPP proposes that the only determinant of exchange rate development is price level (in the case of absolute version of PPP), respectively inflation rate (in the case of relative one). Nevertheless, there exist some reasons (such as the Ballasa- Samuelson (BS) effect) why this theory does not provide good explanation of exchange rate development especially in the case of transitive economies. Another traditional theory is the Uncovered Interest Parity Theory (UIP). Since PPP deals with international movement of goods and services, UIP deals with international movement of capital flows. UIP declares that expected change in the nominal exchange rate is determined by the interest rate differential. Nevertheless, even UIP does not provide good empirical results. That is why EER concepts have become popular. The first one is called Capital Enhanced Equilibrium Exchange Rate (CHEER, developed by Johansen and Juselius (1992)) and it is actually combination of PPP and UIP. It claims that PPP holds in the long-run, and that the difference in domestic and foreign interest rates can cause short-run misalignment between spot exchange rate and exchange rate defined by PPP. Behavior Equilibrium Exchange Rate (BEER), created by MacDonald (1997), is based on above mentioned approaches but it also tries to find other determinants of exchange rate development. Škop and Vejmělek (2009) call it a statistical approach because it uses statistical methods to find determinants of exchange rate development (so called data mining). BEER approach is the most similar approach to this paper. For other approaches to EER such as Fundamental Equilibrium Exchange Rate (FEER), Desired Equilibrium Exchange Rate (DEER), Atheoretical Permanent Equilibrium Exchange Rate (APEER), Permanent Equilibrium Exchange Rate (PEER) or Natural Real Exchange Rate (NATREX), see e.g. Driver and Westaway (2003), MacDonald (2000) or Égert et al. (2006). 18 th International Scientific Conference [4] Faculty of Economics, VŠB - TUO

13 2.2 Review of empirical literature Komárek and Motl (2012) compute BEER and FEER for Czech Republic using quarterly data (1996:Q1 2011:Q4). They estimate real (bilateral) exchange rate (CZK/EUR). As concerns BEER, the cointegration analyses are used. Depending variables are productivity difference, net foreign assets and ratio of real investments and export on GDP. The results confirm the estimates of exchange rate overvaluation by mid-1997 and in 1998, 2002 and Since 2009, the model suggests a significant slowdown in the appreciation of the equilibrium. Škop and Vejmělek (2009) estimate NATREX. Quarterly data covered 1995:Q1 2007:Q4 period. They construct VECM while depending variables are output gap, time preference gap and terms of trade gap. They find that exchange rate is overvaulted in periods and that NATREX appreciated in long run. Babetskii and Égert (2005) estimate BEER for Czech Republic. They use monthly data from 1993:M1 to 2004:M9. They apply several alternative cointegration techniques and identify a period of an overvaluation in 1997 and in 1999, an increasing overvaluation until 2002, an undervaluation in 2003 and a correction towards equilibrium in the second half of Komárek and Melecký (2005) estimate BEER in 1994:Q1 2004:Q1. As determinants of the real equilibrium exchange rate they consider the productivity differential, the interest rate differential, the terms of trade, net foreign direct investment, net foreign assets, government consumption and the degree of openness. They find that the exchange rate is on average undervalued over the period 1994 to 2004 by about 7 percent with respect to the estimated BEER. 2.3 Determinants of exchange rate This assumption to EER is based on UIP adjusted for risk premium: EER = f(r dif ; σ), (1) where EER stands for equilibrium exchange rate, r dif is real interest rate differential and σ represents risk premium, as Driver and Westaway (2003) claim. Nevertheless, authors dealing with BEER approach include a lot of various determinants, which often have an ambiguous effect on EER. In this paper, variables are divided into groups depending on their theoretical effects on development of exchange rate. The equation of EER therefore can be written as: EER = f(r dif ; σ; PROD; TRADE; OTHER), (2) where PROD is a group of variables approximating productivity or BS effect, TRADE represents group of variables dealing with international trade and OTHER includes other variables influencing EER such as government spending or investments. Interest rates (+/-) 1 Since this assumption is based on UIP, another important variable is real interest rate differential. This variable is considered as an indicator of attractiveness of domestic currency, hence faster growth of domestic interest rate should lead to appreciation of domestic currency. On the other hand, the growth of domestic interest rate may (i) lead to higher inflation expectations, growth of demand for foreign currency (instead of domestic one) and depreciation of domestic currency; (ii) indicate that central bank makes an effort to increase an income of 1 (+) and (-) represent expected sing of variables, where (-) stands for appreciation, whereas (+) means depreciation of domestic currency. (+/-) is used for those variables which impact is ambiguous. [5] Faculty of Economics, VŠB - TUO

14 Section S1: Economics foreign investments to improve deficit of current account, which can work in short run only, and in the long run, depreciation of domestic currency is inevitable; (iii) indicate growth of government debt (higher government debt leads to higher interest rates via growth of demand of money), which can lead to distrust of creditors to domestic currency and to its depreciation. From these reasons the effect of difference in domestic and foreign real interest rate is considered as ambiguous. The short run (money market) real interest rate differential is used in this paper and the variable is labeled as sir. Risk premium (+, +-) As MacDonald (2000) claim the UIP condition should be adjusted for risk premium. A higher risk premium usually leads to depreciation of domestic currency. The question here is how to measure the risk premium. There are several possibilities. The first option, suggested by MacDonald (2000), is to proxy it using the ratio of domestic government debt to foreign government debt both as percentage of GDP (debt). Next possibility, used by Frait et al. (2006) for example, is to use net foreign assets (nfa). Deficit of current account leads to increase of foreign debt, which is financed by foreign investors, who demand (to adjust their portfolios) a higher yield. At given interest rates, this can only be accomplished through a depreciation of the currency of the debtor country. Nevertheless, changes of NFA in reaction to exogenous shocks could be offset by adjustments in the capital stock. Since changes in the net foreign asset position and changes in the capital stock have countervailing effects, the impact on the EER may be ambiguous as Maeso-Fernandes et al. (2001) claim. The last option is to use long term real interest rate (lir) of government bonds. Since time horizon for both domestic and foreign interest rate is the same, the difference in the real interest rate can be considered as a risk premium. The advantage of this assumption is that it takes into account real market situation, whereas the other options seem to be an implicit approximation. Productivity and BS effect (-) Most empirical papers, such as Frait et al. (2006) or Bitans (2002), unambiguously consider faster growth of productivity in domestic country than in foreign one as a crucial factor of real appreciation of domestic currency. Productivity is usually measured as a ratio of domestic real GDP per capita to foreign one. This assumption is represented by variable dprod. On the contrary, MacDonald (2000) suggests measuring the productivity as a ratio of tradable to non-tradable goods (proxied as ratio of CPI to PPI). Nevertheless, there are some problems with this assumption. Firstly, price indices seem to be a rough estimate of tradable and nontradable goods. Moreover, there can be a problem of multicollinearity of variables in particular case of this paper. That is why another variable is used for measured productivity growth of tradable sector in this paper. Variable dprodt measures productivity differential as a value added only in manufacturing. The last proxy of productivity measures BS effect. In this case manufacturing is consider as tradable sector and the rest of economic activities is considered as non-tradable. Variable related to BS effect is labeled as bs. International trade (+-) Variables linked to international trade are another important determinants of development of EER. MacDonald (2000) uses terms of trade (tot, the ratio of export prices to import prices) and claims that improvement in terms of trade leads to appreciation of domestic currency (-). Since Czech economy is considered as a small and open economy, another important variable is the openness of economy (open). Some authors, such as Égert and Lommatzsch (2004) or Kim and Korhonen (2005) claim, that the more economy is open the 18 th International Scientific Conference [6] Faculty of Economics, VŠB - TUO

15 weeker exchange rate will be (+). On the other hand, some studies, such as IMF (1998) or Maurin (2001), state that growth of openness of economy leads to appreciation of domestic currency (-). As Komárek and Motl (2012) claim, next determinant of development of EER is ratio of net export (nx) to GDP. The more domestic export is higher than domestic import, the stronger domestic currency will be (-). Other determinants (+-) Another often used variable is government spending (gov), usually expressed as the ratio to GDP. Most authors, such as Fischer (2002), Halpern and Wyplosz (1997) or Kim and Korhonen (2005), say that higher government spending leads to appreciation of domestic currency (-). On the other side, there are authors, such as Bitans (2002) or IMF (1998), who state that higher government spending leads to depreciation of domestic currency (+). The last two variables deal with investment. The volume of domestic investment (inv) is measured as ratio of investment to GDP. Kim and Korhonen (2005) claim that growth of this variable should cause appreciation of domestic currency (-), whereas IMF (1998) says that it is contrariwise (+). Foreign investments are measured as foreign direct investment (fdi) and it is expected that their growth lead to appreciation of domestic currency (-) as Frait and Komárek (1999) claim. 3 Research methods and data 3.1 Methods Since the goal of EER approach is to find long run relationship between variables influencing development of exchange rate, the cointegration analysis is used in this paper. Johansen cointegration tests (Johansen (1991)) are the most common tests of cointegration as Cipra (2013) claims. The advantage of these tests is that they permit more than one cointegration relationship. There exist two types of Johansen cointegration tests: λ trace statistic m ( r) n ln(1 ˆ ), (3) trace ir1 with hypothesis H0: number of cointegration relationships r and H1: number of cointegration relationships > r. And λ max statistic i r) nln(1 ˆ ), (4) max ( r1 with hypothesis H0: number of cointegration relationships = r and H1: number of cointegration relationships = r + 1. Once Johansen tests indicate cointegration between variables, Vector Error Correction Model (VECM) is estimated. When Error Correction Term (ECT) is negative and significant, there is a long run relationship between variables. The length of lag for each model is based on Sequential modified LR test statistic (each test at 5% level), Final prediction error (FPE), Akaike information criterion (AIC), Schwarz information criterion (SC) and Hannan-Quinn information criterion (HQ). Eviews 7 software is used. [7] Faculty of Economics, VŠB - TUO

16 Section S1: Economics 3.2 Data At first, it is important to define exchange rate measure. Since the euro area is the most important trade partner of the Czech Republic, the bilateral exchange rate (CZK/EUR) is used in this paper. Nominal exchange rate is deflated using PPI, because it seems to be better approximation of prices of tradable goods than CPI. For detailed discussion about how exchange rate should be defined and which price index should be used, see Driver and Westaway (2004). Variable approximating exchange rate is labelled as rer. Data for nominal exchange rate (quarterly averages) were obtained from ARAD Time Series System (ČNB, 2015). Price index (PPI) data were gathered from Eurostat Database (Eurostat, 2015). 3 months (money market) interest rates are used for variable sir. Nominal data are deflated using CPI inflation rate (quarterly data were computed as non-weighted average from monthly data). Data for both nominal interest rates and inflation rate were gathered from Eurostat Database (Eurostat, 2015). Variable debt was computed as the ratio of government debt per GDP of the Czech Republic to government debt per GDP of euro area. Data for both quarterly nominal government debt and quarterly nominal GDP were gathered from Eurostat Database (Eurostat, 2015). Variable nfa is defined as a net investment position of the Czech Republic. Since all values were negative, absolute values are used. Growth of this variable therefore means growth of foreign debt. Data were obtained from ARAD Time Series System (ČNB, 2015). Long term government bond (Maastricht criterion) is used fo variable lir. Data were gathered from Eurostat Database (Eurostat, 2015). Variable dprod is computed as a ratio of real GDP per employee of Czech economy to euro area. Variable dprodt, representing tradable sector only, is computed as ratio of value added per employee in relevant sector (manufacturing) of Czech economy to euro area. Approximation of BS effect variable bs was computed as a difference between growth of value added in tradable sector (manufacturing) compared to not tradable sector (all other activities) in Czech economy relatively to euro area. Data for GDP, value added and employment were obtained from Eurostat Database (Eurostat, 2015). Data were seasonally adjusted by author (using Census X12 method). Nominal data were deflated using GDP deflator. Variable tot is defined as ratio of export to import prices of Czech economy. Data were gathered from ČSÚ database (CZSO, 2015). The openness of Czech economy (open) is computed as sum of nominal export and import divided by nominal GDP. The net export (nx) is net export (export import) per nominal GDP. Export and import data were obtained from ČSÚ database (CZSO, 2015). Variables gov and inv are computed as ratio of government consumption (domestic investment respectively) per nominal GDP. Seasonally adjusted data were obtained from ČSÚ database (CZSO, 2015). Variable fdi is defined as foreign direct investment from foreign to the Czech Republic. Data were obtained from ARAD Time Series System (ČNB, 2015). Missing values are computed using EViews 7 software, logarithm transformation is used where it is possible and 2000Q1 = 1. Quarterly data cover 2000Q1 2015Q3 periods. 18 th International Scientific Conference [8] Faculty of Economics, VŠB - TUO

17 4 Results In the case of cointegration analysis, it is needed that all (or at least some of them as Clark and MacDonald (1998) show) variables are integrated on the same level (usually I(1)). That is why tests for stationarity are run. Tab. 1 Results of ADF test ADF - p value Variable level 1st difference prump 0,3354 0,0000 dprod 0,0540 0,0000 dprodt 0,1206 0,0000 BS 0,0086 0,0000 sir 0,1164 0,0004 debt 0,0000 0,0000 nfa 0,1556 0,0000 lir 0,2919 0,0005 tot 0,0619 0,0000 open 0,8127 0,0000 nx 0,6702 0,0000 gov 0,0373 0,0024 inv 0,6944 0,0000 fdi 0,4181 0,0369 Source: Own calculations Results of Augmented Dickey-Fulller tests are depicted in the Tab. 1. From the list of variables, several models are estimated using VECM. All models are tested using Johansen cointegration test. Variables in all models are selected in a way avoiding multicollinearity. Variables which are not significant or have opposite sign than it was expected (such as dprodt), are excluded from next specifications. Only five models, which provide the best results (based on sign and significance of error correction term and variables; R-squared statistic; Log likelihood, Akaike information criterion and Schwarz criterion) are presented in the Tab 2. [9] Faculty of Economics, VŠB - TUO

18 Section S1: Economics Variable Expected sign Tab. 2 Results of VECM Model A B C D E dprod - 0,0628*** dprodt - BS - -0,1170*** -0,1417*** -0,1299*** - 0,1569*** sir +- -0,0010*** -0,0007 0,0328*** 0,0231*** 0,0255* debt + -0,0687*** -0,2471*** 0,3468*** 0,0621 nfa +- -0,0010 lir + 0,0078*** -0,0303*** 0,0089** tot - 0,0292*** 0,0348*** -0,0220*** open +- 0,0178*** -0,0582*** - 0,0426*** nx - -0,1875*** 0,5164*** 0,3242*** gov +- -0,5020*** -0,1509*** inv +- -0,2953*** -0,5368*** -1,2056*** - 1,4269*** fdi - -0,0066** -0,0121*** Error corection term -0,5277*** -0,3887* ,0534 0,0807 R-squared 0,7997 0,8098 0,7391 0,7401 0,6869 Adjusted R-squared 0,5244 0,4579 0,2565 0,2747 0,3625 Log likelihood 1081, , , , ,8736 Akaike information criterion -27,6260-8,3217-8,0059-8,0105-8,0991 Schwarz criterion -17,6790-6,9717-6,6559-6,6843-7,0333 Lags Source: Own calculation Note: - stands for appreciation; values of coefficients are depicted for each variable; each model includes intercept; *, **, *** denote 10%, 5% and 1% level of probability respectively. Based on mentioned criterions, Model A seems to be the best model describing development of the Czech exchange rate. There exists a long run relationship between variables as ECT indicates. All variables except for debt and tot have a right sign. Nevertheless, time horizon is important for these variables, as Frait et al. (2006) claim, and its effect can be ambiguous too. Growth of terms of trade lead to depreciation in model estimated by Fischer (2002) for example. Estimated values are filtered using Hodrick-Prescott (HP) filter to eliminate short run biases. Development of both real bilateral exchange rate and EER are depicted in Fig. 1. Higher values of CZK/EUR (in real terms) than values of EER indicate periods of undervalued currency and vice versa. 18 th International Scientific Conference [10] Faculty of Economics, VŠB - TUO

19 Fig. 1 Development of CZK/EUR (in real terms) and EER in the Czech Republic EER CZK/EUR (in real terms) Source: Own Calculations Note: Time on the horizontal and exchange rate (2000Q1 = 1) on the vertical axis; lower values indicates appreciation of domestic (Czech) currency. Conclusion The aim of the paper was to find which factors influence the development of the Czech currency (measured as real bilateral exchange rate compared to euro area CZK/EUR expressed in real terms) and to identify periods with overvalued and undervalued exchange rate. Several empirical models were estimated and tested. The best results provided Model A. A long run relationship among exchange rate, approximation of Balassa-Samuelson effect, short run interest rate differential, government debt differential, terms of trade, government expenditures and domestic and foreign investments was found. It is interesting that traditional measurements of productivity (differential between growth of real GDP per employee or growth of GDP for tradable goods per employee) seem to be insignificant, or furthermore have opposite effect in the case of the Czech Republic. On the other hand, approximation of BS effect was significant in most models specification. Short run interest rates, as well as government spending and domestic and foreign investment influence development of Czech currency as it was expected. On the other hand, growth of government debt relatively to foreign leads to appreciation of Czech crown. Also development of terms of trade has opposite effect, than it was expected. In the case of these variables, time horizon plays a role. Based on Model A, the development of EER was estimated for the Czech Republic. Real exchange rate seems to be overvalued in 2002, 2005, 2008, and 2015 periods. [11] Faculty of Economics, VŠB - TUO

20 Section S1: Economics References BABETSKII, Ian and Balázs ÉGERT (2005). Equilibrium exchange rate in the Czech Republic: How good is the Czech BEER? CERGE-EI, Working Papers BITANS, Martins (2002). Real Exchange Rate in Latvia: Latvijas Banka Working Paper. CIPRA, Tomáš (2013). Finanční ekonometrie. Praha: Ekopress. ISBN ČNB (2015). ARAD Time Series System. [online database]. Česká národní banka. Available at: < ČSÚ (2015). Databases. [online database]. Czech Statistical Office. Available at: < DRIVER, Rebeca and Peter WESTAWAY (2003). Concepts of equilibrium exchange rates. Bank of England, Woriking Paper ÉGERT, Balász and Kirsten LOMMATZSCH (2004). Equilibrium Exchange Rates in the Transition: The Tradable Price-Based Real Appreciation and Estimation Uncertainty. BOFIT, discussion papers, 9. ÉGERT, Balázs, László HALPERN and Ronald MacDONALD (2006). Equilibrium Exchange Rates in Transition Economies: Taking Stock of the Issues. Journal of Economic Surveys. 20(2): ISSN: EUROSTAT (2015). Eurostat Database. [online database]. Luxembourg: European Commision. Available at: < >. FISCHER, Christoph (2002). Real currency appreciation in accession countries: Balassa- Samuelson and investment demand. BOFIT, discussion papers, 8. FRAIT, Jan, Luboš KOMÁREK and Martin MELECKÝ (2006). The real exchange rate misalignment in the five central European countries. Working Paper. Coventry: University of Warwick, Department of Economics. Warwick economic research papers (739). HALPERN, László and Charles WYPLOSZ (1997). Equilibrium Exchange Rates in Transition Economies. IMF Staff Papers, 4. INTERNATIONAL MONETARY FUND (1998). Republic of Slovakia: Recent Economic Developments. IMF Staff Country Report No. 60. JOHANSEN, Soren (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica. 59(6): ISSN: JOHANSEN, Soren. and Katarina JUSELIUS (1992). Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK. Jurnal of econometrics. 53: ISSN: th International Scientific Conference [12] Faculty of Economics, VŠB - TUO

21 KIM, Byung-Yeon and Iikka KORHONEN (2005). Equilibrium exchange rates in transition countries: Evidence from dynamic heterogeneous panel models. Economic Systems. 29: ISSN KOMÁREK Luboš and Martin MELECKÝ (2005). The Behavioural Equilibrium Exchange Rate of the Czech Koruna. ČNB, Working Paper Series. 5. KOMÁREK, Luboš a Martin MOTL (2012). Behaviorální a fundamentální rovnovážný měnový kurz české koruny. Politická ekonomie. 60(2): ISSN MacDONALD, Ronald (2000). Concepts of equilibrium exchange rates: An Overview. Economic Research Group of the Deutsche Bundesbank, Discussion Paper 3/ MacDONALD, Ronald. (1997). What determines real exchange rates? The long and the short of it. Journal of International Financial Markets, Institutions and Money. 8: ISSN: MAESO-FERNANDEZ, Francisco., Chiara OSBAT and Bernd SCHNATZ (2001). Determinants of the Euro Real Effective Exchange Rate: A BEER/PEER Approach. European Central Bank Working Paper MAURIN, Laurent. (2001). Fundamental Determinants of RER for Transition Countries. In: Stierle, M. H. and T. Birringer (eds.). Economics of Transition: Theory, Experiences and EU-Enlargement. Berlin: Verlag für Wissenschaft und Forschung ŠKOP, Jiří and Jan VEJMĚLEK (2009). Od parity kupní síly k NATREXU případ české koruny. Politická ekonomie. 57(3): ISSN [13] Faculty of Economics, VŠB - TUO

22 Section S1: Economics VLIV RELATIVNÍHO PŘÍJMU NA MEZNÍ SKLON KE SPOTŘEBĚ AN INFLUENCE OF RELATIVE INCOME ON THE MARGINAL PROPENSITY TO CONSUME Ondřej Badura Vysoká škola báňská Technická universita Ostrava, Ekonomická fakulta Abstrakt Tato studie se zabývá otázkou, zdali existuje vztah mezi mezním sklonem ke spotřebě a postavením dané domácnosti v důchodové distribuci reprezentované relativním příjmem. Pokud je tomu tak, potom dosavadní předpoklad mainstreamové teorie spotřeby o konstantní hodnotě mezního sklonu ke spotřebě nemůže být nadále považován za reálný a bude třeba přijmout prvek relativního důchodu za nový, klíčový determinant obecné spotřební funkce. Cílem této práce je nalézt, popsat a dokázat vliv relativního příjmu na mezní sklon ke spotřebě a tím prokázat správnost Duesenberryho hypotézy. K dosažení toho cíle je zde využito panelové regrese, jejíž výsledky jednoznačně potvrzují platnost výchozí hypotézy o existenci funkční závislosti mezního sklonu ke spotřebě na relativním příjmu a tím plně podporují myšlenku interdependentního pojetí užitku a spotřeby. Klíčová slova: relativní příjem, mezní sklon ke spotřebě, Duesenberryho hypotéza JEL: D11, D12 Abstract This study deals with the question whether there is a relationship between the marginal propensity to consume and the status of the household in income distribution represented by a relative income. If so, then the current assumption of mainstream theory of consumption about the constant marginal propensity to consume could no longer be considered realistic and it will be necessary to take the element of relative income as a new key determinant of general consumption function. The aim of this work is to identify, describe and prove an influence of relative income on the marginal propensity to consume and thus prove the correctness of Duesenberry s hypothesis. To achieve this goal, there is used panel regression, which results clearly confirm the validity of the initial hypothesis about the existence of functional dependence of the marginal propensity to consume on the relative income and thus it fully supports the idea of interdependent concept of utility and consumption. Keywords: relative income, marginal propensity to consume, Duesenberry s hypothesis JEL: D11, D12 Školitel: doc. Ing. Martin Macháček, Ph.D. 18 th International Scientific Conference [14] Faculty of Economics, VŠB - TUO

23 1 Úvod Spotřeba představuje v mnoha ohledech klíčový determinant ekonomického myšlení, ne ani tak pro svůj nesmírný praktický význam, jakožto spíše proto, že de facto reprezentuje podstatu ekonomie samotné, podstatu problematiky nekonečných potřeb a omezených zdrojů. Jak z pohledu mikroekonomie, ze které konzumní hypotézy vždy nutně vycházejí, tak v rámci makroekonomického přístupu se široce přijímaná teorie spotřeby ekonomie hlavního proudu zdá být velmi dobře formulována a propracována a jako taková zůstává prakticky nepozměněna již téměř 60 let. Jedná se však o teoretickou koncepci již zcela přesnou a úplnou? Nemohl i zde být jeden z významných determinantů obecné spotřební funkce vynechán? Právě tyto otázky jsou pro nás výchozím bodem, motivem pro vznik této práce. Již od padesátých let 20. století převládá v odborných ekonomických kruzích přístup teorie permanentního důchodu a hypotézy životního cyklu. Tento mainstreamový pohled na základní ekonomické zákony determinující spotřebu domácností je v odborných ekonomických textech zaveden v takové míře, že odlišné přístupy prakticky nejsou vidět. Neznamená to však, že by alternativní hypotézy konzumního chování nadále nevznikaly. Kritických pohledů na standardní teorii spotřeby nalezneme mnoho, avšak často se jedná pouze o řešení úzce zaměřené problematiky, o střípky z mozaiky komplexní alternativní teorie, která však jako celek zůstává rozdrobena napříč nespočtem odborných studií. A pokud už takováto ucelená teorie přeci jen vznikla, byla z různých důvodů ignorována. A to je přesně případ také Duesenberryho hypotézy relativního příjmu - spotřební koncepce, založené na interdependentním pojetí užitku, která má potenciál teoretickou cestou zpochybnit úplnou platnost konzumní teorie ekonomie hlavního proudu a v konečném důsledku a především významně obohatit základní předpis obecně přijímané spotřební funkce přístupu LC-PIH (life cycle permanent income hypothesis) 1. Klíčovými determinanty spotřebitelova rozhodování dle přístupu mainstreamové ekonomie jsou důchod a cena. Hypotéza relativního příjmu však poukazuje na fakt, že pokud je spotřebitel ovlivněn také konzumními návyky svého okolí, tak potom důchod samotný musí být vnímán dvojím způsobem: absolutně a relativně. Z těchto dvou pojetí základního ekonomického determinantu obecné spotřební funkce plynou i dva kanály působení na výši celkového konsumu. Absolutní pojetí důchodu v sobě zahrnuje efekt přímý, dobře známy už z keynesiánské spotřební funkce. Vyšší disponibilní důchod povede úměrně k vyšší hodnotě spotřebních výdajů. Proměnná disponibilního důchodu pak ve funkčním předpisu spotřební rovnice figuruje jednoduše jako nezávisle proměnná přímo vysvětlující výši spotřeby. Zatímco relativní pojetí důchodu, alespoň dle principů Duesenberryho hypotézy, implikuje efekt nepřímý. Vyšší disponibilní důchod povede k vyššímu postavení domácnosti napříč příjmovým rozdělením a dle interdependentního pojetí užitku a spotřeby rovněž ke snížení hodnoty mezního sklonu ke spotřebě (MPC). Pokles MPC pak dále, jakožto prvek transformující disponibilní důchod ve spotřebu, negativně ovlivní konečnou výši spotřeby. Pozice domácnosti v příjmové distribuci tak bude ve spotřebním předpisu reprezentovat nezávisle proměnnou, která nepřímo skrze MPC ovlivňuje výši spotřeby. Problémem je, že zatímco absolutní (přímý) důchodový efekt je věcí obecné známou a prakticky nezpochybnitelnou, relativní (nepřímý) důchodový efekt zůstává odbornou ekonomickou obcí, ať už v podobě keynesiánské spotřební funkce či přístupu LC-PIH, často zcela opomíjen. Je sice pravdou, že každý relevantní a reálně použitelný model musí být 1 Teoretický přístup ke spotřebě vycházející z původních prací: Modigliani (1954) a Friedman (1957). V případě doplnění o prvek racionálního očekávání se pak lze odkázat především na tzv. random walk model, jak jej definuje Hall (1978). [15] Faculty of Economics, VŠB - TUO

24 Section S1: Economics extrahován o prvky, které na něj nemají zásadní vliv. Avšak je i relativní důchodový efekt oním bezvýznamným prvkem, jenž by měl být ze spotřební funkce zcela a beze stopy odstraněn? Je zde interdependentní pojetí užitku ze spotřeby záležitostí zcela irelevantní? Pokud je tomu tak, je celá tato práce snahou zbytečnou. Cílem tohoto článku je nalézt, popsat a dokázat vliv relativního příjmu na mezní sklon ke spotřebě a tím prokázat správnost Duesenberryho hypotézy. 2 Hypotéza relativního důchodu Studie Jamese Duesenberryho ohledně dopadu dat rozpočtu a agregátní spotřeby domácností na obecně přijímanou teorii spotřebitelského chování je jedním z nejvýznamnějších příspěvků poválečné periody k našemu poznání ekonomického chování. Takto hned z kraje své recenze pravil svého času uznávaný neoklasický ekonom a později laureát Nobelovy ceny za ekonomii Kenneth Arrow (1950, s. 906.). Hypotéza relativního důchodu je od základů postavena na kritice zavedených neoklasických předpokladů tvorby poptávky a z nich vycházející keynesiánské teorie spotřeby. Hlavní a zcela zásadní idea, se kterou Duesenberry (1949) přichází na pole poznání, aby tak konfrontoval tyto zavedené poměry ekonomie hlavního proudu, je komplexní sociální pojetí spotřebitele a revize Veblenova demonstračního efektu (Veblen, 1899), kterému pomocí příjmového rozložení domácností dává autor konkrétní rozměr. V práci Jamese Duesenberryho můžeme nalézt dva stěžejní výroky, řekněme postuláty, na kterých teorie relativního důchodu stojí a které jsou základem pro její další implikace (Palley, 2010, s. 6): a) Síla touhy každého jednotlivce zvýšit své spotřební výdaje je funkcí poměru jeho výdajů k jistému váženému průměru spotřebních výdajů ostatních, se kterými přichází do kontaktu. b) Základní psychologický postulát, z něhož náš argument vychází, je, že je pro rodinu těžší redukovat své výdaje z vyšší úrovně než se vyhnout tomu, aby tyto vysoké spotřební výdaje byly v prvé řadě vůbec realizovány. Skutečným základem nového modelu je však především tvrzení první. Jak sám autor tento efekt pojmenoval tzv. keeping up with the Joneses neboli efekt relativního příjmu. Princip je vesměs prostý. Spotřebitel není od ostatních konzumentů izolován, žije ve světě, kde se dennodenně střetává se svými kamarády, kolegy, rodinou, se svými sousedy atd. A nejen že potkává je samotné, především je pak konfrontován s jejich spotřebou. Vidí, co nakupují, za co utrácejí, čím utvářejí svůj životní standard, své postavení ve společnosti. Vidí to, co v teorii viděl Thorstein Velben, tu tzv. okázalou ( zbytečnou ) spotřebu. Na rozdíl od Veblena (1899) však pro většinu populace tyto spotřební výdaje nejsou zbytečné, umožnují totiž dosáhnout nehmotných sociálních hodnot statusu. A to je to, o co tu jde. Náš spotřebitel uzří, jak lidé v jeho okolí nakupují statky pro jejich ceremoniální hodnotu, před jeho očima budou zvyšovat hodnotu svého statusu, upevňovat své společenské postavení a ani on nebude chtít zůstat pozadu. Proto řadí-li se daný spotřebitel k nízkopříjmovým domácnostem (jeho Y D je pod váženým celospolečenským průměrem (Y D)), utratí ze svého disponibilního důchodu více, jen aby ukázal, že na to má, jen aby dohnal společenské postavení ostatních. Jeho MPC tak bude 18 th International Scientific Conference [16] Faculty of Economics, VŠB - TUO

25 relativně vysoký. Naopak vysokopříjmové domácnosti 2 (jejichž Y D je nad váženým celospolečenským průměrem) už zpravidla hodnotným statusem disponují, nemají tudíž tak velkou motivaci někoho dohánět, nemusí utrácet tak velkou část svých příjmů a naopak více spoří, jednoduše proto, že si to mohou dovolit. Docházíme tak k první jednoduché implikaci: MPC 1 > MPC 2 >... > MPC n (1) kde vyšší hodnota indexu n symbolizuje domácnost s vyšší hodnotou relativního disponibilního důchodu (Y RD ), nejjednodušeji vyjádřeného jako: Y RD = Y D (2) Y D Jednoduše řečeno lze mezní sklon ke spotřebě zapsat jako negativní funkční závislost relativního (disponibilního) důchodu, jak obdobně ukazuje Palley (2010): MPC = c(y RD ) 0 < c < 1; c < 0 (3) Celková výše spotřeby domácnosti C je pak dána součinem jejího disponibilního důchodu a mezního sklonu ke spotřebě, který však tentokrát není konstantní (jak naivně předpokládá mainstreamová teorie spotřeby), ale závisí na postavení daného subjektu v křivce příjmového rozložení: C = c(y RD ) Y D (4) Prostý pohled na odvození finálního předpisu obecné spotřební funkce, především pak na vztah mezi MPC a Y RD (rovnice 3) v nás může logicky evokovat otázky typu: Není takto obecný zápis až příliš triviální? Nebylo by možno už v tomto bodě závislost mezního sklonku ke spotřebě na relativním disponibilním důchodě vyjádřit konkrétním funkčním vztahem? V pozdější části této práce zjistíme, že reálná podoba tohoto předpisu není až tak banální záležitostí, odvíjí se od řady dalších faktorů a v obecném tvaru ji takto jednoduše vyjádřit nelze. Existuje pouze řada metod, kterými lze tento vztah aproximovat do konkrétní podoby. Jeden z těchto způsobů je, jak vidno, ústředním námětem této práce. 3 Metody a data První věc, kterou je nutno si v této fázi výkladu uvědomit, je, že mezní sklon ke spotřebě domácností se nemění vzhledem k výši disponibilního důchodu, ale v závislosti na relativním disponibilním důchodu, jak ukazuje právě rovnice 3, a to je zásadní rozdíl! Jedná se v zásadě o ústřední myšlenku probírané hypotézy, o klíčový příspěvek do diskuze nad podobou spotřební funkce. Jak doslova píší Alvarez-Cuadrado a Long (2011, s. 1489): Pro každé relativní důchodové rozložení procento z příjmů, které rodina uspoří, bude mít sklon být unikátní, neměnné a rostoucí funkcí její procentuální pozice právě v rozložení podle důchodu. Uspořený podíl bude nezávislý na absolutní výši příjmu. Což implikuje, že i agregátní míra úspor bude na absolutní výši (agregátního) příjmu nezávislá. Důležitým faktorem tak je, že ačkoli se MPC, a tudíž i APC domácností napříč Lorenzovou křivkou distribuce disponibilního důchodu podstatně liší (k čemuž nás dovede i nejprostší selský rozum, ne už však standardní teorie 2 Jak vidno, pro zjednodušení je zde popsán mechanismus fungování pouze na dvou typech domácností: vysoko a nízkopříjmových. Jedná se zde však pouze o demonstraci principu, který jinak platí pro libovolný počet kategorií (společenských tříd), jak hned vzápětí ukazuje (ne)rovnice 1. [17] Faculty of Economics, VŠB - TUO

26 Section S1: Economics spotřeby), je tomu tak pouze díky efektu relativního příjmu, který na agregátní úrovni neexistuje 3. Průměrný sklon ke spotřebě pro celou ekonomiku tak dlouhodobě bude konstantní, čímž je hypotéza relativního důchodu zcela ve shodě s pozorováním, se kterým své času přišli už Kuznets, Epstein a Jenks (1946) 4. Ať už bude síla efektu relativního příjmu napříč důchodovým rozložením ve společnosti jakákoli, MPC pro každou domácnost, respektive kategorii, do které daná domácnost spadá, bude vždy dán funkčním vztahem vzhledem jejich relativnímu disponibilnímu příjmu. A jak známo, funkce generuje pro danou situaci vždy pouze jeden výsledek, proto každý typ domácnosti bude mít také pouze jeden mezní sklon ke spotřebě. Možná výše popsané zní jako banalita a samozřejmost, avšak je důležité si uvědomit, že MPC různých skupin domácností se v čase ceteris paribus 5 nemění, na absolutní výši důchodu je nezávislý a má tak pro každý Y D konstantní hodnotu. Ale hlavně a především, jak se předchozí řádky snaží naznačit a jak se bohužel i sám Palley (2010), z jehož modelu zde především vycházíme, zapomněl zmínit, výše popsané platí pro typy domácností, pro kategorie, do kterých spadají, ne pro jednotlivé domácnosti a jejich individuální spotřební funkce. V tomto tkví zásadní rozdíl! Největší nedostatek standardního modelu spotřeby v podobě LC-PIH lze tudíž spatřit právě v konstantní charakteristice hodnoty mezního sklonu ke spotřebě pro všechny typy příjmových kategorií. Vyvrátit tento mylný předpoklad je pak právě cílem následující analýzy. 3.1 Metody Připomeňme v tomto bodě, že hlavním motivem této práce je dokázat vliv relativního důchodu na hodnotu jejího mezního sklonu ke spotřebě a to formulací konkrétní podoby možného funkčního předpisu. Klíčovým pojem pro nás nadále tudíž zůstává právě pojem relativního příjmu. Z principiálního hlediska se jedná de facto o kvantifikaci a tedy o možnost matematicko-ekonomického uchopení problematiky postavení domácnosti v rámci rozložení disponibilního důchodu. Z definičního hlediska se jedná o poměr disponibilního důchodu k jeho celospolečenskému váženému průměru, jak ukazuje rovnice 2. Nyní již zbývá pouze konkretizovat právě proměnnou Y D. Teoretický podklad, který nám poskytuje odkaz práce Jamese Duesenberryho nám v této oblasti ponechává relativní volnost, proto je nutné dobře zvážit vhodnost a co nejpříhodnější vypovídající schopnost vybrané definice. Pro potřeby další analýzy tak byla proměnná Y D definována jako vážený celospolečenský průměr Y D, přičemž váhy byly určeny průměrnými počty členů domácnosti v dané příjmové kategorii: Y D = n i=1 n i=1 w i Y D i w i (5) 3 Relativní může ukazatel být pouze v porovnání s jinou hodnotou. Agregátní měřítko však ukazuje pouze jeden typ domácnosti a to tu agregátní. Její disponibilní důchod tak není s čím porovnávat, respektive se rovná disponibilnímu důchodu průměrnému. Po dosazení do vzorce 2 tak vždy dostaneme Y RD roven jedné a ať už z něj vyvozený MPC nabude jakékoli hodnoty, bude konstantní po celou dobu vývoje spotřební funkce. A protože ta je lineární a vychází z počátku souřadnic, průměrný sklon ke spotřebě bude rovněž konstantní a to při rovnosti MPC = APC. 4 Široce uznávaná a respektovaná studie, která na makroekonomických datech z USA za téměř 70. let dokazuje, že ani při rapidním dlouhodobém nárůstu reálného důchodu se průměrný sklon ke spotřebě prakticky nezměnil, jako by autonomní složka spotřeby ani neexistovala. Tento objev tak de facto platnost keynesiánské konsumní teorie v dlouhém období zcela vylučuje. 5 Změna hodnot MPC v čase by zde tedy charakterizovala jediné, změnu v rozložení disponibilního důchodu, de facto tedy zvětšování či zmenšování příjmové nerovnosti. 18 th International Scientific Conference [18] Faculty of Economics, VŠB - TUO

27 kde Y Di charakterizuje důchod i-té příjmové kategorie, w i průměrný počet členů domácnosti v i-té příjmové kategorii a n počet těchto kategorií. Ústřední záležitostí zde bylo stanovení vah, přičemž naše definice tak nejlépe odpovídá původnímu pojetí a smyslu efektu relativního příjmu, čímž je tento dílčí problém vyřešen. K samotnému pokusu o vyjádření konkrétní podoby předpokládané funkční závislosti bude dále využito regresní analýzy a to odhadem regresních koeficientů pomocí metody nejmenších čtverců. Vzhledem k povaze vstupních dat, především pak kvůli omezenému počtu statisticky měřených příjmových kategorií (tedy malému počtu pozorování), by klasická regrese mohla vést ke zkresleným výsledkům, proto bude využito regrese panelové. Podoba obecného předpisu hledaného jednorozměrného lineárního regresního modelu bude záviset na tom, zdali je při panelové regresi využito metody fixních nebo náhodných efektů. Který ze způsobů panelové regrese je pro vyjádření hledané závislosti vhodnější ukáže až Hausmanův test v pozdější fázi analýzy, proto je nyní třeba stále zvažovat obě varianty. V případě užití fixních efektů by byla regresní rovnice dána vztahem: MPC i,t = α i + β Y RDi,t + u i,t (6) kde MPC i,t - mezní sklon ke spotřebě pro i-tou kategorii v čase t je vyjádřen pomocí α i - úrovňové konstanty pro i-tou příjmovou kategorii, součinu Y RDi,t relativního disponibilního důchodu pro i-tou kategorii v čase t a regresního koeficientu β vyjadřujícím citlivost mezního sklonu ke spotřebě právě na relativní disponibilní důchod. Proměnná u i,t pak symbolizuje náhodnou složku. V případě regresního odhadu na základě náhodných efektů by byl hledaný vztah charakterizován: MPC i,t = α + β Y RDi,t + u i,t + ε i,t (7) kde nově α reprezentuje úrovňovou konstantu pro všechny kategorie, u i,t náhodnou složku mezi kategoriemi a ε i,t náhodnou složku uvnitř příjmové kategorie. Ať tak či onak, důležitým výchozím předpokladem obou případných výsledných variant panelové regrese je záporná hodnota koeficientu β, jelikož s rostoucím relativním disponibilním důchodem musí mezní sklon ke spotřebě podle principů Duesenberryho hypotézy nutně klesat. 3.2 Data Předpoklad negativní lineární závislosti MPC na Y RD zde bude testován na příkladu agregátních údajů pro rozpočtovou situaci domácností v České republice, proto i veškerá vstupní data pro zmíněnou analýzu byla převzata z databáze Českého statistického úřadu ( ). Originálními vstupními daty jsou tak roční statistiky mezi lety , kde výsledkem jsou v zásadě dvě časové řady, které se dále dělí na deset dalších podsložek. Sledovaných 16 pozorování je tedy základně zapsáno ve dvou proměnných: Y D - průměrný nominální disponibilní důchod domácnosti na osobu v Kč, C - průměrná nominální spotřeba domácnosti na osobu v Kč. [19] Faculty of Economics, VŠB - TUO

28 Section S1: Economics Jak vidno, budeme zde pracovat s průměrnými daty na osobu. Pro lepší demonstraci platnosti Duesenberryho hypotézy je tento postup totiž jistě vhodnější. Důležitým poznatkem je také již zmíněné druhotné členění základních proměnných. Ukazatele Y D i C jsou oba shodně rozděleny na deset dalších podsložek reflektujících příjmovou a spotřební situaci jednotlivých typů domácností seřazených po decilech vzestupně podle disponibilního příjmu. Evidujeme zde tak v konečném důsledku 20 vstupních časových řad, rozdělených do 10 panelů podle typů příjmových kategorií. Ukazateli, přímo vstupujícími do následné panelové regrese jsou potom Y RD, spočítaný podle vzorce 2, respektive 5 a APC vyjádřený předpisem: APC = C Y D (8) Je tak nutné si v tomto bodě uvědomit, že zde pracujeme s příjmovými kategoriemi (ne jednotlivými domácnostmi), pro které je hodnota APC na Y D nezávislá a při absenci úrovňové konstanty je v každém bodě rovna MPC. Proto jsme tak zde mohli využít této jednoduché ekvivalence, kde hodnoty MPC jsou substituovány právě průměrným sklonem ke spotřebě. Na závěr ještě poznamenejme, že originálními vstupními daty v této studii jsou sice nominální vyjádření spotřeby a disponibilního důchodu, ale vzhledem k relativní povaze ukazatelů MPC a Y RD se tak jako tak zde nežádaný vliv změn cenové hladiny zcela vyruší. 4 Výsledky Nejprve byla otestována stacionarita dat přímo vstupujících do panelové regrese. Dle výsledků Levinova-Linova-Chuova testu jednotkového kořene pak jsou časové řady MPC i Y RD stacionární, alespoň na 5% hladině významnosti, s kterou zde i nadále budeme pracovat. Graf 1 slouží k předběžnému vizuálnímu posouzení předpokládané závislosti. Ačkoli je v tomto bodě lineární závislost obou sledovaných veličin zcela očividná, pouze grafická analýza nám samozřejmě stačit nebude. Cílem zde bylo především tento vztah matematicky aproximovat regresní rovnicí. Obr. 1 Vizuální posouzení lineární závislosti MPC a Y RD MPC YRD Zdroj: vlastní výpočty a zpracování ve Stata 12 Než bude moci být přikročeno k samotnému finálnímu odhadu regresních parametrů zmíněné závislosti, je třeba vzhledem k panelové povaze dat určit, zda má být užita metoda 18 th International Scientific Conference [20] Faculty of Economics, VŠB - TUO

29 fixních nebo náhodných efektů, jinými slovy, zdali v hledaném funkčním vztahu mezi kategoriemi existují rozdíly natolik významné, že musí být zachyceny v samostatné úrovňové konstantě právě pro každou kategorii. Toto dilema jednoznačné rozsuzuje provedený Hausmanův test, když jeho výsledky naznačují, že vhodnou panelovou regresí je v tomto případě metoda fixních efektů a to prakticky na jakékoli hladině významnosti. Výsledky finální panelové regrese s použití fixních efektů tak shrnuje tabulka 1 a 2. Při tomto konečném odhadu hledaného funkčního předpisu bylo využito robustní metody odhadu, čímž byl model ošetřen proti případné autokorelaci a heteroskedasticitě. Důležitým poznatek je pak informace o vysoké hodnotě koeficientu determinace, jenž signalizuje, že přibližně 82 % variability MPC bylo vysvětleno právě pomocí Y RD. Tento fakt tak jednoznačně potvrzuje základní výchozí předpoklad o vlivu relativního disponibilního příjmu na mezní sklon ke spotřebě. Model jako celek je pak bezesporu statisticky významný, stejně jako jeho regresní koeficient a všechny parciální úrovňové konstanty. Hledaný regresní koeficient β dosahuje přesně podle našeho očekávání záporné hodnoty, kterou nemůže ovlivnit ani případná standardní odchylka. Výsledný model tedy odpovídá výchozí ekonomické teorii a predikuje, že se změnou relativního disponibilního důchodu o 0,1 se opačným směrem změní také hodnota mezního sklonu ke spotřebě dané příjmové kategorie a to o 0, Tab. 1 Odhad rovnice 6 pomocí panelové regrese s fixními efekty, část 1. Počet pozorování 160 F( 10, 149) Prob > F R Zdroj: vlastní výpočty a zpracování ve Stata 12 Tab. 2 Odhad rovnice 6 pomocí panelové regrese s fixními efekty, část 2. MPC Koef. Robust Std. Err. t P> t [95% Conf. Interval] YRD α α α α α α α α α α Zdroj: vlastní výpočty a zpracování ve Stata 12 Na závěr zdůrazněme, že výsledek Hausmanova testu výrazně ovlivnil i samotnou predikční schopnost výsledného modelu. Nutnost užití metody fixních efektů znamená, že regresní vztah mezi MPC a Y RD bohužel nelze vyjádřit zcela obecně, ale bude vždy záležet na tom, v jaké příjmové kategorii se pohybujeme. Finální funkční závislost mezního sklonu ke spotřebě na relativním disponibilním důchodě tak bude mít následující podobu: [21] Faculty of Economics, VŠB - TUO

30 Section S1: Economics MPC i,t = 1, ,046 I 2 + 0,0805 I 3 + 0,1119 I 4 + 0,1375 I 5 + 0,175 I 6 + 0,2134 I 7 + 0,2774 I 8 + 0,3835 I 9 + 0,6524 I 10 0,5592 Y RDi,t + u i,t (9) kde I n figuruje jako umělá binární proměnná dosahující hodnoty 1 za podmínky i = n. Závěr Primárním motivem této práce bylo nalézt a dokázat vliv relativního (disponibilního) příjmu na hodnotu mezního sklonu ke spotřebě. K dosažení tohoto cíle zde bylo užito především panelové regrese s tím, že nejprve musela být vyřešena problematika samotné konkrétní definice relativního disponibilního příjmu. Jak ukazují předchozí odstavce, tento cíl byl skutečně naplněn. Nyní již není sporu o tom, že relativní příjem má vliv na mezní sklon ke spotřebě, a jak signalizuje poměrně vysoká hodnota koeficientu determinace, musí se tato závislost stát novým klíčovým faktorem obecné spotřební funkce. Mainstreamová teorie spotřeby, reprezentovaná především konceptem LC-PIH předpokládá konstantní hodnotu MPC pro všechny typy příjmových kategorií. Jak však ale dokazují výsledky naší studie, tento předpoklad už nadále nemůže být považován za reálný. Mezní sklon ke spotřebě je vzhledem k disponibilnímu důchodu neměnný pouze pro danou příjmovou kategorií, ne pro jednotlivé domácnosti. Pokud se totiž změní příjmová situace domácnosti, přeskočí tím do nové příjmové kategorie a zafixuje si zároveň i novou hodnotu MPC. Spotřební funkce domácností tak nebude mít konstantní sklon (na rozdíl od spotřební funkce příjmových kategorií), jak dosud mylně předpokládala mainstreamová teorie spotřeby, ale naopak bude nabývat konkávní charakteristiky. Protože se tak děje pouze díky efektu relativního příjmu, je v tomto bodě vhodné znovu zdůraznit, že mainstreamová mikroekonomie rozlišuje pouze mezi důchodovým a substitučním efektem. Duesenberryho teorie, stejně tak jako závěry této studie, vyžadují přidat další členění a dále rozlišovat mezi důchodovým efektem absolutním (přímým) a relativním (nepřímým). Ačkoli vliv relativního příjmu na mezní sklon ke spotřebě byl jednoznačně potvrzen, problematika jeho přesného charakteru zůstává stále otevřena. Aproximace sledované závislosti pochopitelně závisí na funkčním předpisu, který je k němu použit, a zde využitá lineární funkce jistě není jedinou možností. A co víc, nemusí ani být tou nejvhodnější. Je nutné si uvědomit, že, alespoň z pohledu statistiky, neexistuje jediný správný a objektivní funkční předpis, ten je pouze a jenom takový, jaký si ho nadefinujeme. A právě definice nového, elegantního a příhodnějšího funkčního vztahu MPC a Y RD lépe a přesněji popisujícího spotřebitelské chování domácností tak zůstává motivem pro další vědecké bádání. Literatura ACKERMAN, Frank (1997). Consumed in Theory: Alternative Perspectives on the Economics of Consumption. Journal of Economics Issues. 31(3): ISSN ALVAREZ-CUADRADO, Francisco and Ngo Van LONG (2011). The Relative Income Hypothesis. Journal of Economic Dynamics and Control. 35: DOI /j.jedc th International Scientific Conference [22] Faculty of Economics, VŠB - TUO

31 ARROW, Kenneth J. (1950). Income, Saving and the Theory of Consumption Behavior. By James S. Dueseneberry (book review). American Economic Review. 40(5): ISSN ČESKÝ STATISTICKÝ ÚŘAD (2015). Vydání a spotřeba domácností statistiky rodinných účtů - domácnosti podle postavení a věku osoby v čele, podle velikosti obce, příjmová pásma, regiony soudržnosti [online databáze]. Praha: ČSÚ, [cit ]. Dostupné z: DUESENBERRY, James S. (1949). Income, Saving, and the Theory of Consumer Behavior. Cambridge: Harvard University Press. ISBN FRIEDMAN, Milton (1957). A Theory of the Consumption Function. New York: Princeton University Press. ISBN HALL, Robert E. (1978). Stochastic Implication of the Life Cycle Permanent Income Hypothesis: Theory and Evidence. Journal of Political Economy. 86(6): ISSN KUZNETS, Simon, Lillian EPSTEIN and Elizabeth JENKS (1946). National Product Since New York: National Bureau of Economics Research. ISBN MASON, Roger (2000). The Social Significance of Consumption: James Duesenberry's Contribution to Consumer Theory. Journal of Economic Issues. 34(3): ISSN MODIGLIANI, Franco and Richard BRUMBERG (1954). Utility Analysis and the Consumption Function: An Attempt and Integration. In: KURIHARA, Kenneth (ed.), Post- Keynesian Economics. New Brunswick: Rutgers University Press. ISBN PALLEY, Thomas I. (2010). The Relative Income Theory of Consumption: A Synthetic Keynes - Duesenberry - Friedman Model. Review of Political Economy. 22(1): DOI: / ROMER, David (2012). Advanced Macroeconomics. New York: McGraw-Hill/Irwin. ISBN VEBLEN, Thorstein (1899). The Theory of the Leisure Class: An Economic Study of Institutions. New York: Macmillian. [23] Faculty of Economics, VŠB - TUO

32 Section S1: Economics THE RELATIONSHIP BETWEEN EXCHANGE RATE AND EMU EXPORTS Abstract Markéta Dolinová VŠB TU Ostrava, Faculty of Economics This article is devoted to the examination of relationship between the exchange rate and foreign trade of the Economic and Monetary Union of the European Union (EMU). The objective of the paper was to evaluate the influence of exchange rate on low, medium and high technology exports of the EMU. The empirical analysis was based on exploring monthly data of the EMU exports growth rate and EUR/USD exchange rate in the time period from January 2002 till August 2015 by using Vector autoregression (VAR). Results of the analysis revealed that after unit exogenous shock of exchange rate the highest impact was on the high technology exports, and reversely the least on low technology exports. Keywords: Economic and Monetary Union of the European Union, Exchange Rate, Technology Exports JEL: F31, Q 27 Advisor: prof. PhDr. Stanislav Polouček, CSc. 18 th International Scientific Conference [24] Faculty of Economics, VŠB - TUO

33 1 Introduction The topic of this paper is the relationship between EUR/USD exchange rate and Economic and Monetary Union of the European Union (EMU) exports. This area has always been widely discussed since Euro was introduced in Since the United States of America (USA) is a major business partner for most of European Union (EU) countries, and dollar and euro are the most important foreign currencies, their mutual development and impact on economics is still observed and analysed. The area which is closely connected with the development of EUR/USD parity is foreign trade, therefore this paper is focused on these two fields. The objective of this article is to evaluate the influence of EUR/USD exchange rate on the technology export structure of the Economic and Monetary Union of the European Union. This export structure is as follows: low technology exports, medium technology exports and high technology exports. Time period was examined, specifically monthly time-series from January 2002 to August The main statistical databases which were used are as follows: UNCTADSTAT from the United Nation Conference on Trade and Development (UNCTAD) and World DataBank from the World Bank (WB). Vector autoregression (VAR) including Impulse response functions was chosen as the engine of analysis. The structure of the paper is as follows: the first part introduces the chosen topic as well as its relevance, the main goal, used data and their sources, and chosen model. In the second part, other authors and researches who have published articles on similar topics are introduced. In addition, in the literature review part, some authors who focus on the topic of econometric modeling particularly on the Vector autoregression model are also presented. The third part is focused on the used methodology and data and the last part presents the results of the empirical analysis. The final parts include conclusion and references. 2 Literature Review The export product structure division into four technological categories comes from the Organisation for Economic Co-operation and Development (OECD) classification and it has been revised several times. This classification includes resource based manufactures, low technology manufactures, medium technology manufactures and high technology manufactures. Many authors use this classification for their various scientific researches such as Lall (2000) who dealt with this issue as well. Lall (2000) used the data from Standard International Trade Classification, which is also well-known as SITC and he used the second revision as it covers longer availability of time series. Srholec (2007) examined selected countries and their share on the chosen export categories, particularly on the states which produce and export a large amount of high-tech goods volume. Srholec (2007) notes, that among group of countries specializing on the high-tech exports are also several member countries of the Economic and Monetary Union of the European Union. Wierts and Hann (2012) examined the effect of the exchange rate on export growth and he used the Organisation for Economic Co-operation and Development ISIC classification for distinguishing the export into four categories. These categories are as follows: high technology, medium-high technology, medium-low technology and low technology exports. According to [25] Faculty of Economics, VŠB - TUO

34 Section S1: Economics Wierts and Hann (2012): A 1% appreciation in the real exchange rate leads to a % decrease in real exports. Moreover, the impact of the real exchange rate becomes smaller the higher is the share of high tech exports in total exports. Pereiraa, Bentob, Janis Priedec (2013) work with the OECD technological classification as well as with the third revision of the International System of Industrial Classification from the United Nations (UN). They analyze the impacts of globalization on the exports in selected European Area counties, namely in Belgium, France, Germany and Italy in period Their results show that several changes have occurred in the production segment of these countries. These changes went toward the rise of high-tech production and exports. However, according to their research the conclusions can not be generalized and future research as well as usage of advanced econometrics methods is necessary for further confirmation of their findings. Many authors devote their research to the area of general econometric analysis and creation of economic models. As examples can be noted Hušek (2007), Hušek (2009) or Wooldridge (2012). Many authors extend this area to the applied spheres as for instance Asterious and Hall (2006) or Korobilis (2013) who examines monetary policy topics by using vector autoregressive (VAR) models approach. Anaki (2013) deals with a parity of Euro against main world currencies in Anaki (2013) examined whether Euro was overvalued against these particular currencies or not. He noted that EUR/USD exchange rate is crucial for the world economy, as these currencies are the most commonly used in the international trade. Portes and Rey (1998) add that Euro, after its introduction, became a vital world currency and took over much of the dollar original role in the world payments and trade. Auboin (2012) researches the importance of individual foreign currencies in the world economy in the time period from Based on his results the dollar still dominates in the foreign exchange transactions and on the second place ended up Euro followed by Japanese yen, Pound Sterling, Australian dollar and Swiss Franc. European Central Bank (2005) examined the commercial competitiveness of the European Union and Euro Area in relationship with development of EUR/USD exchange rate which influences the export prices. It has been discussed how the impact of the exchange rate development differs in countries based on the type of products they specialize in and consequently on their export structure as well. Historical experience has shown that exchange rate development strongly influenced the export prices and foreign trade in the United States of America (USA) as well as within the Euro Area. 3 Methods and data The empirical analysis in this paper was based on the model of Vector autoregression. This model is generally used for examination of a wide range of impacts of economic policy authority s decisions especially through construction of the Impulse response functions which were applied in this paper too. VAR models deal with both endogenous and exogenous variables and its main assumption is that all variables must be stationary. Thus, firstly it had to be verified whether the mean and variance are constant over time otherwise the results could have been biased. Unit root test was used for testing stationarity, which is also called Dickey- Fuller test named after its authors David Dickey and Wayne Fuller who developed it in Nevertheless, not all variables were found to be stationary, see Table 1, so it was necessary to 18 th International Scientific Conference [26] Faculty of Economics, VŠB - TUO

35 re-count these variables to ensure the stationarity. These variables were amounts of high, medium and low technology exports and they were transformed into monthly growth rates, see Table 1. Due to the monthly data were used it was also necessary to seasonally adjust data using Census X12 function integrated in Eviews 8. Tab. 1 Verification of stationarity Variable P-value Results of the test Exchange rate EUR/USD Exports LT Exports MT Exports HT Growth rate LT Growth rate MT Growth rate HT Source: author s calculation using Eviews 8. 0,045 Stationary 0,896 Non-Stationary 0,834 Non-Stationary 0,991 Non-Stationary 0 Stationary 0 Stationary 0 Stationary Moreover, this paper has been abstracted from the resource based manufactures therefore it has used only data about low technology, medium and high technology exports in the Economic and Monetary Union of the European Union. Data from UNCTAD database were used and the basic document was the third revision of this classification. There are not significant differences between the second revision, which is used by Lall (2000), and the third revision except time series, changing names and numbers of some items and the most of changes have occurred on the level of resource based manufactures. Moreover, this categorisation may lead to the fact that some activities at different levels of technological complexity can be integrated to the same group of products. For instance, very modern telephones belong to the same category as very simple plastic home telecommunication facilities and the categorisation do not differentiate quality of the products. Low technology exports (LT) are a category of products whose production does not require the usage of high knowledge and skills. The typical products which belong into this group of products are clothes, footwear, kitchen tools, furniture, non-metalic mineral products etc. It is typical for this group that these products very often compete between each other by price. So companies which produce them try to minimize cost structure by shifting its production to the low-cost countries. Moreover, the low technology exports income elasticity is very small. The development of the low technology exports growth rate in is visible in Figure 1. [27] Faculty of Economics, VŠB - TUO

36 Section S1: Economics Fig. 1 Monthly growth rate of low technology exports in EMU during period (%) Source: author s calculation using Eviews 8. Medium technology exports (MT) belongs into a category of innovative goods which production requires advanced knowledge, skills and facilities. It includes for instance gadgets and engines for car industry, chemicals, metals etc. Thus, this type of products is crucial for industrial economies. Companies often prefer to produce them directly in the place of demand as they can cooperate with other complement companies in the area as well because of transport costs might be too high. The development of the medium technology exports growth rate in is visible in Figure 2. Fig. 2 Monthly growth rate of medium technology exports in EMU during period (%) Source: author s calculation using Eviews 8. High technology exports (HT) belong into a group of products which includes a wide range of electronics, medicine or aircraft facilities. High amounts of investments to research and development are very often needed for their production. Especially innovative goods are very demanding for using advanced skills, knowledge and sophisticated technologies. That is the reason why the production of the end product might be the result of cooperation of many private and public subjects. The development of the high technology exports growth rate is visible in Figure th International Scientific Conference [28] Faculty of Economics, VŠB - TUO

37 Fig. 3 Monthly growth rate of high technology exports in EMU during period (%) Source: author s calculation using Eviews 8. 4 Results Because it was ensured that all variables were stationary during their entrance to the model, the Impulse response functions from VAR (1,2) were directly estimated. Which means that it was not necessary to use additional Impulse response functions from Error Correction Model (ECM) as it is required in cases when the time series are non-stationary. All models which were estimated had two optimum numbers of lags. It was also estimated the system of VAR equations 1. The main outputs are the Impulse response functions, see Figure 4, Figure 5 and Figure 6, which were constructed for growth rate of low technology exports, medium technology exports and high technology exports. In case of unit exogenous exchange rate shock it can be generally said that the reaction of low technology exports was minimal in the EMU. The rate of low technology exports was oscillating in an interval from about -0.1 to 0.1 %, see Figure 4. For Impulse response function of low technology exports VAR (1, 2) it was reached the R-squared of Shortly after the unit exogenous exchange rate shock the growth rate of low technology export decreased, however approximately from the half of the second month it was increasing till the half of the third month. From the half of the third month it had a decreasing tendency again. Nevertheless, this growth was just short-terming and from the half of the fourth month the effects of the exchange rate shock were disappearing. upon request. 1 Due to space limitations, the system of VAR equations is not placed in this paper however, it is available [29] Faculty of Economics, VŠB - TUO

38 Section S1: Economics Fig. 4 Impulse response function of low technology exports in EMU Source: author s calculation using Eviews 8. From Figure 5 it is obvious that in case of unit exogenous exchange rate shock, the reaction of medium technology exports growth was medium-sized in EMU. The rate of medium technology export was oscillating in an interval from about -0.2 to 0.2 %. For Impulse response function of medium technology exports VAR (1, 2) it was reached the R-squared of Shortly after the beginning of the exchange rate shock the growth rate of medium technology export decreased. Such decrease lasted till the half of the second month and after it was reached a growth during the following month. Afterwards the growth of medium technology exports was again going down. The effects of the exchange rate shock started to disappear around the half of the fourth month. Fig. 5 Impulse response function of medium technology exports in EMU Source: author s calculation using Eviews 8. In case of unit exogenous exchange rate shock the reaction of high technology exports in EMU was in interval from -0.4 to 0.4 %. For Impulse response function of high technology exports VAR (1, 2) R-squared of 0.36 was gained. Shortly after the exchange rate shock appeared, the growth rate of high technology export was diminishing until the half of the second month. Then it started to increase to the maximum level of 0.4 %, which was reached in the half of the third month. Afterwards, the growth rate of high technology export was decreasing again until the half of the fourth month when the impacts of the exchange rate shock started to weaken and evaporate. 18 th International Scientific Conference [30] Faculty of Economics, VŠB - TUO

39 Fig. 6 Impulse response function of high technology exports in EMU Source: author s calculation using Eviews 8. Conclusion This paper deals with an issue of the relationship between exchange rate and EMU exports namely the low, middle and high technology exports. The objective of this paper was to explore the effects of exchange rate on the individual categories of exports via Vector autoregression model and using Impulse response functions. The results are as follows: the effect of unit exogenous exchange rate shock in EMU was the highest in case of high technology exports and reversely the smallest in case of low technology exports. It can be connected with the fact that low technology goods are usually sold for lower prices. Thus, the changed costs either increased or decreased, which were caused by the unit exogenous exchange rate shock, do not influence the final price as vastly as in case of high technology products, where the difference between the original and final price is significantly higher. Moreover, the low technology exports are created by a group of products which is used in a daily consumption in higher volume. So their export elasticity is lower than in case of the middle and high technology exports. It can be connected with the fact that the low technology exports are very often used for contentment of needs located on the lower levels in the hierarchy of needs. References ANAKI, Kalbasi Nahid (2013). Effects of Euro Devaluation on Eurozone Exports. Canadian Center of Science and Education. 6(2): ASTERIOUS, Dimitrios and Stephen G. HALL (2006). Applied econometrics A Modern Approach. New York: Palgrawe MacMillan, 2006, 397 p. ISBN-10: AUBOIN, Marc (2012). Use of Currencies in International Trade: Any Changes in the Picture? World Trade Organization. Staff Working Paper ERSD EUROPEAN CENTRAL BANK (2005). Competitiveness and the Export Performance of the Euro Area. European Central Bank Germany ISSN HUŠEK, Roman (2007). Aplikovaná ekonometrie: teorie a praxe. Vyd. 1. Praha: Oeconomica, 2009, 344 s. ISBN [31] Faculty of Economics, VŠB - TUO

40 Section S1: Economics HUŠEK, Roman (2007). Ekonometrická analýza. Vyd. 1. Praha: Oeconomica, 2007, 367 s. ISBN KOROBILIS, Dimitris (2013). Assessing the transmission of monetary policy using timevarying parameter dynamic factor models. Oxford Bulletin of Economics and Statistics 75(2): LALL, Sanjay (2000). The technological structure and performance of developing country manufactured exports, Oxford development studies 28(3): OECD (2011). ISIC REV. 3 TECHNOLOGY INTENSITY DEFINITION: Classification of manufacturing industries into categories based on R&D intensities. [online]. [cit ]. Available at: < PEREIRAA, E., CERDEIRA, B., and Janis PRIEDE, J. (2013). The Contribution of Technological Change on EU Exports. University of Aveiro and GOVCOPP, University of Latvia PORTES, Richard and Héléne Rey (1998). The emergence of the euro as an international currency. London Business School and London School of Economics. 26(2) SRHOLEC, Martin (2007). High-Tech Exports from Developing Countries: A Symptom of Technology Spurts or Statistical Illusion? Kiel Institute UNCTAD (2016). UNCTADSTAT International Trade in Goods and Services. [online database]. [cit ]. Available at: UNSTATS (2007). Detailed Structure and Explanatory Notes. [online]. [cit ]. Available at: < WIERTS, Henk van Kerkhoff and Jakob de HANN (2012). Trade Dynamics in the Euro Area: The role of export destination and composition. De Nederlandsche Bank, the Netherlands University of Groningen, CESifo WOODRIDGE, Jeffrey (2012). Introductory Econometrics A Modern Approach. 5 st edition. USA: South Western, 2012, 881 p. ISBN WORLD BANK (2016). World DataBank Trade. [online database]. [cit ]. Available at: < 18 th International Scientific Conference [32] Faculty of Economics, VŠB - TUO

41 FISKÁLNÍ POLITIKA A EKONOMICKÝ RŮST: SPECIÁLNÍ ZAMĚŘENÍ NA SOCIÁLNÍ VÝDAJE 1 FISCAL POLICY AND ECONOMIC GROWTH: SPECIAL FOCUS ON SOCIAL EXPENDITURE Agata Drobiszová Vysoká škola báňská Technická univerzita Ostrava agata.drobiszova@vsb.cz Abstrakt Cílem tohoto článku je zjistit, jaký je vliv sociálních výdajů na ekonomický růst v dlouhém období ve vyspělých ekonomikách. Empirická analýza byla provedena na vzorku 34 zemí OECD v letech Růstový model zahrnuje kromě standardních růstových proměnných také fiskální proměnné, a to daňové příjmy a sociální výdaje. Pro empirickou analýzu byl využit dynamický panel. Hlavním závěrem článku je, že sociální výdaje mohou, za určitých okolností, zvýšit hospodářský růst, ale jde pouze o krátkodobý efekt. Určitá míra sociálních výdajů je nezbytné pro fungování ekonomiky, ale tyto výdaje se nezdají být vhodným nástrojem pro přímé stimulace dlouhodobého růst. Klíčová slova: Daňové příjmy, Ekonomický růst, Fiskální politika, Sociální výdaje JEL: H50, H20, O40 Abstract The aim of this article is to examine the impact of social spending on economic growth in the long term in the developed economies. The empirical analysis was conducted on a sample of 34 OECD countries for the period Growth model includes, besides standard growth variables also fiscal variables, namely tax revenues and social expenditures. For empirical analysis was used a dynamic panel. The main conclusion of the article is that social expenditure may, in certain circumstances, increase economic growth, but it is only a shortterm effect. A certain level of social spending is necessary for the functioning of the economy, but these spending do not seems to be a suitable tool for direct stimulation of long-term growth. Keywords: Tax Revenue, Economic Growth, Fiscal Policy, Social Expenditure JEL: H50, H20, O40 Školitel: prof. JUDr. Ing. Igor Kotlán, Ph.D. 1 Tento článek vznikl za finanční podpory Studentské grantové soutěže EkF, VŠB-TU Ostrava v rámci projektu SP2015/110 " Vplyv fiškálneho deficitu na ekonomický rast a možnosti jeho optimálneho znižovania v ČR. [33] Faculty of Economics, VŠB - TUO

42 Section S1: Economics 1 Úvod Mnoho autorů empirických prací se zabývá jakým způsobem a zda vůbec, lze nastavit fiskální či monetární politiku tak, aby dlouhodobě ovlivňovala ekonomický růst, a to i ve stálém stavu. V rámci fiskální politiky se v současnosti diskutuje o sociálních výdajích. Neboť v souvislosti se stárnutím populace je předpokládáno navyšování těchto výdajů. Sociální výdaje tvoří již nyní relativně velkou část státních výdajů, jeví se tedy důležité zkoumat vliv těchto výdajů na ekonomický růst. Cílem článku je tedy zjistit, jaký je vliv sociálních výdajů na ekonomický růst v dlouhém období ve vyspělých ekonomikách. Empirická analýza byla provedena na vzorku 34 zemí OECD v letech Teoretický základ růstového modelu použitého v tomto článku vychází z práce Barroa (1990). Exogenními proměnnými jsou klasické růstové proměnné, konkrétně fyzický a lidský kapitál. Druhou skupinu vysvětlujících proměnných tvoří fiskální proměnné, a to daňové příjmy a sociální výdaje. Pro empirickou analýzu byl využit dynamický panel. 2 Sociální výdaje v empirické literatuře Jednotlivé typy vládních výdajů mohou mít odlišný vliv na ekonomický růst. 2 V tomto článku se zaměříme na jednu konkrétní část výdajů, tedy na sociální výdaje. Dosavadní empirické práce zkoumající vliv sociálních výdajů a ekonomického růstu nejsou jednoznačné. V zásadě je možné rozdělit ekonomy zabývající se touto problematikou do dvou názorových skupin. Na ty, kteří zastávají názor o negativním vlivu sociálních výdajů na ekonomický růst, a na ty, kteří tvrdí, že opak je pravdou. Autoři, kteří zastávají názor, že redistribuční výdaje, tedy i sociální výdaje, spíše negativně ovlivňují ekonomický růst, argumentují tím, že z důvodů zvyšování těchto výdajů dochází ke snižování míry úspor, a tak i ekonomického růstu. Je to způsobeno faktem, že zvyšování výdajů s sebou přináší vyšší míru zdanění, jakožto zdroje financování. Tím se snižuje motivace k práci a k investicím do lidského kapitálu. Dalším faktorem, který negativně ovlivňuje ekonomický růst, je vytěsňování soukromých investicí (viz např. Agénor, 2010; Afonsa a Furceriho, 2008; Afonso et al., 2005;Schaltegger a Torgler, 2004; Foelster a Henrekson, 2001 nebo Devarajan, Swaroop a Zou, 1996). Afonso, Schuknecht a Tanzi (2005) dodávají, že větší veřejný sektor, tedy relativně vysoké sociální výdaje, automaticky neznamenají jejich efektivní využití a zabezpečení optimálního sociálního zabezpečení. Druhá skupina autorů se naopak snaží vyvrátit obecně přijímaný předpoklad, že sociální výdaje spíše negativně ovlivňují ekonomický růst. Aaron (1982) zkoumal, zda opravdu sociální výdaje negativně ovlivňují míru úspor, a tím i ekonomický růst, a dochází k závěru, že empirické důkazy nepotvrzují tento předpoklad. Sociální výdaje dle empirických studií mohou mít dokonce pozitivní vliv na ekonomický růst, pokud zlepšují sociální soudržnost a politickou stabilitu (Sala-i-Martin, 1992). Výdaje na důchodové zabezpečení, které jsou součástí sociálních výdajů, zase můžou zvyšovat produktivitu na trhu práce, což působí na produktivitu fyzického kapitálu a následně pozitivně i na růst. Pokud přijmeme předpoklad, že produktivita se s věkem snižuje, tak vhodně nastavený penzijní systém může motivovat starší, a tedy i méně 2 Kneller, Bleaney a Gemmell (1999). 18 th International Scientific Conference [34] Faculty of Economics, VŠB - TUO

43 produktivní jedince, aby odešli do důchodu a uvolnili místo mladším, více produktivním (Salai-Martin, 1996). Dalším argumentem pro pozitivní vliv sociálních výdajů na ekonomický růst je, že sociální výdaje poskytují jednotlivcům pobídky k investicím do lidského kapitálu, což má přímý vliv na růst prostřednictvím tohoto kanálu a nepřímý prostřednictvím zvyšování produktivity fyzického kapitálu (Buiter a Kletzer, 1993 a Bellettini a Berti Ceroni; 2000). Z výše uvedené literatury je tedy patrné, že vliv sociálních výdajů na ekonomický růst je stále otevřenou otázkou. Pro získání věrohodných výsledků je tedy nezbytné provádět empirickou analýzu na co nejdelší časové řadě. Z toho důvodu je empirická analýza v tomto článku založena na časové řadě čítající 34 let (období ) a 34 zemí OECD. 3 Empirická analýza Růstový model vychází z práce Barro (1990) a zahrnuje kromě standardních růstových proměnných také fiskální proměnné. Vysvětlovanou proměnnou v empirické analýze je reálný HDP na obyvatele vyjádřený v paritě kupní síly. Růstovými proměnným jsou v tomto článku akumulace fyzického kapitálu aproximovaná hrubou tvorbou fixního kapitálu k HDP a lidský kapitál, zachycený jako index lidského kapitálu. Druhou skupinou vysvětlujících proměnných tvoří fiskální proměnná. Jedná se konkrétně o daňové příjmy a sociální výdaje. Sociální výdaje jsou zkoumány na základě standardní COFOG klasifikace (European Communities, 2007), jde o součet výdajů spadajících do této kategorie 3 vztažených k HDP v PPP. Daňové zatížení 4, je zkoumáno pomocí celkových daňových příjmů k HDP v paritě kupní síly. Různé typy daní jako zdroj financování sociálních výdajů také mohou ovlivnit výsledný dopad na ekonomický růst. Z důvodů, že každá země má jiným způsobem nastaven sociální systém a zdroj financování sociálních výdajů se v článku přistoupilo k vnímání daní jako celku. Data byla čerpána z databáze OECD (OECD ilibrary), konkrétně ze statistiky národních účtů, daňové statistiky a statistiky sociálních výdajů. Data pro lidský kapitál byla stažena z Penn World Table (verze 8.1). V tabulce 1 je zachycena deskriptivní statistika fiskálních proměnných, tedy sociálních výdajů a daňových příjmů, vstupujících do empirické analýzy. Tab. 1. Deskriptivní statistika použitých fiskálních proměnných (země OECD, období ) Sociální výdaje k HDP (%) Daňové příjmy k HDP (%) Průměr 19,38 33,40 Medián 19,70 33,71 Maximum 35,50 49,54 Minimum 2,70 10,67 Směrodatná odchylka 6,28 7,78 Zdroj: vlastní výpočty 3 Dle COFOG se do této kategorie tyto položky: nemoc a invalidita; stáří; pozůstalí; rodina a děti; nezaměstnanost; bydlení; aplikovaný výzkum a vývoj v oblasti sociálních věcí. 4 Daňové příjmy jsou součtem příjmů z těchto položek: daň z důchodů, zisků a kapitálových výnosů, příspěvky na sociální zabezpečení, daně z mezd a pracovních sil, daně majetkové, daně ze zboží a služeb a ostatní daně. [35] Faculty of Economics, VŠB - TUO

44 Section S1: Economics V článku je aplikovaná metoda dynamické panelové regrese, tedy zobecněná metoda momentů (GMM), která zahrnuje instrumentální proměnné. V rámci této metody byl dále použit odhad pomocí Arellano-Bond (Arellano, Bond, 1991). Použití robustního estimátoru při výpočtu kovarianční matice (metoda White Period), došlo k zajištění, aby byly výsledky odhadů standardních odchylek parametrů korigovány o možný výskyt autokorelace a heteroskedasticity. S ohledem na interpretaci výsledků byly jednotlivé proměnné upraveny do logaritmické podoby (dále v textu označeno jako log). U jednotlivých proměnných, před začátkem samotné empirické analýzy, byly provedeny testy stacionarity, za použití testů jednotkových kořenů podle práce Levin, Lin, Chu (2002), dále také podle prací Im, Pesaran, Shin (2003) a Maddala, Wu (1999). Dle jednotlivých testů byly proměnné shledány nestacionární a byly upraveny na první diference (značeno d). V empirické analýze došlo také ke zpožďování fiskálních proměnných (značeno -1, -2, -3, -4 v závislosti na délce zpoždění). 4 Výsledky empirické analýzy V tabulce 2 jsou znázorněny výsledky empirické analýzy. Došlo k odhadnutí celkem čtyř modelů, kdy modely se liší časovým zpožděním fiskálních proměnných. Sargan test, tedy J-statistiky, v tabulce níže, potvrdila významnost nástrojů v každém z odhadovaných modelů. Z empirické analýzy je patrné, že sociální výdaje pozitivně působí na ekonomický růst s ročním zpožděním, což je také v souladu s keynesiánskou poptávkovou teorií. Z růstového modelu (Barro, 1990) je také známo, že na ekonomický růst působí také očekávání a preference spotřebitelů. Pokud se sociální výdaje nárazově v jednom roce zvýší, tak příjemci sociálních výdajů díky zvýšeným příjmům začnou více spotřebovávat, zvýší se jejich mezní sklon ke spotřebě. Také očekávají, že navýšený objem sociálních výdajů přetrvá, tím se jejich spotřeba ještě zvýší. V dalším roce již k navýšení sociálních výdajů nedojde a příjemci sociálních výdajů znovu přehodnotí své spotřební chování a zvýší mezní míru k úsporám, což se projeví v negativním vlivu na ekonomický růst se zpožděním 2 a 3 roky. Ve čtvrtém roce již negativní efekt navýšení sociálních výdajů vyprchá. 18 th International Scientific Conference [36] Faculty of Economics, VŠB - TUO

45 Tab. 2 Vliv sociálních výdajů na ekonomický růst v zemích OECD v letech Závislá proměnná d(log(hdp na ob.))) d(log(hdp na ob.(-1))) 0,042 (1,70)* 0,030 (1,99)** 0,165 (2,97)*** 0,008 (0,37) d(log(fyzický kapitál)) 0,353 (32,47)*** 0,340 (31,62)*** 0,296 (13,10)*** 0,314 (19,47)*** d(log(lidský kapitál)) 0,988 (2,60)*** 0,88 (2,97)*** 2,33 (3,20)*** 0,267 (0,60) d(log(daň. příjmy(-1))) 0,034 (1,55) d(log(soc. výdaje(-1))) 0,062 (3,75)*** d(log(daň. příjmy(-2))) -0,43 (-1,36) d(log(soc. výdaje(-2))) -0,48 (-4,07)*** d(log(daň. příjmy(-3))) 0,131 (2,48)** d(log(soc. výdaje(-3))) -0,089 (-3,21)*** d(log(daň. příjmy(-4))) -0,101 (-2,45)** d(log(soc. výdaje(-4))) 0,092 (5,29)*** Počet pozorování J-statistika 28,7 28,2 25,6 28,0 Počet instrumentů Pozn.: v závorkách jsou uvedeny t-statistiky, jež jsou korigovány o heteroskedasticitu a autokorelaci; směrodatné odchylky jsou spočítány s využitím robustních odhadů; ***, **, * označuje hladinu významnosti 1 %, 5 %, 10 %. Zdroj: vlastní výpočty Závěr Fiskální politika, dle nedávné empirické literatury, může ovlivňovat ekonomický růst i v dlouhém období. Sociální výdaje tvoří relativně velkou část státních výdajů, jeví se tedy důležité zkoumat vliv těchto výdajů na ekonomický růst. Cílem článku bylo tedy zjistit, jaký je vliv sociálních výdajů na ekonomický růst v dlouhém období ve vyspělých ekonomikách. Empirická analýza byla provedena na vzorku 34 zemí OECD v letech Teoretický základ růstového modelu použitého v tomto článku vycházel z práce Barroa (1990). Exogenními proměnnými byly klasické růstové proměnné, konkrétně fyzický a lidský kapitál. Druhou skupinu vysvětlujících proměnných tvoří fiskální proměnné, a to daňové příjmy a sociální výdaje. Pro empirickou analýzu byl využit dynamický panel. Z hlavních závěrů tohoto článku vyplývá, že jednorázové změny v sociálních výdajích nemají na ekonomický růst dlouhodobý vliv. Tato navýšení výdajů se nejprve pozitivně projeví s ročním zpožděním. Následně dva roky dochází k poklesu tempa ekonomického růstu. Efekt jednorázové změny v sociálních výdajích vyprchá za 4 roky, kdy se tempo ekonomického růstu ustálí na původní úrovni. Sociální výdaje tedy za určitých okolností mohou zvýšit ekonomický růst, jde však pouze o krátkodobý vliv. Pokud je tedy tvůrci hospodářské politiky prováděna politika [37] Faculty of Economics, VŠB - TUO

46 Section S1: Economics jednorázových navyšování sociálních výdajů, jde spíše o sledování krátkodobých, politických cílů. Jistá úroveň sociálních výdajů je pro fungování ekonomiky nezbytná, ale je také důležité vhodně určit zdroj financování těchto výdajů. Sociální výdaje se nejeví jako vhodný nástroj pro přímé stimulování dlouhodobého růstu. Literatura AARON, Henry J. (1982). Economic Effects of Social Security. Washington, D.C: The Brooking Institutions. AFONSO, António and Davide FURCERI (2008). Government size, composition, volatility and economic growth. European Central Bank Working Paper No.849. AFONSO, António et al. (2005). Quality of public finances and growth. European Central Bank Working Paper No AFONSO, António, SCHUKNECHT, Ludger and Vito TANZI, (2005). Public Sector Efficiency: An International Comparison. Public Choice, 123(3): AGÉNOR, Pierre-Richard (2010). A Theory of Infrastructure-led Development. Journal of Economic Dynamics & Control. February 2010, 34: ARELLANO, Manuel and Stephen BOND, (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. Review of Economic Studies, 58: BARRO, Robert (1990). Government Spending in a Simple Model of Endogenous Growth. Journal of Political Economy, 98(5): BELLETTINI, Giorgio and Carlotta BERTI CERONI (2000). Social Security Expenditure and Eonomic Growth: An Empirical Assessment. Research in Economics, 54: BUITER, Willem and Kenneth KLETZER (1993). Permanent international productivity growth differentials in an integrated global economy. Scandinavian Journal of Economics, 95: DEVARAJAN, Shantayanan, SWAROOP Vinaya and Heng-fu ZOU (1996). The Composition of Public Expenditure and Economic Growth. Journal of Monetary Economics. 1996, 37(1): EUROPEAN COMMUNITIES (2007). Manual on Sources and Methods for the Compilation of COFOG Statistics Classification of the Functions of Government (COFOG). Luxembourg: Office for Official Publications of the European Communities. FOELSTER, Stefan and Magnus HENREKSON (2001). Growth Effects of Government Expenditure and Taxation in Rich Countries. European Economic Review, 45(8): KNELLER, Richard, Michael, BLEANEY and Norman GEMMELL (1999). Fiscal Policy and Growth: Evidence from OECD Countries. Journal of Public Economics, 74(2): th International Scientific Conference [38] Faculty of Economics, VŠB - TUO

47 LEVIN, Andrew, Chien-Fu LIN and Chia-Shang J. CHU (2002). Unit Root Tests in Panel Data: Asymptotic and Finite-Sample Properties. Journal of Econometrics, 108(1): MADDALA, Gangadharrao and Shaowen WU (1999). A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test. Oxford Bulletin of Economics and Statistics, 61: SALA-I-MARTIN, Xavier (1992). Public Welfare and Growth. Yale University, Economic Growth Center, D.P SALA-I-MARTIN, Xavier (1996). A positive theory of social security. Journal of Economic Growth, 1: SCHALTEGGER, Christoph and Benno TORGLER (2004). Growth Effects of Public Expenditure on the State and Local Level: Evidence from a Sample of Rich Governments. Center for Research in Economics, Management and the Arts (CREMA), Working Paper no [39] Faculty of Economics, VŠB - TUO

48 Section S1: Economics THE CONDITIONAL POLITICAL-TAX CYCLE IN THE DEVELOPED COUNTRIES 1 Jan Janků VSB Technical University of Ostrava, Faculty of Economics, Ostrava, Czech Republic. jan.janku@vsb.cz Abstract The aim of this paper is to evaluate the conditional political tax cycle in the OECD countries. It means to evaluate whether there are systematic decreases in the tax revenues before the elections in the OECD countries, which would depend on the transparency and credibility of fiscal policy. We consider a linear dynamic panel data model for the empirical verification of the hypothesis mentioned above. We use an unbalanced cross-country time-series dataset, comprising 34 developed countries (the OECD members) over the period The results are as follows. First, there is a statistically significant political tax cycle in the tax revenues in the countries with a lower level of fiscal credibility and transparency. Second, the political tax cycle is noticeable especially in the consumption taxes. Keywords: Elections, Imperfect Information, Political Budget Cycle, Rationality, Taxes. JEL: D72, D83 Advisor: prof. Ing. Christiana Kliková, CSc. 1 This paper was financially supported within the VŠB - Technical University SGS grant project No. SP2015/115 Institutional and Monetary Context of Economic Integration of European Countries Today. 18 th International Scientific Conference [40] Faculty of Economics, VŠB - TUO

49 1 Introduction The political business/budget cycle (PBC) is a phenomenon which has been studied by many researchers both economists and political scientists. The PBC denotes situation when the incumbent politician tries to influence voter s behavior in the time of the election. The traditional theory of the political business cycle (the PBC I model) concludes that the incumbent is able to influence certain macroeconomic variables (typically the unemployment) and as a result he can gain some extra votes from the electorate. This theory (in its basic version) assumes that there is a trade-off between the unemployment rate and the inflation rate thus, it assumes the short-term Phillips curve and adaptive expectations of players. Moreover, it assumes that the policy-maker s manipulations should have immediate impact to the economy. Both of these assumptions are seen as unrealistic by some researchers. For this reason, there is a shift in the focus to the political budget cycle theory. The theory of the political business cycle (the PBC I model) is closely associated with the public choice. The newer theories of the political budget cycle (the PBC II and the PBC III models) are rather associated with the political economics. The term political budget cycle is used to describe cyclical fluctuations in the fiscal policy (in the fiscal policy instruments) induced by the timing of elections. However, the reason for the emergence of these cycles in the macroeconomic variables (the PBC I) and in the fiscal variables (the PBC II and the PBC III) is the same re-election motives create incentives for incumbent politicians to appear competent just ahead of the elections. In this paper we examine the conditional political tax cycle (PBCT) in the developed countries (in the OECD countries). We focus especially on the detailed analysis of government revenues we examine the PBCT in the various types of taxes. Using data from the 34 OECD member states over the period we conclude that there is a statistically significant political tax cycle in the tax revenues in the countries with a lower level of fiscal credibility and transparency. Furthermore, the PBCT is noticeable especially in the consumption taxes. The paper proceeds as follows. Section 2 introduces the basic model. Section 3 includes description of the data, empirical strategy and underlying empirical model. In Section 4, we discuss the results of the analysis. Section 5 concludes. 2 Theoretical considerations In this paper, we examine the third generation of political budget cycle models. These models were originally designed by Persson and Tabellini (2000) and Shi and Svensson (2002a). There is a comprehensively derived model in the later article of Shi and Svensson (2006), we outline a basic scheme only. There is an assumption that each politician has a certain competence level in these moral hazard models. Voters have rational expectations and want to elect the politician (incumbent or challenger) with the higher competence level. The competence level is unobservable so that voters must make their decision on a base of the observable macroeconomic performance of the incumbent government (such as the amount of public goods). There is very important assumption that the incumbent government can exert a hidden effort to stimulate policy instruments as well. [41] Faculty of Economics, VŠB - TUO

50 Section S1: Economics Authors (Shi and Svensson, 2006) describe moral hazard models by the utility function of voters i in period t as, where gt is consumption of a government provided good (per capita) in period t, ct is private consumption, zt is a binary variable taking the value -1/2 if a is elected and 1/2 if b is elected, and u(c) is a standard concave utility function. They assume that the economy is composed of a large number of citizens, each of whom derives utility from a private consumption good and a public good. There are two politicians (political parties), denoted with superscripts a and b. All agents are expected utility maximizers. All voters are alike in their preferences over consumption, but they differ in the parameter θ i, which is uniformly distributed on [-1/2, 1/2]. If θ i < 0 voter i is biased in favor of party a (and vice versa), which can be seen as valuation of other dimension (policy or personal characteristics) on which the candidates differ. Shi and Svensson (2006) define public output as, T U t i = β s t [g s + u(c s ) + θ i z s ], s=t g t = τ t + d t R(d t 1 ) + η t j, (2) where τt means taxes, dt means borrowing, R(d) is a continuous cost function of public borrowing with R(0)=0 and R(d)>0 for all d>0 and η j t means certain competence level. At the beginning of each period, all citizens receive an exogenous income y. Public good provision is financed with a lump-sum tax τ, c t = y τ t. (3) The politicians derive own utility from consumption goods in the same way as other citizens. Furthermore, authors state that the politician can gain additional ego rents X. There are only two periods (election and post-election period). Thus, elections take place at the end of every other period and political candidate j s utility function is, (1) T V j t = β s t [g s + u(c s ) + X s ], s=t (4) for j={a, b}. In the time of the elections t, voters will vote for candidate who will deliver the best expected outcome in period t+1. The budget constraint in period t is, where τ * is optimal tax rate. g t = τ + d t + η t. (5) Since borrowing is costly and the marginal utility of public consumption is constant, the government will not borrow in period t+1, it will run a primary surplus to pay down its debt. Thus, 18 th International Scientific Conference [42] Faculty of Economics, VŠB - TUO

51 g t+1 = τ R(d t ) + η t+1 (6) At the beginning of period t, the incumbent sets τt and dt to maximize his total expected utility over the next two periods. The shock ηt occurs during the period. This timing implies that the incumbent facing a large set of possible policy problems knows the tax code, while he is uncertain about the tax revenues it will generate. The first-order condition of maximization problem mentioned in the cited article equates the marginal disutility of taxes with the marginal utility of spending. The voters ability to assess the incumbent s policy differs. Certain share (σ) of the electorate is assumed to be informed (has access to a free flow of information), in the sense that it observes both election year spending (gt), taxes (τt), and the amount of borrowing (dt) before elections. A share of 1- σ of the electorate is uninformed (does not have access to a free flow of information) and only observes the policy instruments that directly influence their utility, i.e. gt and τt. As we examine conditional electoral changes in the tax revenues, we can state that the higher share of uninformed voters (who can confuse decreasing amount of taxes τt resulting in borrowing dt for competence level η i t), the higher should be the incumbent s incentives to manipulate the fiscal outcome. 3 Data and empirical strategy 3.1 Data We use an unbalanced cross-country time-series dataset, comprising 34 developed countries (the OECD members) over the period An autoregressive (dynamic) panel model is used. The panel includes a number of economic, socio-economic and political variables. Data on taxes and economic variables are obtained from the OECD database 2. Data on demographic variables are extracted from the World Bank database. Political data (election dates) are obtained from the Database of Political Institutions (Keefer et al., 2001).We will test the overall tax quota and tax quota sub-components, according to the OECD classification. The sub-components include taxes on individuals (1100), taxes on corporations (1200), social security contributions (2000), property taxes (4000), VAT-type taxes (5110), and selective taxes on consumption (5120). Let us recall previous chapter. It was mentioned that the higher share of uninformed voters is supposed to lead to the higher incumbent s incentives to manipulate the fiscal outcome. For this reason PBCT should arise in the countries with the lower level of fiscal credibility and transparency (we expected the lower share of informed voters in those countries). Worldwide Governance Indicators (WGI) 3 are relatively close to the institutional characteristics mentioned above. A sub-index Government Effectiveness is probably the best 2 Data on taxes are available from: OECD Tax Statistics: 3 see Kaufmann et al. (2010). [43] Faculty of Economics, VŠB - TUO

52 Section S1: Economics approximation. This index reflects perceptions of the quality of public services, the quality of the civil service and the degree of its independence from political pressures, the quality of policy formulation and implementation, and the credibility of the government's commitment to such policies. If an individual country was ranked in the highest category of the index (i.e percentiles) in the period , then we can identify this country as a country with high level of credibility and transparency of fiscal policy. This is the main criterion for the distribution of countries into two groups. Countries with a high level (19): Austria, Australia, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Luxembourg, The Netherlands, The New Zeland, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the USA. Countries with a lower level (15): The Czech Republic, Chile, Estonia, Greece, Hungary, Israel, Italy, Japan, Korea, Mexico, Poland, Portuguese, Slovakia, Slovenia and Turkey. 3.2 Econometric specification of the empirical model We use the dynamic panel data model to test the predictions of the PBCT. Originally, the empirical model has been designed by some authors mentioned above 4. We proposed some modifications in this model. The model has the following form: TAX it = α j Y it j l j=1 + βx it + γgrowth it +[IN it δ 1 + (1 IN it )δ 0 ]elec it + μ i + ε it, (7) where TAXit is a dependent variable, i.e. tax revenues in country i in year t, X it is a row vector of control variables, growthit is the GDP growth rate, elecit is a dummy electoral variable, μ i are unobserved country-specific effects and ε it is an error term. As already mentioned a dependent variable TAXit is always one of the categories of tax quota (thus, the ratio of specific tax revenues to nominal gross domestic product). The vector of control variables can be expressed as X it = (nairu it idr it trade it ). These control variables have been shown to be correlated with fiscal policy outcomes in previous studies. They are important to ensure that our estimated results for the political variable will not draw misleading interferences regarding the unemployment, a business cycle, international trade, etc. The variable nairuit is the non-accelerating rate of unemployment (NAIRU) and represents the equilibrium in the labor market. NAIRU can be seen as a reflection of the potential outcome on the labor market, see related literature - Modigliani and Papademos (1975). It also represents imperfections on the labor market and can be identified with the structural and frictional unemployment. With increasing NAIRU a lower tax revenues are expected. The variable idrit expresses the proportion of the population aged on the proportion of the population aged 65+. It is simply an inverse dependency ratio (workers per dependent). Other authors (Persson and Tabellini (2002) or Brender and Drazen (2005)) use two demographic variables representing the percentage of population aged and Shi and Svensson (2002b, 2006) and Person and Tabellini (2002). 18 th International Scientific Conference [44] Faculty of Economics, VŠB - TUO

53 However, these two variables are collinear and they are not statistically significant. Moreover, due to a reduction of these variables into one, the number of instruments is reduced. With increasing IDR a higher tax revenues are expected. The control variable tradeit has been used in the studies mentioned above as well. This variable represents the trade share, i.e. exports and imports as share of GDP. With an increasing openness of the economy, higher tax revenues are expected because openness of the economy boosts the demand for the public compensation of external risks and puts pressure on a country s social security system. As a result, governments need to collect more tax revenue to finance increased demand for public goods (Troeger, 2013). The exogenous variable growthit is a very important control variable, which represents an annual percentage growth rate of GDP at market prices. Its role is to filter out and to capture fiscal fluctuations (the fluctuations in the tax revenues) caused by the economic fluctuations. The results should not be misrepresented by the dynamic of a business cycle. Finally, the electoral variable elecit codes the year the executive is elected. It equals 1 in the years of legislative election, and 0 in all other years. The variable elecit is a key variable for the evaluation of politically induced cycle. This dummy variable is further divided by a binary indicator INit, INit ϵ {0, 1}. The indicator takes the value 0 at the subsample of countries with worse fiscal institutions and the value 1 at the subsample of countries with better fiscal institutions. See other papers (e.g. Persson and Tabellini, 2002) for a similar procedure. 3.3 Methodology Assuming that the unobserved country-specific effects are equal across countries, that error term is not serially correlated and that the explanatory variables are strictly exogenous, the model (7) can be estimated with Ordinary Least Squares (OLS). It is almost certain that the unobserved country-specific effects are different across countries. Consequently, the simple Ordinary Least Square estimator is biased. Most empirical studies have employed the Fixed Effects (FE) in order to allow for cross-country differences. However, the dynamic panel data model is used in this article (the inclusion of lagged dependent variables). Hence, there is another source of bias because the vector of lagged dependent variable is correlated with the vector of error term. The potential estimation bias is of order 1/T, where T is the length of the panel (the number of periods). (see Nickell, 1981; Kiviet, 1995). This problem is enlarged if the number of individuals i is large, while the number of periods T is quite small (note, that the bias becomes smaller as the length of the panel increases to infinity T ). Since the number of periods is relatively small (T = 14) in this panel and it is lower than the number of cross-sections (i = 34), the generalized method of moments (GMM) is employed. For the panel data, this method uses the Arellano-Bond estimator (Arellano and Bond, 1991). The Arellando-Bond estimation transforms all regressors by differencing (first differencing, FD), and uses the GMM with the instrumental variables (IV) 5. 5 The instruments used in GMM regression are lagged levels of the dependent variable (they are generated for the each period). The electoral dummy and the strictly exogenous covariates are instrumented by themselves. [45] Faculty of Economics, VŠB - TUO

54 Section S1: Economics The consistency of the GMM estimator depends on the condition of no second-order serial correlation of the differenced residuals. For this reason we check the Arellano-Bond test for second-order serial correlation (proposed by Arellano and Bond, 1991). Similarly, the consistency of the GMM estimator depends on the validity of instruments. Thus, we perform Hansen (1982) test for over-identifying restrictions, which is based on Sargan (1958) test. 4 Results and discussion The results of regression analysis are included in the following table (table 1). There are regression coefficients and t-statistics for the model with overall quota as dependent variable in the first column. The coefficients on the lagged dependent variable and the other control variables have expected sign (the variables nairu and trade are statistically insignificant). There are extra rows reporting the Hansen test for over-identifying restrictions and the Arellano-Bond test for second-order serial correlation of the differenced residuals. Both tests have expected p-values (we do not reject the null hypothesis: that instruments are uncorrelated with residuals; that there is no second order serial correlation in the first-differenced residuals). The model is dynamically stable (see the first row) as well. Tab. 1 The political tax cycle in the OECD countries 6 indep./dep. TQ TQ1100 TQ1200 TQ2000 TQ4000 TQ5110 TQ5120 TAX(-1) growth nairu idr trade elec_low elec_high Hansen test 0.657*** [16.509] 0.068*** [7.826] [-0.546] 0.114* [1.645] [1.043] *** [-4.473] [-0.330] [0.260] 0.646*** [19.566] 0.010* [1.589] [0.077] [0.139] [-0.317] [-0.653] [-0.692] [0.290] Corr. test [0.790] [0.903] Source: Eviews 8, own calculations 0.472*** [9.865] 0.068*** [7.983] [-1.342] [-0.528] [1.377] [-1.568] [-0.506] [0.244] [0.439] 0.708*** [27.140] *** [ ] ** [-2.418] 0.033*** [4.085] 0.002** [2.339] ** [-2.069] 0.055** [2.138] [0.458] [0.641] 0.450*** [36.292] 0.011*** [11.356] 0.021*** [3.334] [1.122] [-0.824] *** [-7.980] ** [-2.486] [0.229] [0.146] 0.597*** [23.346] 0.028*** [8.973] [0.610] [0.692] [0.241] *** [3.759] [0.092] [0.294] [0.249] 0.145*** [2.961] 0.021*** [9.251] 0.064*** [3.361] [0.615] *** [-5.858] *** [-5.212] [-0.072] [0.286] [0.274] If we focus on the electoral dummy variables we can see that there is a periodic decrease in the overall tax quota in the time of the election in case of countries with a lower fiscal credibility and transparency (elec_low). On the other hand, we can see that there is no regular 1 percent level. 6 *Significant at the 10 percent confidence level, **significant at the 5 percent level, ***significant at the 18 th International Scientific Conference [46] Faculty of Economics, VŠB - TUO

55 decrease in the tax quota in the countries with a higher level of fiscal credibility and transparency. In the light of these findings, it seems clear that there is a conditional political tax cycle in the OECD countries. The tax quota periodically decreases by 0.50% of GDP in these countries in the time of the election. If we would like to understand this phenomenon more deeply we should focus on the sub-components of the tax quota. We can see that there are highly significant election variables in the case of a consumption taxes (VAT-type taxes and selective taxes on consumption) with a relatively strong impact on these taxes. They decrease regularly about 0.1 % of GDP in the time of the elections. However, this is only valid for the countries with the lower level of fiscal transparency and credibility. We can see similar results in the case of property taxes and in the social security contributions; however an impact of these election variables is quite weak. Again, this is valid especially for the countries with the lower level of fiscal transparency and credibility. Finally, the election variables on income taxes (personal income taxes, corporate income taxes) are insignificant in the both types of countries. Conclusion Let us summarize our results. First, the political tax cycle (PBCT) seems to be a specific problem in the countries with the lower level of fiscal credibility and transparency while it does not matter that these countries are relatively developed. The overall tax quota regularly decreases about 0.5% (in average) in the time of the election in these countries. On the other hand, there is no similar cycle in the countries with the higher level of fiscal credibility and transparency. There was mentioned in the previous chapter that the political tax cycle occurs especially in the consumption taxes. These results seem to be reasonable from the public choice theory view. The consumption taxes have a strong impact on the daily life and every decrease in these taxes can influence voter s preferences and behavior. Therefore, the incumbent can target its effort to the consumption taxes decreasing just before the elections. Additionally, the changes in this type of taxes (consumption taxes, indirect taxes) are relatively easy to perform. On the other hand, the changes in the direct (or income) taxes are not so common inasmuch as they have a whole range of secondary impacts (on the social system, bookkeeping, investment ). The changes in these taxes are often connected with larger changes in the whole welfare system. Therefore, they are not suitable to be appropriate instrument for the electoral manipulations. References ARELLANO, Manuel and Steve BOND (1991). Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations. The Review of Economic Studies, 58(2), BRENDER, Adi and Allan DRAZEN (2005). Political Budget Cycles in New Versus Estabilished Democracies. Journal of Monetary Economics, 52(7), HANSEN, Lars Peter (1982). Large Sample Properities of Generalized Method of Moments Estimators. Econometrica, 50 (4), pp [47] Faculty of Economics, VŠB - TUO

56 Section S1: Economics KAUFMANN, Daniel, Aart KRAAY and Massimo MASTRUZZI. (2010). The Worldwide Governance Indicators: Methodology and Analytical Issues. Policy Research Working Paper KIVIET, Jan F. (1995) On bias, inconsistency, and efficiency of various estimators in dynamic panel data models. Journal of Econometrics, 68 (53-78). MODIGLIANI, Franco and Lucas PAPADEMOS (1975). Targets for Monetary Policy in the Coming Year. Brookings Papers on Economic Activity, 6(1), NICKELL, Stephen (1981). Biases in Dynamic Models with Fixed Effects. Econometrica, 49(6), pp PERSSON, Torsten and Guido TABBELINI (2002). Do electoral cycles differ across political systems? Working Paper No. 232, IGIER, Bocconi University. PERSSON, Torsten and Guido TABBELINI (2000). Political economics: explaining economic policy, Cambridge: Cambridge MIT Press. SARGAN, John Denis (1958). The estimation of economic relationships using instrumental variables. Econometrica, 26(3), pp SHI, Min and Jakob SVENSSON (2002a) Conditional Political Budget Cycles. CEPR Discussion Papers SHI, Min and Jakob SVENSSON (2002b) Political business cycles in developed and developing countries. Working paper, IIES, Stockholm University. Shi, Min and Jakob SVENSSON (2006). Political budget cycles: Do They differ across countries and why? Journal of Public Economics, 90(8-9), TROEGER, Vera (2013). The Impact of Globalisation and Global Economic Crises on Welfare State Policies in Developed Western Democracies: The Interplay between Institutions, Globalisation and Economic Shocks. In: Becker, O. Reversals of Fortune? A Long-term Perspective on Global Economic Prospects. Coventry: University of Warwick. 18 th International Scientific Conference [48] Faculty of Economics, VŠB - TUO

57 CAN PUBLIC DEBT DYNAMICS CHANGE WHAT WE HAVE LEARNT FROM ENDOGENOUS GROWTH MODEL? 1 Martin Murín Vysoká škola báňská Technická univerzita Ostrava martin.murin@vsb.cz Abstract (in English) This contribution focuses on possible distorting effect of debt dynamics on fiscal policy variables in economic growth model. We tried to elaborate the theoretic mechanism of this hypothesis. The aim of this paper is to investigate this hypothesis. The panel data regressions of 30 OECD members in period from 2000 to 2014 were performed. Relative simple methodological idea is used here to focus on difference between long term average of debt to GDP growth rates and long term average growth rates of real GDP per capita. In accordance with criterion derived from the theoretical framework, the whole sample was split into Bad and Good countries. Our results suggest that the hypothesis was confirmed only by direct and indirect taxes. All other taxes and all expenditure categories performed in opposite direction with expectations. Keywords: Fiscal policy, Economic growth, Public debt JEL: H63, O41 Advisor: prof. JUDr. Ing. Igor Kotlán, Ph.D. et Ph.D. 1 Tento článok vznikol za finančnej podpory Studentské grantové souteže EkF, VŠB-TU Ostrava v rámci projektu SP2015/110 "Vplyv fiškálneho deficitu na ekonomický rast a možnosti jeho optimálneho znižovania v ČR". [49] Faculty of Economics, VŠB - TUO

58 Section S1: Economics 1 Úvod V súčasnej dobe prebieha pomerne výrazná debata v oblasti znižovania, respektíve kumulácie verejného dlhu. Niektorí autori sa pokúšajú pomocou odhadov s prahovou funkciu určiť úroveň dlhu k HDP, od ktorého platí jeho negatívny vplyv na rast ekonomiky (Checherita a Rother, 2010; alebo Cecchetti, Mohanty a Zampolli, 2011). Novšie práce potom napádajú tieto výsledky a poukazujú na problematiku verejného dlhu komplexnejšie (Dell Erba, Hausmann a Panizza, 2013; Panizza, Presbitero, 2014). Z výsledkov rozsiahlej empirickej analýzy plynie nejednoznačnosť vzťahu medzi celkovou veľkosťou dlhu a ekonomickým rastom. Je ďaleko pravdepodobnejšie, že ak nejaké negatívne dopady na ekonomiku vznikajú, budú výrazne závisieť od iných faktorov, ako len veľkosť dlhu k HDP. Ani Gosh et al. (2013) alebo Ostry, Gosh a Espinoza (2015) neodporúčajú, aby každá ekonomika nasledovala nedávny úsporný trend. Spoločenské náklady znižovania dlhu sú podľa týchto autorov vyššie v prípade, že fiškálna politika disponuje dostatočne veľkým priestorom v zachovaní udržateľnosti verejných financií aj pri obsluhe vysokého dlhu, viď ekonomika USA, Nemecka atď. Tieto ekonomiky, okrem iného, ťažia z menového uvoľnenia hlavným centrálnych bánk a z rizikovej situácie konkurenčných ekonomík. Potom sa ich manévrovací priestor, odvíjajúci sa od udržateľnosti fiškálnej politiky výrazne zväčšuje. Naopak, ekonomiky, ktoré sa blížia k limitu sú na finančných trhoch trestané zvyšovaním rizikovej prirážky, roztiahnutím CDS rozpätia, čo robí konsolidáciu výhodnejšou. Z uvedeného vzniká predpoklad, že fiškálne nezodpovedné ekonomiky môžu docieliť rozdielne efekty zo zmien výdavkov alebo príjmov verejného rozpočtu voči dlhodobému ekonomickému rastu v porovnaní s ekonomikami fiškálne zodpovednými. Afosno a Jalles (2014) alebo Murín (2015b) čiastočne potvrdzujú tieto závery na panely OECD a EU krajinách. Ich kritériom rozdelenia vzorku bol dlhodobý, priemerný deficit k HDP na úrovni 3 %. Výsledky naznačujú rozdielne dopady najmä investičných výdavkov vlády a priamych a nepriamych daniach. Aj Murín (2015a) vychádza z rovnakého predpokladu, že práve vývoj deficitov v čase predstavuje vývoj dlhovej dynamiky, avšak v ďaleko podrobnejšej analýze nepotvrdil systematickú zmenu pod zhoršovaním deficitu o 1 p. b. Nedoriešeným problémom preto ostáva určiť vhodnejšie kritérium pre členenie krajín podľa modelu v Murín (2015a), ktorý v podstate tvrdí, že pre distorziu vzťahu fiškálnej politiky a ekonomického rastu bude podstatná diferencia medzi tempom rastu verejného dlhu a rovnovážnym tempom rastu ekonomiky. Príspevok sa z týchto dôvodov zameriava práve na zmenu kritéria delenia krajín, tento raz podľa spomínanej priemernej diferencie. Cieľom príspevku tak je overiť platnosť hypotézy o vplyve dynamiky dlhu na odhadnuté parametre fiškálnej politiky voči ekonomickému rastu. Z empirickej analýzy panelu 32 OECD krajín v rokoch 2000 až 2014 vyplýva, že medzi fiškálne zodpovednými a nezodpovednými krajinami sú určité rozdiely. Avšak, tieto rozdiely neboli úplne v súlade s očakávaním. 2 Fiškálna politika v jednoduchom modeli ekonomického rastu Pri formulácií mechanizmu, akým môže dochádzať k zmene vplyvu fiškálnych veličín pri dlhodobom nedodržiavaní rozpočtového obmedzenia vlády, vychádza model z prístupu ekonomických zástupcov, respektíve kombinuje modely Barro (1990) s modelom Bacciocchi, Borghi a Missale (2011). Modelová ekonomika je pre jednoduchosť uzavretou ekonomikou, tvorenou dvoma zástupcami súkromného sektora a vládnym sektorom. Teoretický koncept vychádza z prístupu spoločenského plánovača. Domácnosti sa rozhodujú v nekonečnom časovom horizonte a maximalizujú celkový úžitok v čase: 18 th International Scientific Conference [50] Faculty of Economics, VŠB - TUO

59 U = 0 u(c)e ρt dt, (1) kde U je celkový úžitok, C je celková spotreba a výraz e ρt je predstavuje spojité diskontovanie úžitkov z budúcej spotreby v čase t podľa časovej preferencie ρ. Podmienkou pre stabilitu modelu je konštantnosť časovej preferencie. Rovnako ako Rebelo (1991) je použitá úžitková funkcia v tvare, ktorá predstavuje CRRA úžitkovú funkciu, teda funkciu s konštantnou relatívnou averziou k riziku: u(c) = C1 σ 1 σ, (2) kde platí σ > 0, citlivosť zmeny úžitku z dodatočnej jednotky spotreby je vo veľkosti σ. Pre jednoduchosť je prijatý ďalší predpoklad, že celá populácia tvorí pracovnú silu a rast jej je v čase nulový. Z rovnice (1) a (2) je podľa Rebela možné odvodiť rovnovážny rast spotreby medzi dvoma obdobiami. Ten bude čisto funkciou reálnej úrokovej miery r: C C = 1 σ (r ρ) (3) Produkčná funkcia ekonomiky je daná Cobb-Douglasovou funkciu s konštantnými výnosmi z rozsahu s dvoma druhmi kapitálu. V tomto prípade došlo k dodatočnému zjednodušeniu a model nepracuje s ľudským kapitálom (Bacchiocchi, Borghi a Missale, 2011). Y = K α K G 1 α, (4) kde Y je produkt celkovej ekonomiky, K predstavuje súkromný kapitál a KG kapitál vládny. Pritom pri oboch formách kapitálu platia individuálne podmienky o vzácnosti ekonomických zdrojov a rivalite v ich spotrebe, Y K > 0 a 2 Y K 2 < 0. Predpoklad uzavretej ekonomiky určuje zdrojové obmedzenie celého systému: Y = C + I k + I G + G, (5) kde I K predstavuje hrubé súkromné investície a platí I K = A, čiže hrubé investície sa rovnajú veľkosti prírastu aktív; 2 I G sú investičné výdavky vlády a G sú všetky ostatné vládne výdavky neproduktívneho charakteru. Prírastok súkromného a vládneho kapitálu môže byť vyjadrený ako: K = A δk (6) K G = φi G δk G, (7) kde δ predstavuje mieru amortizácie kapitálových statkov, ktorá je rovnaká pre obe formy kapitálu. Parameter φ vyjadruje fakt, že je pravdepodobné, že len časť korunového výdavku vlády na investície bude znamenať reálne navýšenie hrubých investícií. Rozpočtové obmedzenie súkromného sektora, ktoré vstupuje do optimalizácie úžitkovej funkcie, je dané: 2 V praktickej rovine sa jedná o úspory, teda všetok nespotrebovaný dôchodok, ktorý sa môže použiť na ďalšiu akumuláciu kapitálu. Rovnosť je známa aj z neoklasického rastového modelu. [51] Faculty of Economics, VŠB - TUO

60 Section S1: Economics A = (1 τ A ) Y K A (1 + τ C )C D + G + (1 φ)i G, (8) kde A predstavuje zmenu aktív; hraničný produkt kapitálu jeho reálnou výnosnosťou; 3 A sú celkové aktíva; τ A a τ C je sadzba dane z aktív (výnosov, resp. celková priama daň) a sadzba dane zo spotreby; D predstavuje zmenu vládneho dlhu, ktorá v uzavretej ekonomike znižuje mieru úspor a tým aj zmenu súkromných aktív; G sú iné ako kapitálové výdavky vlády a výraz (1 φ) predstavuje relatívny únik z I G. 4 Rovnosť marginálneho produktu zníženého o daň a reálnej úrokovej miery je vyjadrená vzťahom (9) a predstavuje mikroekonomickú formuláciu optimalizácie dokonalo konkurenčnej produkcie. MR k = (1 τ A ) Y K = (1 τ A )α ( K G K ) 1 α = r (9) Následne je potrebné určiť optimálneho tempo rastu spotreby, ktoré sa súčasne bude rovnať rastu ekonomickému. Preto je výraz (9) substituovaný do rovnice (3). C C = 1 [(1 τ σ A)α ( K G K ) 1 α δ ρ] (10) V bode optima, by mala vláda udržiavať stabilný pomer medzi KG a K (Barro, 1990). Marginálny produkt vládneho kapitálu by sa mal vyrovnať tomu čistému súkromnému, aby nebolo možné žiadnou zmenou K voči KG docieliť Paretove zlepšenie. Preto by mala platiť podmienka MR K = MP G, kde MP G = (1 α) ( K K G ) α. (11) Avšak táto podmienka nie je postačujúca. Pri pohľade na vzťah (7) nie je úplne možné stotožniť hraničné produkty oboch foriem kapitálu s čistými hraničnými príjmami. V investičnom procese vlády totiž dochádza k istým únikom, viď (7). Bacchiocchi, Borghi a Missale (2011) doplňuje model o tzv. tieňové ceny p, ktoré vyjadrujú relatívne ceny medzi jednotkou súkromného a vládneho kapitálu. pφ = 1 (12) p = pmr K MP G, (13) kde MR K predstavuje čistý produkt kapitálu po zdanení, viď rovnica (10), a p = 1 φ je konštantné v equilibriu, 5 v ktorom φ predstavuje únik vládnych investičných výdavkov zo 3 Pri platnosti podmienok dokonalej konkurencie bude platiť, že hraničný produkt kapitálu bude rovný reálnej úrokovej miere. 4 Odporcovia korupcie tvrdia, že tá znižuje efektivitu v ekonomike (Tanzi a Davoodi, 2000). Ak niekto tvrdí, že je súkromný sektor efektívnejší ako sektor verejný, potom ba sa mal na základe rovnice (6) stať advokátom korupcie, resp. únikov z investičnej funkcie vlády (5), pretože v uzavretom systéme to vedie ceteris paribus k zvýšeniu rozpočtového obmedzenia domácností. 5 p = th International Scientific Conference [52] Faculty of Economics, VŠB - TUO

61 vzťahu (7). Vyjadrením nutnej podmienky rovnosti marginálnych výnosov oboch kapitálov bude získaný vzťah: 1 φ (1 τ A)α ( K G K )1 α = (1 α) ( K K G ) α, (14) Z rovnice (14) je možné odvodiť ako úniky z investičných výdavkov vlády znižujú negatívny efekt zdanenia na výnosnosť súkromného kapitálu. V prípade, že je tento parameter určený mierou neefektívnosti verejných výdavkov, resp. korupcie, mohla by do určitého bodu spôsobovať istú formu pákového efektu vlastných zdrojov. Pre uzavretie modelu je potrebné určiť rovnovážny pomer medzi oboma kapitálmi. Ten môže byť odvodený na základe rovnice (4), doplnenej o relatívne ceny (12), (13) a rovnovážny stav (14) MR k = φmp G, potom musí platiť: K G = φ(α 1) 1 α. (15) K Rovnovážne tempo rastu produkcie v prípade, že sú oba kapitálové statky v rovnovážnom pomere a trhy sú dokonalo konkurenčné má tvar: γ = C C = 1 σ (MR K δ ρ) = 1 σ [(1 τ A)(α α φ(1 α) 1 α ) δ ρ]. (16) Z uvedeného vzťahu vyplýva, že vláda má v modeli rovnovážneho tempa rastu dve úlohy. Držať optimálnu úroveň pomeru vládneho kapitálu k súkromnému, čím podporí výnosnosť vlastných aktív. Druhá úloha vlády je vo forme zdanenia. Ak sa rozhodne uvaliť priamu daň, potom by mala byť vykúpená adekvátnym zvýšením KG, čím dôjde ku kompenzácií zníženia čistej výnosnosti poslednej jednotky K. Všetky ostatné výdavky a príjmy v tomto modeli ekonomického rastu nevytvárajú explicitný dopad na rovnovážne tempo rastu produkcie. Ich úlohou je iba pôsobenie na veľkosť rozpočtového obmedzenia. To potom ovplyvní spotrebu C(0) a dôchodok Y(0) v počiatočnom stave. Rovnovážne tempo rastu premenných je dané výlučne vzťahom (16). Otázkou ostáva určiť vplyv dlhodobej fiškálnej nerovnováhy v takomto modeli. Je potrebné si uvedomiť, že dlh explicitne neovplyvňuje rast vo vzťahu (16). Žiadna z veličín zatiaľ nie je determinovaná pomocou nejakého z dlhu odvodeného kritéria. Pre vysvetlenie mechanizmu je potrebné skonštruovať rozpočtové obmedzenie vlády. To je vyjadrené pomocou vzťahu: D t = G t + I Gt + r t 1 1 τ A j=1 D j (τ A Y t + τ C C t ), (17) v ktorom zmena dlhu v čase závisí od veľkosti ostatných vládnych výdavkov vstupujúcich do rozpočtového obmedzenia domácnosti (8), celkových hrubých investičných výdavkoch vlády (7), nákladu z kumulácie predchádzajúcich dlhov, ktorý je na úrovni r 1 τ A. Vyjadruje tak všetky oportunistické náklady. Sám o sebe dlh nenesie domácnosti žiadne výnosy, viď (8). Je dôležité si uvedomiť, že zmena dlhu v podstate znižuje zmenu aktív v rozpočtovom obmedzení, čim musí dôjsť k poklesu akumulácie súkromného kapitálu v prípade, že tempo rastu dlhu prevýši tempo rastu produktu. Problémom to vzťahu (17) je, že marginálny náklad dlhu je v uzavretom systéme vždy vyšší, ako marginálny príjem zo súkromného kapitálu, preto bude vždy nižší aj hraničný príjem z vládneho kapitálu. V podobnej [53] Faculty of Economics, VŠB - TUO

62 Section S1: Economics úvahe formuluje svoje závery Minea a Villieu (2009). Podľa týchto autorov nie je ani zlaté pravidlo vhodnejšie ako vyrovnaný deficit. Bacchiocchi, Borghi a Missale (2011) tvrdia, že vysoký verejný dlh významným spôsobom znižuje investície do rôznych foriem kapitálu. Po vydelení (17) dôchodkom je získaná rovnica: D t = G t Y t Y t + I Gt + ( r γ) D t (τ Y t 1 τ A Y A A t + τ C C t )/Y t. (18) t Z tohto vzťahu plynie, že ak má byť pomer dlhu k dôchodku v čase stabilný, reálny náklad dlhu nemôže prekročiť tempo rastu produktu, ktoré je v tomto prípade rovnovážnym tempom (Gosh, et al., 2013). V zjednodušenej forme môže byť vyjadrené ako: MR K 1 τ A 1 σ [MR k δ ρ] 0. (19) Tvar bude platný len v prípade výrazne malej citlivosti úžitku na zmenu spotreby. Vyjadrením (17) v (8) a pomerením k celkovému dôchodku vzniká nová podmienka, pre zachovanie stabilného rastu a tým je konštantnosť podielu dlhu na Y, pri ceteris paribus. Iba v tomto prípade nebude dochádzať k znižovaniu zmeny aktív vo vzťahu k dôchodku. Pomer ostane stabilný, stabilný bude aj vývoj dlhu k Y, pretože všetky veličiny v rovnováhe by mali rásť rovnakým tempom. Avšak, je vysoko pravdepodobné, že za podmienky ceteris paribus bude náklad dlhu prevyšovať tempo rastu, nerovnica (19) nebude platiť. V takomto prípade dochádza k akcelerácií tempa rastu dlhu, ktorý prevyšuje tempo rastu produktu. Ako bolo spomenuté vyššie, dlh je nakupovaný z dôvodu oddialenia súčasného zdanenia. Pôsobí pozitívna časová preferencia. Rozhodnutie o generácií dlhu je v prvej chvíli exogénne, plne v rozhodnutí vlády. Následná akcelerácia dlhu je pod kontrolou vlády len do určitého bodu. Ako náhle dlh prekročí určitú hranicu, vláda stráca kontrolu a dlh sa generuje sám. Domácnosti maximalizujúce svoj celkový úžitok v nekonečnom horizonte vnímajú tento fiškálny limit. V prípade, že sa vláda v jeho blízkosti rozhodne zvýšiť produktívne výdavky, pri ceteris paribus vedúce k zvýšeniu dlhu, už nemusí platiť ich pozitívny dopad na ekonomický rast, pretože súčasné odloženie daní bude v budúcnosti ďaleko náročnejšie. V takejto situácií dochádza k zvýšeniu časovej preferencie v dôsledku rastu budúcej neistoty o výške spotreby. Dochádza tak k zmene parametra ρ v rovnici (16). Výsledný efekt konkrétnej rozpočtovej kategórie, tak bude závislí na diferencií medzi tempom rastu dlhu a rovnovážnym ekonomickým rastom, pri čom musí platiť ρ > 0 a 2 ρ > 0. λ λ 2 3 Empirická analýza Model endogénneho ekonomického rastu, ktorý ma overiť hypotézu o zmene vplyvu fiškálnych veličín pri dlhodobej diferencií medzi tempom rastu dlhu a tempom ekonomického rastu, bol odhadnutý pomocou statickej panelovej regresie s fixnými efektmi podľa prierezu. Tvar odhadovanej rovnice je nasledovný: γ it = β 0 + β i + β 1 Dcap it + β 2 Dratio it + β 3 Dexp it + β 4 Dindtax it + β 5 Ddirtax it + β 6 Dsoccon it + β 7 Dothtax it + ε it, (20) v ktorej indexy i= a t= predstavujú označenie prierezovej a časovej jednotky, závislou premennou je medziročné tempo rastu reálneho produktu na osobu, jednotlivé nezávislé premenné sú tvorba hrubého fixného kapitálu k HDP, pomer vládneho 18 th International Scientific Conference [54] Faculty of Economics, VŠB - TUO

63 a súkromného kapitálu, všetky mimo kapitálové výdavky vlády k HDP, nepriame dane, priame dane, sociálne zabezpečenie a ostatné dane rovnako v pomere k HDP. ε it predstavuje náhodnú zložku odhadu a konštanty β 0 a β i predstavujú spoločnú a prierezovo špecifickú konštantu. Všetky časové rady boli zlogaritmované a prepočítané na prvé diferencie. Dáta boli získané z OECD (2015). Tab. 2 Výsledky odhadu modelu pre vzorku Good a Bad 30 krajín OECD v rokoch 2000 až 2014 Závislá premenná Medziročné tempo rastu reálneho HDP na osobu Vzorka Good Bad β 0 0,017(40,63)*** 0,016(24,52)*** Dcap 0,244(3,83)*** 0,156(3,29)*** Dratio -0,00014(-2,96)*** -0,00002(-1,92)* Dexp -0,041(-4,89)*** -0,038(-4,91)*** Dindtax -0,010(-0,30) -0,108(-2,21)** Ddirtax 0,026(0,82) 0,046(1,72)* Dsoccon -0,073(-1,49) -0,200(-3,97)*** Dothtax -0,017(-0,80) -0,024(-1,44) F-stat 15,81 11,08 Adj. R 2 0,61 0,48 Prierez N Zdroj: vlastné výpočty Realizácia testovania už spomínaného predpokladu vychádza z pomerne jednoduchej logickej úvahy. Ak je predpokladaný vplyv diferencie medzi tempom rastu dlhu a ekonomiky pravdivý, potom po vhodnom rozdelení celého vzorku, musí dať totožný odhad rôzne výsledky. Preto boli krajiny rozdelené do vzoriek Good a Bad. Good sú krajiny, ktorých priemerná diferencia medzi rastom dlhu a rastom produktu na osobu dosiahla záporných hodnôt. Naopak, vzorka Bad je tvorená tými ekonomikami, kde tempo rastu dlhu dlhodobo prevyšovalo tempo rastu produktu na osobu. Tab. 1 zobrazuje výsledky odhadu modelu (20) pre oba vzorky. Vidieť z nej, že sa medzi sebou líšia jedine pri fiškálnych veličinách. Kedy krajiny Good nemajú tak výrazne signifikantné parametre ako krajiny Bad. Na strane pomeru vládneho a súkromného kapitálu je mierne negatívnejší vplyv u vzorky Good. Bacchiocchi, Borghi a Missale (2011) tvrdia, že veľkosť dlhu znižuje verejné investície, potom sa zdá, že tento pokles znižuje negatívny dopad z pomeru vládneho kapitálu k súkromnému. Navzdory predpokladom, aj ostatné výdavky vo vzorke Bad dosiahli mierne slabší negatívny vplyv ako vo vzorke Good. Jediný predpoklad, ktorý sa podarilo overiť je vplyv z priamych daní, kedy je dosiahnutý mierne pozitívnejší vplyv z ich navýšenia v krajinách Bad. Jedná sa o daňovú kvótu, preto nie je úplne vhodné tvrdiť, že by malo ísť o pozitívny vplyv zo zvýšenia daňovej záťaže, ale skôr o pozitívny vplyv v prípade nárastu podielu priamych daní voči HDP (Kotlán a Machová, 2012). Rovnako aj nepriame dane, ktoré môžu byť stotožnené s daňami spotrebnými vo vzťahu (8) znižujú tempo rastu [55] Faculty of Economics, VŠB - TUO

64 Section S1: Economics výraznejšie v Bad. Tento záver v podstate potvrdzuje to, že vplyvom zvyšovania dlhu dochádza k poklesu zmeny domácich aktív, čo znižuje investičnú činnosť. Navýšenie daní zo spotreby predstavuje zvýšenia cien spotreby. V prípade, že si domácnosti budú chcieť udržať úroveň svojej reálnej spotreby, dochádza k ďalšiemu zníženiu rozpočtového obmedzenia (8). Všetky ostatné daňové príjmy sa chovajú v rozpore s očakávaním, kedy ich dodatočné zvýšenie v krajinách Bad vyvolá negatívnejší efekt na rast ako vo vzorke krajín Good. Jedná sa hlavne o príjmy zo sociálneho zabezpečenia, ktoré môžu byť za normálnych okolností považované za vysoko distorzné. Záver Predkladaný príspevok vychádza z predchádzajúcich príspevkov autora, konkrétne Murín (2015a) a Murín (2015b), ktoré riešia problematiku možného distorzného vplyvu vyplývajúceho z dynamiky vývoja verejného dlhu. V tomto príspevku bolo hlavným cieľom uchopiť mechanizmus pôsobenia tohto vplyvu dynamiky dlhu na vzťahy fiškálnych veličín a ekonomického rastu v teoretickom rámci endogénneho rastového modelu spoločenského plánovača. Na základe vytvorených teoretických predpokladov overiť hypotézu na analýze s odlišným kritériom vývoja dlhovej dynamiky oproti už citovaným prácam autora. Kým v predchádzajúcich príspevkoch bolo za hlavné kritérium zvolený vývoj dlhodobého priemeru deficitu na HDP, tu analýza vychádza priamo z predpokladu, že pokrivenie efektov z vládnych výdavkov a príjmov bude dochádzať vďaka dlhodobej diferencií medzi dlhodobým priemerným tempom rastu dlhu a rastu reálneho produktu na osobu. Z výsledkov panelovej regresie pre 30 krajín OECD v rokoch 2000 až 2014 plynie, že po rozdelení vzorky na krajiny so zápornou a kladnou diferenciou tempa dlhu a produktu, boli dosiahnuté rozdielne výsledky pri niektorých fiškálnych veličinách. Avšak, vládne výdavky sa nechovali v súlade s modelovými očakávaniami. Z daní boli potvrdené predpoklady len u priamych a nepriamych daniach. Zatiaľ čo v krajinách Bad boli dosiahnuté pozitívnejšie efekty z priamych daní, vplyv daní nepriamych bol negatívnejší. Ostatné dane, resp. príjmy boli v rozpore s očakávaním. References AFONSO, Antonio and Joao T. JALLES (2014). Fiscal Composition and Long-term Growth. Applied Economics. London: Routledge, October (3), BARRO, Robert (1990). Government Spending in a Simple Model of Endogenous Growth. The Journal of Political Economy. Chicago: The University of Chicago Press, October (5), S103-S125. BACCHIOCCHI, Emanuele, Elisa BORGHI and Allesandro MISSALE (2011). Public Investment under Fiscal Constraints. Fiscal Studies. Hoboken (NJ): John Wiley & Sons, May (1), CECCHETTI, Stephen G., M. S. MOHANTHY and Fabrizio ZAMPOLLI, F. (2011). The Real Effect of Debt. BIS Working Papers. Washington: IMF, September, No Retrieved from: < 18 th International Scientific Conference [56] Faculty of Economics, VŠB - TUO

65 CHECHERITA Christina and Phillip ROTHER (2010). The Impact of High and Growing Government Debt on Economic Growth: An Empirical Investigation for the Euro Area. ECB Working Paper Series. Frankfurt am Main: ECB, August WP Retrieved from: < >. DELL EBRA, Salvatore, Ricardo HAUSMAN and Udo PANIZZA (2013). Debt Levels, Debt Composition, and Sovereign Spreads in Emerging and Advanced Economies. CID Working Paper. Harvard. August, No Retrieved from: < n_debt.pdf>. OECD (2015). OECD.Stat. [online database]. Paris: OECD, [cit ]. Available at: < GHOSH, Atish R., et al. (2013). Fiscal fatigue, fiscal space and debt sustainability in advanced economies. Economy Journal. Oxford: Blackwell Publishing, February (566), pp. F4 F30. KOTLÁN, Igor a Zuzana MACHOVÁ (2012). Vliv zdanění korporací na ekonomický růst: selhání daňové kvóty? Politická ekonomie. Praha: VŠE, Listopad (6), MUINELO-GALLO, Leonel and Oriol ROCA-SAGALÉS (2011). Economic Growth and Inequality: The Role of Fiscal Policies. Australian Economic Papers. Hoboken (NJ): John Wiley & Sons, September, (2-3), MURÍN, Martin (2015a). Distorting Effect of Debt Dynamics on Fiscal Policy to Growth Relations. In: 5th International Scientific Conference on Taxes in the World, European Association Comenius, Wien, MURÍN, Martin (2015b). Distortionary Effects of Public Debt - Could Prolonged Fiscal Deficit Period Have Impact on the Role of Fiscal Policy in Economic Growth? In Machová, Z., Tichá, M. (eds.). Proceedings of the 13th International Conference ECONOMIC POLICY IN THE EUROPEAN UNION MEMBER COUNTRIES. ISBN OSTRY, Jonathan David, Atish R. GHOSH and Raphael A. ESPINOZA (2015). When Should Public Debt Be Reduced? IMF Staff Discussion Notes. Washington: IMF, June SDN/15/10. Retrieved from: < PANIZZA, Ugo and Adrea F. PRESBITERO (2014). Public debt and economic growth: Is there a causal effect? Journal of Macroeconomics. Elsevier, September , pp REBELO, S. (1991). Long-Run Policy Analysis and Long-Run Growth. Journal of Political Economy. Chicago: The University of Chicago Press, June (3) TANZI, Vito and Hamid Reeza DAVOODI (2000). Corruption, Growth and Public Finances. IMF Working Papiers. Washington: International Monetary Fund, November Working Paper 00/182. Retrieved from: < [57] Faculty of Economics, VŠB - TUO

66 Section S1: Economics MIGRANT REMITTANCES GROWING PHENOMENON IN GLOBAL ECONOMY 1 Abstract Jan Šulák Faculty of Economics/VŠB Technical University of Ostrava jan.sulak@vsb.com Currently, we experience growing international migration, which surely influences both the destinations as well as migrants origins. One of the consequences of emigration on source countries is inflow of financial remittances from migrants to their families in origins. The research area although receives more and more attention from the researchers, is still relatively under-researched, not much is known on the heterogeneous effects of emigrants on remittances flow, and the effects of remittances on economies. Yet, the impact of migration on remittances seems to be very important part of globalization process and possible source of growth in developing and poor countries. Through remittances, migrants transfer funds, information, ideas and practices. Remittances link societies of origin and destination by processes of mobility and exchange and they consist of financial and non-financial part (e. g. ideas and values). Growth of remittance flows is accelerating in the last decades and it is higher than official development assistance. This tentative paper tries to review existing literature on the topic and offers first descriptive evidence on trends in migration and remittances across the world countries. Keywords: Remittances, migrants, developing economies. JEL: J61, O19 Advisor: doc. Ing. Mariola Pytliková, Ph.D. 1 Preliminary draft, please do not circulate or cite. 18 th International Scientific Conference [58] Faculty of Economics, VŠB - TUO

67 1 Introduction and motivation In the current years we are witnessing growing migration, especially from developing counties (e. g. MENA 2 ) to Europe. In general, migration flows could be a source of labour force, information transfer, innovations and other economic consequences for both countries sending and also receiving. There is sizable literature, which is focused on studying migration determinants. Older studies highlight, that key determinant of migration is maximization of income (Hicks, 1932; Stasjaad, 1962; Harris and Todaro, 1970; Borjas, 1989; Mayda, 2010). According to these authors, potential migrant compares his/her income in native country with expected discounted incomes in the receiving country. After substracting potential costs of migration he choses the option with the highest expected outcomes (Harris and Todaro, 1970). Regarding migration costs, there are two types of the costs direct (costs of transport, purchasing or lease of the flat or house) and psychological costs of migration (e. g. loss of ties with family and friends, loss of the fatherland etc. (Massey, 1993). The costs of migration are traditionally proxied by the distance between countries. If the net expected income in the receiving country minus costs of migraiton is higher than income at home country, person will make a decision and migrate to the new destination. However, making of migration decisions is not depending only on one person, but it can concern also all members of the family (or household). In this case, decision to migrate depends on maximization of discounted revenues of all members of household (Stark and Yitzhaki, 1985). As mentioned, by the decision to migrate emigrants affects both destinations and origins. Remittances are one of impacts of migration. Remittances are sent to country of origin by migrants and their growth is impressive in recent years. There are also other ways the international migrants affect their home country economies, such as increased flow of international capital such as foreign direct investments (FDI), portfolio investments and official development assistance. In this paper, I focus on the role of migrants on flows of remmitances to their home countries, and on description of their economic effects. Andersen and Christensen (2009) investigated how migration and remittances may affect consumption of households in case of Nicaragua. Using panel data analysis, they confirm, that member of household, which receives on average USD in remittances, spending on average 150 USD more on consumption expenditures, than person, who obtain no remittances. There is strong and positive impact of number of Nicaraguans (immigrants) in USA. Very important role plays also their education. There is an assumption that more educated workers are able to earn higher amounts of money and part of their budget they are able to send back to their fatherland. In this study, there hypothesis was confirmed, that brain drain is not so harmful for Nicaraguan economy. Using their dataset, it was found that remittances have no impact on investments in Nicaragua. Remittances are very important for inflows of capital into developing economies and they form significant part of their GDP (Anghel, Piracha and Randazzo, 2015). It is documented on cases of following countries: Ukraine, Romania, Tajikistan, Moldavia, Serbia, Hungary, Armenia and Azerbaijan. Remittances received by local household have strong effect in elimination of poverty in mentioned countries. There is discussed a question, if remittances are used for financing consumption of households or they are invested into the human capital (which would be more effective in long run). From this perspective, there exists heterogeneity 2 Middle-East and North Africa countries. [59] Faculty of Economics, VŠB - TUO

68 Section S1: Economics between observed countries. E. g. in Albania, there is no influence of remittances on higher level of education, but in case of Tajikistan remittances had positive impact on education, especially education of girls and women. In this study the question is discussed of the social remittances (e. g. ideas transmission, gender equality), but they are more difficult to quantitative research, due to harder measurement than financial remittances. There are also some determinants, which affect remittances. Docquier, Rapoport and Salomone (2011) founded, that key determinants in sending remittances into developing countries are number of emigrants living foreign, common language between sending and receiving country, skill level (human capital) and GDP of destination country. These determinants they tested on wide panel of developing countries. Remittances should have positive effect on investments of entrepreneurs in Moldavia, which was confirmed by Culiuc (2006). Remittances are the second strongest factor in determination investments in Moldavia. Other researched determinants of investments had not so strong influence on forming investments in this country. As mentioned, there exist heterogeneity and disparities in sending remittances between sending countries and of course receiving countries. It was documented only on limited samples of countries (very often in case of one country) with exception of study Docquier, Rapoport and Salomone (2011). Therefore, it is appropriate to investigate heterogeneity in receiving remittances on wide sample of countries and compare results each other. It should be interesting make comparative analysis according the influence nationality and education on remittances in developing countries, which are sent to the fatherland of migrant. It can help to research of impacts of emigration, which was not so much investigated (compared with impacts of immigration). For these analyses unique actualized panel dataset of authors Adsera and Pytlikova (2015) should be used. Data was collected from OECD and Eurostat databases and contains migration flows and stocks of migrants in 42 OECD countries; however it is necessary to merge mentioned dataset with data on remittances, which are published by World Bank and IMF. 2 Remittances facts Remittances can be defined as households income received from abroad, sending by international migrants employed in foreign country (Yang, 2011). Remittances are usually sent in small amounts with quite high frequencies, because of the reason higher charges. There are some organizations, which mediate sending remittances the most important are Western Union and MoneyGram and they have networks of agents, where remittances are initiated. Formal channels also include international banks and credit unions. Remittances should be used especially for financing consumption or investments. In general, low income households usually use remittance inflows on consumption expenditures, however, higher income households or families more often invest these funds (as mentioned also as investments into human capital). Many studies argue that remittances are positively correlated with small household investments and small business investments in variety of developing countries (e. g. China, Pakistan). In studying remittances an unobserved factor an unobservable business talent of some household members, should be reflected. If they obtain higher remittances, they are able to invest them more effectively. 18 th International Scientific Conference [60] Faculty of Economics, VŠB - TUO

69 It is necessary to distinguish, if remittances are sent by higher or lower educated workers. More educated workers usually earn higher wages, so they can send more from their income to their families. From this perspective heterogeneity exists across the nationality of migrants, which send remittances, not only according to aggregated data, but also according to individual data. Remittances form significant part of migrant s earnings. It will be mentioned in following part of the paper. What are the reasons for sending remittances? There are a few motives. Docquier and Rapoport (2006) formulated model, where basic reason were defined. Altruism, compensation of services, insurance, loan payment and investment are included into the model. As mentioned, welfare effect of remittances in a country of migrant s origin depends very strongly on how remittances are used. Remittances sent through altruism are very often spent only on consumption expenditures of households (Stark, 1995). Small entrepreneurs use remittances for investment into the physical capital and members of households for investments into the human capital. It is a better way of remittances utilization for developing countries. Remittances and migration can be understood as a failure of origin economy, and potential migrants are pushed from the native country, but on the other hand, it can acts as equilibrating mechanism, which can help to eliminate differences between sending and receiving economies. The economic, social and cultural implications of remittances, both for sending and receiving countries, are enormous. For example, changes to the population and to family structures, as well as reorganization of the labour market are some visible signs of the movement of individuals which sending and receiving countries experience in different directions. In countries of origin, levels of poverty, inequality, and household expenditure decisions are some of the channels through which the flow of migrant s transfers discloses its effects on growth and development (Anghel and Piracha, 2015). There are not only benefits in receiving remittances. Remittances can substitute income or wages generated in a national economy and workers in developing economy can rely on remittances compared to relying on own earnings, which can lead to a moral hazard and decreasing national productivity. Another impact of migration is brain-drain, which is closely tied with remittances. In general, people, who posses more human capital, migrate to destinations, where they can find better labour market opportunities, than in their origin country. On the one hand, it means outflow of human capital to foreign countries, but these people send higher remittances to their origin and it can support other members of households in the native economy (e. g. education, investments). On the other hand, effect of obtained remittances in the origin economy is not as high as outflow human capital effect (Anghel and Piracha, 2015). 3 Remittances factors, trends and overview According to World Bank (2015) remittances are key instrument and source of development in/for developing economies. The main factors, which influenced remittances in recent years, are uneven recovery in developing countries, oil prices, development in Russia and Ukraine, stricter migration controls and conflicts driving migration flows. Massive recovery in the United States increased sending remittances in recent years. Remittance into Mexico, Salvador, Guatemala, and Honduras grew up with house construction, employment in services (including hotels and restaurants). On the other hand, low recovery in Europe decrease remittance flows into developing countries. E. g. remittances into Latin America decreased due to high unemployment in Spain, where a lot of Latin-America migrants live. Also remittances to Maghreb countries decreased with European crisis in recent years. Decreasing oil prices and [61] Faculty of Economics, VŠB - TUO

70 Section S1: Economics economic sanctions have negative influence on Russian economy. Armenia, Georgia, Kyrgyz Republic, and Tajikistan are strongly dependent on remittance from Russian Federation and therefore these countries experienced sharp decrease in obtaining remittances in Also depreciation of ruble influenced sent remittances from Russia, especially into the Central Asia countries. The recent depreciation of euro against the US dollar is reducing the dollar value of remittances. For example, from November 2014 to January 2015, remittances to Morocco rose by 9.6 percent in euro but fell by 2.6 percent in dollars. Currency movements also had an important impact on the value of remittances (World Bank, 2015). Recently, there are two conflicts, which influence migration and thus also sending/receiving remittances. Ukraine and conflicts in MENA and Sub-Saharan Africa cause larger migration (refugees) flows to Europe and neighbouring countries (World Bank, 2015). Remittances are growing phenomenon in the global economy. Table 1 presents 15 largest receiving and sending countries ranked by absolute magnitude. The largest remittancereceiving countries in 2013 are India and China, which received approximately 70 and 60 billion of USD. It should be assumed, because Chinese and Indian are the largest nations in the world and many of their native inhabitants migrated to new destinations. Tab. 3 Top 12 remittance recipient and sending countries (millions USD). Recipient economies (2013) Sending economies (2012) India United States China Russian Federation Philippines Saudi Arabia France Switzerland Mexico Kuwait Nigeria Germany Egypt, Arab Rep France Pakistan Luxembourg Germany Qatar Bangladesh Italy Vietnam Netherlands Belgium Spain Source: Own adaptation from theworld Bank database. Remittances are interesting also from another view from the perspective of sending economies. In the Table 1 are top 12 countries, from which remittances are sent. List of sending countries contains besides the most developed countries in the world, also oil-exporting countries. The most common indicator of economic level of all countries is GDP. Figure 1 presents received remittances as a percentage of GDP. Remittances form substantial part of domestic product of developing countries; however, they are very small (with low GDP) in the most cases. 18 th International Scientific Conference [62] Faculty of Economics, VŠB - TUO

71 Fig. 2 Remittances as a percentage of GDP recipient countries, 2013, (Top 10) 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Source: Own adaptation from the World Bank data. Conclusion Remittances are not a new phenomenon in the world economy; however their recent growth is enormous. For many poor countries, remittances represent and will continue to represent the main source of capital. Conclusions from many studies show that remittances form a large part of the GDP in various countries, for instance in most of the Eastern European and MENA countries remittances constitute a substantial percentage of their GDP. Remittances can help households in poor countries to eliminate poverty; however, impacts of remittances should be mixed. Some studies conclude, that remittances can substitute own workers earnings and incomes in remittances receiving economy. It can decrease their productivity. There is a large discussion about impacts of remittances; many papers show positive and many paper negative effects of remittances it depend on researched context. They have a wide spectrum of utilization in receiving economies from financing households consumption, through small entrepreneur investments, to investments to human capital. This preliminary paper offers basic view on remittances as a source of capital and other impacts to sending and receiving countries. Recently, we are finishing with collecting data on remittances and migrants characteristics, which allow us to run panel data analyses, and compare heterogeneity between countries according e. g. education. This paper will serve as literature review and descriptive part of the new study. Acknowledgement This study was supported by the project GA S of the Grant Agency of the Czech Republic. [63] Faculty of Economics, VŠB - TUO

72 Section S1: Economics References ADSERA, Alicia and Mariola PYTLIKOVA. (forthcoming). The Role of Language in Shaping International Migration. Forthcoming in the Economic Journal. ANDERSEN, Lykke. E. a Bent. J. CHRISTENSEN (2009). The Static and Dynamic Benefits of Migration and Remittances in Nicaragua. Institute for Advanced Development Studies, Development Research Working Paper Series No. 05/2009. ANGHEL, Remus. G., Matloob. PIRACHA and Teresa RANDAZZO (2015). Migrants Remittances: Channelling Globalization, IZA working paper No CULIUC, Alexander. (2006). Integrating migration and remittances into a development strategy. The case of Moldova. Harward University John F. Kennedy School of Government. DOCQUIER, F. H. RAPOPORT a S. SALOMONE (2011). Remittances, Migrants.Education and Immigration Policy: Theory and Evidence from Bilateral Data. HARRIS, John. R., a Michael. P. TODARO (1970). Migration, Unemployment and Development: A Two Sector Analysis. American Economic Review 60 (5): KAREMERA, David., V. J. OGULEDO a B. DAVIS (1997). A Gravity Model Analysis of International Migration to North America. Applied Economics. ISSN MASSEY, Douglas. S., et al. (1993). Theories of International Migration: A Review and Appraisal. Population and Development Review 19 (3): MAYDA, Anna. M. (2005). International Migration: A Panel Data Analysis of Economic and Non-Economic Determinants. IZA Discussion Paper. SJASTAAD, Larry. A. (1962). The Costs and Returns of Human Migration. Journal of Political Economy 70 (5): STARK, Oded and Shlomo YITZHAKI. Labour Migration as a Response to Relative Deprivation. MPRA Paper. [online] [cit ]. Available at: < WORLD BANK (2015). Migration and Development Brief. Development Prospect Group. [online]. World Bank, [cit ]. Available at: < WORLD BANK (2015). Migration and remittance data. Migration and Remittance Factbook. [online database]. World Bank, [online]. Available at: < entmdk: ~pagepk: ~pipk: ~thesitepk:476883,00.html>. YANG, Dean (2011). Migrant remittances. Journal of Economic Perspectives, Summer (3): th International Scientific Conference [64] Faculty of Economics, VŠB - TUO

73 DETERMINANTS OF CORRUPTION IN COUNTRIES BRICS Lucie Szczeponková, Ondřej Jajkowicz VSB-TU Ostrava, Faculty of Economics, Department of National Economy Abstract The name of this article is Determinants of corruption in countries BRICS. The aim of this article is to find out determinants which have a significant influence on level of corruption (measured by corruption perception index) in countries BRICS in the period Corruption occures in all countries of the world and, in some countries, it is an integral part of the economic system. Exist a lot of determinants of corruption and they are different across countries. If we want to solve a corruption problem, with a goal to decreasing a level of corruption, it is necessary to find out determinants of corruption, which creates favorable environment for its development and motivate economic subjects to corruption. Keywords: Corruption, BRICS, Panel Regression, Determinants, Corruption Perception Index. JEL: E62, K29 Advisor: prof. Ing. Christiana Kliková, CSc. [65] Faculty of Economics, VŠB - TUO

74 Section S1: Economics 1 Introduction The term corruption covers a broad range of human actions. Transparency international (2016) define corruption as the abuse of entrusted power for private gain and classified grand, petty and political corruption. This definition is both simple, but sufficiently broad to cover most of the corruption. Corruption occures in all countries of the world and often leeds to its enlargement. It is due to a number of problems in detecting and sanctioning corruption. A separate problem is the calculation of corruption. If we want to solve a corruption problem, with a goal to decreasing a level of corruption, it is necessary to find out determinants of corruption, which creates favorable environment for its development and motivate economic subjects to corruption. Exist a lot of determinants of corruption and they are different across countries. Generally they are divided into three cathegories. Economic factors, political and legal factors and social and cultural determinants. This division (with small differencies) is used in most of publications. The aim of this article is to find out which determinants have a significant influence on level of corruption (measured by corruption perception index) in countries BRICS in the period Thanks to a short time series and more collectively assessed countries it was used panel regression (OLS method). The main motivation to writing this article consisted in the topicality of the topic of corruption, because corruption is, in some countries, an integral part of the economic system. Most of authors deal with developed countries and they compare level of corruption in groups of developed countries (fe. in countries of European Union or in countries OECD) in their articles. In this article were choosen countries BRICS. They belong to developing countries and often they are jointly assessed, but not in area of corruption, despite they have a lot of common characteristics. In this article are not determined political, legal, social and cultural determinants of corruption, but only economic factors. Political, legal, social and cultural determinants of corruption will be the subject of further research. The article has four chapters including introduction and conclusion. In the first chapter (introduction) is described the goal of the article, importance of the topic and the structure of article. The second chapter after introduction is focused on a description of research methods, data and short literature evidence. The third chapter contains results of two econometric models and their interpretation. The last chapter is conclusion which is including short summary of important informations and findings introduced in this article. 2 Methodology and data All data were downloaded from the world databases. From the WB database were downloaded data for GDP, implicit price deflator and unemployment. Data about index of economic freedom were downloaded from database of Heritage Foundation. Data about corruption perception index were gained from the database of Transparency International. 18 th International Scientific Conference [66] Faculty of Economics, VŠB - TUO

75 Explained variable corruption was approximated by corruption perception index. The CPI is a composite index based on surveys of reputable institutions. CPI has values from 0 to 10 points and express, how corrupt is the public sector perceived to be in choosen countries (Transparency International, 2015). Economic level of country is expressed by GDP per capita (in constant prices y. 2005, in American dollars). Economic freedom is measured by index of economic freedom. The Heritage Foundation (2015) defines economic freedom as: the fundamental right of every human to control his or her own labor and property. Index of economic freedom is based on 10 quantitative and qualitative factors, divided into four groups: rule of law, limited government, regulatory efficiency and open markets. The index has values from 0 to 100 points, while 100 points means the highest level of economic freedom. Variable inflation is expressed by implicit price deflator (annual, %). Unemployment is measured by share of the labor force without work, as a percentage of total labor force (calculation of ILO, %). All data are annual and the period studied was since 1995 to Models were constructed for countries BRICS (Brazil, Russian Federation, India, China and South Africa). It is a group of similar countries with a relatively high economic growth and on the other hand, with a relatively high level of corruption (low corruption perception index). For models estimation was used software EViews Methodology In this paper was used a panel regression (concretely OLS method) with fixed crosssection effects (in the first model) and without cross-section effects (in the second model). As Novák (2007) says, interest about panel regression increases during the years and it is used both at micro and macro levels. The main pros of panel regression are that it combinates time series and cross-section data, so there are more observations available, than from common time series. Within a panel regression it is possible to test more difficult hypothesis, study a dynamics of changes etc. Williams (2015, p.2 ): Fixed effects models control for, or partial out, the effects of time invariant variables with time-invariant effects. For this article were constructed two models. The first model with fixed cross-section effects, which they were confirmed by a Hausman test. The second model without cross-section effects. Both models contain the same variables. Specification of models can be written as equation: cpi_l = C + α 1 gdp_ld + α 2 ef_l α 3 ipd α 4 unp_d + ε, (2.1) where cpi_l is corruption perception index expressed in logarithms, gdp_ld is growth rate of GDP per capita (in constant prices y. 2005, in American dollars) expressed in logarithms and in first differencies. The ef_l is index of economic freedom in logarithms, ipd is implicit price deflator (%), unp_d is unemployment (%) in first differencies and ε is an error term. [67] Faculty of Economics, VŠB - TUO

76 Section S1: Economics 2.2 Literature evidence As was mentioned above, the determinants of corruption are often divided into three cathegories (economic, political and legal and social and cultural). One of the most used determinants of economic factors is economic level approximated by gross domestic product per capita in constant prices. GDP per capita and corruption (measured by corruption perception index) are positively correlated, which means, that higher economic level rises (less corruption) corruption perception index (Evrensel, 2010). Ata, Arvas (2011) claims, that 1-point increase GDP per capita rises CPI by 0,0361 points. Increasing economic level is connected with increase personal income, better access to education, health care, in general with better security basic needs. Countries with a low or slow increasing economic level usually have a problem with a provision of basic needs. If people living in these countries, want to get these basic needs, they are motivated to corruption (Ata, Arvas; 2011). Ata, Arvas (2011); Braun, Di Tela (2004) and Paldam (2002) examined the relationship between corruption and inflation. They found out a negative dependence, which means, that increase in inflation rate decreases (more corruption) corruption perception index. High inflation rate negatively affects purchasing power of people, because it reduces level of real wages. Even though purchasing power decreases, people have to meet their basic needs. If not, it is very likely, that they will resort to some illegal methods, such as embezzlement, fraud or bribery (Paldam, 2002). Braun, Di Tela (2004) described also a indirect influence of inflation (and its variability) on level of corruption. High and variable inflation decreases private investment and economic growth and decreasing private investment and slow economic growth have a negative influence on level of corruption. Chafuen, Guzman (2000; p. 52) define economic freedom as the absence of government compulsion or constraint on the production, distribution or consumption of goods and services. Economic freedom thus undoubtedly belongs between determinants of corruption, because it is influenced by the level of government activity in an economy, especially in the area monopoly and discretionary power of the government and it affects a level of corruption (Tanzi, 1998). Shen, Williamson (2005) say government interventions (for example regulations, licences or subsidies) creates a favorable environment for the expansion of bureaucracy and it rises the occurence of corruption. Countries BRICS belong between developing countries and mostly in developing countries the role of the state is carried out through the use of many rules or regulations (Tanzi, 1998). Ata, Arvas (2011), Paldam (2002) and Treisman (2000) demonstrated positive relationship between corruption and economic freedom. Increase in the level of economic freedom increases (less corruption) corruption perception index. The last of determinants of corruption mentioned in this article is unemployment. Samadi, Farahmandpour (2013) described negative relationship between corruption and unemployment in their article. Increase in the level of unemployment decreases (more corruption) corruption perception index. It is presumed inability to pay for basic needs by the unemployed people. Such economic subjects are more likely to get involved in illegal activities. 3 Results of empirical analysis All time series were tested on stationarity using four tests: Levin, Lin and Chu test; Im, Pesaran and Shin test, ADF test and PP test. The time series of corruption perception index, 18 th International Scientific Conference [68] Faculty of Economics, VŠB - TUO

77 index of economic freedom and implicit price deflator were stationary. The time series of GDP and unemployment were stationary in first differences. The time series of GDP and index of economic freedom were expressed in logarithms. There was also used a pair correlation between dependent and independent variables and pair correlation between independent variables for verification of pair multicollinearity. There was not confirmed relationship between independent variables. After these tests were constructed model with fixed crosssection effects, which were validated by Hausman test and model without cross-section effects. The robust estimator White period were also used, because assumes heteroskedastic and serially correlated errors for a cross-section (EViews, 2009). 3.1 Results of model with fixed cross-section effects Even though Hausman test validated a fixed cross-section effects, it is evident from table no.1, that results are not satisfactory. The main problem was very high adjusted coefficient of determination (0,88). So high value is not common to a panel regression. After closer examination was found that high level of adjusted coefficient of determination is caused by common constant, which explains most of variability of model. It is caused by the use fixed cross-section effects. Therefore it was decided confirm this theory by the model without crosssection effects (see Table 2). Empirical influences (positive or negative) are consistent with supposed theoretical influences, except variable - unemployment. Tab. 1 Model with fixed cross-section effects Dependent Variable cpi_l Variable Coefficient (t-statistic) Theory Empiricism gdp_ld unp_d ef_l ipd 0,710 (3,28)*** 0,030 (3,67)*** 0,871 (5,28)*** -0,002 (-5,84)*** Number of observations 85 Adj.R 2 0,88 Source: own calculations. Note: *, **, *** mean 10%, 5%, 1% level of probability. From table no.1 it is obvious, that all independent variables are statistically significant on 1% level of probability. There it was found out a positive relationship between CPI and growth rate of GDP per capita (in constant prices y. 2005, in American dollars). Increase in growth rate of GDP in present time (t0) increases CPI (less perception corruption) in next time period (t1) by 0,71 %. The increasing economic level is connected with increase personal income, improvement education, communication technologies, increase expenditures to media, number of people living in urban areas and creation of social classes. All these factors contribute to increase corruption perception index - decrease level of corruption (Ata, Arvas; 2011). Positive relationship was also detected between CPI and index of economic freedom. Increase in index of economic freedom increases CPI (less perception index) by 0,87 %. In the economies, where several officials decide about restrictions, rules, subsidies or quotas, it is created a favorable corrupt environment. Increase in economic freedom means decreasing or elimination above mentioned restrictions and remove corruption opportunities. [69] Faculty of Economics, VŠB - TUO

78 Section S1: Economics Negative relationship was found out between CPI and implicit price deflator. Increase in implicit price deflator decreases CPI (more perception corruption) by - 0,002 %. Increasing level of inflation has negative effect on a real wages and purchasing power. People have to meet the basic needs and if real wages are reducing they are motivating to bribing to meet their needs. Surprisingly positive relationship was detected between CPI and unemployment. Increase in unemployment in present period (t0) increases CPI (less perception corruption) in future period (t1) by 0,03 %. This finding could be explained by selection of countries. The first possibility is that unemployed people in countries BRICS are not motivated to bribing (thanks to low income, separation from making decision and receiving or providing bribes etc.). On the other hand, employed people could likely have more possibilities to bribing or demanding bribes. Employed people may be also forced to bribe through long years functional corrupt environment. 3.2 Results of model without cross-section effects Tab. 2 Model without cross-section effects Dependent Variable cpi_l Variable Coefficient (t-statistic) Theory Empiricism gdp_ld unp_d ef_l ipd -1,155 (-1,00) 0,030 (2,22)** 0,336 (10,89)*** -0,010 (-6,16)*** Number of observations 85 Adj.R 2 0,36 Source: own calculations. Note: *, **, *** mean 10%, 5%, 1% level of probability. In Table 2 it can be seen results of model without cross-section effects. One variable is not statistically significant (gdp_ld). Empirical influences (positive or negative) are consistent with supposed theoretical influences, except unemployment (unp_d) and GDP (gdp_ld). The value of adjusted coefficient of determination is 0,36. The main goal of this model was to find out the value of adjusted coefficient of determination and confirm, that high adjusted coefficient of determination in first model (with fixed cross-section effects) is caused just fixed cross-section effects, which explain most of the variability in data. Conclusion The aim of this article was to find out determinants, which have a significant influence on level of corruption (measured by corruption perception index) in countries BRICS in the period th International Scientific Conference [70] Faculty of Economics, VŠB - TUO

79 In this article were not determined political, legal, social and cultural determinants of corruption, but only economic factors. Policital, legal, social and cultural determinants of corruption will be the subject of further research. The first chapter, after introduction, was paid to methodology and data, including specification of model. In the subchapter was also stated short literature evidence. Third chapter was concentrated on presentation and interpretation of results. Thanks to a short time series and more collectively assessed countries it was used panel regression (OLS method) with fixed cross-section effects. The main problem of the article was very high adjusted coefficient of determination (0,88). So high value is not common to a panel regression. After closer examination it was found, that high level of adjusted coefficient of determination is caused by common constant, which explains most of variability of model. It is caused by, the use fixed cross-section effects. Therefore it was decided confirm this theory by the model without cross-section effects. Adjusted coefficient of determination was 0,36 in the model without cross-section effects. In the article it was found positive relationship between corruption perception index and growth rate of gross domestic product per capita (economic level). The increasing economic level is connected with increase personal income, improvement education, creation of social classes etc. All these factors contribute to increase corruption perception index - decrease level of corruption (Ata, Arvas; 2011). Positive relationship was surprisingly detected between corruption perception index and unemployment. This finding could be explained by selection of countries. Positive relationship was also confirmed between corruption perception index and index of economic freedom. Increase in economic freedom means decreasing or elimination restrictions and remove corruption opportunities. On the other hand, it was detected negative relationship between corruption perception index and implicit price deflator. Increasing level of inflation has negative effect on a real wages and purchasing power. People have to meet the basic needs and if real wages are reducing they are motivating to bribing to meet their needs. References ATA, Yilmaz A., M. Akif ARVAS (2011). Determinants of Economic Corruption: A Crosscountry Data Analysis. International Journal of Business and Social Science. Vol. 2, no. 13., p BRAUN, Miguel and Rafael DI TELLA (2004). Inflation, Inflation Variability and Corruption. Economics & Politics. Vol. 16, no. 1, p CHAFUEN, A. Alejandro and Eugenio GUZMAN (2000). Economic Freedom and Corruption. Index of Economic Freedom. Heritage Foundation Press. P EVIEWS (2009). EViews 7 User s Guide II. Quantitative Micro Software, LLC. EVRENSEL, Y. Ayşe (2010). Institutional and Economic Determinants of Corruption: A Cross-section Analysis. Applied Economics Letters. Vol. 17, p ISSN [71] Faculty of Economics, VŠB - TUO

80 Section S1: Economics HERITAGE FOUNDATION (2015). About the Index [online]. HF, 2015 [cit ]. Available from: NOVÁK, Petr (2007). Analýza panelových dat. Acta Oeconomica Pragensia. Roč. 15, č. 1. Dostupné z: PALDAM, Martin (2002). The Cross-Country Pattern of Corruption: Economics, Culture and Seesaw Dynamic. European Journal of Political Economy, Vol. 18, p SAMADI, Hussein Ali and Bahare FARAHMANDPOUR (2013). The Effect of Income Inequality on Corruption in Selected Countries ( ). Journal of Emerging Issues in Economics, Finance and Banking (JEIEFB). Vol. 1, no. 3, p SHEN, C. and J. B. WILLIAMSON (2005). Corruption, Democracy, Economic Freedom and State Strength. International Journal of Comparative Sociology, Vol. 46(4), p TANZI, Vito (1998). Corruption Around The World: Causes, Consequences, Scope and Cures. IMF Staff Papers, Vol. 45, No. 4, p TRANSPARENCY INTERNATIONAL (2016). FAQS on Corruption [online]. TI, [cit ]. Available from: TREISMAN, Daniel (2000). The Causes of Corruption: A Cross-national Study. Journal of Public Economics. Vol. 76, p WILLIAMS, Richard (2015). Panel Data 4: Fixed Effects vs Random Effects Models [online]. University of Notre Dame, [cit ]. Available from: ed=0ahukewjj9yzjprkahvco3ikhq57c8oqfggfmaa&url=https%3a%2f%2fwww3.nd.edu%2f~rwilliam% 2Fstats3%2FPanel04- FixedVsRandom.pdf&usg=AFQjCNGisqeAOw3rVElOMr5El0vgaBryTQ&sig2=qpgeI3HZh O1T-qaJnc6rKw. 18 th International Scientific Conference [72] Faculty of Economics, VŠB - TUO

81 DAŇOVÝ MIX A JEHO VLIV NA EKONOMICKÝ RŮST: PŘÍPAD ZEMÍ V4 1 THE TAX MIX AND ITS INFLUENCE ON ECONOMIC GROWTH: THE CASE OF V4 COUNTRIES Věra Vráblíková Ekonomická fakulta, VŠB Technická univerzita Ostrava vera.vrablikova@vsb.cz Abstrakt Cílem tohoto příspěvku je zhodnotit vliv daňového mixu na ekonomický růst v zemích V4. Empirická část je založena na modelu růstu, který obsahuje lidský kapitál. Odhad modelů byl uskutečněn metodou panelové regrese s fixními efekty. Datová základna příspěvku obsahovala pozorování za co nejdelší období ( ). Bylo zjištěno, že ovlivňuje ekonomický růst. Dále byl prokázán negativní vliv daní na ekonomický růst, který se projevuje nejvíce s ročním zpožděním. Ekonomický růst je nejvíce omezen příspěvky na sociální zabezpečení, daní z příjmu jednotlivců a prostřednictvím daní z přidané hodnoty. Klíčová slova: Ekonomický růst, Daně, Daňový mix, Lidský kapitál JEL O47, E62 Abstract The purpose of the article is to investigate the impact of the tax mix on economic growth in case of V4 countries. The empirical part is based on the growth model extended by human capital. Models were estimated using the method of panel regression with fixed effects. It was used observation from the longest time period ( ). It was found that economic growth is influenced by tax mix. Further, it was improved the negative impact of taxes on economic growth. This impact is the strongest with one year lag. Economic growth is reduced the most by social contributions, individuals taxes and by value added tax. Keywords:Economic Growth, Taxes, Tax mix, Human Capital JEL O47, E62 Školitel: Prof. JUDr. Ing. Igor Kotlán, Ph.D. et Ph.D. 1 Tento článek vznikl za finanční podpory Studentské grantové soutěže EkF, VŠB-TU Ostrava v rámci projektu SP2015/110 "Vplyv fiškálneho deficitu na ekonomický rast a možnosti jeho optimálneho znižovania v ČR". [73] Faculty of Economics, VŠB - TUO

82 Section S1: Economics 1 Úvod Daně, jakožto součást daňové respektive fiskální politiky, představují velmi cenný nástroj, kterým mohou tvůrci fiskální politiky ovlivňovat výstup ekonomiky. Důležitost tohoto nástroje v čase neustále roste. To je dáno zejména kontextem doby. Nyní se většina zemí stále vzpamatovává z nejhorší recese od dob velké deprese. Míra inflace je velmi blízko nule, představitelé monetární politiky nejsou schopni prostřednictvím standardních nástrojů ovlivnit její výši. Dále použití kurzu jako nástroje monetární politiky je v případě států eurozóny nemožné. Proto se pozornost soustřeďuje čím dál tím více na nástroje fiskální politiky, mezi které, jak už bylo uvedeno výše, patří daně. Obecně použití jakéhokoli nástroje je spojeno s určitými problémy, ani daně nejsou výjimkou. Zde působí značné problémy zpoždění mezi poznáním nutnosti akce a jejím uskutečněním a mezi uskutečněním a reakcí na ní, na což upozorňoval například Milton Friedman. Nastavení daňové politiky je dále znesnadňováno jevem, který je často označován jako stárnutí populace, který je charakteristický zejména pro vyspělé země. Projevuje se tím způsobem, že dochází k úbytku ekonomicky aktivního obyvatelstva, které se podílí na příjmech státního rozpočtu a zároveň dochází k růstu ekonomicky neaktivního obyvatelstva, které zatěžuje výdajovou stranu státního rozpočtu. Cílem představitelů každého státu je optimální nastavení daňové zátěže. To představuje úroveň daňové zátěže, která nebude ekonomické subjekty zatěžovat tak, aby je demotivovala od ekonomické aktivity a zároveň, aby byla na takové úrovni, aby zabezpečila dostatečný objem finančních prostředků do státního rozpočtu. Cílem tohoto příspěvku je zhodnotit vliv daňového mixu na ekonomický růst v zemích V4. za období od roku 1995 do roku Empirická část je založena na modelu růstu, který obsahuje lidský kapitál, viz Mankiw, Romer a Weil (1992). Odhad modelů je uskutečněn metodou panelové regrese. Datová základna příspěvku obsahuje pozorování za co nejdelší období ( ). Daně byly do modelů zahrnuty prostřednictvím daňové kvóty a také použitím dílčích složek tohoto ukazatele daňové zátěže. 2 Daňový mix a ekonomický růst Cílem tvůrců daňové politiky, jak již bylo řečeno v úvodu, je najít optimální nastavení daňové zátěže. S tím souvisí jedna z nejstarších ekonomických otázek, a sice, který typ daňové zátěže omezuje ekonomický růst významněji. Závěrem většiny teoretických a empirických prací je, že ekonomický růst je nejvíce snižován přímými daněmi. Jedním z prvních autorů, který přišel s touto myšlenkou, je Thomas Hobbes v roce Ta byla podporována ekonomy, jako byli J. S. Mill nebo Kaldor. Mill se zaměřoval také na kritiku dvojího zdanění. Během svých úvah však nebral v potaz výši daňové zátěže, ale zaměřoval se pouze na to, kolikrát je příjem zdaňován. Zdanění příjmů zatěžuje více odloženou (budoucí) spotřebu vzhledem k spotřebě současné, zatímco spotřební daň, která je v čase neměnná zatěžuje současnou a budoucí spotřebu stejně, viz Corlett a Hagaue (1953) nebo Auerbach (1985). Zde musí platit předpoklad relativní substituovatelnosti spotřeby a volného času v různých časových obdobích. Volný čas není zdaňovaný faktor, princip optimálního zdanění by měl takový, že by měla být vyšší daňová zátěž zboží, které souvisí s volným časem. Dle Henderson (1948) mají spotřební daně stejný vliv na chování ekonomických subjektů, jako daně z příjmu. Lidé pracují proto, aby získali zboží, v případě, že je snižován jejich příjem, nezáleží na tom, jestli k tomu došlo v důsledku 18 th International Scientific Conference [74] Faculty of Economics, VŠB - TUO

83 přímých nebo nepřímých daní. V případě, že by docházelo ke změně daňového systému směrem ke spotřebním daním, znamenalo by to postupné snížení progresivity daňového systému. Dle Jorgenson (1963) daňový systém, ve kterém by nejvyšší daňová zátěž byla představována korporátními daněmi, by docházelo ke zvyšování nákladů kapitálu a tím ke snižování investic. Další argument proti použití vysoké daňové zátěže, která by byla představována přímými daněmi, je ten, že by docházelo ke snižování investic. Z hlediska modelů ekonomického růstu je důležité zohlednit, zda se jedná o exogenní nebo endogenní model. Závěrem neoklasických růstových modelů je, že ekonomiky dříve či později dospějí do tzv. stálého stavu. To je označení pro situaci, kdy další růst je umožněn pouze změnou exogenních faktorů, tedy technologickým pokrokem nebo změnou růstu populace. V této fázi je daňová politika neúčinná, může být účinná pouze v období mezi rovnovážnými stálými stavy, viz Barro a Sala-i-Martin (2004). Práce vycházející z modelů endogenního růstu, například Lucas (1988) a Romer (1986), využívají mechanismus, kterým může stát ovlivňovat jak míru výstupu, tak tempo růstu stálého stavu. Dle práce Milesi-Ferreti a Roubini (1998), kde byl uvažován endogenní model růstu, byly také diskutovány kanály, prostřednictvím kterých daně ovlivňují ekonomický růst. Bylo zjištěno, že zdanění práce a kapitálu ekonomický růst snižuje, v případě spotřebních daní je zásadní definovat volný čas. Bylo prokázáno, že spotřební daně ovlivňují volbu mezi trávením času v produktivní činnosti (práci) ve prospěch, čímž dochází ke snižování tempa růstu. V případě přímých daní je mechanismus působení obdobný jako u spotřebních daní, s tím rozdílem, že přímé daně dále ovlivňují dále ještě investice, což také tempo ekonomického růstu snižuje. Proto je velmi důležité nastavení daňového mixu v každé zemi. V práci Widmalm (2001), kde byl brán v potaz také model endogenního růstu, byl prokázán negativní vliv daní na ekonomický růst, dále zde bylo zjištěno, že spotřební daně narušují ekonomický růst nejméně. V práci Alm a El-Ganainy (2013) byl popsán mechanismus působení nepřímých daní odlišně. Podle zmíněné práce nepřímé daně ovlivňují ekonomický růst zprostředkovaně přes kanál investic. V krátkém období nepřímé daně přímo ovlivňují úroveň spotřeby v ekonomice. Spotřeba dále působí na výši investic, které ovlivňují ekonomický růst. Prostřednictvím výsledků bylo prokázáno, že vztah mezi nepřímými daněmi a úrovní spotřeby je negativní. Podle této práce zdanění spotřeby vede, alespoň v zemích EU, ke snižování spotřeby a ke zvyšování úspor, které přispívají k vyššímu růstu na rozdíl od daně z příjmu. Práce Izák (2011) na rozdíl od většiny studií bere v potaz vládní rozpočtové omezení, zdůrazňuje vazby mezi různými typy daní, výdajů a rozpočtové bilance. Z hlediska distorzního účinku daní, bylo v této práci prokázáno, že přímé daně se vyznačují silnějšími distorzními účinky na ekonomický růst než daně nepřímé. Ty mají méně výrazné distorzní účinky. Autor práce dále upozorňuje, že by výdaje sociální povahy neměly být financovány distorzními daněmi. V rámci práce Kotlán, Machová a Janíčková (2011) byl prokázán statisticky i ekonometricky významný vliv zdanění, měřený daňovou kvótou, na ekonomický růst. Přičemž při rozboru jednotlivých typů daní byl objeven významný negativní vliv především osobní důchodové daně, sociálních odvodů a spotřební daně. Vliv korporátní daně byl označen za pozitivní, a kvantitativně velmi významný. Tento výsledek je v práci zdůvodněn hned několika faktory. Nejvíce se ale autoři přikláněli k tvrzení, že se jedná o důsledek konstrukce daňové kvóty, což potvrzují i závěry zveřejněné v práci Kotlán, Machová (2014). V případě prací, které jsou založeny na empirické analýze zemí USA bylo zjištěno, že ekonomický růst je nejvíce ovlivňován daněmi z prodeje a majetkovými daněmi, viz Ojede a Yamarik (2012) nebo Li a Lin (2015). [75] Faculty of Economics, VŠB - TUO

84 Section S1: Economics 3 Ekonometrická analýza Vztah daňových proměnných a ekonomického růstu je zde zkoumán na základě růstového modelu, který je dále rozšířen o lidský kapitál, viz Mankiw, Romer a Weil (1992). Modely vychází ze studií Kotlán, Machová a Janíčková (2011) nebo Kneller, Bleaney a Gemmell (1999). Modely jsou odhadovány pomocí metody panelové regrese v statické formě. Statické modely mají následující formu (1): y it = β j L F X jit γ f TAX fit + μ i + ε it j=1 f=1 (1) kde i představuje země a T čas. y it je závislá proměnná. Regresní koeficienty β j označují změnu vysvětlované proměnné způsobenou jednotkovou změnou vysvětlující proměnné. X it je soubor j růstových proměnných. Regresní koeficienty γ f udávají změnu vysvětlované proměnné způsobené jednotkovou změnou vysvětlující proměnné. TAX fit je soubor daňových proměnných. Koeficient α i představuje složky, které v sobě zahrnují individuální specifika subjektů, a mohou být korelována s vysvětlujícími proměnnými modelu. Proměnná u i představuje chybovou složku, která udává efekty nevýznamných proměnných, které jsou charakteristické i-tým pozorováním a příslušnému časovému úseku. ε it je reziduální složka. Ekonomický růst (y it ) je dle Mankiw, Romer a Weil (1992) představován výší reálného HDP na obyvatele v USD, která je přepočtena na základě parity kupní síly. Definice jednotlivých nezávislých proměnných stejně jako specifikace očekávaných znamének koeficientů jsou v souladu s prací Kotlán, Machová a Janíčková (2011). Do skupiny růstových proměnných náleží kapitálová akumulace (KI it ), populace (POP it ) a lidských kapitál (HUM it ). Kapitálová akumulace je aproximována prostřednictvím reálných investic ve vztahu k HDP, předpokládá se pozitivní závislost mezi y it a KI it. Lidský kapitál je aproximován prostřednictvím indexu lidského kapitálu, který se dělí na tři základní části, tvoří jej investice do lidského kapitálu, kvalita těchto investic a výsledky vzdělávání, předpokládá se pozitivní závislost mezi y it a HUM it. Daně jsou do modelů zahrnuty prostřednictvím ukazatelů daňové zátěže. Standardně se používá daňová kvóta (TQ it ), její složky (SOC it, TQC it, TQP it, TQpro it, TQO it, TQV it ), v závorce jsou uvedeny zkratky, k nimž náleží tyto proměnné kvóta příspěvků na sociální zabezpečení, kvóta korporátních daní, kvóta daně z příjmu jednotlivců, kvóta majetkových daní, kvóta spotřebních daní a kvóta daně z přidané hodnoty. Předpokládaný vztah mezi daňovými proměnnými a ekonomickým růstem je negativní. Veškerá použitá data byla čerpána z databáze OECD. Veškeré výpočty byly provedeny v ekonometrickém softwaru E-Views 8. Deskriptivní statistiky pro všechna neupravená data, která byla použita, jsou obsahem tabulky 1. Z tabulky lze vyčíst informace o průměru, mediánu, maximálních a minimálních hodnotách a počtu pozorování. 18 th International Scientific Conference [76] Faculty of Economics, VŠB - TUO

85 Tab. 4 Deskriptivní statistiky neupravených dat Proměnná Průměr Medián Maximum Minimum Yit HUMit KIit TQit SOCit TQCit TQOit TQPit TQproit TQVit Zdroj: vlastní výpočty Jak již bylo uvedeno výše, ke zkoumání vztahu mezi definovanými proměnnými byla použita metoda panelové regrese. Dle Baltagi (2008) se jedná o metodu, která umožňuje postihnout maticově vztahy napříč vybraným vzorkem zemí z časového hlediska. Dle Barro a Sala-i-Martin (1995) je v případě použití metody panelové regrese žádoucí, aby sledované země byly homogenní, podstatné rozdíly mezi zeměmi by měly negativní dopad na konzistentnost výsledků. Podmínka homogenity byla splněna, vybrané země OECD se vyznačují vysokou mírou podobnosti zejména z hlediska institucionálních parametrů a produkčních funkcí. Proměnné byly vyjádřeny v logaritmech s cílem usnadnit interpretaci výsledků, tento krok vedl k tomu, že regresní koeficienty se staly kvantitativně porovnatelnými. Nicméně z ekonomického hlediska je důležitý především směr znamének odhadnutých koeficientů, který vypovídá o tom, zda je vliv nezávislých proměnných na ekonomický růst pozitivní či nikoliv. Předpoklady použitelnosti panelové regrese statických modelů, byly zkoumány standardním způsobem v souladu s Wooldridge (2009). Stacionarita byla zkoumána pomocí Levin, Lin a Chu testu a Im, Pesaran a Shin testu. Přítomnost jednotkového kořene nebyla zjištěna u žádné proměnné. Multikolinearita nebyla u modelů prokázána, testována byla za využití korelační matice. Úpravou kovarianční matice metodou White period 2 bylo zajištěno, že výsledky směrodatných odchylek byly korigovány o autokorelaci a heteroskedasticitu. Předpoklad normality byl testován prostřednictvím Jarque-Bera testu, na základě jeho výsledků bylo možné potvrdit normalitu rozdělení. Statické modely byly odhadovány s fixními efekty (FE), jak doporučuje například Wooldridge (2009) v případě, kdy jsou průřezovými jednotkami státy. 3 Přípustnost modelu fixních efektů vyplývá nejen z povahy vybraných souborů, ale také plyne z výsledků Hausmanova testu 4. 2 Tato metoda je popsaná například v manuálu E-Views (kapitola 18, strana 611). 3 Tento metodický postup byl aplikován v dalších statích zveřejněných v tomto periodiku, například Kotlán, Machová (2012) nebo Izák (2011). 4 Hausmanův test zkoumá exogenitu vysvětlujících proměnných, tedy nekorelovanost vysvětlujících proměnných s náhodnou složkou, viz Baltagi (2008). [77] Faculty of Economics, VŠB - TUO

86 Section S1: Economics 4 Výsledky analýzy Výsledky, kterých bylo dosaženo použitím metody panelové regrese s fixními efekty, reprezentuje tabulka 2. Byly odhadovány dva modely. První zahrnovat růstové proměnné a jednu daňovou proměnná, a sice daňovou kvótou. Druhý zahrnovat růstové proměnné a dílčí složky daňové kvóty. K tomuto řešení bylo přistoupeno z důvodu multikolinearity nezávislých proměnných, ke které by došlo, kdyby byly ponechány všechny daňové proměnné v jednom modelu. Bylo zjištěno, že většina proměnných působí na ekonomický růst se zpožděním jednoho roku. Tento závěr byl učiněn na základě provedení testu křížové korelace. Oba odhadované modely byly statisticky významné, stejně jako většina proměnných. Dále bylo zjištěno, že daně působí na ekonomický růst negativně. Negativní vliv byl prokázán v případě příspěvků na sociální zabezpečení, daně z příjmu fyzických osob, daně z přidané hodnoty, spotřebních daní a majetkových daní. Pouze v případě korporátních daní nebylo možné prokázat statisticky významný vliv. Tab. 2 Výsledky odhadovaných modelů Závislá proměnná: Yit Model TQ koeficient (t-stat.) Model složek TQ koeficient (t-stat.) Ln(HUMit(-1)) 4.87(8.60)*** 4.69(4.02)*** Ln(KIit) 0.32(1.69)* 0.15(0.67) Ln(TQit(-1)) -1.49(-10.17)*** Ln(SOCit(-1)) -0.66(-3.46)*** Ln(TQCit(-1)) 0.06(0.70) Ln(TQOit(-1)) -0.15(-3.07)*** Ln(TQPit(-1)) -0.35(-8.45)*** Ln(TQproit(-1)) -0.13(-1.78)* Ln(TQVit(-1)) -0.24(-1.78)* C 9.59(28.22)*** 7.12(-1.78)*** Adj. R F-statistika *** 80.00*** Počet pozorování Pozn.: *, **, ***; reprezentují hladinu významnosti 10 %, 5 %, a 1 %, označení Ln signalizuje logaritmickou úpravu proměnných, hodnota v závorce značí zpoždění proměnné o příslušné období. Zdroj: vlastní výpočty Závěr Cílem tohoto příspěvku bylo zhodnotit vliv daňového mixu na ekonomický růst v zemích V4. Ačkoli se jedná o téma velmi často diskutované v rámci různých článků, tak v případě tohoto příspěvku bylo přistoupeno k jistým modifikacím, které jej od standardních článků psaných na obdobné téma do jisté míry odlišují. V první řadě jde o volbu datové základy, kterou tvořil vzorek zemí, které se vyznačují vysokým stupněm homogenity, což je velmi důležité z hlediska použité metody panelové regrese, kde by příliš vysoké rozdíly mezi zeměmi, měly negativní dopad na konzistentnost výsledků. Země V4 jsou si velmi podobné 18 th International Scientific Conference [78] Faculty of Economics, VŠB - TUO

87 z institucionálního hlediska, mají také velmi podobný historický vývoj, kdy si každá z nich musela projít fází zvanou transformace. Co dále odlišuje tento příspěvek od ostatních je zahrnutí České republiky do datové základny. V případě celé řady zahraničních studií je Česká republika z důvodu nedostatečného množství v analýzách opomíjena, viz Alm a El-Ganainy (2013) a další. Dále tento příspěvek uvažuje horizont působení daňové politiky. Jedná se totiž o velmi důležitý faktor, který velmi významně ovlivňuje ekonomický růst, což je jeden ze stěžejních cílů hospodářské politiky, jehož vliv se může projevovat s určitým časovým zpožděním. Odhadovaný model byl založen na modelu Mankiw, Romer a Weil (1992). Samotný odhad byl uskutečněn metodou panelové regrese s fixními efekty. Přípustnost této metody byla podpořena výsledky Hausmanova testu. Datová základna příspěvku obsahovala pozorování za co nejdelší období ( ). V modelech byly obsaženy dvě skupiny proměnných, a sice růstové a daňové. Z hlediska růstových proměnných se jednalo o investice a lidský kapitál. Daně byly zahrnuty do modelů prostřednictvím daňové zátěže, což představuje standardní způsob aproximace, který je možno vidět také v jiných článcích, viz Kotlán, Machová a Janíčková (2011). Na základě výsledků lze usuzovat, že daňový mix hraje velmi důležitou roli v případě analyzovaných zemí. V současnosti platí, že se daňová zátěž přesouvá směrem k nepřímým daním, které jsou skryty v cenách výrobků. Jedná se o daňovou iluzi, v rámci které jsou daňoví poplatníci klamáni. Přičemž bylo zjištěno, že ekonomický růst je nejméně omezován majetkovými daněmi a spotřebními daněmi. Nejvýznamnější negativní vliv na ekonomický růst byl prokázán v případě příspěvků na sociální zabezpečení. Významně negativní vliv byl objeven v případě daní z příjmu jednotlivců. Statisticky významný vliv korporátních daní prokázán nebyl. Jedná se pravděpodobně o následek konstrukce ukazatele kvóty korporátních daní, viz Kotlán a Machová (2012). Další možnou příčinou představuje možnost daňových úniků, k obdobným závěrům dospěli také v práci Hanousek a Palda (2004). Jedním ze stěžejních výsledků, kterých bylo v tomto příspěvku dosaženo, je, že daně působí na ekonomický růst se zpožděním jednoho roku, což může pomoci tvůrcům hospodářské politiky přesněji předvídat dopady ve změně daňové politiky na ekonomický růst. Literatura ALM, James and Asmaa EL-GANAINY (2013). Value-added taxation and consumption. In Tax Public Finance. 20: AUERBACH, Alan J. (2006). The choice between income and consumption taxes: A primer. NBER Working Paper, No BALTAGI, Badhi., H. (2008). Econometric analysis of panel data. Weinheim: J. Wiley. ISBN BARRO, Robert and Xavier SALA-I-MARTIN (1995). Economic growth. New York: McGraw Hill. ISBN BARRO, Robert and Xavier SALA-I-MARTIN (2004). Economic growth (2 nd ). Cambridge: MIT Press. CORLETT, William J. and David C. HAGUE (1953). Complementarity and the excess burden of taxation. The Review of Economic Studies. 21(1): [79] Faculty of Economics, VŠB - TUO

88 Section S1: Economics HANOUSEK Jan and Filip PALDA (2004). Quality of Government Services And The Civic Duty To Pay Taxes In The Czech And Slovak Republics and Other Transition countries. Kyklos. 57(2): HENDERSON, Arthur (1948). The case for indirect taxation. The Economic Journal. 58(232): IZÁK, Vratislav (2011). Vliv vládních výdajů a daní na ekonomický růst (empirická analýza). Politická ekonomie. 59(2): KNELLER, Richard, Michael F. BLEANEY and Norman GEMMELL (1999). Fiscal Policy and Growth: Evidence from OECD Countries. Journal of Public Economics. 74(2): KOTLÁN, Igor a Zuzana MACHOVÁ (2014). Horizont daňové politiky v zemích OECD. Politická ekonomie. 62(2): KOTLÁN, Igor, Zuzana MACHOVÁ a Lenka JANÍČKOVÁ (2011). Vliv zdanění na dlouhodobý ekonomický růst. Politická ekonomie. 59(5): LUCAS, Robert (1988). On the Mechanics of Economic Development. Journal of Monetary Economics. 22: LI, J. F. and Z. X. LIN (2015). The impact of sales tax on economic growth in the United States: an ARDL bounds testing approach. Applied Economics Letters. 22(15): MANKIW, Gregory N., David ROMER and David N. WEIL (1992). A Contribution to the Empirics of Economic Growth. The Quarterly Journal of Economics. 107: MILESI-FERRETI Gian M. and Nouriel ROUBINI (1998). Growth Effects of Income and Consumption Taxes. Journal Money, Credit and Banking. 30(4): [1] OJEDE, Andrew and Steven YAMARIK. Tax policy and state economic growth: The longrun and short-run of it. Economics Letters. 116: ROMER, Paul M. (1986). Increasing Returns and Long-Run Growth. Journal of Political Economy. 1(1): SOLOW, Robert (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics. 70(1): WIDMALM, Frida (2001). Tax structure and growth: Are some taxes better than others? Public Choice. 107: WOOLDRIDGE, Jeffery M (2009). Introductory econometrics: a modern approach. Mason: South-Western Cengage Learning. ISBN th International Scientific Conference [80] Faculty of Economics, VŠB - TUO

89 DOPADY ZDANĚNÍ PRÁCE NA EKONOMICKÝ RŮST V ZEMÍCH OECD 1 INFLUENCE OF TAX BURDEN ON LABOUR ON THE ECONOMIC GROWTH IN OECD COUNTRIES Iva Vybíralová VŠB TU Ostrava, Ekonomická fakulta iva.vybiralova@vsb.cz Abstrakt Cílem tohoto příspěvku je zhodnotit dopad zdanění práce na ekonomický růst a potvrdit nebo vyvrátit hypotézu o negativním dopadu tohoto zdanění na ekonomický růst. Analýza panelových dat je provedena na ročních datech 30 zemí OECD. Při odhadování modelu je použita zobecněná metoda momentů (GMM). Model je postaven na endogenních teoriích růstu. Daňové zatížení práce je v tomto modelu reprezentováno výnosy z osobní důchodové daně a z příspěvků na sociální zabezpečení jako % HDP. Také zbylé daňové proměnné jsou vyjádřeny formou daňové kvóty. Výsledky odhadnutého modelu potvrdily negativní dopad zdanění práce na ekonomický růst. Klíčová slova: Ekonomický růst, Analýza panelových dat, Daňové zatížení práce, Daňová kvóta JEL: H20, O40, C50 Abstract Aim of this work is to evaluate impact of labour taxation on economic growth and confirm or refute hypothesis of negative impact of this taxation on economic growth. A panel data analysis was used on annual data of 30 OECD countries. Generalized method of moment (GMM) for estimating model is used. The model is built on endogenous growth theory. Tax burden on labour is represented by revenues from personal income taxes and social security contributions as % of GDP in this model. Also, the remaining fiscal variables are expressed as tax quota. The results of estimated model confirmed negative impact of labour taxation on the economic growth. Keywords: Economic Growth, Panel Data Analysis, Tax Burden on Labour, Tax Quota JEL: H20, O40, C50 Školitel: prof. JUDr. Ing. Igor Kotlán, Ph.D. et Ph.D. 1 Tento článek vznikl za finanční podpory Studentské grantové soutěže EkF, VŠB-TU Ostrava v rámci projektu SP2015/110 "Vplyv fiškálneho deficitu na ekonomický rast a možnosti jeho optimálnehoznižovania v ČR". [81] Faculty of Economics, VŠB - TUO

90 Section S1: Economics 1 Úvod Daňová politika má v rámci fiskální politiky důležité postavení. Daňové příjmy jsou stěžejní složkou příjmů státního rozpočtu. Bez těchto příjmů by tvůrci fiskální politiky neměli dostatečné prostředky pro plnění základních funkcí fiskální politiky. Toto zdanění nesmí být ale neúměrně vysoké, protože zde neplatí vztah mezi vyšší mírou zdanění a vyššími příjmy do státního rozpočtu. Daňové zatížení by proto mělo být optimálně tak vysoké, aby zabezpečilo dostatečný příjem a zároveň nebrzdilo ekonomický růst. Přílišná míra zdanění působí negativně na ekonomické subjekty. Z pohledu daňového zatížení práce může vysoká míra zdanění působit na jednotlivce negativně přes snížení výše disponibilního důchodu. Toto snížení negativně ovlivňuje nejen spotřebu, ale také investice do lidského kapitálu. Z pohledu firem vysoké daňové zatížení práce zvyšuje mzdové náklady firem. Rostoucí mzdové náklady snižují výši plánovaných investic a tím působí negativně na ekonomický růst. Cílem tohoto příspěvku je zhodnotit dopad zdanění práce na ekonomický růst a potvrdit nebo vyvrátit hypotézu o negativním dopadu tohoto zdanění na ekonomický růst. Práce je rozdělena do pěti částí. Po úvodu následuje kapitola věnovaná zdaněním v teoriích růstu. V této kapitole je provedena rešerše literatury. V další kapitole jsou popsána data, která byla použita v této analýze, a také je zde popsána použitá metoda odhadu. Čtvrtá kapitola obsahuje odhadnutý model a jsou zde popsány výsledky analýzy. Následuje závěr, který shrnuje výsledky celé práce. 2 Zdanění v teoriích růstů Tato práce vychází z teorie endogenního růstu. Hlavními představiteli této teorie jsou autoři Romer (1986) a Lucas (1988). Podstatou této teorie je rozšíření neoklasické představy ekonomického růstu (Solow, 1956; Swan, 1956) o lidský kapitál. Tento příspěvek vychází z práce autorů Mankiw, Romer a Weil (1992). Negativní vliv zdanění na ekonomický růst ve své práci prokázal například Barro (1990), Karras a Furceri (2009), Kotlán, Machová a Janíčková (2011), Romer a Romer (2010). Autoři Kneller, Bleaney a Gemmell (1990) zjistili rozdílný vliv daní distorzních a nedistorzních, kdy podle jejich výsledků jsou pro růst škodlivé právě daně distorzní. Myles (2000) a Widmalm (2001) zastávají názor, že výše ekonomického růstu je více ovlivněna samotnou daňovou strukturou, než výší zdanění. Podle autorů Mendoza, Milesi-Ferretti a Asea (1997) změny v daňových sazbách ovlivňují výši investic a dlouhodobý ekonomický růst. Silnější efekt na ekonomický růst mají dle jejich výsledků změny v osobních daních před zdaněním korporací i spotřebními daněmi. Řada autorů ve své práci prokázala negativní vliv zdanění příjmů na ekonomický růst, například Arnold (2008), Barro a Redlick (2009), Dackehag a Hansson (2012), Izák (2011), Johansson, Heady, Arnold, Brys a Vatria (2008) či Milesi-Ferretti a Roubini (1998). Autoři Alesina, Ardagna, Perotti a Schiantarelli (1999) ve své práci věnovali pozornost dani z příjmu a příspěvkům na sociální zabezpečení. Podle jejich výsledků růst těchto daní zvyšuje mzdové náklady firem a negativně ovlivňuje výši budoucích investic. Negativní vliv těchto daní potvrdili také Acosta-Ormaecha a Yoo (2012) nebo Kotlán a Machová (2012). 18 th International Scientific Conference [82] Faculty of Economics, VŠB - TUO

91 3 Použitá data a metodika Analýza byla provedena pro 30 zemí OECD. Tento vzorek zemí byl zvolen z důvodu předpokládané homogenity dat, která se u nejvyspělejších zemí světa dá očekávat. Pro členské země OECD je také dostupná obsáhlá databáze. Model byl v této práci odhadnut na základě odhadu zobecněné metody momentů (GMM). Byla použita roční data. 1.1 Data Při získávání jednotlivých dat byly využity světové databáze. Data z těchto databází jsou získávána a zpracovávána jednotně, proto by pro práci s panelovými daty měly mít vyšší vypovídací hodnotu. Z analýzy byly vyloučeny ty země OECD, pro které nebyla dostupná všechna data 2. Jednotlivá pozorování jsou za časový interval od roku 1995 do roku Rok 1995 byl zvolen z důvodu nedostupnosti dřívějších dat pro některé země a analýza končí rokem 2013 z důvodu nedostupnosti novějších pozorování. Model je postaven na endogenních teoriích růstu. Vysvětlovaná proměnná je proto vysvětlena za pomocí dvou skupin ukazatelů růstových a daňových proměnných. Ekonomický růst je v modelu aproximován pomocí ukazatele HDP (GDP). Tento ukazatel vyjadřuje HDP na obyvatele v amerických dolarech ve stálých cenách roku 2005, získaný z databáze World Bank WB Databank 3. Zbylé proměnné byly získány z databází OECD. Fyzický kapitál, který je zde kontrolní proměnnou, je v modelu aproximován ukazatelem poměru tvorby hrubého fixního kapitálu (GFCF) na HDP. Jednotlivá pozorování pro tento ukazatel byla získána z databáze OECD.Stat 4. Druhou kontrolní proměnnou je lidský kapitál. Z databáze OECDiLibrary 5 byl pro tento účel zvolen ukazatel lidského kapitálu (HC). Jedná se o složený index, který se člení na tři základní části, které tvoří investice do lidského kapitálu, kvalita těchto investic a výsledky vzdělávání. Daňovými proměnnými jsou v modelu jednotlivé daňové kvóty. Tyto kvóty představují daňový výnos dané daně k HDP. Protože se analyzují země OECD, je také použita klasifikace daní podle OECD. Korporátní zdanění je zde reprezentováno daňovým výnosem daně z příjmu, zisku a kapitálových výnosů společností jako % HDP (TQ1200). Nepřímé daně jsou v modelu zastoupeny dvěma ukazateli ukazatelem TQ5110, který představuje daňovou kvótu pro daň všeobecnou, a ukazatelem TQ5120, který představuje daňový příjem daně ze speciálního zboží a služeb jako % HDP. Zkoumané daňové zatížení práce je tvořeno součtem daňové kvóty daně z příjmu, zisku a kapitálových výnosů jednotlivců a příspěvky na sociální zabezpečení (TQ1100_2000). Všechny daňové ukazatele byly získány z databáze OECD.Stat 6. Byla provedena deskriptivní statistika dat, jejíž výsledky jsou uvedeny v tabulce 1. Tabulka obsahuje informace o průměru, mediánu, maximu a minimu jednotlivých ukazatelů. Poslední sloupec tabulky udává počet pozorování, který je u všech proměnných stejný, tzn. jedná se o takzvaný vyrovnaný panel. Jak lze z této tabulky vyčíst, jsou patrné rozdíly v jednotlivých pozorováních u většiny proměnných. Například u proměnné reprezentující daňové zatížení práce (TQ1100_2000) je rozdíl mezi minimem a maximem 24,086 p.b. 2 Jednalo se o Austrálii, Chile, Mexiko a Nový Zéland [83] Faculty of Economics, VŠB - TUO

92 Section S1: Economics Průměrně nejnižší zdanění práce je v Korei a v Turecku, naproti tomu Švédsko nebo Belgie dosahují nejvyšších hodnot. Tab. 3 Deskriptivní statistika vstupních dat Průměr Medián Maximum Minimum Počet pozorování GDP 31740, , , , GFCF 22,853 22,265 37,966 12, HC 3,195 3,260 3,824 1, TQ1200 2,963 2,729 12,755 0, TQ5110 6,791 6,944 11,722 1, TQ5120 3,588 3,488 8,551 0, TQ1100_ ,287 17,988 29,733 5, Zdroj: Vlastní výpočty. 1.2 Metodika Použití panelových dat má oproti použití časových řad řadu výhod. První výhodou je určitě počet pozorování, který díky kombinaci dat průřezových a časových je i při kratším časovém úseku pro analýzu dostatečný. Mohou být proto zkoumána i relativně krátká časová období, což je výhodou při využívání makroekonomických ukazatelů, kde u některých (například zde použitá daňová kvóta) jsou dostupná pouze roční data. Jak uvádí například Baltagi (2005), měla by panelová data kontrolovat individuální heterogenitu, mít vyšší vypovídací schopnost či vyšší variabilitu, viz Baltagi (2005). Pro odhad modelu byla v této práci použita zobecněná metoda momemtů (GMM). Díky použití robustního estimátoru White Period byly směrodatné odchylky ošetřeny o autokorelaci a heteroskedasticitu (Wooldridge, 2009). Dále byl při odhadu použit Arellano-Bond estimátor. Model byl odhadnut v ekonometrickém programu EViews7. 4 Panelová regrese Model odhadnutý v této práci je postaven na endogenní teorii růstu. Ekonomický růst je proto vysvětlován na základě kontrolních proměnných (GFCF a HC) a daňových proměnných (TQ1200, TQ5110, TQ5120 a TQ1100_2000). Tento vztah lze popsat matematickou formulací: GDP it = αgdp it 1 + β 1 GFCF it + β 2 HC it + γ 1 TQ1200 it + γ 2 TQ5110 it + γ 3 TQ5120 it + γ 4 TQ1100_2000 it + u it, (1) kde i = 1,, N představuje počet zemí, t = 1,, T je počet let, α, β a γ jsou odhadované parametry, GDP je ukazatel ekonomického růstu, GFCFje ukazatel fyzického kapitálu, HC je ukazatel lidského kapitálu, TQ1200 je ukazatel daňové zátěže daně z příjmu, zisku a kapitálu společností, TQ5110 je ukazatel daňového zatížení všeobecnou daní, TQ5120 je ukazatel daňového zatížení spotřebních daní, TQ1100_2000 je ukazatel daňového zatížení práce, u je reziduální složka. 18 th International Scientific Conference [84] Faculty of Economics, VŠB - TUO

93 V modelu se předpokládá kladná závislost mezi růstovými proměnnými GHCF a HC a ekonomickým růstem (GDP). U daňových proměnných je předpokládána negativní závislost, jak vyplývá z výše provedené rešerše literatury. Aby bylo možné výsledné odhady porovnat, byly všechny proměnné převedeny do logaritmické podoby. Důležitým předpokladem pro odhad modelu jsou stacionární data. Stacionarita byla testována za pomoci testů Levin, Lin & Chu, Im, Pesaran and Shin a ADF Fisher Chi-square test, které testují danou proměnnou na přítomnost jednotkového kořene (Baltagi, 2005). Nestacionární proměnné TQ5120 a TQ1100_2000 byly za použití první diference upraveny a následně opět testovány na stacionaritu. Obě tyto proměnné již byly stacionární, a proto byly tyto první diference (D) v modelu použity. V případě zpoždění je používána symbolika (-2), která znamená zpoždění daňových proměnných o dvě časová období. Výsledky odhadnutého modelu jsou uvedeny v tabulce 2. První model byl odhadnut bez jakýchkoli zpoždění. Nebyl ale jako celek statisticky významný. Pomocí křížové korelace byla následně zjišťována vzájemná závislost vysvětlujících proměnných k závislé proměnné. Daňové proměnné byly proto zpožděny o dvě období (-2). Model jako celek byl při tomto zpoždění statisticky významný. Přítomnost zpoždění u daňových proměnných je logická také z ekonomického pohledu, kdy se počítá s jistým zpožděním u fiskální politiky, zde politiky daňové. Na základě ekonomické teorie by růstové proměnné měly na ekonomický růst působit pozitivně a daňové proměnné by měly mít s ekonomickým růstem korelaci zápornou. Výsledky modelu jsou tudíž ve shodě s ekonomickou teorií. Všechny proměnné v modelu jsou statisticky významné. Kvantitativně nejsilnější vliv na ekonomický růst má podle očekávání daňové zatížení práce, což odpovídá výsledkům provedené rešerše literatury. Podle výsledků modelu má na růst kvantitativně nejslabší vliv zdanění korporací. [85] Faculty of Economics, VŠB - TUO

94 Section S1: Economics Tab. 4 Model daňového zatížení odhadovaný metodou GMM Proměnná Koeficient (t statistika) GDP_L(-1) 0,823(37,699)*** GFCF_L 0,164(12,863)*** HC_L 0,578(4,711)*** TQ1200_L(-2) -0,007(-2,340)** TQ5110_L(-2) -0,125(-19,035)*** D_TQ5120_L(-2) -0,039(-4,744)*** D_TQ1100_2000_L(-2) -0,129(-13,684)*** Počet pozorování 450 J-statistika 25,949 Počet instrumentů 30 Zdroj: Vlastní výpočty. Pozn.: počet hvězdiček označuje hladinu významnosti 1%(***), 5%(**) a 10% (*). Závěr Znalost dopadů zdanění na ekonomický růst je pro tvůrce hospodářské politiky velmi důležitá. V případě dobré znalosti tohoto vztahu jsou tito tvůrci schopni ovlivňovat nejen vývoj produktu v krátkém období, ale také vývoj dlouhodobého ekonomického růstu. Správně nastavenou výši zdanění mohou ovlivňovat nejen výši současné spotřeby, ale také výši budoucích investic, ať už do kapitálu fyzického či lidského. Toto má potom zprostředkovaně vliv na ekonomický růst. Cílem tohoto příspěvku bylo zhodnotit dopad zdanění práce na ekonomický růst a potvrdit nebo vyvrátit hypotézu o negativním dopadu tohoto zdanění na ekonomický růst. Na základě dosažených výsledků byl potvrzen negativní vliv daňového zatížení práce na ekonomický růst. Také u ostatních daňových proměnných byl potvrzen předpokládaný negativní dopad na ekonomický růst. Výsledný odhadnutý model obsahoval zpožděné daňové proměnné. Jisté fiskální proměnné se na výstupu projevují s určitým zpožděním. Při odhadu modelu bylo díky výsledkům křížové korelace využito zpoždění daňových proměnných o dvě časová období. Odhadnutý model byl jako celek statisticky významný. Pro růst je dle výsledků provedené analýzy nejškodlivějším typem daně osobní důchodová daň a příspěvky na sociální zabezpečení, jež dohromady představují daňové zatížení práce. Tento výsledek odpovídá provedené rešerši literatury. Kvantitativně nejslabší vliv na ekonomický růst má podle provedené analýzy daňové zatížení daně z příjmů, zisků a kapitálových výnosů společností. Překvapivě vysoký kvantitativní vliv na ekonomický růst má také daňové zatížení všeobecných daní. Do této skupiny patří například daň z přidané hodnoty (DPH). Dosažené výsledky mohou 18 th International Scientific Conference [86] Faculty of Economics, VŠB - TUO

95 být způsobeny zvolenými ukazateli. V případě daňového zatížení reprezentovaného daňovou kvótou se nabízí otázka vhodnosti použití tohoto ukazatele. Jeho možnou nevhodnost ve své práci zmiňují například Kotlán, Machová a Janíčková (2011). V případě evropských zemí se nabízí možnost využití implicitních daňových sazeb. Problémem tohoto ukazatele je jeho nedostupnost pro země, které nejsou v Evropské unii, jelikož Eurostat počítá tento ukazatel jen pro ně. Další variantou je využití alternativního ukazatele World Tax Index, který je konstruován pro země OECD. U tohoto ukazatele je nevýhodou nedostupnost dat před rokem Literatura ARNOLD, Jens (2008). Do Tax Structures Affect Aggregate Economic Growth?: Empirical Evidence from a Panel of OECD Countries, OECD Economics Department Working Papers, No BALTAGI, Badhi H. (2005). Econometric analysis of panel data. 3rd ed. Chichester: John Wiley & Sons Ltd. ISBN BARRO, Robert J. and Chales J. REDLICK (2009). Macroeconomic Effects from Government Purchases and Taxes. NBER Working Papers 15369, National Bureau of Economic Research, Inc. BARRO, Robert (1990). Government Spending in a Simple Model ofendogenousgrowth. Journal of Political Economy. 98 (5): DACKEHAG, Margareta and Åsa HANSSON (2012). Taxation of Income and Economic Growth: An Empirical Analysis of 25 Rich OECD Countries. Department of Economics. Working Paper 2012:6. IZÁK, Vratislav (2011). Vliv vládních výdajů a daní na ekonomický růst (empirická analýza). Politická ekonomie. 59 (2): JOHANSSON, Åsa, Christopher HEADY, Jens ARNOLD, Bert BRYS and Laura VARTIA (2008). Tax and Economic Growth. OECD Economics Department Working Paper. No KARRAS, Georgios and Davide FURCERI (2009). Taxes and growth in Europe. South- Eastern Europe Journal of Economics. 7 (2): KNELLER, Richard, Michael F. BLEANEY and Norman GEMMELL (1999). Fiscal Policy and Growth: evidence from OECD Countries. Journal of Public Economics. 74: KOTLÁN, Igor a Zuzana MACHOVÁ (2012). Horizont daňové politiky v zemích OECD. Politická ekonomie. 62 (6): KOTLÁN, Igor, Zuzana MACHOVÁ a Lenka JANÍČKOVÁ (2011). Vliv zdanění na dlouhodobý ekonomický růst. Politická ekonomie. 59 (5): LUCAS, Robert E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics. 22: [87] Faculty of Economics, VŠB - TUO

96 Section S1: Economics MANKIW, N. Gregory, David ROMER and David N. Weil (1992). A Contribution to the Empiricis of Economic Growth. NBER Working papers. Working paper No. 3541, National Bureau of Economic Research, Inc. MENDOZA, Enrique G., Gian Maria MILESI-FERRETTI and Patric ASEA (1997). On the Ineffectiveness of Tax Policy in Altering Long-run Growth: Harberger s Superneutrality Conjecture. Journal of Public Economics 66: MILESI-FERRETTI,Gian Maria and Nouriel ROUBINI(1998). Growth Effects of Income and Consumption Taxes. Journal of Money, Credit and Banking. 30 (4): MYLES, Gareth D. (2000). Taxation and Economic Growth. Fiscal Studies. 21 (1): ROMER, Christina D. and David H. ROMER (2010). The Macroeconomic Effectsof Tax Changes: Estimates Based on a New Measure of Fiscal Shocks. American Economic Revie. 100: ROMER, Paul (1986). Increasing Returns and Long-Run Growth. The Journal of Political Economy, 94 (5): SOLOW, Robert (1956). A Contribution to the Theory of Economic Growth. The Quarterly Journal of Economics. 70 (1): SWAN, Trevor W. (1956). Economic Growth and Capital Accumulation. Economic Record. 32: WIDMALM, Frida (2001). Tax Structure and Growth: Are Some Taxes Better than Others? Public Choice. 107: WOOLDRIDGE, Jeffrey M. (2009). Introductory Econometrics: A Modern Approach. 4th. ed. Mason: South Western CENGAGE Learning. ISBN th International Scientific Conference [88] Faculty of Economics, VŠB - TUO

97 Section S2 Business Administration Honorary Chairman: prof. Ing. Petr Šnapka, DrSc. Guarantor: Ing. Jana Klozíková [89] Faculty of Economics, VŠB - TUO

98 Section S1: Business Administration 18 th International Scientific Conference [90] Faculty of Economics, VŠB - TUO

99 COMPARISON OF COPRAS-G, TOPSIS AND VIKOR MULTIPLE ATTRIBUTE METHODS IN PLANT PERFORMANCE EVALUATION 1 Jiří Franek Faculty of Economics, VSB-Technical University of Ostrava jiri.franek@vsb.cz Abstract Performance evaluation can have a significant impact on the functioning and development of a company. Therefore, the performance evaluation from the set of possible measures is an important and difficult task for decision makers. This paper considers the performance evaluation based on manufacturing plant evaluation criteria. In the proposed evaluation scheme the performances are expressed using crisp and interval values available. For the evaluation criteria weights and results for TOPSIS and VIKOR methods are used from previous research. The same crisp and interval values are used for application of COPRAS and COPRAS-G methods. Results for all three methods using entropy based weights as well as combined subjective and objective weighting are compared. The aim of this paper is to show the differences and applicability of these methods in practice. Keywords: COPRAS-G, COPRAS, TOPSIS, VIKOR, performance evaluation JEL: G11, L25 Advisor: prof. Dr. Ing. Zdeněk Zmeškal 1 This paper was supported by Student competition grant SGS. All support is greatly appreciated. [91] Faculty of Economics, VŠB - TUO

100 Section S2: Business Administration 1 Introduction Business environment is experiencing a period of development of the knowledge society that has influenced decision making processes of firms, organizations and individuals. However, many important strategic decisions are made on the basis of self-evidence, intuition and not always fully comprehend relationships among evaluated factors. The multiple criteria decision-making (MCDM) methods have been successfully applied to many business and management decision making problems. Set of MCDM methods can be divided into two main streams: the multiple attribute decision making (MADM) methods with finite number of alternatives and mathematical optimization linear programming (MOLP). In this case we concentrate on the MADM methods that are more convenient for use in decision making problems within the business domain. The MADM methods are well developed and have a strong mathematical basis. Company performance can be measured by activities where companies spend their capital resources in order to create a value. In order to decide which of the proposed performance evaluation measures can be selected, some various elements may be taken into account. The performance can be evaluated by using economic, financial, technological, ecological-environmental and other efficiency indicators, but it is evident that many companies prefer to concentrate on establishing their specific set of evaluation measures that can be traced back to their business goals and purposes. During evaluation of performance, decision makers (DM) usually make a decision based on certain criteria (attributes), because the performance evaluation can be considered as a multi-criteria decision-making problem. Therefore, many authors propose the use of multi-criteria decision making (MADM) methods. Application of different MADM methods (VIKOR, TOPSIS, SAW, COPRAS) for evaluation of performance was used by several authors. Some authors used MADM approach with aforementioned methods for performance evaluation and supplier selection (Zeydan, Çolpan, & Çobanoğlu, 2011; Chaharsooghi & Ashrafi, 2014). Very useful seems to be combination with AHP method as show in works by Sun (2010), Yalcin, Bayrakdaroglu & Kahraman (2012), Das, Sarkar, & Ray (2012) and Esbouei, Ghadikolaei & Antucheviciene (2014). Other scholars used hybrid models of MADM using DEMATEL (Ranjan, Chatterjee, & Chakraborty, 2016). performance evaluation with MADM or MCDM approaches has been recently investigated by Hsu (2014) and Rabbani et al. (2014). The use of classical MADM methods requires the use of precise data, i.e. the performance ratings of alternatives and criterion weights must be precisely determined. However, solving many real-world problems often requires some kind of variance, and then it is not possible to precisely determine the data which are necessary for using the classical MADM methods. Therefore, many MADM methods have their extensions, formed with the aim of their application in case of imprecise data use. One of the MADM methods that have their extensions is COPRAS method. For its application in the case of data expressed in the form of intervals, its extended version COPRAS-G method was established, and also COPRAS- F for applying fuzzy sets. But many real-world problems cannot be strictly classified into two categories: a category of problems that provides use of crisp data and a category that does not allow its use. In fact, solving many real-world problems using MADM methods often requires the simultaneous use of crisp and imprecise data. Therefore, it can be suggested to use extended forms of procedures that allow mixed use of the steps applied in classical and steps applied in 18 th International Scientific Conference [92] Faculty of Economics, VŠB - TUO

101 the modified versions of MADM methods, which are formed with the aim of using data represented as fuzzy numbers or intervals. The rest of this paper is organized as follows: Section 2 considers some important methodological issues. In section 3 the COPRAS and GOPRAS-G method are presented. In section 4, a performance evaluation example is presented to illustrate the applicability and efficiency of the proposed methodology. The last section is concerned with discussion and conclusion remarks. 2 Performance evaluation using MADM methods Performance evaluation problems can be solved using various types of MADM methods. Basically we can distinguish four main groups of MADM methods that can be used and their combinations. We can use these two perspectives: number of evaluators and type of data. Following table Tab. 1 describes illustrates this problem by introducing four quadrants A, B, C, D. Number of evaluators / type of data Subjective (qualitative) Objective (quantitative) Tab. 1. MADM Decision making matrix Individual decision making SI OI Group decision making SG OG In the quadrant SI we suppose that the individual is an expert or a person in an executive position. Therefore, this person can make his judgement based on his best knowledge and experience and also intuition. In this case the outcome is estimated. Performance evaluation problem is always a multifaceted one so this individual has to decompose the problem into several criteria and sub-criteria. The suggested course of action would be to use one of the simple methods such as ranking, allocation of points. If the number of criteria or sub-criteria in one decision making level (situation) increase over 3, pairwise comparisons should be used either simple pairwise comparisons (using values 1 or 0) or Saaty quantitative pairwise comparisons that use linguistic variables to express decision maker s opinion. The preferred method would be analytic hierarchy process (AHP) for tasks with predetermined structure (hierarchy). For evaluations (decision making problems) that are unique, complicated and where the criteria seem to be interrelated, the evaluator (decision maker) should consider using DEMATEL method to probe the structure of the problem first and then create a network rather than hierarchy and use analytic network process (ANP). Furthermore, the evaluator should consider the resulting values of criteria weights and how precisely they should be representing his opinion. Then simple ranking or pairwise comparisons are not desirable. The quadrant SG illustrates a situation when the performance evaluation is done by a group of people. This group can be coherent as a team or consist of individuals or a board of individuals with predetermined hierarchy. This perspective of decision making is no less important as the method for aggregation of decision makers opinions. If the group is considered to be a set of equally important and equally knowledgeable (about the problem) individuals the method of gathering data can be based on arithmetic or geometric average. [93] Faculty of Economics, VŠB - TUO

102 Section S2: Business Administration When using Saaty method or AHP (analytic hierarchy process) the question is whether to calculate average pairwise matrices or average resulting weights. If the group can be considered a team another option could be to use discussion to reach consensus about particular preferences. If the group has a certain hierarchy, then there is an option to use specific weights for each member based on his/her position within the hierarchy. Group decision making also offers an opportunity to engage wider group of people for example outside an organization. Or certain groups or individuals within the group can evaluate certain areas of the decision making problem hierarchy or network (when using analytic network process). The quadrant OI poses another challenge for the decision maker. If the evaluation of a certain organizational unit or a person can be based on measured values then the subjective decision making can lead to non-transparent, unfair or biased conclusion. However, there is a possibility to combine both subjective and objective approaches. If the decision maker is an individual he can use techniques from the quadrant A to determine evaluation criteria weights or ranking and the apply these to evaluate alternatives such as organizational units or employees, projects, products, etc. The same applies for quadrant OG, with the difference being the method of priorities or weights aggregation. If the members of the group are to going to measure (calculate, determine) the values of alternatives in each criterion then there is the problem of aggregation of these values. Beside calculation averages or using minimum or maximum values an interval or fuzzy approach can be used as well to include this real-life problem of uncertainty. The problem of combining subjective and objective weighting can be again illustrated by a simple matrix. Tab. 2. Subjective and objective weighting in MADM Criteria weighting method / type of measured values Subjective weighting of criteria Objective weighting of criteria Alternatives with qualitative data SQl OQl Alternatives with quantitative data SQt OQt The problem illustrated on the matrix in Tab. 2. Characterizes a situation when the evaluation concerns not only evaluation of criteria but also evaluation of certain alternatives. Then the individual or a group faces following options. The quadrant SQl characterizes a situation when the evaluation is based only on subjective opinions. This can be solved by using simple methods of ranking or point s allocation. In the first phase the decision maker (an individual or a group) evaluates criteria and then evaluates the alternatives. Using utility function U(ai) multiplies each alternative priority in certain criterion by the criterion s particular weight. The sum of these multiplications can be considered the alternative s utility: U m ( ai ) w j aij, j1 (1) 18 th International Scientific Conference [94] Faculty of Economics, VŠB - TUO

103 Where aij represents priority of an i-th alternative within j-th criterion and wj represents the j-th criterion weight. The situation described by the SQt quadrant is relatively frequent. It means that the decision maker evaluates criteria subjectively but the values of criteria themselves can be measured for each alternative. In this case the decision maker has the ability to prioritize set of criteria which are used for evaluation of a finite number of alternatives. Based on the problem characteristics the decision maker can decide whether to use simple or more sophisticated approach. Many applications of MADM in performance evaluation are based on AHP or ANP subjective criteria weighting and then uses another MADM method to evaluate alternatives (ranking or selection). This approach can be suggested in problems where the interrelation of criteria is important and can be considered valuable when doing an evaluation. Typically methods based on distance measurement such as TOPSIS, VIKOR or WSA are used for ranking of criteria and their scores. In recent years also new approach called COPRAS has been developed. These methods use crisp criteria values. Recently researchers suggested to apply intervals or fuzzy number to make evaluations based on hard data more robust. One example can be COPRAS with grey interval number (COPRAS-G). The quadrant OQl is an example of a situation when the criteria weights can be estimated using datasets that represent the criteria characteristics. In the first phase of evaluation the decision maker has to gather date for a matrix consisting of criteria and their particular values among set of alternatives. Then the weights can be estimated using entropy, variation (standard deviation) or correlation measures. These weights can be used for further evaluation of alternatives by calculation U(ai), where the weights of alternatives within each criterion can be based on subjective evaluation. However, this solution can be questionable since we already have quantitative data for evaluation of alternatives. This lead to the final quadrant OQt, where we have a dataset consisting of criteria and alternatives. There is again no difference to individual or group decision making. This evaluation or decision making can be done by an autonomous software that is built in an information system. Combination of methods used for such evaluation can differ and also should be predefined for particular case of evaluation. Before implementation of such decision making support system a rigorous research should be done to establish meaningful interpretation of results. 3 Selected MADM methods The COPRAS (COmplex PRoportional ASsessment) method is presented by Zavadskas and Kaklauskas (Zavadskas et al., 1994). Description of COPRAS methods and possibilities of its application are published in a number of papers (Zavadskas et al., 2001; Vilutiene & Zavadskas, 2003; Zavadskas et al., 2004; Zavadskas et al., 2008). 3.1 The COPRAS method Ranking alternatives by the COPRAS method assumes direct and proportional dependence of significance and priority of investigated alternatives on a system of criteria (Zavadskas et al. 1994). The determination of significance and priority of alternatives, by using COPRAS method, can be expressed concisely using four stages (Zavadskas et al. 1994; Zavadskas et al. 2008): [95] Faculty of Economics, VŠB - TUO

104 Section S2: Business Administration Stage 1. The normalized decision-making matrix D is constructed. In MADM process, criteria usually have different units of measure. In order to transform performances of considered alternatives into comparable dimensionless values, normalization procedure is used. A detailed overview of the most important normalization procedures are also discussed in Zavadskas et. al. (2008). For normalization in COPRAS method the following formula is used: ~ x ij x ij m i1 x ij, (2) where xij is the performance of the i-th alternative with respect to the j-th criterion, is its normalized value, and m is number of alternatives. Stage 2. The sums of weighed normalized criteria describing the i-th alternative are calculated. In COPRAS method, each alternative is described with its sums of maximizing attributes S+i, i.e. optimization direction is maximization, and minimizing criteria S-i, i.e. optimization direction is minimization. In order to simplify calculation of S i and S i in the decision-making matrix columns first of all are placed maximizing criteria and then minimizing criteria. In such cases, and is calculated as follows: S i S i k ~ x j1 ij q j, S i ~ x ij (3) S i n ~ x ij jk1 q j. (4) In formulas (3) and (4), k is number of maximizing criteria; n is total number of criteria; and qj is significance of the j-th criterion. Stage 3. Calculation of the relative weight of each alternative. The relative weight of i-th alternative is calculated as follows: m (5) min Si Si i i1 Qi Si m min Si i Si i1 Si. Q i Formula (5) can also be written in simplified form as follows: Q S i i S i m S i i1 m i1 1 S i. (6) Stage 4. Determine the priority order of alternatives. The priority order of compared alternatives is determined on the basis of their relative weight. The alternative with higher relative weight has higher priority (rank), and the alternative with the highest relative weight is the most acceptable alternative. 18 th International Scientific Conference [96] Faculty of Economics, VŠB - TUO

105 A * A i max Q i i. (7) The presented procedure of COPRAS method indicates that it can be easily applied for evaluating the alternatives and selecting the most efficient one, with decision maker being completely aware of the physical meaning of the process (Zavadskas et al., 2008). However, many decisions are made in real-world situations where criterion values are not precisely known. Then criterion values can be expressed in the form of intervals (Zavadskas et al., 2004; Zavadskas et al., 2008). For this reason a new method of multiple-criteria complex proportional assessment with values determined in intervals COPRAS-G is developed (Zavadskas et al., 2008). 3.2 The COPRAS-G method Instead of using crisp values, COPRAS-G uses criterion values determined in intervals. Replacement of the crisp xij with the interval value, where x ij is the lower limit and x ij is the upper limit of interval, requires some modifications in the ranking procedure, which manifest themselves in stage 1 and stage 2 of the previously described procedure. In stage 1, the use of intervals has effects on the normalization of criterion values. The normalized values of decision-making matrix whose elements are intervals are calculated as follows (Zavadskas et al., 2008) ~ xij 2xij (8) x ij m m m m 1 x ij ij x x ij xij 2 i1 i1 i1 i1, [ x ij, xij] ~ x ij 1 2 m x x ij m ij i1 i1 x ij m i1 2x ( x ij ij xij). (9) In formulas (8) and (9), x ij and alternative with respect to the j-th attribute; and x ij are the lowest and highest performance of the i-th ~ x ij and ~ x ij are its normalized values. In stage 2, the use of intervals has impact on formulas used for calculation of S. Then, the sum of maximizing attributes S of i-th alternative is calculated as: i S i 1 2 k j1 ( ~ x ij i ~ xij) q j, S i and (10) S i 1 2 n jk1 ( ~ x ij ~ xij) q j. (11) The detailed procedure for ranking alternatives using COPRAS or COPRAS-G method is shown in (Zavadskas et al., 2008b; Zavadskas et al., 2009). In this section we will show the detailed procedure for determining the most acceptable alternative when criterion values are expressed with combined use of crisp and interval numbers. This procedure can be accurately expressed in the following steps: [97] Faculty of Economics, VŠB - TUO

106 Section S2: Business Administration In stage 1 the DM selects the set of the most important criteria, describing the alternatives. In stage 2 the decision-making matrix is constructed. For the MADM problem that simultaneously uses the criteria with crisp values and criteria with values expressed in intervals, decision matrix can be expressed as follows: x [ x j, x j ] x n (12) x [ x, x ] x 21 X xm 1 [ x 2 j mj, x 2 j mj ] 2n xmn, where xij is performance of i-th alternative with respect to j-th criterion, m is number of alternatives and n is number of criteria. For criteria which performance is determined in intervals xij it is determined by its: - the lower limit and - the upper limit. In the stage 3 x ij the decision-making matrix is normalized. The normalized values of decision-making matrix are calculated using formula (2) for criteria with crisp values and using (8) and (9) for criteria with values expressed in intervals. In stage 4 the criteria weights are determined. In stage 5 the sums of maximizing criteria for each alternative are calculated. When the decision-making matrix contains criteria with crisp and criteria whose values are expressed in intervals, the sums of maximizing and minimizing criteria can be calculated. In the following stage 6 the relative weight of each alternative can be calculated, by using formula (6). In stage 7 the priority order of alternatives is determined on the basis of their relative weight, and alternatives with higher relative weight have a higher rank. In the last 8th stage the most acceptable alternative is identified, by using formula (7). Q i x ij 4 Performance evaluation example Presented performance evaluation was done using monthly data for manufacturing plant. Data for interval measures were derived from the actual percentages that particular performance goal was met. This value is considered as a minimum value. The value of the goal for the particular measure in a monthly evaluation was used as a maximum value. Therefore, based on this set of data ranking of monthly performance can be determined. To compare results from the COPRAS-G model of MADM approach data from the previous research (Franek & Kashi, 2014) were used. The performance evaluation was done using entropy based criteria weights and combined subjective weights estimated using ANP and objective weights using entropy. These weights were combined using simple additive weighting (SAW). In Appendix 1 and 2 the initial matrix for the COPRAS-G method with interval data using combined subjective and objective weights is attached. The performance evaluation was done using 20 measures in 5 different areas of safety, quality, delivery, cost and human resources. The dataset of alternatives (monthly evaluations) consists of 12 items. The ANP and Entropy weights were used from the previous research from (Franek & Kashi, 2014). Using stage by stage approach from the section 3.2 and formulas (2) to (12) the final COPRAS-G scores were derived and compared with previous results for this example of performance evaluation with TOPSIS and VIKOR methods. 18 th International Scientific Conference [98] Faculty of Economics, VŠB - TUO

107 In the table Tab. 3 results of monthly evaluation using percentages of performance goals that should be met with criteria weights calculated by entropy. This example of evaluation is the case of the objective weighting for individuals (OI) and objective weighting combined with alternatives with quantitative data (OQt). This means that only measured values were used for this evaluation. This can proceed autonomously using this a sub-program for decision support system within a company s information system. In table Tab. 3 results of ranking from 1 to 12 determined using entropy based criteria weights and COPRAS-G, TOPSIS and VIKOR methods for ranking of alternatives are presented. Tab. 3 Performance evaluation with ranking using COPRAS-G, TOPSIS and VIKOR methods with entropy based criteria weights COPRAS- Months Pj Rj Qj Nj G TOPSIS VIKOR January 0, ,100 1, February 0, ,008 0, March 0, ,008 0, April 0, ,007 0, May 0, ,008 0, June 0, ,008 0, July 0, ,007 0, August 0, ,008 0, September 0, ,008 0, October 0, ,007 0, November 0, ,005 0, December 0, ,005 0, [99] Faculty of Economics, VŠB - TUO

108 Section S2: Business Administration Tab. 4 Performance evaluation with ranking using COPRAS-G, TOPSIS and VIKOR methods with combined subjective and objective criteria weights (SAW) COPRAS- Months Pj Rj Qj Nj G TOPSIS VIKOR January 0, ,093 1, February 0, ,007 0, March 0, ,007 0, April 0, ,007 0, May 0, ,008 0, June 0, ,008 0, July 0, ,007 0, August 0, ,007 0, September 0, ,007 0, October 0, ,008 0, November 0, ,006 0, December 0, ,006 0, In both tables we can see that value of Rj is 0. This means that there are no minimizing criteria. The value of Pj is therefore the final score of the alternative. In the table Tab. 3 we can see that the main differences among selected methods TOPSIS, VIKOR and COPRAS-G are in January, March, May, August, September and October. The change in the ranking is significant, however the Pj values of these monthly performance is close so the difference is marginal. If we consider subjective expert views of plant managers from the ANP and combine them with the entropy objective weights the situation is quite different when considering ranking from 4th to 10 th position, however the first their position remains the same. The difference can be seen also in the results for TOPSIS and VIKOR methods. Again the Pj value among corresponding months is very close. The interval method of COPRAS-G gives us results where it does prefer the performance of the plant in January over the performance in May. If we look in the hard data, we can see that the average for goal achievement is better in May. Based on correlation of all rankings with the average percentage of goal achievement the highest overall correlation with the traditional average approach has the COPRAS-G with entropy based weights (96%) followed by VIKOR (91%) and TOPSIS (87%). The combined weighting approach produced lower correlation but still the best results were produced using COPRAS-G method (85%). Conclusion Some scholars can oppose the results of this paper because the comparison was made between quite different methods and datasets (crisp values for TOPSIS and VIKOR, interval values for COPRAS-G). On the other hand, the purpose was to compare the approaches and try to interpret and discus its results. Based on the results the entropy weighting (objective weighting) based approach produced performance ranking that was similar to the one used by the management of the company which was based on arithmetic average. When using interval values (COPRAS-G) and entropy based weighting the ranking become even more similar to the average one. This shows that the interval approach (grey numbers) is very close to the results that top managers used to have but with the significant difference and that is the robustness of 18 th International Scientific Conference [100] Faculty of Economics, VŠB - TUO

109 the approach and its flexibility. It means that changes in monthly targets or priorities of the management can be easily incorporated and produce results that have better explanatory value. Results of this study suggest more research should be done in interval values in MADM methods and their applicability in selecting performance targets for performance evaluation. Secondly this paper uses theoretical decision making approach that helps to identify and distinguish two decision making perspectives in two levels. In the first level the criteria weighting can be individual or group and subjective or objective (based on hard data). And in the second level the selection of alternatives it can be subjective or objective criteria weights and qualitative or quantitative prioritization of alternatives. References CHAHARSOOGHI, Kamal and Mahdi ASHRAFI (2014). Sustainable Supplier Performance Evaluation and Selection with Neofuzzy TOPSIS Method. ISRN Otolaryngology, pp DAS, Manik C., SARKAR, B. and Sougata RAY (2012). A Framework to Measure Relative Performance of Indian Technical Institutions Using Integrated Fuzzy AHP and COPRAS Methodology. Socio-Economic Planning Sciences, 46(3), doi: ESBOUEI, Saber K., GHADIKOLAEI, Abdolhamid S. and Jurgita ANTUCHEVICIENE (2014). Using FANP and Fuzzy VIKOR for Ranking Manufacturing Companies Based on their Financial Performance. Economic Computation & Economic Cybernetics Studies & Research, 48(3), FRANEK, Jiří a Kateřina KASHI (2014). A Review and Critique of MADM Methods and Applications in Business and Management. International Journal of the Analytic Hierarchy Process. 6 (4). s ISSN HSU, Yu-Lung (2014). A hybrid multiple criteria decision-making model for investment decision making. Journal Of Business Economics & Management, 15(3), doi: / RABBANI, Arefeh, ZAMANI, Mahmoud, YAZDANI-CHAMZINI, Abdolreza, and Kazimeras E. ZAVADSKAS (2014). Proposing a new integrated model based on sustainability balanced scorecard (SBSC) and MCDM approaches by using linguistic variables for the performance evaluation of oil producing companies. Expert Systems With Applications, 41(16), doi: /j.eswa RANJAN, Rajeev, CHATTERJEE, Prasenjit, & CHAKRABORTY, Shankar (2016). Performance evaluation of Indian Railway zones using DEMATEL and VIKOR methods. Benchmarking: An International Journal, 23(1), doi: /bij SUN, Chia-Chi (2010). A performance evaluation model by integrating fuzzy AHP and fuzzy TOPSIS methods. Expert Systems With Applications, 37(12), doi: /j.eswa [101] Faculty of Economics, VŠB - TUO

110 Section S2: Business Administration VILUTIENE, Tatjana, and Kazimeras E. ZAVADSKAS (2003). The application of multicriteria analysis to decision support for the facility management of a city s residential district. Journal of Civil Engineering and Management, 10(4): YALCIN, Nese, BAYRAKDAROGLU, Ali and Cengiz KAHRAMAN (2012). Application of fuzzy multi-criteria decision making methods for financial performance evaluation of Turkish manufacturing industries. Expert Systems With Applications, 39(1), doi: /j.eswa ZAVADSKAS, E. Kazimeras, KAKLAUSKAS, Arturas and Vera SARKA (1994). The new method of multi-criteria complex proportional assessment of projects. Technological and Economic Development of Economy, 1(3): ZAVADSKAS, E. Kazimeras, KAKLAUSKAS, Arturas and Neria KVEDERYTE (2001). Multivariant design and multiple criteria analysis of building life cycle. Informatica, 12(1): ZAVADSKAS, E. Kazimeras, KAKLAUSKAS, Arturas, BANAITIS, Audrius and Neria KVEDERYTE (2004). Housing credit access model: The case for Lithuania. European Journal of Operational Research, 155(2): ZAVADSKAS, E. Kazimeras, KAKLAUSKAS, Arturas, TURSKIS, Zenonas, and Jolanta TAMOSAITIENE (2008). Selection of the effective dwelling house walls applying attributes determined in intervals. Journal of Civil Engineering and Management, 14(2): ZAVADSKAS, E. Kazimeras, KAKLAUSKAS, Arturas, TURSKIS, Zenonas, and Jolanta TAMOSAITIENE (2009). Multi-attribute decision making model by applying grey numbers. Informatica, 20(2): ZEYDAN, Mihat, ÇOLPAN, Cüneyt and Cemal ÇOBANOĞLU. (2011). A combined methodology for supplier selection and performance evaluation. Expert Systems With Applications, 38(3), doi: /j.eswa th International Scientific Conference [102] Faculty of Economics, VŠB - TUO

111 Appendix 1 Initial decision making matrix for COPRAS-G method Rec Incidents Non-Rec Incidents Audit PPR Complaints Qua Cost Frst Time Yield Throughput Ontime Invertory X1 X2 X3 X4 X5 X6 X7 X8 X9 X10 opt max max max max max max max max max max Entro Entrop Entro Entro Entro Entro Entro Entro Entro Entro Criteria py ANP y ANP py ANP py ANP py ANP py ANP py ANP py ANP py ANP py ANP Weights 0,05 0,00 0,34 0,01 0,17 0,04 0,00 0,00 0,06 0,00 0,01 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,01 0,10 Weight (SAW) 0,01 0,14 0,22 0,00 0,00 0,00 0,00 0,00 0,00 0,03 100,0 100, 100,0 100,0 100, 100,0 100, 100,0 100, 100, 100, 100,0 100, 100, 100, January , , , , , ,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100, 100, 100,0 100, February ,00 0 0, , , , ,0 100, 100,0 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100, 100, 100,0 100, March , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100, 100,0 100, 100, 100, 100, 100,0 100, April , , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100, 100, 100,0 100, May , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100, 100,0 100, 100, 100,0 100, 100, 100, June , , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100, 100,0 100, 100, 100,0 100, 100, 100, July , , , , , ,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 100, 100, August ,00 0 0, , , ,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100, 100,0 100, September , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 100, 100, 100, October , , , , ,0 100, 100,0 100,0 100, 100,0 100, 100,0 100, 100, 100, 100,0 100, 100, 100, November , , , , ,00 00 December 100, , 00 0,00 100, , , , , 00 33,33 100, 00 68,30 100, 00 99,80 100, , , 00 93,70 100, 00 96,00 100, 00 [103] Faculty of Economics, VŠB - TUO

112 Section S2: Business Administration Appendix 2 Initial decision making matrix for COPRAS-G method for plant performance evaluation 2 nd part Freight Prem Productivit y Lean Manuf Kaizen Overtime Equipment Training Absence Empl. Turnover Improvement Prog. X11 X12 X13 X14 X15 X16 X17 X18 X19 X20 opt max max max max max max max max max max Entro py AN P Entro py AN P Entro py AN P Entro py AN P Entro py AN P Entro py ANP Entro py ANP Entro py ANP Entro py ANP Entrop y ANP Criteria 12,94 6,38 0,11 0,02 0,01 0,03 0,00 8,82 24,25 0,01 0,04 14,5 1,43 10,9 2,64 25,8 0,00 11,5 6,95 Weights % % % % % % % % % % % 0% % 0% % 9% % 6% 0,01% % Weight (SAW) 29,75 % 0,00 % 0,00 % 0,00 % 0,00 % 0,21 % 5,62 % 24,67 % 0,00 % 0,03% 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 January , ,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100, 100, 100, 100,0 100, 100,0 February , , , , , , 100, 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100, 100,0 100, 100,0 March 31, , , , , , 100, 100, 100,0 100, 100,0 100, 100, 100,0 100, 100, 100,0 100, 100,0 April 81, , , , , , ,0 100, 100, 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100,0 May , , , , ,0 100, 100,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 June , , ,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100,0 July , , , ,0 100, 100, 100, 100,0 100, 100,0 100, 100, 100, 100,0 100, 100,0 100, 100,0 August , , , , , ,0 100, 100, 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 September , , , , ,0 100, 100, 100, 100,0 100, 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 October , , , , , , 100, 100, 100,0 100, 100, 100,0 100, 100,0 100, 100,0 100, 100,0 100, 100,0 November 13, , , , , , 100, 100, 100,0 100, 100, 100,0 100, 100,0 100, 100, 100,0 100, 100,0 December 4, , , , , , th International Scientific Conference [104] Faculty of Economics, VŠB - TUO

113 Abstract PRACTICAL APLICATION OF ANALYTIC NETWORK PROCESS IN RATING MODEL OF THE LEVEL OF CORPORATE GOVERNANCE Jana Klozíková Ekonomická fakulta/ Vysoká škola Báňská Technická univerzita Ostrava We are at the beginning of the third millennium and present society increasingly aware that the current regulation is not sufficient. As well as contemporary society develops, it is necessary to develop also institutions in the form of regulations, directives and codes. It is not surprising that in response to the bankruptcies and scandals of past few years, which affected both the local and international community, it led to the fact that the question of improving the quality of corporate governance is increasingly coming to the fore. Confidence of shareholders as well as the confidence of major investors has been shaken worldwide. Major companies have failed from day to day. A successful company is certainly a reflection of how it is managed. There currently exist rating models, focusing especially on the area of corporate governance. The output rating is an important indicator for shareholders and investors. The past has shown that even rating evaluations may not be correct. Management of companies is evaluated primarily on a base of qualitative indicators. This article responds to this fact by applying multi-criteria method of ANP in this area. The aim of this article is the application of methods ANP - Analytical Hierarchy Process, leading to weight evaluation of criteria of selected rating model. It uses new approaches and methods to achieve the best most realistic reflection of how the company is managed and administered. It brings in the evaluation of corporate governance both qualitative and quantitative aspect. Keywords: Corporate governance, integrated framework, currently applied approaches JEL: G30, G34 Školitel: prof. Ing. Miroslav Hučka, CSc. [105] Faculty of Economics, VŠB - TUO

114 Section S2: Business Administration 1 Introduction At the beginning it would be appropriate to outline what does the familiar term Corporate Governance mean to us. Corporate governance is a set of standards, rules, regulations and codes which define the links between the executive management of the company and its statutory bodies, shareholders and stakeholder groups (Mallin, 2007). The right corresponding CG principles also set appropriate motivation for statutory bodies and executive management to strive for achieving the objectives, which are in the interest of the company and its shareholders. Achieving the goals is undoubtedly a reflection of how the company is managed and administered, not only because the management of the company is described as a phenomenon of the last fifteen years (Hučka, 2002). The issue of management and corporate governance is becoming important especially in a view of increasing of investor s confidence. With the aim of creating a uniform and welldefined rule we meet not only on national but also on international level (Cadburry, 2002). Attentive viewers can t overlook initiatives asserted by the OECD, the European Union and other countries, that clearly aim to strengthen the rights of shareholders and other stakeholders and figuratively as to reinforce the competitiveness of companies (Smallman a kol., 2010). The question is how to gain the trust of shareholders? How can we improve corporate governance? In the case that we will be a potential investor, we will certainly want to have the most accurate information about what we want to invest our capital to (Garrat, 2003). Currently, there are rating agencies that specialize specifically on assessing the level of corporate governance operating on the basis of benchmarking. Governance is a new field of science, developing in last few decades, which is a wide choice of options, leading to its improvement. Rating of Corporate Governance allows companies to assess the level of corporate governance, the question remains, on chat basis should be the criteria evaluated. The causal links, including the impact, which prevails in the rating model, were taken into account. Corporate Governance is still assessed mainly on the basis of qualitative criteria and now come to the fore multi-criteria assessment methods (MADM), which allow to objectify conditions deciding to hit only partial aspects of the problem but also its complexity (Fiala, Jabloňský, Maňas, 1994). Companies are constantly evolving and there also arises necessity to respond to developments and adjust it according to the relevant institutions in the form of regulations, codes and ratings. (Hilb, 2005) The aim of this article is to determine the significance of individual criteria of rating model ICRA and so their impact on credit rating through the application of method ANP - Analytical Hierarchy Process, leading to weight evaluation of criteria of selected rating model. This all should lead to achieving accurate results of the selected rating model and thus a more accurate assessment of the level of corporate governance. One advantage of the method ANP is that it works with possible dependencies between elements in decision problem, so it can capture feedback. ANP is a generalized method of AHP, we can say that the application of this method allows us to bring up into the issue of corporate governance both qualitative and quantitative aspect. 2 Rating model ICRA ICRA company was founded by leading financial institutions in Currently, Moody's rating company is its largest shareholder. It is one of the best known rating agencies. ICRA model was created for rating the level of corporate governance, it seeks to assess business meetings, practices and procedures, quality standards for disclosure in terms of fairness and 18 th International Scientific Conference [106] Faculty of Economics, VŠB - TUO

115 transparency for stakeholders. ICRA - corporate governance rating is intended to indicate the relative level of how the organization receives and monitors codes and guidelines for corporate governance. Practices of the corporate governance applied in a company reflect the distribution of rights and obligations between the participants (the board, top management, Investors, total shareholders, stakeholders and many others) and the rules and procedures that they should be respected in society. The definition of OECD about Corporate governance is the general basis of model ICRA. Framework of ICRA s model seeks to understand the interaction between different participants in the company which will be rated. The following diagram shows the typical participants in corporation including the interrelationship, which exist between them. Fig. 1. Interrelationship between typical participants in corporate Source: Own arrangement Model ICRA believes that the rating services can help corporations to its objective and credible opinion on the quality of their corporate governance practices in companies, including their ability to respond in accordance to the financial interests of all stakeholders. Model ICRA is designed to analyze the following key factors as ownership structure, governance structure and management processes, board structure and processes, stakeholder relationship, transparency and disclosures, financial discipline and ethical practices. Empirical research points to the fact that corporate governance is one of the important factors affecting the business valuation. Rating of the corporate governance is a measure to compare compliance of the corporate governance with prevailing practices, where raises the possibility of improving the corporate governance in the corporation. Rating on an adequate level can ensure easier raise of funds, increase of credibility, dealing with third parties, increase in valuation and in mainly the improvement of corporate governance through benchmarking. 3 Analytical network process (ANP) Analytical network process is an extended form of the method AHP, because it cooperates with possible dependencies between elements of the hierarchy. The basic structure is the influence of network of clusters and nodes within their group. Preferences are based on the same principle as in the method AHP. It uses a paired comparison and assessment. A wide range of decision-making problems can t be structured or captured hierarchically. The reason why is that, the decision problems involve the interaction and relationships between elements of a higher level of hierarchy and elements on a lower level of hierarchy. And for this reason, the ANP is represented in the network, not hierarchically. (Saaty, 2001) [107] Faculty of Economics, VŠB - TUO

116 Section S2: Business Administration The significance of criterion should not be based on the significance between alternatives in the hierarchy, but also the significance of alternatives itself determines the significance of the criterion. Feedback allows us to determine what is necessary to ensure for the achievement of the desired future. ANP process is a theory of relative measurement with the absolute range of both qualitative and quantitative criteria, which are determined by the decisions of experts and people knowledgeable of the issue (Saaty, 2001). AHP method reduces multidimensional problem to a one-dimensional problem. Decisions are made on the basis of a single number, representing the best result. In practice, we often see problems that involve feedback. The task is to establish preferences among elements in the network and especially alternatives of our decisions, leading to justify the correctness of the result. Although ANP is based on AHP, there can be found a wide range of disparities among them. AHP provides a framework for decision-making. It s necessary to emphasize one-way hierarchical relationship between decision-making levels. ANP shows the complex of relationships between decisionmaking levels and attributes. For AHP is typical that the highest element of hierarchy is the overall aim of the decision-making process. The hierarchy of the decision problem extends from the general to the particular attribute until the desired criteria for deciding is fulfilled. Method ANP compared with AHP method does not require such strict hierarchical structure. The relative importance or impact force of the elements is determined on a scale similar to AHP. ANP is able to work with the interdependence between elements by bringing weights together through the super-matrix. Professor Saaty describes the concept of supermatrix as a parallel to the Markov chain process (Saaty, 2001). ANP method can also be successfully used for selecting various options in the decision-making process. 3.1 Methodology of ANP As it was mentioned above, the ANP is an extension of method AHP and because of that there will be subsequently analyzed concept of the method and AHP. Development of the decision-making process into a hierarchical structure, assessments of materiality, through the weight evaluation, setting preferences, including finding the optimal variant are the fundamental characteristics of strategic decision making. If we want to find a compromise between the many goals and many criteria, decision-making process is carried out usually on the basis of qualitative criteria, which are presented numerically by paired comparison. Method ANP as well as the method AHP uses quantitative pairwise comparison, or Saaty s method. Quantitative pairwise comparison is implemented at each level of the hierarchy. By using Saaty s method we can determine the weight of the criteria on the basis of the experts' evaluation. The evaluator compares each pair of criteria and the degree of prioritization of the criterion i towards the criterion j, which is mentioned in Saaty s matrix S = (sij): (Zmeškal a kol.2014) Tab. 1 Saaty s recommended scoring scale with descriptors Saaty s matrix 1 s s 1 1 s s12 S s1 k s n 2n (1) 18 th International Scientific Conference [108] Faculty of Economics, VŠB - TUO

117 When we realize pairwise comparison, we use nine-point scale, which is recommended by prof. Saaty. More sensitive differentiation of individual preferences is carried out by using the intermediate stages. Tab. 2 Saaty s scoring scale with descriptors Source: Saaty, 2001 Saaty proposed some ways through which you can determine the weights vj, and these methods are computationally relatively simple. To calculate the weights, the method of logarithmic least squares is most commonly used i.e. (normalized geometric mean of Saaty matrix rows). (Saaty, 2001) Such a solution is obtained by calculating the geometric mean of S matrix rows. v i n n j1 n s i1 j1 ij s ij 1 n 1 n, (2) In the case of application of Saaty s procedure it is extremely important to controle whether the pairwise comparison matrix is consistent. This step should be done before we start counting of weights. To determine whether there appear pairwise comparison discrepancies in the matrix. In practice, there is most commonly used the index of consistency, which is defined as follows. Matrix according to Saaty is considered to be sufficiently consistent, if the condition CI <0.1 is met. CI ( max n), (3) ( n 1) Where n is number of criteria, λmax is the large own number of the matrix. Saaty (1996) recommends to calculate the ratio of consistency, labeled CR, which can be calculated by the following equation in his book. CI CR, (4) RI Where RI is random consistency index. [109] Faculty of Economics, VŠB - TUO

118 Section S2: Business Administration Tab. 3 Random index RI Source: Saaty, 2001 The most significant disparity between the method ANP and AHP is that the ANP replaces a hierarchical representation of the problem by the network of dependences. In the literature it is known as ANP mathematical theory, leading to describe not only dependence but especially feedback in the decision-making process. ANP method describes the qualitative comparison of quantitative data. When we implement methods ANP, the decision-maker is forced to very accurately determine nodes and interactions to ensure an understanding of the decision-making problem. Subsequently there is mentioned comparison of the general structures of both the methods above. Fig. 2. Comparison of the general structures AHP and ANP Source: Zmeškal a kol., 2014 Feedback represents the intrinsic relationship between clusters of criteria. In the matrix of paired comparison is the relative importance of the element i on the element j given by aij=wi/wj. When we substitute the data into the matrix A - matrix of pairwise comparison, we realize estimation of the relative importance of elements according to the equation Aw=λ(max)w, where λ(max) is the largest number of the matrix Aw. The obtained estimates of the relative importance are entered into super-matrix W. goal criteria W sub criteria alternatives W 11 1n 21 n1 n W W... W ij W W W... W W 2n n( n1) n, n, i=1,,n; j=1,, n., (5) Source: Zmeškal a kol., 2014 Where: Wij represents all possible relative importance, obtained by using the paired comparisons. Calculation of weights and preferences from super-matrix ANP is realized in 3 steps. In the first step, the data is substituted into initial super-matrix W (see 5), where we put 18 th International Scientific Conference [110] Faculty of Economics, VŠB - TUO

119 standardized weights wij into the columns of matrix. In the second step, the super-matrix is transformed into weighted super- matrix W, where: n j1 w ij 1 (6) In the last step the limit super-matrix W is calculated by equation: W k lim W, k (7) A more detailed description of the calculation is mentioned by Saaty in his publication from Application of AHP in the rating model ICRA Model ICRA by Moody's company was in its original form composed of seven criteria, which were further divided into 52 sub-criteria. Due to the necessary reduction of a considerable number of sub-criteria there was realized its simplicity with the assistance of experts. There was selected a group of 6 experts who have experience in the field of corporate governance. There was used scoring method, where each one expert selected from a group of experts assigned to individual sub criteria points according to a subjective evaluation. According to the subjective evaluation of experts were selected criteria with the highest number of points assigned. These criteria were sorted into appropriate groups of criteria. Further, based on the detected data there was created simplified hierarchical structure (Klozíková, Dočkalíková, 2014). Fig. 3. Simplified hierarchical structure based on a subjective evaluation of the group of experts Source: Own arrangement Subsequently, the pairwise comparison of criteria was realized by experts. Each of the experts was approached to determine the level of direct impact between the two criteria / factors when substance of the paired comparison is that the occurrence of each pair may only occur once (see calculation 1) The rate determined by expert tells how the factor j is influenced by factor i. The influence was determined by using a point scale (see tab. 3). Thanks to an aid of geometric average there were determined weights for both the group of criteria and also the [111] Faculty of Economics, VŠB - TUO

120 Section S2: Business Administration individual criteria (Klozíková, 2015). The obtained data were imported into super-matrix (see calculation 5). In the following step, the normalized weights were transferred to super matrix W. Next, we calculated the limit super-matrix W according to formula (7). With this last step the analytical hierarchical process was completed. Its aim was to determine the weight of criteria and sub-criteria. Thanks to the vastness of the super matrix, there will be both tender super matrix and calculation of the final limit super matrix annexed. The obtained results are clearly summarized in the following table Tab. 3 The weight evaluation of criteria and sub-criteria of rating model with using the method ANP Criteria group Source: Own arrangement Conclusion Weights of criteria group ETHICAL PRACTICES 0,0858 FINANCIAL DISCIPLINE 0,1299 TRANSPARENCY AND DISCLOSURE 0,1049 OWNERSHIP STRUCTURE 0,2285 MANAGEMENT STRUCTURE AND PROCESSES 0,1768 BOARD STRUCTURE AND PROCESSES 0,2298 RELATIONSHIP WITH STAKEHOLDERS 0,0443 Criteria Weights of subcriterias Global weights monitor. compliance with regulations and guidelines 0,5563 0,0795 complexity of the code of ethics and integrity 0,2488 0,0355 improve communication principles of corp. ethics 0,0808 0,0115 feedback systems support for whistle-blowing 0,1142 0,0163 return on invested capital 0,5591 0,0799 dividend policy 0,3522 0,0503 degree of reliance on external financing 0,0887 0,0127 accounting quality- accounting standards 0,6694 0,0956 applied best practices 0,2426 0,0347 quality data published MDA 0,0879 0,0126 degree of identifiability of the dom. shareholders 0,3487 0,0498 threat to min. shareholders of cross-ownership 0,4836 0,0691 range of institutional shareholding 0,1677 0,0240 quality of information submitted to the board 0,6833 0,0976 the presence of a definition management mechanism 0,1998 0,0285 appropriateness of the decision-making process 0,1168 0,0167 evaluating the performance of top management 0,4178 0,0597 actions about the large investments 0,2259 0,0323 approval, monitoring and evaluation strategy 0,1164 0,0166 control functions of the board 0,1259 0,0180 role of the board in approving the strategy 0,0504 0,0072 composition of the audit committee 0,0635 0,0091 procedures for the transfer and registration of shares 0,4836 0,0691 timely release of sensitive information 0,3487 0,0498 response to investors complaints 0,1677 0,0240 From the results shown in the table above, we can conclusively say that the most important criterion is a board structure and processes with weight rating of The most important sub-criterion of this group was sub-criterion evaluating the performance of top management. For clarity the criterion so called board structure and processes is described below. The key functions of the Board of any corporation may be summed up as approving and monitoring and evaluating the strategy, which was proposed by executive management. The Board evaluates the performance of the top management and control legal and statutory requirements. The board balances the rights and concerns of shareholders and other stakeholders. We can state that, it is criterion with fundamental impact of all other criterions and sub criterions. The second most important criterion is the ownership structure. The most important subcriterion of this group is a threat min. total shareholder of cross-ownership. For clarity the criterion ownership structure is described below. In this area were analyzed the key issues as 18 th International Scientific Conference [112] Faculty of Economics, VŠB - TUO

121 extent of identifiability of dominant shareholders, extent of cross-holdings, which may compromise minority interest, extent of institutional shareholding and pattern of retail shareholding. A transparent ownership structure, where can be the key shareholders easily identifiable, are positives from ICRA s perspectives. The third most important factor is the management structure and processes. The most important sub-criterion of this group is the quality of information submitted to the board. For clarity the criterion the management structure and processes is described below. The ICRA model focuses on the decision making process and quality of information which are submitted to the Board. Model ICRA is convinced that, corporate must be able to react speedily to changes in today s dynamic business environment. Line managers must be given a lot of powers to accept decisions in the most appropriate manner. In comparison with the results of method of AHP it is necessary to note that these two methods differ so largely, so the feedbacks clarify the results so far. Application of method ANP pointed to the fact that the evaluation should not be separated from each other, but on the contrary, it is necessary to realize a possible causal links in this model. This should be reflected in the weight evaluation of criteria and sub-criteria of the rating model. As the time changes, the methods of valuation change too. It is a necessary to suspend over the current progress in the form of new technologies and methods, enabling more accurate outputs, which are applicable in certain areas of corporate governance, for instance in the areas mentioned above - rating. References BROŽOVÁ, H., M. HOUŠKA a T. ŠUBRT. Modely pro vícekriteriální rozhodování. 1.vyd. Česká zemědělská univerzita v Praze, ISBN: CADBURY, Adrian (2002). Corporate Governance and Chairmanship. New York: Oxford University Press. ISBN CORPORATE GOVERNANCE RATING. (ICRA): Corporate governance rating[online].[cit ]. Download at < XYzgMYK9S57yAVElNeyt/XaTZKAvxm5n3QFNK78Qi6AxxtsNfhtNkvqsN02qKn1Jns2J8 e/k/etzmxyh wgx> FIALA, P., J. JABLONSKÝ a M. MAŇAS. Vícekriteriální rozhodování. Praha: VŠE v Praze, ISBN: GARRAT, B. Thin on Top. Why Corporate Governance Matters and how to Measure and Improve Board Performance. United Kingdom: Nicholas Brealey Publishing, ISBN HILB, M. New Corporate Governance. Heidelberg: Springer Berlin ISBN HUČKA, Miroslav. Vlastnická správa korporací. 1. vyd. Vysoká škola báňská Technická univerzita, s ISBN KLOZÍKOVÁ J., DOČKALÍKOVÁ. I. Corporate Governance Rating: Synthesis of Rating Models of Corporate Governance with Utilization Methods AHP and DEMATEL. In: ECMLG, 2014, 10th European Conference on Management Leadership and Governance, s ISBN: [113] Faculty of Economics, VŠB - TUO

122 Section S2: Business Administration KLOZÍKOVÁ, Jana. Analysis of Causal Relations in the Rating Model GAMMA for Determine Level of the Corporate Governance. In: MEKON 2015: the CD of Participants' Reviewed Papers from 16th International Conference. Ostrava: VŠB - Technická univerzita Ostrava, 2015.Pp ISBN: MALLIN, Chris A. Corporate governance. 2. vyd. New York: Oxford University Press, s. ISBN SAATY, Thomas L. Analytic network process. In: Encyclopedia of Operations Research and Management Science. Springer US, p ISBN: SMALLMAN, C.; MCDONALD, G.; MUELLER, J. Corporate Governance. Structure, Process, Practice. 1. Vydání. econtent Management, s. ISBN ZMEŠKAL, Z., D. DLUHOŠOVÁ a T. TICHÝ. Finanční modely: koncepty, metody, aplikace. 3., přeprac. a rozš. vyd. Praha: Ekopress, s. ISBN th International Scientific Conference [114] Faculty of Economics, VŠB - TUO

123 ZHODNOCENÍ REORGANIZAČNÍCH ŘÍZENÍ V SOUVISLOSTI SE ZMĚNOU KVANTITATIVNÍCH KRITÉRIÍ K 1. LEDNU 2014 EVALUATION OF REORGANIZATION PROCEEDINGS IN RELATION TO A CHANGE OF QUANTITATIVE CRITERIA DATING 1 ST JANUARY 2014 Jana Šnoblová Ekonomická fakulta, VŠB-TU Ostrava jana.snoblova.st@vsb.cz Abstrakt Cílem článku je zachycení vývoje reorganizačních řízení za dobu platnosti insolvenčního zákona, vytyčení základních sledovaných ukazatelů, kategorizace jednotlivých typů společností a zhodnocení, zda novela zákona snižující kvantitativní kritéria měla očekávaný efekt na navýšení četnosti řízení. Klíčová slova: reorganizační řízení, kvantitativní kritéria, délka řízení, řízený bankrot Abstract The aim of this article is to describe the development of reorganization proceedings for the time of the duration of the Insolvency Act, setting out basic indicators, categorize the types of companies and assess whether the amendment to the Act reducing the quantitative criteria had the expected effect on the increase in frequency of proceedings. Keywords: Reorganization proceedings, Quantitative criteria, Length of the proceedings, Bankruptcy proceedings JEL: K400, M480 Advisor: Doc. Ing. Dagmar Bařinová Ph.D. [115] Faculty of Economics, VŠB - TUO

124 Section S2: Business Administration 1 Právní rámec reorganizačního řízení Insolvenční řízení je v současné době jedním ze zákonných způsobů, jakým hospodářsky neúspěšné subjekty opouštějí tržní prostředí a síla jednotlivce k individuálnímu vymáhání práv je nahrazena vymáháním kolektivním. Před rokem 2008 byl úpadek společností řešen dle zákona č. 328/1991 Sb., o konkursu a vyrovnání. Během doby platnosti tohoto zákona, tj. celkem 16 let, bylo prohlášeno celkem konkursů a pouze 45 vyrovnání. Nízkou aplikovatelnost vyrovnání (cca 0,2%) nebylo možné v tak dlouhém časovém horizontu svalovat pouze na nedostatek vhodných subjektů. Zákon vykazoval i další nedostatky a bylo potřeba ho přizpůsobit aktuálním tržním podmínkám a trendům. Od 1. ledna 2008 je v platnosti zákon č. 182/2006 Sb., o úpadku a způsobech jeho řešení (insolvenční zákon, dále IZ), který řeší tři základní způsoby řešení úpadku, a to: - konkurs, - reorganizaci, - oddlužení. Reorganizace nahradila dříve používaný proces vyrovnání. Základním principem reorganizace je uspokojení věřitelů z výnosů pokračující podnikatelské činnosti úpadce, přičemž během insolvenčního řízení nedojde ke zpeněžení majetku, ale pouze (či především) ke změně kapitálové struktury společnosti. Reorganizace není ani tak o způsobu řešení úpadku, ale je spíše způsobem, jak se na řešení úpadku dohodnout (Richter, 2008, str. 378). Autoři IZ se inspirovali úpravou insolvenčního řízení zejména v USA, která je vzorem všem moderním úpravám (Kotoučová, 2004, str. 92) sanačního řešení úpadku. Další inspirace byla čerpána ve Francii, Německu a Rakousku. Otázku, proč vůbec do insolvenčního řízení implementovat řízení sanačního typu, je možné jednoduše zodpovědět. V některých případech může být hodnota podniku jako celku vyšší, než prostý součet tržních hodnot jeho částí (zpeněžení, kterého by se dosáhlo při konkursním řízení). Současně musí být splněna podmínka, že za přijatelných transakčních nákladů nelze tuto hodnotu (podniku či jeho rozhodující, samostatně funkční části) realizovat jednorázovým prodejem. Z výzkumů provedených v USA plyne, že čím je menší podnikatelský subjekt, tím více stoupá riziko, že reorganizace bude vedena snahou dlužníka dosáhnout příznivějšího výsledku insolvenčního řízení, spočívající v redistribuci majetku na úkor věřitelů společnosti (Richter, 2008, str. 352). Dále na základě výzkumů, které provedl Klimeš v roce 2004, byly definovány pro účely českých podmínek a) velký podnik jako podnik, který má více než 250 zaměstnanců nebo obrat větší než ,- Kč, b) střední podnik jako subjekt s více než 100 zaměstnanci a obratem větším než ,- Kč (Klimeš, 2004, str. 65, 66). Na základě tohoto výzkumu byla pro účely koncepce IZ stanovena kritéria, kdy standardní reorganizace bude přípustná pro dlužnické subjekty s obratem 100 a více mil. Kč nebo (původně a, ale po nejednoznačnosti při výkladu změněno za nebo) 100 a více zaměstnanci. Pro reorganizaci je typické značné zatížení věřitele, soudu i dlužníka transakčními náklady spojenými s mnohostranným vyjednáváním o nové kapitálové struktuře dlužníka v rámci insolvenčního řízení. S ohledem na tuto skutečnost a fakt, že je empiricky méně pravděpodobné, že malí dlužníci vysoké dodatečné náklady ustojí, byla reorganizační kritéria nastavena takto striktně (Budín, 2008, str. 154). 18 th International Scientific Conference [116] Faculty of Economics, VŠB - TUO

125 Transakční náklady je nutno pokládat za náklady fixní, jejichž velikost je dána složitostí řízení bez ohledu na velikost pohledávky či majetku dlužníka. Přesto zákonodárce umožnil těm dlužníkům, kteří nesplňují velikostní kritéria (dále kvantitativní kritéria), aby využili postup tzv. zkrácené reorganizace (Budín, 2008, str. 154) nebo předbalené reorganizace (Kolesár, Havel, 2011, str. 202). Pokud dlužníci ve smyslu ust. 316 odst. 5 IZ ještě před zahájením insolvenčního řízení, nejpozději však do 15 dnů po rozhodnutí o úpadku předloží insolvenčnímu soudu reorganizační plán, který je přijatý alespoň polovinou všech zajištěných věřitelů (dle výše pohledávek) a alespoň polovinou všech nezajištěných věřitelů (rovněž dle výše pohledávek), soud umožní provedení zkrácené reorganizace. Ustanovení IZ tedy umožňují i dlužníkům nesplňujícím kvantitativní kritéria využívat výhody reorganizace, ale s tím, že intenzivní vyjednávání jsou započata již před zahájením řízení a zároveň dlužník má souhlas věřitelů s tím, že reorganizace je výhodnější než konkurs. Transakční náklady spojené s realizací plánu tedy částečně nese dlužník a nezatěžuje tak všechny subjekty řízení jako v průběhu standardní reorganizace. Velikost dlužníkova podniku sama o sobě neříká nic o tom, co bylo příčinou úpadku, zda subjektivní či objektivní důvody. Důležité je, že vůle (víra) věřitelů vyjádřená hlasováním, bude mít za to, že konkurs je méně efektivní než reorganizace. Kvantitativní kritéria pro vstup do standardní reorganizace byla k 1. lednu 2014 změkčena na obrat 50 a více mil. Kč nebo 50 a více zaměstnanců. Tato úprava měla vést k signifikantnímu navýšení zahájených reorganizačních řízení pro společnosti s obratem mezi 50 až 100 mil. Kč nebo 50 až 100 zaměstnanci. V současné době se zveřejňované statistiky zaměřují na pouhé určení četnosti schválených reorganizací v jednotlivých letech, nesledují typy, velikost, zaměření či geografické rozvržení subjektů do reorganizace vstupujících. Také vyhodnocení úspěšnosti provedených, či do konkurzu rekvalifikovaných řízení zatím nebylo uveřejněno. Hlubší poznání subjektů a jejich kategorizaci lze považovat za klíčové k dalšímu zkoumání a navrhování budoucích změn v procesech, které by měly vést ke zvýšení užívání reorganizačního řízení jako alternativy ke konkursům. Následující části článku se budou věnovat vymezení a zhodnocení základních ukazatelů, které lze sledovat u reorganizačních řízení s cílem nalezení skutečného současného stavu. Zdrojem dat byly jednotlivé spisy zveřejněné v insolvenčním rejstříku od roku Trendy v reorganizačním řízení Během platnosti nového insolvenčního zákona až k , tj. 8 let doby účinnosti, bylo zahájeno celkem 136 reorganizačních procesů společností. Z toho počtu byla 3 řízení klasifikována jako chybně zařazená, 37 řízení je otevřených, 63 řízení bylo v průběhu přeměněno na konkurs a 33 řízení dospělo k úspěšnému konci. S chybně zařazenými případy nebude dále pracováno. [117] Faculty of Economics, VŠB - TUO

126 Section S2: Business Administration Tab. 1 Chybně klasifikovaná řízení zařazená v IR pod schválené reorganizace Název společnosti Zařazení dle spisových informací Spisová značka Ladislav Jaloševský Oddlužení KSPL 56 INS 1909 / 2012 Key Project s.r.o. Konkurs KSPH 38 INS / 2011 Emil Hladil Oddlužení KSPA 56 INS / 2012 Zdroj: Insolvenční rejstřík Pokud vezmeme v potaz započatá reorganizační řízení ve srovnání s podanými insolvenčními návrhy kumulativně v jednotlivých letech, zjistíme, že reorganizace jsou využívány stále marginálně a nárůst oproti procentu vyrovnání, jež bylo užíváno během platnosti zákona č. 328/1991 Sb., o konkursu a vyrovnání, je minimální, a to z 0,20% pouze na 0,32%. Tab. 2 Srovnání insolvenčních návrhů a návrhů na provedení reorganizace Rok Celkem Návrhy na provedení reorganizace Insolvenční *,** návrhy *** Podíl v % 0,18 0,29 0,34 0,24 0,19 0,22 0,85 0,78 0,32 Zdroj: Creditreform, Insolvenční rejstřík, vlastní výzkum *pouze podnikající subjekty **očištěno o insolvenční návrhy spojené s návrhem na provedení reorganizace ***data pouze za 1-9/2015 Z Tab. 2 je patrné, že v případě reorganizací není zřejmé navýšení četností nově zahájených reorganizací, jak by se dalo očekávat vzhledem ke zkušenostem, které v průběhu let získávají jak společnosti, tak i soudcové, insolvenční správci či poradenské firmy, které se reorganizačním řízením věnují. Skokový nárůst v roce 2014 je patrný, avšak z Grafu 1 bude zřejmé, že nebyl jednoznačně způsoben snížením kvantitativních kritérií, ke kterému došlo k Byla zavedena kategorizace jednotlivých subjektů dle legislativních kritérií a velikosti obratu subjektů. Díky členění bude v další práci jednodušší analyzovat typické vzorce chování subjektů v jednotlivých kategoriích a reagovat procesními opatřeními přímo na míru jednotlivým kategoriím. 18 th International Scientific Conference [118] Faculty of Economics, VŠB - TUO

127 Tab. 3 Jednotlivé kategorie společností v reorganizačních řízeních Kat. Subkat. Popis A B I II III IV Splněna kvantitativní kritéria obrat za předcházející období 100 a více mil. Kč nebo 100 a více zaměstnanců (případně obě kritéria zároveň) Splněna kvantitativní kritéria obrat za předcházející období 50 a více mil. Kč nebo 50 a více zaměstnanců (případně obě kritéria zároveň) Předbalená reorganizace + splněna kvantitativní kritéria 100 a více mil. Kč nebo 100 a více zaměstnanců (případně obě kritéria zároveň) Předbalená reorganizace + splněna kvantitativní kritéria 50 a více mil. Kč nebo 50 a více zaměstnanců (případně obě kritéria zároveň) V Předbalená reorganizace (společnosti mající obrat nižší než 50 mil. Kč a méně než 50 zaměstnanců) Zdroj: Vlastní kategorizace dat Graf 1 Vývoj četností zahájení reorganizačních řízení v letech 2008 až Kat. AI Kat. AII Kat. B Zdroj: Insolvenční rejstřík Z Grafu 1 je patrný nárůst v kategorii předbalených reorganizací, dokonce bylo předpřipraveno 7 reorganizací (kat. BIII a BIV), které automaticky splňovaly kvantitativní kritéria, což svědčí o vůli managementu se již dopředu dohodnout s věřiteli na společném postupu. Aktuální kumulativní rozdělení četností za dobu platnosti zákona je 55% pro kat. AI, 5% pro kat. AII a 40% pro kat. B. Z uvedeného plyne (a v Kap. 3 bude dále rozvedeno), že snížení kvantitativního kritéria pro vstup do reorganizace nemělo očekávaný efekt, kterým by bylo signifikantní navýšení zahájených reorganizací v kategorii AII. 2.1 Úspěšnost řízení Dalším hlediskem, které je nutné sledovat, je úspěšnost provedených reorganizací, tj. schopnost realizovat kroky v souladu se schválenými reorganizačními plány, které mají vést k úspěšnému ukončení reorganizace. K bylo ukončeno celkem 96 reorganizačních řízení, z toho pouze 34,38% bylo ukončeno úspěšně. Větší úspěšnosti je dosahováno v kategorii [119] Faculty of Economics, VŠB - TUO

128 Section S2: Business Administration společností v obratem převyšujícím 100 mil. Kč a (/nebo) více než 100 zaměstnanci, které tvoří 67% z celkového počtu úspěšně ukončených reorganizací. Tab. 4 Četnosti ukončených reorganizačních řízení v jednotlivých letech dle kategorií Status Kategorie Celkem AI Reorganizováno BIII BV Celkem reorganizováno AI Změna v konkurs AII BIII 1 1 BV Celkem změněno v konkurs Zdroj: Insolvenční rejstřík, vlastní výzkum 2.2 Časové hledisko Délka reorganizačního řízení je jedním ze základních faktorů určující výši nákladů spojených s tímto řízením. Čím delší doba řízení je, tím vyšší jsou náklady na vyjednávání s věřiteli, na dohled insolvenčního správce, soudní výdaje. S prodlužující se dobou trvání reorganizace také roste riziko snížení (až vyčerpání) majetkové podstaty, z které by se měli věřitelé uspokojovat v případě přeměny reorganizace v konkurs. Tab. 5 Délka trvání řízení v měsících u úspěšně ukončených reorganizací Kategorie Celkový průměr AI BIII BV Průměr Zdroj: Insolvenční rejstřík, vlastní výzkum Z Tab. 5 plyne, že doba řízení je nejkratší u předbalených reorganizací u společností s obratem vyšším než 100 mil. Kč (a/nebo) více než 100 zaměstnanci. U předbalených reorganizací u společností nesplňující ani snížená kritéria se doba trvání řízení prodlužuje o 5 měsíců a nejdelší řízení jsou u kategorie společností s obratem přesahujícím 100 mil. Kč (a/nebo) 100 a více zaměstnanci, kde nedošlo k vyjednávání o reorganizačním plánu před zahájením řízení. 18 th International Scientific Conference [120] Faculty of Economics, VŠB - TUO

129 U řízení, která byla v průběhu procesu překlasifikována na konkursní řízení, nedošlo v 63% ani ke schválení reorganizačního plánu. Průměrně v takovém případě trvalo 14 měsíců, než bylo rozhodnuto o přeměně reorganizace v konkurs. Nejkratší doba od schválení reorganizace k přeměně v konkurs byla u kategorie BIII 5 měsíců, u BV 14 měsíců, u AI 14 měsíců, u AII 19 měsíců (zatím jediné ukončené řízení v této kategorii). 2.3 Geografické hledisko Posledním sledovaným aspektem je geografické rozložení společností vstupujících do řízení a úspěšnost jednotlivých soudů v řešení těchto řízení. Nejvýraznějšími regiony jsou Praha (18%), Moravskoslezský kraj (14%) a Jihomoravský kraj (10%), jež tvoří dohromady 42% celkového počtu zahájených reorganizačních řízení. Praha je regionem, kde společnosti v 68% provádí reorganizaci formou předbalené reorganizace, tj. kat. B (z toho celých 52% v kat. BV). V Moravskoslezském kraji usilují o reorganizaci buď firmy velké (kat. AI 58%), nebo naopak firmy malé (kat. BV 42%). V Jihomoravském kraji v 62% reorganizují velké firmy v kat. AI. Graf 2 Geografické rozložení reorganizovaných firem 5% 5% 3% 3% 3% 2% 1% 18% Hlavní město Praha 4% Moravskoslezský kraj 4% 6% 6% 8% 8% Zdroj: Insolvenční rejstřík, vlastní výzkum Nejnižší úspěšnost v řešení reorganizačních řízeních vykazuje Krajský soud v Ústí nad Labem pobočka v Liberci, a to 0% (3 případy), Krajský soud v Ostravě (25%) a Městský soud v Praze (26%). Ostatní soudy se pohybují v rozpětí 30-44%, Krajský soud v Českých Budějovicích vykazuje dokonce 57% úspěšnost a Krajský soud v Ostravě pobočka v Olomouci 100% (ale pouze 1 případ). 10% 14% Jihomoravský kraj Jihočeský kraj Středočeský kraj Pardubický kraj Ústecký kraj Liberecký kraj Plzeňský kraj Olomoucký kraj 3 Analýza dopadu snížení kvantitativních kritérií Jak již bylo napsáno v úvodu článku, k došlo ke snížení kvantitativních kritérií, které opravňují společnosti k zahájení reorganizačního řízení. Očekávaným efektem tohoto snížení bylo signifikantní navýšení zahájených reorganizačních řízení v kategorii AII. K ověření, zda provedená změna metodiky měla dopad na rozložení četností v kategoriích u zahájených reorganizací v letech 2014 a 2015, byl použit Kolmogorovův-Smirnovův test dobré shody pro dva výběry. [121] Faculty of Economics, VŠB - TUO

130 Section S2: Business Administration Předpoklad testu - pokud by kvantitativní kritéria zůstala nezměněna (stav před ), potom by společnosti z kategorie AII, které tato kritéria nesplňují, spadly do konkursního řízení. Nemůžeme totiž předpokládat, že by byly automaticky přesunuty do kategorie B, neboť v ní je potřeba mít již předschválený reorganizační plán. Také výše uvedené zjištění, že u 63% společností, které nemají předschválený reorganizační plán, dojde k přeměně reorganizace v konkurs, vede k myšlence zařazení těchto společností do konkursu. Pokud tedy aplikujeme tuto úvahu na skutečná data z let 2014 a 2015, získáme rozdělení četností v jednotlivých třídách dle následující tabulky. Tab. 6 Úprava skutečných četností z let 2014 a 2015 na stav dle původní legislativy Kat. Skutečné rozložení četností Rozložení po úpravě AI AII 7 0* BIII 5 5 BIV 1 0** BV Celkem Zdroj: Vlastní výzkum *rekvalifikace reorganizace na konkurs **přesun do kategorie předbalených reorganizací bez současného splnění nižších kritérií (BIV do BV) Byly získány dva soubory o k kategoriích s ročními četnostmi n1j a n2j. Zakreslením dat do histogramu bylo zjištěno, že soubory nemají normální rozdělení pravděpodobnosti, proto byl použit neparametrický test dobré shody pro dva výběry k ověření, zda rozdělení pravděpodobností dvou souborů je shodné. Nulová hypotéza - oba soubory odpovídají stejnému rozdělení pravděpodobnosti, to znamená, že změna v kvantitativních kritériích nemá vliv na rozdělení četností v jednotlivých kategoriích. Pro výpočet relativních kumulativních četností bylo užito vztahu F 1j = 1 n 1 N 1j, F 2j = 1 n 2 N 2j, (1) kde N1j, N2j jsou kumulativní četnosti jednotlivých souborů a n1, n2 jsou celkové četnosti souborů, kde platí že n1, n2 jsou > 40 a různě velké. Grafické srovnání relativních kumulativních četností jednotlivých souborů pro kategorie I až V viz Graf th International Scientific Conference [122] Faculty of Economics, VŠB - TUO

131 1,000 Graf 3 Relativní kumulativní četnosti pro kategorie I až V v letech 2014 a ,800 0,600 0,400 0,200 0,000 I II III IV V relativní kumulativní četnosti skutečné relativní kumulativní četnosti upravené Zdroj: Vlastní výzkum Hodnoceným kritériem je D 2 = max F 1j F 2j, (2) kde j=1,,k. Kritická hodnota na hladině α=0,05 se získá ze vztahu D 2;0,05 = 1,36 (n 1 + n 2 ) (n1 n 2 ), (3) kde dosazením do (2), (3) byly získány hodnoty D2 = 0,106 a D2;0,05 = 0, , nulová hypotéza se nezamítá. Z výsledku provedeného testu lze dospět k závěru, že nové nastavení kvantitativních kritérií, které snižuje podmínky pro vstup do reorganizace, v současné době nemá statisticky významný vliv na rozdělení četností v jednotlivých kategoriích a jeho rozdělení pravděpodobnosti je totožné s původním. Jinými slovy nedošlo k signifikantnímu navýšení četnosti zahájených reorganizací v kategorii AII tak, jak bylo očekáváno. Závěr Reorganizační řízení bylo do české legislativy implementováno před 8 lety na základě zkušeností s obdobným nástrojem z předcházející právní úpravy, zkušeností s průběhy sanačních řízení z okolních států a s cílem se přizpůsobit aktuálním tržním podmínkám. Podmínky pro vstup společností do reorganizace byly i nadále upravovány na základě apelu odborné veřejnosti pro usnadnění vstupu obratově menších společností (viz novela k ). Provedeným šetřením bylo zjištěno, že za dobu účinnosti toho nástroje došlo k navýšení četnosti zahájených reorganizačních řízení z 0,2% na 0,32% oproti původní právní úpravě. Detailní kategorizace dat přispěla k poznání, jaké subjekty se do reorganizací zapojují a jaká je jejich úspěšnost. Dle určených délek trvání řízení budou dále moci býti odhadovány náklady řízení dle kategorií. Geografické rozložení ukazuje na specifika regionů. Vyhodnocení [123] Faculty of Economics, VŠB - TUO

132 Section S2: Business Administration úspěšnosti jednotlivých soudů bude zase podkladem ke spolupráci s jednotlivými soudy při hledání příčin, proč jsou některé, jinak srovnatelné firmy, úspěšnější než jiné. Analýzou dopadu změkčení kvantitativních kritérií bylo ověřeno, že provedená právní úprava dosud nevedla k očekávanému statisticky významnému navýšení reorganizací u firem v kategorii AII. Z provedeného zkoumání je patrné, že je potřeba se zaměřit na specifické oblasti v jednotlivých kategoriích a pomoci jednotlivým subjektům se zorientovat v praktické stránce reorganizačního řízení tak, aby tato řízení byla zahájena tam, kde to smysl má a neplýtvat prostředky a časem věřitelů v případech směřujících ke konkursu. Další kroky zkoumání v oblasti reorganizačního řízení budou zaměřeny zejména na: - způsoby navýšení četnosti užívání reorganizačního řízení v mezích současné právní úpravy; - analýzu nízké úspěšnosti řízení předbalených reorganizací (kat. B); - analýzu příčin nadstandardní délky trvání řízení (AI); - analýzu nízké úspěšnosti v přijímání reorganizačních plánů (kat. AI a AII) vedoucí k následné přeměně reorganizace v konkurs a nalezení způsobu eliminace takovýchto případů ještě před schválením reorganizace soudem. Literatura BUDÍN a spol. (2008). Insolvenční právo aneb osobní bankroty začínají. Rašínova vysoká škola s.r.o.. Brno. ISBN: KLIMEŠ, Jan (2004). Bankrot: teorie, česká úprava a praxe. Rigorózní práce. Univerzita Karlova. Praha KOLESÁR, Pavel a HAVEL, Bohumil (2011). Přípustnost tzv. předbalené reorganizace bez návrhu či proti vůli dlužníka. Obchodněprávní revue 7/2011. ISSN KOTOUČOVÁ, Jiřina (2004). Reorganizace nová cesta řešení úpadku v insolvenčním právu. Acta Oeconomica Pragensia. 8/2004. ISSN MAREK, Luboš a kol. (2005). Statistika pro ekonomy Aplikace. Professional publishing. Praha. ISBN: RICHTER, Tomáš (2008). Insolvenční právo. vyd. 1. ASPI a.s.. ISBN: Zákon č. 182/2006 Sb., o úpadku a způsobech jeho řešení 18 th International Scientific Conference [124] Faculty of Economics, VŠB - TUO

133 TASKS OF THE SUPERVISORY BOARDS IN POLISH MUNICIPAL COMPANIES 1 Łukasz Żabski Wroclaw University of Economics lukasz.zabski@ue.wroc.pl Abstract The main purpose of the paper is to define the tasks of the supervisory boards in Polish municipal companies and to measure a degree of their importance. The analysis of literature and criticism method, research of internal documents of the municipal companies and qualitative research using the technique of questionnaire survey have been used in achieving the target. The paper describes an essence of the municipal companies and a role of the supervisory board in exercising the ownership supervision. Then, based upon own research the powers exercised by supervisory boards and measured degree of their importance according to local government units, members of the supervisory boards and members of the management boards have been indicated. Keywords: Local Government Units, Municipal Companies, Ownership Supervision, Supervisory Board JEL: K00, H89 1 The results presented in this paper have been supported by the Polish National Science Centre under grant no. DEC-2013/09/N/HS4/ [125] Faculty of Economics, VŠB - TUO

134 Section S2: Business Administration 1 Introduction According to the binding regulations the municipal services can be realized by the commercial companies. These are the business entities which function above all is based upon the commercial companies code and also upon the act on the municipal services. They act in the name and for the account of performing only the public tasks the purpose of which is current and continuous meeting of collective needs of population. On account of performing role in community the legislator has established obligatorily supervisory boards in these companies. These are the basic ownership supervision institution whose main purpose is protection of the owner s interests against improper operation of the management of the company. In the system of the Polish laws there are provisions which in general terms formulate tasks to be realized by the supervisory boards. In addition, it has been allowed the possibility of extending the scope of their duties in the papers of associations and statutes. Therefore, it extends considerably the scope of the supervisory board s powers. After all, performing all tasks is difficult due to the time restrictions. In that case the key issue is to determine the most important obligatory and optional tasks of the supervisory board in the municipal company. Main aim of this paper is to define the tasks of the supervisory boards in Polish municipal companies and to measure a degree of their importance. 1.1 Supervisory board as foundation of the ownership supervision over the municipal companies The act on the municipal services includes an obligation of appointing the supervisory board in the companies with share of the local government units. It performs the leading role in internal mechanism of the ownership supervision over the company. It is an important tool for owners, shareholders and investors of the business entity being used to monitor and control the decisions and activities taken by management and to make an objective assessment degree of completion of own financial objectives. Obligatory establishment of the supervisory board in the municipal companies is to ensure first of all the proper supervision over using the public funds in accordance with the rules of correct economy (Misterska-Dragan 2004). The supervisory board as supervisory control body has been equipped by the commercial law in the following powers (Urbanek 2005): exercise ongoing supervision over the company s activity in all aspects of its operation [Commercial companies code], appointment, suspension and dismissal of members of management board (taking shape of composition of the management board art of CCC). determination of principles and amount of remuneration for members of the management board (art. 378 of CCC), delegate members of the supervisory board to temporary performing the management functions (art. 383 of CCC). make an assessment of annual financial report, represent interests of the company in agreements and disputes between the management board and partners (art. 379 of CCC). 18 th International Scientific Conference [126] Faculty of Economics, VŠB - TUO

135 For performing of the above duties the supervisory body may examine all documents of the company and also to require reports and explanations from the management board and employees, and to review the state of assets of the company. In addition, each member of the supervisory body in the limited liability company may supervise independently, unless otherwise agreed in the articles of association. In a case of the joint stock company, it has been written down that the supervisory board performs their duties collectively and may delegate individual members to perform specific supervision actions independently. It s worth adding that the supervisory board operating in the commercial companies is not allowed to give binding orders to the management board on matters related to running the business [Commercial companies code]. In practice, it means that the supervision body may only carry out an assessment of decisions and actions taken by the management board, and relevant explanations and grounds are required from it. A catalogue of functions and tasks of the supervisory board resulting from provisions of the Polish companies code is quite general and indicates fundamental aspects of functioning this body. Better scope for defining and systematizing of functions performed by the supervisory board are suggested by different publications and documents focusing on full characteristics of the corporate governance and role of the supervisory bodies in achieving the basic objectives of business activity. Organisation for Economic Co-operation and Development (OECD) pointed out to functions and tasks which should be realized members of the supervisory boards in the companies. These recommendations are of universal character and do not depend on legalorganizational form of the company. These are the model of good practice for organization and activity of the supervisory bodies. To tasks and functions of the supervisory boards specified in a code of OECD were included [OECD 2005]: 1. Modification and orientation of the strategy of company, main plan of action, risk management policy, annual financial plans and business plans; fixing the result targets; monitoring the implementation actions and results of the company; supervision over the most important expenditures, taking over the other companies and operations of selling out the big parcel of assets. 2. Monitoring of an efficiency of used practices of supervision in the company and modification and improvement of them on an as-needed basis. 3. Choice, remuneration, monitoring of work and if necessary, an exchange of members of the management board and supervision over the succession planning policy. 4. Adaptation of salaries of members of the management and supervisory boards to long term interests of the company and its partners/shareholders. 5. Assurance of transparent and clear procedures of appointing and choosing the members of the company governing body. 6. Monitoring and management with possible conflicts of interests among members of the management board, supervisory board and partners/shareholders, including the cases of improper using the property of a company or unfair transactions with contracting parties. 7. Assurance of reliability of accounting and financial reporting systems of the company, including the independent auditing of financial statements, and assurance of existing the appropriate control systems in the company, in particular the risk monitoring systems, financial and operational control and observance of regulations and standards in force. [127] Faculty of Economics, VŠB - TUO

136 Section S2: Business Administration 8. Supervision over the disclosure and transferring information process. In addition, on account of performing of functions in the supervision governing bodies of important companies from interest of community point of view, the supervisory boards should control and monitor in particular: - degree of completion and performance of tasks by the public utility companies,- degree of completion of the development strategy of companies and commissions, - decisions of the management boards of companies essential for their further functioning, - working effects of the management board of companies, - social perception of business activities, including the quality and assessments of provided services. It s worth to be emphasized that members of the supervisory board are not representatives of individual shareholders. They represent themselves and are obliged to be guided by interest of the company when taking decisions. However, they will understand an interest in the way it is understood by the shareholders who delegated them to perform these functions (Nowakowski, Zołotar, 2014). 2 Scope of tasks of the supervisory boards in the municipal companies - results of own research As mentioned in previous chapter of the paper, the tasks of the supervisory board can be extended in the articles of association or statute of the company. Moreover, areas of activity of the supervision governing body can be found in domestic and foreign documents which propose a certain universal model of functioning the supervisory board to improve an efficiency of exercised supervision, and then measured by financial-economic efficiency of the company. 2.1 Research methodology The issue of type of tasks performed by supervisory board and degree of their importance in exercising the ownership supervision was discussed within the frames of the research project related to an efficiency of the ownership supervision over the municipal companies in province of Lower Silesia. It has been decided to find answers for the following research questions: 1. What tasks are performed by the supervisory boards in the municipal companies? 2. To which extent individual tasks of the supervisory board in the municipal company are important? Before completion of the substantial research it has been made the study of literature, legal acts and analysed several papers of associations and statutes of the companies in terms of powers and tasks of the supervisory board. It has also been conducted an interview with present and previous members of the supervisory boards in the companies with share of local government and with the executive bodies as well in order to determine a list of potential tasks that may be performed by the supervisory boards in subordinated companies. It has been worked out the list of tasks which are put to the supervisory board in the municipal company based upon the analysis of literature and legal regulations. Afterwards direct interview was conducted with 3 executive bodies of the communes in province of Lower Silesia selected by the quota-random sampling and with 5 current and 4 previous members of the supervisory boards of the municipal companies to indicate which of proposed tasks are the most essential in working of the supervisory body. 18 th International Scientific Conference [128] Faculty of Economics, VŠB - TUO

137 Selection of tasks which were mostly indicated by the interviewed group was made after receiving of feedbacks. Finally, the list included the following tasks: 1) Assessment of the management board of company; 2) Examination and acceptance of the financial statement; 3) Division of annual financial result in the company (giving an opinion); 4) Increasing/Decreasing the share capital (giving an opinion); 5) Planning of investments; 6) Planning and realization of the company s strategy; 7) Controlling of the company s debt; 8) Assessment of the management report on company s operations. The technique of questionnaire survey has been used for achieving the target. Research sample was composed of 44 commune offices 2 in province of Lower Silesia that had been selected by the non-random sampling method 3, and also 36 members of the management boards and 59 members of the supervisory boards of companies with share of selected communes. On purpose, it has been decided to address a question to members of the supervisory and management boards to achieve better picture of the examined issue. Respondents were asked for anonymous answers to mentioned tasks by indicating their degree of importance in exercising the supervision function. In the question was used sevendegree scale of Likert including seven possible answers, i.e. absolutely important, important, rather important; neither agree nor disagree, rather valid, valid; absolutely valid. Even number of answers has been used in order a central answer to be possible neutral and thus to obtain more reliable taking an attitude of respondents towards issue. 2.2 Results of research In opinion of the examined communes having stocks or shares in the municipal communes, the most important tasks of the supervisory body are examination and acceptance of the financial statement, assessment of the management report and controlling of the company s debt (Fig.1). Two first tasks clearly result from regulations of the commercial law. In turn a control of incurring liabilities by the company, in opinion of respondents is important for rational disposing of municipal property contributed to the company in completion of the public tasks. Division of annual financial result in the company and increasing/decreasing the share capital were indicated as less important tasks of the supervisory body. It may be a consequence of the fact that final decision is taken by owner of the company, i.e. an executive body of the local government unit. The supervisory board should express an opinion on the division of annual financial result and increasing/decreasing the share capital proposed by the management board. Expressed opinion does not bind the owner but it enables getting to know a stand point of the body which on account of performing role has better knowledge on processes happening in the companies and possible consequences of taking specific actions. 2 Questionnaires obtained from the communes were mostly filled in by employees of commune offices performing the duties including the ownership supervision issues. Some questionnaires were filled in directly by executive bodies or their deputies. 3 Communes from the province of Lower Silesia which had at least majority stocks/shares (above 51%) in the municipal companies, existing not less than 4 years on the market have been classified to the studies. [129] Faculty of Economics, VŠB - TUO

138 Section S2: Business Administration Fig. 1. A degree of importance of the supervisory board s tasks in the municipal company as per communes unimportant rather unimportant absolutely unimportant neither agree nor disagree rather important important absolutely important Assessment of the management report on operation Controlling of the company s debt Planning and realization of the company s strategy Planning of investments Increasing/Decreasing the share capital Division of annual financial result Examination and acceptance of the financial statement Assessment of the management board of company Source: Own research Answers of members of the supervisory boards in the municipal companies are illustrated below in Fig.2. It shows that the most important tasks standing before the supervisory body are assessment of the management board of company, assessment of the management report on operation of company and examination of the financial statement. These are also obligatory tasks provided by law regulations. Less important are the tasks related to the increasing/decreasing of the share capital, division of annual financial result and planning of investments. Achieved results suggest that members of the supervisory boards are more concentrated on performing the tasks that result from legal regulations because failing to perform them is subject to penalties. Moreover, performing of optional tasks are considered by them as not very important because it requires additional engagement. Fig. 2. A degree of importance of the supervisory board s tasks in the municipal company as per members of the supervisory boards unimportant rather unimportant absolutely unimportant neither agree nor disagree rather important important Assessment of the management report on operation Controlling of the company s debt Planning and realization of the company s strategy Planning of investments Increasing/Decreasing the share capital Division of annual financial result Examination and acceptance of the financial statement Assessment of the management board of company Source: Own research In opinion of interviewed members of the management boards of the municipal companies the most important tasks in working of the supervisory boards are examination and acceptance of the financial statement, assessment of the management board and assessment of 18 th International Scientific Conference [130] Faculty of Economics, VŠB - TUO

139 the management report on operation of the company (Fig.3). It can be identified that achieved results show that for members of the management board of the company very important is their activity in company to be main subject of the supervisory board s working. It is in accordance with principles of the ownership supervision according to which supervision body cares for managers of company realize the interests of owner. The respondents recognized planning of investments and planning and realization of the company s strategy as less important tasks of the supervisory board. Both tasks are optional and may result from provisions of the contracts or principles of ownership supervision formulated by the executive body of local government unit. Presence of them prove attention to increasing of importance of the supervisory body in the company and thus exercised ownership supervision. Fig. 3. A degree of importance of the supervisory board s tasks in the municipal company as per members of the management boards neither agree nor disagree rather unimportant unimportant absolutely unimportant rather important important Assessment of the management report on operation Controlling of the company s debt Planning and realization of the company s strategy Planning of investments Increasing/Decreasing the share capital Division of annual financial result Examination and acceptance of the financial statement Assessment of the management board of company Source: Own research Conclusions Supervisory board in the municipal companies play an important role in a process of ownership supervision. It performs a number of tasks, the purpose of which is rational functioning of the entity providing the public services. For that reason, the supervisory board is responsible for protection of the public interest. The tasks given to the supervisory board are obligatory and optional ones. Their number and scope significantly determines exercising the ownership supervision over company. Moreover, they influence on efficient functioning of the municipal company. The presented results prove that the most important tasks of the supervisory body are tasks resulting from legal regulations and tasks being of obligatory character. Less important are the optional tasks which enable the supervisory board to perform opinion-forming and consulting functions for the management board and owner of the company. It may be result for want of necessity of taking action in the tasks belonging to other bodies or also due to lack of time and motivation. Lesser engagement can be caused by lack of the legal sanctions for failing to perform tasks going beyond the legislative framework. [131] Faculty of Economics, VŠB - TUO

140 Section S2: Business Administration References COMMERCIAL COMPANIES CODE (2000), Retrieved from: < MISTERSKA-DRAGAN, BARBARA (2004). Czy Skarb Państwa to dobry wzór? - nadzór właścicielski nad spółkami z udziałem jednostek samorządu terytorialnego. Zeszyty naukowe nr 2 Wyższej Szkoły Ekonomicznej w Bochni, Bochnia. NOWAKOWSKI, Bogusław and ZOŁOTAR Anna. (2014). Odstępstwa od regulacji ustawowych w umowie spółki z o.o. z udziałem JST. Spółki jednostek samorządu terytorialnego, C.H. Beck. ORGANISTATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT (2004). Zasady nadzoru korporacyjnego Retrieved from: < URBANEK, P. (2005). Nadzór korporacyjny a wynagrodzenie menedżerów. Wydawnictwo Uniwersytetu Łódzkiego. ISBN th International Scientific Conference [132] Faculty of Economics, VŠB - TUO

141 Section S3 Management Honorary Chairman: prof. PhDr. Jiří Bláha, CSc. Guarantor: Ing. Štěpánka Staňková [133] Faculty of Economics, VŠB - TUO

142 Section S3: Management 18 th International Scientific Conference [134] Faculty of Economics, VŠB - TUO

143 MANAGEMENT OF TECHNOLOGY TRANSFER IN TERMS OF INNOVATIVE ACTIVITY Stanisław Brzeziński, Dagmara Bubel, Katarzyna Szymczyk Faculty of Management, Czestochowa University of Technology Abstract Nowadays, in modern competitive economy, it is essential to create innovations that will appear on the market and as new products and services will be purchased by customers. The ability to transform scientific knowledge into new products, services, technology, marketing techniques and organizational solutions determines the market success of individuals, companies and entire economies. Therefore, in recent times, improvement of knowledge commercialization the way it could be used practically and beneficially by the greatest number of customers has become a real challenge. In Poland, several institutions take part in the process of transferring technology including research or technology transfer centres and enterprises which due to the access to existing knowledge can develop new skills, new products and services. For the process of commercialization to be fast and efficient, it is necessary at first to examine all the mechanisms that manage this process as well as the motives of the participants. Additionally, the so-called bottlenecks should be recognized and necessary steps to remove obstacles and to simplify the whole process need to be determined. The issue of technology transfers and technology commercialization is strategically essential for Polish and European economy. Creation of the knowledge-based economy requires long-term investment in key technologies and the coherent and cohesive approach oriented on chosen objectives. Thus, the improvement of technology transfer processes in Polish companies is so important. In the modern economy, knowledge becomes a crucial resource that to a greater extent determines the competitiveness of enterprises, or even the competitiveness of regions and entire economies. The influence that contributes to a successful outcome comes from the knowledge transfer mechanisms between actors of socio-economic life and the knowledge commercialization, that is, transformation into new products, services, technologies, marketing methods and organizational solutions (Stabryła, 2015). The aim of this article is to analyse academic centres of innovation and entrepreneurship. The article discusses three types of academic institutions involved in technology transfer: academic pre-incubators, university incubators and university technology transfer centres. The analysis allowed the evaluation of the functioning of these institutions in the economy. Collected results illustrate the clash between the activity declared by the centres and their actual contribution to the progress of technology transfer from science to business. Keywords: Technology transfer, knowledge, innovation, economy, commercialization JEL: 030, 033, 034 [135] Faculty of Economics, VŠB - TUO

144 Section S3: Management 1. Introduction The growing importance of knowledge, as a factor of creating, requires deep changes in science and higher education. The new quality of thinking and acting within the framework of scientific and educational institutions becomes common practice - an open way for cooperation with business and to build entrepreneurial skills among students, graduates and academics. The existing model of higher education, based on education and research, is extended to the formation of active manners to enable individual action on the market. The modern third generation university is a college that perceives the commercialization of know-how as its own mission mainly important as the research and education. Such effectively fulfilled mission requires many structural changes in organization, management and the performance of the university, namely the development of innovation culture, multidisciplinary teams, or peer reviewing system (Jelonek & Pawełoszek, 2013). In addition, the academic community is obliged to create university entrepreneurship support structures and to establish a network cooperation with external research organizations, companies and institutions supporting knowhow transfer. Eventually, universities become the part of the system supporting commercialization of knowledge (Sieniewska, 2014). In Poland, the use of knowledge is a generated side effect, an unmaintained task which does not correspond to the mainstream school activities and it is not a significant factor influencing school's evaluation. The main emphasis is put on the development of know-how, though, the entire responsibility and the risk associated with the purchase and exploitation belong to external customers. There is a lack of a functioning system of assessment, valuation and commercialization of research through the sale of licenses or the creation of new technology companies. Recently, in order to change the situation, research institutions, especially universities, have been establishing in their organizational structures the so called technology transfer centres. Their aim is to promote research and marketing results or technology projects (Kamińska & Skonieczny, 2012). In order to rationalize and enhance the effectiveness of such units, some colleges appoint external, subordinate economic operators or work together with external providers of the same objectives. Simultaneously, transfer of technology conditions are provided - new companies are formed by research academics using their study results and students having some business ideas. Success depends on the development of the educational supporting system to help some potential entrepreneurs to go through the most difficult steps in business initiating process and to estimate professionally all market values of such project. Therefore, the potential risk of their actions on the market should be reduced. Such a role plays pre-incubators and academic incubators of entrepreneurship (Górka, 2013). The effectiveness of these forms of knowledge transfer does not depend only on the university. Certain suitable financial instruments, external supporting institutions as incubators or science and technology parks are fundamental in completing the effectiveness. 18 th International Scientific Conference [136] Faculty of Economics, VŠB - TUO

145 2. Knowledge and academic centres of innovation and entrepreneurship In the modern economy, knowledge becomes a resource increasingly crucial not only for the competitiveness of enterprises, but also for the regions and entire economies (Kwiatkowski, 2013). The mechanism of knowledge transfer between the social and economic actors, its commercialization, i.e. transformation of knowledge into new products, services, technologies, marketing methods and organizational solutions make a success (Flisiuk & Gołąbek, 2015). The knowledge transformation process into innovations appears to be a socially difficult and complex phenomenon. New network links between companies and their clusters, research institutions, government departments, local governments, or NGOs are necessary to improve that process. These network links roles of supporting the penetration of ideas and sharing of experiences is increasing continuously. The economic policy moves towards the intensifying knowledge transfer processes and consequently, the construction of the innovation system (Pyka &Janiszewski, 2012). The so called infrastructure support institutions, supporting functions transformation of knowledge into innovation, are an essential part of this system and they include centres of innovation and entrepreneurship, namely parks and incubators, pre-incubators, university incubators, technology transfer centres, training and consulting centres, or technology platforms and clusters. These institutions link "production" of knowledge and its "consumption", in the form of a new commercial product, service, process or organization. Their main tasks revolve around: distribution of knowledge and skills through consulting, training and information in the context of training and consulting; helping in the transfer and commercialization of new technologies in the context of technology transfer centres; assisting in the creation of new businesses in an environment of scientific institutions and universities set up by students, graduates, postgraduates and researchers in pre-incubators and university incubators; technical and infrastructure assistance for start-ups in parks and technology incubators, business incubators; clustering and animation by combining innovative environments on a specific, developed area of business services and various forms of assistance to companies within the technology parks, business zones and industrial parks (Siekierski & Śliwa, 2015). For dynamic feedback to function, entrepreneurs should adjust more to the use of knowledge and scientists to commercialize study results. Despite the long process, the effects may be remarkable, if only both sides will manage to identify common interests and suitable conditions exist. The technology transfer goes effectively only in the process in which interactions between persons and entities creating an innovative environment happen continuously (Tomaszewski, 2015). Due to that a number of activities aimed at the customer to become familiar with the test results occur, i.e. creating centres of scientific and industrial research departments in companies, advanced technology centres, technology platforms and other structures in which scientists can work directly in companies or work on joint projects. It looks similar at the universities where these processes maintained by the infrastructure of innovation lead to a system effectively supporting the commercialization of knowledge. In [137] Faculty of Economics, VŠB - TUO

146 Section S3: Management recent years the number of centres of innovation and entrepreneurship in Poland is gradually increasing, as Figure 1 shows. Fig.1 The development of innovation and entrepreneurship in Poland in the years technological parks academic business incubators technology transfer centres Source: own study. The above group illustrates how important place is occupied by the organizations working in the academic environment that focus on the transfer of technology from the academic environment to the economy. Below, there is an analysis of the activity of technology transfer centres and the academic enterprise operating at Polish universities. The situation of three groups of subjects have been described in details: pre-incubators, university incubators and technology transfer centres, and the attempt to organize their definitions and characteristics has been taken. The academic pre-incubators (AP) are the newest type of innovation and entrepreneurship centres (Mizgajska, 2015), the specialized units to handle the needs of potential entrepreneurs on the seed stage of creating the company. They occupy an important place in the idea of an entrepreneurial university and are the key cells of integrated model to support the academic entrepreneurship. They role is to support students, graduates, faculty members and graduates with practical market activities. Academic business incubators (ABI) are separate entities being based on property. Apart from office space, they provide support services for start-ups. Their primary goal is to help fresh companies on the toughest stage of the business and provide them with appropriate surroundings to achieve business (Wach, 2013). The main difference between incubators and pre-incubators is the fact of holding the relatively large surface area. ABI provide companies starting business with office, telephone, computer and laboratory infrastructure. They also offer accounting services and legal support in raising funds for the initial stages of company development, organizing open competitions on business plan, training, information campaigns and promotional activities. Three main features of the incubator (Ładyga, 2012): - offering the surface of a certain standard, in a form readily convertible models to the specific needs; - providing direct access to the full range of services to support the development of companies in early, difficult years of activity, namely during the incubation period - the amount and scope needed at any given time; 18 th International Scientific Conference [138] Faculty of Economics, VŠB - TUO

147 - moderate lease terms allowing to enter or leave the incubator in a convenient for the enterprise mode. Academic technology transfer centres (ATTC) are a diversely organized group of nonprofit consulting, training and informational entities active in the area of technology transfer and commercialization and all accompanying this process tasks. They are a subgroup of individuals in the group training and information consultancy, active in the area of technology transfer and commercialization, i.e. technology transfer centres. ATTC act between science and business and help companies to adapt to modern technologies, which contributes towards the improvement of innovativeness and competitiveness of enterprises and regional economic structures. These units are designed to provide a kind of shelter integrating commercialization, research and teaching activities at universities, and they are created for the purpose of sale or complimentary transfer of the study results into the economy. According to the theoretical task ATTC (Lis, 2013): - participation in the development and implementation of university policy of commercialization of research results; - management of intellectual property generated in research institutions and licensing; - promoting the achievements of scientific institutions and their research teams; - consulting, training and information activities of innovative projects, - popularization and development of technological entrepreneurship; - evaluation of the commercial potential of new technological, product and organizational skills; - cooperation with other innovation and entrepreneurship centres; - identification of innovative operators needs; - developing a contact network linking academia and business; - raising funds for research, development of human resources and innovative projects. According to above tasks, academic innovation and entrepreneurship centres are one of the components of the structure of university technology transfer and commercialization of research results. 3. Academic centres of innovation and entrepreneurship with regards to research The main objective of the study conducted in 2014 was to present the achievements and to identify directions of development of institutions supporting innovative entrepreneurship. Surveys were addressed to three types of academic centres of innovation and entrepreneurship (ACIE) - academic pre-incubators, university incubators and university technology transfer centres located on Polish territory. The survey was done by using online technology questionnaire interviews CAWI (Computer Assisted Web Interview). The choice of CAWI technique was optimized by reason of the large volume of surveys and detailed questions. CAWI helped to collect both quantitative and qualitative data and simultaneously, to trim down the research process. As an additional technique, CATI (Computer Assisted Telephone Interview) was used, in case of emerging concerns, which allowed the collection of complementary with respect to those obtained during interviews CAWI data. At universities, the widely understood theme of commercialization and technology transfer becomes the responsibility of different actors. The protection of intellectual property (IP) rights is pointed to a patent attorney office, according to a large amount of the respondents. Cooperation with [139] Faculty of Economics, VŠB - TUO

148 Section S3: Management industry is the domain of various structures which are, for example, Vice-Rector for contacts with the economy or the Vice-Rector for education. Intersectoral cooperation is done by preincubators and technological incubators, or technology transfer departments and centres of innovation. Advanced technology centres, research centres and inter-acie complete tasks related to technology commercialization, too. In many universities, there are other separate organizational units that operate independently and which specialize in specific areas of TT. They usually take the form of operating units within the organizational structure of universities or external entities with separate legal personality Academic pre-incubators Academic pre-incubators are appointed on the basis of the Law on Higher Education of 27 July It gives universities the opportunity to take on new challenges in shaping and creating entrepreneurial attitudes among the academic community. Employment in the AP varies, but the average core of personnel is less than half of the employee. People are employed on civil law contracts. Such a policy reduces the budget centre, though it does not let to construct substantive teams and weakens bonds among the co-workers. Only one of the surveyed preincubators demonstrated the commitment of volunteers to carry out their tasks. The most popular actions are the informational and promotional activities as well as training in entrepreneurship for students and academics. Teaching entrepreneurship at local universities was on third position. Four of the twelve pre-incubators surveyed are financially supported by individuals, which is from 10 to 100% of the budget of the centre. Among the surveyed entities they were also those whose only source of income are grants and projects of national and regional structural funds. According to the analysis of sources of funding, the AP have practically no incomes from its own activities, counselling or training, or do not benefit from local resources. There is a risk that when reducing the possibility of receiving subsidies from European funds and from the university, their activities may be liquidated or significantly reduced. A relatively small number of pre-incubators remain in formal contact with other support institutions. The network of contacts indicated primarily for foreign partners or other similar in character units. Each organization indicated no more than two such co-operating institutions. The structure of services shows access to European funds, protection of intellectual property, entrepreneurship and the creation of the company at first place. This activity involves mainly training or information. Support of accounting and marketing are vaguely less popular and the least frequent services are: quality management, implementation of new products and services and brokering cooperative. In the light of the pre-incubators objectives, the activity in the most frequently mentioned issues remains with the consent of their statutory tasks. The study clearly showed that individual care project in the form of mentoring, counselling or consultation is strongest aspect of AP. Four centres offer such services which should be treated in terms of absence in view of the specificities of entities created based on the latest technologies and organizational solutions. The vast majority of academic pre-incubators declared that examining customers needs by using surveys and individual interviews with the public. No other ways of obtaining such information were presented. Nearly half of the surveyed centres do not receive any substantive support from the university. The fact that only one of them runs advice program may significantly impact on the manner and scope of operation. In the category "other" there are: supervising council including the faculty representatives and the student government, or the advisory board, which acknowledge the low level of scientific community involvement in pre-incubators functioning as an important obstacle to their development. The state of the academic pre-incubators functioning comes from the local nature, often limited to one academia or, in some cases, only to one department. They rarely establish broad cooperation with other institutions in the region or country. Centres 18 th International Scientific Conference [140] Faculty of Economics, VŠB - TUO

149 working together with other successful independently structures like technology transfer centres and technological parks are the exception. Most of the AP have not got the industry specialization, and the average project is implemented with the hold up of pre-incubator benefit from his support for a little more than two years. Customers fees are collected according to different systems. Some centres yearn for flat-rate monthly charges, using different rates depending on the level of the project development, other divide fees into rent and operating costs considered just symbolic. According to pre-incubator employees, the major problem in the implementation of business projects is the lack of financial resources, followed by insufficient economic and organizational knowledge and small determination to make effort to put their plans into effect. The lack of business-oriented partnership and cooperation with the scientific community and the lack of projects for commercialization lead to obstacles in the operation and development of pre-incubators. This shows that pre-incubators established yet to live by universities did not gain the academic environment. Pre-incubators development plans are primarily focused on the following areas presented in Figure 2. Fig.2 The academic pre-development plans AREAS OF PRE-INCUBATORS DEVELOPMENT PLANS CONTENT- ORGANIZING AREA INFRASTRUCTURE AREA FINANCE AREA raising the level of expertise provided services the introduction of mentoring services, monitoring the fate of the companies after an incubation period, cooperation with incubators from other countries - exchange of experience and exchange of business organization of competitions for business activities aimed at cooperation with the business community widely understood promotion of entrepreneurship training for authors of businesses and business projects authors, experts and advisers the introduction of start-up companies in the structure of science and technology parks; support the commercialization of research results support (housing, advice) to enterprises at the seed and start-ups, networking implementation of the concept of co-working and open space development of infrastructure facilities for rent incubator to customers to create the premises of extensible creativity among students raising funds for the financing of EU funds a package of commercial services extension Source: own study based on test results. [141] Faculty of Economics, VŠB - TUO

150 Section S3: Management The information above shows that the pre-incubators enable new businesses to develop due to potential access to university laboratories and research equipment, technology consulting and patent knowledge of scientists and students in the provision of consulting and training services and databases Academic business incubators The study results determined that due to strict conjunction with the parent scientific institution, ABI have suitable conditions for development - primarily by access to knowledge and research results and constant contact with academia. According to a survey, incubators employees assessed the relationship with the university administration as good and with academics as neutral. Despite the above, good conditions for doing business with the support of the university authorities and students were indicated. The services offered by the ABI are significantly provided by staff, consultants or business supporting structures. Some external partners help is also used, for example those specializing in specific issues that contribute to raising the level of professionalism of service. The surveyed incubators offer access to the most needed infrastructure and technical services: broadband, computer network, a seminar room, reception and secretarial support. The budget of academic business incubators includes income from space leasing, the parent institution donation, grants and projects. ABI gain access to best practices, experiences, contacts and knowledge as a result of long-term relationships with relevant associations and networks. The conducted study confirmed that the students were the most frequent clients of studied incubators. Their average participation in group of ABI was 44.4%. The increase of students' participation in the group of clients of ABI should be reviewed positively. The structure of clients of studied incubators in 2014 has been illustrated in Figure 3. Fig.3 The structure of ABI clients in 2014 (in%) 2014 PhD students 6,0 Graduates (up to 2 years after finishing studies 20,6 New entrepreneurs 12,3 Students 44,4 Other entities 0,3 University staff 14,4 Other university staff 2,0 18 th International Scientific Conference [142] Faculty of Economics, VŠB - TUO

151 Source: own study based on test results. Another, in terms of numbers, group of customers ABI in 2014 were graduates who finished studies 2 years before. Their average share in the group of respondents was in %. For this group of customers, the decreasing trend is unfavourable due to the fact that graduates have the highest enthusiasm and the entrepreneurship skills, and therefore they are the most likely to set up their own companies which will operate permanently on the market. In third place, in terms of numbers, ranks a group of academics whose the average share in the group of customers ABI in 2014 was about 14.5%. There is also a new group of ABI customers accounted for beginner, new entrepreneurs. Their average share was 12.3%. This could be a positive signal, provided that this is not a consequence of the passage of time and the automatic transition of graduates to the group of "aspiring entrepreneurs." Under this assumption, the total share of graduates and potential entrepreneurs is not too high which is not a positive trend. The consequence of this assumption may be the fact that ABI provide services all the time to the same group of customers and their turnover is very low. The accepted assumption confirms the structure of the customer according to which, the participation of a group of promising new entrepreneurs is similar to the share of customers in the late phase of incubation. One of the less active group of customers of ABI were PhD students. Their average share in the structure of clients of studied incubators fluctuated around 6%. The share of the "other university staff" is minimal and amounted to 2%. The share of the last called "other entities" is marginal and amounts to 0.3%. ABI characteristics of the beneficiaries due to the incubation phase of their clients presents Figure 4. Fig.4 The structure of beneficiaries ABI due to their incubation phase in % 53,2% 50% 40% 30% 30,4% 20% 13,0% 10% 3,4% 0% preincubation Early intubation (after year of foundation) Late incubation (2-3 years after the foundation) Above the third year of operation Source: own study based on test results. The highest share 53.2%. in the structure of customers have projects that are in the phase of pre-incubation. The existing convention of university assumes that the ABI is a pre-incubator functioning as seedbed of ideas. Therefore, the occurrence of an upward trend in this field must be considered as the most preferred. In contrast, the increase of beneficiaries of such activity over three years of operation should be considered as not favourable. In 2014, their share in the structure of the total was 3.4%. According to the essence of incubators, the respondents should support their clients in setting up new companies and help them in the initial period of their [143] Faculty of Economics, VŠB - TUO

152 Section S3: Management existence. Too long support make businesses acclimated to operate in better than market conditions and limit their ability to cope without the outside help. It could also indicate a deliberate evasion of the establishment and long-term use of the opportunities offered by the functioning of the ABI. Also a group of projects in the late stage of incubation is minimal and amounts 13.0%, which confirms the weakening willingness to transform pre-incubated projects in the start-up. Confirmation of this statement is the fact that the sum of the projects are in the late phase of incubation and functioning in the ABI over three years is 16.4%. This means that only 2.3% of projects in the late phase of incubation came out of the ABI. Whereas, the number of entities in the early stages of incubation is maintained at the level of 30.4%. The support provided to the ABI customers considers two fundamental fields: material support and substantive support for the training and counselling. The structure of key to the mission of ABI services is shown in Figure 5. Fig. 5 The range of services provided by ABI in Information and publicity actions in the field of enterprise 90% Mentoring, coaching - individual conduct promising projects selected by caregivers 80% Providing infrastructure ABI new entrepreneurs (desk, phone, computer, address, etc.). 80% Assistance in obtaining funds starting capital (grants, subsidies, loans, capital entry, etc.). 80% Taught courses in entrepreneurship at a local university 70% Offering assistance to access to laboratory infrastructure 70% Providing legal assistance to clients of ABI 60% Intermediation in executing incubator client orders 50% Open competitions for business plan 40% 0% 20% 40% 60% 80% 100% Source: own study based on test results. In 2014 incubators implemented information campaigns and the promotion of entrepreneurship and testified legal assistance to their clients and also to their clients who applied mentoring and coaching, provided assistance in obtaining funds and conducted classes on entrepreneurship. In 2014 there were also services including: providing infrastructure ABI for aspiring entrepreneurs, offering assistance to access to laboratory facilities and implementation of open competitions on the business plan. In 2014, the emergence of the "intermediation in executing client orders incubator" was found as disturbing issue. Such action, despite customer preferences of ABI is contrary to the statutory purpose of incubators. Over 50% of ABI showed a mediation activity in executing orders of incubator clients. This activity 18 th International Scientific Conference [144] Faculty of Economics, VŠB - TUO

153 is for ABI an additional source of funding. The service consisting of an intermediary in the execution of orders acquired by their clients in certain situations allows the achievement of revenue by the student and the intermediary. But there is a kind of surrogate activities, the ultimate goal does not appear to incubate the company, but rather to create a mechanism that generates income, which weakens the motivation of potential entrepreneurs to start their own firm 100. In addition, ABI accept this mechanism because of the fact that dealing with the execution of client orders brings tangible results, e.g. in the form of revenues, number of customers and the number of projects. Besides, 70% of respondents indicated providing proinnovative services for the customers. According to answers from the respondents, the share of these services ranged from 14 to up to 100% (as indicated by two respondents). Incubators, which showed the employment of 1-2 professional staff testified total of from 5 to 20 proinnovation services per year, while the incubators, which employed about 30 professional staff performed up to 200 pro-innovation services in the year. The study found that ABI which function together with technology parks within one institution leading pro-innovation services provide more than ABI functioning at universities. In 2014, conducting training activities showed 90% of respondents. All respondents trained a total of 1,463 persons in 127 training. For one ABI it was an average of 14 training courses to have trained a total of 163 people, and one train of an average of 12 people. The study showed that the most frequently recurring areas of support offered by incubators to their customers is consulting: development of business plans and business model, entrepreneurship and the establishment of companies, business management, legal, financial, tax and training in market analysis and marketing. In turn, the least incubators led training in quality management, information technology and computers, international cooperation and foreign trade and consultancy in the field of quality management. The characteristics of the areas in which ABI provide training support and consulting presented in the Figure 6. [145] Faculty of Economics, VŠB - TUO

154 Section S3: Management Fig.6 The thematic areas of training and mentoring support offered by ABI in 2014 AREA - SUPPORT ADVISORY ABI NUMBER THAT OFFER SUPPORT Consultancy in the development of business plans and business model 9 Consulting business and establishing companies 8 Legal consultancy 8 Financial and tax advisory 7 Management consulting business 7 Consultancy in the field of market analysis and marketing 6 Consulting Accounting 6 Consultancy technology and patent 6 Advice on access to EU funds 6 Advising on cooperation 4 Consultancy in the field of human resources management 2 IT consultancy and computers 2 Consultancy in the field of quality management 1 Consulting and training in implementation of new products and services AREA - SUPPORT TRAINING ABI NUMBER THAT OFFER SUPPORT Training and development of business plans 6 Entrepreneurship training and business creation 5 legal training 4 Training in the field of finance and taxation 3 Training in business management 6 Training in market analysis and marketing 7 Training in Accounting S Technology training and patent 3 Training in accessing European funds eto 6 Training in cooperation 2 Training in human resources management S Training in computer science and computers 1 Training in quality management 1 Training in the field of international cooperation and foreign trade Source: own study based on test results. More and more ABI provide advice and training in key areas for their mission to be put into practice. In 2014 this type of action pursued all test of ABI. Noteworthy is the fact that the activities of ABI in a given subject area often took the form of counselling than training. An exception in this regard were training for market analysis and marketing and personnel management. In 2014, most ABI testified advisory services: the development of business plans, entrepreneurship and business creation and in terms of legislation. Training services were related to market analysis, develop business plans and access to European funds. Support from the ABI in terms of raising funds for conducting business presents Figure th International Scientific Conference [146] Faculty of Economics, VŠB - TUO

155 Fig.7 ABI support in obtaining financial assistance in Venture Capital 60% Cooperation with business angels 60% Subvention, grants, subsidies 50% A seed capital fund 50% Local / regional loan fund 40% Loans and credit intermediation 40% A guarantee fund 30% No support offered in obtaining financial assistance 10% 0% 10% 20% 30% 40% 50% 60% 70% Source: own study based on test results. The obtained results indicate the approach to the issue of support from the ABI for its customers in terms of financial aid by % of the surveyed incubators helped their clients in dealing with venture capital funds or business angel networks. This situation is the result of the appearance on the market of over 60 seed capital funds that are very actively looking for projects to fund. Half of the respondents indicated that it facilitated raising capital in the framework of subvention, grants or subsidies of seed funds. Mediation in dealing with loan funds, banks and actors through credit were facilitated by 40% of respondents. In order to provide the customers, support from the guarantee funds 30% of respondents undertook some support actions. In contrast, only 10% of surveyed respondents did not offer support to the clients in obtaining financial assistance. Information about the provision of advisory services were available in all tested ABI. The structure of respondents due to the number of advisory services presents Figure 8. [147] Faculty of Economics, VŠB - TUO

156 Section S3: Management Fig.8 Number of advisory services in 2014 from 25 to 99 40% from 100 to % from 2 to 24 30% from 400 to % Source: own study based on test results. The total number of counselling services provided by the respondents amounted to 1869 while broken down by the number of incubators the amount was very diverse. The largest number of advisory meetings organized by one incubator is 600, at least one centre organized only two meetings. Average number of meetings per one respondent was 120, while the average number of participants per one ABI amounted to 187 people. In 70% of incubators number of events and the number of people participating in them was identical, which means that it was a private meeting. In 20% of incubators number of customers was less than the number of advisory meetings, which means that one client held several meetings. However, in 10% of incubators, number of customers was greater than the number of meetings, which shows that in one meeting more than one client attended. By analyzing issues related to the way the services by ABI are provided, it is worth paying attention to the issue of outsourcing services. The study shows that 50% of respondents who provide their customers with business support services, to a greater or lesser extent, use the services of third parties. While the remaining 50% respondents providing the same services rely only on own personnel resources. ABI structure due to the scope of services commissioned by external entities is presented in the Figure 9. Fig.9 The level of services ordered by ABI to external entities in 2014 from 75% to 100% 10% from 50% to 74% 0% 0% (lack of orders for third parties) 50% from 25% to 49% 30% from 1% to 24% 10% Source: own study based on test results. 18 th International Scientific Conference [148] Faculty of Economics, VŠB - TUO

157 Among the services provided by external parties accounting services were to dominate. They were provided by external entities in 30% of all surveyed incubators. In turn, the services like training, legal, related to the organization of financial support and services related to scientific advice and specialized occurred in 20% of incubators. Single incubators indicated additional outsourced services related to: provision of scientific equipment, entering foreign markets and services related to carrying out research projects. This is an adequate range of services for external support provided by ABI. Analysis of formal action areas of ABI included the following topics: the rules or procedures for the selection of projects for incubation - 90% regulations on the management of copyright, related rights and industrial property rights - 60% special procedures related to the protection of copyright and related rights and intellectual property rights - 50%. The use of regulations on the management of copyright, related rights and industrial property rights were showed by 60% of respondents. The study shows that incubators have rules or procedures for the selection of projects for incubation. In addition, under the regulations specifying rules for supporting the tenants located in the incubator, 80% of respondents indicated to take into account the time constraints functioning of the beneficiaries of support in these incubators. In 60% of incubators, the ability of beneficiary functioning in the incubator has been limited to a period of three years, while another 20% of incubators period was 8 years. Excessive extension of the permissible period of stay in the ABI should be regarded as inconsistent with their mission, which involves the generation of well-prepared projects for commercialization through the creation of start-ups. The process of pre-incubation should not exceed 2-3 years. The incubation process of the company itself should be kept in an incubator technology or entrepreneurship. Some ABI extend the life of the incubator, as they assume the realization of the ABI functions of pre-incubation and incubation together. In 2014, 260 business projects were submitted to the surveyed incubators. In three incubators not a single business project was reported. Per one incubator an average of 37 business projects were submitted. The structure of these projects due to the person who reported this project presents Figure 10. Fig.10 The structure of business projects in ABI due to the person who submitted in 2014 Other ( students of other universities, professors, entrepreneurs having a number code) 8% Students 39% PhD students 9% Graduates 29% Young academia workers 14% Source: own study based on test results. [149] Faculty of Economics, VŠB - TUO

158 Section S3: Management Generally, the tested incubators revealed the launch of 532 businesses. However, as the above data shows, 30% of surveyed incubators do not released not a single "grown" company. The median number released by ABI graduates was 19.5 entities. It should be emphasized that all of the group released on the market only a few graduate business enterprise was a manifestation of the commercialization of knowledge, which is confirmed by data from Figure 11. Fig.11 The number of ABI which incubated spin off and spin-out companies and the average number of this type of companies per one ABI in 2014 No SPECIFICATION 2014 The number of incubators which were the company spin off 5 The number of incubators which were spin-out company 5 The share of incubators in which there were no firm spin off and spin-out 4 The average number of spin off in incubators where such companies were 2 5 The average number of spin-out in one incubator Source: own study based on test results. 7,4 Most graduates of ABI in their activity relied on the widely available technologies and knowledge, which means that they did not indicate the spin off and spin out companies. The study shows that half of the respondents indicated the creation of spin off and the same number of respondents showed the creation of spin-out. Participation of ABI where spin off and spinout occurred simultaneously in the entire study group of ABI was 40%. It should also be noted that for each incubator reporting the occurrence of this type of firms holds the creation of 2 spin off and over 7 spin out. In total, as a result of ABI support 10 spin off and 37 spin-out started. The diversified customer structure and range of services provided to them correspond to the mission carried out by the ABI. There was also, however, a negative, from the point of view of the mission of ABI, tendency to increase the number of services of mediation in executing client orders. This type of service is a source of revenue for ABI, however, it extends the preincubation time and reduces the tendency of potential entrepreneurs to start the company in real terms. Apart from space renting, providing the necessary infrastructure, technical service and legal and accounting service, the great importance is given to the possibilities of obtaining valuable information, advice, participation in specialized courses and training. Available in this area knowledge exists in a very broad spectrum: from the basics of entrepreneurship, creating a business, developing a business plan, market analysis and marketing, through the protection of intellectual property, financial, accounting and tax issues, legal and human resource management, to the access to European funds, internationalization and international cooperation. Nevertheless, none of incubators in the survey offer mentoring services. The lack of funds for technical infrastructure and equipment are the biggest problems for the incubators. 18 th International Scientific Conference [150] Faculty of Economics, VŠB - TUO

159 The lack of business-oriented partnership and cooperation with the scientific community and the poor economic situation of the region are the most important obstacles. Serious problems were noticed among the representatives of the ABI, namely sort of reluctance present in academia in terms of commercialization of scientific achievements, difficulties in cooperation with local and regional institutions and lack of support from their side, and academic grey economy. In terms of barriers faced by the centres in the context of the implementation of business projects, the lack of places for new customers is the most serious complication. Analysing the activity of entities similar in terms of the span of activity and clients, one may conclude that academic pre-incubators and incubators do not develop dynamically as similar technology transfer centres and technological incubators Academic technology transfer centres In this study, representatives of academic technology transfer centres stated that their main activity objectives are widely understood commercialization, technology transfer and university intellectual property management. Other objectives included the development of academic entrepreneurship as well as promoting of science and research. Two directions of development of academic technology transfer centres can be extracted: the use of the university's potential for technology transfer and conferring legal forms of TT. Some of them act in wider area by specializing in dealing with SMEs and helping them in acquiring new technologies and expertise or by participating in regional activities stimulating economic development through the construction of networks. Current centres activity focus on the transfer and commercialization of new technologies and technological and patent counselling. The second most time-consuming area of activity is the promotion of scientific achievements for their enforcement. According to the survey, the academic technology transfer centres focus frequently on activities in areas related to technology transfer. The centres offer training, consulting and information services are mainly conducted in the framework of projects where the small part of consulting and training services requires payment being, in this way, the own source of income. Training activities focus on human resources and quality management, legal aspects of technology transfer and deployment of new services and products. Significantly fewer subjects deal with workshops on technological audit, cooperative brokering, market analysis, business development and business management. Consulting centres focus on human resource management, developing business plans, creating companies, quality management and protection of intellectual property. In further position, there are consultations of new services and products implementation, cooperative brokering and technology audit. Single centres offer an assessment of patentability and commercialization. The information technology audit and IT control the information services. Further areas include prototyping and testing, quality management and legal information. The academic technology transfer centres focus very little on the implementation phase of technology transfer which is reflected in the low position of directory services, including market analysis, testing and prototyping technology, or business management. These topics function only at the level of information services. Other specific forms of activity centres are shown in Figure 3. [151] Faculty of Economics, VŠB - TUO

160 Section S3: Management Fig.12 Forms of academic activity centres for technology transfer organization of seminars and conferences contract research organization, operation monitoring service and research work preparing opinions on innovations participation in fairs and exibitions FORMS OF ACTIVITY CENTRE TECHNOLOGY TRANSFER creation of data bases, its offer of scientific or expert staff and university research equipment, necessary to establish cooperation with industry the organization of closed workshops organization of study visits and missions abroad organization of business meetings and trade fairs kooperacyjnych professional traineeships Source: own study based on test results. The academic centres put the effort to analyze the needs of their customers. However, the developed methodology shows the analysis is done unsystematically. The study often correlate the implementation of projects which impose such a requirement and are frequently not a judgment-based activity. A variety of tools are used: telephone interviews, questionnaires and direct meetings evaluation. More attention is put on evaluation of satisfaction with services ATTC than on the study of the expectations of potential visitors. The largest group of academic technology transfer centres considered the scope of its activity as regional, by seeing its role on this market as a player. This can be explained by the fact that the regional operational programs donate participants in various initiatives. The programs promote the creation of regional networks of business environment institutions. In addition, such regional initiatives also include partnerships with clusters. A relatively large group of centres declares to function on European scale or globally, but one should not allow too much for the importance of this indicator - the use of external contacts of these institutions is their weak spot. The international character is declared primarily through the prism of individual contacts with foreign partners which practically does not indicate real opportunities for entering the global market with technology or product. The survey illustrates the main barriers in the development of control centres including the reluctance of the scientific community to commercialize and cooperate with business, the lack of procedures and legal particulars related to the transfer and commercialization of technology. The lack of commercialization projects and low interest in the creation of spin-offs are less important problems. The academic technology transfer centres identified the their own, necessary for further development lines of action which are presented in Figure th International Scientific Conference [152] Faculty of Economics, VŠB - TUO

161 Fig.13 Lines of action of the academic technology transfer centres strengthening of human resources and infrastructure, improving workers' skills, professionalization of services and the development of commercial services intensification of external contacts with businesses and the creation of networks of entrepreneurs and investors in order to facilitate the commercialization of innovations, research results and knowledge DIRECTIONS FOR THEIR strengthen its position mainly in the region but also expanding contacts other areas OWN ACTIONS OF ACADEMIC creating among scientists need to conduct studies that can be implemented in the economic sector CENTRE TECHNOLOGY developing activities in the field of academic entrepreneurship and the creation of start-ups and spin-offs, including the implementation of projects dedicated to raising awareness in this area; TRANSFER integration activities related to technology transfer, which requires closer cooperation with home university and coordination with other units of the institutional level and external stakeholders Source: own study based on research results. Relatively to the level of ATTC development, two basic strategies can be outlined. The first group of centres is aimed at professionalising the commercialization of technology services and increasing revenues from this activity. The second group puts the emphasis on softer targets: raising awareness of the environment of the university on the knowledge marketing, the promotion of science and technology, patent protection searching and reporting. ATTC remains a challenge for the reluctance of the scientific community to commercialize and cooperate with business. There are not effective procedures TT functioning which should be regarded as a significant obstacle to business. There are not good practice available due to which specific projects related to technology transfer can be modelled. Conclusion The academic centres of innovation and entrepreneurship (ACIE) diverse, both in terms of level of development, and the scope of services. It is difficult to determine the standard offer which would allow for a real comparison of their activity due to collected data. Studies confirm that the number of support centres at universities and institutions increased insignificantly in recent years. The significant decrease in the activity of higher education institutions has been noticed in the group of academic incubators. The study also identified entities that hold statutory activities occasionally or do not hold them at all, because of limited financial resources and / or insufficient teams' skills and competencies. The most common solution for legal and organizational ACIE is a university-wide unit controlled directly by the Rector or the Vice Rector. This formula causes considerable difficulties in identifying their role in the parent organization, makes it difficult to exercising control and professional supervision over their [153] Faculty of Economics, VŠB - TUO

162 Section S3: Management activities. Substantive support centres received from the partner institutions is far too small and in many cases missing. Universities do not treat ACIE as an offer of higher education or a significant advantage of academia. Functioning of all types of centres mainly is done inside the university. External connections are mostly limited. No effective clients supporting in establishing business relationships with other companies or acquiring new markets can be discussed. Apart from exceptions, the ACIE market functioning is local or regional. The creation of regional innovation systems and networking with other support institutions operating in their area is rather limited. The surveyed entities do not conduct market analysis on customers' needs or in terms of demand for their services. The main analytical tool for assessing the market situation is a questionnaire used to measure organized meetings and training sessions. Therefore, the academic innovation and entrepreneurship centres do not have a good recognition of the expectations of the business environment in which they work. To a small extent, supporting units are busy with active marketing of technology. The challenge for all types of ACIE is still the reluctance of science to commercialization and collaboration with business. Pre-incubators show significantly low activity in the academic research environment. The potential of knowledge and infrastructure located at universities is not used by the centres. Units are not able to offer services their customers need because of the narrow substantive cooperation with the scientific and economic environment. Without a financial background, individuals limit their human and technical potential to a minimum, making it impossible to create competent teams serving customers efficient means. There are not good practices available - model projects of technology transfer. Multiple service providers of the same range so common in colleges are not helpful in strengthening the ability to perform the tasks. Lack of coordination and synergy put a stop to the creation of university entrepreneurship support system. The availability of EU funds for the establishment of systems support entrepreneurship and innovation in recent years has resulted in the creation of attractive entities more or less focused on technology transfer processes. The variety of services offered to businesses and universities by ACIE may cause, however, losing the main purpose of their activities in the area of TT. Taking into consideration the research, the main objective should include forcing the university authorities to increase their interest in ACIE activity. Their real performance of these individuals in the teaching processes will have a positive impact on their development, and will increase interest in academics economic activity. Assignment of ACIE to specific departments or cathedrals allow better supervision over the activities of cities, while at the same time, it reinforce their integration with the university community. Giving the opportunity to ACIE to benefit from the extensive contacts of national and international universities is essential for the development of these entities, as well as to take action on behalf of clients. Integration and coordination of academic centres activities for technology transfer from academic preincubators and incubators will certainly facilitate the dual use and development of infrastructure and will increase funding opportunities for projects. References FLISIUK, Barbara; GOŁĄBEK, Adam. MOŻLIWOŚCI KOMERCJALIZACJI WYNIKÓW BADAŃ NAUKOWYCH W INSTYTUTACH BADAWCZYCH MODELE, PROCEDURY, BARIERY ORAZ DOBRE PRAKTYKI. Zeszyty Naukowe. Organizacja i Zarządzanie/Politechnika Śląska, 2015, No. 77, pp GÓRKA, Krzysztof. Ocena wybranych aspektów rozwoju inkubatorów przedsiębiorczości w Polsce na tle rozwoju rynku inkubatorów przedsiębiorczości w Stanach Zjednoczonych. Zarządzanie i Finanse, 2013, Vol. 2.2, pp th International Scientific Conference [154] Faculty of Economics, VŠB - TUO

163 JELONEK, Dorota; PAWEŁOSZEK, Ilona. Technologie semantyczne w zarządzaniu platformą otwartych innowacji. Informatyka Ekonomiczna, 2013, No. 30, pp KAMIŃSKA, A.; SKONIECZNY, J. Transfer technologii z uniwersytetu do biznesu [w: Komputerowo zintegrowane zarządzanie]. Red. R. Knosala. Wydawnictwo Polskie Towarzystwo Zarządzania Produkcją, Opole, 2012, pp KWIATKOWSKI, Eugeniusz. Gospodarka oparta na wiedzy a stan rynku pracy w krajach Unii Europejskiej. ActaUniversitatisLodziensis. Folia Oeconomica, 2013, Vol. 281, pp LIS, Anna. Główne bariery w systemie transferu technologii w Polsce. Zarządzanie i Finanse, 2013, No. 4, pp ŁADYGA, Małgorzata. Akademickie inkubatory przedsiębiorczości jako koncepcja wspierania przedsiębiorczości. Zeszyty Naukowe Uniwersytetu Szczecińskiego. Ekonomiczne Problemy Usług, 2012, Vol. 98, pp MIZGAJSKA, Hanna. Współpraca małych i średnich przedsiębiorstw z instytucjami otoczenia biznesu w latach na przykładzie województwa wielkopolskiego. Przedsiębiorczość- Edukacja, 2015, No. 11, pp PYKA, J.; JANISZEWSKI, A. Transfer innowacji w usieciowionej gospodarce globalnej. Organizacja i Zarządzanie: kwartalnik naukowy, 2012, No. 4, pp SIEKIERSKI, Jan; ŚLIWA, Renata. Otoczenie instytucjonalne a procesy innowacyjne w polskiej gospodarce w latach (w świetle dokumentów strategicznych i operacyjnych). Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie, 2015, Vol. 1, No. 26, pp SIENIEWSKA, Barbara. Trudności we współpracy uczelni z biznesem w zakresie komercjalizacji wiedzy w świetle badań naukowych. Studia Ekonomiczne, 2014, Vol. 199, pp STABRYŁA, Adam. Koncepcja zarządzania wiedzą i rozwojem przedsiębiorstwa. Zeszyty Naukowe Małopolskiej Wyższej Szkoły Ekonomicznej w Tarnowie, 2015, Vol. 1, No. 26, pp TOMASZEWSKI, Marek. Źródła informacji o innowacjach a kooperacja innowacyjna. Studia Ekonomiczne, 2015, No. 214, pp WACH, Krzysztof. Edukacja na rzecz przedsiębiorczości wobec współczesnych wyzwań cywilizacyjno-gospodarczych. Przedsiębiorczość-Edukacja, 2013, No. 9, pp [155] Faculty of Economics, VŠB - TUO

164 Section S3: Management USING ADVANCED MCDM METHODS FOR EMPLOYEES TRAINING AND DEVELOPMENT 1 Abstract Katerina Kashi VŠB Technical University of Ostrava, Faculty of Economics katerina.kashi@vsb.cz Today, well-educated and trained employees present a significant value for any company. Today, the companies are trying to concentrate not only on hiring and keeping qualified employees but also on their training and development, which can also be utilized by the company as an employees motivation or benefit. In order to determine and provide needed activity which enables the employees to be more productive the author will use quantitative methods of economic analysis, to determine core competencies of key employees and then create a proposal for training and development program for the company. Key role will be played by the decomposition methods AHP (analytic hierarchy process) to rank key competencies, WINGS method for finding causal relations among criteria and TOPSIS which will be used for evaluating employees. Keywords: Employees training and development, competency models, key competencies, multiple criteria decision making methods, WINGS method JEL C49, M12, M51 Advisor: prof. PhDr. Bláha Jiří, CSc. 1 This paper is supported by the Education for Competitiveness Operational Programme, project registration number CZ.1.07/2.3.00/ All support is greatly acknowledged and appreciated. 18 th International Scientific Conference [156] Faculty of Economics, VŠB - TUO

165 1 Introduction The activity of training and development does not represent only to manage some course or training; it is much more. Before the training it is necessary to take certain steps, to consult proposal of training with employees and at the end of training cycle it is necessary to evaluate it. The process also includes the discussions with supervisors about the training necessity and justification for these training programs and also their financial demands. The most important part of training and development is the person who is being trained. Since, if our employees will be trained and developed towards something they do not really want or need, the training and development will not provide required results. However, most of the companies exercise the training and development system where the training activities are based on the needs of employees, either based on needed development or according to their development objectives determined at their annual appraisal (Boone and Kurtz, 2002). Assessing the company s training needs represents the diagnostic phase of a training plan. This assessment considers issues of employee and company s performance to determine if training can help. Needs assessment measures the competencies of a company, a group or an individual as they relate to what is needed in the strategic plan. It is necessary to find out what is happening and what should be happening before deciding if training will help, and if it will help, what kind is needed, (Mathis and Jackson, 2008). Competencies have to lead to effective performance, which means that the performance of a person with competency must be significantly better than that of a person without it. Competencies are components of a job which are reflected in behavior that is observable in a workplace (Sanghi, 2007). Well-designed competency model can be used by the organization in various ways by the human resources department. It can serve as a base for: recruitment, performance management, succession planning, recognition and rewards, compensation, training and development utilize the competencies to design needed training and other learning activities, create feedback instrument to evaluate employee needs for specific competency development, develop planning guides which provide employees with specific suggestions on how to acquire or strengthen each competency (Marelli, Tondora, Hoge 2005). Depending on the objectives, some models are meant to identify core competencies that are relevant and necessary to all organization s members; however, the model can be designed for key employees only. The competency models are usually designed based on the employees position and can be divided into three general groups: top management, middle management, line management and administrative (Sanghi, 2007). Completed competency model should include a list of competencies that are divided into groups by the type, (such as personal, technical, managerial etc.) with a definition and several examples of behavior for each competency. (Marelli, Tondora, Hoge 2005). Main aim of this paper is to present a case study, where advanced multiple criteria decision making methods, namely TOPSIS and WINGS methods are used for employees evaluation and employees training and development. The case study will be executed in a middle size company producing automotive parts based in the Moravian-Silesian region. [157] Faculty of Economics, VŠB - TUO

166 Section S3: Management 2 Methods Used Quantitative research will be executed through semi structured interviews. For creation of competency models AHP (analytic hierarchy process method) has been used, see Kashi, Friedrich (2013), WINGS method and TOPSIS method will be used 2.1 WINGS Method The WINGS method (Weighted Influence Non-linear Gauge System) has been published recently (Michnik, 2013) and it is not widely known yet. That's why we shortly describe all steps of WINGS procedure during the process of solution of the model (the full description of the method and its theoretical background can be found in (Michnik, 2013). The basic input in WINGS comprises two features of the studied system's components: internal strength of each component and influence that one component exerts on another one. The following scale for the influence evaluations has been chosen: 0 no influence, 1 low influence, 2 medium influence, 3 high influence, 4 very high influence. Similarly the evaluations for internal strength (importance) of system components span from no strength (0) to very high (4) with values computed from the initial AHP weights, that were acquired before. The strength (importance) dimension in WINGS can have different meanings, thus it is possible to use AHP estimated priorities converted into WINGS scale. The preferences of importance are a result of Saaty pairwise comparison instead of direct input made by decision makers suggested in the original WINGS procedure as of Michnik (2013). Following description of WINGS is composed of following steps. All evaluations are inserted into a square matrix D called the direct strength-influence matrix. This matrix is a n n type with components dij. Values that represent the strength (importance) of components are inserted on the main diagonal ie. dii= importance of the component i. Values representing influences are inserted into the matrix so that, dij= influence of the component i on the component j. i j Matrix D is then calibrated according to the formula 1 C= D s, (1) where calibrating factor s is defined as a sum of all elements of matrix D, ie. s n n dij i1 j1. The calibration ensures the existence on total strength-influence matrix T defined in (3) if there exist at least two positive elements in the matrix D and both are not in the same row. Opposite situation can be excluded from the analysis, because it does not represent any system. As well as in the DEMATEL it will ensure that the results are stable according to homothetic ' dij dij dij, 0, transformation for i, j 1,..., n. In the next step the total strengthinfluence matrix T is calculated: 2 3 C T C C C... (3) I C (2) 18 th International Scientific Conference [158] Faculty of Economics, VŠB - TUO

167 The way of calibration ensures that the series in above equation converge, and consequently the total strength-influence matrix T exists in almost all cases besides some exotic ones that can be excluded from the consideration. Then, for each element in the system the row sum ri and column sum cj of the matrix T are calculated: n n (4) r t, c t, i ij j ij j1 i1 where tij are elements of the matrix T. The ri and ci represent the total impact and the total receptivity of component. Finally, for each element in the system r c i i and r c r c i i are calculated. r c i i shows the total engagement of the component in the system; indicates the net position (role) of the component in the system: its positive sign means the component belongs to the influencing (cause) group, negative sign means that the component belongs to the influenced (result) group. Therefore, we can create a graph XY ( r i c i and r i c i ), that it is called engagement-position map, that together with a numerical output helps with the analysis and discussion. i i 2.2 TOPSIS Method TOPSIS method is one of the methods which uses the calculation of distance from the ideal variant for criteria s evaluation. For the calculation it is necessary that all criteria are y y maximization type, therefore all criteria are modified based on relation ij ij. The calculation procedure can be summarized into following steps. Conversion of minimization criteria to maximization ones, yij rij 1/ 2 p 2 yij (5) j1, i = 1, 2, p, j = 1, 2,, k, v j Where is the weight of j th criteria. The columns in this matrix are after transformation created by vectors of unitary length based on Euclid s metrics. Consequently it is necessary to find weighted criteria matrix W so that every j-th column of normalized criteria matrix R is multiplied by relevant weight v j W w11w12... w1 k v1r 11v2r12... vkr1 k w21w22... w 2k v1r21v2r22... vkr 2k wp 1wp2... wpk w1r p1w2rp 2... wk rpk. (6) H H1 2 Next step is to determine ideal variants, H,..., H k D D D D,,..., k 1 2 and basal variant regarding to values in weighted criteria matrix, where: H max w, j 1, 2,..., k, j i ij D min w, j 1, 2,..., k. It follows with calculating the distance of variant from the ideal variant. j i ij (7) [159] Faculty of Economics, VŠB - TUO

168 Section S3: Management 1/ 2 k 2 i ij j, 1,2,...,, (8) j1 d w H i p and distance of individual variants from basal variant. 1/ 2 k 2 i ij j, 1,2,...,. (9) j1 d w D i p In both of these cases, Euclid s range of distance is used. Second to last step is to find the relative indicator of the variant s distance from the basal variant. di ci, i 1,2,... p, di d (10) i. Where for values c i is considered: 0 c 1, i i j 1 2 k i j 1 2 k c 0 a D, D,... D, c 1 a H, H,... H. By ranking the variants based on descended values obtained and there is the possibility to determine the best variant Fiala, Jablonsky, Manas, (1994). (11) c i complete ranking of all variants is 3 Executed Research and Its Results The following chapter will describe the application of TOPSIS and WINGS method on a real case in an automotive, manufacturing company based in the Czech Republic. TOPISIS method will be used for employees evaluation based on the key competencies and WINGS method will be used for the causal relations, in order to find out if there are any cause and effect among the competencies. 3.1 Results for TOPSIS Method Seven core competencies were selected for the yearly appraisal of the employees. The employees were evaluated on all the competencies; however the most important competencies (seven first) i.e. professional knowledge, analytic thinking, proactivity, mental agility, team cooperation, effective communication and stress resilience will be linked to the employees total reward. The TOPSIS method was used to find out (according to employees score in each key competency see table 1) what the ranking of the employees are see table th International Scientific Conference [160] Faculty of Economics, VŠB - TUO

169 Alternative Tab. 1 Evaluation of employees according to TOPSIS for position Specialist Professional knowledge Analytic thinking Proactivity Mental agility Team cooperat. Effect. communic. Employee Employee Employee Employee Employee Source: Author s Elaboration Stress resilience The data in table 1 show what evaluation employee 1-5 received for the core (first seven) competencies. The applicant s ranking is, within the TOPSIS method, determined based on value ci, since it deals with distance minimization from the ideal variant, whereas the values are in descending order. The results of employees rankings are shown in table 2. Tab. 2 Ranking of employees according to TOPSIS for position Specialist Ranking Employees Evaluation 1 Employee Employee Employee Employee Employee Source: Author s Computation From the table above it is evident that employee 2 is the closest to the ideal variant, followed by employee 1 and employee 3. Employee 5 has received the worst evaluation with 0.19 which is very far from 1 the ideal variant. 3.2 Results for WINGS Method The existing WINGS model of interrelationships and influences was used as a starting point and importance measure was added to the matrix as characterized by (1). Then the following sequence of (2) to (4) was used to determine the total strength-influence matrix T. r c Then values of and of the levels of the model. i i r c i i were calculated to draw the engagement-position maps for each Tab. 3 Total strength-influence matrix T for top level competencies Matrix T Managerial Interpersonal Technical Personal Managerial 0,017 0,000 0,000 0,000 Interpersonal 0,178 0,144 0,000 0,223 Technical 0,000 0,000 0,206 0,000 Personal 0,183 0,223 0,000 0,182 Source: Author s Computation [161] Faculty of Economics, VŠB - TUO

170 Section S3: Management Fig. 1 Engagement-position map for top level competencies Source: Author s Elaboration As can be seen from Figure 1 and in the Table 3 the personal and interpersonal competencies highly affect the managerial competencies, so it means that the attention should be paid to the development of these competencies, i.e. the personal and interpersonal competencies should be developed the most, since they affect the most the other ones. Technical competencies are independent, and they are neither affected nor affecting any other competencies. Tab. 4 Total strength-influence matrix T for managerial competencies Matrix T Work with info Problem solving Leadership Delegating Change manag. Work with info 0,077 0,069 0,008 0,067 0,082 Problem 0,007 0,085 0,043 0,064 0,062 solving Leadership 0,008 0,084 0,017 0,047 0,078 Delegating 0,038 0,041 0,002 0,013 0,005 Change manag. 0,081 0,073 0,076 0,085 0,037 Source: Author s Computation Fig. 2 Engagement-position map for managerial competencies 0,150 0,100 0,050 0,000-0,0500,000 0,100 0,200 0,300 0,400 0,500 0,600 0,700-0,100-0,150-0,200 Work with info Problem solving Leadership Delegating Change manag. Source: Author s Elaboration 18 th International Scientific Conference [162] Faculty of Economics, VŠB - TUO

171 The structure of managerial competencies is shown in Figure 2 and table 4. It is evident that work with information, change management and leadership are the crucial competencies within the managerial competencies, since they highly affect the problem solving and delegating. Next, the problem solving affects the change management and delegating is only the receiver and does not affect any other competency. Tab. 5 Total strength-influence matrix T for interpersonal competencies Matrix T Effective communic. Negotiating Active listening Team cooperation Motivating others Effective 0,057 0,058 0,026 0,090 0,081 communic. Negotiating 0,040 0,016 0,021 0,080 0,009 Active 0,080 0,060 0,036 0,089 0,030 listening Team 0,026 0,021 0,024 0,085 0,078 cooperation Motivating others 0,062 0,008 0,058 0,086 0,033 Source: Author s Elaboration As can be seen in Table 5 and Figure 3 the effective communication affects all other competencies apart from active listening. Team cooperation is affected by all four competencies and therefore if the four competencies are improved the team cooperation should improve as well. 0,200 0,100-0,200 Fig. 3 Engagement-position map for interpersonal competencies 0,000 0,000 0,100 0,200 0,300 0,400 0,500 0,600 0,700-0,100-0,300 Effective communic. Negotiating Active listening Team cooperation Motivating others Source: Author s Elaboration From Table 6 and Figure 4 it is evident that the professional knowledge is the most important since it affects the other three competencies. If professional knowledge, strategic thinking and analytic thinking are improved then business knowledge will be positively affected. [163] Faculty of Economics, VŠB - TUO

172 Section S3: Management Tab.6 Total strength-influence matrix T for technical competencies Matrix T Professional know. Business know. Strategic thinking Analytic thinking Professional know. 0,130 0,044 0,048 0,109 Business know. 0,010 0,039 0,119 0,046 Strategic thinking 0,071 0,099 0,039 0,134 Analytic thinking 0,077 0,108 0,138 0,140 Source: Author s Computation Fig.4 Engagement-position map for technical competencies 0,060 0,040 0,020 0,000-0,0200,000 0,200 0,400 0,600 0,800 1,000-0,040-0,060-0,080-0,100 Source: Author s Elaboration As can be seen from figure 5 and table 7 the creativity is the key competency, since it influences mental agility and stress resilience. Creativity further affects mental agility. Stress resilience can be improved by developing proactivity and mental agility. Tab. 7 Total strength-influence matrix T for personal competencies Matrix T Proactivity Creativity Mental agility Stress resilience Proactivity 0,214 0,000 0,120 0,170 Creativity 0,006 0,027 0,091 0,016 Mental agility 0,080 0,000 0,138 0,197 Stress resilience 0,156 0,000 0,109 0,092 Source: Author s Computation Fig. 5 Engagement-position map for personal competencies 0,150 Professional know. Strategic thinking Business know. Analytic thinking 0,100 0,050 0,000 0,000 0,200 0,400 0,600 0,800 1,000 1,200-0,050-0,100-0,150 Proactivity Creativity Mental agility Stress resilience Source: Author s Elaboration 18 th International Scientific Conference [164] Faculty of Economics, VŠB - TUO

173 Conclusion This work briefly describes the competency models, its development and utilization. It also deals with the description of WINGS method and TOPSIS method and their utilization in competency modelling. To see the benefits of suggested MCDM approach we have to look for common aspects of selected methods. The results from WINGS imply that among the employees interpersonal, personal and managerial competencies are cause and effect relationships that show how are those competencies interrelated. This insight should help the company s management to concentrate on improving particular competencies that are most influential to the others. The technical competencies were found to be not affecting nor affected by other competencies. When comparing results from AHP and WINGS we have to look for an intersection. The most important competency according to prioritization using AHP is professional knowledge followed by analytic thinking. Using WINGS it was found that these competencies are independent to other competencies and are interrelated only within technical competencies themselves. This means that company HRM will not be able to influence them by enhancing other competencies and also that better technical competencies shall not be influential to for example managerial ones. Since the technical competencies are important the employees selected for the position have to have these competencies at higher level than the others that can be somehow influenced and steadily improved. Another intersection is among AHP and TOPSIS methods that can be used for more transparent employee appraisal. Additionally, the appraisal priorities can be changed according to current company situation, strategy and goals. This can be helpful for implementation of managerial concepts that require continual monitoring of personal or organizational targets. TOPSIS method uses comparison and ranking to given quantitative values and its properties can be set to represent chosen evaluation purpose (compromise solution). The work presented an example that revealed fundamental benefits of MCDM approach towards competency modelling. According to study s findings, one may use the AHP and the WINGS to study the design of competency models as a HR strategic management system. AHP and WINGS methods easily handle qualitative and quantitative metrics simultaneously while incorporating subjective elements of the choice process that may perhaps be so deeply latent to the respondents underlying thought processes that the respondents are unable to articulate. The AHP and WINGS are also able to neatly capture the consensus of a potentially divergent group of managers and can be quickly and easily updated as desired. Resources BOONE, Louis E.; KURTZ, David L. Contemporary Business th ed. Mason: South- Western, s. ISBN KASHI Kateřina., FRIEDRICH Václav Manager s Core Competencies: Applying the Analytic Hierarchy Process Method in Human Resources. In: Proceedings of the 9th European Conference on Management Leadership and Governance, Reading: Academic Conferences and Publishing International Limited, pp MARRELLI, Anne F., Janis TONDORA a Michael A. HOGE. Strategies for Developing Competency Models. Administration and Policy in Mental Health and Mental Health Services Research. 2005, roč. 32, 5-6, s ISSN x. Available at: [165] Faculty of Economics, VŠB - TUO

174 Section S3: Management MATHIS, Robert L.; JACKSON, John H. Human Resource Management. 12th ed. Mason: South-Western, s. ISBN 13: SANGHI, S. (2007). The Handbook of Competency Mapping. London: Sage. ISBN SAATY, Thomas L. (1994). Fundamentals of Decision Making and Priority Theory with the Analytic Hierarchy Process. Pittsburgh: RWS Publications. ISBN SAATY, Thomas L., Kirti PENIWATI a Jen S. SHANG. The analytic hierarchy process and human resource allocation: Half the story. Mathematical and Computer Modelling. 2007, roč. 46, 7-8, s ISSN Available at: TZENG, Gwo-Hshiung., CHIANG, Cheng-Hsin & LI, Chung-Wei (2007). Evaluating intertwined effects in e-learning programs: a novel hybrid MCDM model based on factor analysis and DEMATEL. Expert Systems with Applications, 32 (4), ZMEŠKAL, Zdeněk (2012). Aplikace dekompozičních vícekriteriálních metod AHP a ANP ve finančním rozhodování. 6th International Scientific Conference Managing and Modelling of Financial Risks. Ostrava: VŠB TU Ostrava, září Available at: ZMEŠKAL, Z.: Soft Approach to Company Financial Level Multiple Attribute Evaluation. In: Proceedings of the 21st International Conference Mathematical Methods in Economics, P th International Scientific Conference [166] Faculty of Economics, VŠB - TUO

175 ASSESSMENT OF CORPORATE SOCIAL PERFORMANCE BASED ON FUZZY AHP METHOD Štěpánka Staňková VŠB Technical University of Ostrava, Faculty of Economics Abstract Together with the managerial decision to run a business in accordance with Corporate Social Responsibility (CSR) principles, important questions dealing with the necessity of systematic CSR evaluation and measurement should be answered. The main aim of this paper is connected with the application of the Fuzzy Analytic Hierarchy Process method (FAHP) in a complex CSR assessment of three major telecommunication organizations operating in the Czech Republic (T-Mobile Czech Republic, a.s., Vodafone Czech Republic, a.s. and O2 Czech Republic, a.s.). This paper proposes a systematic approach to evaluate CSR using linguistic scales that enable a decision maker to express his/her uncertainty and ambiguity in decisionmaking processes. It is shown how the FAHP procedure could be used as a helpful managerial tool providing reliable sources for a suitable CSR assessment. Keywords: Business Ethics, Corporate Social Responsibility, Fuzzy Analytic Hierarchy Process, group decision making JEL: M14, L21 Advisor: prof. PhDr. Jiří Bláha, CSc. [167] Faculty of Economics, VŠB - TUO

176 Section S3: Management 1 Introduction In 1953 the American economist Howard R. Bowen (Garriga and Melé, 2004) introduced his book named Social Responsibilities of Businessman that served as a source of inspiration for the title of the special study named Corporate Social Responsibility (in short CSR). Specialized research centres focusing on the exploration of this dynamically developing field have gradually emerged. Moreover, organizations supporting and promoting the sustainable and responsible entrepreneurship have been established worldwide. For example, European Business Ethics Network, International Business Leaders Forum and CSR Europe belong to the most popular ones at global level. Due to a spontaneous development of the CSR study integrating a plenty of scientific disciplines and expert opinions, a diverse terminology relating to various measurement methods causes difficulties connected with different interpretations of CSR results and performance. The main goal of this paper is focused on the evaluation of CSR activities in a telecommunication sector by applying the fuzzy AHP method together with group decision making. A theoretic part of this paper is focused on more detailed characteristic of the CSR concept and contemporary possibilities of CSR measurement (see Chapter 2). The hybrid method called fuzzy AHP is described in Chapter 3, followed by result and conclusion sections. 2 Theoretical Background of Corporate Social Responsibility and its Assessment The stockholder theory introduced by Milton Friedman in 1970 and Richard Edward Freeman s stakeholder theory published in 1984 represents foundations of the CSR concept that, in fact, polarize opinions of these issues (Horrigan, 2010). The mutual dependence, following from the stakeholder theory, is evident for example in a Green Paper by the Commission of European Communities (2001) describing CSR as a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis. According to Kunz (2012) a long-term orientation, a systematic approach and voluntariness together with unlimited possibilities of a practical application are considered to be characteristic features of the CSR definitions. Contemporary authors such as Coombs and Holladay (2012), Horrigan (2010), Dahlsrud (2006) are familiar with a triple-bottom-line concept presented also by the European Union that includes three basic areas of interest: Profit, Planet and People. A responsible organization conducts business transparently, respects Corporate Governance rules, ethical marketing policies and ethical codes, pays attention to quality, innovations or safety and is universally beneficial to its community (Profit). An environmentally sustainable organization uses environment-friendly technologies, supports their development and reduces its environmental impacts (Planet). A responsible organization also fully respects human rights, occupational health standards and is fair in relation to its stakeholders (People). The level of a systematic assessment of CSR activities in organizations is dependent on individual understanding of the CSR principles by owners, managers and employees, together with their internal explanations of the necessity of a permanent implementation, monitoring and a regular evaluation of this above-standard commitment. Publicly presented CSR results could be considered as an opportunity to gain a competitive advantage, however, especially small 18 th International Scientific Conference [168] Faculty of Economics, VŠB - TUO

177 organizations operating regionally take a responsible conduct of business for granted. There are several possibilities to evaluate CSR activities: a special audit, a certification or a quality mark. All these tools used for measurement of the corporate social responsibility performance differ in their methodologies, complexity and range of a suitable application in various business sectors or organization structures. Nowadays, socially responsible investing is considered to be an emerging trend, represented by diverse sustainability indices. Their main deficiency is connected with the fact that only the world s largest companies whose stocks are marketable in global stock markets are tracked. A separate category of evaluation tools is represented by nonfinancial reporting initiatives based on a regular publication of CSR reports that could be used as a communication medium informing about the CSR progress as well as managerial instrument providing a survey of CSR results (for detailed information see White, 2009). Regardless of the legal form of the organizations it is possible to apply a content analysis to evaluate or mutually compare CSR activities mentioned in CSR reports, internet pages and presentations. Practical examples of CSR evaluation possibilities and tools are given in Tab. 1. Tab. 1 Summary of CSR evaluation tools and methods Certification/ Guidance Specialization Organization AA 1000 Evaluation of CSR principles application AccountAbility ISO 14001, ISO Environmental management system International Organization for Standardization ISO Guidance on reliable CSR strategy International Organization for Standardization Quality Label Appraisal of CSR strategy complexity from stakeholders point of view Forum Ethibel CSR Evaluation Methodology Specialization Organization International Standard for Measuring Corporate Corporate community investment London Benchmarking Group Community Investment Sustainability Indices Specialization Organization Ethibel Sustainability Index Dow Jones Sustainability Indices FTSE4Good CSR performance evaluation of the world s largest companies whose stocks are marketable in global stock markets Forum Ethibel S&P Dow Jones Indices London Stock Exchange Group Non-financial Reporting Specialization Organization G4 Guidelines CSR reporting methodology and forms Global Reporting Initiative Source: own elaboration according to Coombs and Holladay (2012) 3 Research Methodology The Analytic Hierarchy Process (AHP) was first introduced by its author Thomas L. Saaty at the beginning of 1970s. This method has been presented as an efficient and useful tool for multiple-criteria decision making, overcoming obstacles of intuitive decisions. The AHP is based on pairwise comparisons of components forming a hierarchy. The first level of the hierarchy is usually represented by a clear specification of decision making goal or task. The second level is connected with a formulation of criteria influencing the goal while the third layer includes sub-criteria giving accuracy to every criteria belonging to the previous level. Finally, the fourth level symbolizes a list of considered options between which decision-making processes are realized (Saaty, 2000; Tzeng and Huang, 2011). [169] Faculty of Economics, VŠB - TUO

178 Section S3: Management Once all paired comparisons on every hierarchical level using a linear scale (ranging between 1 9; 1/9) are made a computation of normalized local weights wi, representing a contribution to the parent node in the level immediately above, follows. Local weights wi could be calculated for example by using geometric mean of rows of Saaty s matrix S according to a mathematic formula (1), where N represents the order of Saaty s matrix S with elements si,j. wi vi N vi i N j N i s N j i, j s i, j 1 N 1 N, (1) The AHP method is based on a principle of utility maximization that is why the option with the highest sum of the global weights is chosen. This method is called a distributive mode synthesis. Another solution of this task could be brought by an ideal mode synthesis that is connected with a relative expression of the global weights, while an ideal value is represented by 100 % (Saaty, 2000). A requirement of meeting the transitivity condition resulting in the demanded consistency of Saaty s matrices is necessary to obtain a high-quality evaluation and reliable results. The value of consistency ratio (in short CR) must definitely meet a condition: CR 0.1. The consistency ratio is calculated by the formula: CR CI RI max N N 1 RI, (2) where λmax is maximum eigenvalue and can be calculated as follows: 1 N max ( S w) i i / wi, (3) N where w symbolizes an eigenvector of weights wi and ( S w) stands for i-th element of i vector w. The random index (RI) values are determined empirically depending on the order of Saaty s matrix S and ranging values mentioned in Tab. 2. Tab. 2 Random index N RI 0,00 0,00 0,58 0,90 1,12 1,24 1,32 1,41 1,45 1,49 Source: Saaty (2000) For a detailed description of AHP method, see Zmeškal (2014). According to Chen and Fan (2011), the conventional AHP approach is ineffective in cases of ambiguous problems. Sometimes an exact numerical assessment of defined criteria could be very difficult for decision makers. To overcome this limitation of AHP method and to deal with vagueness, a fuzzy AHP method should be applied. Zadeh (1965) firstly introduced a fuzzy set theory and after that Laarhoven and Pedrycz (1983) proposed a hybrid method called Fuzzy AHP (FAHP). In the FAHP approach exact values (so called crisp values) are replaced with interval values (fuzzy numbers) that depict assessment of criteria more realistically. 18 th International Scientific Conference [170] Faculty of Economics, VŠB - TUO

179 A fuzzy number represents a fuzzy set F ( x, F ( x)), x R while a membership function assigning a number between 0 and 1 to x. A triangular fuzzy number, the most widely used membership function, is denoted as M = (l, m, u) where l represents the smallest possible value, m stands for the most promising value and u represents the largest possible value respectively. The triangular numbers suitable for FAHP procedure are shown graphically in Fig. 1 and mathematically in Tab. 3. Fig. 1: Graphical representation of triangular fuzzy numbers F (x) stands for Source: Wang and Chen (2008) Tab. 3: Linguistic and numerical features of triangular fuzzy numbers Triangular fuzzy Fuzzy number Linguistic expression scale (l, m, u) Just equal (1, 1, 1) 1. Equally important (1, 1, 3) 3. Moderately important (1, 3, 5) 5. Strongly important (3, 5, 7) 7. Very strongly important (5, 7, 9) 9. Extremely important (7, 9, 9) Source: Kabir and Hasin (2011) Assuming two triangular fuzzy numbers M1 = (l1, m1, u1) and M2 = (l2, m2, u2) basic mathematical procedures have to be applied as follows: M M M l l ; m m u u, (4) ; 1 2 M l l ; m m u u, (5) ; M l, m, u ), 0, R 1 1 ( , (6) 1 M 1 1 1, u1 m1 1, l 1 A degree of possibility that M1 M2 is defined as: M, (7) V ( M1 2 x y M y 1 M 2 M ) sup (min( ( x), ( ))), (8) while V ( M M ) 2 ( ) and d is the ordinate of highest intersection point D between 1 d and. For further information and practical application of FAHP in various fields, see Chen M 2 and Fan (2011), Kabir and Hasin (2011), Kahraman (2008) and Wang and Chen (2008). M1 [171] Faculty of Economics, VŠB - TUO

180 Section S3: Management 4 Utilization of FAHP Method in Corporate Social Responsibility First of all, it was necessary to create a hierarchic structure with respect to a main goal that is connected with the evaluation of CSR activities of three selected organizations operating in the Czech telecommunication sector. Each criterion was chosen according to the triplebottom-line definition of CSR (see Chapter 2) while it was specified by three sub-criteria. It is assumed that every responsible organization fully respects law regulations and that is why the sub-criteria mainly focus on above-standard commitments and activities. The graphic representation of the hierarchic structure together with the indication of criteria, sub-criteria and options (organizations) is shown in Fig. 2. Fig. 2: Hierarchic decomposition of decision-making task Source: own elaboration according to Horrigan (2010) In second step, the importance (preference) appraisal of criteria and sub-criteria using a linguistic scale was accomplished by 6 academics interested in the CSR issues. They were supposed to work together and fill in a fuzzy judgement matrix. It was assumed that experts opinions were equal (i.e. decision-making outcomes of each expert were given a same weight). To verify the consistency of experts views the consistency ratio (CR) was computed according to formulae (2) and (3). Thirdly, fuzzy weights of each criterion were calculated using geometric mean: 1 c~ c~... c~ n, i 1,2 n, (9) ~ ri i1 i2 in,.., ~ ~ r, (10) w i i ~ ri... ~ rn where c ~ is a fuzzy comparison value, r~ is a geometric mean of a fuzzy comparison ij i values of criterion i and w ~ is a fuzzy weight of i-th criterion. Fourthly, a CSR evaluation of i chosen companies was accomplished. A CSR performance of the three organizations was appraised by author s opinions based on information got from a content analysis of current 18 th International Scientific Conference [172] Faculty of Economics, VŠB - TUO

181 internet presentations, CSR reports and other available publications and surveys. T-Mobile Czech Republic, a.s. is marked with the expression Organization A, Vodafone Czech Republic, a.s. is called Organization B and finally O2 Czech Republic, a.s. is labelled Organization C. According to the results of the Czech Top 100 Most Admired Firms survey held in 2014, all of these organizations are considered to be an essential part of the Czech business sector. Fifthly, a hierarchical layer sequencing procedure was applied to calculate a final fuzzy weight value of each alternative according to this formula: n ~ U i w~ ~ j r, (11) ij j1 where it was necessary to obtain a crisp number suitable for ranking. One possibility is to compute a fuzzy mean. For detailed characteristics of this defuzzification procedure, see Kabir and Hasin (2011). U ~ i stands for a triangular fuzzy number. Finally, to choose an optimal alternative ~ x U ) ( i 5 Results Input data represented by fuzzy judgement matrices together with weighted fuzzy numbers and rankings are presented in Tab According to computed consistency ratio values (CR), the obtained results represent a reliable source of information for subsequent decision making analysis. The economic field (C1) is rated to be the most preferred (important) criterion in a case of a CSR performance evaluation. The environmental field (C2) follows and the social field (C3) is the least preferred one. The most preferred sub-criteria are connected with overall safety (C11), ecological innovations (C21) and employee welfare (C31). According to a fuzzy mean value x ( U ~ i ) reaching Vodafone Czech Republic, a.s. (Organization B) is considered to be the most successful firm from the sample. O2 Czech Republic, a.s. (Organization C) was second. A fuzzy mean value of organization C x ( U ~ i ) reached T-Mobile Czech Republic, a.s. (Organization A) was placed on the third position. A fuzzy mean value of organization A x ( U ~ i ) reached A detailed overview of computed fuzzy weight values and fuzzy mean values of the organizations are presented in Table 17. Tab. 4: Fuzzy judgement matrix and weighted fuzzy numbers for CSR fields (CR =0.03) Goal C1 C2 C3 Weighted fuzzy number 1 Ranking C1 (1, 1, 1) (1, 3, 5) (3, 5, 7) (0.267, 0.659, 1.369) 1. C2 (1/5, 1/3, 1) (1, 1, 1) (1, 1, 3) (0.108, 0.185, 0.604) 2. C3 (1/7, 1/5, 1/3) (1/3, 1, 1) (1, 1, 1) (0.067, 0.156, 0.290) 3. Source: own computation Tab. 5: Fuzzy judgement matrix and weighted fuzzy numbers for economic sub-criteria (CR = 0.01) C1 C11 C12 C13 Weighted fuzzy number1 Weighted fuzzy number2 Ranking C11 (1, 1, 1) (5, 7, 9) (1, 3, 5) (0.316, 0.737, 1.489) (0.084, 0.485, 2.038) 1. C12 (1/9, 1/7, 1/5) (1, 1, 1) (1/5, 1/3, 1) (0.052, 0.097, 0.245) (0.014, 0.064, 0.335) 3. C13 (1/5, 1/3, 1) (1, 3, 5) (1, 1, 1) (0.108, 0.267, 0.716) (0.029, 0.176, 0.980) 2. Source: own computation [173] Faculty of Economics, VŠB - TUO

182 Section S3: Management Tab. 6: Fuzzy judgement matrix and weighted fuzzy numbers for environmental sub-criteria (CR = 0.03) C2 C21 C22 C23 Weighted fuzzy number1 Weighted fuzzy number2 Ranking C21 (1, 1, 1) (1, 3, 5) (3, 5, 7) (0.267, 0.659, 1.369) (0.029, 0.122, 0.826) 1. C22 (1/5, 1/3, 1) (1, 1, 1) (1, 1, 3) (0.108, 0.185, 0.604) (0.012, 0.034, 0.364) 2. C23 (1/7, 1/5, 1/3) (1/3, 1, 1) (1, 1, 1) (0.067, 0.156, 0.290) (0.007, 0.029, 0.175) 3. Source: own computation Tab. 7: Fuzzy judgement matrix and weighted fuzzy numbers for social sub-criteria (CR = 0.03) C3 C31 C32 C33 Weighted fuzzy number1 Weighted fuzzy number2 Ranking C31 (1, 1, 1) (3, 5, 7) (7, 9, 9) (0.510, 0.950, 1.665) (0.034, 0.148, 0.483) 1. C32 (1/7, 1/5, 1/3) (1, 1, 1) (1, 1, 3) (0.097, 0.156, 0.418) (0.006, 0.024, 0.121) 2. C33 (1/9, 1/9, 1/7) (1/3, 1, 1) (1, 1, 1) (0.062, 0.128, 0.219) (0.004, 0.020, 0.063) 3. Source: own computation Tab. 8: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in safety (C11) (CR = 0.03) C11 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/3, 1, 1) (1/7, 1/5, 1/3) (0.067, 0.156, 0.290) (0.006, 0.076, 0.591) 3. B (1, 1, 3) (1, 1, 1) (1/5, 1/3, 1) (0.108, 0.185, 0.604) (0.009, 0.090, 1.230) 2. C (3, 5, 7) (1, 3, 5) (1, 1, 1) (0.267, 0.659, 1.369) (0.023, 0.320, 2.789) 1. Source: own computation Tab. 9: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in transparent reporting (C12) (CR = 0.07) C12 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/9, 1/7, 1/5) (1/5, 1/3, 1) (0.052, 0.097, 0.245) (0.001, 0.006, 0.082) 3. B (5, 7, 9) (1, 1, 1) (1, 1, 3) (0.316, 0.511, 1.255) (0.004, 0.033, 0.421) 1. C (1, 3, 5) (1/3, 1, 1) (1, 1, 1) (0.128, 0.385, 0.716) (0.002, 0.025, 0.240) 2. Source: own computation Tab. 10: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in ethical codes (C13) (CR = 0.07) C13 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/5, 1/3, 1) (1, 1, 3) (0.108, 0.185, 0.604) (0.003, 0.033, 0.591) 2. B (1, 3, 5) (1, 1, 1) (5, 7, 9) (0.316, 0.737, 1.489) (0.009, 0.130, 1.458) 1. C (1/3, 1, 1) (1/9, 1/7, 1/5) (1, 1, 1) (0.062, 0.140, 0.245) (0.002, 0.025, 0.240) 3. Source: own computation Tab. 11: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in ecological innovations (C21) (CR = 0.01) C21 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/5, 1/3, 1) (1, 3, 5) (0.108, 0.267, 0.716) (0.003, 0.033, 0.591) 2. B (1, 3, 5) (1, 1, 1) (5, 7, 9) (0.316, 0.737, 1.489) (0.009, 0.090, 1.230) 1. C (1/5, 1/3, 1) (1/9, 1/7, 1/5) (1, 1, 1) (0.052, 0.097, 0.097) (0.002, 0.012, 0.202) 3. Source: own computation Tab. 12: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in recycling (C22) (CR = 0.03) C22 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/5, 1/3, 1) (1, 1, 3) (0.108, 0.185, 0.604) (0.001, 0.006, 0.220) 2. B (1, 3, 5) (1, 1, 1) (3, 5, 7) (0.267, 0.659, 1.369) (0.003, 0.023, 0.499) 1. C (1/3, 1, 1) (1/7, 1/5, 1/3) (1, 1, 1) (0.067, 0.156, 0.290) (0.001, 0.005, 0.106) 3. Source: own computation Table 13: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in environmental management and certifications (C23) (CR = 0.03) C23 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/3, 1, 1) (1, 3, 5) (0.128, 0.385, 0.716) (0.001, 0.011, 0.125) 2. B (1, 1, 3) (1, 1, 1) (3, 5, 7) (0.267, 0.457, 1.155) (0.002, 0.013, 0.202) 1. C (1/5, 1/3, 1) (1/7, 1/5, 1/3) (1, 1, 1) (0.057, 0.108, 0.290) (0.000, 0.003, 0.051) 3. Source: own computation 18 th International Scientific Conference [174] Faculty of Economics, VŠB - TUO

183 Tab. 14: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in employee welfare (C31) (CR = 0.03) C31 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1, 1, 3) (1/7, 1/5, 1/3) (0.097, 0.156, 0.418) (0.003, 0.023, 0.202) 2. B (1/3, 1, 1) (1, 1, 1) (1/9, 1/9, 1/7) (0.062, 0.128, 0.219) (0.002, 0.019, 0.106) 3. C (3, 5, 7) (7, 9, 9) (1, 1, 1) (0.510, 0.950, 1.665) (0.017, 0.141, 0.805) 1. Source: own computation Tab. 15: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in corporate donations (C32) (CR = 0.01) C32 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/3, 1, 1) (1/9, 1/7, 1/5) (0.052, 0.097, 0.245) (0.000, 0.002, 0.030) 3. B (1, 1, 3) (1, 1, 1) (1/5, 1/3, 1) (0.108, 0.267, 0.716) (0.001, 0.007, 0.087) 2. C (5, 7, 9) (1, 3, 5) (1, 1, 1) (0.316, 0.737, 1.489) (0.002, 0.018, 0.181) 1. Source: own computation Tab. 16: Fuzzy judgement matrix and weighted fuzzy numbers for organization performance in employee volunteering (C33) (CR = 0.01) C33 A B C Weighted fuzzy number1 Weighted fuzzy number3 Ranking A (1, 1, 1) (1/9, 1/7, 1/5) (1/3, 1, 1) (0.062, 0.140, 0.245) (0.000, 0.003, 0.016) 3. B (5, 7, 9) (1, 1, 1) (3, 5, 7) (0.456, 0.874, 1.665) (0.002, 0.018, 0.106) 1. C (1, 1, 3) (1/7, 1/5, 1/3) (1, 1, 1) (0.097, 0.156, 0.418) (0.000, 0.003, 0.027) 2. Source: own computation Tab. 17: Overview of organization CSR performance Normalized fuzzy weight Final fuzzy weight value values T-Mobile Czech Republic, a.s. (Organization A) Vodafone Czech Republic, a.s. (Organization B) O2 Czech Republic, a.s. (Organization C) Source: own computation ~ x U ) ( i Overall ranking (0.019, 0.193, 2.449) (0.004, 0.036, 0.456) (0.042, 0.421, 5.338) (0.008, 0.079, 1.000) (0.049, 0.551, 4.640) (0.009, 0.103, 0.869) Conclusion The main goal of this paper is connected with the complex assessment of CSR performance of the selected telecommunication organizations using the Fuzzy AHP method. The application of the FAHP method in CSR evaluation topics is demonstrated on a sample consisted of the three organizations considered to be an essential part of the Czech telecommunication sector and important employers. Preferences of the criteria and the subcriteria included in that multiple-criteria decision-making task were appraised by 6 academics, while the CSR performance of each selected organization was considered by the author s opinions based on information got from a content analysis of current internet presentations, CSR reports and other available publications and surveys. In comparison with the AHP method, the FAHP approach deals with a possible vagueness connected with decision makers inability to express their opinions exactly (numerically using a crisp value). For that reason, various linguistic scales are usually used. According to computed fuzzy mean values, Vodafone Czech Republic, a.s. (Organization B) representing a firm promoting a successful CSR approach achieved the best results within the sample. O2 Czech Republic, a.s. (Organization C) followed by T-Mobile Czech Republic, a.s. (Organization A) took a second place. [175] Faculty of Economics, VŠB - TUO

184 Section S3: Management Although this study has its limitations, e.g. it presents the opinions of a certain group of experts that may be different from other opinions and views of individuals, groups and organizations; it provides a basis for an advanced application of fuzzy logic principles in multiple-attribute decision making. It is possible to use different shapes of fuzzy numbers, scales or methods dealing with various ranking procedures of alternatives (see Kahraman, 2008). References COMMISSION OF EUROPEAN COMMUNITIES (2001). Green Paper Promoting a European Framework for Corporate Social Responsibility released on [online]. Brussels: European Commission, [cit ]. Available at: < >. COOMBS, Timothy W. and Sherry J. HOLLADAY (2012). Managing Corporate Social Responsibility: Communication Approach. Chichester: Wiley Blackwell. ISBN CHEN, Shouming and Jiasi FAN (2011). Measuring Corporate Social Responsibility Based on a Fuzzy Analytical Hierarchy Process. International Journal of Computer Network and Information Security. Hong Kong: MECS Publishers, August (5): ISSN: DAHLSRUD, Alexander (2006). How Corporate Social Responsibility is Defined: an Analysis of 37 Definitions. Corporate Social Responsibility and Environmental Management. 15(1): DOI: /csr.132 GARRIGA, Elisabet and Domenec MELÉ (2004). Corporate Social Responsibility Theories: Mapping the Territory. Journal of Business Ethics. Netherlands: Kluwer Academic Publishers, August (1): ISSN: DOI: /B:BUSI HORRIGAN, Bryan (2010). Corporate Social Responsibility in the 21st Century. Massachusetts: Edward Elgar Publishing. ISBN KABIR, Golam and Ahsan A. HASIN (2011). Evaluation of customer oriented success factors in mobile commerce using fuzzy AHP. Journal of Industrial Engineering and Management. Barcelona: OmniaScience. 4(2): ISSN KAHRAMAN, Cengiz (2008). Fuzzy Multi-Criteria Decision-Making: Theory and Application with Recent Development. New York: Springer. ISBN KUNZ, Vilém (2012). Společenská odpovědnost firem. Praha: Grada. ISBN LAARHOVEN, P. J. M. and Witold PEDRYCZ (1983). A fuzzy extension of Saaty s priority theory. Fuzzy sets and Systems. 11(1): SAATY, Thomas L. (2000). Fundamentals of Decision Making and Priority Theory with the Analytic Hierarchy Process. Pittsburgh: RWS Publications. ISBN th International Scientific Conference [176] Faculty of Economics, VŠB - TUO

185 TZENG, Gwo-Hshiung. and Jih-Jeng HUANG (2011). Multiple Attribute Decision Making: Methods and Applications. CRC Press, Boca Raton. ISBN WANG, Tien-Chin and Yueh-Hsiang CHEN (2008). Applying fuzzy linguistic preference relations to the improvement of consistency of fuzzy AHP. Information Sciences.178: DOI: /j.ins WHITE, Gwendolen B. (2009). Sustainability Reporting: Managing for Wealth and Corporate Health. New York: Business Expert Press. ISBN ZADEH, Lotfi A. (1965). Fuzzy sets. Information and Control. Berkeley: University of California. 8(3): ZMEŠKAL, Zdeněk (2014). Application of the group multi-attribute decision-making methods in financial management. Managing and Modelling of Financial Risks, 7 th International Scientific Conference Proceedings, ISBN [177] Faculty of Economics, VŠB - TUO

186 Section S3: Management GAMES IN RECRUITMENT AND SELECTION PROCESSES Adam Sulich 1 Faculty of Computer Science and Management, Wroclaw University of Technology adam.sulich@pwr.edu.pl Abstract Games or their elements can be employed in recruitment and selection processes. These two specific processes are called often e-processes because they are held in the Internet. The e-recruitment is based mostly on social media, where recruiters want to attract as many candidates to enable rational selection. Therefore, some limitations exist in every social media related tool, like limitation in number of nodes and ties describing the social graph. The article presents information on the gamification as a very popular tool in recruitment and selection. This method is popular because it employs games elements into traditional organizational processes (gamification in its broader sense). Games are an example of the algorithms that can simplify identification of best-performing candidate a perfect employee. As a result, simple algorithms can be used as mathematical methods in recruitment and selection processes. Findings from this study suggest that graduate recruitment activities can be improved by applying a form of game mechanics called gamification. Keywords: Gamification, Dunbar s number, social graph, six degrees of separation JEL: M51, J64, C70 1 Wroclaw University of Technology, Faculty of Computer Science and Management, Department of Management Infrastructure, ul. Wybrzeże S. Wyspianskiego 27, Wroclaw , Poland; 18 th International Scientific Conference [178] Faculty of Economics, VŠB - TUO

187 1 Introduction The goal of this article is to expand idea of use of mathematical tools in recruitment, selection processes based on game theory elements, which were introduced in my previous article (Sulich, 2015). This paper presents state of the art and is more focused on games and gamification methods as simple mathematical tools. In this article some examples of use gamification in recruitment and selection processes were also presented. Mathematical tools and models are interesting especially for employers, because they allow to simplify and reduce costs of recruitment and selection. Recruitment is process of attracting as many candidates to enable rational selection. Not only is the process of finding and recruiting this talent expensive, it is also inefficient and wasteful when the wrong people are hired. This bad employment costs each company real money and time, because all hiring processes have to be repeated. Therefore, hiring talented individuals is critical to an organization s success (Sulich, 2015; Pietraszek 2014). One proposed solution is to use an algorithm, which leads to select an ideal (perfect) candidate by gamification. The text is organized as follows: The first part describes games and their potential scope in recruitment and selection. The following section distinguishes role of gamification in attracting certain amount of candidates to enable rational selection. The next part briefly presents the preliminaries of using games and gamification in social graph and describes its limitations and opportunities. Readers who are interested may find a broader survey of the subject in another work (Sulich, 2015). The final section contains brief conclusions and question which should be addressed in further studies. 2 What is a game? There are many game definitions, but a lot of them are not related with economy or management, but rather with game theory or psychology (Winnicka-Weiss, 2015). E. Berne described game as an ongoing series of complementary ulterior transactions progressing to a well-defined, predictable outcome (Berne, 2004). This general definition is purposive for further deliberation, which touches both game theory and human resources management. P. Tkaczyk in his book described many types of games and recalled R. Caillois (table 1) division of games because of their main goal (Tkaczyk, 2012). Although P. Tkaczyk pointed that many games are intertwined with other types of games. In recruitment and selection most popular are games which connect two types of games for example agon and mimesis (table 1) (Tkaczyk, 2012). Therefore, game is a multidimensional interaction between players with specified goal and finite number of moves. When games are considered as algorithms, it is purposive to recall their definition according to game theory. If the game is the zero sum game (table 1), where one of players win completely and rest loose, an algorithm is simpler than nonzero sum game one. In second case, attendants of game want to maximize their result (Cormen at al., 2001). To achieve better outcome each of players in nonzero game make conscious decision according to a strategy to change actual position (node of algorithm). Therefore, players compete against each other staying constantly in game specific conflict situation (called skirmish, when in zero sum game we can talk about duels). [179] Faculty of Economics, VŠB - TUO

188 Section S3: Management Tab. 1 Games classification Type Description Examples Ludus (Latin: ludus - game, sport, play) Agon (Ancient Greek: agón fight, wrestling) Alea (Latin: alea to dice) Mimesis (Ancient Greek: mimicós mimicry, imitation) Ilnix (Ancient Greek: ίlnix whirlpool, ίlngos - headache) Games that require an even greater amount of effort, patience, skill, or ingenuity than just skills of player. They are nonzero type games. Competition in zero sum game or a contest in which a winner is selected from among two or more entrants. Games of chance (nonzero type) outcome is determined by chance rather than by the skill of its players. Role playing also the act or art of copying or imitating closely. Games altering perception to change perception of the world. Player act against his own weaknesses. Some board games like: go, latrunculi, Chess, racings, shooting to target Roulette, dice, lotteries Theater, role playing games, Extreme sports (parachuting, riding roller coasters), Paidia (Ancient Greek: paidiá, - amusement) More connected with internal change, transformation or metamorphosis. Games with uncontrolled fantasy. Concert, Festivals, Kaleidoscope Source: Own adaptation based upon data from (Caillois 1997; Takczyk, 2012; Winnicka- Weiss, 2015; Zielinski, 2015) Games as simple algorithms not only can help reduce risk of bad employment, but also identify high-performing candidates. It is also a game on for recruiters looking to win war for talent in tight employment market (Zielinski, 2015). Companies are more interested in easy evaluation and assessment of undertaken actions. Games allow measuring players efficiency on each stage. Therefore, games are popular tools in recruitment (e.g. social recruiting and employee referrals based on social graphs) and selection processes (e.g. assessment center, development center). It is also possible to see some elements of game during the job interview. 3 Importance of games as algorithms The first step towards an understanding why the algorithms and then games are so important in human resources is to define exactly what we mean by an algorithm. According to Thomas H. Cormen "an algorithm is any well-defined computational procedure that takes some value, or set of values, as input and produces some value, or set of values as output" (Cormen at al., 2001). In this article, finite algorithms are considered only, as the infinite ones do not produce any outcome, neither partial nor by any heuristic method. It can be assumed that games are usually simple algorithms, because they have stages, which can be repeatable or looped (board games). Although there is a lot of linear games (e.g. role-playing games) which can be even more complicated by multiple choice of moves or complicated story (missions to accomplish). Games can be complicated also as a result number of players. Players can create teams. Some games usually lead to solve problem hidden in riddle, 18 th International Scientific Conference [180] Faculty of Economics, VŠB - TUO

189 puzzle or brain teaser. Each level of game is described by the node of a game tree. Every node is state of game and to achieve it player has to make certain number of activities. There is one or more correct actions (moves) to accomplish final state of game (last node). Usually the goal of the game is to achieve desired result in shortest path or shortest time. It is possible that not only time is important but also the effect (e.g. all team members survived, properly aligned jigsaw puzzle) or accuracy. Because games are algorithms with nodes, assessment is available at each step of game. This approach can change game into a talent-spotting tool designed to attract and evaluate promising undergraduates (tab. 2). Tab. 2 Examples of the existing gamification in recruitment Company Title of game Description L Oreal Siemens Topstep Trader L Oreal Brandstorm Power Matrix Topsteps Traders Game allows players from the world to get knowledge about specified position in a company and about their future targets at work. Brandstorm is L'Oréal's unique business competition for students to unleash their creativity and apply ground-breaking ideas to one of L'Oréal's international brands and distribution channels. They have possibility to work on real life challenges and be coached by top L'Oréal executives. ( A browser game explains the correlations and processes of the individual variables involved in energy economics with the help of simulation and strategy games that have universal appeal. Best student players are offered a position. ( Online game checking skills of players in simulated conditions of financial market. Best student players are offered a position. ( Deolitte Deloitte has introduced gaming technology to its recruitment process to help identify people with skills in innovation, creativity and problem solving. Applicants to Firefly Freedom the firm s BrightStart Business Apprenticeship programme will be assessed as they play the game. ( Source: Own adaptation based upon data from companies websites Games as algorithmic hiring tools have been on the rise in recent years (Winnicka- Weiss, 2015). This interest is also compatible with younger generations needs for social media, networking and quick information search (Zielinski, 2015). As a result, some companies used algorithms (mathematical methods) to staff up quickly, employing an elaborate survey to zone in on candidates who will fit into their corporate culture. To use algorithms companies move their actions to virtual world of game (tab. 2), not only by gamification (Zielinski, 2015). Some recruiting games allow candidates to experience real management processes and business operations (hotel management) and this way future employees can decide whether they are still interested in this company (the game s virtual environment puts students in the shoes of employed staff). [181] Faculty of Economics, VŠB - TUO

190 Section S3: Management Human resources teams involved in recruitment processes every day receive an enormous amount of applications from candidates willing to join the organization (Sulich, 2015). This makes games available in wider use than entertainment. Games allows moving recruitment processes forward to selection practices and prospective hires (Zielinski, 2015). 4 Gamification In the previous part of this article, whole games were discussed as tools in recruitment and selection. The application of typical elements of game playing (e.g. point scoring, competition with others, rules of play) to other areas of activity, typically as an online marketing technique to encourage engagement with a product or service, is called gamification (Pietraszek, 2014; Tkaczyk, 2012). Many companies are finding that elements of virtual games, which integrate points, badges, competition and role-playing, can be used to effectively attract and assess candidates, particularly younger generations (Zielinski, 2015). We can distinguish two types of application of typical elements of game inside of organization, so we talk about gamification. First is gamification, which is well-planned and defined use of techniques and methods employed in games project processes. It is used to enhance loyalty, engagement of employees or change their behavior and customs. Second type of gamification is enterprise gamification is gamification used in outside environment of company to attract potential customers, companies to cooperation and build employer brand. Methods of this gamification are used to enhance sale and recruitment (Tkaczyk, 2012). Winnicka-Weiss highlights that infotainment (presenting an information in easy and pleasure way) is more changed into advergaming or enterprise gamification (Winnicka-Weiss, 2015). 5 Social graph P. Tkaczyk explains that use of the social media is also kind of game. It is a game about the status, number of friends, likes and comments. Therefore, the social graph represent a new game concept wandering in history and can be recognized as a game (Tkaczyk, 2012). Social media are now so integrated into our daily lives that we can barely remember a time without them. The exponential growth in social media has resulted in the disruption of many traditional organizational processes. One such activity is recruitment and selection, where social media have been used to disrupt practices at industry, organizational and individual levels. Therefore, social media allows maintaining social recruitment in social graph. Social media give the ability to attract and retain top talent is source of sustainable competitive advantage for companies (Dery at al., 2014). Processes associated with attracting and selecting the best available talent are built around networking, relationship building, and engaging with people who have the necessary attributes to add value to the organisation. Social media are designed to enhance capabilities around all of these activities, and therefore are well positioned to alter traditional talent management practices. It is clear that organisations are able to use these platforms effectively have much to gain. A social graph is a diagram that illustrates interconnections among people, groups and organizations in a social network (Tkaczyk, 2012). The term refers to both the social network itself and a diagram representing the network. Individuals and organizations, called actors, are nodes on the graph. Interdependencies, called ties, can be multiple and diverse, including such characteristics or concepts as: age, gender, race, genealogy, chain of command, ideas, financial 18 th International Scientific Conference [182] Faculty of Economics, VŠB - TUO

191 transactions, trade relationships, political affiliations, club memberships, occupation, education and economic status. When portrayed as a diagram, a social graph appears as a set of points or dots connected by lines. There does not exist a single social graph (or even multiple that interoperate) that is comprehensive and decentralized. Rather, there exist hundreds of disperse social graphs, most of dubious quality. The graph needs to exist outside of one social media like Facebook. MySpace also has a lot of good data, but not all of it. Likewise, LiveJournal, Digg, Twitter, Zooomr, Pownce, Friendster, Plaxo, the list goes on. The most important are nodes of graph because they represent people, which can create new ties in real, non-online world. Recruiters are also limited in social graph by Dunbar s number. This is a suggested cognitive limit to the number of people with whom one can maintain stable social relationships (Dunbar, 2010). An individual knows who each person is and how each person relates to every other person in these relationships. Dunbar s number has been proposed to lie between 100 and 250, with a commonly used value of 150 (Tkaczyk, 2012). Dunbar's number states the number of people one knows and keeps social contact with. This number does not include the number of people known personally with a ceased social relationship, nor people just generally known (famous) with a lack of persistent social relationship. Dunbar s number might be much higher and likely depends on long-term memory size (Dunbar, 2010). Therefore, recruiters need to gamify the recruitment process (social recruitment) to spread an information about opened position in social graph. The success of any organization lays in combination of two concepts: gamification and social recruitment (fig. 1), because methods related with direct search are clearly limited by Dunbar s number. Social graph with its limitation described by Dunbar s number is connected with another interesting theory called six degrees of separation. This theory is the theory that everyone and everything is six or fewer steps away (in average) by way of introduction, from any other person in the world, so that a chain of "a friend of a friend" statements can be made to connect any two people in a maximum of six steps (Barabási, 2003). L. Barabási proved that in such networks like social most important are super-hubs (nodes in social graph), people who have enormous number of friends and can create huge number of interdependencies (Barabási, 2003). Pointing this idea, Barabási solved a problem, which Stanley Milgram faced before in his empirical study of the structure of social networks, that the number six is just an average of ties between nodes. If we assume that in all social graph exist phenomena of normal distribution idea of super-hubs importance in social graph is true. Six degrees of separation was mathematically proved by Watts and Strogatz, and it is used in all social networks where an optimal algorithm to calculate degrees of separation in different social networks (Bakhshandeh et al., 2011). To solve this limitation of specified number of possible ties the brand ambassadors are used. They are involved in their environment people or just famous celebrities, who can influence the social graph. Recruitment is more often held in the social graphs, and then it is called e-recruitment. E-recruitment automates the search of social networking sites, leaving the search for appropriate candidates and encouraging them to apply to a crowdsourcing mechanism (Woźniak, 2015). This mechanism transfers these tasks to a group of people outside the company, without precisely specifying the boundaries of this group (Woźniak, 2015). The core recruitment tasks are held mostly in the Internet and are performed more and more often online (Sulich, 2015). In the case of recruitment, this signifies a web-based implementation of recruitment procedures, which includes locating potential candidates (labor market segmentation), contacting them and collecting information necessary for the selection process [183] Faculty of Economics, VŠB - TUO

192 Section S3: Management (Woźniak, 2015). This online recruitment is available because of its gamification to go over the described social graph limitations. Conclusion The usage of game or gamification as tools is the fastest developing area in the managing human resources. The continual variability of the instruments used in this field hinders a theoretical understanding of its specifics. The aim of this paper was to summarize state of the art to set questions for further studies about employment among young people. Is enormous number of tools positive phenomena to market labour transparency? Can future candidates manage well they applications in games reality? What is real efficiency of this gamified selection? Traditional recruitment and selection consume money and time in this article proposed that gamification can be solution for this inconveniences. Gamification is part of an ongoing shift toward more-interactive talent acquisition strategies. Processes recruitment and selection depends not only on used methods but also on limitations. They are connected with social media and social graph therefore. Important is also the concept of specific game social media game that is limited by Dunbar s number and six degrees of separation theory. These limitations can be mitigated by selected type of gamification. Another step is crowdsourcing-based recruitment (gamified referral programmes), although it does not solve the problem of how to reach those people who are not currently searching for a job. These ideas are intertwined with social media, or social graph which most important part are people (nodes) who can create more relations (ties) with each another. This allows too fast and efficient transfer of information among people. The scientific contributions of this paper are as follows: 1. Analysing the limitations of using gamification and games in social media 2. Describing most important aspect of usage games or their elements in recruitment and selection 3. Showing the utility of the gamification as whole games used in recruitment and selection. References BAKHSHANDEH, Reza and Mehdi SAMADI, Zohreh AZIMIFAR, Jonathan SCHAEFFER (2011). Degrees of Separation in Social Networks, Available at: < BARABÁSI, László A. (2003), Linked : how everything is connected to everything else and what it means for business, science, and everyday life, New York [etc.] : A Plume Book, ISBN BERNE, Eric (2004), Games Peoples play. The Psychology of Humans Relationships. Publisher Ballantine Books (August 27, 1996), ISBN , p. 37 CAILLOIS, Roger (1997), Gry i ludzie [orig. title: Man, Play and Games]; Warszawa: Volumen, 1997; ISBN CORMEN Thomas H. et al. (2001), Introduction to algorithms, ISBN The Massachusetts Institute of Technology [cit ] Available at: < 18 th International Scientific Conference [184] Faculty of Economics, VŠB - TUO

193 DERY, Kristine and Carole TRANSLEY, and Ella HAFERMALZ (2014). Hiring in the age of social media. University of Auckland Business Review. Spring2014, Vol. 17 Issue 1, p DUNBAR, Robin I. M. (2010). How many friends does one person need?: Dunbar's number and other evolutionary quirks. London: Faber and Faber. ISBN PIETRASZEK, Marcin (2014), Grywalizacja [in:] Promocja. Reklama i public relations w małej firmie. Gliwice (Poland): Onepress. ISBN: SULICH, Adam (2015), Mathematical models and non-mathematical methods in recruitment and selection processes, p [in:] Mekon 2015, Reviewed papers form 17th international conference; M. Kastan (edit.) Ostrava VSB-TUO, Faculty of Economics 2015, ISBN Available at: < TKACZYK, Paweł (2012), Grywalizacja. Jak zastosować mechanizmy gier w działaniach marketingowych. Gliwice (Poland): Onepress. ISBN WINNICKA-WEISS, Alicja and Anna LIPKA, Stanisław WASZCZAK, (2015), Eksperyment w obszarze HR, Warszawa : CeDeWu.pl, ISBN WOŹNIAK, Jacek (2015), The Use of Gamification at Different Levels of E-recruitment Methods. Management Dynamics in the Knowledge Economy, Vol.3 (2015) no.2, pp ZIELINSKI, Dave (2015), The Gamification on Recruitment. HR Magazine. November 2015, Vol. 60 Issue 9, p [185] Faculty of Economics, VŠB - TUO

194 Section S3: Management THE ROLE OF PEOPLE SUPPORTING EMPLOYEES DEVELOPMENT IN COMMERCIAL ORGANISATIONS Aneta Szara Jagiellonian University in Cracow Abstract This article is based on observations and analysis of the practices of the retail sector organizations and it is a description of the selected roles of people supporting the development of an employee in the competence - based management. Conclusions and recommendations were developed by describing appropriately selected individuals within the organization while identifying their responsibilities. The research was based on a critical analysis of the material contained in the case study of a trade organization conducted to determine the conditions affecting the increase of employees competencies. The analysis showed that during the growth process it is of key importance to support the responsible persons and to define the extent of their responsibility in the development of competencies. Keywords: development, training, competence, coaching, mentoring, career paths. JEL: M53, O15 Advisor: dr hab. Jerzy Rosiński 18 th International Scientific Conference [186] Faculty of Economics, VŠB - TUO

195 1 Introduction Improving people s skills in the organization, within the competence management, is a process that consists of appropriate tools, scheduled in time, during which workers are accompanied by the people responsible for supporting their development. From the observations of the labor market, it appears that now an important element in choosing an employer is the possibility of increasing ones competencies. This gives an organization a broader context to build the employer s brand, based on the values that guide the employees. The company rooted in the values associated with socially recognized standards is an acceptable part of society in which it operates. Therefore, it becomes increasingly important for employers not only to pay attention to what job the employees do, but how they do their job. During the development it is necessary to support those responsible for the teaching process and to define their roles. Peter Senge clarifies the above considerations based on the axiom that the involvement of all employees in the improvement process of an organization guarantees its genuine development. Thanks to that, goals are achieved faster and easier and the proceedings in accordance with the values create a culture of belonging. The aim of this paper based on the case study is to define the roles and responsibilities of people supporting the development of employees competencies. As part of this paper, the specificity of actions of individuals with reference to performed tasks in the development process was determined. The conducted critical analysis of the organization takes into account the conditions and factors affecting the improvement of the employee, while also referring to the theoretical basis. In a broader context, the described process facilitates the preparation of selected members of the organization to take up a new role. On the basis of data obtained from in-depth interviews among groups of employees, a critical analysis of the organization was carried out. The realization of the target was made possible thanks to the analysis of the case study of an organization from the commercial industry. The size and territorial scope of the analyzed organization, employing several thousand people, carries a plurality of positions in various business areas. Their succession must be protected in order to achieve the goals which the organization sets. 2 The roles of people supporting the development - a case study In the development process, members of the organization are involved in the process of increasing competencies. They are, among others, managers, coaches, mentors. Also, do not lose sight of the representatives of the personnel and training departments (Suchar M. 2003) As pointed out by A. Mayo (2002) in the field of career management, representatives of organizations have three basic responsibilities: to figure out what competencies the organization will need in the future and which it has now to help an employee realize their professional aspirations to provide means for dialogue between the above two elements. In an organization a major role in the process plays the management staff. When cooperating with the representatives of the personnel departments, it pursues a policy of competencies development. However, indisputably, the person responsible for their own professional development is the individual employee. In the dynamically changing environment and with the trend of shortening periods of employment, the concern about the development of competencies becomes a guarantee of presence in the labor market. In the process of supporting people responsible for the acquisition of knowledge and experience, it is important to remember that learning is inseparable from human beings, their attitude, way of thinking, perceiving situations. This pattern can be found following the "quadrilateral learning" described by B. [187] Faculty of Economics, VŠB - TUO

196 Section S3: Management Mikula, where 4 sides of the quadrangle are knowledge, ability to apply it, motivating people, and the internal conditions of the organization. The literature emphasizes that there can be no effective talent management system in an organization without the full support of its management staff. Their task is to create an appropriate culture, especially that of cooperation and knowledge sharing, as well as show the best model to follow. The analyzed company has many years of experience in improving the competencies of its employees, based on the exchange of international experiences with other countries within the group. It provides a variety of development programs targeting groups of workers at different levels of responsibility spanning key, specialist and managerial positions, and development programs targeted at university graduates. These programs create a base to carry out a critical analysis of the organization. As part of the project activities related to the construction of career paths, the analyzed company has identified and defined the people accompanying the employee in the course of developing competencies. The insight into the case study helped to define the key roles of people supporting the development of employees competencies and the recommendations arising out of the case study can be used in practice. In the presented trade organization, during the competencies development process, the employee is accompanied by carefully selected individuals. Throughout the whole process, this support comes at different levels and occurs at different frequencies. The case study confirms the validity of claims that these are personnel departments which initiate new policies and practices, but that line managers have the primary responsibility for their implementation (Purcell, Kingie, Hutchinson Rayton, & Swart, 2003; Baron & Armstrong, 2008). The effectiveness of competencies development programs requires "ensuring that the general policy and specific solutions regarding HRD suit the operational needs and providing active assistance in training with particular emphasis on the implementation and use of acquired skills ( Matthew Megginson & Surtees, 2008). In the discussed organization we can distinguish the individual roles which are described in the following table: 18 th International Scientific Conference [188] Faculty of Economics, VŠB - TUO

197 Tab. 1 Roles of people supporting the development and the nature of their support for employee Role Kind of support Key development activities Superior Line Manager Direct staff assessment, approval of individual goals and competencies development plan, making decisions about promotion, support during operation and the implementation of personal development plan. Mentor Direct promotion acceptance to another or a higher position, support in the implementation of individual objectives and development plan Personnel Manager Indirect aiding personal development plan, support for personnel processes and procedures, care over the proper course of the development process Development Planning Manager Indirect overall planning of training - development activities within the organization Employee Direct responsibility for personal development: preparing proposals for goals and personal development plan, preparation for evaluation meetings, active participation in training sessions and any other opportunities for development Trainer- Instructor Indirect supporting the development in the form of conducting training sessions Sources: Own study based on internal company materials. The immediate superior - line manager, leads the whole process of education. Seeking confirmation in the literature, we can say that the concept of the organization follows the statement, "and the fifth manager develops people". From the manner in which it would be done, it depends on whether people will find it easier or more difficult to grow (Drucker, 2004). Line manager is a person who embraces the course of the entire program. He gives support to the employee by assisting in the analysis of the training needs and creating a personal development plan which eliminates the competence gap. During the current tasks, it is the line manager who coordinates the work and training, and transmits his knowledge and experience related to the job. He is the support which is necessary to create the right conditions for development. An important task of this role is to conduct evaluation meetings, during which the results of the work and progress of development are discussed. The superior is to support the development of an employee resulting in the introduction of a permanent change in behavior. This ratio increases the quality of work and makes it easier to achieve the objectives set for the organization. In the presented corporation, when training an employee for another, often higher position, the chief manager, director or senior manager acts as a mentor. He is an expert who helps a participant in the development of competencies. During the training for a higher position, mentor approves the employee's personal development plan and the potential scope of the project tasks. At the same time, it is important that he assists the employee to remove difficulties and obstacles. Ultimately, mentor is a person who confirms the employee s willingness to embrace a different or higher position. In such a situation, periodically, with the [189] Faculty of Economics, VŠB - TUO

198 Section S3: Management employee's immediate supervisor, mentor participates in the evaluation meetings. We can say that he acts as an advisor, in a broad sense of the word, meaning that he shares his experience and expertise about the job. During the mentoring sessions, he provides information on how to develop interpersonal and specialized skills effectively, and how to build a career path. Mentor helps the student discover his potential and shows him the possibilities of its use in the future. When searching for the definition of mentoring (D. Megginson D. Clutterbuc 2004), it can be defined as the provision of non-linear help in transforming knowledge, work and thinking. Mentor is a person who will provide support twofold, on the one hand by providing an opportunity to soar to a higher level of development by presenting achievable challenges for an employee and at the same time by supporting the implementation of the assumed plan. An important task of the mentor is to help establish valuable contacts, which inspire the student to a general overview, giving an insight into different opinions and experiences. We can say that the mentor not only passes on his expertise, but also warns of the dangers and shares his resources. Going further, according to Kathy E. Kram, mentor will also provide psychological support through open dialogue about the goals, aspirations and fears. He will arouse motivations for action and offer acceptance, friendship and advice. This two-way support is particularly important for people making decisions about their careers. Mentor aims to develop interpersonal skills that allow us to soar to a higher level. This form of development allows for fuller use of the potential and thereby helps achieve results. The person form the personnel department, acting as a personnel manager, helps to increase employee s competencies by conducting coaching sessions. Personnel manager supports the participant by giving feedback, which also contains guidelines for the preparation of a training needs analysis and a personal development plan. At the same time, personnel manager is an expert on the personnel processes and procedures, and he accompanies an employee in the proper course of work. In the case of employee s promotion to another or higher position, Personnel manager is a person who participates in the evaluation meetings. Development planning manager creates and monitors development programs, thereby carries out activities, which will ensure succession throughout the organization. He creates career paths and tools for their effective implementation. When determining development needs of organizations, the manager develops and adapts appropriate actions. He supports employees in the form of meetings and joint training workshops. He acts as an expert who can provide information on development goals. In the process of competencies acquisition, trainer appears in the role of a coach who leads training sessions which allow for increasing staff competencies. Based on market analysis, we can say that training, relying largely on the workshops, allows for the increase of knowledge and the participant of such workshops may apply developed skills in practice. An important task of the coach during the training is to increase the knowledge, skills and motivation of its participants. The aim of the training sessions is to increase accountability and identification of the tasks that the employee implements. You cannot miss the special role of the employee who should take responsibility for achieving the program and development objectives and conscientiously perform the duties of his post. It is important here to emphasize that the initiative of obtaining the commitment of people responsible for the development is on the side of the participant employee. His task is to take a proactive role, and take responsibility for the education process and achievement of development goals. In the analyzed company, it is the employee who prepares a plan to increase his competencies, which then he consults and confirms with his immediate supervisor. In the case of the training for another or a higher position, the employee is responsible for implementing his career goals at the current position, as well as development objectives associated with taking up a new role. A proactive stance should be manifested in the form of proper preparation for meetings with the immediate supervisor and the full use of the support and evaluation meetings. This approach helps the employee to obtain a more complete feedback on his work and eventually helps identify actions that will let him pursue development 18 th International Scientific Conference [190] Faculty of Economics, VŠB - TUO

199 objectives more effectively. In order to achieve success, an employee should ask for feedback on his development at every opportunity. He should benefit from trainings and all opportunities for development. There are a number of employee s responsibilities which include: determining with his immediate superior a way of working and their expectations, inviting mentor for cooperation and setting rules regarding meetings and mutual expectations for mentoring sessions. When analyzing the above, we can assume that it is in the interest of the employee to determine what he does well and what needs further work. Described activities follow the statement of T. Peters, who writes that the manager has actual control when "...thousands of unknown people take the initiative, do not take into account the descriptions of work and organizational constraints, better serve, better serve customers, improve work processes, and thus work faster and faultlessly (T. Peters 1993) Each of the above people have the task of developing the knowledge and interpersonal skills that eventually an employee acquires during current job. The leader, who we can identify as any person responsible for supporting the development, should be primarily an agent of cultural change which brings him closer to the teacher who helps people clarify their goals and objectives, who makes people aware of the effects of cultural changes, and who participates in the analysis and solving of group and individual problems (RF Allen J Allen, Ch. Kraft, 1987) 3 Supporters of the development - environment for the functioning Those responsible for staff development should be seen in a wider range, not limited to the individual approach. It is impossible here to separate the development activities from the context of the functioning of the group and the accomplishments of tasks. We can also say that development activities conducted by members of the organization cannot remain detached from the teams in which they operate and from the tasks placed before them. The proposal is to consider the roles of those responsible for development, based on the model proposed by John Adair, which involves an analysis of 3 interpenetrating areas within the organization. They are important from the point of view of the individual employee, confronted with the tasks, and the entire organization. These areas can be determined regarding the satisfaction of the following requirements: (i) the individual employee and his coordination with the objectives of the group, (ii) the needs of the group through team building and creating an atmosphere conducive to achieving the goals of the organization, (iii) task needs to achieve the goals established by organizations. Finding a common point connecting these three areas is a key task of the organization. Fig 1. Leadership Model TASKS WE I Source: TM John Adair Leadership Model [191] Faculty of Economics, VŠB - TUO

200 Section S3: Management The "I" refers to an individual person's motivation and skills which he brings to the organization. Going further from the people responsible for the development of staff, there should be inspiration to answer questions from the individual members of the organization that we can describe: How well is he doing his work now? How am I going to pursue it in a new, better way? The area "WE" will focus on the interaction between all team members. Here, the questions posed should be: How the team intends to work in a new and better way? Under "Tasks" it is important to reflect on how to use your skills so that the whole organization achieves the objectives and works in a new and better way. Within each area the tasks to complete should be defined, they should stimulate reflection and extensive discussion. It is therefore important to reflect on what in each area is possible and conditional to keep up or even stay ahead of changing circumstances. In particular, the answer to these questions should be the people responsible for the development of employees in the organization This is particularly important as choosing the right approach for employee s development is critical for providing human resources at the desired level. The role of people supporting development is crucial, and will require extensive discussion and determination within the organization. According to Knowles contention, we can conclude that adults are more motivated to learn if they believe that they are able to learn new content and that knowledge can be used in practice. Willpower, which gives incentives, allows you to take over responsibility for your own learning. Employee - an adult, thanks to motivation he selects goals, but a strong will is needed to implement them effectively (Knowles, 2009). Stimulating the motivation of the learner is dependent on many factors. However, the obvious seems to be the fact that motivation can be stimulated by the person teaching, who makes the learner ready to increase his knowledge and skills. Conclusion Based on the analysis of the organization, regarding building employees competencies and people that support the development, we can distinguish the different roles of people who support the development of an employee within the organization, but it is worth noting that in order to ensure the quality of development activities it is necessary to prepare these people properly to perform specific roles. Lack of adequate training may result in development activities going in exactly the opposite direction. Lack of clarity about the process, regarding application of the evaluation criteria or access to growth opportunities can lead to a significant drop in employees motivation. Awareness of their role and responsibilities is an essential element in supporting the development of employees within the organization. Based on the case study analysis, it can be shown that the employee s development process cannot be separated from the broader context, which is his functioning in teams and organizations. The atmosphere conducive to learning should be accepted by its members and the task of managers is to be its agent. The success factor here is the existence of an appropriate organizational culture, in which different groups of people play particular roles, assuming that the most important factor are the people and their attitude to the changes in the organization, which is ultimately the decisive criterion for success. ( J. Tabor 2008). It is also clarified by WJ Rothwell and H. C. Kazanas in the Strategic Development of Talent - SDT as the process of changing the organization, external and internal groups, and workers by planned and unplanned learning in such a way that they possess the necessary competencies to support the organization in achieving and maintaining a competitive advantage. In any other case, marginalization of development processes may arise, caused by both the employees and the management team concentrating solely on operations. Such an approach can reduce development activities to only completing 18 th International Scientific Conference [192] Faculty of Economics, VŠB - TUO

201 the necessary forms for the needs of personnel departments, which is a waste of time and financial resources. It is therefore legitimate to refer to the claim that the effectiveness of development activities requires " ensuring that the general policy and specific solutions for HRD suit operational needs and it requires active assistance in training with particular emphasis on the implementation and use of acquired skills' ( Matthew Megginson & Surtees, 2008). Considering the above, we can say that the way we promote the work style, which supports development activities, is to a large extent responsible for creating the image of the unit. Based on market analysis, we can say that the company nowadays is more than just doing business, and the real value of the organization are the people who create the culture of the organization. Initiating changes in the organization in accordance with the needs of people interested in it and the growing market for business stands out as a dynamic way of functioning. We can say, following Czeslaw Sikorski, that the "radical change of the conditions for the functioning of modern organizations, due to globalization of business and the formation of a network of structural reforms, raises the question of leadership in a different light. This is because, the main pillar supporting the traditional understanding of leadership, which is the hierarchy, collapses. Dominance of horizontal relationships in the organizational system over the hierarchical relationships makes the changes revolutionary in its nature. (Sikorski 2002). In the course of the development process it is necessary to support those responsible for the training course. Comparing the above considerations implemented in a business organization, we can say that they involve assumptions of Roger C. a representative of humanistic psychology, according to whom a person teaching should: - recognize that all learners have the ability to learn, - implement the training plan corresponding to the needs of trainees. - provide an atmosphere where the learner will feel comfortable. - enable participation and initiative for learners both in the course of training provided online and at traditional workshops, - promote self-esteem of the trainee, - support learner s focus on the process itself, not the final "product". (Mietzel, 2003). Ensuring the above elements in the training process allows building of human resources through which the organization will succeed. Recognition of resources, the atmosphere conducive to improving and supporting the initiative of the employees, they all create another dimension to the process of acquiring knowledge and skills. At the same time encouraging an employee for self-assessment and feedback allows to bridge the competence gap. In conclusion, we can say that the responsibility for supporting these activities is a common and principal task of managers. Summarizing the above, we can say that the development activities within the organization are the sum of many actions in which operational activities are directly linked to the personnel processes and should not function separately. The role of people supporting development is important within the organization but should not be separated from the broader context, which is the acceptance of development activities. References ADAIR, John E. (1973). Action-Centred Leadership. London: McGraw-Hill. ISBN-10: DRUCKER, Peter F. (2004). Menedżer Skuteczny. Warszawa: Wydawnictwo MT Biznes. ISBN: [193] Faculty of Economics, VŠB - TUO

202 Section S3: Management HERZBERG, Frederick (1987). One more time: How do you motivate employees?. WL Harvard Business Review, 65(5), pg KOUZES, James M. and Barry Z. POSNER ( 2003). Wzmocnić ducha. Jak premiować I wyrażać uznanie. Poradnik Lidera. Warszawa: Wydawnictwo Emka JUDGE, Timothy A. and, Charles L. HULIN and Reeshad S. DALAL (2009). Job satisfaction and job affect. W KOZŁOWSKI, S.,W.,J. (red.), The Oxford Handbook of Industrial and Organizational Psychology (s. 1-25).New York: Oxford University. KNOWLES, Malcom S. and Elwoon F. HOLTOM III, Richard A. Swanson (2009). Edukacja dorosłych. Warszawa: PWN. ISBN: MAYO, Andrew (2002). Kształtowanie strategii szkoleń i rozwoju pracowników. Kraków.Oficyna Ekonomiczna MEGGINSON, David and David CLUTTERBUCK. (2004). Techniques for coaching and mentoring. Routledge. ISBN -13: MIETZEL, Gerd. (2003). Psychologia kształcenia. Gdańsk: GWP. PETERS, Tom. (1993). Liberation Management London: Pan Books. PURCELL John and Nicolas KINNIE and Sue Hutchinson S and Bruce Rayton and Juani SIKORSKI Czesław. (2002). Zachowania ludzi w organizacji. Warszawa: PWN. ISBN SUCHAR Marek (2003) Rekrutacja i selekcja personelu. Warszawa. C.H. Beck SWART J. (2003). People and Performance: How People Management Impacts on Organisation Performance. Londyn: CIPD ROTHWELL William J H.C KAZANAS (2004). The Strategic Development of Talent. HDR Press. ISBN- 10: TABOR Joanna (2008). Rozwój organizacji uczącej się a zarządzanie talentami, e- mentor, 18 th International Scientific Conference [194] Faculty of Economics, VŠB - TUO

203 Appendix 1 Roles of people supporting the development and the nature of their support for employee Role Kind of support Key development activities Direct staff assessment, approval of individual goals and competencies development plan, making decisions about promotion, support during operation and the implementation of personal development plan. Superior Line Manager Mentor Direct promotion acceptance to another or a higher position, support in the implementation of individual objectives and development plan HR Director Indirect aiding personal development plan, support for personnel processes and procedures, care over the proper course of the development process Manager for Career Planning Indirect overall planning of training - development activities within the organization Employee Direct responsibility for personal development: preparing proposals for goals and personal development plan, preparation for evaluation meetings, active participation in training sessions and any other opportunities for development Trainer- Instructor Indirect supporting the development in the form of conducting training sessions Sources: Own study based on internal company materials. Fig 1. Leadership Model TASKS WE I Source: TM John Adair Leadership Model [195] Faculty of Economics, VŠB - TUO

204 Section S3: Management THE PILOT RESEARCH FINDINGS CONCERNING DEVELOPMENT OF COMPETENCE AND AGE OF EMPLOYEES Wojciech Wychowaniec Jagiellonian University in Cracow Abstract The article contains a report of a pilot research concerning the development of competencies of employees of all ages. The aim of the study was to examine the state of implementation of age management policies in Polish enterprises in the development of competencies of employees of all ages. The survey was conducted on a group of 10 medium-sized and large Polish companies in the form of structured interviews conducted with key personnel of HR departments. The principal conclusions related to the implementation of the surveyed companies competence development strategies, methods of staff development in the context of age and the adoption and implementation of the policy of age management. Keywords: Age management, older workers, competences development JEL: J11, M53 Advisor: dr hab. Jerzy Rosiński 18 th International Scientific Conference [196] Faculty of Economics, VŠB - TUO

205 1 Introduction This article presents the findings of a pilot research, prior to the actual process of research for a doctoral dissertation on age management. The study referred to above was carried out in the period from June to August The author is aware that the formula of the pilot research, in a particular sample size, the results do not allow to aspire to the status of scientific fact. It was decided that an appropriate examination, in the framework of the doctoral thesis, will be preceded by a pilot project that will initially verify assumptions and to ensure high quality research tool. According to the methodology of scientific research primary function it is to obtain a pilot, incomplete, preliminary knowledge of the surveyed population, which could provide guidelines for further inquiries, as well as improve the efficiency of the main study (Nowak, 2007, p ). In recent years, public spaces, widely discussed, the impact of population aging on the overall socio-economic situation, not only Polish, but also the world. Analysis of the size and structure of the population and the projected demographic changes, leading to an unequivocal confirmation of the thesis of advanced aging societies. In 2014, the Central Statistical Office of Poland (GUS) issued a very important from the point of view of this work, "forecast the population for the years " (GUS, 2014) With the forecast that in the coming years will decrease the number of employees of mobile group (18-44 years ). In the 22 years between 2013 and 2035 a year, this number will change from more than 15 to 9 million, while the number of workers older workers (45-retired.) Will increase slightly (0.5 million). Table 1 presents these data in percentage terms. The presented forecast shows that while in 2013 per employee with a group of immobile for almost two employees aged to 44 years of age, already in 2035, it will be a ratio of 1 to 1, and even a group of immobile reaches outnumbered (GUS, 2014). Tab. 1 Forecast of the age structure of Poles of working age in the context of the labor market in the years (in%) Produkcyjny mobilny ,48 59,69 47,52 48,99 Produkcyjny niemobilny 45-emer. 37,52 40,31 52,48 51,01 Source: Won adaptation based upon data from GUS (2014), 148 If these forecasts are confirmed, which is highly unlikely, the Polish labor market will have to deal with a completely new situation, which places an employer series, unprecedented challenges. Business owners and managers will be required to effectively manage teams, in which equal voice, will have a group with diverse interests and needs. Among other things, these data have given rise to undertake research work in the field of age management. In connection with the demographic data presented and an analysis of available literature, it was found that age management in enterprises is a topic that requires further examination, particularly in the context of the development of the competencies of employees belonging to different age groups. Based on the conclusions from the analysis of the literature was adopted following the main objective of the pilot study whether and how companies develop competencies of employees of all ages. It was assumed also the following specific objectives: 1) Verify whether the organizations surveyed have a strategic tool for the development of competencies of employees 2) Check what methods of competence development are implemented in enterprises, and whether any of them are recommended for people of a certain age [197] Faculty of Economics, VŠB - TUO

206 Section S3: Management 3) Check whether the companies have and utilize comprehensive age management strategies and the possible predictions for implementation in the future. 2 Background substantive and research methods The adoption of the research objectives for the pilot was preceded by not only analyzes the demographic situation, but also an extensive literature search query. The reflection resulted in, among others, to study the report "Analysis of conditions of implementation of age management in the EU" (Kołodziejczyk-Olczak, 2013). The creators of the study, based on evidence related to the issue of older workers in the labor market, EU countries divided into 4 groups, depending on the severity level of implementation of age management policies, in terms of the central - state. Poland is in Group IV - characterized by weak or negligible interest in age management (Kryńska, ). Therefore, it was decided to check the level of awareness of companies in the field of age management and verify whether it had the company strategy in this regard. It was decided to also check what methods of competence development are applicable to workers of all ages. On the achievements of the social sciences in this field it shows that between employees at different stages of professional development, there are many differences, affecting their functioning in the organization. Therefore adopts an assumption that there may be differences in development needs. Physical and psychological development of man determines his reactions, behaviors and abilities and attitude, which is assumed inextricably linked to the level of his personal development, the emerging with the development of mental observation work, orientation to others, identification of the environment and by overall experience. One such theory appears in the development of novel and Worley'a Cummings (2009, ). The authors of the characteristics proceed from the assumption that companies should not use the same tools for career planning and further development of all employees. According to them, the most important is meticulous observation of workers and deciding what action managerial will best suit the unique concerns, needs and challenges of workers (Bańka, 1995, 135). In connection with this observation it was concluded that the best source of knowledge in the functioning of the organization are key HR representative. It was assumed that they can best determine both what action personnel are used in the company and how the spirit in which the organization manages to employees of all ages. Therefore, it is assumed that the study will be quantitative and qualitative in nature and will be conducted through structured interviews, which ensure a high degree of standardization of response (Piórkowska, 2014, 107). Quantitative data were to provide closed questions, while qualitative information about respondents could give in the comments and remarks. The interview questionnaire was prepared before the test, which ensures that you receive precisely the information that is needed from the perspective of research purposes. It was decided that participants in the study will be key members of HR departments, HR departments, or boards of companies, so that one interview brought the necessary information about a single institution. The study was conducted in 10 Polish companies, which declared that develop the competencies of their employees. The smallest tested the company employs 137 workers, and the largest over out of 10 companies can be classified as large companies, and 2 are classified as medium-sized firms, ie. Less than 250 employees. 18 th International Scientific Conference [198] Faculty of Economics, VŠB - TUO

207 3 The research results 3.1 System Tools on the development of competencies of employees of different ages Most of the surveyed companies have strategies for competence development (Figure 1) based on an analysis of development needs, which is the basis for the planning of all the training activities. Representatives of the companies stress that in enterprises carried out a current analysis of competency gaps and development activities are organized on the basis of managerial observations, however, in seven cases, the basis for the actions is a strategic document. Interestingly, not all companies have already implemented entirely those documents, which did not bother them in the implementation of the provisions of section (Figure 2). Fig. 1 Basics of planning of developing competencies in organizations "Do actions to develop competencies are..." Used according to plan, because of the development strategy Used ad hoc as a result of the current needs analysis Used ad hoc as a result of management decisions Source: Own adaptation Fig. 2 Level of implementation of a coherent system of competence development "At what stage it is your company implementing a coherent system of competence development?" Implemented During implementation Prepared, but not implemented Will being prepared There is no such a plan Source: Own adaptation It should be pointed out that the two companies with fewer than 250 employees do not realize employees' competence development activities in a systematic way, including one declares no plans to adopt such a document. [199] Faculty of Economics, VŠB - TUO

208 Section S3: Management Fig. 3 Groups covered by the competence development due to age "What group of workers is covered under the emerging powers? (criterion of age) The criterion of age does not affect the access to competence development Mainly employees younger and less experienced Mostly older workers, who do not have specific competence because of age Source: Own adaptation From the point of view of "equality of opportunity" is satisfied that in all the surveyed organizations, the age requirement does not affect a person's activities cover developing competencies (Figure 3). However, this also negative implications. This means that, in any of the organizations surveyed, employees with special needs (eg. For 25- and 45+), they have also facilitated access to competence development 3.2 Methods of competence development in the context of the age of workers Table 1 shows that companies implement a number of development activities in the organization. These activities are both an individual and group, carried out at their own expense or with the assistance of external experts. But making the choice of a specific method of competence development, surveyed firms, do not make decisions on the basis of age, which may be potentially problematic in practice. The only development activities, in which the age criterion is relevant programs practice and apprenticeship programs. The rules of those programs in five surveyed companies is a transcript of the closing opportunity to take an internship or practices after 26 years of age (in special cases 30 years). One of the companies surveyed realized a special internal program for young talent, which gives them a chance to participate in training and internships normally inaccessible to them. 18 th International Scientific Conference [200] Faculty of Economics, VŠB - TUO

209 Tab. 2 Application development tools expertise in organization Area Method Level of implementation in organizations (in%) Formal education - financing for higher education Gaining professional experiance - less experienced employees learn by working alongside more experienced workers - mentoring 60% 100% Internships - unpaid intership 60% - paid intership 70% Job training - complex training of "raw" workers 80% Courses, training and workshops Cenferences / seminars E-learning / distance learning Totation and replacement systems - Preliminary introduction to the job 60% the already prepared employee - psychological trainings 80% - managerial trainings 100% - specialistic trainings (e.g. 100% accountancy, computer literacy itp.) - linguistic trainings 40% - prefessional or scientific cenferences 90% and seminars - e-lerningowe and distance learning 30% - substitutions system 70% - internal recruitment 90% Self-development powered by employer - rotation, as a way to work against 30% routine - appointing experienced employees as 70% trainers and coaches - motivating to self-development 80% - delivering of professional books and 80% press Self-development - employees develop their competences 70% on their own Individual methods - coaching in the workplace 10% - coaching out of the workplace 40% - consultinh out of the workplace 30% Performance appraisal - regular performance appraisal 50% - regular feedback session 50% Source: Own adaptation [201] Faculty of Economics, VŠB - TUO

210 Section S3: Management 3.3 The age management strategy and prospects implementation In order to assess the feasibility of competence development provided by the surveyed organizations must be admitted that the offered range of tools is quite impressive. The major problem identified by the research relates only to the fact that in choosing these methods do not take into account the age of the employees. Fig.4 Characteristics of the problem of the age of employees in organizations Please describe the problem of age in your organization A large number of elderly staff A large number of young staff The wide variation in age of workers Age of employees does not currently causing management problems Source: Own adaptation Regarding the level of implementation of age management policies in companies, it must be pointed out that none of the surveyed companies have not carried out such activities in a systematic way, ie. Not adopted a comprehensive age management program. This can be explained by the fact that, according 7 to 10 companies age of employees does not, as yet, the problems of management (Figure 4). Many interviewees highlights here, however, the word "now" and it is estimated that this issue will become important in the near or distant future. Hence the 7 respondents believe that the implementation of age management policy is needed (Figure 5), although this issue was discussed in only 3 organizations (Figure 6). 18 th International Scientific Conference [202] Faculty of Economics, VŠB - TUO

211 Fig.5 Enterprises are interested in the implementation of age management policies Is your company discussed the need to implement age management policies NO YES Source: Own adaptation Fig. 6 Assessing the need for policy implementation of age management in organizations Whether by Mrs. / Mr implementation of age management policy is needed? NO YES Source: Own adaptation Conclusions From 5 to 10 surveyed organizations have a strategic tool to support the development of employee competencies, 2 companies implement these documents, 2 consecutive intend to do so in the future. 7 companies surveyed examines the development needs in relation to the provisions of the strategic document. Important conclusions from this part of the study brings the fact that the two companies were classified into a group of medium-sized companies do not have such a strategy. In large organizations, especially with the international capital you can be seen significant consolidation, standardization and homogenization (Rosińska-Bukowska, 2009, 144), suggesting that the conditions for the functioning of such companies in Poland are similar. The situation is different in the SME sector, which summarizes in one study of large companies, it would be dominated by showing disparities potentials. As shown above, all tested in the pilot large companies have less or more structured system of workers' skills development, which is important from the perspective of the actual test, which will check the thesis also in this regard. Therefore, study principal decided to carry out only for the group of companies employing more than 250 employees. The survey shows that companies employ a wide range of methods of competence development of employees, without limiting the (usually) have access to them because of their age. Representatives of HR departments surveyed enterprises state that age is not, in any case, a barrier to access to development tools expertise. On the other hand, with two exceptions (internships and practices), these methods are not adapted to the age of employees. It does not [203] Faculty of Economics, VŠB - TUO

212 Section S3: Management apply, so demarcations, for the promotion of specific methods specified age groups. Therefore, it was decided to expand the study appropriate for recommendations of the respondents, which measures competency development should be more effective for the age groups. The survey shows quite unambiguous conclusion that the company did not have adopted and implemented a coherent strategy for age management. 7 out of 10 people indicates that such solution strategy will be necessary in the future, even though the problem was discussed in just three organizations. It was decided to expand the study appropriate to examine what are the expectations, the representatives of HR departments to implement age management policies in the future. The study focused on a specific aspect of age management, ie. The development of competence and not verified the general level of understanding and possible implementation of this policy. Therefore, it was decided to expand research tool about the possibility of verifying that the company implement best practices or individual age management standards (Liwiński, 2010). References BAŃKA, Augustyn (1995), Zawodoznawstwo, doradztwo zawodowe, pośrednictwo pracy. Psychologiczne metody i strategie pomocy bezrobotnym, Poznań: Print-B, ISBN: CUMMINGS, Thomas G. and Christopher G. WORLEY (2009), Organization development and change, Mason: South-Wester Cengage Learning, 13: GUS - GŁÓWNY URZĄD STATYSTYCZNY (2014), Prognoza ludności na lata , Warszawa. Available at: NOWAK, Stefan (2007). Metodologia badań społecznych, Warszawa: Wydawnictwo Naukowe PWN, ISBN: KOŁODZIEJCZYK-OLCZAK, Izabela (2013) Metodologiczna charakterystyka badań [in:] E. KRYŃSKA, J. KRZYSZKOWSKI, B. URBANIAK, J. WIKTOROWICZ (ed.), Diagnoza obecnej sytuacji kobiet i mężczyzn w Polsce. Raport końcowy, Łódź: Uniwersytet Łódzki. Available at: KRYŃSKA, Elżbieta and Piotr SZUKALSKI (2013), Rozwiązania sprzyjające aktywnemu starzeniu się w wybranych krajach Unii Europejskiej Raport końcowy, Łódź: Uniwersytet Łódzki, ISBN LIWIŃSKI, Jacek and Urszula SZTANDERSKA (2010), Wstępne standardy zarządzania wiekiem w przedsiębiorstwach, Warszawa: PARP PIÓRKOWSKA, Katarzyna (2014), Metodologiczne i metodyczne aspekty prowadzenia badań naukowych, w świetle badań nad lojalnością menedżerską kontekst triangulacji teoretyczne i metodycznej, Organizacja i Kierowanie. Warszawa: 162(2): ROSIŃSKA BUKOWSKA Magdalena (2009)., Rola korporacji transnarodowych w procesie globalizacji. Kreowanie globalnej przestrzeni biznesowej, Toruń: Dom Wydawniczy DUET, ISBN: th International Scientific Conference [204] Faculty of Economics, VŠB - TUO

213 Section S4 Marketing and Business Honorary Chairman: doc. Ing. Lenka Kauerová, CSc. Guarantor: Ing. Vojtěch Klézl [205] Faculty of Economics, VŠB - TUO

214 Section S4: Marketing and Business 18 th International Scientific Conference [206] Faculty of Economics, VŠB - TUO

215 KEY CUSTOMER VALUE MANAGEMENT BASED ON EXAMPLE OF COMPANY X Marta Kadłubek, Iga Kott, Wioletta Skibińska Czestochowa University of Technology martakadlubek@wp.pl Abstract Key Customer Value creation is now one of the main activities, undertaken by currently operating, modern enterprises. Because, through the appropriate management of Key Customer Value, the value of company s customers increases as well, which translates into an increase in the company s value. This articles presents, the process of Key Customer Value Management, conducted in a selected company X, preceded by a short introduction, concentrated on three areas: Key Customer Value, Customer Value (called Customer Lifetime Value CLV) and Corporate Value. In the further part of the article, a process of creating the Key Customer Value will be described, along with the expected results, influencing the Company Value itself. Keywords: Market, Customer, Customer value, Corporate value, Key Customer Value Management JEL: G32, L22, L29 [207] Faculty of Economics, VŠB - TUO

216 Section S4: Marketing and Business 1 Introduction One of the most commonly used, in relation to the market, term is the adjective "dynamic". This reflects the reality, in which operate all market participants, currently. Another inherent with the market, occurrence is the competition, which is a challenge of every market participant. However, unlike the old days, when the company knew their competitors and its products, as well as their strengths and weaknesses, today the situation is completely different. First of all, the location criteria have disappeared, because all companies have the tools and possibilities to enter into foreign markets (Yamamoto, 2001). In turn the "dynamism" causes dramatic changes, not only on the market, but also through the competitors, which makes it difficult to characterize it, as well as to determine its strengths and weaknesses. Constantly changing number of companies, changes in profiles of their business or introducing more and more new products to market, because that competition in the current circumstances is even more difficult. Current market is also a globalized market, it means that, if the competition is still based on the same grounds: product, quality, price, customer service or access to the market, in nowadays is also based on the culture of the product, processes and systems or its structure of the business. As mentioned above, competition based on products or services, constituting its center, but nowadays they change very quickly: the innovation processes occur much faster and more frequently than in previous years, the production cycles are getting shorter and the finished products are more individualized (Cox, 2007). These rapid changes have caused that the companies have changed their activities and focused on customers, the end users of their products and services. This customer orientation causes that the company is closely linked to the market, which enable for the rapid adaptation to the constantly changing customers needs and expectations. This change in attitude has given rise to the concept of Customer Value, which is defined in many ways. One of them says that: Customer value is a customer s perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer s goals and purposes in use situations (Woodruff, 2007). In the simplest term, Customer Value is the difference between the value that the client acquires in connection with buying and using a certain product, and the cost of its purchase. On the other hand, Customer Value can be seen as the difference between the total cost of a product containing the same cost of purchase, the time spent on the purchase, the cost of physical effort and sustained energy, and overall customer value, including: product value, service value, the value of staff and brand value (Christopher, 1996). Customer Value is created when the perception of the benefits of the purchase are bigger than the cost of the purchase. Alongside the concept of Customer Value, very often the concept of Customer Satisfaction is met, which means the extent to which a product s perceived performance matches a buyer s expectations (Kotler, Keller, 2009). If the product s performance does not meet customer s expectations, he becomes dissatisfied, if the product s performance matches the expectations the buyer is satisfied. Moreover, he is delighted. Outstanding companies have in mind, that satisfied customer will buy another products, and also, he will tell other about his satisfaction and good experience with the company. In many today operating companies, their aim is to delight their customers, by promising only what they can deliver, but in fact, delivering more than they have promised. It might be concluded that customers expectations are based on past buying experiences as well as on the other buyers opinions, marketers and competitors information and promises. 18 th International Scientific Conference [208] Faculty of Economics, VŠB - TUO

217 2 Customer Lifetime Value Quite often the Customer Value is quoted with Customer Lifetime Value (CLV). However, the second term possesses its own definition, saying that CLV it is a value of the entire stream of purchases that a customer would make over a lifetime patronage ( 2015). It simply describes the net present value of the future profits stream, which are expected over the whole customer s life time purchases. According to P.D. Berger and N. I. Nasr, Customer lifetime value for a firm is the net profit or loss to the firm from a customer over the entire life of transactions of that customer with the firm. Hence the lifetime value of a customer for a firm is the net of the revenues obtained from that customer over the lifetime of transactions with that customer minus the cost of attracting, selling, and servicing that customer, taking into account the time value of money (Berger, Nasr, 1998). CLV consists of three main elements: the value provided by the customer by paying for the goods or services, the brand value and the relationships value. The first value is derived mainly from a customer s perception of the value, which is provided to him in the form of purchased goods or services. The second value is a subjective evaluation by customers made of their awareness of the brand s existence, as their relation with the brand and emotions caused by it. The third value is an expression in the form of acquired knowledge about customers, and their tendency to create a close bonds with the company, based on compatibility in regards to mutually expected objectives, which are the subjects of exchange between the company and its customers (Czarniewski, 2014). Fig. 1 Elements of the Customer Value Lifetime The brand value: - Brand awareness, - Customer s attitude, - Perception of brand s label The value of relationships: - Loyalty programs, - Knowledge based about customers - Customers special treatment, - Emotional links, - Community of customers Income and profitability gained from transactions and purchased offers The value of the customer for the company Source: Own adaptation based upon (Rust, Zeithaml, Lemon, 2004). In the literature we can also find another proposition in regard to elements which are the dimensions, perceived by the customers as the most important (Yang, Yang, 2011): 1. Economic value this value is provided when the customer realizes, that using a specific company s services, will allow him to save some money. In simple words: process for the foods or services, offered by one company are lower that offered by [209] Faculty of Economics, VŠB - TUO

218 Section S4: Marketing and Business the another company. Apart from saving the money, the customer will presumably receive some money as well, by the purchased foods or services (for example: purchased information system for the company will increase its employees effectiveness) (Gupta, Lehmann, 2005), 2. Functional value in a broad sense, this value is perceived as the benefits, which can be gained from the functions or features, offered by the purchased good or service. There are three main factors of this value: correct, accurate or appropriate attributes, characteristics, functions or features in the form of quality, creativity or customization. Appropriate performances such as reliability, performance quality and service-support outcomes. And the third: appropriate outcomes or consequences, in the form of strategic values, operational and environmental benefits and effectiveness (Smith, Colgate, 2007), 3. Relationship value this value cannot be measured as the real benefits; this value is often created within the context of customer-provider relationships. Also, the relationship may be a separate characteristic from the quality of the products itself (Howden, Pressen, 2008), 4. Psychological value this the value of a service far beyond its economic and functional value. This value is gained from service, existed in the company s brand name, image, reputation, logo and other intangible characteristics (Gupta, Lehmann, 2005). It is noteworthy that customer life time value in the literature, appears under different names, such as customer equity or customer profitability. Also, in the literature, quite often customer value, key customer value and customer life time value are treated as synonymous, but we can conclude that customer life time value has much broader sense that the other two. 3 Corporate Value Corporate value, also known as company value or company core values, is the operating philosophy or principles, that guide a company s internet conduct, as well as its relationship with its customers, shareholders or partners. Core value are usually summarized in the mission statement or in the company s Core Value Statement ( 2015). The role of corporate values is to support the vision and shape its organizational culture. They are key elements of identification of the company. Despite the fact that more and more companies are defined mission, vision and values, still lots of them, primarily focuses on technical skills, underestimating the role of key values. And establishing strong core value will provide significant advantages to the company (Collins, 2000): - Affect the decision-making processes, eg. taking as the key value offering products of the highest quality, ones that do not meet these standards are immediately eliminated and do not become the subject of discussion as to their subsequent destination, - Have a set of core values strengthens the competitive position of the company. - Thanks to the publicity through the adopted key values, companies are identified by customers and appreciation through transparency of their activities, - To a certain extent also affect the sourcing of employees who identify with the values adopted by the company, which increases the likelihood of their future involvement in the life of the organization. The most common core values are the values of the companies listed below: - Accountability this is acknowledging and assuming responsibilities for action, operations, products, policies and decisions, 18 th International Scientific Conference [210] Faculty of Economics, VŠB - TUO

219 - Balance this describes the proactive stand in order to create and maintain a healthy work-life balance for workers. This value is become more and more popular while the employees started to seek a balance between their work and private life, - Commitment committing to a product, service or any other company s initiatives, that impact lives inside and outside the company, - Community show that society and people are important and also demonstrates the corporate social responsibility adapted by the company, - Diversity respects the diversity and provides the best composition, also establishes an employee equity program, - Empowerment its role is to encourage employees to be imitative and try to give the best, - Innovation striving to create new ideas, that have potential to change the world, - Integrity this is the company s behavior in which it acts honestly and tells the truth, - Ownership the company takes care about itself as well as about its customers, - Safety ensuring that work and safety policies are correctly established and are in constant use, in order to provide an accident-free workplace for company s employees, - Environment the company also takes care about the closest natural and social environment, this core value is quite often defined as Corporate Social Responsibility or Sustainable Development. For example, a Starbucks Company have established the following corporate core values ( 2015): 1. Provide a great work environment and treat each other with respect and dignity, 2. Embrace diversity as an essential component in the way we do business, 3. Apply the highest standards of excellence to the purchased, roasting and fresh delivery of our coffee, 4. Develop enthusiastically satisfied customers all the time, 5. Contribute positively to our communities and our environment, 6. Recognize that profitability is essential to our future success. Of course, in the case of a company whose activity differs from Starbucks, adopted core values of the company may differ, but as mentioned earlier, in most cases, core values express today: the desire to provide high quality products and services, taking care of the environment and closest social environment, provide employees with proper working conditions (not only in safety but also the development path and achieve a balance between work and private life). 4 Key Customer Value Management in Company X Company X was founded in 2002 and operates in the telecommunications industry, focusing primarily on providing services related to the Internet. In addition, the company sells, installation and administration of telephone exchanges, designing and setting up networks. Also distributes computer hardware and accessories. The mission of the company is to create an alternative to the services offered by large operators while maintaining an attractive level of prices of services offered. The employees creativity of the company and its uncommon approach to doing business enables the company to execute even very unusual projects and allows the delivery of the Internet where it was previously impossible. It is possible thanks to solutions that combine the latest wireless and wired technologies. If necessary, the company reaches out for unconventional solutions, in order to implement projects while maintaining [211] Faculty of Economics, VŠB - TUO

220 Section S4: Marketing and Business viable and attractive prices, not only their performance but their further exploitation. In order to provide services at the highest level and attracting new customers, the company in its activity is guided by: - constant access to the latest technology, - continuous improvement of skills and competencies by company s employees, - the use of effective solutions, taking into account the individual needs of customers, - continuous improvement of processes and activities, - high levels of employee engagement to implement the quality policy. Recently, the company took actions to follow in Key Customer Value Management (KCVM) concept. The first stage of the operation was to identify and define the main objectives: 1. Attracting new customers and encourage the previous ones to come back, 2. Keeping the current customers, 3. Increase the level of sales and services, 4. Increase of average revenue per user (ARPU - is a measure, mainly used by consumer of telecommunication companies, is defined as the total revenue divided by the number of subscribers), 5. Decrease the costs of current clients. After defining the main goals, the company selected three employees responsible for this project implementation. The next step, was to estimate the so-called. the current situation in respect of: 1. Company s strategy, 2. Organization and Governance, 3. Processes, 4. Tools, 5. Resources and expertise, 6. KPI (Key Performance Index) The table below shows the current state of the company with regard to designated areas as well as estimated effects of the Key Customer Value Management actions. 18 th International Scientific Conference [212] Faculty of Economics, VŠB - TUO

221 Tab. 1 Comparison between the present and future state Areas Present state Future state Strategy Organization and Governance Processes Tools Resources and expertise KPI (Key Performance Index) Source: Own work. Lack of understanding of customers profile or behaviors, only Basic customer s segmentation is being used Lack of Key Customer Value Management There is no processes and procedures of KCVM within the company Only roots causes analysis is conducted No KCVM trainings Only Gross Adds, Market Share and Churn are calculated Higher understanding of customers profile, more advanced customers segmentation Team responsible for KCVM Establishment of the most important processes and procedures of KCVM Implementation of CRM software Organization of trainings and seminars related to KCVM Added: ARPU and Payback period and couple more Based on the analysis, which results presented in the table above, it became possible to define the actions that the company should take. These are activities that fit into the main objectives, as well as, allow to change the present status quo for the next awaited. The most common activities are grouped according to the objectives set, to each group are assigned more specific steps, which should enable the realization of the adopted objective. Assuming that the company intends to achieve the following objectives: gaining new customers and retaining existing, together with the re-conquest of previous customers (1), increase sales of services and products (2) and reduce the costs associated with maintaining clients (3), it may take a number of actions involving: 1. Offer attractive shops and lower dealers commissions such activities are addressed to customers in the form of shops and dealers, the company can offer them offers or reduce fees that are incurred by them. 2. Launch an attractive welcome package, using websites or other communications channel in order to attract new customers, the company can offer additional benefits, e.g. an exemption from certain fees for the first three months, although these are often souvenirs or gifts, for example. during the holidays, the mobile operator companies offer packets destined for young users, which include the phone and some toy for example, 3. Bring back to alive inactive accounts by offering the specific offers or perform proactive retention calls directed to complaining customers when the company wants to attract former customers, it can offer them special services or products. Very often a company conducts a preventive action, at a time when the clients contract is going to end, the company makes contact with him and presents an offer that will encourage him to continue to use its services. 4. Start loyalty programs or start a SMS campaign in order to refrain old customers on the one hand the nature of this action will keep the customers by the potential [213] Faculty of Economics, VŠB - TUO

222 Section S4: Marketing and Business benefits, they will make every effort to get as many points, thus becoming loyal customers. On the other hand, at a time when almost every company offers this kind of loyalty program, it loses the advantage of "maintenance" and very often after its completion, the customer also waives the services of the company, 5. Create a dedicated Customer Service team for reactive retention in any telecommunications company there is a department of customer service, but in this case it's more about the separation of several people, whose task will be to stop leaving customers and convince them that they are important customers for the company 6. Perform welcome calls and calls to specific high value customers these are activities aimed at accepting any new customer, or check that the customer is very important for the company. On the other hand, these activities carry some risk because if too frequently perform this type of phone, consumers can begin to perceive the company as intrusive, 7. Launch promotions in order to stimulate top-up, Internet usage or transfer to another offer those operations are mostly emphasized the advantages of using the Internet, to offer preferential rates reload or certain benefits for the transition to a higher (more expensive subscription) 8. Increase the use of Internet and its application in order to make a contact, offer product or service or communicate with existing customers this action will complement the implementation of CRM software, which enables for faster data transfer. In addition, the use of the Internet is not only cheaper but also faster (SMS packages shipped to customers or instead of paper mail). It is worth mentioning that some of these activities has been realized by the company, but they were mentioned in order to determine the overall actions towards the objectives of Key Customer Value Management. In all these activities, actions consisting in offering new services and products were not mentioned, it was crumpled on the ground that such actions are constantly undertaken by telecommunications companies (and the other ones as well). Every moment there are new products in the form of mobile, tablet or offers, in the market, aimed at both new and existing customers. In addition to the activities involving the reference and maintaining contact with customers, the company should implement special CRM software, which will enable to create a customer s database, allow for their needs and preferences identification (ie. profiling), will increase the scope of use of the Internet (customer service via the Internet, sales or complaint handling) and, further, will allow to generate reports, that identify areas requiring further action. Conclusion In some areas, the company X which was the subject of research, has already completed some goals: implemented CRM software, enabling them to customer profiling, resulting in, among others, they can create individual offers which fully meet customers expectations or contact them quickly. The company have created a team of people responsible for achieving the objectives of Key Customer Value Management and conducted an analysis of KPIs in which ARPU has been taken into account ARPU. On the other hand, the company still did not organize the training courses and workshops in order to familiarize employees with issues concerning KCVM and still, KCVM key management processes and procedures, have not been defined. Further effects of actions taken is the increase the percentage of customers who decided to continue using the services of the company as well, in comparison with last year, the 18 th International Scientific Conference [214] Faculty of Economics, VŠB - TUO

223 percentage of newly acquired customers. Only in the area of re-acquiring previously lost customers nothing has changed. Also, according to a study conducted by an external company brand recognition of the company has increased as well as improved opinion regarding their products and services. On the other hand, it should be noted that the nature of the activities enrolling in politics KCVM is their perpetuity. Because the adoption of this policy involves the ongoing introduction of certain measures, the nature of which will vary according to the constantly changing environment -, customers, services, products, technologies are changed, which forces companies to adapt to rapidly changing conditions. References BERGER, Paul D. and Nada I. NASR (1998). Customer Lifetime Value: Marketing Models and Applications. Journal of Interactive Marketing. Wiley Periodicals, Winter (1): CHRISTOPHER Martin (1996). From Brand values to customer value. Journal of Marketing Practice: Applied Marketing Science. Emerald Insight, (1): COLLINS Jim (2000). Aligning Action and Values. The Forum. United States 2000, Available at: < COX George (2007). Customer focus a commercial imperative. Managing Service Quality. Emerald Insight, (1): CZARNIEWSKI Slawomir (2014). Building Customer Value in Relationship Marketing. International Journal for Academic Research in Accounting. Finance and Management Science. HRMARS (4): Examples of Company Core Values, retrieved from < GUPTA, Sunil, Donald. R. Lehmann (2005). Managing Customers as Investments: The Strategic Value of Customers in the Long Run. Upper Saddle River: Wharton School Publishing HOWDEN, Charles, Andrew D. PRESSEY (2008). Customer value creation in professional service relationships: the case of credence goods. The Service Industries Journal (6): KOTLER Philip, Kevin. L. KOLLER (2009) Marketing Management. Pearson Education Inc., New Jersey RUST Roland. T, Valarie A. ZEITHAML, Katherine N. LEMON (2004). Return on Marketing: Using Customer Equity to Focus Marketing Strategy. Journal of Marketing. 68(1): DOI: SMITH Brock J, Mark COLGATE (2007). Customer Value Creation: a practical framework. Journal of Marketing Theory and Practice. 15(1): WOODRUFF Robert B. (2007). Customer Value: The next Source for Competitive Advantage. Journal of the Academy Marketing Science. 25(2): [215] Faculty of Economics, VŠB - TUO

224 Section S4: Marketing and Business YAMAMOTO Gonca T. (2001). Understanding Customer Value Concept: Key to Success. Maltepe University. Turkey YANG Ching-Chong, Dylan SUNG (2011). An integrated model of value creation based on the refined Kano s model and the blue ocean strategy. Total Quality Management. 22(9): th International Scientific Conference [216] Faculty of Economics, VŠB - TUO

225 FACTORS AFFECTING CUSTOMERS SATISFACTION WITH ONLINE GROUP-BUYING: COMPARISON OF THE CZECH REPUBLIC AND CANADA 1 Pavlína Pawlasová Faculty of Economics, VŠB Technical University of Ostrava pavlina.pawlasova@vsb.cz Abstract The topic of this paper is the comparison of the factors that affect customer satisfaction with online group-buying purchases in the Czech Republic and Canada. Social exchange theory was adopted to identify these factors. Reciprocity, reputation, trust, vendor s creativity and customers satisfaction with the purchase can be included among these factors. The aim of this paper is to identify the factors affecting customers satisfaction with online group-buying websites in Canada and compare the results with the results of Czech customers. The method of a structural equation modelling is used. The optimal model in Canada was found. The results confirm that trust is the most important factor for Canadian customers, the same for Czech customers. Keywords: Online Group-Buying, Satisfaction, Social Exchange Theory, Structural Equation Modelling JEL: M31, M37 Advisor: doc. Ing. Vojtěch Spáčil, CSc. 1 The research is due to the support provided by the Operational Programme Education for Competitiveness Project No. CZ.1.07/2.3.00/ All support is greatly acknowledged. [217] Faculty of Economics, VŠB - TUO

226 Section S4: Marketing and Business 1 Introduction Social commerce including online group-buying became popular all over the world and is rapidly growing across the world. (Turban et al., 2015; Jang et al., 2013; Erdogmus and Cicek, 2011). Group-buying social commerce refers to a sales method in which a specific product is sold at a discounted price when a certain number of potential buyers is reached within a limited time. The transaction can proceed only when the required number of buyers is reached (Jang et al., 2013; Shiau and Luo, 2012). Group-buying social commerce is a new phenomenon that takes advantage of both online marketing, group-buy site and social network influence (Jang et al., 2013; Erdogmus and Cicek, 2011). This paper focuses on this phenomenon in the Czech Republic and Canada. Michl (2013) and Oliveira (2012) confirm that this topic cannot be omitted in these countries. When Czech people want to buy some discounted thing, online group-buying websites are the third most common place for them to look. According to Michl (2013) the most usual places are leaflets and seasonal sales in shops. Also Canadians prefer a good deal, even more than Americans. Oliveira (2012) states that about 53 per cent of Canadians are familiar with at least one group deal web site such as the Chicago-based originator Groupon or homegrown competitors like Dealfind, TeamBuy and WagJag. About 42 percent of the Canadians familiar with groupbuying websites are signed up to receive daily offers via . Pilík (2012) and Oliveira (2012) confirm both Czech and Canadian customers are very conservative customers. They can be find far more responsible than other countries in their spending and online group-buying is just another way for them to be responsible. If we agree with Zamazalová (2009) a high consumer satisfaction rate can increase a consumer loyalty to the service provider significantly, service providers should try to achieve the maximum user satisfaction with services, products or purchases. According to Shiau and Luo (2012) consumer satisfaction helps companies to establish long-term relationships with consumers. Also the success of an online group-buying website depends on the number of customers that the system is able to attract and retain. Therefore, the quality of service and purchase satisfaction become issues of maximum importance (de Oña et al., 2013). The aim of this paper is to identify the factors affecting customer satisfaction with online group-buying websites in Canada and compare the results with the results of Czech customers. The affecting factors were identified according to social exchange theory (SET) that was applied in Shiau and Luo (2012) for identification of factors that affect users satisfaction with online shopping in China. This approach primarily offers only egoistic perspective that is based on the economic and social exchange theories. According to these theories human behaviour is influenced with expected economic rewards. Altruistic motives are omitted in this study. However there are no intention of improving the welfare of other buyers and no expectation of personal returns in online group-buying (Pawlasová, 2015; Shiau and Luo, 2012). This article contains the theoretical background of satisfaction measurement and social exchange theory. The subsequent practical part of the article contains the research methodology and an introduction to the method of structural equation modelling (SEM), which is used to evaluate the factors in Canada this paper and in the Czech Republic in Pawlasová (2015). Eventually, the results are described and the similarities and differences of Czech and Canadian customers are presented. This paper also includes a discussion of the results and a conclusion. 18 th International Scientific Conference [218] Faculty of Economics, VŠB - TUO

227 2 Theoretical background of customer satisfaction measurement and social exchange theory Satisfaction can be described as the difference between consumer expectation and actual satisfaction measured after a purchase (Shiau and Luo, 2012). If the satisfaction is measured from the customers perspective, the most important is the customers perceptions about each factor characterizing the satisfaction. However, it is not only important to know the perceptions about each the factors influencing customer satisfactions but the most important is to identify which factors have the highest influence on the global assessment of the purchase and which factors have the lowest influence on it. The actual trend is asking customers to express their opinions about the importance of each service attribute is widely used, but it can lead to the erroneous estimation. Respondents can rate some factors as important even though they have little influence on the overall satisfaction, or they are important only in one of the moments of the assessment (before or after thinking) (de Oña et al., 2013). Therefore, applying one of the derived methods which determine the importance of the factors by statistically testing the strength of the relation of the individual factors with the overall satisfaction is recommended (Weinstein, 2000). In Shiau and Luo (2012), Hsu et al. (2014) and Aktepe et al. (2015), there was structural equation modelling applied in order to measure customer satisfaction. As was mentioned above, this study applies social exchange theory in order to explore the factors related with customer psychology and relation exchange. The factors that are included in social exchange theory were identified as critical factors affecting both online and psychical shopping. Social exchange theory has been adopted in social networking research and across different areas, such as sales performance or adoption decisions. The psychological and consumer behaviours are important for marketers seeking to increase customer satisfaction, loyalty as well as sales rates (Shiau and Luo, 2012). Shiau and Luo (2012) states that people and organizations interact to minimize their costs and maximize their rewards according to social exchange theory (SET). This theory also states that individuals typically expect reciprocal benefits (namely personal affection, trust and gratitude) and economic returns when they act according to social norms. According to SET reciprocity, reputation and trust are factors influencing online groupbuying customer satisfaction. We can also add vendor s creativity and factors of satisfaction such as pleasure, contentment and delight (Shiau and Luo, 2012). Reciprocity is frequently defined as quid pro quo behaviour. Reputation is derived from the degree to which a person trusts that social interaction potentially enhances personal reputation. Trust can be described as the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action significant to the trustor, irrespective of the ability to monitor or control that other party. Creativity can be explained with creative products. These are often characterized by novelty and appropriateness; otherwise, we can consider them as general products. Creative products also have an expected competitive advantage (Shiau and Luo, 2012). [219] Faculty of Economics, VŠB - TUO

228 Section S4: Marketing and Business 3 Data collection and research method The purpose of this research was the identification of factors influencing customers satisfaction with online group-buying in Canada and comparison the results with the results from the Czech Republic. The factors of SET increased with vendor s creativity were used. The data were obtained in online questioning conducted in January 2015 in Canada. This method was chosen because of its connection with the research concern. The population was all online group-buying websites users, meaning everyone who has ever bought at these websites. The sample consisted of 426 Canadian respondents. The structure of the sample was equal to the structure of the customers of online group-buying websites and the control variables were frequency of online group-buying purchases, gender, age, education. See Table 1. Tab. 1 Structure of Canadian sample of respondents Frequency of online group-buying purchases Gender Age Education Once a fortnight 4.4 % Man 31.7% % Primary 20.1 % Once a month 27.9 % Woman 68.3 % % High school 46.1 % Quarterly 37.5 % Total % % University 33.8 % Less often 30.2 % Total % Total % Total % Source: Author s own. The respondents expressed their satisfaction regarding to the statements. The statements about the factors influencing satisfaction with online group-buying were adopted from Shiau and Luo (2012). The respondents expressed their satisfaction with factors using a Likert scale of 1 to 5, where 1 corresponded to a positive statement and 5 corresponded to a negative statement. A structural equation modelling (SEM) was used to evaluate the proposed model for behaviour of Canadian customers of online group-buying websites. These results were then compared with results of the same proposed model of Czech customers of online group-buying websites presented in Pawlasová (2015). 3.1 Structural equation modelling Structural equation modelling (SEM) is a method which permits to describe latent constructs really appearing in such a phenomenon in which are some latent factors due to the respondent subjectivity. SEM is similar to the regression modelling but it is more advanced (de Oña et al., 2013). A general structural model consists of two parts. These parts are a measurement model and a structural model; see Nachtigall et al. (2003). A measurement model describes the relations between the observed and the latent variables. If the latent variable is measured by several observed variables it is called an 18 th International Scientific Conference [220] Faculty of Economics, VŠB - TUO

229 indicator. The measurement model does not infer the residual segment of the variance. The residual variance can be considered as an unobserved variable (Urbánek, 2000). A measurement model can be algebraically defined as two systems of equations in matrix form (de Oña et al., 2013): x, x (1) y, (2) where is the vector of the indicator for the vector of unobserved variable is the vector of the indicator for the vector of unobserved variable stands for the vector for the unobserved exogenous variable, is the vector for the unobserved endogenous variable, and are the x matrixes of the structural coefficients for the relations of variables vectors and and variables and and are the vectors of residual variables for the vectors and y, and y, The measurement model also consists of the covariation matrixes, y x x and y x y. of the vectors of the residual variables. These matrixes are usually diagonal, and residual variables do not correlate in the model (de Oña et al., 2013). A structural model interprets the relations between the latent variables. This model detects which unobserved variable is independent (exogenous) and which unobserved variable is dependent (endogenous). The exogenous variable is the variable not influenced by any of the independent variables, whilst the endogenous variable is influenced by other variables. The structural model can be interpreted as follows (de Oña et al., 2013):, (3) where and are the matrixes of the structural coefficients of the unobserved endogenous (exogenous) variables and are the measurement errors. The validity of the proposed model can be confirmed with multiple chi-squared tests. CFI, NFI and Cronbach s Alpha were applied in this paper. The rate of change of a conditional mean is interpreted as a regression coefficient. Standardized regression coefficients should take values of 0.5 and higher if the relations between the variables are important (Hair et al., 2010). The comparative fit index (CFI) can be algebraically calculated as CFI = P N P Nb, (4) where P N and P Nb are the parameters of noncentrality for the estimated and the basic model. The CFI should be close to for the optimal model. This index does not vary much with the sample size (Urbánek, 2000). The normed fit index (NFI) can be interpreted as NFI = 1 F F b, (5) where F is the minimum value of the loss function for the estimated model and Fb is the value of the loss function as the minimum for the basic model (Urbánek, 2000). The NFI index should also be close to (Hooper et al., 2008). Another applied coefficient is Cronbach s Alpha which is one of the most frequently applied coefficients of reliability. It computes reliability as internal consistency. It is a measure of reliability used to evaluate the degree to which different test items that probe the same construct produce similar results. The Cronbach s Alpha can be computed as α = k (1 k 1 k 2 i=1 σ i σ2 ), (6) t [221] Faculty of Economics, VŠB - TUO

230 Section S4: Marketing and Business where k is the number of estimated (free) parameters, σ i 2 stands for the variance of component i for the current sample and σ t 2 is the variance of the observed total test scores. The actual value of the Cronbach ś Alpha should be higher than 0.7 for each latent variable. The latent variable is valid if the Cronbach s Alpha of the latent variable exceeds 0.7 (Urbánek et al., 2011). 4 Model analysis and results There were 26 variables in the original proposed model. This original model was tested in the Canadian conditions at first. It was found the model is not optimal for describing behaviour of Canadian customers of online group-buying websites. The number of variables was reduced in order to optimise the model. It means that statistically unreliable and insignificant variables were excluded from the model. These are variables all observed variables creating the latent variable Reputation, all observed variables creating the latent variable Reciprocity and all observed variables creating the latent variable Vendor s creativity and also the observed variable Online group-buying gives me a feeling of trust (Q47) was excluded from the original model because of too high significance level. As was found in the process of model optimisation, also variables I feel absolutely delighted with my overall shopping experience with online group-buying vendors (Q57) had to be excluded from the model because the model with these variables had too low values of goodness-of-fit indexes. It can be considered that these factors are not significantly important for Canadian customer satisfaction. 4.1 Variables in the optimal model There are 5 observed variables and 7 latent variables including 5 residual variables in the optimal model. The following Tab. 1 shows the variables in the tested model. Tab. 2 Variables of the tested model Name of variable in the Type of variable model Observed variables Q48 - Q49 Q54 Q56 Latent variables Trust Satisfaction Residual variables Source: Author s own. e1 e5 The first latent variable Trust is created by the observed variables Q48 Q49. These observed variables elicited the trust; while trust is consumer s confident belief in online groupbuying vendor s honesty towards the consumer. Specifically, the following factors were evaluated: 18 th International Scientific Conference [222] Faculty of Economics, VŠB - TUO

231 Q48 I have trust in online group-buying vendors, Q49 the online group-buying vendor gives me a trustworthy impression. The second latent variable Satisfaction is measured by three observed variables Q54 Q56. This variable describes the consumers perceptions of their prior shopping experience with the online group-buying vendor. Specifically, the following factors were evaluated: Q54 Q55 Q56 I feel very satisfied with my overall shopping experience on online group-buying vendors, I feel very pleased with my overall shopping experience on online group-buying vendors, I feel very contented with my overall shopping experience on online group-buying vendors. 4.2 Validity of model The presented values of the standardised regression coefficients and goodness-of-fit indexes were calculated in SPSS Amos 20. Fig. 1 shows the relations between the variables in the measurement model according to (1) and (2) and the relations between the variables in the structural model according to (3). Fig. 1 Standardised regression coefficients of the measurement and the structural model Source: Author s own. Validity of measurement model The relations between the observed and the unobserved variables in the measurement model were calculated. Following Tab. 3 shows the values of the standardised regression coefficients in the measurement model. The significance level of 0.05 was applied. [223] Faculty of Economics, VŠB - TUO

232 Section S4: Marketing and Business Latent variable Tab. 3 Values of standardised regression coefficients in the measurement model Observed variable Significance Standardised regression coefficients Trust I have trust in online group-buying vendors (Q48) The online group-buying vendor gives me a trustworthy impression (Q49) Satisfaction I feel very satisfied with my overall shopping experience on online group-buying vendors (Q54) I feel very pleased with my overall shopping experience on online group-buying vendors (Q55) I feel very contented with my overall shopping experience on online group-buying vendors (Q56) Source: Author s own All observed variables in the measurement model are statistically reliable at the significance level of See Tab. 3. If we consider 0.5 as the minimum value for a significant relation between variables, all the tested variables creating the latent variable Trust are significant. Their actual values of standardised regression coefficients are higher than 0.7 but lower than 0.9, so the impacts of these variables I have trust in online group-buying vendors and The online group-buying vendor gives me a trustworthy impression on the latent variable Trust are strong. These are the variables with the most important impact to the Canadian customers satisfaction with online group-buying. There are also three observed variables with weak relations to their latent variable. Their actual values of standardised regression coefficients are lower than 0.5 and these are variable I feel very satisfied with my overall shopping experience on online group-buying vendors (Q54), I feel very pleased with my overall shopping experience on online group-buying vendors (Q55) and I feel very contented with my overall shopping experience on online groupbuying vendors (Q56) measuring the latent variable Satisfaction. Validity of the structural model The relations between the latent endogenous and the latent exogenous variable in the structural model were calculated. The following Tab. 4 shows the values of the standardised regression coefficients in the structural model. The significance level of 0.05 was applied. 18 th International Scientific Conference [224] Faculty of Economics, VŠB - TUO

233 Tab. 4 Values of standardised regression coefficients in the structural model Latent endogenous variable Latent exogenous variable Significance Standardized regression coefficients Satisfaction Trust Source: Author s own. If we consider the significance level of 0.05, the relation between the latent variable Trust and the latent variable Satisfaction is statistically reliable. The variable Trust is the most important factor affecting Canadian customers satisfaction with online group-buying purchases. The relation between the variables Trust and Satisfaction is very strong. Goodness-of-fit indexes of the proposed model The comparative fit index (CFI) and the normed fit index (NFI) were applied to validate the proposed model. The internal consistency as reliability was measured by Cronbach s Alpha. The CFI and the NFI show that the proposed model is optimal; see Tab. 5. The CFI index was calculated as (4) and the NFI index was calculated as (5) in SPSS Amos 20. Tab. 5 Values of CFI and NFI for the tested model Model CFI NFI Default model Source: Author s own. The CFI of the tested model takes the value of This is a very high value. In addition, the NFI which takes the value of shows that the model is optimal and cannot be improved. According to the NFI, the proposed model fits the real data with a score of with 93 %. All these used indexes confirmed that this model is optimal. It means that there are just small possibilities to improve the model and these possibilities can be measured by residual variables. It would be necessary to conduct new research in this case. The Cronbach s Alpha for each latent variable was calculated as (6) in SPSS 20 and the actual values are shown in Tab. 6. Tab. 6 Values of Cronbach s Alpha for each latent variable Latent variable Cronbach s Alpha N of items Trust Satisfaction Source: Author s own. According to actual Cronbach s Alpha values all the latent variables are valid, because each actual Cronbach s alpha value for each latent variable is higher than 0.7; thus, it is possible to state that this model is valid. 5 Discussion about the factors affecting Czech and Canadian online group-buying satisfaction According to Pawlasová (2015), Czech customers satisfaction with online groupbuying is affected the most by trust. Trust is the most important factor also for Canadian [225] Faculty of Economics, VŠB - TUO

234 Section S4: Marketing and Business customers of online group-buying websites. It was found that both Czech and Canadian customers have to have trust in online group-buying vendors and the online group-buying vendor has to give them a trustworthy impression. These are the most important indicators of Czech and Canadian customers satisfaction. That is why online group-buying vendors in both countries should increase buyers trust in this method of buying. It is possible to recommend money refunds if there is a problem with the service, insurance for vouchers or the possibility to withdraw from the contract after a longer period than 14 days. The providers can also set up security gates for payment, certificates of quality and secure certificates and they can become members of associations of online group-buying. Except this similarity, Canadian and Czech customers claim that reputation and reciprocity are not important factors for them. It indicate that customer from these countries are more introvert and less grouped. There is also a difference between indicators that influence customers satisfaction with online group-buying in the Czech Republic and Canada. Whilst the vendor s creativity is the second most important indicator influencing satisfaction of Czech customers according to Pawlasová (2015), vendor s creativity is not important for Canadian customers. It can be considered that Czech and Canadian customers are both very conservative customers, but the difference founded in this research can indicate that Canadian customer are more conservative than Czech customers. Canadian customers do not appreciate if the online group-buying vendor develops new ways to meet consumer demands and or often has new ideas about how to promote products or often has a new approach to selling products. Whilst Czech online groupbuying vendors should think about new ways of promoting products and services and they should adopt a new approach to sell products, Canadian online group-buying vendors should be more careful in this area. Conclusion This paper focuses on the factors affecting customers satisfaction with online groupbuying. First, the factors influencing customers satisfaction with online group-buying in Canada are identified and then the comparison of the results with Czech Republic is conducted. Social exchange theory was used to identify these factors. The factors reciprocity, reputation and trust are groups of variables that affect customers satisfaction with online group-buying according to this theory. According to the literature review these factors coming from this theory can be extended with the vendor s creativity. The aim of this paper is to identify the factors affecting customer satisfaction with online group-buying websites in Canada and compare the results with the results of Czech customers. This paper includes the theoretical background of online group-buying as well as social exchange theory, which is the base of the tested model. A structural equation modelling was conducted to evaluate the proposed model in the Canadian conditions and find the optimal model with the most significant factors. The theoretical background of this method and also forms are the part of this paper. This research demonstrated that the trust is the most important factor affecting Czech and Canadian customers satisfaction with online group-buying purchases. Czech and Canadian customers also agree that reciprocity and reputation are not important for them. There is also a difference between indicators that influence customers satisfaction with online group-buying in the Czech Republic and Canada. Whilst the vendor s creativity is the second most important 18 th International Scientific Conference [226] Faculty of Economics, VŠB - TUO

235 indicator influencing satisfaction of Czech customers, vendor s creativity is not important for Canadian customers. References AKTEPE, Adnan et al. (2015). Customer satisfaction and loyalty analysis with classification algorithms and Structural Equation Modeling. Computers & Industrial Engineering. Kidlington: Elsevier Science, 86: doi: /j.cie ERDOĞMUS, Irem Eren and Mesut ÇIÇEK (2011). Online Group Buying: What Is There For the Consumers?. Procedia - Social and Behavioral Sciences. Kidlington: Elsevier Science, 24: ISSN HAIR, Joseph et al. (2010). Multivariate Data Analysis. 7th Ed. Prentice Hall. ISBN HOOPER, Daire et al. (2008). Structural Equation Modelling: Guidelines for Determining Model Fit. Electronic Journal of Business Research Methods [online]. 6(1): pp [ ]. Available at: HSU, Meng-Hsiang et al. (2014). Determinants of repurchase intention in online group-buying: The perspectives of DeLone & McLean IS success model and trust. Computers in Human Behavior. Kidlington: Elsevier Science, July 2014, 36: ISSN JANG, Heeyoung et al. (2013). The Effect of Group-Buy Social Commerce and Coupon on Satisfaction and Continuance Intention -- Focusing on the Expectation Confirmation Model (ECM). In: 46th Hawaii International Conference on System Sciences (HICSS). Wailea, HI, USA, 7-10 January 2013, doi: /HICSS MICHL, Petr (2013). Infografika: Slevové portály si vedou rok od roku lépe [online]. Marketing journal. Focus Agency, s.r.o., [cit ]. Available at: s288x9729.html NACHTIGALL, Christof et al. (2003). (Why) Should We Use SEM? Pros and Cons of Structural Equation Modelling. Methods of Psychological Research Online [online]. 8(2): [ ]. Available at: OLIVEIRA, Michael (2012). Canada loves daily deal sites, even more than U.S.: survey [online]. The Canadian Press. The Globe and Mail Inc., [cit ]. Available at: de OÑA, Juan et al. (2013). Perceived service quality in bus transit service: A structural equation approach. Transport Policy [online]. 29, [ ]. Available at: [227] Faculty of Economics, VŠB - TUO

236 Section S4: Marketing and Business PAWLASOVÁ, Pavlína (2015). Factors affecting users satisfaction with online group buying: A social exchange theory approach. Central European Review of Economic Issues Ekonomická Revue. Ostrava: VŠB-Technická univerzita Ostrava, Ekonomická fakulta, 18(2): doi: /cerei PILÍK Michal (2012). On-line Shopping on B2C Markets in the Czech Republic. Journal of Competitiveness. Zlín: Tomas Bata University, December (4): DOI: /joc SHIAU, Wen-Lung and Margaret Meiling LUO (2012). Factors Affecting Online Group Buying Intention And Satisfaction: A Social Exchange Theory Perspective. Computers in Human Behavior. Kidlington: Pergamon Press, November (6): DOI: /j.chb TURBAN, Efraim et al. Social Commerce: Marketing, Technology and Management. Cham: Springer International Publishing, p. ISBN URBÁNEK, Tomáš (2000). Strukturální modelování v psychologii. Brno: Psychologický ústav AV ČR a Nakladatelství Pavel Křepela. ISBN URBÁNEK, Tomáš et al. (2011). Psychometrika: Měření v psychologii. Praha: Portál. ISBN WEINSTEIN, Aaron (2000). Customer satisfaction among transit riders: How customers rank the relative importance of various service attributes. Transportation Research Record [online]. 1735: [cit ]. Available at: ZAMAZALOVÁ, Marcela (2009). Marketing obchodní firmy: nový přístup k zisku, růstu a obnově. Praha: Grada. ISBN th International Scientific Conference [228] Faculty of Economics, VŠB - TUO

237 POWER POSITIONING IN COMMODITY PROCUREMENT: A PORTFOLIO-BASED ANALYSIS Jan Vašek, Vojtěch Klézl VSB-TU Ostrava, Faculty of Economics vojtech.klezl@vsb.cz, jan.vasek.ekf@vsb.cz Abstract (in English) Relative power distribution within the industrial supply chain is an important purchasing category management contingency, yet it is under-researched in commodity procurement. Taking a manufacturing company view, a conceptual Commodity supply chain power distribution matrix integrating both the supplier-manufacturer and manufacturer-customer perspective is constructed and five principal triadic set-ups presented: commodity volatility management focus, commodity price management focus, bargaining zone, double squeeze, and collaborative. The conceptual framework serves as basis for actual empirical research. Keywords: Commodity procurement JEL: M11 Advisor: doc. Ing. Vojtěch Spáčil, CSc. [229] Faculty of Economics, VŠB - TUO

238 Section S4: Marketing and Business 1 Introduction Commodities understood as homogenous, undifferentiated goods traded on commodity exchanges or possessing reference price (Rauch, 1999) are a distinct procurement category. Relative power distribution stands out as important SC related contingency shaping the choice, suitability and effectiveness of commodity category management strategies for manufacturing companies who face the price risk conceptualized as extreme commodity price increase and/or price volatility (Fischl et al., 2014). Extant literature review suggests that SCM research mostly explores power distribution from the dyadic perspective. While this approach provides many valuable insights, it may not be appropriate for commodities as it fails to capture the implications of commodity price inputoutput (mis)alignment. This paper therefore focuses on exploring the triadic power distribution among the commodity supplier, manufacturer and the final customer and argues that it determines the available and suitable commodity price and volatility management practices. The rest of the paper is organized as follows: after a short literature review, we propose a typology of relative power distribution within the simplified commodity supply chain and consider the implication for the five most important identified power distribution set-ups. 2 Related literature To acquire commodities (input) and to sell the final product containing commodities (output) a manufacturer interacts with the environment and thus establishes interdependence (Pfeffer & Salancik, 1978) which is only rarely symmetrical or balanced. The less dependent organization has more power which is defined as the ability to get things done the way one wants them to be done (Salancik & Pfeffer, 1974: 454). Power is a property of social relations and is relative (to whom) and situational (in which context) (Emerson, 1962). The power distribution along the supply chain is important from the value appropriation perspective and can be used to assess the supply management strategies suitability (for example Cox et al., 2004). It has a double role in commodity contracts: (1) the more powerful party may choose the price discovery mechanism and shape the actual transaction terms, and (2) impose its volatility management preference (Pennings & Leuthold, 2000). Influential portfolio matrices focus on the dyadic power distribution. For example, the Purchasing portfolio matrix (Kraljic, 1983) compares buyer strength to supply market strength based on 10 criteria and defines three basic set-ups: Exploit, balance and diversify. Similarly, the Power distribution matrix (Cox, 2014) draws on the relative supplier and relative buyer power axes which are extensively operationalized by 75 buyer-side and 90 supplier-side power attributes (Cox, 2014) and defines four constellations: independence, buyer dominance, supplier dominance and interdependence. Finally, the amount of specific buyer and supplier investments in a business relationship (Bensaou, 1999) also operationalize relative power operationalization and lead to quadrants similar to Cox (2014). Suitable procurement practices are then designed based on the purchasing category position in the respective portfolio matrix. The analysis from manufacturer s perspective however suggests that such dyadic assessment is insufficient for explaining the reasons and degree of commodity price risk because the actual exposure can only be measured by the input-output commodity price 18 th International Scientific Conference [230] Faculty of Economics, VŠB - TUO

239 (mis)alignment (Hull, 2011). As both the input and output alignment have to be assessed at the same time the analytical lens has to be based on both the supplier-manufacturer and manufacturer-customer perspective and the respective triadic power distribution. 3 Commodity supply chain power distribution matrix The simplified industrial SC for commodities is formed by the commodity supplier (upstream market), the manufacturer (processor), and the customer (downstream market) (Jackson, 1980). The power distribution within this triad determines manufacturer s degree of exposure to commodity price risk, ability to impose its preferred contractual arrangements on the upstream and downstream commodity channel members and suggests suitable (available) commodity price and volatility management practices. Commodity power distribution matrix Relative manufacturer- customer power distribution Manufacturer power Customer power COMMODITY VOLATILITY MANAGEMENT FOCUS DOUBLE SQUEEZE COMMODITY PRICE MANAGEMENT FOCUS COLLABORATIVE APPROACH Manufacturer power Relative supplier - manufacturer power distribution Supplier power Figure 1: Commodity supply chain power distribution matrix It is important to note that the conceptual Commodity supply chain power distribution matrix (Figure 1) is constructed and interpreted from manufacturer s perspective. It combines the dyadic supplier-manufacturer and manufacturer-customer power balance. Both axes are operationalized using the strategic dependence view (Pfeffer & Salancik, 1978) and the transaction cost approach (Williamson, 2008) key variables. The relative commodity channel member power (degree of dependence) is therefore contingent upon (1) the commodity importance to the buyer, (2) degree of concentration of control over the commodity, (3) member s ability to mobilise enough counter-power, (4) the degree of uncertainty linked to the commodity, (5) existence of specific assets and (6) transaction frequency. [231] Faculty of Economics, VŠB - TUO

240 Section S4: Marketing and Business Next sections shortly discuss both axes and reviews the four power distribution set-ups identified in extant literature. It is important to note that the framework is only valid when channel members choose to leverage their power. The frequently observed collaborative arrangements are visualised as laying outside of the matrix. 3.1 Supplier-Manufacturer axis The supplier-manufacturer axis goes along the supplier power-power paritymanufacturer power continuum. The manufacturer commands higher power over commodities that are relatively unimportant, supplier concentration and control over commodity is low and any significant uncertainty is absent (Narayandas & Rangan, 2004), as well as over commodities undergoing the process of standardization resulting in increased price pressure, unattractive industry structure due to high supplier rivalry, difficulty to achieve loyalty and lock-in customers (de Figueiredo, 2000). Power parity is typical for commodities traded on commodity exchanges or having a reference price informed by a price reporting agency which provides a reliable and transparent price finding mechanism. Both parties can easily switch to an alternative supplier should the realization price deviate from the benchmark. The parity is also achieved when the concentrated supply market faces similarly strong manufacturers as was the case with coking coal in Pacific region where concentrated mining companies negotiated with equally concentrated steel manufacturers (Bowden & Insch, 2013). Suppliers dominate and influence the market (Luzzini et al., 2012) through posted prices when the ownership is highly concentrated and manufacturers are relatively small. This was the case with many commodities (such as aluminium, zinc or oil) before the market disintegrated due to new entrants (Radetzki, 2012) Suppliers also have the upper hand during the periods of market disequilibrium when demand significantly exceeds the available offer. 3.2 Manufacturer-Customer axis The manufacturer-customer axis goes along the manufacturer power-power paritysupplier power continuum. Customer power seems to be the most frequent set-up: Extant literature suggests that bargaining power durably shifts from manufacturers to customers who become more concentrated and skilled (Homburg et al. 2012). Fischl et al. (2014) argues that manufacturers struggle to pass through the increases and implies customer power. Numerous other examples of customer power were found in extant literature: retailers exercising pressure on agricultural processors (Jones et al., 2007), OEMs dominating their SME suppliers (Peters et al, 2011) or commodity PCB suppliers (Narayandas & Rangan, 2004). Coffee manufacturers ability to pass through cent-for-cent the green coffee price movement to their customers is an example of power parity (Leibtag et al., 2007). Cox et al. (2004) conceptualize this situation as buyer-supplier independence, however, it could be argued that the customer has more power in such set-ups as she makes the final decision. 18 th International Scientific Conference [232] Faculty of Economics, VŠB - TUO

241 Kannegieser & Guenther (2011) study is a rare example where a dominating manufacturer imposes its contract preference by the Counterintuitive sourcing, that is by forcing customers to compete for limited capacity, and at the same time leveraging its power vis-à-vis suppliers. 4 Triadic configurations Combining the two axes creates five possible triadic set-ups which will be shortly discussed and illustrated by examples from extant literature. The commodity positioning on the matrix informs manufacturer s scope to influence the realization price, potential to appropriate value and impose the governance method. Manufacturer s price management options range from the price taker (high dependence/low power) to price maker (low dependence/high power). The triadic power distribution also determines how much discretion the manufacturer has to impose its contract preference (spot or forward, and price fixation duration) and redistribute cash flow volatility (Lusch & Brown, 1996). Considering risk aversion and preference for a fixed price contract as a default option, manufacturer s volatility management options range from full volatility absorption to complete volatility pass-through. 4.1 Double squeeze Double squeeze configuration appears frequently in business practice. Suppliers push for maximum product market value appropriation and, simultaneously, customers impose their preferred contract arrangement exposing manufacturers to commodity volatility risk which they cannot pass over to suppliers. The strategic dependence theory (Pfeffer & Salancik, 1978) identifies four generic strategies to deal with such dependence: (1) Accept the dependence and act accordingly approach was adopted by manufacturers trapped on the customer side by fixed long term contracts. They were obliged to accept the dependence, assume the rare earths price increase imposed by monopoly suppliers as neither futures markets nor short-term substitutes exist (Slowinski et al. 2013) and reduce their margin; (2) Absorb the environment through vertical and horizontal integration such as inter-company alliances that backward vertically integrate to gain control over critical commodities (Fischl et al., 2014) is a quite radical and capital intensive option; (3) Attempt to negotiate the environment by creating interdependence through jointventures, long term agreements, or purchasing consortia was manifest in the case study of rhenium die casting manufacturer facing a monopoly supplier who created a successful purchasing alliance with its customer (Bastl et al., 2013). Finally, creating environment through law and social sanction was successfully leveraged by small manufacturers disadvantaged by the secret discounting who joined forces with new entrants to switch from posted prices to a transparent price discovery mechanism (Radetzki, 2013). 4.2 Commodity price management focus When the supplier dominates the triad, Commodity price management gains importance as the vendor seeks to appropriate the maximum product-market value. Commodity volatility management is less of an issue because the manufacturer can simply pass the volatility over to the customer. Manufacturers may seek to strengthen their bargaining power by volume [233] Faculty of Economics, VŠB - TUO

242 Section S4: Marketing and Business bundling (Zsidisin & Hartley, 2012), create less adversary relationship by cooperation and trust building (Jones et al., 2007), pass the purchasing responsibility to the customer who has more leverage with the supplier (Cox et al., 2004), or accept the situation and work on transaction cost optimisation. 4.3 Commodity volatility management focus Facing a dominating customer emphasises the importance of commodity volatility management practices especially if upstream channel members are unable to take over the price volatility. Switching from the volatile market price to a more stable cost-plus model may be a suitable practice as well as hedging or other risk mitigation practices. Manufacturers may also leverage their power over the supplier and appropriate value through distributive commodity price management practices such as leverage competition, switching suppliers threat and creating disincentives for suppliers (Tang & Tomlin, 2008), e-auctions or bargaining. This was the case in the metalwork industry where buyers sought to gain concessions from suppliers and beat the commodity index (Moosmayer et al., 2012). 4.4 Bargaining zone The vast majority of triads fall into the Bargaining zone configuration where manufacturers have strategic choice concerning the CPM and CVM practices. Jackson (1980), Buehler et al., (2008), Hayenga (1979) provide examples of managing this configuration. Divesting (outsourcing) commoditized components (Venkatesan, 1992) is an example of manufacturer s deliberate move into the bargaining zone under favourable circumstances. 4.5 Collaborative approach Finally, the collaborative approach rejects what Lindgreen et al. (2012) call the distributive bargaining with aggressive sourcing mindset. Instead, SC partners look for an optimum and mutually advantageous set-up. There are three integrative bargaining approaches (Lindgreen et al., 2012): Electronic with emphasis on efficient information exchange and transaction cost reduction, Interactive dedicated to building a long term relationship with selected SC partners, and Network focused on creating SC wide relationships. These relational approaches are not mutually exclusive and may be used in combination. The concept of transferring the risk to and rewarding the member who can best cope with it (Buehler et al., 2008) is a good example of collaborative approach. Extant literature identifies many diverse examples of decommoditization and collaborative value creation (e.g. Van Leer, 1976; Levitt, 1980; Pagell et al., 2010; Lacoste & Johnsen, in press; Alvarez et al., 2010). Concluding remarks This paper took a manufacturing company perspective and presented a conceptual Commodity supply chain power distribution matrix which integrates the simplified industrial commodity supply chain. Five configurations are defined based on the relative power distribution among SC members, each requiring different commodity price and volatility management practices. 18 th International Scientific Conference [234] Faculty of Economics, VŠB - TUO

243 The paper has several important limitations: it is necessary to assess the relevance of axes operationalization variables, define the cut-off points and substantiate the conceptual configurations. Field research is required to establish the pertinence of the proposed framework for procurement practice. Finally, commodity price and volatility practices should be reviewed and their suitability checked against individual set-ups: some may fit only a single configuration while others may be suitable in several instances. References ALVAREZ, Gabriela, et al (2010). Nestlé Nespresso AAA sustainable quality program: an investigation into the governance dynamics in a multi-stakeholder supply chain network. Supply Chain Management, 15(2): BASTL, Marko, et al (2013). Who's seeking whom? Coalition behavior of a weaker player in buyer supplier relationships. Journal of Supply Chain Management, 49(1): BENSAOU, M. (1999). Portfolios of buyer-supplier relationships. Sloan management review, 40(4): BOWDEN, Bradley and Andrea INSCH. (2013). A study of resource dependency: the coal supply strategy of the Japanese steel mills Journal of Management History, 19(1): BUEHLER, Kevin et al (2008). Owning the Right Risks. Harvard business review, 86(9): COX, Andrew (2014). Sourcing Portfolio Analysis: Power Positioning Tools for Category Management & Strategic Sourcing. Stratford-upon-Avon (UK): Earlsgate Press. ISBN: COX, Andrew, et al (2004). Managing appropriately in power regimes: relationship and performance management in 12 supply chain cases, Supply Chain Management. 9(5): DE FIGUEIREDO, John M. (2000). Finding Sustainable Profitability in Electronic Commerce, Sloan management review, 41(4): EMERSON, Richard M. (1962). Power-Dependence Relations. American Sociological Review. 27 (1): FISCHL, Maria, et al (2014). Towards financial resilience in manufacturing companies: A toolbox for the mitigation of consumption factors market price risks. At: 21st European Operations Management Association (EurOMA) Conference (Palermo, Italy). HAYENGA, Marvin L. (1979). Risk Management in Imperfect Markets: Commodity Procurement Strategy in the Food Manufacturing Sector, American Journal of Agricultural Economics, 61(2): HOMBURG, Christian, et al. (2012), How to Organize Pricing? Vertical Delegation and Horizontal Dispersion of Pricing Authority. Journal of Marketing. 76(5): [235] Faculty of Economics, VŠB - TUO

244 Section S4: Marketing and Business HULL, John. (2011). Options, Futures, and Other Derivatives. 8th ed, London (UK): Pearson Education. ISBN: JACKSON, B. B. (1980). Manage risk in industrial pricing. Harvard business review. 58(4): JONES, Kraig, et al (2007). Commodity-Procurement Strategies of Food Companies: A Case Study. Journal of Food Distribution Research. 38(3): KANNEGEISSER, Matthias and Hans-Otto GUENTHER (2011). An integrated optimization model for managing the global value chain of a chemical commodities manufacturer. Journal of the Operational Research Society. 62(4): KRALJIC, Peter (1983). Purchasing Must Become Supply Chain Management. Harvard Business Review. 1983, 9: LACOSTE, Sylvie and Rhona E. JOHNSEN (2015). Supplier customer relationships: A case study of power dynamics. Journal of Purchasing and Supply Management. 21(4): LEIBTAG, Ephraim, et al (2007). Cost pass-through in the US coffee industry, 38, USA: USDA-ERS Economic Research Report. LEVITT, Theodore (1980). Marketing success through differentiation--of anything. Harvard business review. 58(1): LINDGREEN, Adam, et al. (2013), Go Configure: The Mix of Purchasing Practices to Choose for Your Supply Base. California management review. 55(2): LUSCH, Robert F. and James R. BROWN (1996), Interdependency, contracting, and relational behavior in marketing channels. The Journal of Marketing, 60(4): LUZZINI, Davide, et al. (2012). A transaction costs approach to purchasing portfolio management. International Journal of Operations & Production Management. 32(9): MOOSMAYER, Dirk C., et al. (2012). Reference Prices as Determinants of Business to Business Price Negotiation Outcomes: An Empirical Perspective from the Chemical Industry. Journal of Supply Chain Management. 48(1): NARAYANDAS, Das and V. Katsuri RANGAN (2004). Building and Sustaining Buyer Seller Relationships in Mature Industrial Markets. Journal of Marketing. 68(3): PAGELL, Mark, et al. (2010). Thinking differently about purchasing portfolios: an assessment of sustainable sourcing. Journal of Supply Chain Management. 46(1): PETERS, Nils J., et al (2011). Institutional entrepreneurship capabilities for interorganizational sustainable supply chain strategies. International Journal of Logistics Management. 22(1): PENNINGS Joost. M. E. and Raymond M. LEUTHOLD (2000). The Motivation for Hedging Revisited. Journal of Futures Markets. 20(9): th International Scientific Conference [236] Faculty of Economics, VŠB - TUO

245 PFEFFER, Jeffrey and Gerald R. SALANCIK (1978). The external control of organizations: A resource dependence perspective. New York: Harper and Row Publishers. RADETZKI, Marian (2013). The relentless progress of commodity exchanges in the establishment of primary commodity prices. Resources Policy. 38(3): RAUCH, James E. (1999). Networks versus markets in international trade. Journal of International Economics. 48(1): SALANCIK, Gerald R. and Jeffrey PFEFFER (1974). The Bases and Use of Power in Organizational Decision Making: The Case of a University. Administrative Science Quarterly. 19(4): SLOWINSKI, Gene, et al. (2013). Dealing with Shortages of Critical Materials. Research Technology Management. 56(5): TANG, Christopher and TOMLIN, Brian (2008). The power of flexibility for mitigating supply chain risks. International Journal of Production Economics. 116(1): VAN LEER, R. Karl (1976). Industrial marketing with a flair. Harvard business review. 54(6): VENKATESAN, Ravi (1992). Strategic sourcing: to make or not to make. Harvard business review. 70(6): WILLIAMSON, Oliver E. (2008). Outsourcing: Transaction Cost Economics and Supply Chain Management. Journal of Supply Chain Management. 44(2): ZSIDISIN, George. A. and Janet L. HARTLEY (2012). A Strategy for Managing Commodity Price Risk. Supply Chain Management Review. 16(2): [237] Faculty of Economics, VŠB - TUO

246 Section S4: Marketing and Business THE ISSUE OF ACCESSIBILITY FROM THE POINT OF VIEW OF TOURISM SERVICE PROVIDERS Dagmar Zorková Silesian University in Opava, School of Business Administration in Karviná, Institute of Doctoral Studies Abstract The objective of the article called The Issue of Accessibility from the Point of View of Tourism Services Providers is to find out the barriers to development of accessible tourism. The questionnaire survey was made in restaurants, accommodation facilities, information centres, tourist attractions and travel agencies. More than 90% of respondents were interested in clients with special requirements. As far as evaluation of current state of accessibility is concerned, 81% of respondents regarded the business premises as barrier-free, 70% of them think that they provide services adjusted to special requirements of clients and 93% of respondents consider communication of staff as satisfactory. The respondents also expressed their opinions on the influence of particular criteria of accessibility on service quality. They regarded barrier-free access in buildings as the most important (95%), followed by offer adjustment to special requirements (77%), the level of communication between staff and clients (71%) and possibility of lending disability equipment (64%). Keywords: Accessible tourism, criteria of accessibility, service quality JEL: L29 18 th International Scientific Conference [238] Faculty of Economics, VŠB - TUO

247 1 Introduction The objective of the article is to find out the barriers to development of accessible tourism. The introductory part is devoted to the issue of accessible tourism including the emphasis on connection between universal design and demographic trend of aging population. The following chapter deals with the research, specific experimental questions and the design of the research. The results of the research and discussions are mentioned in the last chapter. Accessibility, which comes from the philosophy of design for all, is the base and condition of travelling regardless of age and state of health. It is an approach to planning and realization of developed areas, products and services, which allows everyone to be a participant in the community life (The Center for Universal Design, 2016). Aging population is becoming a significant demographic effect which is closely connected with this issue and will outstandingly influence the aspects of tourism. The senior segment 1 concerns nowadays more than 75 million people in Europe and according to estimations the ratio of elderly people will increase by 35% in 2025 (European Commission, 2015). From the global point of view, many authors regard universal design as a paradigm extending the approach of continuous journeys, accessibility, mobility and barrier-free environment, including integration of intergenerational planning which acknowledges the connection between aging, disability and skill development of people throughout their lives (Aslaksen, Bergh, Bringa, and Heggem, 1997; Ostroff, 2001; Steinfeld and Shea, 2001, In: Darcy, Cameron and Pegg, 2010, p. 519). Buhalis and Darcy (2011) regard accessible tourism as a phenomenon which is developed in a certain way not only in academic studies, but also in practice. Dimensions of this phenomenon are multidisciplinary and they concern geography, disability studies, economy, politics, psychology, social psychology, management, postmodern cultural studies, marketing, architecture, medicine and many others. The definitions of accessible tourism come from the points of view of the authors. The General Assembly of UNWTO emphasises accessibility as a central element of any responsible and sustainable tourism policy (UNWTO, 2015). Buhalis and Darcy (2011, p. 10) claim that accessibility is a tourist industry that includes and requires cooperation of all participants involved, the result of which is a universally designed tourism product, services and environment which allow people with access requirements to participate in tourism individually, equally and dignifiedly. The authors emphasize the necessity of a lifelong approach to clients who could use these arrangements throughout their lives. Kazuist is a company in the Czech Republic which emphasizes a simple access to facilities, buildings, transport, roads, attractions and other services including an active integration of all clients in programmes and events for guests. Competences of staff, namely abilities to respond to special requirements of customers, are also reflected in accessibility. (Kazuist, ENAT, NRZP, Trianon, 2010, p. 2-3). A potential client with special requirements expects an access to a complex offer including all kinds of tourist services. The accessibility of tourism services consists of the following dimensions: 1. Physical accessibility (buildings and environment, transport and infrastructure), 2. Information accessibility (reliability of information, accessible communication channels, standards for accessibility assessment), 3. Communication accessibility (access of staff to clients and communication with them), 1 Population aged 65 and older [239] Faculty of Economics, VŠB - TUO

248 Section S4: Marketing and Business 4. Economic accessibility (access to various price levels) (Kazuist, ENAT, NRZP, Trianon, 2010). The most significant segments of potential customers of accessible tourism are: People aged 65 and older (Po65), People with disabilities (PwD), People with children up to 3 years old (PwCh) 2. All the above mentioned segments show special requirements during travelling, as Tourism from the Point of View of Clients with Special Requirements confirms (Zorková, 2014). The number of potential clients in the main segments in the Czech Republic is illustrated in Table 1. Tab.1 The Number of Potential Clients of Accessible Tourism in the Czech Republic Segment of accessible Number of people tourism (in thousands) Po PwD 937 PwCh Total Source: Kazuist, ENAT, NRZP, Trianon (2010) 2 Methods 2.1 Research Area, Research Topics and Experimental Questions The research deals with the supply side of accessible tourism, namely with the evaluation of accessibility from the point of view of service providers. Research area: accessible tourism Research topic: specification of supply side of accessible tourism General experimental question: How do tourism services providers evaluate accessibility? Specific experimental questions: 1. What is the attendance of clients with special requirements like? 2. How do service providers evaluate current state of barrier-free accessibility to buildings and what design changes are they planning? 3. How do service providers evaluate current offer adjustment to special requirements? 4. How do service providers evaluate communication between staff and clients with special requirements and are they interested in staff training regarding this issue? 5. What is the influence of accessibility on service quality like? 6. Are service providers interested in a manual dealing with the issue of accessibility and placement in the database of showplaces and tourist destinations? Objective of the research 2 The segment also involves people with acute movement injuries, people with chronic diseases, people with internal diseases, people suffering from gigantism or nanism, people with excess baggage etc. 3 Incl. pregnant women 18 th International Scientific Conference [240] Faculty of Economics, VŠB - TUO

249 The objective of the research was to find out how the service providers evaluate the issue of accessibility, namely criteria of accessibility and the influence on quality. 2.2 Design of the Research The subchapter specifies the methods of the research, the formation of general sample and the way of implementation of the research. Methods: investigation type Survey Sample selection: combination of quota sampling and judgement sampling Data collection, tools: personal questioning, questionnaire for a structured interview General sample: five types of subjects providing tourism have been chosen as a general sample: restaurants, accommodation facilities, information centres, tourist attractions and travel agents General sample was specified according to the following attributes: 1. Belonging to one of five types of subjects twelve business premises have been chosen from each category, which means 60 business premises in total. 2. Size and attendance of subject it is presumed that larger and more attended subjects have better sources for creation of surroundings for clients with special requirements and that they are interested in them. 3. Geographic area Ostrava, Opava and its surroundings. In total, the sample included sixty subjects providing tourism services. Implementation of the research: Personal questioning in the form of structured interview with the manager or employee of the subject of tourism took place from January 2014 to April Results of the Research and Discussions The following chapter deals with the results of the research and discussions divided according to specific experimental questions. 3.1 Attendance of Clients with Special Requirements Introductory experimental questions were focused on attendance of clients with special requirements in particular types of tourist facilities. 12% of all the addressed subjects responded that they are not attended by seniors, 25% are not attended by disabled people and 13% are not attended by families with children up to 3 years old. Whereas, 97% of respondents are interested in senior attendance, 93% in attendance of disabled people and 95% are interested in attendance of families with children. Interesting results have been found out about average number of clients of particular segments per month. The data are summarized in Table 2, from which it is obvious that it is a senior segment which uses tourism services the most and this trend will increase according to statistic estimations. Tab. 2 Attendance of Clients with Special Requirements per Month 4 Types of tourism subject Po65 PwD PwCh 4 Average attendance per one business premise [241] Faculty of Economics, VŠB - TUO

250 Section S4: Marketing and Business Restaurants Information centres Tourist attractions Travel agencies Accommodation Source: Own research ( ) Discussion: From the comparison of three segments it is obvious that information centres (IC) are mostly used by people older 65 years. This phenomenon is, in my opinion, caused by that fact that older people prefer personal contact with IC employees and they enjoy the possibility of receiving advertising materials. People with disabilities use tourism services the least, which is the most obvious in case of travel agencies (TA) that are attended by only 2 people per month. The travel agents explain that disabled people do not travel on their own and they do not organize their journeys. The attendance of tourist attractions is also very low (6 people per month) which is, in my opinion, caused by unsatisfactory level of physical (barrier-free access) and information accessibility in the Czech Republic. Currently, there is no unified Methodology of categorization of tourist destination accessibility and a potential client is not informed about existing databases. Due to these reasons, the choice of destination and tourist facility is complicated by current level of relevance of information about barrier-free access (Accessible Tourism and Relevancy of Information about Barrier-free Access, Zorková 2014). As it was expected, tourist attractions are mostly attended by families with children. However, they do not use IC services as much as seniors, because younger generations prefer searching information using electronic devices. 3.2 Evaluation of the Current State of Barrier-free Access in Buildings and Design Planning The initial condition of accessibility development in environment is a barrier-free access of buildings and their surroundings. The opinions of respondents on barrier-free access of their business premises are shown in Figure 1. For the purposes of the research, the barrier-free building is considered to have a barrier-free entrance and circulation areas, a barrier-free toilet, a lift and respectively a barrier-free room. 81% of respondents (combination of responds definitely yes and rather yes) consider their business premises to be barrier-free. 19% of respondents assessed their buildings negatively, namely rather not or definitely not. However, the realization of barrier-free design is planned by only one of the respondents. 18 th International Scientific Conference [242] Faculty of Economics, VŠB - TUO

251 Fig.1 Barrier-free Buildings 0% 2% 15% 17% 66% Definitely yes Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) Discussion: 81% of respondents consider their business premises to be barrier-free. The result might be influenced by the sample selection and by insufficient knowledge of demands on barrierfree access, which comes from the Act No. 398/2009 on General Technical Requirements Ensuring the Use of Buildings by Persons with Limited Movement and Orientation Capabilities. 3.3 Evaluation of Current Offer Adjustment to Special Requirements The offer adjustment of services to special requirements of seniors includes for example clear arrangement and comprehensibility of information, larger font size on printed materials and special requirements regarding the diet. Parents with small children will appreciate the possibility of warming up the baby food or babysitting. Disabled people will appreciate barrierfree tourist routes or information materials written in Braill font. The respondents evaluated how the offer of services is adjusted to their special requirements. Their opinions are shown in Fig. 2. From the above mentioned it is obvious that offers which would be tailor made to requirements of clients are not common among tourism service providers. Fig. 2 The Adjustment of Services to Special Requirements 6% 16% 8% 32% 38% Definitely yes Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) Discussion: The topic of adjustment of services to people with special requirements was examined by The Research of Demand Side of Accessible Tourism (Zorková, 2014). The results of the research show that the representatives of particular segments have a lot of wishes and suggestions on service providers and destination management companies suggestions were proposed by seniors, 729 by disabled people and 745 by people with children. According to the opinions of customers it is obvious that there is a significant potential for improving the quality of tourist services. Just to illustrate the situation the most common suggestions of seniors are mentioned: better marking, a possibility of collective transport, more benches and resting places, special room equipment, presence of a medic or medical assistance, more banisters, self [243] Faculty of Economics, VŠB - TUO

252 Section S4: Marketing and Business service counter aid, clearly arranged menu, more space around the table and a space for crutches, more willing staff etc. 3.4 Evaluation of Communication of Staffs with Clients with Special Requirements and the Concern about Training in this Field This specific experimental question investigated whether respondents consider behaviour of staff to clients with special requirements to be adequate. As it is obvious from Fig. 3, most of the respondents consider the behaviour of staff to be adequate. The result was surprising for me, as I assumed that tourist services employees are not sure how to deal with clients with special requirements. My presumption was confirmed by the following question focusing on the need of training. 41% of respondents said they would be interested in training (combination of responds definitely yes and rather yes). Four subjects would be willing to pay up to 3000 Czech crowns for the training, the others would be concerned about training just in case of financing from other sources. As regards the contents of training, practical demonstrations and model situations in particular workplaces would be required the most. Fig. 3 Communication of Staffs with Clients with Special Requirements 12% 1% 2% 85% Definitely yes Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) Discussion: Comparisons of responds of particular segments show very similar results. The respondents who chose definitely yes argued that they are professional towards all clients. They responded rather yes regarding disabled people, as they were not sure of adequacy of their behaviour towards them. The responds of potential customers from The Research of Demand Side of Accessible Tourism confirms (Zorková, 2014) are mentioned to make comparison. 93% of respondents considered training of the staff to be an essential requirement in order to increase the quality. Staff training should involve communicativeness (29%), information about particular special requirements of clients (27%), personal approach (25%), practical training in particular situations (17%). Willingness, stress management, patience, basic knowledge of sign language were mentioned among other suggestions. As the specific experimental questions 3 and 4 are nominal variables, it is not possible to provide the T test, but we can estimate the error. If the number of respondents is 60 and the probability 95%, the admissible error is 3.7%, from which it is obvious that the variations between them are statistically insignificant. 18 th International Scientific Conference [244] Faculty of Economics, VŠB - TUO

253 3.5 The Influence of Accessibility on Service Quality The question investigating opinions of service providers on the relation between accessibility and quality was divided into several subsections: barrier-free access to buildings, possibility of lending disability equipment, tailor made offer and staff training. 95% of service providers (combination of responds definitely yes and rather yes) consider barrier- free access in buildings to be the essential part of quality, as it is obvious from Fig. 4. Fig. 4 The Influence of Barrier-free Access on Service Quality 17% 5% 0 % 0% Definitely yes 78% Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) Fig. 5 shows the results of the following subsection. 64% of respondents (combination of responds definitely yes and rather yes) consider lending of disability equipment as an important part of quality. Fig. 5 The Influence of Presence of Disability Equipment on Service Quality 14% 14% 3% 34% 30% Definitely yes Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) The following Fig. 6 shows opinions of providers on adjusting the tailor-made offer to special requirements of particular groups. 77% of respondents responded definitely yes or rather yes, 18% chose the option not sure and 5% rather not. [245] Faculty of Economics, VŠB - TUO

254 Section S4: Marketing and Business Fig. 6 The Influence of Tailor-made Offer on Service Quality Definitely yes 18% 5% 0% 33% 44% Rather yes Not sure Rather not Definitely not Source: Own empirical research ( ) The influence of staff training and behaviour to clients with special requirements is visible in Fig. 7. The percentage of responds definitely yes and rather yes is 35% and 36%. Fig. 7 The Influence of Staff Training and Behaviour to Clients with Special Requirements on Service Quality 11% 16% 2% Definitely yes Rather yes 35% Not sure 36% Rather not Definitely not Source: Own empirical research ( ) Discussion: The conclusion of responds of all the subsections show that the barrier-free access in buildings (95%) influences quality the most, followed by tailor-made offer of services (77%), staff training and behaviour (71%) and possibility of lending disability equipment (64%). The comparison of results of the subsection about staff training and behaviour with the results of the fourth experimental question is contradictory. Even though service providers consider an approach of staff as an essential part of quality (71%), only 41% are interested in staff training. The rest of them probably suppose that the staff is sufficiently trained. In my opinion it is necessary to develop and intensify this sphere. In my conception, particular items which form the accessibility of services significantly influence the quality perceived by customers. From this reason I have prepared and I have been realizing a research focused on comparison of that issue from the point of view of the provider and customer as well. 3.6 Interest in a Manual Dealing with the Issue of Accessibility and Placement in a Database of Showplaces and Tourist Destinations The final part of the research focused on the questions regarding the interest in the Manual and placement in a database. 45% of respondents (e.g. IC Ostrava Svinov, Ostrava Gong, Opava) were potentially interested in the manual. The Manual should inform service providers about requirements of clients of accessible tourism. 55% of respondents are not 18 th International Scientific Conference [246] Faculty of Economics, VŠB - TUO

255 interested in this manual (e.g. Ostravské museum, Hradec nad Moravicí castle, Slezské zemské museum and others). The database of showplaces and tourist destinations ( is known among only 18% of respondents and 60% of them would like to be placed in the database. Conclusion The conclusion is divided into two parts. The first part shows how the respondents evaluated current situation of accessibility of their services and the opinions of respondents on the influence of particular criteria on quality in general. In the second part the differences between particular segments of potential customers are concluded. 81% of service providers consider the building of their business premises as barrier-free. The lowest percentage was found out about adjustment of service offer, 70% of respondents mentioned that their offer is so called tailor-made. On the other hand, most of the respondents evaluated communication between staff and clients positively. They supposed that behaviour of staff is adequate to all clients. In contrast to that supposition is the fact that only 41% of respondents would be interested in training regarding this issue. According to the respondents, barrier-free access in buildings influences the quality of services the most (95%), followed by offer services adjustment to special requirements (77%), the level of communication between staff and clients (71%) and lending of disability equipment is the least important (64%). The pivotal research questions investigated also the opinions of service providers on particular segments of customers of accessible tourism. About 90% of respondents are interested in attendance of clients with special requirements. They are mostly interested in attendance of seniors (97%), followed by families with children (95%), the least interest was expressed towards disabled people (93%). However, I consider the differences between particular segments to be minimal. As far as attendance of business premises is concerned, most of service providers said that they are visited by people over 65 years old (85%) and people with children (87%), the attendance of disabled people is less (75%). From the comparisons it is obvious that seniors visit mostly information centres and tourist attractions, disabled people visit mostly information centres and restaurants, families with children visit tourist attractions and information centres. In total, the segment of people over 65 years shows the highest attendance in all types of tourism facilities. The responds concerning the adjustment of offer to special requirements, which is not different for particular segments, showed surprising findings. The providers consider their services to be tailor-made to seniors in 70% of responds, to disabled people in 67% of responds and families with children in 73% of responds. Another question included communication between staffs and guests. From the comparisons of responds it is obvious that differences between segments are not large. 100% of providers consider their offer to be adjusted to seniors, 97% to disabled people and 93% to families with children. I assumed that differences between evaluated segments of customers will be more considerable regarding the last two evaluated fields. Based on the above mentioned results it is possible to claim that tourism service providers are aware of the importance and significance of increasing accessibility of their service offers, which is the essential and initial prerequisite for development of accessible tourism in Moravian-Silesian region. [247] Faculty of Economics, VŠB - TUO

256 Section S4: Marketing and Business References BUHALIS, Dimitrios and Simon DARCY (2011). Accessible Tourism: Concepts and Issues, Bristol (UK): Chanel View Publications. ISBN-13: DARCY, Simon, Bruce CAMERON and Shane PEGG (2010). Accessible tourism and sustainability : discussion and case study. Journal of Sustainable Tourism, 18(4), EUROPEAN COMMISSION. (2015). Final report: Mapping and Peformance Check ot the Supply of Accessible Tourism Services. [online database]. Luxembourg: European Commision, [cit ]. Available at: < KAZUIST, EUROPEAN NETWORK FOR ACCESSIBLE TOURISM (EANT), NRZP ČR, TRIANON. (2010). Athena na cestách. Přístupný cestovní ruch v kostce. Třinec: Kazuist. THE CENTER OF UNIVERSAL DESIGN (2016). [online database]. USA: University of Washington [cit ]. Available at: < UNWTO. (2013). UNWTO approves accessible tourism recommendations. [online database]. [cit ]. Available at: < ZORKOVÁ, Dagmar. (2014). Tourism from the Point of View of Clients with Special Requirements. Proceeding of the Internation Conference Tourism, Hotel and Spa in light of scientific research and practice. Opava: Silesian University in Opava, s ISBN ZORKOVÁ, Dagmar. (2014). Accessible Tourism and Relevancy of Information about Barrierfree Access. Proceeding of the Internation Masaryk Conference for Ph.D. Students and Young Researchers. Hradec Králové: MAGNANIMITAS. s ISBN , ETTN th International Scientific Conference [248] Faculty of Economics, VŠB - TUO

257 Section S5 Law Aspects of the Economy Honorary Chairman: Judr. Bohuslav Halfar Guarantor: Ing. Martina Krügerová, Ph.D. [249] Faculty of Economics, VŠB - TUO

258 Section S5: Law Aspects of the Economy 18 th International Scientific Conference [250] Faculty of Economics, VŠB - TUO

259 INSURANCE DISTRIBUTION DIRECTIVE NEW CHALLENGE TO POLISH AND EUROPEAN LAW Abstract (in English) Maciej Balcerowski Nicolai Copernicus University in Toruń Law and Administration Faculty Insurance Law Cathedra The main goal of this article is to show European Union regulations concerning insurance mediation from Polish perspective. The first part of the article refers main principles of European legislation of insurance mediation and its history. Next part pertains new directive Insurance Distribution Directive (IDD) which is successor of current Insurance Mediation Directive. Article shortly refers few unsolved problems at the IDD such as threat of goldplatting. The main part of the article concerns on probable problems which might take place during implementation IDD to Polish Legal system. At conclusions author is trying to present his idea for creating common insurance market. Keywords: Insurance Mediation, Insurance Distribution, Insurance, European Law, Insurance Distribution Directive. JEL: K23, K33 Advisor: dr Damian Walczak [251] Faculty of Economics, VŠB - TUO

260 Section S5: Law Aspects of the Economy 1 Introduction If we analyse the roots of European Union acts which are concerning on insurance mediation area (such as Insurance Mediation Directive or Markets in Financial Instruments Directive) we can see two main reasons of regulations. First of them is the protection of consumer of the insurance services and the second is facilitation of creating common insurance market. Despite of the European Union legislative actions aims at creating common market we can observe that insurance market is divided into national markets. Declared freedom of services of insurance intermediaries is strictly limited by diverse local regulation. We can observe bigger role of insurance companies which are operating under freedom of services than insurance intermediaries. It has its roots in fact that regulations concerned at insurance companies are more unified than regulations aimed at intermediaries. National regulations, even after implementation of IMD, do not have unified list of insurance intermediaries. For example, according to Polish law there are two types of insurance intermediary insurance broker and tied agent. Meanwhile in some other countries we can observe another types of insurance intermediaries such as bancassurance operators or insurance advisors. Moreover, during more detailed analyses, we can see big difference between regulations of specific type of insurance intermediaries. It causes problems with provision of services by foreign entities. For example, according to Austrian law if insurance broker do not have provision agreement, would not receive his remuneration (Fras, 2007). It is important limitation for Polish brokers who are not required to have provision agreement in Poland. So if broker needs to stipulate a contract with Austrian insurer he is obliged to incur expenditure of negotiation of this agreement. It can result in lack of cooperation within Polish brokers and Austrian insurers. 2 Short review of EU legislation of insurance mediation Base of European regulation of insurance mediation was set up in 77/92/EWG Directive. This act established the principal rule of freedom of providing services and establishment for insurance intermediators. Directive gave the right to use mentioned freedoms for intermediaries who were representing insured or insurer interest. The amendment to this regulation was a list of insurance intermediaries which were regulated by this directive. Despite of that this directive had rather limited scope of regulation, in 70s we could call it revolution for insurance mediation market (Hodgin, 2002). The next step of harmonisation of insurance mediation market was the recommendation of the Commission of European Communities from 18 th of December That act beyond the regulations mentioned in 77/92/EWG directive introduced general conditions which have to be fulfilled by insurance intermediaries. On the basis of recommendation from 1991 were named professional requirements such as appropriate knowledge, minimum capital, etc. This act provides also obligation of registration of the insurance intermediaries. One of the most important issues regulated in this recommendation were rules of responsibility for insurance intermediaries. Insurance markets changes and need of further integration of the market result in new Directive 2002/92/WE called IMD. New directive did not introduce completely new 18 th International Scientific Conference [252] Faculty of Economics, VŠB - TUO

261 conceptions of insurance mediation regulations. We should rather recognize it as an evolution of previous regulations. This directive was more detailed that previous acts and had more precise regulations. It concerns on the topics connected with professional requirements such as minimal level of professional knowledge and experience and obligations of registration. IMD concerns also on the topic of responsibility for insurance intermediaries and provide obligatory insurance for part of insurance intermediators. In my opinion the main impact of IMD on Polish regulations was creation of definition of the insurance mediations. It has an impact not only on insurance mediation act but also for VAT regulations. 3 Insurance Distribution Directive From the beginning of European regulations of the insurance market we can observe that it getting to be more and more detailed and harmonise new part of insurance law. The next step of harmonisation insurance mediation regulations for long time supposed to be new directive which was called informal IMD II. IMD II history starts soon after implementation IMD in 2005 to national regulations. CEIOPS - Committee of Insurance and Occupational Pensions Regulators (now: EIOPA European Insurance and Occupational Pension Authority) prepared in 2006 report concerns on the implementation of IMD to national legal systems (CEIOPS, 2007). This report states that every member country implemented regulation of IMD to its legal system but some of them decided to adopt higher requirements than identified in directive. This phenomenon was called goldplatting [Roszewski, Szczepaniak, 2010]. It was acceptable on the basis of directive but it caused new problems with difference of legal regulations in member states. It results in project of IMD II which was created in Works on this project ends in 2015 but it did not result in directive IMD II but the new project IDD - Insurance Distribution Directive. In contrast to work on IMD II, works on IDD were finished in December New directive is supposed to be great revolution on insurance mediation market. This is because of the fact that this directive radically changes the scope of entities which are regulated under this act. If this directive would be implemented, not only professional insurance intermediaries would be regulated by it, but also non-professional insurance intermediaries (e.g. tourism agency) and insurance companies. It was achieved by changing the terminology from insurance mediation to insurance distribution. It was justified because in previous regulations client who were contract directly with insurance company or non-professional insurance intermediator was in worse condition than when he/she was contracting through professional insurance intermediator. IDD also develop many requirements which are imposed on insurance distributor. For example, the new solution was a preparing the list of topics which have to be take into account during the training of insurance distributor. 4 Unsolved problems according to IDD If we would try once more to analyse main problems of European regulations of insurance market probably we will name three main issues. First problem is division of insurance distributors into three parts: professional insurance intermediaries, non-professional insurance intermediaries and insurance companies. Second problem is lack of unified types of distributors and their regulations. The final problem is giving to member states power to adopt higher requirements than identified in directive. [253] Faculty of Economics, VŠB - TUO

262 Section S5: Law Aspects of the Economy First of mentioned problems was solved on the ground of IDD. This directive still divides distributors into three parts but unlike other regulations it is regulating all free kinds of distributors. Dividing distributors is justified because of their scope of obligations. Unfortunately, IDD would not solve the problems connected with diversity of insurance distributors types. Still member s countries can freely decide which type of insurance intermediaries are allowed to operate on their territory. It causes problems when insurance intermediary is trying to establish business in second country and this second country do not recognize its form as allowed to provide insurance mediation services in this country. For example, if bancassurance operator from France would like to set up this business in Poland he is not able to do it in this form. According to Polish Insurance Mediation Act he has to choose if he wants to provide its business as an agent or broker. IDD in current shape would not solve this problem. The defect of IDD is its form. Now I mean that the main problem of IDD is that it was created as a directive, not as regulation. Consequence of this fact is that IDD provides only minimal harmonization [Hakenberg, 2012]. That means that member states can introduce higher requirements and the market would be still divided. In my opinion the best solution would be replacing directive by regulation which can establish common market without risk of goldplatting. 5 Problems of implementation Insurance Distribution Directive in Poland One of the most interesting issue in professional intermediary regulation are requirements connected with their professional skills. On first sight new regulation looks similar to regulations from IMD. However, we can observe that new regulation are far more detailed than previous one. For example, IMD provides only that insurance intermediary has to have sufficient professional knowledge and new directive provides list of minimum parts of professional training of insurance intermediary. Mentioned change in professional training on insurance intermediary is very interesting from Polish point of view. It is because the fact that in 2014 Polish government decided about partial deregulation of profession of insurance intermediaries (brokers and tied agents). One part of this deregulation was elimination of obligatory professional trainings. It means that this reform has to be withdrawn. The implementation IDD into Polish legal system require change in way of thinking about distribution of insurance. According to current state of market terms mediation and distribution are considered almost as synonyms. It has a source in fact that almost 90% of insurance distribution is carried out with participation of third parties such as insurance broker, tied agents or other non-professional insurance intermediaries. This way of thinking results in creation separate legal act Insurance Mediation Act. New regulation should provide not only new restriction on current professional or nonprofessional insurance intermediaries but also on insurance companies. New regulation probably will result in atrophy of non-professional insurance intermediaries. Probably most of them would become regular insurance agent because reason why they were non-professional intermediaries would disappear. The maim problem would be creation new rules of distribution 18 th International Scientific Conference [254] Faculty of Economics, VŠB - TUO

263 of insurance by insurance companies. Probably it would result in additional costs in the side of insurers. In turn, it may result in higher cost of insurance protection. Nowadays it is hard to say whether IDD would be implemented as a part of insurance and reinsurance activity act, new insurance distribution act, part of future insurance code [Kowalewski, 2009] or we would just have amendment to insurance mediation act. From my point of view least likely we would have amendment to insurance mediation act because this amendment would change basic assumption of this act. It is because the fact that changing terminology from insurance mediation to insurance distribution causes fundamental difference in subjective and objective scope of this regulation. It means that the most probably way of implementation would be creation new act of insurance distribution or adding new regulations into insurance and reinsurance activity act. If we analyze Polish practice of implementation completely new form distribution would result in creation new legal act. Conclusions As it was said in this article Insurance Distribution Directive is important step on creation of common insurance market. Detailed regulation would harmonize member states regulations more than previous legal acts. Besides that, I am afraid that I cannot said that IDD would result in creation real common insurance market. Directive do not regulate issues connected with true unification of legal forms of insurance intermediaries or distributors. It is hard to say if member states insurance markets are prepared to unification. From one point of view the introduction of uniform list of insurance distributors is condito sine qua non of creation common insurance market in EU. On the other hand, such deep interference in member states may be carried out only if insurance market would be harmonized. From Polish point of view IDD implementation would have great impact on Polish regulations. It can create new level of consumer protection. On the other hand, complete and correct implementation of directive would be significant challenge for Polish legislature. References CEIOPS Report on the implementation of Insurance Mediation Directive s key provisions, March 2007, CEiOPS-DOC-09/07. FRAS, Mariusz, Uwagi o transparentności wynagrodzenia brokerskiego na tle ustawodawstwa austriackiego wzór dla polskiego ustawodawcy?: Prawo Asekuracyjne 4/2007, ISSN HAKENBERG, Waltraud (2012), Prawo europejskie, Warszawa (Polska): CH Beck HODGIN, Ray (2002). Insurance Law: Text and Materials. London (Great Britain): Cavendish Publishing Limited ISBN KOWALEWSKI, Eugeniusz (2009), O potrzebie polskiego kodeksu ubezpieczeń. Toruń (Polska): Dom Organizatora ISBN [255] Faculty of Economics, VŠB - TUO

264 Section S5: Law Aspects of the Economy ROSZEWSKI, Zbigniew, SZCZEPANIAK Łukasz (2010), Goldplating przy wdrożeniu dyrektywy 2002/92/WE w sprawie pośrednictwa ubezpieczeniowego w państwach UE: Prawo Asekuracyjne 2/2010, ISSN th International Scientific Conference [256] Faculty of Economics, VŠB - TUO

265 MEDICAL MALPRACTICE DIFFERENT METHODS OF COMPENSATION Diana Renata Bożek University of Warsaw, Law and Administration Faculty, Department of Insurance Law Abstract The subject of the article is medical malpractice and different methods of its compensation. The goal of the text is to compare polish system of compensation (based on 2 types of insurance) with other European solutions French and Swedish. In second chapter an author explains the definition of medical malpractice and underline its common elements in different countries. Third chapter is dedicated to polish legal system. After general overview an author presents third party liability insurance and medical events insurance. In the next chapter there are presented Swedish and French systems of compensation medical malpractice cases. Keywords: Medical Malpractice, Third Party Liability Insurance, Medical Events Insurance, Compensation JEL: K13, K32 Advisor: dr hab, Magdalena Szczepańska [257] Faculty of Economics, VŠB - TUO

266 Section S5: Law Aspects of the Economy 1 Introduction Since ancient times life and health were perceived as the precious values for individuals. Doctors people who can save life or improve health was treated as magicians. During ages medicine has changed from magic to science. Nowadays development of medical sciences is very fast and based on experiments and wide research. One thing is still the same medical treatment, even if it is based on examination with using new technology, can cause damages to patients. Of course standard of healthcare in Europe is one of the best in the world. On the other hand every year thousands of people are affected by medical events caused by doctors, nurses and other medical staff. The goal of the article is to show how medical malpractice is compensated in different European countries. An author wants to compare polish model of compensation (based on 2 types of insurance: third party liability insurance, obligatory for all medical entities and voluntary no fault insurance dedicates to hospital) with models based on different rules - especially French model with important role of State and Swedish one based on general no fault insurance construction. After presentation of these systems author wants to choose the most effective of them. Main research method used in this article is formal-dogmatic analysis, typical for legal research. Also comparative method is applied, because the text is based on regulations of different countries. First part of the article is dedicated to explanation of medical malpractice term. Second part brings closer the polish system of compensation damages caused by medical treatment. Last part is dedicated to other legal systems. 2 Definition of medical malpractice Medical malpractice is a special type of tort committed by medical staff. Medical malpractice has 2 forms: acting (e.g. cutting healthy kidney instead of ill one) and omission (lack of all examination, lack of control after treatment, delay in diagnosis). Generally, to declare if an act is a medical malpractice, there is a necessity to prove: (1) a professional duty owed to the patient; (2) breach of such duty; (3) injury caused by the breach; and (4) resulting damages. (Bal, 2009) Medical malpractice can cause economical loss (e.g. costs of additional treatment, medicines, special food, etc.) and non-economic (pain and suffering). Both types of loss should be covered by perpetrator and as a consequence by the insurer. Nowadays we can observe that compensation connected with pain and suffering are much higher than these connected with economic loss. The reason of it is that people appreciate intangible values more than some years ago. 3 Polish medical malpractice compensation system In polish law there is no special legal act dedicated to medical malpractice. Claimant s claims are based on polish Civil Code. Article 415 states that any person who by his fault has caused damage to another person is obliged to redress it. As a consequence, there is a need to prove damage (economic or non-economic), willful acting of medical staff and connection 18 th International Scientific Conference [258] Faculty of Economics, VŠB - TUO

267 between this 2 factors. Liability of medical staff can be tortious based on article 415 of Civil Code or contractual (in that case there is no need to prove fault article 471 of Civil Code states that the debtor shall be obliged to redress the damage resulting from the non-performance or improper performance of the obligation unless non-performance or improper performance were due to the circumstances for which the debtor is not liable.). Type of liability regime is applicable in the circumstances of a certain case depends on the status of the doctor (the hospital) and the nature of medical services that have been rendered to a patient. (Bączyk- Rozwadowska, 2011) One of the disadvantages connected with polish system of compensation in medical malpractice cases is lack of the statistical data. Doctors and hospitals do not have any legal obligation to inform any authority about medical event which can result in damage in the future. Ministry of Justice can only estimate the number of cases, because there is no specific legal ground for such medical cases. The Commissioner for Patients' Rights who act in Poland since 2008 has only the data based on complains to the Commissioner. According to the report for 2014 number of cases reported to the Commissioner was (Commissioner for Patients' Rights, 2015) It is necessary to underline that not all of the cases are reported to the Office, as well as some of reported are groundless. Liability for damages caused by medical treatment has changed many times during the history. Changes was dependent on historical development of legal system, as well as political and economic situation. For example, during communist regime in Poland (period of Polish People s Republic: ) all medical market (like other branches of economy) belonged to the State. As a result, all doctors, cooperating on the basis of labor contract, were treated as a public officer. As a consequence, the State was responsible for their acting and the State paid compensation. After 1989 the situation changed because of growing share of private capital in medical market. It was necessary to create a system which can protect patients but also let medical entities not to fall in case of paying high compensation. That was the reason to choose insurance. In 1998 first obligatory third party liability insurance for medical market was introduced. After that regulation about obligatory insurance was changed some times to adjust to changing world and growing compensation. Actual legal status is in force since Third party liability insurance Since 2012 all entities that perform therapeutic activity, acting on polish market (both public and private) are obliged to have an obligatory third party insurance. According to Medical Activity Act entities that perform therapeutic activity are divided in 4 groups: (1) hospitals, (2) clinics, (3) doctors and dentists performing their therapeutic activity in the form of professional practice individual or in groups, (4) nurses performing their therapeutic activity in the form of professional practice individual or in groups. The scope of insurance protection is defined in Medical Activity Act and in the Ordinance of the Ministry of Finance. Obligatory character of this insurance means that there is no permission to offer healthcare without it but there is no possibility for an insurance company to limit its duty to pay indemnities in the insurance contract. The ordinance enters also insurance trigger act committed which means that the wrongful act or negligence must take place during the validity of the policy. The moment of discovering loss can be later, as well as the moment of reporting the case to the insurance company. This solution allows patients to feel safer because even if the medical entity finishes activity, they will still have a policy to demand compensation. [259] Faculty of Economics, VŠB - TUO

268 Section S5: Law Aspects of the Economy The minimum guaranteed sums have been established with respect to the types of entities that perform therapeutic activity. For hospitals the sum is euro per one damage and per all damages in one-year period of insurance policy. Clinics and doctors performing as professional practices have lower sum: euro per one damage and per all damages in one-year period of insurance policy and nurses the lowest sum: euro per one damage and per all damages in one-year period of insurance policy. Main problem connected with the form of this obligatory insurance is an insufficient height of guaranteed sums. Last time level of claims has changed dramatically. As an example we can compare 2 sentences by Supreme Court, based on similar facts: in the hospital patients, young man was infected hepatitis C. Both of them made a lawsuit. One of them in 2000 was given PLN compensation, second 6 years later was given PLN compensation (Janiszewska, 2004). 3.2 Medical events insurance Polish legislator was aware that system of compensation of medical malpractice based on traditional civil liability is ineffective, because court proceeding usually take more than 2 years (main problem is to prove fault doctor or hospital) and cost a lot. That was the reason why in Poland was created new alternative compensation system medical events insurance. Initially this insurance was obligatory for all hospitals, but since July 2012 is voluntary. The goal of new system was to give patients possibility to use quicker path with less formalities. To implement it, legislator created 16 Voivodship Investigations Commissions. Every patient affected by treatment in hospital can file a request to the Commission. Task of this authority, which composes of lawyers and medical staff, is to state if the medical event has existed or not. If the verdict of the Commission is positive, decision of the Commission is conveyed to the Insurer who propose an amount compensation. Because there is no minimum limits (only maximum PLN for patient or PLN for the family in case of patients death), Insurer can propose even very small amount of money (e.g. 500 PLN for death). If patient is not satisfied with the proposed compensation, he or she can reject the proposal and go to the Civil Court. According to M. Serwach polish medical events insurance is not typical no fault insurance system. In no fault systems there is a require proof in injury, its size and causal relationship between action and failures to perform made by given subject and the which are the cause for patient s suffering. (Serwach, 2015). Polish definition of medical events demands also proof that death or injury was a consequence of diagnosis or treatment in contradiction to actual medical knowledge. Term discrepancy with actual medical knowledge is very similar to the understanding of fault in polish legal system. Damages caused by acting pursuant to actual medical knowledge cannot be compensated in this insurance. 4 European medical malpractice compensation system Problem of medical malpractice is not only polish specificity, almost all European countries were forced to create special legal solutions to carry with this problem. In Italy e.g., where more than 15,000 medical liability actions are filed per year against doctors, and hospitals, system of compensation is based on professional liability insurance. (Fuschiani 2004) This insurance is issued on a claims-made basis, thereby making it necessary for medical staff 18 th International Scientific Conference [260] Faculty of Economics, VŠB - TUO

269 to purchase coverage extending into the future for as long as a claim could reasonably arise. (Traina, 2009). Sweden and France, chosen by author to compare with polish system, have very interesting legal solutions connected with medical malpractice and are often presented as a model in this area. 4.1 Sweden Swedish system is based on obligatory No Fault Patient Insurance (NFPI). This insurance is not the modification of the rules of liability, but different system made on its own rules. Sweden begun the idea of no fault insurance in 1970 s, as a result of cooperation between association of local councils and consortium of the largest insurers. On the beginning the insurance was voluntary, but after years of discussion, Swedish Government decided to make it obligatory. Since 1996 in Sweden The Patient Injury Act is in force. The Act states definitions and procedures. Scope of insurance cover is very wide, but not absolute. According to the act Patient injury compensation is paid for personal injury to patients if the injuries with preponderant probability were caused by (1) examination, care, treatment or similar measure provided that the injury could have been avoided either by a different performance of the chosen procedure or by choosing some other available procedure which according to an assessment made retroactively from a medical point of view would have satisfied the need of treatment in a less hazardous way; (2) defects in the medico-technical products or hospital equipment used in the performance of an examination, care, treatment or similar measure, or improper use thereof; (3) an incorrect diagnosis (4) transfer of a contagious substance entailing infection in connection with an examination, care, treatment or similar measure; (5) accidents in connection with an examination, care, treatment or similar measure or during a patient transport or in connection with a fire or other damage to health care premises or equipment, or (6) prescription or provision of pharmaceuticals in contravention of regulations or instructions. Analysing this act, we can state that some areas connected mostly with patient s rights are excluded breach of the documentation right, right to informed consent, etc. Procedure in no fault insurance is very patient-friendly. If patient think that treatment may cause any damage, can fulfil special formulary and give it to the medical entity. The chief of the entity with proper doctor add their own observations and convey formulary with full medical documentation to the insurer. Insurance company with expert in medicine analyses this documentation and on the basis on Patient Injury Act issue a decision. If the decision is negative for the patient, he or she can appeal to Commission which makes second analysis. After that the Commission issue a recommendation which is non-binding for insurer. However most of them (85-90%) changed their decision in accordance to Commission s recommendation. In case of irregularities in the procedure both parties can go to Arbitrary Court. Popularity of this solution is very low every year Court consider from 10 to 15 cases (Bączyk-Rozwadowska 2013). 4.2 France French system of compensation medical malpractice is very interesting example of mixing different rules of liability. In France we can distinguish one pillar based on fault rule, second [261] Faculty of Economics, VŠB - TUO

270 Section S5: Law Aspects of the Economy one based on risk rule and third one based on rightness rule, in which damages are compensated by State. Compensation based on National Solidarity is a result of statement that not all cases can be compensated in systems based on fault and even on risk. That was a reason to create in 2002 special fund for victims of damages independent in medical malpractice, e.g. hospital-acquired infections, HIV infection for blood transfusion and hepatitis C infection. All that damages have one thing in common: it is very hard or almost impossible to point one person who is liable to the patient. Obtaining a compensation in this procedure is not very easy. Every case which is granted from National Fund for Compensation of Medical Accidents (ONIAM) must fulfill 3 conditions which are interpreted in very strict way. Firstly, it is necessary to prove direct connection between damage and medical treatment. Moreover, the damaging consequence must be regarded as abnormal in relation to patient s health status and foreseeable evolution (Helleringer 2011). In addition, only serious harms (with more than 25% disability rate) or long disabilities (more than 6 moths) are compensated by ONIAM. (Bączyk-Rozwadowska, 2013) Second part of French reform of healthcare was creation of an alternative to the court: alternative dispute resolution (ADR), known as Regional Commissions for Conciliation and Compensation for Medical Accidents, Iatrogenic Diseases, and Nosocomial Infections. French legislator created 25 local Commissions and gave them competences to offers an opinion on responsibility for some cases. This system is voluntary for patients. The Public Guarantee Fund usually pays compensation when a Conciliation Commission designates it as financially responsible, but the Fund can contest the Conciliation Commission finding (Rodwin, 2011). Conclusion There is no doubt that medical malpractice cases will be very important issue also in next years. Irrespective of development of the society and technology, life and health will be always the most important values in people s life. The role of State is to guarantee people high standard of healthcare, as well as mechanism of obtaining compensation for damages caused by medical treatment. An author presented different methods of compensation: based on fault rule and third party liability insurance, based on no fault rule and based on liability of state. Polish model of compensation medical malpractice seems to be deficient. Last important change coming into force medical events insurance was more failure than success. In my opinion there is a necessity to observe carefully solutions in different countries (e.g. in France and Sweden), but before creating new legal instrument there is also a necessity to make deep analysis of potential losses and profits. References BAL, Sonny (2009). An introduction to Medical Malpractice in United States. [online database]. [cit ]. Available at: < 18 th International Scientific Conference [262] Faculty of Economics, VŠB - TUO

271 BĄCZYK-ROZWADOWSKA, Kinga (2013). Odpowiedzialność cywilna za szkody wyrządzone przy leczeniu. Toruń (Poland): Towarzystwo Naukowe Organizacji i Kierownictwa. ISBN BĄCZYK-ROZWADOWSKA, Kinga (2011). Medical Malpractice and Compensation in Poland. [online database]. [cit ]. Available at: < COMMISSIONER FOR PATIENTS RIGHTS (2015). Sprawozdanie dotyczące przestrzegania praw pacjenta na terytorium Rzeczpospolitej Polskiej. [online database]. [cit ]. Available at: < 014_r..pdf>. FUSCIANI, Marco (2004). Rischio tecnologico e responsabilità legale in sanità. Milano (Italy): Politecnico di Milano. HELLERINGER, Genevieve (2011). Medical Malpractice and Compensation in France: Part II: Compensation Based on National Solidarity. [online database]. [cit ]. Available at: < JANISZEWSKA, Beata (2004). Aktualne zagadnienia procesów lekarskich. Prawo i medycyna. Warsaw: Instytut Problemów Ochrony Zdrowia. Volume 1/2004. ISSN RODWIN, Marc. A. (2011). French Medical Malpractice Law and Policy through American Eyes: What It Reflects about Public and Private Aspects of American Law. [online database]. [cit ]. Available at: < SERWACH, Małgorzata (2015). No fault Insurance Systems in Polish Law and in Other European Legal Systems. Prawo Asekuracyjne. Warsaw: Fundacja Prawo Ubezpieczeniowe. Volume 1/2012. ISSN TRAINA, Francesco (2009). Medical Malpractice: the experience in Italy. [online database]. [cit ]. Available at: < [263] Faculty of Economics, VŠB - TUO

272 Section S5: Law Aspects of the Economy STATE AID FOR ENERGY FROM RENEWABLE SOURCES IN EUROPEAN UNION: LEGAL FRAMEWORK Abstract Magdalena Brodawka University of Warsaw, Institute of International Law, Department of European Law This article aims to present the legal framework concerning the State aid for energy from renewable sources in European Union law. Thus, the author has analysed the relevant legal acts and instruments adopted by the European Union's institutions concerning the aid for electricity from renewable energy sources. The conducted analysis shows that public support, such as State aid, is necessary to reach the European objectives, including nationally binding targets implemented by so-called the climate and energy package, with regard to the expansion of electricity produced from renewable energy sources. Keywords: State aid, environmental protection, renewable energy, EU law JEL: K21 Advisor: Prof. M. M. Kenig Witkowska 18 th International Scientific Conference [264] Faculty of Economics, VŠB - TUO

273 1 Introduction The main objective of this article is to present and analyse the legal framework concerning the State aid for energy from renewable sources in European Union law. It should be noted that the European Union law lays down the principle that State aid is prohibited, in order to prevent State aid from distorting competition in the internal market and affecting trade between Member States in a way which is contrary to the common interest. However, in some circumstances government interventions is necessary for a well-functioning and equitable economy. The Treaty leaves room for a number of policy objectives for which State aid can be permissible. Environmental protection, among others, is such an objective, for which State aid can be considered compatible. The European Union s secondary law indicates that public support is necessary to reach the European objectives with regard to the expansion of electricity produced from renewable energy sources. Therefore, there have been adopted many legal acts and instruments in order to support Member States in reaching climate change and energy sustainability targets, while ensuring that subsidies granted to renewable energy do not cause distortions of competition or a fragmentation of the internal market. 2 Research methods As already indicated, the main objective of this article is to present and analyse the legal framework concerning the State aid for energy from renewable sources in European Union law. The research methodology, which seems to be the most appropriate for the analysis of legal provisions and instruments for their implementation is the dogmatic method. It should be emphasized that the subject of a dogmatic and legal analysis is not only the content of the law, but also its interpretation, both in terms of case-law and legal doctrine (Szafrański, 2014, p. 3). Thus, in order to fully analyse the legal framework concerning the State aid for energy from renewable sources in European Union law, it is necessary to refer not only to the relevant legal regulations, but also to the case-law of the Court of Justice of the European Union (herein after referred to as the CJEU ), as well as the doctrine developed pursuant to the relevant provisions. 3 General prohibition of State aid in European Union law In order to prevent State aid from distorting competition in the internal market and affecting trade between Member States in a way which is contrary to the common interest, the Treaty on the Functioning of the European Union (herein after referred to as the TFEU ) lays down the principle that State aid is prohibited. According to Article 107(1) TFEU any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. Thus, to be covered by the prohibition of the State aid within the meaning of Article 107(1) TFEU, a national measure must fulfil the following conditions: (i) there must be an intervention by the State or through State resources; (ii) it must confer an advantage on the recipient; (iii) it must distort or threaten to distort competition; (iv) the intervention must be liable to affect trade between Member States (Psychogiopoulou, 2013, p. 86). According to settled case-law of the CJEU, categorisation as aid requires that all the above conditions be fulfilled (see Case C-142/87 Belgium v Commission, 1990, ECR I-959, paragraph 25; Joined [265] Faculty of Economics, VŠB - TUO

274 Section S5: Law Aspects of the Economy Cases C-278/92 to C-280/92 Spain v Commission (1994) ECR I-4103, paragraph 20; Case C- 482/99 France v Commission (2002) ECR I-4397, paragraph 68, and Case C-280/00 Altmark Trans and Regierungspräsidium Magdeburg (2003) ECR I-7747, paragraph 74). In the light of the case-law of the CJEU, only advantages which are granted directly or indirectly through State resources are to be regarded as State aid within the meaning of 107(1) TFEU. The wording of this provision itself and the procedural rules laid down in Article 108 TFEU show that advantages granted from resources other than those of the State do not fall within the scope of the mentioned provisions (see Case 82/77 Openbaar Ministerie of the Netherlands v Van Tiggele (1978) ECR 25, paragraphs 23-25; Joined cases C-72/91 and C- 73/91 Firma Sloman Neptun Schiffahrts AG v Seebetriebsrat Bodo Ziesemer der Sloman Neptun Schiffahrts AG (1993) ECR I-887 paragraph 19). It should be noted that an economic advantage granted by a Member State constitutes an aid only if it is such as to favour certain undertakings or the production of certain goods. Thus, in order to prove that the measure at issue applies selectively to certain undertakings or to the production of certain goods, it is for the Commission to prove that it creates differences between undertakings which, with regard to the objective of the measure at issue, are in a comparable factual and legal situation (see Case C-279/09 P Commission v Netherlands (2011) ECR I-551, paragraph 62; Case T-538/11 Kingdom of Belgium v European Commission (2015) ECR I-188, paragraph 102). Moreover, the aid must distort of threaten to distort competition by favouring certain undertakings or the production of certain goods. The case-law of the CJEU indicates that not only aid which distorts competition is incompatible with the common market but also aid which threatens to do so (see Case T-35/99 Keller and Keller Meccanica v Commission, (2002) ECR II-261, paragraph 85; Joined Cases T-239/04 and T-323/04 Italian Republic and Brandt Italia SpA v Commission of the European Communities (2007) ECR II-3265). In addition, Article 107(1) TFEU applies to State aid in so far as it affects trade between Member States. Under the case-law of the CJEU, the concept of an effect on trade between Member States, which must be understood as requiring that there be an impact on such trade, or at least that there be the possibility of such an impact, means that an interpretation which renders the recovery of the whole of the aid subject to a criterion that trade should be fully affected, in contrast to a partial effect on it, where only a proportion of the aid would be recoverable by virtue of the principle of proportionality, is unfounded (Case C-66/02 Italian Republic v. Commission of the European Communities, (2005) ECR I-10936, paragraph 112). Therefore, the national measures that satisfy all the abovementioned criteria, are, in general, incompatible with the internal market, regardless of their purpose, justification or objective (KREISER, Larry, Ana Yabar STERRLING, Pedro, HERRERA, Janet E. MILNE and Hope ASHIABOR (2012)). However, in some circumstances government interventions is necessary for a well-functioning and equitable economy. In number of cases, therefore, State aid could be considered acceptable. 4 Exemptions to the prohibition of State aid As already indicated, the State aid prohibition is not an absolute one. Despite the general prohibition of State aid, Article 107(2) and 107(3) TFEU lay down provisions for specific types 18 th International Scientific Conference [266] Faculty of Economics, VŠB - TUO

275 of aid that are or may prove to be compatible with the internal market. Therefore, State aid may be permissible in a number of cases (Fräss-Ehrfeld, 2009, p. 143). First, certain aid is declared by Article 107(2) TFEU to be compatible with the internal market. The mentioned Article states that (i) aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned; (ii) aid to make good the damage caused by natural disasters or exceptional occurrences; (c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division, shall be compatible with the internal market. Secondly, the Commission has a discretion under Article 107(3) TFEU enabling it to determine that certain aid is compatible with the internal market. Thirdly, according to Article 107 (3)(e) TFEU, the Council may decide that other categories of aid which are indicated in the Article 107(3) may be permissible under decision issued on a proposal from the Commission. Therefore, the Treaty leaves room for a number of policy objectives for which State aid can be considered compatible (Quigley, 2009, p. 193). In this context, there is a need to refer to so-called environmental integration rule. According to Article 11 TFEU, environmental protection requirements must be integrated into the definition and implementation of the Union's policies and activities, in particular with a view to promoting sustainable development. It follows from the wording of Article 11 TFEU that environmental protection requirements should be implemented in the all EU policies and activities. The legal doctrine indicates that the mentioned provision has a double objective. On the one hand, it aims to promote sustainable development. On the other hand, it is a provision with the objective to reach the objectives of EU environmental policy laid down in Article 191 TFEU and in the overarching objectives (Sjaffel & Wiesbrock, 2014, p. 47). As already indicated, Article 191(1) TFEU defines objectives and principles of EU environmental policy. Union policy on the environment shall contribute to pursuit of (i) preserving, protecting and improving the quality of the environment; (ii) protecting human health; (iii) prudent and rational utilisation of natural resources and (iv) promoting measures at international level to deal with regional or worldwide environmental problems, and in particular combating climate change. Thus, in accordance with the so-called environmental integration rule, the said objectives of EU environmental policy should be taken into account and fully considered in all EU policies, including the decisions and activities of other sectors. It is beyond doubt, that using renewable energy contributes notably to achieving objectives of Articles 11 and 191(1) TFEU e.g. preservation and improvement of the environmental quality through limiting the impact of energy use on the latter (Sikora, 2015). Therefore, that environmental protection is an objective, for which State aid can be considered compatible. Under Article 107(3)(c) TFEU, the aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest, may be considered to be compatible with the internal market. It should be noted that the mentioned Article is the most relevant exemption in the field of environmental protection (Kreiser, Sterrling, Herrera, Milne & Ashiabor, 2012). [267] Faculty of Economics, VŠB - TUO

276 Section S5: Law Aspects of the Economy In order to ensure transparency and to create predictability and legal certainty in the application of the exemptions of general prohibition of State aid, the European Commission has made public the criteria it uses when deciding whether aid measures notified to it qualified for exemptions. These publications have taken the form of regulations, communications, notices, frameworks, guidelines, and letters to Member States (Nordby, Bakken, 2010, p. 23). 5 The support of renewable energy sources On 9 April 2014, the European Commission has adopted the new rules on public support for projects in the field of environmental protection and energy i.e. Guidelines on State aid for environmental protection and energy (OJ C 200, , p. 1; herein after referred to as the Guidelines ). Despite the fact that the Guidelines are not a binding act of European Union secondary law (KENIG-WITKOWSKA, Maria M. (2011), p. 191), they certainly have significance not only for the proper functioning of the internal market, but also, more importantly, they include an obligation to execute the objectives resulting from the European Union s political framework concerning climate and energy. In fact, the aim of the new guidelines it to support Member States in reaching their 2020 climate targets, while ensuring that subsidies granted to renewable energy do not cause distortions of competition or a fragmentation of the internal market. In 2010, the European Union adopted the Europe 2020 strategy for smart, sustainable and inclusive growth, which is favourable for social inclusion (COM (2010) 2020 final, 3 March 2010). Some of the main objectives that the European Union is supposed to achieve by 2020 are targets concerning change and energy sustainability: (i) a 20 % reduction in Union greenhouse gas emissions when compared to 1990 levels; (ii) raising the share of Union energy consumption produced from renewable resources to 20 %; and (iii) a 20 % improvement in the EU s energy-efficiency compared to 1990 levels. At the same time, the first two of the said nationally binding targets were implemented by so-called the climate and energy package, which includes Decision No 406/2009/EC of the European Parliament and of the Council of 23 April 2009 on the effort of Member States to reduce their greenhouse gas emissions to meet the Community s greenhouse gas emission reduction commitments up to 2020 (OJ L 140, , p. 136) and Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources (OJ L 140, , p. 16). The Directive 2009/28/EC is crucial for supporting renewable energy sources. In accordance with the said directive, the increased use of energy from renewable sources, together with energy savings and increased energy efficiency, constitute important parts of the package of measures needed to reduce greenhouse gas emissions and comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and with further European and international greenhouse gas emission reduction commitments. Those factors also have an important part to play in promoting the security of energy supply, promoting technological development and innovation and providing opportunities for employment and regional development, especially in rural and isolated areas (recital 1 of the Directive 2009/28/EC). Moreover, it is apparent from the Directive 2009/28/EC that public support is necessary to reach the European objectives with regard to the expansion of electricity produced from renewable energy sources (recital 27 the Directive 2009/28/EC). The European Commission 18 th International Scientific Conference [268] Faculty of Economics, VŠB - TUO

277 indicates, therefore, that State aid can be an appropriate instrument to contribute to the achievement of the Union objectives and related national targets. Thus, the Guidelines has replaced and extended the scope of the previous guidelines i.e. the Guidelines on State aid for environmental protection published on 1 April 2008 (OJ C 82, , p. 1.) to the energy field, in particular to cover State aid to energy from renewable sources, which is based on case practice and policy developments of the recent years. The European Commission has emphasised that during the years of the application of the previous guidelines, a large part of expenditure assessed under those guidelines has served to promote energy from renewable energy sources. Bearing the above in mind, the rules for supporting renewable energy have been modernised to take account of their increasing share in the electricity market and the need to make support systems sustainable for society. The European Commission has reflected, however, that the remarkable growth of renewable energy over recent years, partly induced by public support, has helped to make progress on environmental objectives but has also caused serious market distortions and increasing costs to consumers. The rich case-law of the CJEU confirms that financing renewable energy may likewise put into doubt the compatibility with the internal market (see Case C-379/98 PreussenElektra AG v Schhleswag AG, in the presence of Windpark Reußenköge III GmbH and Land Schleswig-Holstein (2001) ECR I-02099; Case C-262/12 Association Vent De Colère! Fédération nationale and Others v Ministre de l Écologie, du Développement durable, des Transports et du Logement and Ministre de l Économie, des Finances et de l Industrie, EU:C:2013:851). Thus, the Guidelines aim to better integrate renewables into the internal electricity market in a gradual way, limiting support to what is truly necessary. It is apparent from the Guidelines that in order to allow Member States to achieve their targets in line with the EU 2020 objectives, the European Commission presumes the appropriateness of aid and the limited distortive effects of the aid provided all other conditions detailed in the Guidelines are met (see points of the Guidelines). Moreover, the new rules simplify the granting of State aid - in particular certain categories of aid have been moved to the so-called General Block Exemption Regulation (GBER) i.e. Regulation No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (herein after referred to as the Regulation ), including measures to promote renewable energies. When expenditure in such projects complies with the criteria in the Regulation, those measures are automatically deemed to be compatible with the internal market. Therefore, there is no need of the European Commission approval before those measures can be implemented. Conclusion As already indicated, using renewable energy contributes notably to achieving objectives of Articles 11 and 191(1) TFEU. Nevertheless, nothwidstanding the scope of targets of the energy policy of a Member State, financing of the use of renewables must comply with requirements of Article 107 TFEU establishing rules applicable to State aid [SIKORA, Alicja (2015)). Therefore, in order to ensure transparency and to create predictability and legal certainty in the application of the exemptions of general prohibition of State aid, the European Commission has made public the criteria it uses when deciding whether aid measures notified to it qualified for exemptions. The latest adopted Guidelines, which cover State aid to energy [269] Faculty of Economics, VŠB - TUO

278 Section S5: Law Aspects of the Economy from renewable sources, support Member States in reaching their 2020 climate targets, while ensuring that subsidies granted to renewable energy do not cause distortions of competition or a fragmentation of the internal market. Bearing in mind that the Guidelines provide a simpler and more consistent framework for assessing State aid measures, it may be expected that together with the Regulation, they will have a positive impact on the development of renewables. References FRÄSS-EHRFELD, Clarisse (2009). Renewable Energy Sources: a Chance to Combat Climate Change. Kluwer Law International. ISBN KENIG-WITKOWSKA, Maria M. (2011), Prawo instytucjonalne Unii Europejskiej, C.H. BECK, ISBN KREISER, Larry, Ana Yabar STERRLING, Pedro, HERRERA, Janet E. MILNE and Hope ASHIABOR (2012). Green Taxation and Environmental Sustainability, Edward Elgar Pub, ISBN NORDBY, Thomas and Espen BAKKEN (2010), European state aid control: latest developments by the European Commission, Competition 2010 (1): PSYCHOGIOPOULOU, Evangelia (2013). State Aid to the Press in the EU: Legal Issues and Trends, in: MURSCHETZ, Paul C. (Ed.) State Aid for Newspapers: Theories, Cases, Actions. Springer-Verlag Berlin Heidelberg. ISBN QUIGLEY, Conor (2009). European State Aid Law and Policy. Hart Publishing. ISBN SIKORA, Alicja (2015). Wybrane aspekty publicznego finansowania energii odnawialnej w świetle zasad pomocy państwa. Europejski Przegląd Sądowy 2015 (3): SJAFFEL, Beate and WIESBROCK, Anja (2014). The Greening of European Business under EU Law: Taking Article 11 TFEU Seriously. ISBN SZAFRAŃSKI, Adam (2014). Prawo energetyczne. Wartości i instrumenty ich realizacji. ISBN: th International Scientific Conference [270] Faculty of Economics, VŠB - TUO

279 RARE EARTH ELEMENTS CASE AND ITS INDICATIONS - MONOPOLY POWER AND PROTECTIONISM IN INTERNATIONAL LAW PERSPECTIVE Attila Endre Simay Károli Gáspár University of the Reformed Church in Hungary attila.endre.simay@gmail.com Abstract In 2012 the EU, USA and Japan asked the WTO to investigate that China imposed three distinct types of restrictions on the export of rare earths elements, tungsten, and molybdenum, and argued that the restrictions are related to the conservation of its exhaustible natural resources, and necessary to reduce pollution caused by mining. The case show many elements of monopoly power and protectionism, but also involves many political issues. Briefly China used economy power as a weapon, reportedly cutting off rare earth supplies to Japan in September 2010 over a long-standing territorial dispute. The WTO decided in favour of the EU, USA and Japan, but the decision probably has some important other indications about the use of economic weapon and environmental protection too. Keywords: Rare Earth Elements, China, WTO, International Law, Monopoly JEL: K21, K23, K33 [271] Faculty of Economics, VŠB - TUO

280 Section S5: Law Aspects of the Economy 1 Introduction The raw materials involved in this case are several rare earths elements (REE), as well as tungsten and molybdenum. The EU, together with the US and Japan, launched a World Trade Organisation (WTO) dispute settlement (DS) case in March They claimed that Chinese export restrictions have been mainly export duties or export quotas, as well as additional requirements and procedures for exporters. They create serious disadvantages for foreign industries by artificially increasing China s export prices and driving up world prices. Such restrictions also artificially lower China s domestic prices for raw materials. As they increase domestic supplies. This gives China s local industries a competitive advantage and puts pressure on foreign producers to move their operations and technologies to China (European Commission, 2014). The importance of Chinese restriction comes from that according to estimates, China plays host to around a third of the world's proven rare earth reserves. Due to the country's strategic and prescient focus on developing its rare earth mining and processing capacity in the 1980s, today it controls around 85-95% of the global supply of rare earths, with 70% of the world's light rare earths coming from a single mining operation at the Bayan Obo deposit in Inner Mongolia (Lo, 2015). The case involves the issues of monopoly and protectionism in the international trade, so we can take a look to this case to get better understanding how the legal regulation operates in order to facilitate free trade. Rare earth elements are a group of seventeen chemical elements that occur together in the periodic table. The group consists of yttrium and the 15 lanthanide elements: lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. Scandium is found in most rare earth element deposits and is sometimes classified as a rare earth element. For example, the International Union of Pure and Applied Chemistry includes scandium in their rare earth element definition. Rare earth elements are not as "rare" as their name implies. Rare earths are relatively abundant in the Earth's crust, but discovered minable concentrations are less common than for most other ores. Rare earth elements are heavily used in several industries, so the demand for them should remain high. For instance, REE used in automobiles, consumer electronics, energy-efficient lighting, and catalysts. Rare earth magnet demand is expected to increase, with the demand for rechargeable batteries. New developments in medical technology are also expected to increase the use of surgical lasers, magnetic resonance imaging, and positron emission tomography scintillation detectors, which use REE as raw material (King, 2014). Therefore, REE are the key source materials in the high-tech industry, and consumer electronics in general, and the trading conditions of REE also has major impact on recent global economy. 2 Monopoly Market and the Law China only has about 30 percent of the world's rare earth metal deposits, but thanks to clever planning it today controls 97 percent of the world's production of these scarce resources. (Daily Tech, 2011). China's overwhelming presence in this market affords the country significant influence over the market, a fact that has alarmed many international users, especially the US military, which has come to rely on China for the rare earths it uses in missiles and other advanced military hardware. Indeed, while the Chinese dominance over the supply of rare earths went unnoticed for decades as the supply was cheap and abundant, in recent years Beijing hasn't been shy about exerting its influence to bolster its own industrial sector at the expense of foreign markets (Lo, 2015). 18 th International Scientific Conference [272] Faculty of Economics, VŠB - TUO

281 China get its advantage in REE mining and supply because of long-run planning industry development, which is also applied in the Western capitalism. But once an actor has market dominance, it will use this. China and the Western countries are the same, that use their market dominance, if they can (Zajec, 2010). Currently, advanced economies are highly dependent on Chinese rare earths supplies despite the small size of the market. Global demand for rare earths has been growing steadily at around 8 11% since the late 1990s. In 2010, China tightened its export quotas on rare earths by over 35% (Liu - Maughen, 2010). The use of market dominance indicates the issue of monopoly. Usually a company or in this case a country has market dominance and effectively use this kind of power in monopoly situation in a certain market. A monopoly phrase come from Greek monos ("alone" or "single") and polein ("to sell") words. It exists when a specific person or enterprise is the only supplier of a particular commodity. So a monopoly faces no competition in a certain market, which can be described by a relevant product or service or geographical market (Carlton - Perloff, 2005). However, in this case the monopoly is a country: China, which has monopoly power in the rare earth elements market worldwide as an almost only supplier. Regulation against monopolies has a long history, because the economists and others have long known that unregulated monopolies tend to damage the economy by charging higher prices, providing inferior goods and services and suppressing innovation, as compared with a competitive situation. Probably the first law against monopolies was implemented in the USA. The Sherman Antitrust Act of 1890 was the first measure passed by the U.S. Congress to prohibit abusive monopolies, and in some ways it remains the most important. In 1914 Congress passed two measures that provided additional support for the Sherman Antitrust Act. One was the Clayton Antitrust Act, which elaborated on the general provisions of the Sherman Act and specified a number of illegal practices that either contributed to or resulted from monopolization. The other was the establishment of the Federal Trade Commission, an agency with the power to investigate possible violations of antitrust laws and to issue orders forbidding unfair competitive practices. The most successful application of the Sherman Antitrust Act during the second half of the 20th century was the breakup of the American Telephone and Telegraph (AT&T) monopoly, which was agreed upon in early 1982 and went into effect on January 1, (LINFO 2004). Because the USA had major role to set up WTO, so free trade and anti-trust regulation features become an essence of the international trade law. The creation of international trade regulations is a match between free trade and protectionism. The idea of free trade based on the perfect competition, where no tariffs and barriers interfere the economic mechanism. It also means no discrimination among domestic and foreign actors and products. The problem is that perfect competition only exist in economy theory, but do not in the real markets. The goal of World Trade Organisation to make the international trade free, gradually eliminate the tariffs and other restrictions. However, the lack of agreement in Doha Round shows that WTO members do not have consensus about how free the trade should be. Protectionism would not disappear from international trade soon, because states want to protect domestic economic actors from foreign competitors and reduce their dependence from international economy (Tolnai, 2006). China wanted and achieved domestic control of the entire supply chain, from mining to end products in REE market, so the state has developed this industry strategically since the early 1990s. Under the current situation, any high-end REE products must originate or pass through China's vast value chain (Mancheri, 2015). As we will see, when China used economy power against foreign actors, the WTO decision based on against protectionism, and does not [273] Faculty of Economics, VŠB - TUO

282 Section S5: Law Aspects of the Economy really involves the issue of monopoly. But in my opinion the real issue originates from monopoly situation and how an actor can use or abuse monopoly power. 3 Chinese export restrictions In 2010, China pushed global rare-earth prices sharply higher, when it slashed its export quota on the 17 elements by 40% from the preceding year. China has said it was an effort to clean up a highly polluting domestic rare-earth mining industry (Wall Street Journal, 2015). Like nuclear power plants, rare earths projects require strict independent auditing in order to prevent environmental damage. The waste, however, will emit low levels of carcinogenic radioactivity for centuries, according to scientists. So rare earth mining has toxic and radioactive legacy. Scientists say under-regulated rare earths projects can produce wastewater and tailings ponds that leak acids, heavy metals and radioactive elements into groundwater, and they point out that market pressures for cheap and reliable rare earths may lead project managers to skimp on environmental protections (Ives, 2013). Briefly the environment protection is a serious issue in rare earth elements mining, and restrictions because of environmental damages could be a valid and legal point. On the other hand, the EU, USA and Japan were doubted that environmental protection is the real reason of export limitations and restrictions. The request of USA, EU and Japan refers to materials falling under but not limited to 212 eight-digit Chinese Customs Commodity Codes and over 30 measures. The request also refers to a number of Chinese published as well as unpublished measures that, operating separately or collectively, allegedly impose and administer export restrictions. These restrictions include export duties, export quotas, minimum export price requirements, export licensing requirements and additional requirements and procedures in connection with the administration of the quantitative restrictions. The United States, the EU and Japan claims that these measures are inconsistent with: Articles VII, VIII, X and XI of the GATT 1994; and paragraphs 2(A)2, 2(C)1, 5.1, 5.2, 7.2, 8.2 and 11.3 of Part I of China s Protocol of Accession, as well as China s obligations under paragraph 1.2 of Part I of the Protocol of Accession (WTO, 2015). The case of REE export restrictions originates from a political incident between China and Japan. The political incident started on 7th September 2010, when the fishing boat of Captain Zhan Qixiong collided with two Japanese coast guard vessels. The area where the collision took place is near a group of uninhabited but disputed islands, which called Diaoyu by the Chinese and Senkaku by the Japanese. Initially, Japanese authorities took into custody the entire crew of the Chinese ship. All members except the captain have been released until 20th September 2010, but a Japanese court extended the captain's pre-trial detention until Sept. 29, over the protests of Chinese officials. In just two weeks the incident has escalated to a fullscale diplomatic standoff (The Washington Post, 2010). China summoned Japan's ambassador twice in 24 hours to protest about the arrest of the captain and a small group of Chinese nationalists demonstrated outside the Japanese embassy in Beijing. The reason that the territory, known as Diaoyu in China, is a focal point for competing territorial claims as Japan and China step up their search for resources in the area. The Japanese-controlled islands, which are also claimed by Taiwan, are surrounded by rich fishing grounds and, possibly, oil and gas deposits (The Guardian, 2010). China s Commerce Ministry denied on 23th September 2010 that it had halted exports to Japan of a crucial category of minerals, but eight executives, analysts and traders in the 18 th International Scientific Conference [274] Faculty of Economics, VŠB - TUO

283 Chinese, Japanese and North American rare earths industries said that China had suspended the shipments in response to a diplomatic dispute over Japan s detention of a Chinese fishing trawler captain. Industry executives, analysts and two Japanese traders confirmed that rare earths bound for Japan stopped leaving Chinese ports (The New York Times, 2010). In addition, governments worried about China's dominance and their dependence on China for various rare earth products can facilitate state support, financial incentives for domestic mining and processing companies, and vertical integration in the supply chain. Even US defence industries are dependent on China for some advanced materials and components, including magnets used in F-35 fighter jets. Only the basis of economic power on the demand side from major consumers such as Japan or the United States, who contribute about 20 percent of global consumption, remains weak and will not alter the market (Mancheri, 2015). These features gave big political and economy relevance to the restrictions, involving security policy as well. 4 Legal Moves In 2011 as rare earth prices hit record highs and global demand cooled, China s exports of rare earths slowed to a crawl and by the end of the year only 60 per cent of the annual quota had been used up. Prices have also subsequently come down. EU officials say they support environmental regulation, but not through export restrictions. Such policies, they argue, have little environmental benefit since foreign demand tends to be replaced by local demand. Such restrictions also artificially lower China s domestic prices for raw materials, which gives China s local industries a competitive advantage. Chinese rare earth exports are also taxed at an effective tax rate of 42 per cent, although the tax is much lower for finished products such as rare earths magnets, making it difficult for foreign companies that use rare earths to compete on prices with Chinese manufacturers in certain sectors (Financial Times, 2012). This puts pressure on foreign producers to move their operations and technologies to China. Chinese officials have expressed hope foreign manufacturers that use rare earths will shift production to China and give technology to local partners. But the US, the EU and Japan challenged the quotas in a WTO complaint. They said China violated its free trade commitments by limiting access to raw materials (The Guardian, 2015) and they had complained that China was limiting exports in a bid to drive up prices (BBC, 2015). The EU, the USA and Japan launched a WTO dispute settlement case in March Initial consultations with China did not bring an amicable solution. As a result, the WTO set up a panel in June All parties had 60 days in which to appeal against the panel s report (European Commission, 2014). China imposed three distinct types of restrictions on the export of rare earths, tungsten, and molybdenum: duties (taxes) on the export of various forms of those materials; an export quota on the amount of those materials that can be exported in a given period; and certain limitations on the enterprises permitted to export the materials (Metal Powder Report, 2014). The prohibition on the use of quantitative restrictions is central to the WTO regime. An analyses from 2010 mentioned Article XI:1 shall not extend to cases where export prohibitions or restrictions are temporarily applied to prevent or relieve critical shortages of foodstuffs or other products essential to the exporting Member. Thought China s ability to invoke Article XI:2 (a) as a valid exception would slim, largely depending on how China satisfies the temporariness and critical shortage requirements. The study foresaw that China could seek to justify its [275] Faculty of Economics, VŠB - TUO

284 Section S5: Law Aspects of the Economy measures for environmental protection or natural resource conservation purposes under GATT Article XX (b) and XX (g). However, despite China s substantial efforts in recent years to improve its environmental protection and conservation regulations, the evaluation stated its export quota regime is unlikely to meet the narrow terms of these exceptions (Liu - Maughan, 2010). 5 WTO Dispute Settlement The Panel Report was published in 26 March China argued that the restrictions are related to the conservation of its exhaustible natural resources, and necessary to reduce pollution caused by mining. The complainants disagreed, arguing that the restrictions are designed to provide Chinese industries that produce downstream goods with protected access to the subject materials. The complainants alleged that China applies export duties on various forms of rare earths, molybdenum, and tungsten. The complainants argued that these duties are inconsistent with China s WTO obligations. Specifically, Article XX(b) allows WTO Members to maintain measures that would otherwise be inconsistent with the GATT 1994 if the measures are necessary to protect human, animal or plant life or health. In this case, China argued that the export duties are necessary to protect human, animal and plant life and health from the pollution caused by mining the products at issue. All of the panellists agreed that even if Article XX(b) were available to justify China s export duties, those duties were not necessary to protect human, animal, or plant life or health, as required under Article XX(b). Under the circumstances, China s imposition of the export duties in question was found to be inconsistent with China s WTO obligations. China also imposes quantitative limits (quotas) on the amount of rare earths, tungsten, and molybdenum that can be exported in a given period. Although it recognized that such restrictions are inconsistent with the GATT 1994, China argued that they are justified under the exception in Article XX(g) of the GATT 1994, since they relate to the conservation of an exhaustible natural resource. The Panel did not agree. It found that China s export quotas were designed to achieve industrial policy goals rather than conservation. The Panel concluded that the overall effect of the foreign and domestic restrictions is to encourage domestic extraction and secure preferential use of those materials by Chinese manufacturers. China imposes certain restrictions on the right of enterprises to export rare earths and molybdenum. Although China has committed to eliminating trading restrictions in its Accession Protocol, it argued that the restrictions in question are justified pursuant to Article XX(g), since they too relate to the conservation of exhaustible natural resources. The Panel found that China had not satisfactorily explained why its trading rights restrictions were justified under this provision. Accordingly, the Panel concluded that China s trading rights restrictions breach its WTO obligations (WTO, 2015). Briefly the WTO found that China's export duties and quotas were in breach of China s WTO commitments and were not justified for reasons of environmental protection or conservation policy. Neither the complainants nor the panel contest China s right to put in place environmental and conservation policies. However, as unequivocally confirmed by the WTO Panel, the sovereign right of a country over its natural resources does not allow it to control international markets or the global distribution of raw materials. A WTO Member may decide on the level or pace at which it uses its resources but once raw materials have been extracted, 18 th International Scientific Conference [276] Faculty of Economics, VŠB - TUO

285 they are subject to WTO trade rules. (European Commission, 2014). Which rules indicates that materials already mined from the soil is a subject to free trade. 6 Elimination of restrictions After losing the case, it was only a matter of time until China ended export restrictions, including export quota and export tariff. The Ministry of Commerce (MOC) reported that China abolished rare earths export quota on December 31, Additionally, on January 21, 2015, the MOC announced that China's rare earths export tariff would be abolished on May 2, 2015 (Han et al, 2015). But it should be noted that the world s second-largest economy: China exported 24,866 metric tons of rare earths in the first 11 months of 2014, well below its yearly quota of 30,611 tons. Exports totalled 22,493 tons in 2013, sharply lower than the ministry s 30,996-ton quota (Wall Street Journal, 2015). The market price of rare earths spiked in 2011 amid fears of shortages. But prices have declined since then, however 2014 prices are above 2010 levels (The Guardian, 2015). The WTO ruling against China has not yet had considerable effects on the REE market, which is already imperfect, but it may be considered as a political win against an assertive and rising economic player. Although China applied a number of restrictions on REE exports, there has been sufficient supply to meet international demand owing to lack of foreign demand despite the allocated quotas not being exported. REE prices in the last few years have been very unpredictable and unreasonably so (Mancheri, 2015). In addition, when the export restriction policies are abolished, the Chinese rare earths firms would be inclined to increase their production and exports driven by potential profits. This may bring about negative effects on the reasonable exploitation and utilization of rare earths resources and environmental protection. In contrast, foreign firms will decrease their scale of production and domestic supply. This aggravates the dependence of other countries on China s rare earths supply. In fact, the United States and Australia have reopened their rare earths mines and the European Commission have launched the European Raw Materials Initiative enforcing deeper links and cooperation contracts with other producing countries, particularly in Africa to relieve the pressure of China s decrease in rare earths export (Han et al, 2015). Indications This case provides a very good example that monopoly can be a state and not only a company or a person. In the global economy states can become the economic actors in certain conditions, and states as monopoly can use or abuse the power of monopoly in the international trade. In this case the People's Republic of China is a monopoly in the rare earth elements market, because the huge majority of product supply belongs to this country. The international community continuously strive for a more a peaceful world, where countries and nations can live together in harmony. After World War II, the prohibition on the use of force by states was laid down in article 2 (4) of the Charter of the United Nations (UN) which prohibits the threat or use of force against the territorial integrity or political independence of any state. Aggression was first recognized as an international crime resulting in individual criminal liability under international law in the Charter of the International Military Tribunal at Nuremberg (Werle, 2009). This WTO decision probably a step forward [277] Faculty of Economics, VŠB - TUO

286 Section S5: Law Aspects of the Economy that states can eliminate economic weapons against each other, and do not use or threat with economic restrictions as a violation against integrity or political independence of another state. Because in this case one of the core problem was that China started to use export restrictions as weapons against another state: Japan as political retaliation. On the other hand, if once the prohibition of aggression will include the prohibition of economic aggression this rule should be universal among nations. In my view developed and developing countries should not face different judgements. In the future cannot be singled sided punish China to use economic weapon against a developed country, like Japan, while the winners of this WTO decision also use economic weapons as political retaliations. In 2014 the EU and US have implemented sanctions several times as political retaliations, tightening restrictions on major Russian state banks and corporations because of Russia's annexation of Crimea. Than new EU and US sanctions have been introduced against Russia for backing separatists in eastern Ukraine (BBC, 2014), which second issue is a supposition of the Western governments, but which is not proved without any doubts. The WTO dispute settlement should be based on unbiased investigations and decision making and the Panel should make just judgements. However, the results suggest that the decision about export quotas are questionable, because the total export of Chinese rare earth materials do not exceed the export quota, so these quotas cannot really have considered as a real barrier of global supply. The market balance cannot justify the WTO decision to eliminate the export quotas of REE. Only the selective restrictions and protectionism can be the issues of fair decision making the WTO Panel. The serious political relevance of the case is inevitable, where the two biggest global economies: the USA and China had economic debate in the WTO. This type of cases in order to preserve the good reputation of WTO Dispute Settlement, no member of the organisation can abuse the WTO as a political retaliation itself. In short terms the developed countries, like the USA probably can take advantage this way to achieve political wins against trade partners, but in long term the whole international law and regulations could be challenged and face erosion. The case also involved environmental protection issues. However, the damages and problems of REE mining are inevitable, the WTO Dispute Settlement decision did not deeply involve the environmental protection issues. The Panel focused on more contractual and economic issues to make a decision, which make the long list longer when international courts avoid to make precedent in favour of international environmental protection (cf. Gabcikovo- Nagymaros Case). Considering the economic power of the USA the international law should avoid that only the biggest economic actor can claim environmental protection to implement international trade restrictions (cf. Tuna Dolphin Case or Shrimp Turtle Case) against developing countries. In long term to achieve sustainable consensus on environmental protection every global economic actor should and could use environmental protection as a potential and valid reason of restrictions under certain circumstances as an exception of the general rule of free trade. References BBC (2014): How far do EU-US sanctions on Russia go? [cit ). Available at: < 18 th International Scientific Conference [278] Faculty of Economics, VŠB - TUO

287 BBC (2015): China scraps quotas on rare earths after WTO complaint. [cit ). Available at: < CARLTON, Dennis W and PERLOFF Jeffrey M. (2005). Modern Industrial Organisation. Prentice Hall, New Jersey DAILY TECH (2011): China Cuts Off World's Rare Earth Metal Supply. [cit ). Available at: < 9.htm>. EUROPEAN COMMISSION (2014): Chinese restrictions on access to rare earths and other raw materials - WTO rules in EU s favour. [cit ). Available at: < FINANCIAL TIMES (2012): China s rare earth stranglehold in spotlight. [cit ). Available at: < HAN, Aiping; GE, Jianping; LEI, Yalin (2015): An adjustment in regulation policies and its effects on market supply: Game analysis for China s rare earths. Resources Policy, Vol. 46, No. 2, pp IVES, Mike (2013): Boom in Mining Rare Earths Poses Mounting Toxic Risks. Environment360. [cit ). Available at: < 4/>. KING, Hobart (2014): REE - Rare Earth Elements and their Uses. [cit ). Available at: < LO, Chris (2015): The false monopoly: China and the rare earths trade. [cit ). Available at: < LINFO (2004): The Sherman Antitrust Act. [cit ). Available at: < LIU, Hanwei and MAUGHEN, John (2010): China s rare earths export quotas: out of the China-raw materials gate, but past the WTO s finish line? Journal of International Economic Law, Vol. 15, No. 4, pp MANCHERI, Nabeel A. (2015): World trade in rare earths, Chinese export restrictions, and implications. Resources Policy, Vol. 46, No. 2, pp METAL POWDER REPORT (2014): WTO rules against China rare earth restrictions. Metal Powder Report, Vol 69, No. 3, p. 13. THE GUARDIAN (2010): Japan-China row escalates over fishing boat collision. [cit ). Available at: < [279] Faculty of Economics, VŠB - TUO

288 Section S5: Law Aspects of the Economy THE GUARDIAN (2015): China scraps quotas on rare earths after WTO complaint. [cit ). Available at: < THE NEW YORK TIMES (2010): China Is Blocking Minerals, Executives Say. [cit ). Available at: < THE WASHINGTON POST (2010): Boat collision sparks anger, breakdown in China-Japan talks. [cit ). Available at: < TOLNAI Ágnes (2010): Nemzetközi gazdaságtan (International Economy). Grotius E- Könyvtár. Retrieved from: < das%c3%a1gtan.pdf>. WALL STREET JOURNAL (2015): China Ends Rare-Earth Minerals Export Quotas. [cit ). Available at: < WERLE, Gerhard (2009): Principles of International Criminal Law, T.M.C. Asser Press, Hague WTO (2015): China Measures Related to the Exportation of Rare Earths, Tungsten and Molybdenum. [cit ). Available at: < ZAJEC, Olivier (2010): China sits tight on its goldmine. Le Monde diplomatique - English Edition, 2010 november. Retrieved from: < 18 th International Scientific Conference [280] Faculty of Economics, VŠB - TUO

289 ROLE PLYNOVÝCH ZÁSOBNÍKŮ V EU A NÁRODNÍ ENERGETICKÉ POLITICE: BEZPEČNOST DODÁVEK ZEMNÍHO PLYNU THE ROLE OF GAS STORAGE IN EUROPEAN AND NATIONAL ENERGY POLICY: SECURITY OF GAS SUPPLY Martin Švec Právnická fakulta, Masarykova univerzita martin.svec.law@gmail.com Abstrakt Liberalizace energetického sektoru je jedním ze základních konceptu energetické politiky v západních demokraciích. Toto strategické odvětví se tak dostává do vlastnictví soukromých subjektu, avšak bytostným zájmem a povinností státu je zajistit svoji energetickou bezpečnost. Svu j nepřímý vliv stát realizuje, mimo jiné, prostřednictvím tvorby regulatorního rámce. Zajištění energetické bezpečnosti je též jedním z hlavních pilířu energetické politiky Evropské unie. Jedním z jejích nástroju je nastavení regulatorního rámce zajištění bezpečnosti dodávek plynu. Evropská unie dováží 53% z celkového objemu energie, kterou spotřebuje. Z dovozu pochází 90% surové ropy a 66% zemního plynu. Zásobníky plynu tak hrají v zajištění energetické bezpečnosti jak Evropské unie, tak jednotlivých členských zemí, významnou roli. Klíčová slova: Plynové zásobníky, energetická bezpečnost, právo EU, Abstract Liberalization of energy sector is considered as a key principle of European energy policy. Ownership and strategic control has been transferred to private entities, however states still have a vital interest on its energy security. States thus pursue their policy through a regulatory framework. For the same reasons energy security became also one of the pillars of European energy policy. Today, the EU imports 53% of the energy it consumes. Energy import dependency relates to crude oil (almost 90%), to natural gas (66%). Gas storage is considered as an important and strategic instrument increasing security of supplies. Hence, a regulatory framework for gas storage plays a significant role in both European and national energy policies. Keywords: Gas storage, energy security, EU Law JEL K330, K230, K200 Školitel: prof. JUDr. Vladimír Týč, CSc. [281] Faculty of Economics, VŠB - TUO

290 Section S5: Law Aspects of the Economy 1 Úvod Liberalizace energetického sektoru je jedním ze základních konceptu energetické politiky v západních demokraciích. Toto strategické odvětví se tak dostává do vlastnictví soukromých subjektu, avšak bytostným zájmem a povinností státu je zajistit svoji energetickou bezpečnost. Zajištění dodávek energií přesahuje zájmy národní a je zájmem též evropským. Členské státy Evropské unie prostřednictví Smlouvy o fungování Evropské unie přenesly na Unii tzv. sdílenou pravomoc v oblasti energetiky (Leal-Arcas and Filis, 2014). Evropská unie dováží 53% z celkového objemu energie, kterou spotřebuje. Z dovozu pochází 90% surové ropy a 66% zemního plynu (COM, 2014a). Významným akcelerátorem pro legislativní činnost a konkrétní kroky Unie i členských zemí byla dočasná přerušení dodávek zemního plynu v letech (COM, 2014a) či plynová krize 2014 v du sledku sporu mezi ukrajinskou společností Naftogaz a ruskou společností Gazprom (Rusko nedá plyn Ukrajině, 2014). Tento příspěvek se zaměřuje na jeden z nástroju zajištění energetické bezpečnosti, na plynové zásobníky. Jeho cílem je analýza právního prostředí, jak na národní, tak na evropské úrovni. Předmětem příspěvku bude vysvětlení širší podstaty plynových zásobníku, jejich role v evropské regulaci za účelem zajištění bezpečnosti dodávek zemního plynu a rozdílné přístupy členských zemí v její implementaci. Příspěvek vznikl jako jeden z výstupu vědeckovýzkumného projektu Význam plynových zásobníku pro energetickou bezpečnost, jejich národní a evropská regulace. Ačkoliv Evropská unie považuje za jediné dlouhodobé řešení své energetické budoucnosti udržitelný energetický systém složený z velké části z obnovitelných zdroju (EHSV, 2015), je problematika plynových zásobníku nanejvýš aktuální a dlouho bude. Rychlost přechodu k systému, složeného z velké části z obnovitelných zdroju, stále závisí na celé řadě okolností technického i politického charakteru. Dalším du vodem, proč věnovat zvýšenou pozornost energetické bezpečnosti, je existence dlouhodobých kontraktu. Například do České republiky bude na jejich základě proudit plyn z Ruska až do roku 2035 (COM, 2014b). Ve střednědobém horizontu tak bude zemní plyn hrát stále klíčovou roli, ovšem i v budoucnu s ním Evropský hospodářský a sociální výbor počítá jako s doplňkovým zdrojem k obnovitelným zdroju m (EHSV, 2015). 2 Zemní plyn jako strategická surovina Evropská unie dlouhodobě akcentuje význam skladování pro energetickou bezpečnost Unie. Potvrzují to například výsledky Madridského fóra o evropské regulaci plynárenství, jež považují skladování plynu za strategicky významné pro bezpečnost dodávek pro EU (EHSV, 2015). Ke stejnému závěru dospěl i Evropský hospodářský a sociální výbor, který vidí ve skladování strategicky významný krok k zajištění trvalé bezpečnosti dodávek v Unii a k fungujícímu trhu energií (EHSV, 2015). Zemní plyn je pro Evropskou unii surovinou mimořádného významu. Představuje jednu čtvrtinu primárních dodávek energie do Unie a využívá se k výrobě elektřiny, k vytápění, jako surovina pro pru mysl či palivo v dopravě (Nařízení 994/2010/EU). 18 th International Scientific Conference [282] Faculty of Economics, VŠB - TUO

291 Světové společenství bylo svědkem celé řady energetických krizí, při nichž byly přerušeny dodávky surovin, a to buď z du vodu přírodních katastrof (hurikán Katrina v roce 2005) anebo z du vodu politických, jejichž příkladem budiž ropné embargo v du sledku Yom Kippurské války v roce 1973, Íránsko-Irácká válka v roce , či ukrajinská plynová krize v letech 2005/2006, 2008/2009, 2014 (Schnittler, 2009). Je třeba upozornit na stále nedostatečnou diverzifikaci dodávek zemního plynu ze strany některých členských zemí. Jak plyne ze zprávy EU, šest členských zemí, konkrétně Finsko, Slovensko, Bulharsko a Pobaltské státy jsou ze 100% závislé na dovozu plynu z Ruské federace (DG for internal policy, 2015). 3 Nástroje k zajištění bezpečnosti dodávek strategické suroviny na evropské úrovni 3.1 Směrnice 2009/119/EC Z regulativního hlediska jsou za nejinvazivnější, ale i nejefektivnější metodu zajištění dodávek strategické suroviny považovány její tzv. povinné rezervy. Evropská unie jejich prostřednictvím čelí závislosti na dodávkách ropy a jsou upraveny směrnicí 2009/119/EC. Členským zemím je uložena povinnost vytvářet povinné rezervy ropných produktu ve výši odpovídající nejméně 90 dnu m pru měrného denního čistého dovozu nebo 61 dnu m pru měrné denní domácí spotřeby, podle toho, která z těchto dvou hodnot je vyšší (Směrnice 2009/119/EC). Česká republika tuto povinnost implementovala prostřednictvím zákona č. 189/1999 Sb., o nouzových zásobách ropy a o řešení stavu ropné nouze (Zákon o nouzových zásobách ropy). Povinné rezervy potom spravuje Státní správa hmotných rezerv České republiky (Zákon o pu sobnosti správy státních hmotných rezerv). 3.2 Nařízení 994/2010/EU Ve vztahu k zajištění bezpečnosti dodávek plynu zvolila Evropská unie opatření méně direktivní, obsažená v nařízení 994/2010/EU o opatřeních na zajištění bezpečnosti dodávek zemního plynu. Unie si sice uvědomuje, že otázka bezpečnosti dodávek je věcí celoevropského významu, jelikož, je-li ohrožena bezpečnost dodávek pro jeden členský stát, existuje riziko, že jednostranná opatření jím v du sledku toho přijatá mohou negativně ohrozit řádné fungování vnitřního trhu s plynem jako celku (Nařízení 994/2010/EU). Těmto riziku m ovšem Unie nečelí povinnými rezervami, nýbrž solidaritou, koordinací, diverzifikací a budováním infrastruktury. Nařízení ukládá členským zemím vypracovat plán preventivních opatření, tzv. standard pro infrastrukturu a zřídit orgán k provádění těchto opatření. Směrnice tak preferuje tržní opatření na straně poptávky i nabídky, jako například zvýšení flexibility dovozu i těžby, komerční skladování plynu, diverzifikaci, zpětné toky, energetickou účinnost či zvýšení využití obnovitelných zdroju. Strategické skladování plynu je potom uvedeno mezi doporučenými netržními opatřeními v Příloze III (Nařízení 994/2010/EU). Členským zemím je tak ponechána ve strategii zabezpečení dodávek zemního plynu relativní volnost. [283] Faculty of Economics, VŠB - TUO

292 Section S5: Law Aspects of the Economy 4 Plynový zásobník a jeho funkce Dle legální definice se za plynový zásobník považuje podzemní nebo nadzemní plynové zařízení včetně souvisejících technologických objektu a systému řídicí a zabezpečovací techniky a zařízení k převodu informací pro činnosti výpočetní techniky a informačních systému, sloužící k uskladňování zemního plynu v plynné nebo kapalné formě, přímo propojené s plynárenskou soustavou České republiky nebo se zahraniční plynárenskou soustavou (energetický zákon). První pokus uskladnit plyn byl proveden ve Spojených státech již v roce 1915 (Natural Gas Storage, 2016). Co se týče technického provedení, obvykle se ke zřízení zásobníku využívají přírodní, případně uměle vybudované prostory v podzemí, které jsou umístěny v geologicky nepropustných vrstvách. Nejčastěji se setkáváme s tzv. porézními a kavernovými zásobníky. V případě porézních zásobníků se jedná o vytěžená ložiska ropy anebo zemního plynu. Místo vzniklé vytěžením ropy nebo zemního plynu je tak využito pro skladování. Na stejném principu fungují tzv. aquifery, což je podzemní reservoár vody, která je odtlačena a nahrazena skladovaným plynem. Kavernové zásobníky jsou potom uměle vytvořené prostory vzniklé ražením a těžením horniny z podzemních sktruktur. Obvykle disponují vysokým vtláčecím a těžebním výkonem (Hrozek, 2015), (Natural Gas Storage, 2016), (RWE, 2016a). Pro účely nastavení regulace skladování plynu je třeba přihlédnout, jaké funkce zásobník mu že plnit. Zásobník neslouží pouze ke skladování plynu pro účely přerušení jeho dodávek. Naopak, zásobník mu že vyrovnávat sezónní výkyvy poptávky plynu, představovat obchodní příležitost, kdy v něm bude uložen plyn za účelem jeho dalšího prodeje za výší cenu ( price gain ), dále mu že sloužit jako zásoba pro výrazný náru st poptávky, při dálkovém transportu za účelem snížení rizika přerušení dodávky z technických du vodu (za tímto účelem využívá plynové zásobníky například Gazprom), či za účelem optimalizace dodávek plynu (COM, 2014b), (GSE Position Paper, 2015). Jak plyne z výše uvedeného, význam plynového zásobníku překračuje pouze zajištění energetické bezpečnosti pro případ přerušení dodávek ze strany dodavatele plynu. Po využití služeb skladování tak v tržním prostředí bude velmi pravděpodobně existovat poptávka. Du kazem toho je Německo, které jako jedna ze tří zemí EU (spolu s Rakouskem a UK) neukládá povinnost skladovat určité množství plynu a přitom disponuje zdaleka největší sítí plynových zásobníku, konkrétně 51, s celkovou kapacitou tvořící 22% všech zásob plynu v EU (COM, 2014b). 5 Národní metody regulace skladování plynu Evropská unie členským státu m neukládá povinnost skladovat určité množství plynu pro případ přerušení jeho dodávek. V následující kapitole budou, na základě komparativní analýzy právní regulace jednotlivých členských zemí, rozvedeny jednotlivé metody právní regulace skladování plynu. V přístupu k zajištění energetické bezpečnosti jednotlivými členskými státy se lze setkat se třemi ru znými metodami; 18 th International Scientific Conference [284] Faculty of Economics, VŠB - TUO

293 a) ponechat zajištění dodávek plynu na tržních mechanismech (Německo, Rakousko, Velká Británie); b) povinná strategická rezerva strategic storage (Itálie, Maďarsko); c) povinnost dodavatelu plynu skladovat jeho určité množství mandatory storage obligation (většina zemí, včetně České republiky). Jednotlivé metody se tak liší zejména tím, kterému účastníku na trhu s plynem je povinnost skladovat uložena. Pro úplnost dodávám, že Maďarsko aplikovalo systém kombinující jak povinnou strategickou rezervu, tak povinnost dodavatelu plynu skladovat jeho určité množství a podle zprávy Evropské komise tak disponuje nejkomplexnějším a nejrobustnějším legislativním rámcem pro účely zajištění své energetické bezpečnosti (COM, 2014b). Vzhledem k tomu, že metoda zajištění dodávek plynu tržními mechanismy není nepřímým regulatorním nástrojem státu, nebude jí věnována speciální podkapitola. 5.1 Povinná strategická rezerva, strategic storage V tomto modelu je povinnost skladovat určité množství plynu uložena provozovateli zásobníku plynu. Strategické rezervy jsou určeny ke kompenzaci nedostatečných dodávek plynu či pro případ plynové krize. Rezervy mohou být použity pouze se souhlasem příslušného Ministerstva. Provozovatel zásobníku plynu má povinnost část své zásobní kapacity určit ke skladování strategických rezerv, stejně jako ji zajistit plynem, který je v jeho vlastnictví. Za jeho skladování je potom odškodněn na základě poplatku, který odvádí všichni dovozci a domácí výrobci zemního plynu. Pru měrně je tak vyplaceno zhruba 60 milionu Euro ročně. Itálie v strategických rezervách uchovává 4,8 milionu kubických metru plynu, což tvoří 27,5% celkové skladovací kapacity v této zemi. Kapacita, která bude určena pro rezervy plynu, je ročně určována příslušným Ministerstvem (Mantoni, 2015), (Falach, 2013). Du vodem zavedení strategických rezerv v Itálii bylo významné množství domácností odebírajících zemní plyn. V Itálii byl tento model zaveden v roce 2000 zákonem č. 167/2000 (Falach, 2013). 5.2 Povinnost dodavatelů plynu skladovat jeho určité množství, mandatory storage obligation V převažujícím modelu je povinnost uložena obchodníku m s plynem/dodavatelu m plynu, obvykle pokud dodávají plyn chráněným (zejména koncovým) zákazníku m. V České republice je obchodník s plynem povinen uskladnit tzv. bezpečnostní standard, minimálně 20% roční dodávky plynu, v plynových zásobnících na území Evropské unie. Tato povinnost se vztahuje pouze na roční období od 30. září do 1. dubna (Vyhláška o Stavu nouze v plynárenství). Skladovací kapacity jednotlivých plynových zásobníku jsou potom nabízeny v rámci vícekolových elektronických aukcí (Vyhláška o Pravidlech trhu s plynem), načež je mezi žadatelem o skladovací kapacitu a skladovatelem uzavřena smlouva o uskladnění plynu. Výše uvedené rozdělení skladovací kapacity na základě tržních mechanismu by nebylo možné bez tzv. třetího energetického balíčku (Tichý, 2011.), tedy směrnic EU upravujících pravidla pro vnitřní trh s plynem a elektrickou energií (2009/72/ES a 2009/37/ES), Českou [285] Faculty of Economics, VŠB - TUO

294 Section S5: Law Aspects of the Economy republikou implementovanou prostřednictvím Energetického zákona. Ten uložil provozovateli zásobníku plynu, byl-li součástí vertikálně integrovaného podnikatele, povinnost jeho oddělení co do právní formy, organizace a rozhodování. Další významnou povinnost, kterou zavedl třetí energetický balíček, je tzv. TPA (Third Party Access), tedy povinnost zajistit neznevýhodňující podmínky pro přístup do zásobníku plynu za podmínek stanovených zákonem tomu, kdo o to požádá a splňuje podmínky připojení (energetický zákon). 6 Vhodnost jednotlivých modelů Je du ležité zdu raznit, že aplikace jednotlivých modelu záleží do velké míry na geopolitické situaci, na energetické infrastruktuře a míry diverzifikace dané země. Nelze tak automaticky tvrdit, že neexistující povinnost skladovat jakékoliv množství zemního plynu v případě Velké Británie je nutně riskantní. Bezesporu nejspolehlivější metodou je zajištění dodávek strategické suroviny prostřednictvím povinných státních rezerv. Nejedná se ovšem o nepřímý regulatorní nástroj. V případě státních rezerv ropy stát ropu kupuje, vlastní a vykonává nad ní dozor a rozhoduje o tom, jak s ní bude v krizové situaci naloženo. Zároveň jde o metodu pro stát nejnákladnější a netržní. Naopak čistě tržní přístup zaujalo Německo, Rakousko a Velká Británie. Plynové zásobníky v nich fungují na komerčním principu. Předchozí kapitoly prokázaly, že skladovat plyn je výhodné nejenom z bezpečnostních du vodu přerušení jeho dodávek. Většina zemí EU zavedla povinnou strategickou rezervu či povinnost dodavatelu skladovat určité množství plynu. V jejich případě je vlastní zajištění energetické bezpečnosti uloženo legislativou (stát tak zajišťuje energetickou bezpečnost nepřímo, prostřednictvím regulatorního rámce). V jednom případě je povinnost převedena na provozovatele zásobníku (příklad Itálie), v druhém potom na obchodníky s plynem (příklad České republiky). Obě metody narážejí na určité obtíže. Povinná strategická rezerva omezuje komerční činnost provozovatelu plynových zásobníku. Další obtíž spočívá v tom, že strategická rezerva se odvíjí od infrastruktury a množství plynových zásobníku. Itálie sice disponuje 11 zásobníky a 4 vznikají (Mantoni, 2015), ale například Bulharsko či Belgie evidují pouze jediný zásobník (COM (2014b). Pokud neexistuje poptávka po plynových zásobnících, bude muset stát pravděpodobně přijmout další opatření na podporu jejich vzniku, případně je sám zřídit. Výhodou této metody je bezpochyby spravedlivý a soutěž nenarušující systém jejich financování, tedy skrze proporcionální poplatek určený Ministerstvem vu či výrobcu m a dovozcu m plynu. Povinnost skladovat určité množství plynu neomezuje komerční činnost provozovatelu plynových zásobníku, je ovšem složitější co se dozoru týče. Mu že mít ovšem, bude-li nastavena tak, jak je tomu v České republice, negativní du sledky pro soutěž mezi obchodníky s plynem. Skladovací kapacity jsou nabízeny na komerčním principu v elektronické aukci (RWE, 2016b). Skladovací povinnost mají ovšem všichni zákonem určení obchodníci s plynem a ekonomicky silní obchodníci tak mohou (při omezené celkové kapacitě zásobníku v České republice) svojí účastí v aukci uměle navyšovat výslednou cenu skladovací kapacity. Jistě by se dalo namítat, že obchodník s plynem mu že skladovat i v zahraničí, s tím jsou ovšem pro něj spojeny další náklady. Stejně jako v případě povinných strategických rezerv se stát mu že potýkat s nedostatkem skladovací kapacity, ovšem je to méně riskantní, jelikož povinnost skladovat je 18 th International Scientific Conference [286] Faculty of Economics, VŠB - TUO

295 převedena na obchodníka s plynem a provozovatel mu že veškerou kapacitu zásob věnovat komerčním účelu m. Závěr Plynové zásobníky hrají významnou roli v zajištění bezpečnosti dodávek zemního plynu. Potřeba jejich efektivního zajištění se opakovaně projevuje především v souvislosti se zhoršující se geopolitickou situací ve východní Evropě či v regionech s Evropou sousedících, na Blízkém Východě a v Severní Africe. Jde o problematiku nejenom aktuální, ale du ležitou i z dlouhodobé perspektivy. V Evropské unii jsme sice svědky postupného přechodu z centralizované energetiky, postavené na fosilních palivech, na systém decentralizovaný, významnou měrou využívající obnovitelné zdroje energie, ovšem vzhledem k charakteristice obnovitelných zdroju se bude muset celý systém vyrovnat se zvýšenými nároky na vyrovnání nabídky a poptávky a nároky na flexibilitu. Tu mohou poskytnout právě plynové zásobníky (Zillman and Mcharg and Barrera-Hernández and Bradbrook, 2014). Existuje celá řada názoru, podle kterých je regulatorní rámec zásobníku plynu, nastavený Unií, nedostatečný, zejména ve světle zhoršujících se geopolitických vztahu s Ruskou federací a nestabilní situací v Libyi (Bedeschi, 2015), (Maugeri, 2014). Energetickou politiku Unie je však třeba vnímat v celé její šíři. Je pouze otázkou času, kdy přijde další krize, která odhalí připravenost Unie a účinnost opatření přijatých za účelem zajištění energetické bezpečnosti. Závěrem je třeba zdu raznit, že plynové zásobníky jsou jen jedním z nástroju zavedených směrnicí 994/2010/EU. Na jejich příkladu však mu žeme sledovat, jak stát/mezinárodní organizace využívá regulatorní rámec za účelem zajištění své energetické bezpečnosti. Navzdory odkazu m na ru zné právní úpravy byla v práci zachovávána terminologie českého práva a energetického zákona. Literatura BEDESCHI, Beatrice (2015). Europe should create common strategic gas reserves. [online). Platts. [cit ). Dostupné z: COM (2014a). Sdělení Komise Evropskému Parlamentu a Radě: Evropská strategie energetické bezpečnosti, COM(2014) 330 final. [online). Luxembourg: European Commision, [cit ). Dostupné z: com_com(2014)0330_cs.pdf COM (2014b). The Role of Natural Gas in internal market and in ensuring security of supplies. [online). Luxembourg: Publications Office of the European Union. [cit ). Dostupné z: pdf [287] Faculty of Economics, VŠB - TUO

296 Section S5: Law Aspects of the Economy DG FOR INTERNAL POLICY (2015). Energy Storage: Which Market Designs and Regulatory Incentives Are Needed? [online). Luxembourg: Publications Office of the European Union. [cit ). Dostupné z: 9_EN.pdf EHSV (2015). Stanovisko EHSV k tématu Skladování energie: faktor integrace a energetické bezpečnosti. [online). Brusel: Evropský hospodářský a sociální výbor. [cit ). Dostupné z: AC-TRA-cs.docx ENERGETICKÝ ZÁKON. Zákon č. 458/2000 Sb., o podmínkách podnikání a o výkonu státní správy v energetických odvětvích a o změně některých zákonů, ve znění zákona č. 104/2015 Sb. [online). Energetický regulační úřad. [cit ). Dostupné z: bca3-6c32f50c888f FALACH, Daron (2013). The Internatoinal Comparative Legal Guide: Oil and Gas REgulation London (UK): Global Legal Group Ltd. ISBN GSE POSITION PAPER (2015). On the role of gas storage in ensuring elektricity security of supply in the persepective of a Blueprint for Capacity Remunireation Menchanism. [online). Gas Storage Europe. [cit ). Dostupné z: HROZEK, Dian (2015). Zásobníky plynu v České republice, o energetice. [online). O Energetice. [cit ). Dostupné z: LEAL-ARCAS, Rafael and FILIS, Andrew (2014). International Energy Governance. Edward Elgar Publishing Limited (UK), ISBN MAUGERI, Leonardo (2014). Europe Needs a Strategic Gas Reserve. [online). Belfer Center. [cit ). Dostupné z: html?breadcrumb=%2fproject%2f68%2fgeopolitics_of_energy_project MANTONI, Afra (2015). Gas Storage in Italy. [online). Energy Law Group. [cit ). Dostupné z: NAŘÍZENÍ 994/2010/EU. Nařízení Evropského Parlamentu a Rady (EU) č. 994/2010 ze dne 20. října 2010, o opatřeních na zajištění bezpečnosti dodávek zemního plynu a o zrušení směrnice Rady 2004/67/ES. [online database). Eur-Lex. [cit ). Dostupné z: NATURAL GAS STORAGE (2016). Natural Gas Storage. [online). Stogit. [cit ). Dostupné z: RUSKO NEDA PLYN UKRAJINĚ (2014). Rusko nedá plyn Ukrajině. Hrozí plynová krize i v Česku? [online). Aktuálně. [cit ). Dostupné z: 18 th International Scientific Conference [288] Faculty of Economics, VŠB - TUO

297 RWE (2016a). Druhy podzemních zásobníků. [online). RWE. [cit ). Dostupné z: RWE (2016b). Informace o realizovaných aukcích skladovací kapacity. [online). RWE Gas Storage. [cit ). Dostupné z: SCHNITTLER, Bernd (2009). Strategic Storage of Natural Gas: Is it really necessary? [online). Union of European Petroleum Independents. [cit ). Dostupné z: ittler_en.pdf SMĚRNICE 2009/119/EC. Směrnice Rady 2009/119/EC ze dne 14. září 2009, kterou se členským státům ukládá povinnost udržovat minimální zásoby ropy nebo ropných produktů. [online database). Eur-Lex. [cit ). Dostupné z: VYHLÁŠKA O PRAVIDLECH TRHU S PLYNEM. Vyhláška č. 349/2015 ERU, Pravidla trhu s plynem, ze dne ze dne 8. prosince [online). Energetický regulační úřad. [cit ). Dostupné z: VYHLÁŠKA O STAVU NOUZE V PLYNÁRENSTVÍ. Vyhláška č. 344/2012 Sb., ze dne , o stavu nouze v plynárenství a o způsobu zajištění bezpečnostního standardu dodávky plynu. [online). TZB-Info. [cit ). Dostupné z: TICHÝ, Lukáš (2011). Liberalizace energetického trhu v EU a pozice České republiky. Současná Evropa, 17(2): , ISSN ZÁKON O NOUZOVÝCH ZÁSOBÁCH ROPY. Předpis č. 189/1999 Sb., Zákon o nouzových zásobách ropy, o řešení stavů ropné nouze a o změně některých souvisejících zákonů (zákon o nouzových zásobách ropy). [online). Sbírka zákonu a mezinárodních smluv České republiky. [cit ). Dostupné z: ZÁKON O PŮSOBNOSTI SPRÁVY STÁTNÍCH HMOTNÝCH REZERV. Předpis č. 97/1993 Sb., Zákon o působnosti Správy státních hmotných rezerv. [online database). Portál veřejné správy. [cit ). Dostupné z: ZILLMAN, Alan. N., MCHARG, Aileen., BARRERA-HERNÁNDEZ, Lila., BRADBROOK, Adrian (2014). The Law of Energy Underground. Oxford (UK): Oxford University Press. ISBN [289] Faculty of Economics, VŠB - TUO

298 Section S6 Finance and Accounting Honorary Chairman: prof. Dr. Ing. Dana Dluhošová Guarantor: Ing. Regína Střílková Ing. Ondřej Mikulec [291] Faculty of Economics, VŠB - TUO

299 Section S1: Economics 18 th International Scientific Conference [292] Faculty of Economics, VŠB - TUO

300 THE MATURITY ANALYSIS OF CLAIMS AND LIABILITIES IN HEALTH SECTOR OF SLOVAK REPUBLIC 1 Mária Braunová, Monika Jančovičová, Lucia Jantošová University of Economics in Bratislava, Faculty of Business Management, Department of Business Administration maria.braunova@euba.sk, jancovicova.monikaa@gmail.com, jantosova.lucia@gmail.com Abstract Healthcare in Slovakia in recent years shows a number of problems, including in particular the debt, which resulted in a change in ownership of facilities providing health care from the state to private. The object of research is a financial sphere, the aim of this paper is to track payment discipline, analyse changes and implications. The main indicators that we use to determine the solvency of individual periods are financial indicators of activity the claim s turnover time and liabilities payment time. The necessary data for the analysis of hospitals in the Slovakia were obtained from financial statements of analysed group that are published in a public register of financial statements. This analysis is provided for the years 2012 and 2013 by reason of availability of the data for the comparison (Financial indicators of economic activities in the Slovak Republic). Second reason is that in this period were taken many steps from the government for an improving the payment discipline in healthcare. These steps had improved the economic and financial situation in the health care, but today situation is more complicated and these steps are insufficient. In conclusion of the article is the summary of the achieved results how solvency of the state and private hospitals. Our aim is to show that the basic steps in the improving of solvency in the hospitals did not bring the required results. For that reason, are mentioned in the conclusion possible solutions for improving the situation in the Slovak healthcare. Keywords: The maturity, claims, liabilities, health sector, the Slovak Republic JEL: I13, I15, I18, G33, M21 Advisor: prof. Helena Majdúchová, CSc., doc. Ing. Miroslav Tóth, PhD. 1 The research is due to the support provided by the project VEGA nr. 1/0844/15 Diagnostika podnikových procesov v kontexte šedej ekonomiky and VEGA1/0128/15 Faktory zvyšovania výkonnosti poľnohospodárskych podnikov vo väzbe na rozvoj vidieka a zabezpečenie primeranej potravinovej sebestačnosti. [293] Faculty of Economics, VŠB - TUO

301 Section S6: Finance and Accounting 1 Introduction A current state of Slovak health service requires a number of steps oriented to ensure that improved the overall situation in the institutions providing health care, both from the economic as well as qualitatively. The aim of our analysis is to examine whether actions to improve payment discipline in hospitals brought the desired effect. The government engaged the problem of high indebtedness of hospitals for several years. The government implemented from 2011 a number of measures such as the introduction of the ceiling due liabilities of hospitals, 60 days, streamlining their operations, optimize material purchase, and many other measures. Currently debts of hospitals have reached the limit of more than 500 million, despite the fact that in 2011, the health of the Slovakia provided "financial injection" of over 300 million Euros (SITA, 2012). The government provides financial assistance to the health sector, but because of consolidation of government due, this help was stopped. Nowadays it is question whether these actions had improving effect in the health sector in Slovakia. 2 Methodology and methods of research The aim of this paper is to analyse claim s turnover time and maturity of liabilities in Slovak hospitals, and the paper is pointed out the net effect of changes, which should lead to the improvement of the indicators in hospitals. The survey sample includes 78 hospitals which were included in the list of hospital quality studies enrolled in Slovakia implemented various health insurance companies operating in Slovakia. Slovakia operates approximately 130 hospitals in the private and public sector. Order of the hospital in that list is a combination of the assessment of patients and professionals in the field. This comparison was made between relatives hospitals to produce a ranking of faculty, general and paediatric teaching hospitals, also Institute of Oncology and cardiology institutes. Based on the individual rankings it was created resulting ranking that represents the order of the hospitals in Slovakia. The ranking is still very subjective, because the response rate was only 26%, which means that out of 5,213 questionnaires were received only 1,355 questionnaires, which is not a representative sample. It is because of number of hospitals in Slovakia (130 hospitals) (Methodology of sample is available on the website The survey results were taken into account only if a sufficient number of the returned questionnaires. For the foregoing reasons, 78 hospitals were analysed (Folentová, 2013). 2.1 Financial analysis indicators of activity To analyse the financial situation of hospitals can be used a variety of methods, one of which is the use of relative financial indicators. The method is started using the early 20th century and has become one of the most used. Analysis using financial ratios is laborious and it is made of many steps, included calculation of financial ratios, which are represented the company's ability to pay their liabilities, asset utilization, the structure of financial resources, the overall profitability of the company and market value (Bull, 2007). From selected indicators were chosen the indicators of activities that allow to report, to quantification and to analyse whether company, in our case the individual hospitals, use their assets efficiently, while its non-use is as ineffective as its lack. If the assets of company are not using, the costs for its maintenance will increase. The analysis was focused onto two indicators of activity, concretely maturity period of liabilities and claim s turnover time. In case of claim s turnover time is an expression of how many days it will take until that repayment (collection) of claims (Zalai, 2013). 18 th International Scientific Conference [294] Faculty of Economics, VŠB - TUO

302 Claim s turnover time = Claims *360 (1) Sales revenues Indicator liabilities payment time is an expression of how many days it will take from the moment of genesis of liability to its repayment. 2.2 Database Liabilities payment time = Liabilities *360 (2) Costs The study is consisted of 78 hospitals, of which the necessary data to calculate the ratio financial indicators were gained from the available accounts. The individual financial statements were drawn on the financial statements register. Register of financial statements is an information system, in imposing financial statements, auditor's report and annual reports. Register accounts in the legislation is anchored in 23 to 23d of Act No. 431/2002 Coll. on Accounting, as amended. Register is divided into public and non-public part. In the public section are available financial statements of companies, cooperatives, state enterprises, government entities, entities that are accounted for in accordance with international accounting standards and other selected entities. In the non-public part of the register are the financial statements of entities that are not in the public section. There are mainly accounts of entrepreneurs - individuals and non-profit organizations that are exempt from disclosure. Based on available data, various ratios were calculated and then were compared with the values of the indicators for the period of time in the area of business as described by mean values of financial indicators of economic activities in the Slovak Republic (Slovak Credit Bureau, 2012, 2013). After this, data were compared the situation in hospitals in terms of ownership, based on the median of the hospitals in the private and public sector. The conclusion is the analysis of the current state of settlement of liabilities and claims payments in the Slovak healthcare and suggesting possible solutions (Hindls, 2007). 2.3 The analysis of payment discipline in the Slovak health care Health is one of the most important human values. By definition of the World Health Organization's "health is state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity." Health care is included into services in which employees, medical and non-medical staffs primarily provide its procedure to the patient as the main customer. The provision of health care is also an important element alone instrumentation but staff is a defining element in the implementation and provision of services. To achieve patient satisfaction and providing quality health care is to provide the necessary care so as to meet the expectations and wishes of patients. The right to appropriate quality of healthcare means that the work of medical professionals must be highly professional. Quality health care is the degree of excellence of care in relation to the current level of knowledge and technological developments and in accordance with economic possibilities (Lloyd, 2004). [295] Faculty of Economics, VŠB - TUO

303 Section S6: Finance and Accounting 2.4 Health service in 2015 In Slovakia, there are health subjects in the scope of the Ministry of Health, of religious groups (all groups will join the State providers) and of private entities. Health centres under the Ministry of Health in 2015 received funds, which were used primarily for reconstruction work. Historically, it is the most significant financial support over the past years (Bulletin of MZSR ). The Ministry considered it necessary, even taking into account the fact that the level of productivity of hospitals in Slovakia significantly influences their infrastructure, which in some cases outdates (the average age of hospital buildings at 42 years) and poor is also logistic arrangement of departments and buildings, hospitals. The Higher territorial units also invested into the reconstruction of health facilities and other founders as well as private operators. Year 2015 is a breakthrough for the Slovak health, because health debt reached the level of 500 million Euros for the first time, the volume of funds available for the purchase of health care for patients is about 250 million Euros (Folentová, 2015). That year also brought other negative impacts such as increasing minimum wages, introduction of security features for recipe continued indebtedness of hospitals, and inefficient use of funds and property, and the prohibition of charges in the clinic (Bulletin of MZSR ). The various steps that have been taken in the health sector SR led to the hospital again facing problems with payment discipline. The government a few times solved the problem, by system of debt relief. First deleveraging hospitals were during the government of Mikuláš Dzurinda, which was used by the lending company, which was used for debt elimination of 664 million Euros (Beer, 2009). The second deleveraging was occurred during the first government of Robert Fico, which provided to hospitals million (Pažitný, 2010). The resources were granted on the condition return in 15 years but were later forgiven the debt of hospitals. Last deleveraging was yet in the government of Iveta Radičová in 2011, when it was hospital on Debt relief provided over 300 million (TASR, 2015b). The aim of this deleveraging process should be the transformation of hospitals into joint stock companies, but eventually it stopped. Further deleveraging process is expected in the near term, as the debt of hospitals heretofore value of more than 500 million (Hunková, 2015). However, due to the increase in wages in the health sector will be difficult to find money for debt elimination hospitals in Slovakia, and ultimately solve the problem of debt elimination. Currently, there are problems in some public hospitals so serious that the maturity of some liabilities beyond the 615 days. The reason for these problems is the debt from the past. Therefore, the aim of the analysis is to determine whether the adopted changes lead to the improvement of payment discipline in hospitals in Slovakia (TASR, 2015a). 3 Analysis of claim s turnover time Claim poses a form of financing which a supplier essentially provides free of interest to its customers. The aim of any business is to accelerate debt collection and release cash that is tied in claims. Effectiveness of debt collection needs to be continuously evaluated. However, it has several deficiencies and a major deficiency of claim s turnover time is its fluctuations in the case of seasonal or other fluctuations. Claims are a function of sales revenues for the previous period. If we calculate the turnover time of claims in annual sales revenues and it shows seasonal fluctuations, this calculation can lead to excessive fluctuations of claim s turnover time (Peterson, 2012). The following tables (Tab.1 and Tab.2) display the final values of the claim s turnover time for each year. Based on the calculation of individual indicators for each hospital, the research compares the values with interval valid for 2012 and 2013 according to the publication 18 th International Scientific Conference [296] Faculty of Economics, VŠB - TUO

304 The mean values of financial indicators of economic activities in the Slovak Republic. Given values valid for the year 2012 are from the interval 58,16 83,10 and for the year 2013 the interval is 56,75 87,23. In case that the indicator shows a value in the interval, 0 is assigned to this indicator, if the value is below the given interval number 1 is assigned to this indicator, if the indicator shows a value over a given interval indicator is assigned by 2. According to the above values, the papers shows analyse of private and public hospitals. The number of private hospitals, which are examined, is 33 and state 45, which can be seen in the tables below. Subsequently, we determined the percentage of the total number of hospitals according to their ownership. By using the percentages in case of public and private hospitals, these hospitals are evaluated whether its share in each category is positive. For claims is regarded as a positive phenomenon if the turnover time of claims is under or within the evaluated period. If the indicator values are over the interval (negative effect) it means that customers repay their liabilities later, which can have a negative impact on the ability of hospitals to fulfil their obligations. Tab. Chyba! Nebyla zadána posloupnost. Analysis of claims 2012 Evaluation Private (P) % State (S) % Final Evaluation 0- within the interval P 1- below the interval S 2- over the interval S Without the evaluation P TOTAL Source: Own adaptation based upon data from financial reports from Tab. 2 Analysis of claims 2013 Evaluation Private (P) % State (S) % Final Evaluation 0- within the interval below the interval S 2- over the interval S Without the evaluation P TOTAL Source: Own adaptation based upon data from financial reports from In case of claims this research shows worse results in private hospitals, where claims are paid later than in public hospitals. Within the interval research has not experienced significant differences but in the case of the interval values (hospital debts are paid in a shorter period of time) are in better numbers private than public hospitals. However, if we look at the overall annual growth rates, the number of days to pay claims to hospitals is shorten, while causing a decrease in the number of hospitals, which their claims were paid after more than 80 days. 4 The maturity analysis of liabilities Maturity of liabilities defines for how many days on average researched subject (in our case hospitals) is able to pay its liabilities. It is advisable that the value of this indicator was higher than the turnover time of claims. This indicator shows how negotiating has the strong position for the company to its suppliers and employees (Shim, 2007). [297] Faculty of Economics, VŠB - TUO

305 Section S6: Finance and Accounting The following tables (Tab.3 and Tab.4) display final values which represent the maturity of liabilities for each year. This research uses exactly steps as were used for claims where the individual indicators for each hospital were compared with the interval valid for 2012 and 2013 according to the publication The mean values of financial indicators of economic activities in the Slovak Republic. The interval values valid for 2012 are from 71,32 161,65 and in 2013 are from 52,33 141,10. The evaluation was conducted in the same way as in claims: in case that the indicator shows a value in the interval, 0 was assigned to this indicator, if the value was below the given interval it was assigned by 1, if the indicator shows a value over a given interval indicator has been assigned by 2. The sample remained unchanged, taking into account once again we took ownership of the hospital. The percentages of shares assess whether the share of hospitals in each category evaluation is positive for public or private hospitals. For liabilities it is positive, if the maturity of liabilities is below or within the evaluated interval. As for claims the negative phenomenon is when the values of indicator are below the interval since that it reflects the payment discipline problems in hospitals. Tab. 3 Analysis of liabilities 2012 Evaluation Private (P) % State (S) % Final Evaluation 0- within the interval P 1- below the interval S 2- over the interval P Without the evaluation P TOTAL Source: Own adaptation based upon data from financial reports from Tab. 4 Analysis of liabilities 2013 Evaluation Private (P) % State (S) % Final Evaluation 0- within the interval P 1- below the interval S 2- over the interval P Without the evaluation P TOTAL Source: Own adaptation based upon data from financial reports from The private hospitals show better results of indicator the maturity of liabilities within the interval of evaluation, which means that their liabilities are repay earlier than the average for the sector. In the addition, this research determined that public hospitals on average pay its liabilities rather than private, which means that mainly showed values within the interval. For liabilities over the interval evaluation, significantly worse payment discipline was recorded in state hospitals, where the results of the boundary are under the interval (recorded up to 36% of hospitals in 2012 and in 2013 to 42% of hospitals), which means that the payment discipline in the state hospitals has deteriorated significantly. This deterioration trend in payment discipline could also be seen at private hospitals (the share has increased from 18% to 30%). The analysis brings the hospital without evaluation too. These hospitals have been transformed by ownership or change of legal form, so in this research these data of previous original equipment and these hospitals were not considered in the analysis. 18 th International Scientific Conference [298] Faculty of Economics, VŠB - TUO

306 Conclusion Hospitals in Slovakia face many problems and the main problem is their high indebtedness. For that reason, a change in ownership of hospitals is often phenomenon, which is often passed from the hands of the state to the private sector or vice versa because of financial difficulties changing its owner and legal form. According to the analysis the conclusion is that in the case of claim s turnover time indicator, was recorded a positive trend. Hospitals pay their liabilities on average to 80 days. A decline was recorded too in the case of claim s turnover time where the value of this indicator is over 80 days. Based on the median in 2012 was this indicator in private hospitals 60,63 days and 60,71 days in public hospitals, representing approximately the same value. In 2013, this value of indicator is in private operators 57,20 days (annual decrease of 5,66%) and 57,20 days in state (an annual decrease of 5,78%). In 2013, a decline in the case of claims indicator was recorded, which means that hospitals repay their liabilities faster from year to year. The private and public hospitals have recorded the same decline by 4,19% (from 57,20 to 54,80). By using the median, in 2012 was the value of liabilities indicator by private operators 89,45 days and 92,90 days in state, compared with 2013, with by private operators, an increase of 2,90% (from 89,45 to 92,05) was marked, while in public hospitals have declined by 0,92% (from 92,90 to 92,05). In private hospitals, a slight increase was recorded in the number of days the payment of liabilities and from 92,05 days to 92,80 days. Public hospitals recorded a slight decrease of 1% (from 92,05 days to 91,12 days). In general the indicators will improve for each year, which it can be seen at the extent of examined intervals for claims where there has been only modest changes in commitments and a significant decline too. However, changes in the payment discipline of hospitals will not solve the long term problems of Slovak health care system. Problems that healthcare is facing are due to inefficiency of whole system providing health care in Slovakia. Slovak healthcare gradually takes over the foreign elements healthcare systems such as ehealth system, DRG system and new management systems, for example the controlling as a complementary tool by the hospital management (Braunová, 2014). The Government is currently taking steps to an overall "healing" of health care in Slovakia, however to ensure that those steps are effective is essential that these steps have been taken at the right time and the right way. The introduction of the DRG system has to deal with a large part of the problems related to inefficiency of hospitals, however, if hospitals do not take the consequences for their own uneconomical actions, no action adopted by the Government will solve the situation and will be only a temporary solution to a complex and long-standing problem (CKS, 2014). References Act on Accounting no. 431/2002 BRAUNOVÁ, M. JANTOŠOVÁ, L. (2014). The Importance of Monitoring and Recording of Costs Incurred For Patient Care. Bulletin of MZSR (2008). [online database]. [cit ]. Available at: < CKS. (2014). Učebnica DRG pre odborne spôsobilé osoby. Úrad pre dohľad nad zdravotnou starostlivosťou- Centrum pre klasifikačný systém, lnstitut fur das Entgeltsystem im Krankenhaus GmbH, p [299] Faculty of Economics, VŠB - TUO

307 Section S6: Finance and Accounting HINDLS, R. (2007). Statistika pro ekonomy. 8. vyd. Praha : Professional Publishing, p ISBN PETERSON, P. (2012). Analysis of Financial Statements. John Wiley and Sons, p ISBN Folentová Veronika. (2013). S ktorými nemocnicami sú pacienti najmenej spokojní In. SME. [online database]. [cit ]. Available at: < Register of financial statements. (2015). [online database]. [cit ]. Available at: < SHIM, J.K. SIEGEL, J.G. (2007). Handbook of Financial Forecasting and Modeling. CCH,p ISBN Slovak Credit Bureau. (2012, 2013) Stredné hodnoty finančných ukazovateľov ekonomických činností v Slovenskej republike za rok Bratislava : CRIF -, p ISBN TASR. (2015a). Dlhy nemocníc sa blížia k pol miliarde. In Teraz Slovensko. [online database]. [cit ]. Available at: < ZALAI, K. (2013). Finančno-ekonomická analýza podniku. 8. preprac. a rozšír. vyd. Bratislava : Sprint 2, p ISBN Gabriel Beer. (2009). Tajné oddlžovanie zdravotníctva. In TREND. [online database]. [cit ]. Available at: < Pažitný Peter. (2010). Oddlženie bez záruky ďalšieho nezadlžovania In. HPI. [online database]. [cit ]. Available at: < TASR.(2015b).Nemocnice sa chystá štát opäť oddlžovať. In Denník N. [online database]. [cit ]. Available at: < SITA. (2012).Vláda nemocnice transformovať nebude, sprísni ich kontrolu. [online database]. [cit ]. Available at: < Bull Richard. (2007). Financial Ratios: H+ow to use financial ratios to maximise value and success for your business. Elsevier, p. ISBN Lloyd C. Robert. (2004). Quality Health Care: A Guide to Developing and using Indicators. Jones & Bartlett Learning, p. ISBN Folentová. Veronika. (2015). Väčšinu nemocníc štát oddlží In Denník N. [online database]. [cit ]. Available at: < 18 th International Scientific Conference [300] Faculty of Economics, VŠB - TUO

308 Hunková. Mária. (2015). Ozdravenie nemocníc netrvalo dlho. In Trend. [online database]. [cit ]. Available at: < 11/ozdravenie-nemocnic-netrvalo-dlho-opat-zvysuju-straty.html> [301] Faculty of Economics, VŠB - TUO

309 Section S6: Finance and Accounting CRISIS-ROBUST PORTFOLIO OPTIMISATION WITH SAMPLING METHODS Mateusz Dzicher University of Economics in Katowice, Department of Applied Mathematics Abstract In this paper, a crisis-robust portfolio composition framework is proposed to address the issue of allocating proportions to the selected securities in an investment portfolio formulation problem under the modified portfolio theory and with an use of the sampling methods. The developed model implements the rationale that financial markets largely feature quiescent (noncrisis) periods that are occasionally interspersed with stress (crisis) periods. For that reason, the presented approach minimises the adverse effects of heightened market volatility and enhances the investment decision-making process. The intention of this paper is to present the abovementioned approach in the process of attributing the investment portfolio weights. At present, quantitative methods are extremely helpful in providing solutions to the variety of increasingly complex financial issues, including an financial instruments portfolio construction. The suggested technique is proved to hold demanded computational quality and, importantly, the capacity for further development. Keywords: Investment Decisions, Optimisation Techniques, Portfolio Choice, Statistical Simulation Methods JEL: C150, C610, G th International Scientific Conference [302] Faculty of Economics, VŠB - TUO

310 1 Introduction Markowitz (1952) introduced a quantitative framework that intends to define a portfolio formulation process known as the portfolio theory. As part of the concept, the financial market s investors commit capital and anticipate a satisfactory benefit in reward, which is, typically, an adequate rate of return from their individual asset allocation. Therefore, investment s participants are assumed to, on all occasions, favour its higher rates of return whilst exposed to a certain risk level, or conversely for a particular expected rate of return they always prefer lower extent of the volatility. Lundblad (2007), inter alia, distinctly confirmed that a statistically significant positive trade-off between securities expected rates of return and associated risk exists. Consequently, the more volatile a financial instrument is, or the higher its potential loss, the higher its expected rate of return. Thus a proper management of the investment s volatility should be of vital concern. Cited rationale is the fundamental notion of the portfolio theory (see, e.g. Elton et al. (2014)). Essentially, in periods of market turbulence an increase in the volatility of investment assets is observed. The recent sudden wave of economic losses resulted from global failures of banks and credit institutions that began in 2007 and 2008 reminded the raison d être of a suitable portfolio risk management (Aliber (2011)). During a financial crisis, correlations among securities rates of return use to appreciate in excess of that implied by the economic fundamentals, what may, e.g. influence the efficiency of the idiosyncratic risk diversification effect, emphasised by Goetzman and Kumar (2001). Loretan and English (2000), Hartmann et al. (2001) and Bekaert et al. (2005) highlighted this issue for financial market collapses of the last quarter century and identified it as the contagion phenomena. Accordingly, at present, more robust security selection strategies are sought. In order to formulate an investment portfolio it is essential to apply a competent optimisation technique for rational investment decisionmaking and proper selection of financial instruments. It is understood that a rational asset allocation assures of desirable trade-off between portfolio s expected rate of return and its volatility. In this paper, a crisis-robust portfolio formulation process, derived from the Markowitz s approach, is examined. The presented model implements also the idea, described by Litzenberger and Modest (2008), that financial markets do feature quiescent (non-crisis) periods that are occasionally interspersed with stress (crisis) periods. Thus the suggested framework minimises the adverse effects of a severe market volatility during the latter instance. Moreover, such constructed investment portfolios may be considered an alternative to, e.g. a regimeswitching asset allocation, proposed by Ang and Bekaert (2002, 2004), which requires early recognition and pre-stress period strategy adjustments. By and large, crisis-robust portfolios reduce the necessity of investment position rebalancing, what, ceteris paribus, diminishes the related transaction costs. Finally, the methodology, if employed to markets that exhibit flightto-quality effect (Berben and Jansen (2005), Baur and Lucey (2006) and Beber et al. (2006)), provides an opportunity to compose as stress-insensitive portfolios as possible, i.e. the optimal portfolios. The remainder of this paper is organised as follows. In Chapter 2 a formulation of the crisis-robust portfolio optimisation model, derived from the Markowitz s portfolio theory and with an use of the sampling methods (to overcome the limitations of, e.g. Newton s method), is defined. In Chapter 3 a specified portfolio optimisation problem is addressed using the developed framework and obtained computational results are presented for the selected and available input data set. Thereafter, conclusions are stated and recommendations for further research are mentioned. [303] Faculty of Economics, VŠB - TUO

311 Section S6: Finance and Accounting 2 The model 2.1 Portfolio Composition Background In portfolio theory framework it is assumed that assets rates of return follow the multivariate normal distribution. It entails that an investment portfolio is comprehensively characterised by its expected rate of return, E(rp), given as and its variance (volatility, or risk), σ p 2, such as n E(r p ) = i=1 (w i E(r i )) = W T R (1) n i=1 n j=1 (2) j i σ p 2 = (w i w j Cov(r i, r j )) = W T CW where W is a matrix of proportions, wi, invested in i-th security, R is a matrix of expected rates of return of selected financial instruments, and C is a symmetric variance-covariance matrix (Markowitz (1959)). In this manner an investor with a single period portfolio construction problem considers two feasible approaches. First, (i) to minimise the volatility of an investment portfolio for a given expected rate of return. Second, (ii) to maximise the expected rate of return of an investment portfolio for a particular volatility level. Approach (i) involves finding the solution to an optimisation issue with continuous random variables, quadratic objective and linear constraints, whereas approach (ii) implies solving an optimisation issue with continuous random variables, however, with linear objective and all linear constraints but one quadratic limitation. Bodie et al. (2010) noticed that despite the fact that proposed methods logically resemble each other, approach (i) is computationally more efficient. For that reason, formally, the portfolio optimisation problem is widely defined as subject to min σ p 2 = W T CW (3) n i=1 w i = 1 (4) 0 w i 1 for i = 1, 2,, n (5) where proportions, wi, always sum up to one (short selling is not allowed) and for a desired minimal benchmark rate of return, E(rb). The crisis-robust investment portfolio composition procedure incorporates the principle that financial markets are characterised, in most of the times, by quiescent periods that are infrequently interspersed with exogenous stress periods. Investment participants take into account the market turbulence possibility as stated in Kole et al. (2005). Normally, the crisis intervals are specified by acute decline in securities rates of return and increased volatility. In consequence, the crisis-robust asset allocation is done in the process of minimising the ratio of variances in both non-crisis period, σ q 2, written as and in crisis period, σ c 2, formulated as σ q 2 = W T C q W (6) 18 th International Scientific Conference [304] Faculty of Economics, VŠB - TUO

312 σ 2 c = W T C c W (7) where Cq and Cc are symmetric variance-covariance matrices for quiescent and stress intervals respectively. Thus, if wi (i = 1, 2,, n) are the proportions of resources invested in i-th security n under either non-crisis or crisis regime and i=1 w i = 1, then the optimisation issue is defined, in general, as follows ŵ = argmin wi σ c 2 σ q 2 { 0 w i 1 where i = 1, 2,, n n w i = 1 i=1 (8) The crisis-robust portfolios reduce the necessity of investment position rebalancing, what, ceteris paribus, attenuates the associated transaction costs. Passive investment strategies enthusiasts, who wish to limit detrimental effects of heightened volatility, may consider it useful to adapt the model in their asset allocation. The proposed approach is suitable for all asset classes, provided that the non-crisis/crisis regime is implemented. 2.2 Crisis-Robust Portfolio Composed of Two Assets In order to determine the crisis-robust portfolio analytically, let a two asset market spectrum (i = 1, 2) be considered. Volatility is measured by variance in both quiescent period, σ 2 q, and in time of market turmoil, σ 2 c. Furthermore, the securities correlation coefficient between rates of return is ρq, during non-crisis interval and ρc, while crisis. If short selling is not n allowed, therefore wi <0, 1> and i=1 w i = 1, then the portfolio composed of two assets consists of weights wa for asset A and (1 wa) for asset B. As a result, it is true that σ 2 q = w 2 A σ 2 Aq + (1 w A ) 2 σ 2 Bq + 2w A (1 w A )σ Aq σ Bq ρ q (9) σ 2 c = w 2 A σ 2 Ac + (1 w A ) 2 σ 2 Bc + 2w A (1 w A )σ Ac σ Bc ρ c (10) With the purpose of finding the value of the proportion wa that minimises the relation σ c 2 necessary to differentiate with respect to wa, what leads to σ q 2 it is ( ρ c 1) [4w ρ A (1 w A )(w A σ 2 Aq (1 w A )σ 2 Bq ) 2(1 2w A )(w 2 A σ 2 Aq + (1 w A ) 2 σ 2 Bq )] = 0 q If the correlation coefficient of financial instruments rates of return in quiescent interval is a higher value then its equivalent in stress period, or ρc > ρq, then it reveals the contagion phenomena. In the opposite scenario, or ρc < ρq, flight-to-quality effect is observed. In essence, if the relation ρ c ρ q varies from one ( 1), what is analogous to the statement that correlations of investment assets rates of return differ in crisis periods, the condition may be given by (11) w 2 A σ 2 Aq (1 w A ) 2 σ 2 Bq = 0 (12) Therefore, the distinctive asset allocation determined by proportions σ Bq w A = σ Aq +σ Bq { w B = 1 w A = σ (13) Aq σ Aq +σ Bq [305] Faculty of Economics, VŠB - TUO

313 Section S6: Finance and Accounting for the crisis-robust portfolio is completed. In case when the flight-to-quality effect is present the correlation spread between non-crisis and crisis periods is always negative (ρc ρq < 0), what creates the anticipated volatility and correlation trade-off. 2.3 Sampling Methods Approach In the Markowitz s approach the proportions, wi, are found based on observations of particular securities rates of return obtained from a single sample. In consequence, the estimates may be biased, especially if, e.g. these rates of return are asymmetrically distributed, what results in suboptimal allocation due to estimation errors. Mentioned issue became a catalyst for the development of a variety of statistical methods, which are utilised to reduce the unfavourable outcomes of estimation risk in investment portfolio selection process. Such methods are notably: robust estimation methods, Bayesian estimation methods, robust optimisation methods and sampling methods. Basically, the sampling methods allow to formulate an optimal portfolio built on many samples either from an empirical distribution or a theoretical distribution. In order to overcome the risk of not receiving an optimal solution to the optimisation issue (via, e.g. Newton s method), the results are an average of weights, wi, attained from multiple scenarios. Michaud (1998) was first to introduce the technique to the field of asset allocation. Typically, the phases of portfolio construction procedure in accordance with the sampling methods are as follows: Phase 1. Based on an initial sample (K x n) matrix of rates of return observations a k-amount of subsamples of the same size as the initial sample is formed. Subsamples may be derived from an empirical distribution (bootstrapping methods) or from a theoretical distribution (Monte Carlo simulations). Phase 2. For each subsample j (j = 1, 2,, n) an estimation of E(rj) vector and Cj matrix is done. Phase 3. For an desired level of minimal benchmark rate of return, E(rb), proportions, wj, are obtained. Phase 4. Subsample j portfolio proportions are averaged: n w o = 1 w n j=1 j (14) so that an optimal solution, or weights, wo, are calculated (Orwat-Acedańska and Acedański (2013)). Scherer (2002) noticed that investment portfolios derived in the above manner hold a higher level of diversity than those achieved by means of a classic mean-variance optimisation. The received proportions are also less sensitive to significant changes due to accepted risk alterations. Moreover, sampling methods may be used for a wide variety of rates of return distributions classes and for risk measures other than variance, i.e. CVaR (Conditional Valueat-Risk). 3 Empirical Analysis and Results In this section the computational results for attributing the investment portfolio s proportions, wo, with an use of the crisis-robust portfolio optimisation with sampling methods (for subsample derivation from both an empirical distribution and a theoretical distribution, i.e. normal distribution) are presented. In order to validate the usefulness of the proposed approach, an investments in a well-diversified fixed-income UK Gilt indices for five different groups of 18 th International Scientific Conference [306] Faculty of Economics, VŠB - TUO

314 maturity is considered. For the purpose of a portfolio formulation process, the model stated and described in Chapter 2 is implemented. All analysed data is publicly available. The input data consist of historical daily logarithmic rates of return of selected financial instruments from January 2000 until December For the considered investment, the reference, or risk benchmark instrument, in relation to which the data segregation and assignment to period subsamples q quiescent and c stress is done, is the index with the shortest maturity. The volatility of this instrument is calculated for at least three time intervals (e.g. 3M, 6M and 1Y). It is assumed that if the reference instrument s volatility for the shortest-term interval is a higher value than for the medium-term interval and long-term interval, and if volatility for the medium-term interval is a higher value than long-term interval then a stress period, or simply crisis is observed. The below Fig. 1 is a graphical illustration of the above assumption for the risk benchmark s volatility time intervals (1M, 3M, 6M and 1Y) in the considered time period for the discussed UK Gilt portfolio. Fig. 1 Reference instrument s volatility for 1M, 3M, 6M and 1Y intervals for the UK Gilt portfolio 1,20% 1M_UK 3M_UK 6M_UK 1Y_UK 0,90% 0,60% 0,30% 0,00% Source: Own elaboration. The above figure clearly depict the volatility repercussions of, e.g. the latest subprime crisis. The sampling methods are claimed to permit to compose an optimal portfolio built on many samples either from an empirical distribution (bootstrapping methods) or a theoretical distribution (Monte Carlo simulations). In this paper, the final results are an average of proportions obtained from 5 000, drew with replacement, scenarios. After the input data is declared for either period subsamples q or c, the symmetric variance-covariance matrices, Cq and Cc, are constructed. Ultimately, the asset allocation is done via minimisation of the relation of the specific time s interval data subsamples q and c volatilities, as stated in Subchapter 2.1. The desired minimal benchmark rate of return, E(rb), is determined at the level of 4%. The below Tab. 1 and Tab. 2 conclude the detailed calculations. [307] Faculty of Economics, VŠB - TUO

315 Section S6: Finance and Accounting Tab. 1 UK Gilt indices portfolio characteristics, delivered with an use of the bootstrapping methods wo1 [%] E(ro1) [%] MDo1 CVaRo1 CVaRo1 [%] Portfolio CVaRo1 Portfolio CVaRo1 [%] UK Gilt Index 18,84 0,0105 0, ,41 0,11 209,40 4,98 1-3Y UK Gilt Index 3-5Y UK Gilt Index 5-7Y UK Gilt Index 7-10Y UK Gilt Index 19,40 0,0149 1, ,79 0,28 540,14 12,85 47,11 0,0188 3, ,10 0, ,82 55,42 11,64 0,0208 4, ,88 0,71 830,79 19,77 3,01 0,0226 6, ,34 0,97 292,95 6,97 Source: Own elaboration ,10 100,00 Tab. 2 UK Gilt indices portfolio characteristics, delivered with an use of the Monte Carlo simulations wo2 [%] E(ro2) [%] MDo2 CVaRo2 CVaRo2 [%] Portfolio CVaRo2 Portfolio CVaRo2 [%] UK Gilt Index 18,85 0,0105 0, ,41 0,11 209,53 4,99 1-3Y UK Gilt Index 3-5Y UK Gilt Index 5-7Y UK Gilt Index 7-10Y UK Gilt Index 19,58 0,0149 1, ,79 0,28 545,01 12,97 46,76 0,0188 3, ,10 0, ,51 55,01 11,77 0,0208 4, ,88 0,71 840,12 19,99 3,04 0,0226 6, ,34 0,97 296,16 7,05 Source: Own elaboration ,33 100,00 The first portfolio, which was delivered with an use of the bootstrapping methods, is characterised with an annualised expected rate of return, calculated as stated in equation (1), E(ro1), equal to 4,2397% and to a modified duration, MDo1, at the level of 2,8754. Its Conditional Value-at-Risk, Portfolio CVaRo1, is 4 202,10 GBP (the assumed initial investment is GBP). Afterwards, the second portfolio, which was received from an use of the Monte Carlo simulations, is defined with an annualised expected rate of return, E(ro2), equal to 4,2388% and to a modified duration, MDo2, at the level of 2,8751. Its Conditional Value-at- Risk, Portfolio CVaRo2, is 4 202,33 GBP (the assumed initial investment is GBP). Interestingly, the two analysed and slightly alternative investment portfolio composition procedures yield nearly identical results. 18 th International Scientific Conference [308] Faculty of Economics, VŠB - TUO

316 Additionally, the initial data s subsamples assigned to the quiescent and stress periods accordingly, was scrutinised under the flight-to-quality effect assumption. If it is observed then the correlation spread between quiescent and stress periods is always negative (ρoc ρoq < 0). Inside the below Tab. 3 the flight-to-quality effect in analysed UK Gilt portfolios is highlighted. Tab. 3 UK Gilt indices portfolios flight-to-quality effect UK Gilt Index 1-3Y UK Gilt Index 3-5Y UK Gilt Index 5-7Y UK Gilt Index 7-10Y UK Gilt Index UK Gilt Index 1-3Y UK Gilt Index 3-5Y UK Gilt Index 5-7Y UK Gilt Index 0,0235 0,0548-0,0038 0,0503-0,0401-0, Y UK Gilt Index Source: Own elaboration. 0,0350-0,0450-0,0485 0,0060 It may be concluded that in times of increased volatility, the financial market investors, favour fixed-income assets (among above considered) with shorter maturities. Conclusion In this paper a crisis-robust portfolio formulation process is proposed to address the problem of attributing proportions to the chosen financial instruments in an investment portfolio selection issue under the modified Markowitz s approach and with an use of the sampling methods. The introduced model follows the concept that financial markets are mainly characterised by quiescent, or non-crisis periods that are, however, occasionally interspersed with stress, or crisis periods. Therefore the suggested method minimises the unfavourable effects of heightened market volatility. Furthermore, the obtained computational results indicate that it enhances the investment decision-making process and also provides useful and desired flexibility in quantitative analysis. Moreover, the detailed technique has quality features and capacity to be helpful in increasingly sophisticated financial issues that, inter alia, regard portfolio construction process. References ALIBER, Robert Z. (2011). Financial Turbulence and International Investment. Portfolio and Risk Management for Central Banks and Sovereign Wealth Funds. Basel (Switzerland): BIS Papers. ISBN ANG, Andrew and BEKAERT, Geert (2002). International Asset Allocation with Regime Shifts. Review of Financial Studies. April (4): ANG, Andrew and BEKAERT, Geert (2004). How Regimes Affect Asset Allocation. Financial Analyst Journal. March/April (2): [309] Faculty of Economics, VŠB - TUO

317 Section S6: Finance and Accounting BAUR, Dirk and LUCEY, Brian M. (2006). Flight-to-quality or Contagion? An Empirical Analysis of Stock-Bond Correlations. IIIS Discussion Paper No Retrieved from < BEBER, Alessandro and BRANDT, Michael W. and KAVAJECZ, Kenneth A. (2007). Flightto-Quality or Flight-to-Liquidity? Evidence from the Euro-Area Bond Market. NBER Working Paper Series. Cambridge (USA): NBER, July Retrieved from: < BEKAERT, Geert and CAMPBELL, Harvey R. and NG, Angela (2005). Market Integration and Contagion. Journal of Business. January (1): BERBEN, Robert-Paul and JANSEN, W. Jos (2005). Co-movement in International Equity Markets: a Sectoral View. Journal of International Money and Finance. 24(5): BODIE, Zvi and KANE, Alex and MARCUS, Alan J. (2009). Investments 8 th ed. New York (USA): McGraw-Hill Irwin. ISBN ELTON, Edwin J. and GRUBER, Martin J. and BROWN, Stephen J. and GOETZMANN, William N. (2014). Modern Portfolio Theory and Investment Analysis 9 th ed. New York (USA): John Wiley & Sons. ISBN GOETZMANN, William and KUMAR, Alok (2001). Equity Portfolio Diversification. NBER Working Papers. Cambridge (USA): NBER, December Retrieved from: < HARTMANN, Philipp and STRAETMANS, Stefan and DE VRIES, Casper G. (2001). Asset market linkages in crisis periods. Tinbergen Institute Discussion Papers /2. Retrieved from: < a675>. KOLE, Erik and KOEDIJK, Kees and VERBEEK, Mauro (2006). Portfolio Implications of Systemic Crises. Journal of Banking & Finance. August (8): LITZENBERGER, Robert H. and MODEST, David M. (2008). Crisis and Non-Crisis Risk in Financial Markets: a Unified Approach to Risk Management. SSRN Electronic Journal. July Retrieved from: < LUNDBLAD, Christian (2007). The Risk Return Tradeoff in the Long Run: Journal of Financial Economics. July (1): LORETAN, Mico and ENGLISH, William B. (2000). Evaluating Correlation Breakdowns during Periods of Market Volatility. Board of Governors of the Federal Reserve, International Finance Discussion Paper No Retrieved from: < MARKOWITZ, Harry (1952). Portfolio Selection. Journal of Finance. March (1): th International Scientific Conference [310] Faculty of Economics, VŠB - TUO

318 MARKOWITZ, Harry (1959). Portfolio Selection: Efficient Diversification of Investments. New York (USA): Wiley & Sons (reprinted by Yale University Press, 1970). ISBN MICHAUD, Richard O. (1998). Efficient Asset Management: a Practical Guide to Stock Portfolio Optimization and Asset Allocation. Boston (USA): Harvard Business School Press. ISBN ORWAT-ACEDAŃSKA, Agnieszka and ACEDAŃSKI, Jan (2013). Zastosowanie Programowania Stochastycznego w Konstrukcji Odpornych Portfeli Inwestycyjnych. Studia Ekonomiczne. 135: SCHERER, Berndt (2002). Portfolio Resampling: Review and Critique. Financial Analyst Journal. November/December (2002). 58(6). [311] Faculty of Economics, VŠB - TUO

319 Section S6: Finance and Accounting OPTIMAL EFFICIENT PARTIAL HEDGING STRATEGY OF SHORTFALL RISK 1 Abstract Haochen Guo Department of Finance, Faculty of Economics, Technical University of Ostrava haochen.guo@vsb.cz Risk measure and hedging which are two concepts investor used and considered every daily life. Usually partial hedges which require less capital and reduce the risk. Which depends on exposure and risk attitude towards. This paper presents hedging optimization for compute expected shortfall risk in the cases of lower partial moments, linear and risk-taking that based on attitude towards risk under the Black-Scholes model. Also it applies illustration that is the efficient hedging strategy for call option in the Black-Scholes model based on geometric Brownian motion with loss function. The resulting efficient hedges allow the investor to interpolate in a systematic way extremes of partial hedging (between no hedge and full hedge) that depend on the accepted level of shortfall risk. Keywords: Partial Hedging, Expected Shortfall, Black-Scholes Model JEL Classification: D81, G1, G32, 1 The research was supported by the SGS project of VSB-TUO Ostrava under no.sp2015/15. And the ESF project research team. 18 th International Scientific Conference [312] Faculty of Economics, VŠB - TUO

320 1 Introduction General to say there are two basic measures in risk management which are Value at Risk (VaR) and Expected Shortfall (ES). In this paper is going to look for strategies which minimize the shortfall risk defined as the expectation of the shortfall weighted by some loss function. It calculate the cases of lower partial moments, linear and risk-taking that consider the attitude towards risk, the result present the efficient hedge for call option in BS model. The objective of this paper is analyze partial hedge of estimate the ES risk in the BS model. Risk measure and hedging which are two concepts investor used and considered every daily life. But how much should be hedged 0% - 50% - 100% (no hedge partial hedge full hedge)? Depends on exposure and risk attitude towards. Risk attitude is a complex area, it can measure in variety ways, though not perfect and entirely accurate, but it are progressing. The paper is interested in the approach of partial hedge of estimate risk measure s ES risk in the BS model based on different risk attitude towards. 2 Optimal Hedging Strategy The shortfall risk is defined as the expectation E[ l(( H V T ) )] of the shortfall weighted by the loss function l. The optimization problem which minimizes the expected shortfall risk while not using more capital under the constraint by following equation ~ V V E[ l(( H V ) )] E[ l(( H V dx ) )] min (1) T The excess ( T H V ) The optimal hedging 0 T 0 s s is called a shortfall. ~ present by following 0 0 Objective Function min E[ l((1 ) H )] (2) Constraint l ~ sup E *[ H] V p* is strictly convex; on { H 0}. 0 (3) General considering the case of lower partial moments based on the optimal hedging x which the loss function l( x) for 1 P p P. Proposition. The optimal hedge consists in hedging the modified claim p1 H H c (*) H, (4) p p where the constant c p is determined E* [ ph] V0. 1 ~ [313] Faculty of Economics, VŠB - TUO

321 Section S6: Finance and Accounting 3 Efficient Partial Hedging Strategy in the BS Model Black-Scholes (BS) model is a model for pricing European options on stocks, developed by Fischer Black, Myron Scholes, and Robert Merton. The BS formulas for the prices at time zero of a European call option on a non-dividend-paying stock and a European put option on a non-dividend-paying stock are rt c S0N( d1) X e N( d2) p Xe rt N( d 2 ) S0 N( d1) (5) (6) where d d 1 ln( S 0 / X ) ( r / 2) T T 2 ln( S0 / X ) ( r / 2) T 2 d1 T 2 T (7) (8) is the cumulative probability distribution function for a variable that is normally distributed with a mean of zero and a standard deviation of 1.0. is the strike price, r is the continuously compounded risk-free rate, is the stock price volatility, and T is the time to maturity of the option. X N(x) In the BS model with constant volatility 0 S 0 is the stock price at time zero, the underlying discounted price process is given by a geometric Brownian motion dx X ( dw mdt ), where E( X ) X With initial value X0 x0, wherew is a Wiener process under P assume that. The unique equivalent martingale measure m 0 * dp * m exp( WT dp m where it set. 2 The process W * defined by 1 m ( ) 2 2 t T) constx t t T P * is given by t 0 e m 1 m 2 [ ( ) ( T t)] 2. and m is a constant. If, (9) m W * t Wt t, (10) is a Brownian motion under * P. A European call payoff function H initial capital T ( X K) T can be hedged perfectly if it provide the * H E H] x ( d ) K( d ), (11) 0 [ 0 18 th International Scientific Conference [314] Faculty of Economics, VŠB - TUO

322 [315] Faculty of Economics, VŠB - TUO where T T K x K x d 2 1 ln ln ), ( 0 0, (12) and denotes the distribution function of the standard normal distribution. Suppose it use only an initial capital 0 ~ V which is smaller than the BS price H 0. Under this constraint to minimize the shortfall risk )] ) (( [ T V H l E where l is given loss function satisfying the assumptions. Lower partial moments and the linear case are modified claims and strategies determined and compare to the Black-Scholes perfect hedging strategy, see [Föllmer and Leukert (2000)]. Proposition. Example case of lower partial moments modified claims and strategy for p. )) ( ln ln ( 1)] 1 ( exp[ ) ( 1 ) 2 1 ln ln ( ), ( ), ( p L x p p x K L L p L x x t F x x t p p p p. (13) Let t T, 2 m. Hence the function F p by following equation ) 1 ), ( ( 1)] 1 ( exp[ ) ( )), ( ( )), ( ( ), ( p L x d p p x K L L L x d K L x d x x t F p p p. (14) The constant L is modified claim of option prices which determined by the equation of ) (0, ~ 0 x 0 F V p. Let determine 0 ~ V equal 1, which means when 0 t, calculate by the following equation 1 ~ ) 1 ) 2 1 ln ln ( 1)] 1 ( exp[ ) ( ) 2 1 ln ln ( ) 2 1 ln ln ( ) (0, V p T T T L x p p T x K L L T T L x K T T L x x x F p p p (15) Resulting of L input calculate the equation (14) for call option with strike corresponding to the BS. Illustration. Example of the call option for modified claims and strategies determined the BS efficient hedging strategy in U.S. financial markets. Tab.1 presents the parameters call option Apple Inc. (AAPL) under the BS model by following.

323 Call option price Call option price MEKON 2016 Section S6: Finance and Accounting Tab.1 parameters call option under the Black-Scholes model V 0 1 X 109 T t 0.15 H T 0.25 m 0.1 K 120 t Source: own calculation Hence, is strike price, X is underlying asset price. Following Fig.1 presents the Black-Scholes call option efficient hedging strategy. V 0 denotes initial capital, H 0 denotes the Black-Scholes price, Fig.1 the Black-Scholes call option efficient hedging strategy K Underlying Asset Price (a) p 0, quantile hedging, grey line (the BS price) higher than black line (modified claims) Underlying Asset Price (b) p 0. 85, risk seeking, grey line (the BS price) higher than black line (modified claims) 18 th International Scientific Conference [316] Faculty of Economics, VŠB - TUO

324 Call option price Underlying Asset Price (c) p 1.1, risk aversion, grey line (the BS price) higher than black line (modified claims) Call option price Underlying Asset Price (d) p 2, the efficient frontier means balancing cost and shortfall risk, grey line (the BS price) higher than black line (modified claims) Different attitudes towards shortfall risk are reflected in different shapes of the modified claims and of the resulting hedging strategies. It was illustrated the approach of partial hedge of estimate the ES risk in the BS model, the efficient hedges for call option in the geometric Brownian motion with known volatility and for the loss function based on different risk attitude towards. Because risk profiling is not an exact science, risk attitude is a complex area, but it can measure in variety ways, even each of ways measurement has their own advantages and disadvantages. Based on Fig.1 to summarize different attitudes towards shortfall risk are reflected in different shapes of the modified claims and of the resulting hedging strategies by following special case when p means risk free, the graphs shows modified claim again a call but now at a higher strike; when p 1 means risk neutral, the graphs shows modified claim knock-in option for risk neutral and knock-out option of quantile hedging; when p 0 means quantile hedging, the graphs show how quantile hedging appears as one extreme on the scale of attitudes towards risk, corresponding to the value equal zero; when p means risk seeking behavior; when p 1. 1means risk aversion p 1 ; when p 2the efficient frontier means balancing cost and shortfall risk. [317] Faculty of Economics, VŠB - TUO

325 Section S6: Finance and Accounting Conclusion The objective of this paper is analyze the optimal efficient partial hedging for call option in the BS model based on geometric Brownian motion. The computation of ES risk in the cases of lower partial moments, linear and risk-taking that based on attitude towards risk under the BS model. The application of illustration which determined the BS efficient partial hedging strategy. The resulting efficient hedges allow the investor to interpolate in a systematic way extremes of partial hedging which depend on the accepted level of shortfall risk attitude towards. The graphs illustrate how the efficient hedging strategies constructed above allow the investor to interpolate in perfect hedge (no chance of making profit) and no hedge (full risk of shortfall full chance of profit), depending on the investor s appetite for risk. References FISHBURN, P. (1977). Mean-Risk Analysis with Risk Associated with Below-Target Returns. The American Economic Review 67, FÖLLMER, H., LEUKERT, P. (1999). Quantile Hedging. Finance and Stochastics 3, FÖLLMER, H., LEUKERT, P. (2000). Efficient Hedging: Cost versus Shortfall Risk. Finance and Stochastics 4, GRACIA, L., OOSTERLEE, C. (2014). Efficient VaR and Expected Shortfall Computations for Nonlinear Portfolios within the Delta-Gamma Approach. Applied Mathematics and Computation 244, HULL, J. (2012). Risk Management and Financial Institutions. Third Edition. John Wiley & Sons, Inc., Hoboken, New Jersey. Canada. ISBN JADHAV, D,.RAMANATHAN,T,V,.NAIK-NIMBALKAR,U,V. (2013). Modified Expected Shortfall: A New Robust Coherent Risk Measure. Journal of Risk 16(1), PFLUG, G., RÖMISCH, W. (2007). Modeling, Measuring and Managing Risk. World Scientific. ISBN th International Scientific Conference [318] Faculty of Economics, VŠB - TUO

326 Section S7: Finance and Accounting Alternative methods to estimate returns of a large scale portfolio selection problem 1 Noureddine Kouaissah a,b a Department of Management, Economics and Quantitative Methods University of Bergamo, Via dei Caniana 2, Bergamo, Italy b Department of Finance VSB-TU of Ostrava, Sokolská 33, Ostrava, Czech Republic noureddine.kouaissah@unibg.it Abstract In this paper, we consider alternative methods to estimate returns within a large scale portfolio selection problem. In particular, we use a general nonparametric multivariate regression framework to cope with several problems arising with linear regression approximation. First, we reduce the dimensionality of the large scale portfolio by performing a principal component analysis on the stock returns. Then, within k-fund separation model, we use two distinct methodologies to approximate the portfolio returns. Specifically, we apply the classical ordinary least squares and the nonparametric regression using local polynomial smoothing technique. Finally, through an empirical analysis, we show the impact of regression estimation on the expost sample paths of several portfolio strategies. The ex-post analysis confirms that it is better using nonparametric regression rather than the classical parametric regression. Keywords Large scale portfolio selection, dimensionality reduction, conditional expectation estimators, rewards measure JEL: G11, C44, G10 Advisor: Prof. Sergio Ortobelli Lozza, doc. Ing. Tomáš Tichý, Ph.D. 1 This paper has been supported by the Italian funds ex MURST 60% 2014 and 2015 and MIUR PRIN MISURA Project, The research was also supported through the Czech Science Foundation (GACR) under project S, by VSB-TU Ostrava under the SGS project SP2015/15, and the European Social Fund in the framework of CZ.1.07/2.3.00/ th International Scientific Conference 319 Faculty of Economics, VŠB - TUO

327 Section S7: Finance and Accounting 1 Introduction The The mean-variance model has had a central role in portfolio theory ever since the pioneering work of Markowitz (1952). The main idea behind mean-variance model is that the return and risk are modeled in terms of portfolio mean and variance. In particular, it may be suitable to small rational investors whose investments cannot influence the market prices and who prefer smaller risks to larger ones and higher yields to lower ones. Unfortunately, widespread researches point out that a set of assumptions under which the classic mean-variance framework built is not consistent with all investors preferences. For this reason, several alternative approaches to portfolio selection has been proposed, see among others Biglova et al. (2004), Rachev et al. (2008), and Ortobelli et al. (2009). Despite the fact that portfolio optimization based on several alternative risk measures has been introduced in the literature (Konno and Yamazaki, 1991; Young, 1998; Rockafellar et al., 2006; Rachev et al., 2008; Ortobelli and Tichý 2015 and the literature therein) and become utilized in practice, the literature on the effect of regression analysis other than the linear regression within k-fund separation model is limited. For this aim, our paper investigates the impact of the regression estimation on large scale portfolio selection problems. The first contribution of this paper is to investigate the impact of alternative regression methods on the approximated returns within k-fund separation model, see Ross (1978). Assuming linear regression model the ordinary least squares (OLS) is widely used as procedure to estimate the coefficient of k-fund separation model, see among others Ortobelli and Tichý (2015). Generally, OLS is a well-established and important procedure for solving regression problems when the errors are normally distributed. Although small departures from normality of the error terms do not affect the regression coefficients greatly, however errors with a heavier tailed distribution, as the general case of return distribution, can result in extreme observations and can significantly affect the estimated OLS regression coefficients, see Nolan et al. (2013). Moreover, we believe that there exists substantial evidence of nonlinearity in the data set used to estimate returns. For this reason, we use nonparametric regression analysis which relaxes the assumptions of linearity. To this end, a number of conditional expectation estimators have been proposed to remove at least a significant part of the estimation errors from portfolio selection problem that is based on k-fund separation model. The second contribution of this paper is to use some correlation measures in the portfolio theory, see Ortobelli and Tichý (2015). In particular, we use the correlation measures to reduce the dimensionality of large-scale portfolio selection problems. Therefore, in searching for an acceptable model to describe the dependence structure, we use some linear correlation measures to perform a principal component analysis (PCA) that identifies the main portfolio factors whose dispersion is significantly different from zero. These factors are used to approximate the portfolio returns in the large-scale portfolio selection problems. Finally, through an empirical analysis, we show the effect of regression estimation on the ex-post sample paths of several portfolio strategies, obtained by performing two different reward-risk performance ratios, which use the estimated returns. The rest of the paper is organized as follows. In section 2 we set up the portfolio dimensionality problem and we briefly discuss some performance ratios. In section 3 we introduce the ordinary least squares and nonparametric regression analysis. In section 4 we 18th International Scientific Conference 320 Faculty of Economics, VŠB - TUO

328 Section S7: Finance and Accounting provide empirical comparison among different portfolio strategies. Our conclusions are summarized in section 5. 2 The portfolio dimensionality problem In finance, a portfolio is a collection of investments held by an individual, an institution or a fund. In this context, the dimensionality reduction of large scale portfolio selection problems has a central role in investments strategies. Two main alternative approaches for optimal portfolio selection problem have been considered in the literature. The first one based on risk rewards analysis, while the second approach is based on expected utility preferences. Generally, in both cases we deal with portfolio selection under uncertainty, so it is necessary to consider the robustness of the estimated returns of the portfolio. Since we compute optimal portfolios according to some ordering criteria, we have to consider the impact of correlation and risk-reward measures to changes in the portfolio. Thus, the concepts related to robust portfolio theory are essentially twofold: (1) the correlation and risk-reward contribution given by individual stock components of the portfolio and (2) the estimation of the statistical parameters (i.e., inputs), see among others Papp et al. (2005), and Kondor et al. (2007). According to many researchers, see among others Rachev et al. (2005), the portfolio dimensional problem is extremely related to the estimation of inputs, statistical parameters, which describe the dependence structure of the returns. Hence, in order to have a good approximation of the portfolio risk-reward measures Papp et al. (2005) and Kondor et al. (2007) have shown that the number of observations should increase with the number of assets. Therefore, in order to get a sound approximation of portfolio input measures, it is important to find the right trade-off between the number of historical data and a statistical approximation of the historical observations which depend only on a few numbers of parameter. In practice there are two main ways to reduce the dimensionality of large scale portfolio. First method based on preselecting a number of assets by performing some performance measures, while the second way to reduce the dimensionality of the problem is to approximate the return series with a regression model (e.g. k-fund separation model) that depends on a sufficient small number of parameters, see Ross (1978). In this study we combine both methodologies. First, we preselect 200 assets, from S&P 500 components, that have the highest Rachev ratio. Then, we perform a PCA of the returns on the preselected 200 stocks in order to identify a small number of factors (portfolios) with the highest variability. Therefore, we replace the original n (n = 200) correlated time series z i with n uncorrelated time series R i assuming that each z i is a linear combination of the R i. Thus, we apply a dimensionality reduction by choosing only those factors which effectively summarize a large part of the variation of the data. In other words, we choose those portfolios whose variance is significantly different from zero. In particular, we call portfolios factors f i the s portfolios R i with a significant variance, while the remaining n s portfolios with very small variances are summarized by an error. Consequently, each series z i is a linear combination of the factors plus a small uncorrelated noise: 18th International Scientific Conference 321 Faculty of Economics, VŠB - TUO

329 Section S7: Finance and Accounting s n s. (1) z b f b R b f i ij j ij j ij j i j1 js1 j1 It is possible to apply the PCA either to the Pearson correlation matrix or to any other linear correlation measure, see Ortobelli and Tichý (2015) for more details. Since returns are generally heavy-tailed, we apply PCA to the correlation matrix obtaining 200 principal components, which ' are linear combinations of the original series, z z,z,...,z Based on factor models, several researchers proposed statistical methodologies to determine the number of factors, see among others Onatski (2010). One simplest approach is illustrated in the following. Figure 1 reports the total variance explained by an increasing number of principal components applied to the first recalibration of the portfolio as an example. Thus, the first component explains only 27.20% of the total variance and the first 35 components explain 75.60% of the total variance. Since the last components contribute no more than 0,73% of the total variance, we apply a dimensionality reduction by choosing only the first 35 factors. Figure 1: Percentage of total explained variance at the first recalibration Percentage Percentage of total explained variance Principal components zi i,..., can be represented as a linear combination of 35 factors plus a small uncorrelated noise. In other words, after identifying the 35 factors that explain more than 75% of the total variance, we can characterize the future returns z i using the factor model: Therefore, each series z s z b b f. (2) i i, 0 i, j j i j1 Consequently, we can apply any portfolio optimization problem to the approximated portfolio: x' z x' bˆ ˆ x' b f, (3) 0 s j1 j j 18th International Scientific Conference 322 Faculty of Economics, VŠB - TUO

330 Section S7: Finance and Accounting ' where, bˆ j b ˆ ˆ 1, j,...,b n, j is the vector of estimated coefficients ˆb i, j j 01,,...,s. In this context, we propose a different procedure that uses nonparametric regressions in order to cope with several problems faced with linear regression approximation. In particular, when asset returns are not normally distributed and present heavy tails. 2.1 Review of performance ratios Since the fundamental works of Sharpe (1964), the area of performance measures has attracted great attention in the financial economic literature over the years. In particular, performance measures are mainly used for the scope of identifying the best fund to investment in, or to compare its performance with that of some benchmark. Alternatively, performance measures may be used to select a number of assets for the naive portfolio allocation rules, such as the uniform portfolio, see De Miguel et al. (2009). Therefore, a crucial concept in investment portfolio management is the measurement and evaluation of portfolio performance. More generally, the performance of a portfolio is measured via some reward-to-risk ratios. For more details on the classes of reward risk optimization problems that arise from different choices of reward and risk measures see among others Stoyanov et al. (2007). Here, we briefly review two main performance ratios that we use in the next section when we perform our empirical comparisons. Sharpe and Rachev ratios: Sharpe ratio (1994): The Sharpe ratio is used to characterize how well the return of an asset compensates the investor for the risk taken. The Sharpe ratio computes the price for unity of risk and calculated by subtracting the risk-free rate from the rate of return for a portfolio and by dividing the result by the standard deviation of the portfolio returns. Formally: SR( x'z) E( x'z) z 0, (4) where, E(x z) is the portfolio expected returns, z 0 is the risk-free return and σ x z is the portfolio standard deviation. Rachev ratio, see Biglova et al. (2004), is the ratio between the average of earnings and the mean of losses. i.e.: x'z ETL z x' z RR x' z T 1,, ETL x' z z T 1,b T 1 T 1 T 1,b where ETL is the expected Tail Loss, also known as Conditional Value at Risk (CVaR), and defined as: and q 1 ETL X VaR 0 q X dq, 1 VaR X F q inf x\ P X x q, X is the Value-at-Risk (VaR) of the random return X. If we assume a continuous distribution for the ETL X E X X VaR X, therefore ETL, can be probability law of X, then interpreted as the average loss beyond VaR. Many performance measures have been proposed (5) 18th International Scientific Conference 323 Faculty of Economics, VŠB - TUO

331 Section S7: Finance and Accounting over the years, for more details see among others Farinelli et al. (2008) and the references therein. The aim of this study is to try to find how the method (parametric versus nonparametric) of estimated returns influences the performance measure in large scale portfolio selection problems. 3 Parametric and nonparametric regression analysis Regression analysis is surely one of the most suitable and widely used statistical techniques. In general, it explores the dependency of the so-called dependent variable on one (or more) explanatory or independent variables. Y E( Y X x) m( x). (6) It is well known that, if we know the form of the function m( x) E( Y X x), (e.g. polynomial, exponential, etc.), then we can estimate the unknown parameters of mxwith ( ) several methods (e.g. least squares). In particular, if we do not know the general form of mx, ( ) except that it is a continuous and smooth function, then we can approximate it with a nonparametric method, as proposed by E. A. Nadaraya (1964) and G. S. Watson (1964). The aim of non-parametric technique is to relax assumptions on the form of regression function, and allows data search for an appropriate function that represent well the available data, without assuming any specific form of the function. Now, we describe in details the widely used method, i.e. ordinary least squares, and then we propose an alternative approach to cope with several problems faced with linear regression analysis. 3.1 Ordinary least squares Ordinary least squares (OLS) is a well-established and important procedure for solving regression problems when the errors are normally distributed. Admitting small departures from normality of the errors do not affect the regression coefficients significantly, however errors with a heavier tailed distribution can result in extreme observations and can greatly affect the estimated OLS regression coefficients. In particular, when there exists substantial evidence of nonlinearity in the data set used to approximate the returns. One objective of this paper is to have a sound approximation of returns from k-fund separation model such that the returns are not normally distributed, i.e. the profit/loss distributions tend to be asymmetric and present fat tails, possibly with skewness, where OLS can perform very poorly, giving a poor fit and leading to faulty predictions. Using OLS we are generally interested in estimating the regression coefficients by minimizing the error distribution. The standard linear regression model is as follow: k y b x b, i 1,...,n (7) i i, 0 i, j i, j i j1 where x i, j are independent variables, y i are the response variables, b i, j are the coefficients of the regression, to be estimated, and the error terms i are i.i.d. random variables. The regressors must all be linearly independent and it is also assumed that the regressors have finite moments up 18th International Scientific Conference 324 Faculty of Economics, VŠB - TUO

332 Section S7: Finance and Accounting to at least second. When these assumptions are violated the regression coefficient estimated efficiently. b j cannot be Several researchers have been using OLS to estimate the coefficients without considering the behavior of the data. Recently, in order to approximate the portfolio returns within k-fund model, Ortobelli and Tichý (2015) used the OLS to estimate the parameters b j. However, given that the returns are not normally distributed and the nonlinearity issues, we believe that OLS can perform very poorly, allowing a poor fit and leading to faulty predictions. For this reason, we aim to remedy this deficiency and propose to use the nonparametric regression analysis which allows data search for an appropriate function that represent well the available data, without assuming any specific form of the function. Next section describes the multivariate kernel method that we use to estimate the portfolio returns consistently and cope with the assumption of linearity. 3.2 Multivariate kernel methodology Nonparametric regression analysis has been rapidly developed over the last decades as researchers have realized that parametric regression is not suitable for many data sets that arises in practice. In this context, several recent researches have used nonparametric techniques to relax the parametric restrictions imposed on the data process. In particular, the multivariate kernel regression technique can be used without assuming any specific form for the relationship between ' a response and a set of explanatory variables, which we denote as y and x, x 1,x 2,...,x d respectively. Given observations (y i, x i ), for i 12,,...,n, the multivariate kernel regression model is as follows x, y m i i i (8) where i, for i 12,,...,n, are assumed to be independent and identically distributed (i.i.d) with mean zero and variance 2 m. Commonly used estimator for Nadaraya-Watson kernel estimator which is given by: m is multivariate version of the n 1 n Kh x- xi yi i1 ˆm xh,, n 1 n K x- x i1 h j (9) ' where h is a vector of positive real numbers commonly called bandwidths, and = h 1,h 2,...,h d 1 x1 x2 xd Kh x K,,..., h1 h 2...hd h1 h2 h, d 18th International Scientific Conference 325 Faculty of Economics, VŠB - TUO

333 Section S7: Finance and Accounting with K is a suitable multivariate kernel function. For further discussion of kernel estimators, see Scott (2015) or Fan and Gijbels (1996). The nonparametric regression techniques have been largely used in the financial modelling literature, see for instance, Kouaissah and Ortobelli (2015) and the literature therein. Since the denominator of the equation (9) is the kernel density m x can estimator of f x, Härdle (1990) indicated that the Nadaraya-Watson estimator of be also expressed as: 1 n h,i i n i 1 x h x where ˆm, w y, x x - x x h x h x x j w K / ˆf, h,i h i h This result shows that the multivariate kernel regression estimator of 1 n n j 1 ˆf K. m x given by the estimator (9) is indeed a weighted average of the observed values of y in the local region of x, w x, for i 12,,...,n, are determined by the kernel and bandwidth. A and the weight functions h,i general class of kernel-type nonparametric regression estimator are based on local least squares fitting using kernel weights, hence the estimate of regression function m x at the point x is given by minimization of the following criterion Mininize n i=1 {y i α b T (x i x)} 2 K h (x x i ). (10) For more details about the properties of multivariate locally weighted least squares regression we refer to Ruppert and Wand (1994). They derive the leading bias and variance terms for general multivariate kernel weights using weighted least squares matrix theory. Several researchers showed that the choice of kernel is not critical, while the performance of the smoothed regression function is more a question of bandwidth choice. Fan and Gijbels (1996) gives a survey on bandwidth selection for univariate local polynomial smoothing technique, which contains the Nadaraya Watson estimator as a special case. They discuss two bandwidth selection methods, namely the rule-of-thumb and the plug-in bandwidth selection. In particular, the former is the normal reference rule for kernel density estimation presented in Scott (2015) and Bowman and Azzalini (1997). For general multivariate kernel estimators, Scott (2015) suggests the following bandwidth selectors: Scott s rule in R d : 1 (d+4) ĥ i = σ i n, (11) where σ i is the usual estimate of the standard deviation of each variable x i, and n is the sample size. This method of bandwidth selection has the property that it minimizes the mean integrated squared error of the estimate. This technique is widely known as normal reference rule, which is further generalized by Bowman and Azzalini (1997). For more discussion about bandwidth selection for multivariate kernel regression we refer the readers to Härdle and Müller (2000). To conclude this section, several researchers in kernel estimation technique suggest that any reasonable kernel function gives almost optimal results. Here we use a normal kernel function and as a rule for bandwidth selection the one given by Scott (2015). 18th International Scientific Conference 326 Faculty of Economics, VŠB - TUO

334 Section S7: Finance and Accounting 4 An empirical ex-post analysis In this section we first describe the data set and the methodology used to compare different estimators and models. Then, we propose an ex-post comparison among portfolio models based on two performance measures (4) and (5). We use all active stocks on S&P 500 index from March 17, 2003 to February 24, 2015 using the previous 3000 daily observations. The data set is taken from DataStream. We examine the ex-post impact of regression analysis considering two portfolio problems: portfolio dimensionality reduction problems and portfolio performance ones. In particular, starting from September 12, 2003 we preselect the 200 stocks with the highest Rachev performance ratio. Then, using the preselected stock, we have to reduce the dimensionality of the portfolio problem. Thus, as suggested by Ortobelli and Tichý (2015), we perform a PCA on the return of the selected stocks in order to identify few number of factors that represent the highest return variability. We apply PCA on Person correlation matrix and then we regress the series on these factors so that we are able to approximate the returns: s z b b f. (12) i i, 0 i, j j i j1 Since our aim in this paper is to investigate the impact of regression analysis on large scale portfolio selection problems, we approximate the portfolio returns by two different methods, namely the classical OLS and the nonparametric technique based on multivariate kernel estimator, see section 3. On the preselected gross returns, we maximize both Sharpe and Rachev ratios such that the vector of weights x belongs to the simplex: n n S x R \ x i 1; x i 0; x i i1 This means that short sale is not allowed we invest not more than 5% in each asset. In this empirical analysis, we ignore the transaction costs, we assume risk free rate to zero and α and β in Rachev ratio are set to 5%. We use a moving average window of 125 working days for the computation of each optimal portfolio and we recalibrate the portfolio every 20 days. First, in this empirical analysis we find that the multivariate kernel outperforms the classical OLS in terms of the Sum-MSE. Moreover, in order to evaluate the impact of the regression analysis on portfolio theory we go further with the following empirical analysis. Starting with an initial wealth W0 1 that we invest on September 12, 2003, we evaluate the ex-post wealth sample paths obtained from two performance ratios (4) and (5). Thus, at the k-th recalibration time, the following steps are performed for Sharpe and Rachev strategies: Step 1 Preselect the 200 stocks with the highest Rachev performance ratio. Step 2 Apply a PCA as suggest in section 2 and choosing the first 35 factors, then we approximate the gross returns by applying the OLS and Kernel method. ( k) Step 3 Determine the market portfolio x M that optimizes the portfolio problem applied to the approximated returns. Step 4 Since we recalibrate the portfolio every 20 days, we calculate the ex-post final wealth as follows: W ' ( k) ( expost ) t k 1 W tk x M z ( tk1), (13) 18th International Scientific Conference 327 Faculty of Economics, VŠB - TUO

335 Section S7: Finance and Accounting where z ( expost ) ( tk1) tk1 tk 20. is the vector of observed gross returns in the period between t k and tk 1, such that We apply the four steps until the observations are available. The results of this analysis are reported in Figure 2. Figure 2: Ex-post wealth obtained with Sharpe and Rachev performance via kernel and OLS estimate Figure 2 reports the ex-post wealth evolution obtained with two performance ratios, Sharpe and Rachev, when the portfolio returns are approximated either by the OLS or Kernel method. On one hand, we observe that Rachev strategy with kernel technique outperforms the strategy based on Rachev with the OLS. On the other hand, the Sharpe performance with kernel procedure is also higher than both performance ratios, Sharpe and Rachev, when the portfolio returns are approximated by the classical OLS. To sum up, the performance strategies that give the best results are those based on the returns approximated with kernel methodology. One main reason for such results, in terms of ex-post wealth, between the two procedures can be explained by the difference of the two estimators. In particular, the assumptions assumed for each model and of course the minimization of the errors terms when the process are not either linear or normally distributed. Finally, from Figures 2 and Sum-MSE we deduce that the classical OLS has some impact on the large scale portfolio within k-fund separation model. Therefore, we believe that nonparametric techniques are much more effective, when used as procedure to approximate the portfolio returns, than the classical OLS. 18th International Scientific Conference 328 Faculty of Economics, VŠB - TUO

336 Section S7: Finance and Accounting Conclusion In this paper, we consider the impact of two alternative regression techniques on the large scale portfolio selection problems. In particular, we reduce the dimensionality of the large scale portfolio by perform a PCA on the stock returns. Then, within k-fund separation model, we use two distinct methodologies to approximate the portfolio returns, namely the classical OLS and kernel method. Thus, we examine the impact of the two procedures on the U.S. stock market. First, a comparison among two techniques is performed in terms of the Sum-MSE. Secondly, we compare the ex post wealth obtained with two different portfolio performances when the returns are approximated either by the OLS or kernel method. From the comparison among different strategies, we deduce that the best results are those based on the returns approximated with kernel methodology. Therefore, the nonparametric regression techniques are much more effective and performing, when used to approximate the portfolio returns, than the classical OLS. References Biglova, A., Ortobelli, S., Rachev, S., Stoyanov, S. (2004). Different approaches to risk estimation in portfolio theory. Journal of Portfolio Management, 31(1), Bowman, A.W., Azzalini, A. (1997). Applied Smoothing Techniques for Data Analysis. Oxford University Press, London. DeMiguel, V., Garlappi, L., Uppal, R. (2009). Optimal Versus Naive Diversification: How Inefficient is the 1/N Portfolio Strategy? Review of Financial Studies, 22, Fan. J., Gijbels, I. (1996). Local polynomial modelling and its applications. Chapman and Hall, London. Farinelli, S., Ferreira, M., Rossello, D. (2008). Beyond Sharpe ratio: Optimal asset allocation using different performance ratios. Journal of Banking & Finance, 32(10), Härdle, W. (1990). Applied Nonparametric Regression. Cambridge University Press, Cambridge. Härdle, W., Müller, M. (2000). Multivariate and semiparametric kernel regression. In: Schimek, M.G. (Ed.), Smoothing and Regression: Approaches, Computation, and Application. John Wiley & Sons, New York, Kondor, I., Pafka, S., Nagy, G. (2007). Noise sensitivity of portfolio selection under various risk measures. Journal of Banking and Finance, 31, Konno, H. and Yamazaki, H. (1991). Mean absolute deviation portfolio optimization model and its applications to Tokyo stock market. Management Science, 37(5), Kouaissah, N., Ortobelli, S. (2015). Alternative Methods to Evaluate the Arbitrage Opportunities. WSEAS Transactions on Business and Economics, E-ISSN: , Volume 12, Markowitz, H. M. (1952). The utility of wealth. Journal of Political Economy, 60, Martin D., Rachev S., Siboulet F., (2003). Phi-alpha optimal portfolios and Extreme Risk Management. Wilmott Magazine of Finance, November, Nadaraya, E. A. (1964). On estimating regression. Theory of Probability and its Applications, 9(1), Nolan, J.P., Ojeda-Revah, D. (2013). Linear and nonlinear regression with stable errors. Journal of Econometrics, 172(2), Onatski, A. (2010). Determining the number of factors from empirical distribution of eigenvalues. The Review of Economics and Statistics, 92(4), th International Scientific Conference 329 Faculty of Economics, VŠB - TUO

337 Section S7: Finance and Accounting Ortobelli, S. Rachev, S., Shalit, H., Fabozzi, F. (2009). Orderings and probability functionals consistent with preferences. Applied Mathematical Finance, 16(1), Ortobelli, S., Tichý, T. (2015). On the impact of semidefinite positive correlation measures in portfolio theory. Annals of Operations Research, 235(1), Papp, G., Pafka, S., Nowak, M.A., Kondor, I. (2005). Random matrix filtering in portfolio optimization. ACTA Physica Polonica B, 36, Rachev, S.T., Menn, C., Fabozzi, F.J. (2005). Fat-tailed and Skewed Asset Return Distributions: Implications for Risk Management, Portfolio Selection, and Option Pricing. John Wiley & Sons, New York. Rachev, S., Ortobelli, S., Stoyanov, S., Fabozzi, F. Biglova, A. (2008). Desirable properties of an ideal risk measure in portfolio theory. International Journal of Theoretical and Applied Finance, 11(1), Rockafellar, R. T., Uryasev, S., Zabarankin, M. (2006). Generalized Deviations in Risk Analysis. Finance and Stochastics, 10, Ross, S. (1978). Mutual fund separation in financial theory-the separating distributions. Journal of Economic Theory, 17, Ruppert, D., Wand, M.P. (1994). Multivariate locally weighted last squares regression. The annals of Statistics, 22(3), Scott, D.W. (2015). Multivariate Density Estimation: Theory, Practice, and Visualization. John Wiley & Sons, New York. Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), Sharpe, W.F. (1994). The Sharpe ratio. Journal of Portfolio Management. Fall, Stoyanov, S., Rachev, S., Fabozzi, F. (2007). Optimal financial portfolios. Applied Mathematical Finance, 14(5), Watson, G. S. (1964). Smooth regression analysis. Sankhya, Series A, 26(4), Young, M. R. (1998). A minimax portfolio selection rule with linear programming solution. Management Science, 44(5), th International Scientific Conference 330 Faculty of Economics, VŠB - TUO

338 KOMBINACE REÁLNÝCH OPCÍ A TEORIE HER PŘI INVESTIČNÍM ROZHODOVÁNÍ COMBINATION OF REAL OPTIONS AND GAME THEORY FOR INVESTMENT DECISION MAKING Ondřej Mikulec VŠB-Technická universita Ostrava, Ekonomická fakulta ondrej.mikulec@vsb.cz Abstrakt Problematika investičního rozhodování a ocenění aktiv představuje pro společnosti jeden z nejdůležitějších problémů finančního řízení. V článku je řešeno ocenění investičního projektu reálně opční hrou neboli hybridním modelem kombinujícím oceňování reálných opcí v podmínkách konkurenčního prostředí vyjádřeného pomocí teorie her. Empiricko-praktická část práce postupně porovnává řešení investičního problému v podobě výpočtu výplatní funkce jednotlivých firem na základě optimálního množství produkce dle Nashovy rovnováhy v podmínkách klasického duopolu a Stackelbergova duopolu. Samotný projekt je poté oceněn pomocí binomického modelu oceňování opcí. Klíčová slova: Reálné opce, modely trhu v teorii her, investiční rozhodování Abstract Investment decision making and assets evaluation represent one of the most important issues of financial management. This paper solves the evaluation of investment project using real option game or in other words a hybrid model combining evaluation of real options under competition, which is reflected by game theory. Empirical-practical part of the paper compares the solutions of investment problem for classical duopoly and Stackelberg duopoly. The payoff of each company is based on the optimal production according to the Nash equilibrium. The project is evaluated by binomial options pricing model. Keywords: Real options, market models in game theory, investment decision making JEL C7, D43, G1, G11 Školitel: prof. Dr. Ing. Zdeněk Zmeškal [331] Faculty of Economics, VŠB - TUO

339 Section S6: Finance and Accounting 1 Úvod Problematika investičního rozhodování a ocenění aktiv představuje pro společnosti jeden z nejdůležitějších problémů finančního řízení. Základním kritériem pro uskutečnění či neuskutečnění investice je správné určení hodnoty. Metodologie reálných opcí navazuje na metodiku NPV a dále ji rozvíjí o možnost ocenit flexibilitu a tím zpřesnit ocenění hodnoty projektu v nestálém a volatilním prostředí. Teorie her obohacuje komplexitu reálných opcí o zachycení vlivu konkurenčního prostředí, blíže v Grenadier (2000) nebo Smit, Trigeorgis (2004), Zmeškal (2014). Článek je rozdělen na tři části. První kapitola je věnována metodologii reálných opcí s definicí reálných opcí s důrazem na binomický model oceňování opcí. Druhá kapitola je zaměřena na teorii her s obecnou klasifikací a především definicí různých modelů trhu. Třetí kapitola slouží k ocenění investičního projektu pomocí kombinace reálných opcí a teorie her. Pro výpočty jsou použita modelová data. Projekt je oceněn v různých tržních prostředích. V závěru druhé části je srovnání celkových hodnot investičních projektů v různých tržních prostředích a celkové produkce a zisku dosaženého v daném tržním prostředí. 2 Metodologie reálných opcí Obdobně jako mají práva na budoucí rozhodnutí svou hodnotu na finančních trzích, lze analogicky stanovovat hodnotu práv na budoucí rozhodnutí při reálném rozhodování podniku o umístění investic. Práva se v tomto případě netýkají finančních aktiv, ale reálných aktiv. Rozdíly mezi finančními a reálnými opcemi a zároveň základní parametry jednotlivých charakteristik reálných opcí jsou uvedeny v Tab Tab. 2.1 Analogie finančních a reálných opcí a jejich základní parametry Parametr Finanční opce Reálná opce Podkladové aktivum (S) tržní cena aktiva hodnota projektu (aktiv) Realizační cena (X) cena, za kterou bude aktivum nakoupeno nebo prodáno dle typu reálné opce (např. inves- tiční výdaje na rozšíření, atd.) Volatilita podkladového aktiva (σ) volatilita ceny finančního aktiva volatilita hodnoty projektu (aktiv) Cena opce (C) opční prémie hodnota flexibility projektu Doba do splatnosti (T) Zdroj: Čulík 2013 relativně krátká, odpovídá době trvání kontraktu relativně delší, odpovídá době životnosti projektu Opce na odložení zahájení projektu Typově představuje opce na odložení zahájení projektu kupní opci, jež umožňuje vedení společnosti odložit okamžik zahájení projektu za předpokladu, že NPV bude vyšší v případě odložení než v případě okamžitého zahájení. Opce je tedy firmou uplatněna v případě, že současná hodnota očekávané NPV při zahájení v budoucnosti je vyšší než v případě okamžitého zahájení projektu. Má-li firma možnost odložit projekt jen v daném roce, jedná se o opci evropského typu, pokud má firma možnost zahájení projektu odložit o více let, pak se jedná o opci amerického typu. 18 th International Scientific Conference [332] Faculty of Economics, VŠB - TUO

340 Pro projekt platí, že aby byl přijat, musí být jeho NPV 0. V případě odložení zahájení projektu musí tedy platit, že očekávaná NPV projektu je také kladná, neboli E(NPV t ) = max[e(v t ) I t ; 0]. (1) Opce na odložení zahájení projektu je tedy uplatněna v případě, že je současná hodnota očekávané NPV vyšší než NPV, které by bylo dosaženo v případě okamžitého zahájení projektu, neboli v případě, že je vnitřní hodnota opce kladná, což lze vyjádřit jako VH 0 D = max[pv (E (NPV t )) NPV 0 ; 0]. (2) Opce je tedy využita a projekt odložen v případě, že VH D > 0. Naopak projekt je vhodno zahájit ihned, je li jeho NPV kladná a zároveň VH D = Binomický model oceňování opcí Předpokládá se, že vývoj podkladového aktiva v průběhu životnosti opce lze rozdělit do konečného množství dílčích období, ve kterých dochází k růstu u s pravděpodobností p anebo poklesu d s pravděpodobností 1 p. Cena podkladového aktiva S tedy může v čase T1 nabývat pouze dvou hodnot, a to S 1 u v případě růstu ceny a nebo S 1 d v případě poklesu ceny, přičemž daná pravděpodobnost růstu anebo poklesu se v čase nemění. Binomický model obecně vychází z předpokladů neexistence arbitráže, zákona jedné ceny, existence dokonalých trhů, předpokladu, že výnos každého aktiva je roven bezrizikové sazbě a předpokladu, že podkladové aktivum se vyvíjí dle geometrického Brownova procesu (Scholleová, 2007). Vycházíme-li ze základních vlastností opcí, pak na konci prvního období bude opce v případě růstu dosahovat hodnoty C u = max(u S X, 0) s pravděpodobností p a C d = max(d S X, 0) s pravděpodobností 1 p. V případě americké kupní opce je potřeba hodnotu opce získat rekurentním postupem z koncových uzlů binomického stromu. Má-li i-tá hodnota uzlu v období n vnitřní hodnotu kupní opce rovnu (C i ) n = max(s u i d n i X, 0), (3) pak hodnotu i-tého uzlu v období n 1 poté získáme jako 1 (C i ) n 1 = max [ (1 + r) (p (C i ) n + (1 p) (C i+1 ) n ), max((s i ) n i X, 0)]. (4) Známe-li volatilitu podkladového aktiva za období T vyjádřenou směrodatnou odchylkou σ a binomický model je rozdělen do n období, pak pro růst u a pokles d platí, že u = e σ T n, d = e σ T n. a jejich pravděpodobnosti lze vyjádřit jako rizikově neutrální pravděpodobnost jako 3 Modely trhu v teorii her (1 + r)t n d p =, 1 p = (1 + r)t/n u. (6) u d d u Základem každého rozhodovacího problému je určitá hra představující soubor pravidel, na jejichž základě volí hráči určité strategie za účelem optimalizace jejich výplatní funkce. (5) [333] Faculty of Economics, VŠB - TUO

341 Section S6: Finance and Accounting Tento článek je zaměřen na nekooperativní hry. V důsledku je hledána Nashova rovnováha (blíže Fudenberg a Tirole, 1991, nebo Gibbons, 1992) v oligopolní tržní struktuře, přičemž tento princip lze přenést na problém investičního rozhodování. Předpokládejme model oligopolu (monopolu a duopolu), který má následující parametry: a) lineární poptávková funkce ve tvaru P(Q) = θ b Q, kde Q je celkové množství produkce dodávané na trh (pro Q θ je tvaru P(Q) = 0), θ představuje náhodný parametr funkce poptávky, jehož vývoj se předpokládá dle geometrického Brownova procesu. b) Q = i=1 q i, kde q i představuje produkci jednotlivých firem (pro monopol platí Q = q m, pro duopol platí Q = q i + q j,), c) mezní náklady jsou značeny jako c, nákladová funkce tvar C i (q i ) = c i q i + FX i, kde c < θ d) výstup lze libovolně dělit, prostor strategií tedy označujeme S i = (0; ). π i (q i ) q i Model Cournotova duopolu Výplatní funkci představující ziskovou funkci jednotlivých firem i a j definujeme jako π i (q i, q j ) = q i P(Q) C i = q i [θ b i (q i + q j )] (c i q i + FX i ). (7) Hledáme maximum ziskové funkce, řešíme tedy parciální derivaci prvního řádu pro q i, = 0, a dostáváme reakční funkci ve tvaru θ 2b i q i b i q j c i = 0. (8) Pro uspořádanou dvojici (q 1, q 2 ) Nash-Cournotovy rovnovážné hry je nutno vyřešit následující soustavu rovnic q i = θ b iq j c i, q j = θ b jq i c j. (9) 2b i 2b j Řešením Nash-Cournotovy rovnovážné hry je tedy optimální produkce pro q i (a analogicky pro q j ) stanovena jako Model monopolu q i = 2b j(θ c i ) b i (θ c j ) 3b i b j. (10) Ve speciálním případě, kdy se na trhu bude pohybovat jen jedna firma a trh tedy bude vykazovat monopolní tržní strukturu, bude firma v monopolním postavení maximalizovat zisk max π m(q m, 0) = max q m(θ b i q m ) (c i q m + FX i ). (11) 0 q m 0 q i Řešením optimalizační úlohy pro monopol poté získáme optimální míru produkce jako Model Stackelbergova duopolu q m = θ c i 2b i. (12) Tento model vychází ze shodných předpokladů jako Cournotův model s výjimkou vzájemné reakce firem. Stackelbergův model je dynamického charakteru a předpokládá 18 th International Scientific Conference [334] Faculty of Economics, VŠB - TUO

342 sekvenční stanovení výstupu, tj. reakci j-té firmy na změnu výstupu i-té firmy. První firma se nachází v dominantním postavení (vůdce) a druhá se jí musí podřídit (následovník). Firma v dominantním postavení určí optimální množství výroby q 1 > 0, následně si firma v podřízeném volí množství výroby q 2 > 0 na základě množství stanoveného firmou v dominantním postavení. V prvním kroku řešíme optimální reakci firmy v pozici následovníka na možná rozhodnutí firmy v postavení vůdce. Při hledání optimálního řešení podhry hledáme tzv. dokonalou rovnováhu podhry pro všechny rozhodovací situace a úlohu řešíme na základě zpětné indukce max π j (q i, q i ) = max q j [θ b j (q i + q j )] (c j q j + FX j ). (13) q j 0 q j 0 Řešením získáme reakční křivku následovatele v podobě R j (q i ) q j = θ b jq i c j 2b j. (14) Protože firma v dominantním postavení zná reakci firmy v podřízeném postavení, tak ji bude reflektovat ve svém rozhodování. Řešením úlohy získáme optimální množství produkce vyráběné vůdcem q i jako q i = 2b j(θ c i ) b i (θ c j ) 2b i b j. (15) Zpětným dosazením optimální reakce vůdce do reakční křivky následovníka získáme optimální produkci pro q j jako R j (q i ) = q j = 3b i(θ c j ) 2b j (θ c i ) 4b i b j. (16) Při srovnání Cournotva duopolu a Stackelbergova duopolu zjistíme, že množství produkce vyráběné v případě Stackelbergova duopolu je vyšší, ačkoli celkový zisk dosažený součtem zisků i-té a j-té firmy je nižší. V případě monopolu pak společnost dosahuje nejvyššího zisku při nejnižším celkovém objemu produkce. 4 Řešení problému pomocí hybridního modelu V této kapitole bude aplikována metodologie reálných opcí a teorie her na konkrétní investiční projekt. Projekt bude oceněn na základ metodologie reálných opcí, které zohledňují riziko a flexibilitu spočívající v možnosti odložení investice. Ocenění projektu reflektuje vzájemné působení ostatních firem (hráčů) na trhu, které je popsáno teorií her. Nejlepší diskrétní strategie je určena na základě bi-maticové hry (Zmeškal, 2014). Rovnovážný bod bi-maticové hry se za předpokladu diskrétních proměnných nachází v ryzích strategiích. Předpokládáme, že strategie i-tého hráče je sm,i ε Si a j-tého hráče sn, j ε Sj. Pro s m,i je potom strategie Nashovy rovnováhy a nejlepší strategie i-tého hráče π i (s m,i, s n,j ) π i (s m,i, s n,j ) Podobně pro j-tého hráče π j (s n,j, s m,i ) π j (s n,j, s m,i ). Rovnovážný bod bimaticové hry je stanoven metodou best response neboli nejlepší odpovědi jako [335] Faculty of Economics, VŠB - TUO

343 Section S6: Finance and Accounting {s m,i, s n,j } = {arg max s m,i ε S i min π i (s m,i s n,j ε S j, s n,j ); arg max s n,j ε S j min π j (s n,j s m,i ε S i, s m,i }. (17) Postup pro ocenění investičního projektu pomocí hybridního modelu je následující: a) determinace náhodného faktoru poptávky představující možný vývoj podkladového aktiva v jednotlivých letech pomocí geometrického Brownova procesu, b) Výpočet výplatní funkce pro jednotlivé společnosti v závislosti na typu tržní struktury a příslušné úrovní poptávky, c) Určení optimální reakce jednotlivých společností dle Nashovy rovnováhy, d) Ocenění reálné opce, tj. stanovení hodnoty investičního projektu, pomocí rizikově neutrální pravděpodobnosti zpětným postupem z koncových uzlů binomického stromu. 4.1 Popis a řešení problému Dva investoři se rozhodují, zda učinit investici, jež by v případě realizace zvýšila objem produkce a zlepšila jejich postavení v daném tržním prostředí. Investici je možno odložit až o dva roky, tato flexibilita je zastoupena v americké opci na odložení zahájení projektu. Pro účely této práce je uvažováno o monopolním a duopolním tržním prostředí (zachyceno v klasické podobě pomocí Cournotova duopolu a v dynamické formě pomocí Stackelbergova duopolu). Investoři se rozhodují, zda investovat, nebo investici opustit. Výsledků dosažených v této kapitole bylo dosaženo vlastními výpočty, není-li stanoveno jinak. V případě duopolního tržního prostředí, ve kterém se pro investici rozhodne jen jeden z účastníků trhu, se tržní prostředí promění na monopolní, což ovlivní výplatní funkci daného investora. Hodnota hry je při investičním rozhodování oceněna pomocí kritéria NPV na bázi perpetuity představující výplatní funkci jednotlivých účastníků trhu, které lze pro i-tého a j-tého hráče po dvou letech vypočítat jako NPV i = π i(s n,j, s m,i ) I, NPV R j = π j(s m,i f, s n,j ) I. (18) R f Nashova rovnovážná strategie bi-maticové hry se pro jednotlivé investory vypočte na základě (17). Hodnota projektu za podmínek flexibility a rizika v konkurenčním prostředí zachyceném pomocí teorie her určí jako (18). Vývoj náhodného faktoru poptávky se řídí geometrickým Brownovým procesem a je zachycen v binomickém stromu v Tab 4.1. Celková produkce je stanovena jako P(Q) = θ b Q. Výplatní funkce se na základě objemu produkce firem v dané tržní struktury vypočte jako (10), (12), (16). Investice bude oceněna pomocí binomického modelu pro oceňování opcí (4) Tab. 4.1 Vstupní údaje a binomický strom vývoje náhodného parametru poptávky Vstupní údaje uu θ 0 = 25 náhodný faktor poptávky u 43,6 U = 1,32 index pro rostoucí poptávku 0 33,0 ud=du D = 0,76 index pro klesající poptávku 25,0 d 25,0 Rf = 0,1 roční bezriziková sazba 18,9 dd p = 0,624 rizikově neutrální pravděpodobnost 14,3 18 th International Scientific Conference [336] Faculty of Economics, VŠB - TUO

344 Tab. 4.2 Individuálně stanovené parametry pro jednotlivé společnosti parametr investor i parametr investor j bi = 0,7 bj = 0,7 poptávkový koeficient ci = 2 cj = 3 mezní náklady FXi = 30 FXj = 20 fixní náklady I = 180 I = 180 investice Řešení pro Cournotův duopol Tabulka 4.3 zachycuje postup výpočtu jednotlivých výplatních funkcí, na něž navazuje tabulka 4.5 s volbou rozhodnutí a zachycením výplatní funkce odpovídající danému rozhodnutí. V tabulce 4.6 jsou zachyceny tři binomické stromy zobrazující výplatní funkce v jednotlivých uzlech, zpětný propočet investičního projektu a strom s konečnými investičními rozhodnutími. Tab. 4.3 Řešení investičního problému pro Counotův duopol uzel u uzel d uzel uu uzel ud=du uzel dd firma i j i j i j i j i j poptávka koef. θ 33,0 33,0 18,9 18,9 43,6 43,6 25,0 25,0 14,3 14,3 Duopol produkce q 15,2 13,8 8,5 7,1 20,3 18,8 11,4 10,0 6,4 4,9 Cournot cena p 12,7 12,7 8,0 8,0 16,2 16,2 10,0 10,0 6,4 6,4 zisk π 132,5 113,5 21,1 15,4 257,5 228,4 61,4 50,0-1,7-3,0 NPV 1145,4 954,9 30,8-25,7 2395,2 2104,1 434,3 320,0-197,2-210,0 náklady c q+fx 60,5 61,4 47,1 41,3 70,5 76,5 52,9 50,0 42,7 34,8 celková produkce celkový zisk Q π T 29,0 246,0 15,7 36,5 39,1 485,9 21,4 111,4 Pokud se rozhodne investovat jen jedna z firem a druhá investici opustí, tak zůstane na trhu sama a bude vystupovat jako monopol. Tab. 4.4 řeší investiční problém v monopolním tržním prostředí. Tab. 4.4 Řešení investičního problému pro monopol uzel u uzel d uzel uu uzel ud=du uzel dd firma i j i j i j i j i j poptávka koef. θ 33,0 33,0 18,9 18,9 43,6 43,6 25,0 25,0 14,3 14,3 Monopol produkce q 22,1 21,4 12,1 11,4 29,7 29,0 16,4 15,7 8,8 8,1 cena p 17,5 18,0 10,5 11,0 22,8 23,3 13,5 14,0 8,2 8,7 zisk π 313,2 301,4 72,5 70,7 586,9 567,5 158,9 152,9 24,5 26,0 NPV 2952,1 2834,3 544,8 527,4 5688,7 5495,4 1409,3 1348,6 64,5 79,9 náklady c q+fx 74,3 84,3 54,2 54,2 89,4 106,9 62,9 67,1 47,6 44,3 celková produkce Q = q mi 22,1 21,4 12,1 11,4 29,7 29,0 16,4 15,7 8,8 8,1 celkový zisk π T =π mi 313,2 301,4 72,5 70,7 586,9 567,5 158,9 152,9 24,5 26,0 Tab. 4.5 Volba rozhodnutí na základě výplatní funkce v bi-maticové hře firma j firma j u d investovat opustit investovat opustit investovat 1348,6 320,0 2952,1 0,0 investovat 94,7-206,5 544,8 0,0 firma i firma i opustit 0,0 2834,3 0,0 0,0 opustit 0,0 527,4 0,0 0,0 11,3-4,7 [337] Faculty of Economics, VŠB - TUO

345 Section S6: Finance and Accounting firma j firma j uu dd investovat opustit investovat opustit investovat 2754,6 947,6 5688,7 0,0 investovat -161,8-302,0 64,5 0,0 firma i firma i opustit 0,0 5495,4 0,0 0,0 opustit 0,0 79,9 0,0 0,0 firma j ud=du investovat opustit investovat 548,6-22,9 1409,3 0,0 firma i opustit 0,0 1348,6 0,0 0,0 Tab. 4.6 Binomický strom NPV hodnot pro investory, zpětný propočet hodnoty investičního projektu a strom investičního rozhodování Výplata - NPVi Hodnota - Vi Investiční rozhodování firma i uu firma i uu firma i uu u 2395,2 u 2395,2 u investovat ,4 ud=du ,5 ud=du 0 pokračovat ud=du 0,0 d 434,3 1040,5 d 434,3 pokračovat d investovat 544,8 dd 544,8 dd investovat dd 0,0 0,0 opustit Výplata - NPVj Hodnota - Vj Investiční rozhodování firma j uu firma j uu firma j uu u 2104,1 u 2104,1 u investovat 0 954,9 ud=du ,4 ud=du 0 pokračovat ud=du 0,0 d 320,0 800,5 d 320,0 pokračovat d investovat 0,0 dd 181,4 dd pokračovat dd 0,0 0,0 opustit Řešení pro Stackelbergův duopol Vychází se ze stejných vstupních hodnot a předpokladů jako v případě Cournotova duopolu s tím rozdílem, že i-tý investor je v dominantním postavení (vůdce) a j-tý investor se nachází v podřízeném postavení (následovník). Tabulka 4.7 zachycuje postup výpočtu jednotlivých výplatních funkcí, na niž navazuje tabulka 4.8 s volbou rozhodnutí a zachycením výplatní funkce odpovídající danému rozhodnutí. V tabulce 4.9 jsou zachyceny tři binomické stromy zobrazující výplatní funkce v jednotlivých uzlech, zpětný propočet investičního projektu a strom s konečnými investičními rozhodnutími. Tab. 4.7 Řešení investičního problému pro Stackelbergův duopol uzel u uzel d uzel uu uzel ud=du uzel dd firma i j i j i j i j i j poptávka koef. θ 33,0 33,0 18,9 18,9 43,6 43,6 25,0 25,0 14,3 14,3 Duopol produkce q 22,9 10,0 12,8 5,0 30,4 13,8 17,1 7,1 9,5 3,3 Stackelb cena p 10,0 10,0 6,5 6,5 12,6 12,6 8,0 8,0 5,3 5,3 erg zisk π 152,9 50,0 27,5-2,7 293,5 112,8 72,9 15,7 1,8-12,2 NPV 1348,6 320,0 94,7-206,5 2754,6 947,6 548,6-22,9-161,8-302,0 náklady c q+fx 75,7 50,0 55,6 34,9 90,8 61,3 64,3 41,4 49,1 30,0 celková produkce celkový zisk Q π T 32,9 202,9 17,8 24,8 44,2 406,2 24,3 88,6 12,9-10,4 18 th International Scientific Conference [338] Faculty of Economics, VŠB - TUO

346 firma i Tab. 4.8 Volba rozhodnutí na základě výplatní funkce v bi-maticové hře firma j firma j u d investovat opustit investovat opustit investovat 1145,4 954,9 2952,1 0,0 investovat 30,8-25,7 544,8 0,0 firma i opustit 0,0 2834,3 0,0 0,0 opustit 0,0 527,4 0,0 0,0 firma j firma j uu dd investovat opustit investovat opustit investovat 2395,2 2104,1 5688,7 0,0 investovat -197,2-210,0 64,5 0,0 firma i firma i opustit 0,0 5495,4 0,0 0,0 opustit 0,0 79,9 0,0 0,0 firma j ud=du investovat opustit investovat 434,3 320,0 1409,3 0,0 firma i opustit 0,0 1348,6 0,0 0,0 Tab. 4.9 Binomický strom NPV hodnot pro investory, zpětný propočet hodnoty investičního projektu a strom investičního rozhodování Výplata - NPVi Hodnota - Vi Investiční rozhodování firma i uu firma i uu firma i uu u 2754,6 u 2754,6 u investovat ,6 ud=du ,9 ud=du 0 pokračovat ud=du 0,0 d 1409,3 1432,2 d 1409,3 pokračovat d investovat 544,8 dd 799,0 dd pokračovat dd 0,0 0,0 opustit Výplata - NPVj Hodnota - Vj Investiční rozhodování firma j uu firma j uu firma j uu u 947,6 u 947,6 u investovat 0 320,0 ud=du 0 537,2 ud=du 0 pokračovat ud=du 0,0 d 0,0 304,6 d 0,0 pokračovat d opustit 0,0 dd 0,0 dd opustit dd 0,0 0,0 opustit 4.2 Srovnání ocenění investice Firma i měla nižší variabilní náklady a vyšší fixní náklady než firma j. V případě Cournotova duopolu byla hodnota projektu oceněna pro i-tou společnost ve výši Vi = 1040,5 a pro j-tou společnost Vi = 800,5. V případě Stackelbergova duopolu byl investiční projekt pro dominantní i-tou společnost oceněn ve výši Vi = 1432,2 a pro podřízenou j-tou společnost Vi = 304,6. Srovnáme-li celkový dosažený zisk, pak zjistíme, že ačkoli je Stackelbergův duopol oproti Cournotově duopolu alokačně efektivnější, tak dosahuje celkového nižšího zisku. Rozdíl v hodnotě projektu vzniká proto, že v případě Stackelbergova duopolu si i-tá firma přivlastní část produkce a tím i zisku j-té společnosti, což pro ni dělá investiční projekt méně atraktivní, ale stále jak pro společnost i, tak pro společnost j platí doporučení k investování. Závěr Uvažovaný investiční projekt byl oceněn pro dvě společnosti s různými vstupními podmínkami ve třech různých podmínkách tržního prostředí s modelovými daty. V souvislosti [339] Faculty of Economics, VŠB - TUO

347 Section S6: Finance and Accounting s objemem produkce a výší nákladů ve všech uvažovaných tržních strukturách byla hodnota investice vždy výhodnější pro společnost i, nicméně ve všech uvažovaných případech byl investiční projekt hodnocen kladně a tudíž doporučen pro investování jak pro společnost i, tak pro společnost j. Investiční projekt byl oceněn pomocí hybridního modelu, který pro investiční rozhodování zohledňuje riziko (náhodný faktor poptávky), flexibilitu (reálná opce na odložení zahájení projektu) a konkurenci (chování ostatních účastníků trhu). 5 Literatura ČULÍK, Miroslav. Aplikace reálných opcí v investičním rozhodování firmy. 1. vyd. Ostrava: VŠB-TU Ostrava, 2013, 182 s. ISBN DLUHOŠOVÁ, Dana a kol. Finanční řízení a rozhodování podniku. 3. upravené vydání. Praha: EKOPRESS, s. ISBN FUDENBERG, Drew a Jean TIROLE. Game Theory. Cambridge, Massachusets: The MIT Press, 1991, 579 s. ISBN: GIBBONS Robert. A Primer in Game Theory. Financial Times, Prentice Hall; 1. vydání. 1992, 288 s. ISBN: GRENADIER, Steven. Game choices: The intersection of Real Options and Game Theory. 1. vyd. London: Risk Waters Groups, s. ISBN LARSON, Nathan C. Strategic Delay and Efficiency in Global Games. B. E. Journal of Theoretical Economics, Vol. 16, 2016, s , ISSN: SCHOLLEOVÁ, Hana. Hodnota flexibility: reálné opce. Vyd. 1. Praha: C.H. Beck, 2007, 171 s. ISBN SMIT, H. T. J., TRIGEORGIS, L. Strategic Investment: Real Options and Games. 1. vyd. Princeton: Princeton University Press, s. ISBN ZMEŠKAL, Z., D. DLUHOŠOVÁ a Tomáš TICHÝ. Finanční modely: koncepty, metody, aplikace. 3. vyd., Praha: Ekopress, 2013, 267 s. ISBN ZMEŠKAL, Zdeněk. Game theory and real options decision-making hybrid models under random demand s. 5. ISBN: E th International Scientific Conference [340] Faculty of Economics, VŠB - TUO

348 VARIANCE ANALYSIS OF A COMPANY IN ENERGY SECTOR Barbora Ptáčková VSB TUO, Faculty of economics barbora.ptackova.st@vsb.cz Abstract This paper is dedicated to analysis of the variance of partial indicators to ROE using the methods of variance decomposition. Financial performance is a random process which could be decomposed into the particular indicators. Knowledge of the influence of an indicator is important for performance analysis. Variance is one of the possible random influence measures. There is in the paper derived a problem of the non-linear delta method approximation of variance decomposition. Financial performance variance decomposition in energy sector is verified and investigated Keywords: ROE, variance, decomposition, non linear function, deviation analysis JEL: G320 Advisor: prof. Dr. Ing. Dana Dluhošová [341] Faculty of Economics, VŠB - TUO

349 Section S6: Finance and Accounting 1 Introduction One of the most important financial tasks is to identify and analyze the deviations of indicators, find and quantify factors, which contribute to the deviations the most. The application of methods of pyramidal decomposition is one of the ways, how to make this analysis. The basic idea of this method is gradual breakdown of the top indicator on the subindicators and quantifies the impact of partial factor on the top indicator. We can differentiate the static and dynamic analysis. The dynamic analysis is characterized by the type of investigated function: linear and non-linear type. The static approaches were presented e.g. in Dluhosova (2014), Zmeskal (2013). The aim of this paper is to derive the method for dynamic influence analysis for financial performance of non-linear dependency function of financial performance applicable in energy sector. The method proposal is based on delta approximation by the Taylor expansion and variance analysis. Example of decomposition of financial performance on Return on Equity measure of the firm in Energetics is presented. 2 Methods of analysis of deviations In this part of the paper there are described methods of analysis of deviations. First part is dedicated to methods of analysis of additive relationship, then there are described methods for multiplicative relationship, exponential relation and in the end of this part the variance of non-linear function on the delta approximation is derived. Firstly, the linear example is derived and then the non-linear delta approximation formula is derived. Commonly applicable methods for non-linear functions are the functional method and the integrand method. 2.1 Methods of analysis of deviations with additive relationship For three factors the approximation by the Taylor series is x x x xa1 a2 a3 a1 a2 a3 a1 a2 a3. (1) a1 a2 a3 Influence of the factors is then as follows ai xa i y x ai i, (2) where ai, 1 is the value of the i-th factor in a given period. 2.2 Methods of analysis of deviations with multiplicative relationship Multiplicative relation for three factors can be expressed as x a1 a2 a3. We can distinguish five applicable methods method of the gradual changes, method of the decomposition with surplus, logarithmic method and integral method Method of the gradual changes In this method the influences are generally quantified without surplus as follows y x y x x a1 a2,0 a3,0 xa a1,1 a2 a3,0, x a 2 a 1,1 a2,1 a x x x a, 1 3 n x y. (3) 18 th International Scientific Conference [342] Faculty of Economics, VŠB - TUO

350 [343] Faculty of Economics, VŠB - TUO Generally, it is.,0,1 x y a a a x x i j j i j j i a i (4) Simplicity and no remain are advantages of this methods. On the other side the fact that influence value depends on the factors ordering is not good Methods of decomposition with surplus In this method influences are calculated with remain. So, particular influences are as follows, 1 3,0 2,0 1 1 x y R a a a x x a, 2 3,0 2 1,0 2 x y R a a a x x a ,0 1,0 3 x y R a a a x x a (5) In general.,0 x y R a a x x i i j j i a i (6) Pros of the decomposition with remain is results independence on ordering. Method cons consist in non-uniqueness of remain distribution Logarithmic method When logarithmic method is used for analysis of deviations, margin is to be expressed as ln ln ln a a a I I I a a a x. (7) Particular influences are then calculated as. ln ln x x a a y I I x i i (8) Advantage of this method is that the simultaneous changes are reflected. On the other side, existence of negative ratio not allows to apply the method Functional method In this method all levels of Taylor expansion are applied. For more derivation see Zmeškal (2014). Particular influences assigned to factors are then , , x a a a a a x a x a a a a a x a x a a a a a x a y R R R R R R x y R R R R R R x y R R R R R R x (9) The functional method is based on the discrete returns. Advantage coincide with logarithmic method; constraint of the negative ratio does not exist Integrand method Procedure of the integrand method is analogical to the functional method. Difference consist in applying only linear components of the Taylor expansion, for more see Zmeškal (2014). particular influences can be expressed as follows

351 Section S6: Finance and Accounting 18 th International Scientific Conference [344] Faculty of Economics, VŠB - TUO x x a a x x a a x x a a y R R x y R R x y R R x ,, (10) Advantages of the integrand method are similar to the functional method. Interpretation and calculation of the deviation should be more simple including the signs and direction, see Zmeškal (2014). 3 Methods of analysis of deviations with exponential relationship Due to linear Taylor expansion, ln 2 i i a a i i i i i a a a a a a a a x a a x x i i i. (11) Then x a i i a y x a a a x i i , x i a a y x a a a x i i 1 1 ln, for 2 i. (12) 3.1 Linear variance analysis method derivation Suppose the linear function,, (13) where Y is dependent variable, ai is coefficient and Fi is independent factor. Then we can express the margin as follows,, (14), where. Then (15) Variance of the function is following (16) here,. i i Y a i F a i F i Y i F i a E j j j F E F F i i i i i i i i F E a F a F a E F a Y j i i i j j i i i i i i i n F F E a a F E a F a E f E F F F f Y ),,, ( var var F i F i E var 2 j i j i F F F F E, cov

352 [345] Faculty of Economics, VŠB - TUO So formula for the variance of particular factor is as follows, (17) than relative influence of particular factor is as follows,. (18) 3.2 Linear approximation delta variance analysis method derivation The basic non-linear function and margin is possible to express as follows,, (19). Because of application of the Taylor expansion, the general formula is, and linear part is. (20) The variance formula is following,, (21) where,. General formula for variance (22) where,, and so.(23) Therefore, we can express variance of particular factor as follows,. (24) Relative influence of particular factor is expressed as follows j i j j i j i i i i F F a a F a z, cov var 2 i i i i z z s ),,, ( 2 1 n F F F f Y ),,, ( 2 1 n F F F f Y i i i n F F f F F F f ) ( ),,, ( ) ( ),,, ( var i i i n F F f E f E F F F f j j j F E F F i i F f E a ) ( j i j i i j j i i i i i i i n F F E a a F E a F a E f E F F F f Y ),,, ( var var F i F i E var 2 j i j i F F F F E, cov i i F f E a ) ( i i j j i j i i i i n F F a a F a F F F f Y, cov var ),,, ( var var i j j i j i i i i F F a a F a z, cov var 2

353 Section S6: Finance and Accounting s i i z i z i. (25) Linear approximation delta variance analysis method derivation of three factors Applying procedure of previous part, for three factors it is possible to express as follows Y f f ( ) F f ( ) F F1, F2, F3 E F1 E F2 E F3, (26) where a E, for more see Dluhošová (2015). i i 4 Application of delta non-linear variance method in energy sector The goal of this part of the paper is to find the relative influence of the three factors (sales profitability, assets turnover and financial leverage) on return on equity in energy sector. The input are quarterly data of energy sector in period 1Q 2007 to 4Q Return on equity reflects the total profitability of own resources, see Dluhošová (2010). Generally, the return on equity can be written as where EAT is net profit and E is equity. 1 f ( ) F EAT ROE, E (27) The return on equity can be decomposed into individual sub-indicators as follows 2 f ( ) F 3 ROE EAT S S A A E F F 1 2 F3 (28) where is sales profitability, is assets turnover, is financial leverage, is equity, S is sales, is asset. So, the formulas of variance influence calculation in coincidence with previous part are where EAT S A S A A E F1 a1 a2 covf 1, F2 a1 a3 covf 1 F3 F2 a2 a1 covf 2, F1 a2 a3 covf 2 F3 F a a covf, F a a covf F 2 1 a1 var, z z z 2 2 a2 var, 2 3 a3 var , 2 E, (29), (30), (31) 18 th International Scientific Conference [346] Faculty of Economics, VŠB - TUO

354 T/A, A/VK EAT/T MEKON 2016 a F F F E E 2 F3 F1 F E, (32) 4.1 Input data a F F F E E 1 F3 F2 a F F F E E 1 F2 F3 F E, (33) F E. (34) There are in the Fig. 1 presented the input data of sales profitability, assets turnover and financial leverage of the company ČEZ, a.s. from energy sector. These data are quarterly, from the period 1Q 2006 to 4Q2013 taken from annual reports of the company. 3,000 2,500 2,000 1,500 1,000 0,500 0,000 Fig. 1 Quaterly input data of energy sector 100,00% 80,00% 60,00% 40,00% 20,00% 0,00% -20,00% S/A A/E EAT/S Source: own adaptation based upon data from annual reports 4.2 Results There are in Tab. 1, Tab. 2 and Tab. 3 presented results of the calculation due to part 3. It is apparent that if we measure the financial performance by the ROE indicator, then the most influential sub-indicator is profitability sales (86.12%), less important assets turnover (13.49%) and then financial leverage (1.40%). Tab.1 Calculated parameters i E(Fi) ai Source: own adaptation based upon data from annual reports [347] Faculty of Economics, VŠB - TUO

355 Section S6: Finance and Accounting Conclusion Tab. 2 Covariance matrix EAT/S S/A A/E EAT/S S/A A/E Source: own adaptation based upon data from annual reports Tab.3 Influence of factors EAT/S S/A A/E ROE zi E E si 85.12% 13.49% 1.40% % Source: own adaptation based upon data from annual reports This paper was devoted to the deviation influential analysis of a company ČEZ, a.s. in energy sector. Firstly, methods of the deviation analysis were briefly described: gradual change method, method of deviation with residuals, logarithmic method, functional method and integrated method. Then the delta approximation variance method of non-linear function was described. Delta approximation variance method was then applied to data of a company ČEZ, a.s. from energy sector and the financial performance of the ROE indicator was verified. The most influential factor of this firm in this sector was founded the sales profitability. References COPELAND, T. E, WESTON, J. F., SHASTRI, K. (2005). Financial theory and corporate policy. 4 th ed. Harlow: Pearson. DAMODARAN, A. (1994). Damodaran on valuation, security analysis for investment and corporate finance. Chichester: Wiley. DLUHOŠOVÁ, D., RICHTAROVÁ, D., VALECKÝ, J., ZMEŠKAL, Z. (2010). Finanční řízení a rozhodování podniku. 3. vyd. Praha: Ekopress. DLUHOŠOVÁ, D., ZMEŠKAL, Z. (2014). Generalised approach to deviation analysis of non company discounted value measure. Metal pp DLUHOŠOVÁ, D., PTÁČKOVÁ, B., ZMEŠKAL, Z. (2015). Financial performance variance analysis of non-linear decomposition in metallurgy. Metal POITRAS, G. (2002). Risk Management, Speculation, and Derivative Securities. Academic press. ZMEŠKAL, Z. (2004): Přístupy k eliminaci finančních rizik na bázi finančních hedgingových strategií. In: Finance a úvěr Czech Journal of Economics and Finance, roč. 54, č. 1-2, str th International Scientific Conference [348] Faculty of Economics, VŠB - TUO

356 ZMEŠKAL, Z. (2013). Finanční modely. Koncepty, metody, aplikace. Praha: Ekopress. ZMEŠKAL, Z. (2014). Generalised approach to deviation analysis of non-linear company discounted value measure. Metal [349] Faculty of Economics, VŠB - TUO

357 Section S6: Finance and Accounting WAVELETS COEFFICIENTS DISTRIBUTION ANALYSIS Jaroslav Schürrer Masaryk Institute of Advanced Studies, Czech Technical University, Kolejní 2637/2a, Praha, Czech Republic Abstract The normal distribution plays important role in all statistical problems in science. Financial theory relies on the normal distribution of stock market returns mainly in the portfolio theory, capital asset pricing model and efficient market hypothesis. Wavelet analysis of financial time series decomposes the original entity into a set of coefficients where their distribution can play a notable role in the possibility of how to use the coefficients for further analysis where the normal distribution is most feasible. In this paper we show approaches to test given time series for normality of returns and show differences in wavelet coefficient distribution depending on the type of data, decomposition level and Wavelet used for analysis. Keywords: Discrete Wavelet Transformation, wavelets coefficients distribution, fractal Brownian motion JEL: E62, K29 Advisor: Prof. Ing. Miloslav Vošvrda, CSc. 18 th International Scientific Conference [350] Faculty of Economics, VŠB - TUO

358 1 Introduction The goal of this article is to show by force of graphical and numerical analysis comparison of wavelet coefficient distribution between standard model for modeling random stock price movement and real-time data represented by two stock indexes and two company shares. We also show how Discrete Wavelet transformation (DWT) changes distribution of original data in term of wavelet coefficients. The distribution of wavelet coefficients influences noise filtering potential which in turn makes our stock prices observations imperfect and consequently causes differences from their theoretical values 1. The simplest method of noise removal is thresholding, but this method is strongly dependent on the threshold selection. Another application where we can benefit from the knowledge of wavelet coefficient distribution is analyzed time series compression - most notably in case of ultra-high frequency financial data, where we deal with necessity to create a simple analytical representation. These two areas are being extensively researched (Cohen 2012) mainly in signal analysis and image processing, but we believe that similar approach can be beneficial for stock time series although not yet investigated. Even if we are unable to analytically describe real world data at general level distribution of wavelet coefficients, we can do so numerically in the specific case this paper describes. The article is divided into two main parts. First part summarizes theory of Discrete Wavelet Transformation, Brownian motion and setup bases for assumption about normality of data. The second part first analyzes random stock price movement represented by fractal Brownian motion and follows with real-time data. Numerical simulations use own code written in Python with support of additional packages for scientific computing (NumPy and SciPy). 2 Theoretical part Wavelets represent way of analyzing time series in particular non-stationary time series where ensure time and frequency localization. It means that provided wavelet coefficients that are local both in time and frequency and have a sparse presentation meaning that information is concentrated in a few coefficients and also preserve energy. Wavelet analysis has two main methods. Continuous Wavelet Transformation (CWT) is used for time series defined over the whole real axis and Discrete Wavelet Transformation (DWT) defined over a range of integers. 3 Discrete Wavelet Transformation We may consider DWT as a critical sampling of CWT it uses least number of coefficients. DWT has orthonormal basis. Mother function φ is defined by equation φ (s,l) (x) = 2 s 2φ(2 s x l) where s, l represent scale and dilatation of mother functions to generate wavelets. During rescaling and dilatation of mother function powers of two are used. Scaling function W(x) for the mother function φ has following equation N 2 W(x) = ( 1 k c k+1 φ(2x + k)) k= 1 1 Noise is not the only factor, but is relatively easy analytically sizeable [351] Faculty of Economics, VŠB - TUO

359 Section S6: Finance and Accounting where c k are wavelets coefficients satisfying following two constraints N 1 c k = 2, c k c k+2l = 2 k=0 N 1 k=0 where δ is delta function and l is location index. Every wavelet system has its own defining coefficients. The simplest one is Haar Wavelet followed by Daubechies Wavelets. Coefficients constitute a filter in the transformation matrix which is used against analyzed data. One kind of coefficients captures approximation (denoted ca) and second one detailed (denoted cd) level. Let s denote ca and cd with indexes indicating n-level of decomposition. So for the 1-level of decomposition we get pair of ca1, cd1 coefficients where DWT conservers energy which means that energy of pair ca1, cd1 coefficients is equal to energy of the original signal 2. For 2-level we get ca2, cd2 coefficients computed from ca1 and so on. Because detail coefficients fluctuation is small relative to trends coefficients we can observe energy compaction where most of the energy is concentrated in approximation coefficients. This property along with time series length are main influences of the maximal level of decomposition during DWT. Here we show a simple discrete example of simplest wavelet Haar Wavelet. Consider the following sequence of numbers {96.45, 96.96, 98.53, 97.39, 99.52, 97.13, 96.66, 96.79} that represents select part of stock prices of AAPL. First consider these eight numbers as series of four pairs of numbers {96.45,96.96}, {98.53, 97.39}, {99.52, 97.13}, {96.66, 96.79}. Replace them with their averages and differences. The averages represent ca1 coefficients { , ,, , δ l, } and the differences cd1 coefficients { ,, }. Extra step of multiplying by 2 is necessary to ensure that DWT preserves the signal energy. Calculated coefficients for 1 decomposition level are following ca1 = {136.8, 138.6, 139.0, 136.8}, cd1 = { 0.36, 0.81, 1.69, 0.10}. If we further examine magnitudes of cd1values we can observe that they are significantly smaller than magnitudes of the original signal. A different case is for ca1 coefficients where we could have noticed that they approximately represent original signal. Another thing we can notice is energy compaction where 99.99% of the total energy is compacted into ca1 coefficients (that represent half the length of the original signal). We started with a 1-level Haar transform and we obtained ca1 and cd1 coefficients. The second level of Haar transform is performed by computing ca2 and cd2 coefficients from ca1 and so on for other levels. If we calculate energy for ca2 we will see it dropping to 99.98%. 4 Geometric Brownian motion Geometric Brownian motion (GBM) is a special case of Brownian Motion (non-negative variation) which is often used to model financial processes. For given drift and volatility rate we can represent GBM with equation S(t) = S 0 e X(t) 2 Signal energy is equal to the the sum of the squares of its values 18 th International Scientific Conference [352] Faculty of Economics, VŠB - TUO

360 where X(t) = σb(t) + μt is Brownian motion (BM) with drift and S(0) = S 0 > 0 is initial value. Logarithm leads back to the BM: ln(s(t)) = ln(s 0 ) + X(t) which is normal with mean μt + ln(s 0 ), and variance σ 2 t. For given t, S(t) has lognormal distribution. GBM satisfies the Markov Chain property S(t + h) = S 0 e X(t+h) = S(t)e X(t+h) X(t) so the future given the present state is independent of the past. 5 Numerical part In numerical part use generated and real stock data where we analyze distribution of original data and Wavelets coefficients. We use Daub4 and Haar transform which are similar but differs in number of scaling coefficients. Firstly, we use generated Monte Carlo Paths for geometric Brownian motion as an abstraction of effective market and then we numerically analyze its distribution and distribution of wavelets coefficients with their theoretical probability density function (pdf). Later on we perform the same analysis with real Financial Times Stock Exchange (FTSE) data. 6 Geometric Brownian motion We generated Monte Carlo paths for geometric Brownian motion with the following parameters: initial stock value = 100, constant short rate = 0.05, constant volatility = 0.2, number of time steps = Total number of generated paths with above mentioned parameters is equal to paths. The following picture shows the generated realizations. Further analysis uses log returns of above generated paths. Realization statistics can be seen in Appendix 1. Fig. 2 Ten simulated paths of geometric Brownian motion Source: Own algorithm in Python. From the way we generated these realizations we know that frequency distribution will have lognormal probability density function. The simplest non-parametric density estimator is a histogram. We perform graphical test of normality in two ways. First, we plot frequency distribution (histogram) of data with their theoretical pdf of the normal distribution 3. 3 Parameterization is based on the values used to generate geometric Brownian motion [353] Faculty of Economics, VŠB - TUO

361 Section S6: Finance and Accounting Fig. 3 Histogram of log returns and normal density Next we calculate sample quantiles and compare them with theoretical quantile values in quantile-quantile plot which is suitable for this task. If the points on the qq plot align with the diagonal line x = y then the data set conforms with the distribution. From Fig. 3 we see that there is quite a good fit as well as for Fig. 2. Fig. 4 qq plot for log return Source: Own calculation. Graphical approach is suitable as initial approximation but we can use more rigorous statistical tests. We use skewness test, kurtosis test and normality test. Kurtosis test tests whether a dataset has normal kurtosis (tests the null hypothesis that the kurtosis of the population from which the sample was drawn is that of the normal distribution). Skewness test tests whether the skew is different from the normal distribution (tests the null hypothesis that the skewness of the population that the sample was drawn from is the same as that of a corresponding normal distribution) 4. All statistical tests are summarized in Appendix 2. The numerical test of the generated paths against 78 different distributions is summarized in Appendix 3 where the table includes only results with lower values which indicates better fit. Lowest value has Anglit pdf ( f(x) = sin(2 x + pi/2) = cos(2 x) for pi/4 <= x <= pi/4. 7 Real-word data In this part we use historical time series of the FTSE index, NASDAQ index, Apple Inc. and Microsoft Inc. which are used as a real-time data 5. The analysis will use a time interval starting on 1/1/2006 until present time. We show graphs only for FTSE because for others indexes and stock we can make similar graphical analysis to save space. Statements about normality will be assumed for all data. 4 Taken from the SciPy documentation 5 Extracted data from Yahoo! Finance (freely available by remote data access) 18 th International Scientific Conference [354] Faculty of Economics, VŠB - TUO

362 Fig. 5 Stock and index levels evolution (2514 entries) Source: Yahoo Inc. (from top to down AAPL, ^IXIC, MSFT, ^FTSE) In theoretical finance there is a widely used assumption that stock price returns are normally distributed. This partially stems from the fact that models use random walk theory of stock price. Histogram of return in Fig. 4 shows that real-time data might not be normal. Pdf exhibits faster tails than the normal distribution and that additional test is needed. If we into look into statistical test in Appendix 2 we will see that the p-values are zero and we reject hypothesis that all sample data are normally distributed. Fig. 5 Histogram of log return Source: Own calculation. Quantile values of qq plot do not lie on a straight line, indicating that distribution is not normal. On the left and right sides there are many values that lie below the line and above the line. The time series data exhibit fat tails. Fig. 6 qq plot for FTSE log return Source: Own calculation. During DWT original stock data are down-sampled at every decomposition level which leads to energy leaks with increasing of decomposition level. Wavelet transformation thus does [355] Faculty of Economics, VŠB - TUO

363 Section S6: Finance and Accounting not preserve primary stock data distribution. Wavelet approximation coefficients histogram in Fig. 7 and 8 for Haar and DB4 wavelet for first and fourth level of decomposition show that coefficients might not be normal. Both histograms include a plot of normal pdf for comparison with frequency distribution. If we examine the statistical test in Appendix 2 we can see that the p-values are zero for all approximations coefficients of FTSE and we reject hypothesis that wavelet coefficients are normally distributed which is consistent with our expectations. Fig. 7 Histogram of log returns and normal density for FTSE index (Haar Wavelet) Source: Own calculation Fig. 8 Histogram of log returns and normal density for FTSE index (DB4 Wavelet) Source: Own calculation 18 th International Scientific Conference [356] Faculty of Economics, VŠB - TUO

364 The choice of binning 6 can have a disproportionate effect on the resulting visualization. We can estimate the density directly from the data without assuming a particular form for the underlying distribution thru Kernel Density Estimator (KDE). The KDE can be used to plot the shape of distribution. We replace each data point of time series with a Gaussian curve centered on that value. Next we calculate the sum of these curves to compute the value of the density at each point and resulting curve is then normalized. We see from Fig. 8 that KDE notably does not change with DWT decomposition level and it is preferable to estimate the distribution function. Fig. 9 Kernel density estimator for FTSE index, coefficients ca1, ca5 (Haar and DB4 Wavelets) Source: Own calculation Conclusion This paper presented Discrete Wavelet Transformation and point two methods used for normality test for stock data and wavelet coefficients. We demonstrate the differences in frequency distribution between different wavelets transformations and levels of decomposition. Statement about normality was confirmed only for random stock data embodied in the geometric Brownian motion model, but not for the used real-time data. We also show that the selection of the wavelet doesn t significantly influence distribution of wavelet coefficients and that KDE is better estimator for wavelet coefficients than pdf based on the normal distribution. References CHRISTENSEN, O., CHRISTENSEN, K.L (2004). Approximation Theory: From Taylor Polynomials to Wavelets. Boston: Birkha user. ISBN PATRICK, J. V. F. (2008) Discrete Wavelet transformations. Hoboken (New Jersey). Wiley Sons. ISBN RAMSEY, J. The Contribution of Wavelets to the Analysis of Economic and Financial Data. Royal Society, September (1760) DOI: /rsta COHEN, R. Signal Denoising Using Wavelets, Project Report. Israel Institute of Technology. February Retrieved from: < BRUCE, E., H. Lecture Notes on Nonparametrics. University of Wisconsin. Spring Retrieved from: < >. 6 Sub interval on the horizontal axis which cover range of the data. [357] Faculty of Economics, VŠB - TUO

365 Section S6: Finance and Accounting Appendix 1 Statistics for analysed data size min max mean std skew kurtosis ^FTSE ^IXIC AAPL MSFT Source: Own calculations Appendix 2 normality test (p-values) Skew Skewness test Kurtosis Kurtosis test Normality test GBM ^FTSE ^IXIC AAPL MSFT Source: Own calculations Appendix 3 data set fitting against probability distributions applying the Kolmogorov-Smirnov one sided test Name Sum of neg log p KS-test Sum of neg log likelihood # parameters alpha anglit beta exponweib norm exponpow gengamma gompertz johnsonsb Source: Own calculations 18 th International Scientific Conference [358] Faculty of Economics, VŠB - TUO

366 AVAILABILITY OF FOUNDATIONS ANNUAL REPORTS IN THE CZECH REPUBLIC Andrea Valentová School of Business Administration in Karviná/Silesian university in Opava Abstract The main objective of this paper is to prove whether there is some progress in publication of annual reports of Czech foundations. Their availability can be proved in the Collection of Documents, where annual reports shall be published. In the past, several researches took place and found out how many of foundations do fulfill this duty, but with quite different results. This article shows a conclusion of current research, which was aimed for years and matches current findings with previous results. Based on this comparison it can be said that there is almost no improvement and that less than one third of foundations meet their obligations regularly and more than a half of foundations do not submit their annual reports at all. Keywords: Non-profit organization, foundation, annual report, financial statements JEL: L31, M40 [359] Faculty of Economics, VŠB - TUO

367 Section S6: Finance and Accounting 1 Introduction The development of non-profit organizations in the Czech Republic started after the year 1989 but their transparency was not a subject of interest because of more reasons as a lack of concern when main focus was aimed to business entities. Also, their growth was faster than an evolution of their legal frame. Important was the year 1997 that changed rules for regulation of foundations. Afterwards, years 2000 and 2004 influenced the non-profit sector in general because a financial support was moved from the state level to regions and led to a higher supervision and the entry of the Czech Republic to European Union raised the standard for transparency as well (Bachman, 2014). Transparency of non-profit organizations became an interesting issue and was researched and described in various articles and reports apart from these mentioned later in this paper. For example Šplíchal (2007) published an analysis of information flow in public administration and associations where it is pointed out that it is not possible to determine how many associations prepare and publish annual reports from any available sources. Rohrbacher (2007) examined internet pages of 344 associations and found out that only 7% of them publish annual reports. Bachmann (2013) studied internet pages of non-profit organizations as well and according to his survey, only 17,3% of checked foundations published annual reports. When it comes to foundations, they have a specific role, because they should use their property and donations for beneficial use and that is why they have a duty to publish their annual report to protect public interest for public knowledge. This legal duty is valid also in other European countries (apart from France and the Netherlands) (Rosenmayer, 2006). However, there were no sanctions which would motivate foundations to publish their annual reports. Till end of the year 2013 The Register Court could fine foundation up to CZK only in case that the foundation did not submit its annual report after an appeal to do so. But the courts were so occupied, that they did not check whether the foundation published it. There were some cases when The Register Court asked for missing annual report, but till April 2005 there had not been any known case of penalization (Rosenmayer, 2006). The year 2014 and the Act no. 304/2013 Col., on public registers brought some news to this area. According to its paragraphs , the legal entity might receive a fine up to CZK if the subject does not submit prescribed documents. If the subject breaches this duty repeatedly or this behavior might have relevant consequence to other subjects, it might lead to start of cancellation of the legal entity. Another type of penalty may arise from the Act no. 563/1991 Col, on accounting. The paragraph 37 says that not publishing of financial statements and annual reports is considered as an offence and can be fined up to 3% of a value of assets. This penalty has been valid since 1 st January The aim of this paper is to find out whether there is some progress in terms of publishing annual reports by foundations. Foundations were chosen firstly because of possibility to compare current data about them with researches done in previous years and secondly, foundations have a duty to publish their annual reports publicly since 1998 and this fact facilitates the proving of an actual status. Available data covers the period of last eleven years which makes the comparison both interesting and considerable. The article is divided into three parts. The first part describes based on what preconditions this research was done and how was realized, i.e. what data were collected and 18 th International Scientific Conference [360] Faculty of Economics, VŠB - TUO

368 how they were evaluated and compared. The second part shows results and is finally followed by a conclusion that summarizes gained knowledge. 2 Research methods and data Several research methods were used for purpose of this paper. First of them was an analysis of former and current legal acts related to foundations and their annual reports, which was followed by a comparison of both approaches. During this second phase, which was already aimed on gaining data (primary research) and their evaluation (secondary research), empirical and statistical methods were used. The last third phase was carried on using general theoretical methods again. The main of them was a synthesis which enabled to express conclusions based on previous findings. Apart from this one also a comparison and generalization was used to achieve desired results (Široký, 2011). Further description of used methods is stated below in this paper. All of them were aimed at one target - to prove whether there was some progress in publication of annual reports of Czech foundations during last fourteen years or not. The first phase of the research was focused on an analysis of legal background which should determine rules for foundations. There are three main law acts that are connected directly to foundations and their annual reports and were examined for their content. The first one is a former Act no. 227/1997 Col., on foundations and endowment funds which was valid in its old version till end of year According to 24, foundation s yearly financial statements must be verified by an auditor. Paragraphs 25 and 26 say that the foundation has to prepare an annual report latest within six months after end of an assessed period (commonly a calendar year). This report has to be published by its assign to the Collection of Documents within 30 days after an approval by a board of directors and latest till end of following accounting period, even if it was not approved by the board. Financial statements are an enclosure to the annual report. The second one is the Act no. 89/2012, on Civil Code which is valid from January 1 st The 341 mentions that the financial statements must be verified by an auditor in case that the foundation s capital or a turnover exceeded limit of 5 mil. CZK in the last accounting period. This is a difference compared to previous state when all foundations had to have an audit. According to , a foundation has to prepare an annual report, which includes financial statements, latest within six months after end of a preceding accounting period. The conditions for its publishing remained the same as they were in the Act no. 227/1997 Col. The year 2016 brought an amendment to the Act no. 563/1991 Col., on accounting and this third legal acts influenced also the topic of foundations. These changes are related mainly to wording. Firstly, there is no more mention about The Commercial Register, only about Register which can vary for different type of organizations. Secondly, instead of the deadline defined as end of following accounting period, there is now a statement till twelve months from the balance sheet date of published financial statements. Temporary provisions also specify exact terms for these organizations which do not need an audit. The second phase started with decision regarding examined sample of foundations. Because it was not possible to determine a representative random sample of all foundations (the register does not enable to filter foundations for example according to a region or a turnover), it was decided to check all of them. The list of existing foundations was gained from the public register on a webpage which is an official server of Czech judiciary. Because every foundation has to [361] Faculty of Economics, VŠB - TUO

369 Section S6: Finance and Accounting have a word nadace in its name, all legal entities with a legal form of foundation and this above word in their name were filtered. In total 486 organizations were listed on 31 st December 2015, but the list included also organizations which were set up during the year 2015 (19 foundations) and these were excluded then, because they could not submit any annual report so far. After this correction, the final list contained 467 organizations and represented a main data set. Apart from this exception, also organizations set up during years 2013 (18 foundations) and 2014 (12 foundations) were checked only for respective years, if needed. The list includes also foundations that are now in the process of liquidation. Taking to consideration all these limits, following number of foundations was considered as obliged to publish their annual reports: for year foundations, for year foundations, for year foundations. These numbers do not match with official numbers of foundation released by the Czech Statistical Office. The reason is probably that data from the Czech Statistical Office were closed at the end of each year and some of foundations were erased in next years. The development of number of foundations since year 2005, based on statistical data, is described in the following table. Tab 1. Number of foundations in years Year Foundations Source: Czech Statistical Office (2015) In the next phase, which was focused already on an acquisition of data, foundations were checked for an availability of their annual reports in the Collection of Documents in years Apart from annual reports, also a publication of financial statements and auditor s reports were checked but these had rather a second-class significance. Methods used for this part of research were mainly method of measurement and an arithmetic mean. The availability of each document was marked either as 1 or 0 for availability/ unavailability. This availability was considered as an alternative statistical characteristic which can be measured. Based on the law, annual reports for year 2014 were supposed to be published till end of a following accounting period, which means till end of For simplification of the research, it is taken into consideration that the accounting period starts 1 st January and end on 31 st December. However this simplification fits almost all foundations, because there was only one of these which published annual reports and which had the accounting period defined differently. The research was held within last days of the year so it very likely that no more annual reports were submitted and that gained data present the current status credibly. The check was aimed at an availability of documents. But for example, a file called an annual report may involve all three types of information, i.e. an annual report, financial statements and an auditor s report. In another case an auditor s report included financial statements but an annual report was separate. Because an approach of each foundation is different, documents available in the register were examined for their presence, i. e. specific information which can be found. However, the research was not aimed on the content of documents, for example on the requested information which should be stated in the annual report. 18 th International Scientific Conference [362] Faculty of Economics, VŠB - TUO

370 The third and a last phase of the research contained two steps; firstly gained data were compared and evaluated within themselves and matched with results from previous researches and secondly, acquired results were judged and interpreted. To achieve desired results, general theoretical methods as a comparison (in relation to results of previous researches) and generalization (taking to consideration current situation of publishing documents in registers) were used. 3 Results Following chart shows development of number of foundations based on their list from the public register and number of foundations which published their financial statements and annual reports in years Fig. 1 Documents published in the register in years Financial statements Annual report Number of foundations Source: own adaptation The chart shows that less than a half of foundations submit their annual reports to the Collection of Documents. Despite the growing quantity of organizations, amount of these who published their financial statements and annual reports is decreasing. Interesting is a fact, that there are more financial statements submitted than annual reports. The financial statements shall be part of annual reports, so the fact that there are more of them means that some organizations submit only financial statements and do not add annual reports which should include another information. The table below describes absolute values and also percentage of submitted financial statements/annual reports compared to number of foundations which were supposed to publish them. Tab. 2 Published financial statements and annual reports in years Year Number of foundations Financial statements absolute value % of foundations 49% 44% 37% Annual absolute value report % of foundations 46% 42% 31% Source: own adaptation [363] Faculty of Economics, VŠB - TUO

371 Section S6: Finance and Accounting There is quite a big difference between years 2013 and 2014, when the quantity dropped from 44% to 37% for financial statements and from 42% to 31% for annual reports. Despite the fact that foundations should have submitted these documents till end of year 2015, not all of them have probably done it. Based on subjective impression, which arose during a realization of the research, foundations exceed the deadline and publish necessary documentation later than they should. Next chart displays how many foundations submitted their annual reports regularly for years , which of them did that twice or once and which do not do that at all. It is shown that 53% of foundations have not fulfilled their duty generally and only 28% of foundations did it for all these three years and in time, i.e. till end of year Fig. 2 Percentage of foundations which published their annual reports in years % 53% 7% 12% Annual report for three years Annual report for one year Source: own adaptation Annual report for two years No annual report The annual report shall include also an auditor s report in case that a foundation has to have an audit. However, for purpose of this research, this document was not deeply examined. There are two main reasons for that. Firstly, a mandatory audit was valid only till year 2013 so a comparison to year 2014 would not be meaningful. Secondly, foundations submit sometimes an auditor s report for financial statement and not for whole annual report. Depth check of each auditor s report would be demanding and it is not really essential for this research. However, only for a brief idea, taking to consideration limits of such information, the numbers are shown in an appendix to this article. Following table compares values which were recorded for years with years Data for years are taken from a study described in the article which was dealing with annual reports of non-profit organizations (Rosenmayer, 2006). This study took data from the register on 5 th March It is visible that there was no progress between the years, there is probably even a small decrease of submitted annual reports. Tab. 3 Number of foundations and published annual reports in years and Year Number of foundations absolute value Annual report % of foundations 34% 49% 48% 46% 42% 31% Source: own adaptation based on Rosenmayer, 2006, p th International Scientific Conference [364] Faculty of Economics, VŠB - TUO

372 Another study was aimed directly at foundations, but results of this research (Stránský, 2008) are quite different. This study examined annual reports for years not only for their availability but also content of the documents. This research includes list of various examined requirements and six of them are connected to presence of annual reports and financial statements in stated three years. The sample should have included foundations registered at courts on 28 th March However, a size of a sample is only 164 foundations and this is much lower number then is officially stated by the Czech Statistical Office. There were 302 foundations in year 2006, 2007 and 379 foundations in The research took place in 2008 to give foundations enough time to submit their documents. It was checked whether required document is available in stated year. Table below describes results of this research. Tab. 4 Percentage of foundations which submitted stated document Year Annual report 74% 80% 80% Financial statements 62% 76% 78% Source: own adaptation based on Stránský, 2008 According to these numbers, most of the foundations would fulfill their obligation almost every year and this finding is in a conflict with previous discoveries. Taking to consideration at least strange number of checked registered foundations, this result is probably not really trustworthy. However, to avoid possible poor judgement, findings of this paper can be compared also with general approach of organizations in the Czech Republic towards publishing their financial statements in the Collection of Documents. This research (Varvařovský 2012) investigated how many organizations submitted financial statements during years The term organizations means in this case business entities listed in the Commercial register and other legal entities listed in other public registers. Foundations were included in the division N. None of them has submitted financial statements in all stated years. The Collection of Documents was loaded with 46% of all financial statements which should be published by foundations. This number responds with results of this paper. Following chart shows shares of organizations based on the number of financial statements which they have published in the Collection of Documents. It is visible that 52% of organizations have not uploaded even one of their financial statements and only 9% have done it in all these years. [365] Faculty of Economics, VŠB - TUO

373 Section S6: Finance and Accounting Fig. 3 Percentage of organizations which published their financial statements in years % 52% 39% Conclusion all financial statements only part of financial statements no financial statements Source: Varvařovský 2012 Based on the data gained in previous survey and also data collected for years for this research, it can be said that the ratio of foundations, which publish their annual reports remains almost the same, it is still slightly below 50% and there was no improvement within more than ten years. Despite the fact that another research shows significantly higher number, it is much more likely that data gained in this paper are correct because they correspond with general state of publishing documents in the Collection of documents, as proves the research focused on all organizations in the Czech Republic. Due to the fact that this paper compares data from three following years , it shows that 53% of foundations had not published their annual reports at all, 19% of them did present them rather randomly and 28% of foundations presented them regularly. Also this finding responds with a general approach of Czech organizations towards publishing their documents in the Collection of Documents. The ratio annual reports/foundations for year 2014 is lower than for previous two years despite the fact that quantity of foundations grows. The reason might be the fact that foundations do not adhere to the law, which says that annual report must be submitted till end of following accounting period, in this case till December 31 st 2015 or they took already into consideration temporary provisions stated in the Act no. 563/1991 Col., on accounting. According to this provisions, organizations which do not have to have an audit and started their accounting period in the year 2014, can submit their financial statements and annual reports till 31 st March So if their documents are sent to the Collection of Documents during year 2016, the ration would increase then from 31% to range between 40% 50%. This assumption is supported with the fact that giving foundations more time for their duties leads to higher number of submitted annual reports. Another interesting point arises from comparison of a publishing of financial statement and annual reports. The quantity of financial statements is slightly higher than number of annual reports. The reason might be that foundations are not aware of necessity to publish annual report, or in their opinion financial statements meet the requirements of law and are sufficient. It is visible that there is a development of legislation related to foundations and their annual reports and it should lead to an improvement. Apart from these changes, which should 18 th International Scientific Conference [366] Faculty of Economics, VŠB - TUO

374 ensure a clarification and a simplification, there are also other possibilities how to increase number of annual reports submitted to the Collection of Documents. For example, Rosenmayer (2006) suggests changes in the system of providing subsidies and improve a system of sanctions. However, as also Varvařovský (2012) mentions, the courts do not provide the control in a sufficient way, they have also different approach in terms of consistency and last but not least they do not have sufficient legal instruments to claim these deficiencies. References Act no. 89/2012 Col., on Civil Code. [cit ]. Available at: < Act no. 227/1997 Col., on foundations and endowment funds. Wording from [cit ]. Available at: < Act no. 304/2013 Col., on public registers. [cit ]. Available at: < Act no. 563/1991 Col., on accounting. [cit ]. Available at: < BACHMANN, Pavel (2013). Webová transparentnost českých neziskových organizací. Sborník recenzovaných příspěvků: Hradecké ekonomické dny [cit ]. Available at: < BACHMANN, Pavel (2014). Transparentnost a veřejná prospěšnost českých neziskových organizací. [cit ]. Available at: < Časové řady počtu NI v S.15 zahrnutých do satelitního účtu podle právní formy (do roku 2013). Czech Statistical Office: Satellite account of non-profit organizations. [cit ]. Available at: < ROHRBACHER, Tomáš (2007). Rozbor webových stránek občanských sdružení; analýza problémů transparentnosti a návrh na její zlepšení. [cit ]. Available at: <http :// ROSENMAYER, Tomáš (2006). Koncepce zveřejňování výročních zpráv neziskovými organizacemi. Brno: Centrum pro výzkum neziskového sektoru, [cit ]. Available at: < STRÁNSKÝ, Jakub (2008). Transparentnost a výkaznictví v českých nadacích. [cit ]. Available at: < ŠPLÍCHAL, Josef (2007). Veřejná správa a občanská sdružení. Analýza informačních toků. [cit ]. Available at: ŠIROKÝ, J. a kolektiv (2011). Tvoříme a publikujeme odborné texty. Brno: Computer Press, a. s. ISBN [367] Faculty of Economics, VŠB - TUO

375 Section S6: Finance and Accounting VARVAŘOVSKÝ, Pavel (2012). Zpráva o šetření veřejného ochránce práv výzkum naplněnosti sbírky listin. [cit ]. Available at: < Appendix 1 - Documents published for the years Financial statements Auditor's report Annual report Number of foundations Source: own adaptation 18 th International Scientific Conference [368] Faculty of Economics, VŠB - TUO

376 Section S7 Public Economy and Administration Honorary Chairman: prof. Ing. Et Ing. Dušan Halásek, CSc. Guarantors: Ing. Eva Ardielli, Ph.D. Ing. Markéta Dolinová [369] Faculty of Economics, VŠB - TUO

377 Section S7: Public Economy and Administration 18 th International Scientific Conference [370] Faculty of Economics, VŠB - TUO

378 Abstract CYBERCRIME IN PUBLIC ADMINISTRATION Jiri Ardielli, Eva Ardielli, Jan Stankovič VŠB - Technical University of Ostrava, Faculty of Economics eva.ardielli@vsb.cz Tieto Czech s.r.o. jiri.ardielli@tieto.com Intergraph CS s. r. o. jan.stankovic@intergraph.com The paper deals with the theoretical question of cybercrime in its introduction. Development of emerging trends in the use of the Intranet / Internet and online technologies, the usage of new technologies and systems are the driving force behind the ever-increasing threats in IT. Health systems, intelligent energy, but also the whole concept of Czech e- Government currently poses a cyber-security risk. In the introduction the paper describes the legal standards in CR and to ensure cyber security in the CR. Cyber security law, national cybersecurity strategy, the establishment of a national centre of cyber security and others are concrete steps to ensure or mitigate threats in the form of cybercrime. Despite all these activities there are repeatedly documented the security incidents in IT. There are many different types of attacks, the list of specific cases are documented in the paper. Current statistics show continuing trend of threats. The paper then tries to analyse on the one hand the trend of increasing efforts to ensure cyber security and on the other hand the growing trend in the number of incidents and the growing threat of cybercrime. Keywords: Cybercrime, Public Administration, Cybersecurity JEL: H00, H11 [371] Faculty of Economics, VŠB - TUO

379 Section S7: Public Economy and Administration 1 Úvod Jak vyplývá ze Zprávy o stavu kybernetické bezpečnosti České republiky 2014 (Národní bezpečnostní úřad, 2015) vydané Národním centrem kybernetické bezpečnosti (NCKB), otevření NCKB jako součásti Národního bezpečnostního úřadu (NBÚ) a přijetí zákona č. 181/2014 Sb., o kybernetické bezpečnosti (Parlament ČR, 2014), byly dvě nejvýznamnější události roku 2014 na poli zajištění kybernetické bezpečnosti v České republice (ČR). ČR bude v nadcházejících letech vystavena mnoha kybernetickým bezpečnostním hrozbám a rizikům a národní sítě a systémy musí být za všech okolností vždy stabilní a bezpečné, jak je uvedeno v preambuli stěžejního dokumentu ČR nazvaného Národní strategie kybernetické bezpečnosti České republiky na období let 2015 až 2020 (NCKB, 2014). Významnými riziky jsou podle Strategie kybernetická špionáž, ať průmyslová, vojenská, politická či jiná, za kterou stále častěji stojí přímo vlády, potažmo bezpečnostní struktury konkrétního státu, působení organizovaného zločinu v kyberprostoru, hacktivismus (hacking k politickým účelům), záměrné šíření dezinformací za účelem dosažení politických a vojenských cílů, či v budoucnu i kyberterorismus. NBÚ, coby hlavní garant kybernetické bezpečnosti ČR, si jasně uvědomuje dynamiku nárůstu hrozeb přicházejících z šedé zóny. Vlády a bezpečnostní struktury cizích zemí, organizovaný zločin, velké hackerské organizace ti všichni dělají z internetu v polovině druhého desetiletí 21. století obdobu válečné země nikoho. Je to území, kde je dovoleno vše a kde hledisko konečného úspěchu ospravedlňuje jakékoliv počínání (Fér, 2015). Cílem je zhodnocení aktuálních bezpečnostních trendů informační kriminality v ČR a vyhodnocení časové řady bezpečnostních incidentů se stanovením odhadu. 2 Kybernetická bezpečnost v ČR Oblast kybernetické bezpečnosti nabývá neustále na svém významu a již nyní je jednou z určujících aspektů bezpečnostního prostředí ČR. Konkrétně pojem kybernetické bezpečnosti představuje v ČR souhrn organizačních, politických, právních, technických a vzdělávacích opatření a nástrojů směřujících k zajištění zabezpečeného, chráněného a odolného kyberprostoru v ČR, a to jak pro subjekty veřejného a soukromého sektoru, tak pro širokou českou veřejnost (Borovička, 2015). Kybernetická bezpečnost pomáhá identifikovat, hodnotit a řešit hrozby v kyberprostoru, snižovat kybernetická rizika a eliminovat dopady kybernetických útoků, informační kriminality, kyberterorismu a kybernetické špionáže ve smyslu posilování důvěrnosti, integrity a dostupnosti dat, systémů a dalších prvků informační a komunikační infrastruktury. 2.1 Organizační a koncepční zajištění kybernetické bezpečnosti v ČR Gestorem a národní autoritou v oblasti kybernetické bezpečnosti ČR byl v roce 2011 ustaven NBÚ. V rámci své činnosti pak NBÚ v roce 2014 v Brně oficiálně otevřel Národní centrum kybernetické bezpečnosti CERT (Computer Emergency Reponse Team), které má v řešení kybernetické bezpečnosti v ČR zásadní roli. NCKB tedy představuje organizační složku NBÚ a skládá se z vládního CERT (GovCERT.CZ) a Oddělení teoretické podpory vzdělávání a výzkumu (OTPVV). Pracovišti GovCERT.CZ náleží hlavní role ve sledování současných trendů v oblasti kyberbezpečnosti. Zabývá se technickými otázkami kybernetické bezpečnosti zahrnující řešení bezpečnostních incidentů subjektů spravujících důležité komunikační a 18 th International Scientific Conference [372] Faculty of Economics, VŠB - TUO

380 informační systémy pro stát, analýzu malware, sběr a vyhodnocování informací o kybernetických útocích a hrozbách atp. Oddělení vládní CERT plní zejména úkoly, jako jsou zajištění prevence před kybernetickými hrozbami a útoky proti subjektům kritické informační infrastruktury a orgánům veřejné správy a zajištění řešení a koordinaci řešení kybernetických bezpečnostních incidentů u subjektů kritické informační infrastruktury a orgánů veřejné správy (CSIRT, 2015). Po svém předchůdci v této funkci (Ministerstvu vnitra) NBÚ převzal Strategii kybernetické bezpečnosti ČR. Národní strategie kybernetické bezpečnosti České republiky je dokumentem, který deklaruje základní hodnoty, zájmy, přístupy, ambice a nástroje ČR při zajišťování své bezpečnosti a formuluje principy, na nichž je bezpečnostní politika ČR založena. V této strategii jsou definovány životní, strategické a další významné zájmy ČR, bezpečnostní prostředí ČR i popis bezpečnostního systému ČR. Bezpečnostní strategie ČR je tak základním dokumentem bezpečnostní politiky ČR, který ve svém textu na obecnější úrovni akcentuje samozřejmě i bezpečnost kybernetickou. Na tuto strategii pak navazují dílčí strategie a koncepce. V rámci zajišťování kybernetické bezpečnosti jsou nejdůležitější dvě hlavní navazující strategie/koncepce (Bagge a Pačka, 2014). Je to Bílá kniha o obraně (Ministerstvo obrany České republiky, 2011), která definuje v oblasti kybernetické obrany hlavní úkoly Ministerstva obrany a celonárodní Strategie pro oblast kybernetické bezpečnosti v České republice na období , kterou od nahrazuje Národní strategie kybernetické bezpečnosti na období let 2015 až Nová Strategie oproti minulé verzi, která operovala spíše v obecnějších konturách a snažila se především o základní vybudování prostředků, kapacit a legislativního/strategického rámce k zajištění kybernetické bezpečnosti, řeší problematiku kybernetické bezpečnosti mnohem více komplexně a systematicky. V současné době slouží jako výchozí dokument pro tvorbu navazujících právních předpisů, politik a standardů, směrnic a jiných doporučení v rámci ochrany a zabezpečení kyberprostoru v ČR. 2.2 Kybernetická kriminalita v trestním právu Masivní nástup internetu a komunikačních technologií obecně se významně odrazil v oblasti trestního práva. Informační kriminalitou je chápána trestná činnost, která je páchána v prostředí informačních technologií včetně počítačových sítí, kdy předmětem útoku je samotná oblast informačních technologií nebo je páchána tato kriminalita za výrazného využití informačních technologií, jakožto prostředku k jejímu páchání. Jedná se tedy o definici skupiny trestných činů, která v sobě zahrnuje určitý společný faktor popisující způsob spáchání. V současnosti se zejména jedná o zneužívání celosvětové počítačové sítě internet (Kuchařík, 2014). Základním mezinárodním dokumentem, který se úpravě trestní odpovědnosti za činy spáchané v souvislosti s kyberprostorem věnuje, je Úmluva o počítačové kriminalitě, 104/2013 sb. m. s. (Parlament ČR, 2013), na evropské úrovni potom směrnice 2013/40/ES o útocích na informační systémy (Evropský parlament a Rada, 2013), která z Úmluvy přímo vychází. Úmluva rozeznává tři typy trestných činů souvisejících s počítačovou kriminalitou. Prvním typem jsou trestné činy proti důvěrnosti, integritě a použitelnosti počítačových dat a systémů. Ty jsou v českém právu promítnuty v 230 a 231 trestního zákoníku (Parlament ČR, 2009). Jedná se například o neoprávněný přístup k počítačovému systému (hackování), odposlech (sledování komunikace v době, kdy pobíhá) a zasahování do dat a systému (jejich změny, poškození). Trestná je rovněž výroba, opatření nebo zpřístupnění virů a dalších zařízení (ať už hardware, nebo software), vytvořených k získání neoprávněnému přístupu do počítačového [373] Faculty of Economics, VŠB - TUO

381 Section S7: Public Economy and Administration systému nebo sítě elektronických komunikací. Druhou oblastí trestných činů, které Úmluva uvádí, jsou padělání a podvod. Třetí oblast je zaměřena přímo na obsah komunikací. Specificky uvádí trestnost výroby a šíření dětské pornografie a trestnost porušování práva duševního vlastnictví (pirátství). Pirátství je jediný trestný čin související s obsahem, který se do úmluvy jmenovitě dostal vedle dětské pornografie, o jejímž negativním efektu a nutnosti potírání nelze pochybovat (Hladká a Fousek, 2014). Počítačová kriminalita se často vyšetřuje pomocí provozních a lokalizačních údajů, které povinně ze zákona uchovávají telekomunikační operátoři ( 97 zákona o elektronických komunikacích (Parlament ČR, 2005)) a poskytují je vyšetřovatelům, kteří z nich dokáží určit, na jaké webové stránky podezřelý přistupoval, s kým komunikoval, a kde se u toho fyzicky nacházel. Aby mohla být počítačová kriminalita úspěšně odhalena a hlavně stíhána, je zapotřebí intenzivní mezinárodní spolupráce. Orgány činné v trestním řízení různých států si vzájemně pomáhají, a to jak v situacích sběru důkazů, tak zadržování a následném vydávání osob. V ČR od 1. ledna 2015 nabyl účinnosti zákon č. 181 Sb., o kybernetické bezpečnosti (ZOKB). ZOKB je zásadním krokem v české legislativě, vedoucím k vyšší bezpečnosti v digitálním prostředí státních institucí i firem. Zákon významně zvyšuje standard bezpečnosti a dostupnosti služeb, které jsou v kyberprostoru občanům poskytovány (Krátký, 2014). ZOKB stanovuje především pravidla pro subjekty, jejichž systémy, sítě či služby mají zásadní význam pro fungování státu nebo informační společnosti. Jde o tzv. kritickou informační infrastrukturu a dále významné informační systémy, které jsou spravovány orgány veřejné moci a u kterých by narušení bezpečnosti informací mohlo ohrozit nebo výrazně omezit činnosti veřejné správy. Uvedeným subjektům stanovuje zákon nové povinnosti, především povinnost provozovat systémy detekující kybernetické bezpečnostní události a incidenty. Narušení bezpečnosti informací v provozovaných systémech musejí hlásit vládnímu centru CERT (Kniewald, 2014). 2.3 Národní strategie kybernetické bezpečnosti ČR pro období února 2015 ředitel NBÚ předložil Vládě ČR ke schválení novou Národní strategii kybernetické bezpečnosti České republiky na období let 2015 až Schválená Strategie navazuje na původní strategii pro oblast kybernetické bezpečnosti na období 2012 až Obsahově tato Strategie představuje ucelený soubor opatření směřujících k dosažení co nejvyšší míry kybernetické bezpečnosti v ČR a za tímto účelem definuje vizi ČR v této oblasti, ke které chce směřovat. Zároveň jsou ve Strategii stanoveny základní principy, které bude ČR následovat a dodržovat při zajišťování kybernetické bezpečnosti. Strategie také definuje konkrétní výzvy a problémy na poli kybernetické bezpečnosti jak pro ČR, tak i pro mezinárodní prostředí, v jehož rámci se ČR nachází, a kterým musí čelit. Stěžejní část Strategie pak představují hlavní cíle, kterých bude v následujících pěti letech dosaženo, a které jsou rozděleny do 8 prioritních oblastí: Zajištění efektivity a posilování všech struktur, procesů a spolupráce při zajišťování kybernetické bezpečnosti Aktivní mezinárodní spolupráce Ochrana národní KII a VIS Spolupráce se soukromým sektorem Výzkum a vývoj / Spotřebitelská důvěra Podpora vzdělávání, osvěta a rozvoj informační společnosti 18 th International Scientific Conference [374] Faculty of Economics, VŠB - TUO

382 Podpora rozvoje schopností Policie ČR vyšetřovat a postihovat informační kriminalitu Právní úprava pro kybernetickou bezpečnost (vytváření právního rámce). Účast na tvorbě a implementaci evropských a mezinárodních pravidel. Na strategii navazuje Akční plán k Národní strategii kybernetické bezpečnosti České republiky na období let 2015 až 2020, který definuje již konkrétní kroky, stanoví u nich zodpovědnost, termíny jejich plnění a kontrolu. Z hlediska struktury a členění samotného textu Strategie je nejprve představena vize ČR pro oblast kybernetické bezpečnosti, přesahující časový rámec této Strategie ( ), a následně jsou definovány základní principy, které stát následuje při zajišťování kybernetické bezpečnosti v ČR: Ochrana základních lidských práv a svobod a principů demokratického právního státu Komplexní přístup ke kybernetické bezpečnosti založený na principu subsidiarity a spolupráce Budování důvěry a spolupráce mezi veřejným a soukromým sektorem a občanskou společností Rozvoj kapacit k zajišťování kybernetické bezpečnosti. Na tuto první obecnější část navazuje kapitola o konkrétních výzvách na poli kybernetické bezpečnosti jak pro ČR, tak i pro mezinárodní prostředí, v jehož rámci se ČR nachází. Závěrem jsou představeny hlavní strategické cíle, které těmto výzvám čelí a ze kterých vychází konkrétní Akční plán kybernetické bezpečnosti České republiky na období let 2015 až Ve Strategii je definováno 19 výzev, které ČR identifikuje v současné době jako zásadní. Jedná se o problémy a trendy, kterým ČR a její občané čelí, a na které musí stát určitým způsobem (pomocí stanovení hlavních cílů a kroků v Akčním plánu) reagovat. 3 Metodický postup, metody a data Pro analýzu aktuálních bezpečnostních incidentů a počtu incidentů byly využity roční zprávy z let publikované Ministerstvem vnitra ČR (MVČR, ), které popisují informační kriminalitu. Dalším zdrojem analýzy jsou měsíční výkazy bezpečnostních incidentů, které zveřejňuje NCKB, a to za období Výsledky výzkumu byly zjištěny metodou trendové analýzy a analýzy časových řad. Pro evaluaci aktuálních bezpečnostních trendů byly sledovány a zmapovány současné a nově vznikající trendy v oblasti on-line síťových technologií, které mají dopad na veřejnou správu. Vycházelo se ze zdrojů renomovaných společností, jako jsou Gartner (Gartner, 2015) nebo IEEE Computer Society (IEEE, 2015). Zde proběhla systematizace jednotlivých trendů, jejich chápání v širších souvislostech a následně kategorizace a výběr klíčových trendů s ohledem na veřejnou správu. [375] Faculty of Economics, VŠB - TUO

383 Section S7: Public Economy and Administration 4 Výstupy výzkumu 4.1 Analýza aktuálních bezpečnostních trendů ve veřejné správě 1. Rostoucí objemy dat (Big data) a problematika správy a zabezpečení takového množství dat Big Data, tedy generování datových sad, jejichž jak komplexnost, tak objem jsou exponenciálně rostoucí, jejich analýzy, archivace a sdílení, jsou jedním z velkých problémů 21. století. Ochrana a zabezpečení dat je pro ČR velmi důležité, a to především těch, která jsou záležitostí veřejného zájmu. Ve veřejné i soukromé sféře narůstá množství dat, se kterými se pracuje a která je zapotřebí nadále skladovat. Začaly se proto využívat nové formy ukládání dat, např. cloudová úložiště. Zvýšené používání těchto online služeb a cloudů však vede mnohdy k netransparentnímu řešení zabezpečení, jehož důvěryhodnost je minimálně sporná. 2. Diverzita mobilních zařízení ( bring your own device (BYOD)) Významnou vnitřní hrozbou je znepokojující trend rostoucí akceptace modelu přineste vlastní zařízení" (BYOD). Počítačoví zločinci v rostoucí míře tento trend využijí, aby pronikli do cílových společností (nejprve infikují osobní zařízení zaměstnanců, kteří nezavedli přísná bezpečnostní opatření, a pak jejich prostřednictvím nasadí trojského koně, který infikuje sítě). Politiky na využití hardware vlastněné zaměstnanci musí být důkladně přezkoumány a tam, kde je to nutné, aktualizované a rozšířené. 3. Bezpečnost cloudu a soukromí Útoky na cloudové služby nabírají na intenzitě, očekává se veliké narušení bezpečnosti v cloudu v blízké budoucnosti. V současnosti podle IBM tři čtvrtiny z narušení bezpečnosti trvají dny, týdny nebo dokonce měsíce, než byly objeveny, a tak výrazně zvyšují poškození způsobené útočníky. 4. Nutnost sledování datového pohybu uvnitř organizace Behaviorální analytické technologie umožňují podnikům (firmám, institucím) sledovat uživatele v rámci firmy i koncové uživatele. To jim může přinášet upozornění na podezřelé chování, které by mohlo být krádeží dat nebo napadení prostřednictvím škodlivého software. 5. Útoky s cílem ničit Některé ideologicky vyprofilované skupiny hacktivistů avizují, že se budou i nadále pokoušet o destruktivní útoky proti zájmům určitých společností či veřejných institucí. 6. Bezpečnostní rizika spjatá s elektronizací veřejné správy (egovernment) Např. elektronický zadávací proces s sebou ponese nová rizika, která mohou ohrozit důvěryhodnost zadávacího řízení či bezpečnostní rizika související se skutečností, že elektronické nástroje pro zadávání veřejných zakázek jsou napojeny na veřejné sítě. 4.2 Trendy informační kriminality Trendy informační kriminality byly vyvozeny z ročních zpráv publikovaných v letech 2011 až 2015, které jsou vydávány každoročně Ministerstvem vnitra ČR, odborem bezpečnostní politiky. Každá Zpráva o situaci v oblasti vnitřní bezpečnosti a veřejného pořádku na území České republiky v roce 2011 (až 2015) popisuje mj. informační kriminalitu a kybernetickou bezpečnost za předešlý rok, tedy za období 2010 až Kromě roku 2010 jsou ve všech zprávách kvantifikovány údaje o informační kriminalitě. V letech 2010 a 2011 byly nejčastější projevy této kriminality shodné, a řadilo se mezi ně zejména porušování autorských práv, šíření extremistické a teroristické propagandy, šíření zakázané pornografie, podvodných jednání, výhrůžek, vydírání, šíření poplašných zpráv, pomluv a útoků na informační systémy a 18 th International Scientific Conference [376] Faculty of Economics, VŠB - TUO

384 Počet případů MEKON 2016 data. V roce 2012 přibyl stalking. V roce 2013 a 2014 se jednalo shodně o porušování autorských práv, výhrůžky, vydírání a podvodná jednání, kde je zaznamenáván neustálý nárůst. Rovněž tak byl patrný nárůst detekce trestné činnosti spočívající v neoprávněných manipulacích s daty. Co se týká počtu případů, tak pro rok 2010 nebyly publikovány. V roce 2011 evidovala Policie ČR celkem 1502 trestných činů spáchaných internetem nebo ostatními počítačovými sítěmi. V roce 2012 to bylo 2195 (+693, +46,1 %) trestných činů a v roce 2013 bylo evidováno 3108 (+913, +41,6 %) trestných činů. V roce 2014 byla informační kriminalita stále na vzestupu, bylo řešeno případů (+40 %). Lineární spojnice trendu s koeficientem determinace 0,98 odhaduje 5151 případů pro rok 2015, viz figure Fig. 1 Trend informační kriminality v letech 2011 až y = 945,1x + 425,5 R² = 0, Rok 5151 (odhad) Zdroj: Vlastní zpracování na základě dat z ročních zpráv MVČR ( ). Kromě dat sledovaných MVČR byla také zpracována data kybernetických incidentů z NCKB, a to za roky 2013 až Vycházelo se jednak z ročních zpráv - Zpráva o stavu kybernetické bezpečnosti České republiky, dostupných pro rok 2013 a 2014 (NBÚ, 2014), jednak z měsíčních výkazů uveřejněných v bulletinu - Bezpečnostní incidenty, dostupné pro roky 2014 a 2015 (NCKB, ). V obou ročních zprávách jsou sledovány počty požadavků (100; 81), a ve správě z r také počty incident reportů (791). V měsíčně vydávaném bulletinu Bezpečnostní incidenty jsou popsány jednotlivé incidenty v daném měsíci, viz figure 2. Suma incidentů za rok 2014 činí 616, a za rok 2015 to je 770 incidentů. Až polynomické funkce 4. řádu s uspokojivým koeficientem determinace 0,61 odhaluje mírně rostoucí trend pro další období. [377] Faculty of Economics, VŠB - TUO

385 Section S7: Public Economy and Administration Počet bezpečnostníc incidenůt Fig. 2 Trend bezpečnostních incidentů v letech 2014 až 2015 y = 0,0014x 4-0,0935x 3 + 2,1428x 2-18,327x + 94,726 R² = 0, Zdroj: Vlastní zpracování na základě dat bezpečnostních incidentů z NCKB ( ). 5 Diskuse dosažených výsledků Jak vyplynulo z analýzy vývojových trendů v oblasti kyberkriminality a bezpečnostních rizik, v budoucnu se předpokládá, že s nárůstem počtu zařízení užívajících počítačové technologie a jejich síťového propojování bude narůstat možnost zneužívání. Zároveň lze očekávat nárůst sofistikovanosti útoků. Lze tedy shrnout, že do budoucna se lze obávat výraznějších útoků a díky rozšiřování moderních technologií bude možné způsobit mnohem větší škody. To odpovídá výzkumům odborníků z této oblasti, kteří předvídají i riziko kyberválek, tedy konfliktů vedených skrze počítačové sítě, viz Singer a Friedman (2014), Kaiser (2015). Ta může být vedena jednotlivými státy či jejich bezpečnostními službami (v této souvislosti byl např. útok v Estonsku připisován zkoušce účinnosti kyberzbraní NATO). Z tohoto pohledu existuje reálná možnost výskytu obdobného útoku jako v Estonsku i např. v České republice, jak upozorňuje Herzog (2011). Samotný NBÚ v dokumentu Národní strategie konstatuje nedostatečnou důvěru veřejnosti ve stát a jejich bezpečnostní aparáty. Nepříliš pozitivně hodnotí NBÚ i e-government, jehož služby a aplikace poskytované občanům a soukromým podnikům označuje za značná kybernetická bezpečnostní rizika. ČR ke svému zabezpečení využívá technologie používané i dalšími státy. Proto může sloužit útočníkům jako testovací objekt před samotným útokem na spojence nebo jiné státy s větším strategickým významem, užívající stejné technologie a zabezpečovací mechanismy a procesy, jak uvádí NCKB (2014). Tomu nasvědčuje i fakt, že množství kybernetických útoků stabilně narůstá. Z vlastní analýzy sledovaných případů internetové kriminality vyplynulo, že mezi nejvýraznější projevy počítačové kriminality patří podvody a zpronevěry, padělání, elektronická msta a pomluvy, hoaxes, warez, průnik do systému, počítačové bankovní krádeže (Phishing, Pharming, IP spoofing). To dokládají i studie jiných autorů, viz Bagge a Pačka (2014). Na tomto místě je třeba připomenout, že povinnost hlásit kyberútok je ze zákona (ZOKB) povinná a za její nedodržení hrozí pokuty, viz Parlament ČR (2014). Ochrana a zabezpečení dat je pro Českou republiku velmi důležité, a to především těch, která jsou záležitostí veřejného zájmu. Ve veřejné i soukromé sféře narůstá množství dat, se kterými se pracuje a která je zapotřebí nadále skladovat. Začaly se proto využívat nové formy 18 th International Scientific Conference [378] Faculty of Economics, VŠB - TUO

386 ukládání dat, např. cloudová úložiště. Zvýšené používání těchto online služeb a cloudů však vede mnohdy k netransparentnímu řešení zabezpečení, jehož důvěryhodnost je minimálně sporná, jak uvádí NCKB (2014). Závěr Zajištění kybernetické bezpečnosti státu je jednou z klíčových výzev současné doby. Závislost veřejného a soukromého sektoru na informačních a komunikačních technologiích se stává stále zřetelnější. Sdílení a ochrana informací je v dnešní době zásadní pro ochranu zájmů státu a jeho obyvatel v oblasti bezpečnosti, ekonomiky a hospodářství. Zatímco široká veřejnost se nejvíce obává finančních ztrát či ztráty svých dat a zneužití osobních údajů, realita celé problematiky kybernetické bezpečnosti je mnohem rozsáhlejší. Riziko v současnosti představují nejen velmi frekventované kybernetické útoky prováděné za účelem např. ekonomického prospěchu, ale i případy narušení bezpečnosti a integrity sítí způsobené nezáměrně, např. selháním lidského faktoru, živelnou pohromou apod. Stát musí být proto schopen zajistit účinnou reakci na všechny současné i budoucí výzvy v prostředí neustále se měnících kybernetických hrozeb, které mohou z dynamicky se vyvíjejícího kyberprostoru přicházet a garantovat tak zabezpečený a důvěryhodný kyberprostor. Strategie národní kybernetické bezpečnosti ČR znamená výraznou změnu v pojetí boje o zachování kybernetické bezpečnosti českého informačního prostředí. Česká republika, jakožto moderní středoevropská země a aktivní člen Evropské unie, Severoatlantické aliance, Organizace spojených národů a dalších mezinárodních organizací, bude v nejbližších letech aspirovat na přední postavení v oblasti kybernetické bezpečnosti, a to jak v rámci svého regionu, tak i celé Evropy. Reference BAGGE, Daniel and Roman PAČKA (2014). Kybernetický prostor viděn ze zahraničí: Národní strategie kybernetické bezpečnosti České republiky. Sborník Evropského měsíce kybernetické bezpečnosti Praha: Národní centrum bezpečnějšího internetu, pp 8. BOROVIČKA, Václav (2015). Legislativa ČR v oblasti kybernetické bezpečnosti. Brno: AFCEA, May 2015, pp 31. CSIRT (2015). Zákon o kybernetické bezpečnosti. Available at: < Evropský parlament a Rada (2013). Směrnice o útocích na informační systémy. Available at: < FÉR, Ondřej (2015). Česko chce hrát prim v boji o kybernetickou bezpečnost, zatím ale zaostává. Available at: < Gartner (2015): Gartner Identifies the Top 10 Strategic Technology Trends for Available at: < HLADKÁ, Eva and Jan FOUSEK (2014). Základy IT gramotnosti. Available at: < [379] Faculty of Economics, VŠB - TUO

387 Section S7: Public Economy and Administration HERZOG, Stephen (2011). Revisiting the Estonian Cyber Attacks: Digital Threats and Multinational Responses. Journal of Strategic Security 4, no. 2, ISSN: IEEE (2015): Top Technology Trends for Available at: < KAISER, Robert (2015). The birth of cyberwar. Political Geography 46. Elsevier ISSN: KNIEWALD, Karol (2014). Zákon o kybernetické bezpečnosti přinese nové nároky na vzdělávání odborníků. Národní pojištění. Praha: Ministerstvo práce a sociálních věcí ČR. 8-9/2014. ISSN KRÁTKÝ, Pavel (2014). Zákon o kybernetické bezpečnosti v praxi. IT Systems. Brno: CCB, s. r. o., September ISSN X. KUCHAŘÍK, Karel (2014). Aktuální trendy informační kriminality v rámci šetřených případů PČR. Sborník Evropského měsíce kybernetické bezpečnosti Praha: Národní centrum bezpečnějšího internetu, pp 4. Ministerstvo obrany České republiky (2011). Bílá kniha o obraně. Tiskárny Havlíčkův Brod. ISBN Národní bezpečnostní úřad (2015). Zpráva o stavu kybernetické bezpečnosti České republiky Available at: < Národní centrum kybernetické bezpečnosti ( ). Bezpečnostní incidenty. Available at: < Národní centrum kybernetické bezpečnosti (2014). Národní strategie kybernetické bezpečnosti České republiky na období let 2015 až Available at: < Parlament ČR (2005). Zákon o elektronických komunikacích. Available at: < Parlament ČR (2009). Zákon trestní zákoník. Available at: < Parlament ČR (2013). Úmluva o počítačové kriminalitě. Available at: < Parlament ČR (2014). Zákon č. 181/2014 Sb. o kybernetické bezpečnosti. Available at: < SINGER, W. Peter and Allan FRIEDMAN (2014). Cybersecurity and Cyberwar: What Everyone Needs to Know. Oxford University Press. ISBN MVČR ( ). Zpráva o situaci v oblasti vnitřní bezpečnosti a veřejného pořádku na území České republiky v roce. MVČR, Praha. 18 th International Scientific Conference [380] Faculty of Economics, VŠB - TUO

388 RELATION OF THE E-GOVERNMENT DEVELOPMENT AND PUBLIC ADMINISTRATION MATURITY IN EU COUNTRIES 1 Eva Ardielli, Roman Vavrek VSB Technical University of Ostrava, Sokolská 33, Ostrava, Czech Republic eva.ardielli@vsb.cz University of Prešov, 17. Novembra 15, Prešov, Slovakia roman.vavrek@yahoo.com Abstract This paper deals with the evaluation of e-government state in the European Union countries. The goal of the paper is to assess the relation between e-government development and public administration maturity. There are compared the results of e-government evaluation model using multiple criteria decision making methods with the WGI index developed by World Bank to measuring the maturity of public administration worldwide. The purpose of the submitted research study is to identify the influence of the selected indicators on the e- government development by usage of correlation and regression analysis. Keywords: E-government, evaluation, public sector, European Union JEL: H11, H83 1 The research is due to the support provided by the project SGS VŠB-TUO SP2016/80. All support is greatly acknowledged. [381] Faculty of Economics, VŠB - TUO

389 Section S7: Public Economy and Administration 1 Introduction E-government is one of the priority trends of public administration modernization in the EU countries as stated by Khosrow-Pour (2005), European Commission (2014) and West (2004). Interpretation of the term e-government is quite broad and divergent. The general definition describes e-government as the use of information and communication technologies (ICT) in a way of government transformation for the purpose of increasing availability, effectiveness and accountability (United Nations, 2014). As stated by Lněnička (2015), in accordance to the trend of cost savings in the public sector, e-government became one of the possible options how to operate more efficiently, effectively and transparently, to provide better, cheaper and faster services and open data to the public and to facilitate the participation of citizens and businesses in the governance. The paper deals with the evaluation possibilities of the e-government state, because of the importance of e-government as a tool of progressive modernization of public administration. The goal of the presented research is to compare the current state of e-government in the European Union on the basis of e-government indicators and on the assessment of the public administration indicators described and monitored by World Bank (World Bank, 2014). The goal of the research is supported by the research question: Countries with higher level of public administration have also the higher level of e-government. To verify the research question the hypothesis was determined which is tested in the empirical part of the paper. H1: There was a statistically significant correlation between the level of public administration (e-government index) and the level of e-government (Good Governance Index). 2 Problem formulation and research methodology Since the development of e-government is a continuous process of improvement, it requires continuous evaluation and updating framework using modern computing technologies and platforms (Máchová, 2015). A large amount of research has been investigated into monitoring, evaluating and benchmarking of e-government systems (Torres, Pina and Royo, 2005). Thus, with the rapid e-government development, it becomes critical to investigated, redefine, restructure and also reweight the related e-government development frameworks and indices, as stated by Rorissa, Demissie and Pardo (2011) or United Nations (2014). There are a number of indexes describing e-government development. Each model measures how ready a society or economy is to benefit from ICT. However, the range of tools uses widely varying definitions and different methods for measurement (Mohammed and Ibrahim, 2013). E-government has been monitored as a part of the activities of many organizations. Approaches to e-government monitoring differ considerably across organizations, for example Eurostat (2013) processes and evaluates data in the field of e-government by indicators measuring the interaction of citizens and businesses with public administration. The OECD has been involved in monitoring of the usage of ICT in EU member countries, but e-government as a specific area is not measured here. OECD also deals with economic analysis of e-government, see OECD (2006), focusing on identification of the e-government impacts in terms of costs and benefits comparison. In contrary European Commission's approach to e-government evaluation is connected with the effectiveness evaluation of European Information Policy (European Commission, 2014). This activity is based on the obligations of the European institutions. 18 th International Scientific Conference [382] Faculty of Economics, VŠB - TUO

390 For the purpose of European Information Policy evaluation, there was designed the evaluation framework of basic e-services by the organization Capgemini (Capgemini, 2007). These e-services are evaluated annually in the EU. The evaluation of selected aspects of e- government is at the international level also dealt with benchmarking of United Nations (UN). There is evaluated the practice and progress of UN member countries in e-government. UN (UNPACS, 2014) deal with the evaluation of e-government on the basis of the annual evaluation of egovernment Readiness index and E-participation index. In contrast, on the distinction of different levels of overall maturity scores of e-services is based the evaluation of the organization Accenture from 2000, see Accenture (2000). In the presented paper the attention is paid to e-government indicators monitored by international institutions (United Nations - UN, European Union and Eurostat) using one of the multiple criteria decision making methods - TOPSIS method (The Technique for Order Preference by Similarity to Ideal Solution). TOPSIS is one of the methods of multi-criteria evaluation of alternatives. According to Shih, Shyur and Lee (2007) or Bhutia and Phipon (2012), the aim of the methods of multi-criteria evaluation of alternatives is to determine the ranking of individual variants in terms of selected criteria, wherein the variant with the best ranking represents the best compromise variant. TOPSIS method is based on the selection of variant that is closest to the ideal variant and furthest from baseline variant. It is assumed the maximizing character of criteria. Application of TOPSIS method is described in Yoon and Hwang (1995) and it consists of 7 steps: - Creation of the criteria data matrix, - creation of the normalized data matrix, - creation of the weight normalized data matrix, - determination of the ideal and basal variant relative to the matrix values, - distance calculation of variants from the ideal variant, respectively basal variant, - calculation of the relative distance indicator of variants from basal variant and - creation of the ranking of EU countries. The research is based on data set across multiple data sources. These are egovernment Benchmark study from 2014, see European Commission (2014), data processed by Eurostat, see Eurostat (2013) and data managed by UN, see UNPACS (2014). Evaluated data describe the state of e-government in the year In the research there was selected the final list of variants (the EU-28 countries) and criteria (9 e-government indicators.) The selected e- government indicators (i1 i9) included 3 types of indexes: - Indexes monitored by European Commission: User Centric Government (i1), Transparent Government (i2), Citizen Mobility (i3), Business Mobility (i4) and Key Enablers (i5), - indexes monitored by UN: Online Service Index (i6), E-Participation Index (i7) and - indexes monitored by Eurostat: Individuals Using Internet (i8) and Enterprises Using Internet (i9). Based on the results of TOPSIS method was possible to determine ranking of EU countries in terms of the functioning of e-government in the year 2013, see Fig.1. The detailed calculations are processed in Ardielli and Halásková (2015). In Fig. 1, there are presented also the averages of different EU country groups (EU-28, EU-25, EU-15 and EU-10 average). [383] Faculty of Economics, VŠB - TUO

391 0,1 0,7 0,7 0,7 0,7 0,6 0,6 0,6 0,6 0,6 0,6 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,5 0,4 0,4 0,4 0,4 0,4 0,3 0,3 0,3 0,3 0,2 0,2 0,2 MEKON 2016 Section S7: Public Economy and Administration Assessment of the state of e-government in the EU countries in 2013 showed that on the best place ranked Estonia and the Nordic countries - Finland and Sweden, while the worst e- government state was detected in Croatia, Bulgaria and Romania. The results obtained in own research of e-government development in EU countries largely reflect current results obtained on the basis of international benchmarking activities of major international institutions such as the World Economic Forum, see World Economic Forum (2013), or the European Commission, see European Commission (2014) and other studies, for example Kuncová and Doucek (2013). Fig. 2 Evaluation of e-government state in the EU by TOPSIS method (2013) Relative distance indicator c i 1,0 0,9 0,8 0,7 0,6 0,5 0,4 0,3 0,2 0,1 0,0 EU countries Source: Own calculations based upon data from European Commission (2014), Eurostat (2013) and UNPACS (2014). The goal of the presented paper is to demonstrate the relationship between the e- government state and public administration maturity. In the analyses are used the results obtained by TOPSIS method to demonstrate the state of e-government in EU countries and the data provided by World Bank, see World Bank (2014). According to Mohammed and Ibrahim (2013) world e-government rankings are increasingly important as they guide countries focus of their efforts. The e-government rankings are in a process of maturation in that direction, moving from purely measuring web sites to assessing use and government qualities. Also the relation between governance in the country and e-government maturity was examined by more authors, for example Krishnan et al. (2013), Mohammed and Ibrahim (2013) or Grönlund (2011). Currently, there is in the field of public affairs administration significantly promoted the concept of Good Governance. Good governance is the designation for high-quality and properly functioning public administration with an integrated element of subsidiarity, allowing for the participation of the citizens and respecting democratic values and the rule of contemporary modern state. The the success in implementation of this concept in the countries indices the quality of public administration functioning and overall maturity public administration in the state, as specified by Klenk and Nullmeier (2003), Kooiman (2003) or Zanger (2000). To evaluate the state of public administration maturity in EU countries there was used the approach of the World Bank in our research. The World Bank has been collecting data about 18 th International Scientific Conference [384] Faculty of Economics, VŠB - TUO

392 Composite index of Good Governance ( ) 1,85 1,80 1,78 1,70 1,68 1,53 1,47 1,42 1,40 1,37 1,32 1,16 1,16 1,14 1,08 1,04 1,00 0,96 0,87 0,86 0,85 0,84 0,83 0,81 0,71 0,70 0,65 0,50 0,43 0,31 0,14 0,12 MEKON 2016 Good Governance for the broad international comparison since 1996 and currently they have been monitored annually. It processes indicators of governance for 215 economies of the world, closer UNPACS (2014). Good Governance is monitored on the basis of six aggregate indicators, so called WGI (Worldwide governance indicators): Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. Each of the aggregate indicators becomes normalized values in the interval from -2.5 (worst result) to 2.5 (best result). For the purpose of the dependence investigation the state of public administration maturity in EU countries was determined on the basis of the above mentioned aggregate indicators as the arithmetical average, see (1). n i=1 x i (1) x = 1 (x n 1 + x x n ) = 1 n Where x is the composite index of Good Governance, n is the number of aggregate indicators and xi are the results of individual aggregate indicators. Fig. 2 summarizes the state of public administration maturity in the EU in the year There are also included the results of selected EU country groups (the EU-15, EU-25, EU-28 and EU-10 countries). The obtained results show that the top ranked countries in EU are the Nordic countries: Finland, Sweden and Denmark. On the contrary, the worst score was reached by Greece, Romania and Bulgaria. Fig. 2 State of public administration maturity in the EU countries (2013) 2,50 2,25 2,00 1,75 1,50 1,25 1,00 0,75 0,50 0,25 0,00 The EU countries Source: Own calculations based upon data from World Bank (2014) This above mentioned outputs of own research were used as input data for regression analysis examining the correlation between the maturity of public administration and e- government state. The relationship between variables is tested by correlation analysis and regression analysis. Firstly is tested normal distribution of each variable by Shapiro-Wilk test ( u i x i ) 2 W = u 2 i (x i x ) 2 with: u i constant x i value of i-th statistical unit [385] Faculty of Economics, VŠB - TUO

393 Section S7: Public Economy and Administration x average of variable Linear correlation between TOPSIS evaluation of e-goverment state and Index of Good Governance is tested by Pearson correlation coefficient of Kendall rank coefficient (depends on normal distribution of each variable). Estimation of constant and regression coefficient is realized by Method of Least Squares with main idea is described in further formula n (y i y ) 2 i = e 2 i min i=1 n i=1 with: y i measured value y i estimated value e i random error (residue) Model suitability is assessed by coefficient of determination which is a number that indicates how well data fit a statistical model. R 2 = n i=1 (y i y i) 2 (y i y i) 2 n i=1 with: y i - measured value y i - estimated value y i average value The data were processed in program MS Excel and in statistical program SAS. 3 Results and interpretation The obtained results of e-government state in EU countries in the year 2013 are analyzed in the regression model to assess the relation between the state of public administration and e- government development in EU countries. The evaluation of e-government by TOPSIS method in the 2013 acknowledged, that the best ranking in this field obtained Estonia, then the Scandinavian countries (Finland, Sweden) and Malta. The worst state of e-government was reported in Romania, Bulgaria and Croatia. Countries with above average level of government showed also above average level of e-government in a large part of cases. This was true for Denmark, Finland, Sweden, the Netherlands and Austria. Other countries with above-average public administration were among the countries with an average e-government. This was true of Germany, Luxembourg, Ireland, Great Britain and Belgium. Conversely, France, Malta, Estonia, Latvia, and Portugal showed only average state of public administration, but in the area of e-government were above average among the EU countries. There were identified the countries with below-average state of public administration and e-government - Bulgaria, Croatia, Romania and Greece. Czech Republic shows in the area of e-government below average values; however the state of public administration average among EU countries. The same was verified in Slovakia and Hungary, which are in the area of e-government also below average. Input data for the verification of research hypothesis are e-government index processed by TOPSIS and comprehensive index values of good governance from 2013 (Good governance 18 th International Scientific Conference [386] Faculty of Economics, VŠB - TUO

394 index). In order to check the relationship (the correlation of these two variables) it is necessary to verify their normal distribution. Results see in Table 1. Tab. 1 Normal distribution of variables Name of index S-W test p-value E-government index Good Governance index Source: Own calculations in software SAS Confirmation of the normal distribution of both variables allowed to test the relationship between these variables using Pearson coefficient, which confirmed their linear correlation (W = ; P 0.001). Using correlation analysis we can reject the null hypothesis, i.e. countries with higher levels of public administration have also higher levels of e-government. Tab. 2 Linear regression Root MSE R-Square Dependent Mean Adj R-Sq Coeff Var Source: Own calculations in software SAS Tab. 2 captures the significance of regression model that describes the relationship between the monitored variables by means of the following equation: e Government Index = Good Governance Index Coefficient of determination (R 2 = ) shows the predictive value of regression model % of the E-government index total variability is outlined by above mentioned model. Fig. 3 shows a scatter plot with the calculated regression function whose parameters were estimated by the method of least squares. The shape of the dot plot confirms the linear correlation between the E-government index and the Good Governance Index. Greater variation of the points along the line, which is caused by the existence of other factors not included in the model resulted in lower value of the coefficient of determination. [387] Faculty of Economics, VŠB - TUO

395 Section S7: Public Economy and Administration E-government Index Fig. 3 Dependence of public administration maturity and e-government state in EU countries 0, , , , , , , ,10000 y = 0,2452x + 0,21 R² = 0,5629 0, ,2 0,4 0,6 0,8 1 1,2 1,4 1,6 1,8 2 Good Governance Index Source: Own calculations based upon data European Commission (2014), Eurostat (2015), UNPACS (2014) and World Bank (2014). Correlation between the level of e-government in EU countries and the maturity of the public administration has been verified on the basis of the outcomes of regression analysis. The association between variables was demonstrated already within the Pearson correlation coefficient. The coefficient of determination indicates the influence of other factors not included in the model. Conclusion The research has confirmed that the level of e-government depends on the state of public administration in specific countries. The more advanced level of governance is in a country, the higher is the level of e-government. The research question was verified. Between the level of e-government and maturity of public administration in EU countries is a positive linear correlation, i.e. countries with higher levels of public administration have also higher levels of e-government. References ACEMOGLU, Daron (2009a). Introduction to Modern Economic Growth. Princeton (USA): Princeton University Press. ISBN ACEMOGLU, Daron (2009b). When Does Labor Scarcity Encourage Innovation? NBER Working Papers. Cambridge (MA): NBER, March WP Retrieved from: < BUCHANAN, James M. and Yong J. YOON (2000). Symmetric tragedies: Commons and Anticommons. Journal of Law and Economics. Chicago: UC Press, April (1): th International Scientific Conference [388] Faculty of Economics, VŠB - TUO

396 EUROSTAT (2012). GDP and main components. [online database]. Luxembourg: European Commision, [cit ]. Available at: < statistics/search_database>. HELLER, Michael A. and Rebecca S. EISENBERG (1998). Can Patents Deter Innovation? The Anticommons in Biomedical Research. Science. Washington: AAAS, 1 May Vol DOI: /science ACCENTURE (2000). Implemeting egovernment Rhetoric and Reality. [online]. [cit ]. Available at: < 848.pdf>. ARDIELLI, Eva a Martina HALÁSKOVÁ (2015). Assessment of E-government in EU countries. Scientific Papers of the University of Pardubice. Pardubice: University of Pardubice, (34): BANNISTER, Frank (2007). The curse of the benchmark: an assessment of the validity and value of e-government comparisons. International Review of Administrative Sciences. June (2): CAPGEMNI (2007). The User Challenge Benchmarking The Supply Of Online Publice Services. [online]. [cit ]. Available at: < EUROPEAN COMMISSION (2014). E-Government Benchmark: Insight report. [online]. Luxembourg: Publication Office of the European Union [cit ]. Available at: < EUROPEAN COMMISSION (2014). Delivering the European Adventage?: The 11th egovernment Benchmark report. Luxembourg: Publication Office of the European Union. ISBN EUROSTAT (2013). Statistical database. [online database]. Luxembourg: European Commision, [cit ]. Available at: < GRÖNLUND, Ake (2011). Connecting egovernment to Real Government The Failure of the UN eparticipation Index. Lecture Notes in Computer Science. Berlin Heidelberg: Springer, : JABLONSKÝ, Josef (2009). Software Support for Multiple Criteria Decision Making Problems. Management Information Systems, (2): KHOSROW-POUR, Mehdi (2005). Practicing E-Government: A Global Perspective. Hershey: Idea Group Publishing. ISBN: KLENK, Tanja and Frank NULLMEIER (2004). Public Governance als Reforms Strategie. Düsseldorf: Edition der Hans-Böckler-Stiftung. ISBN KOOIMAN, Jan (2003). Governing as Governance. London: Sage, ISBN [389] Faculty of Economics, VŠB - TUO

397 Section S7: Public Economy and Administration KRISHNAN, S., TEO, T. and J. LIM (2010). Electronic Services of egovernment in the European Union Countries. Scientific Papers of the University of Pardubice. Pardubice: University of Pardubice, (17): KUNCOVA, Martina a Petr DOUCEK(2013). Využívání ICT v České republice ve srovnání s evropskými zeměmi. Regionální studia : LNĚNIČKA, Martin (2015). E-government Development Index and int Comparison in the EU Member States. Scientific Papers of the University of Pardubice. Pardubice: University of Pardubice, (34): MÁCHOVÁ, Renáta (2015). An Analytical Hierarchy Process Model for the Evaluation of the E-government Development. Scientific Papers of the University of Pardubice. Pardubice: University of Pardubice, (34): MILANI, A. S., SHANIAN, A. and C. El-LAHHAM (2008). A decision-based approach for measuring human behavioral resistance to organizational change in strategic planning. Mathematical and Computer Modelling. December 2008, 45(11-12): MOHAMMED, Fathey and Othman IBRAHIM (2013). Refining E-government Readiness Index by Cloud Computing. Jurnal Teknologi (1): OECD (2006). E-Government Project Proposed Outline for Assessing E-Government Benefits. [online]. [cit ]. Available at: < RORISSA, Abebe, DEMISSIE, Dawit and Therese PARDO (2011). Benchmarking e- Government: A comparison of frameworks for computing e-government index and ranking. Government Information Qarterly (3): SHIH, Hsu, SHYUR, Huan. and E. Stenley LEE (2007). An extension of TOPSIS for group decision making. Mathematical and Computer Modelling. Amsterdam: Elsevier Science Publishers B. V., April (7-8): TORRES, Lourdes, PINA, Vicente and Sonia ROYO (2005). E-government and the transformation of public administrations in EU countries: Beyond NPM or just a second wave of reforms? [online]. Zaragoza: University of Zaragoza. [cit ]. Available at: < UNPACS (2014). Data Center - Government Development Index [online database]. [cit ]. Available at: < WEST, Darrel M. (2004). E-Government and the Transformation of Service Delivery and Citizen Attitudes. Public Administration Review. February (1): WORLD BANK (2014). Worldwide Governance Indicators [online]. [cit ]. Available at: < >. WORLD ECONOMIC FORUM (2013). The Global competitiveness report [online]. Geneva: World Economic Forum. [cit ]. Available at: < 18 th International Scientific Conference [390] Faculty of Economics, VŠB - TUO

398 ZANGER, Sabine C. (2000). Good Governance and European Aid the Impact of Political Conditionality. European Union Politics. October (3): [391] Faculty of Economics, VŠB - TUO

399 Section S7: Public Economy and Administration OPTIMUM CURRENCY AREA CRITERIA RESULTS FOR THE EU S MEMBER STATES Vendula Beránková VŠB TU Ostrava, Faculty of Economics vendula.berankova@vsb.cz Abstract The Euro Area is probably one of the most famous monetary integration in the world. The aim of this article is to evaluate an appropriateness of nine EU countries standing out of the Eurozone for a membership in this monetary union according to the optimum currency area criteria. These criteria are based on the optimum currency area theory and then on the so called optimum currency area index. According to my results, there are countries which reach satisfactory values. These countries are especially the Czech Republic and Hungary. On the other hand there are countries which reach worse values, e.g. Romania or Bulgaria. These countries are not appropriate for the membership in the Eurozone. Keywords: Monetary Union, Optimum Currency Area, Eurozone, Optimum Currency Area Index JEL: E42, E52 Advisor: doc. Ing. Zuzana Kučerová, Ph.D. 18 th International Scientific Conference [392] Faculty of Economics, VŠB - TUO

400 1 Introduction The creation of monetary union is not something new in the world, respectively in the Europe. The reasons for creation of such a union can be different - historical, economic and ultimately political. In the world, there are few monetary unions, e.g. United States of America, the Eastern Caribbean Currency Area and the Central African Economic and Monetary Community. These days, probably the most famous monetary union is the monetary integration within the European Union, i.e. the Eurozone, which now consists of nineteen European countries 1. The other nine EU member states are currently in the statute of candidate countries for the monetary union. Assess, whether the country is a good candidate for membership in the monetary union, it is not as simple as it might seem at first glance. Of course, joining the monetary union brings the country certain benefits (e.g. removing of the transaction costs of exchange, removing of the exchange rate risks, or intensification of competition and pressure on production quality). On the other hand, the monetary union membership also brings some disadvantages. Probably the biggest disadvantage is the loss of autonomous monetary policy. Member country is losing the possibility to react to potential economic shocks. It's necessary, that these benefits outweigh the obvious disadvantages. The optimum currency area is an appropriate instrument by which it is possible to assess the costs and benefits of membership in the monetary union. The aim of this article is to evaluate an appropriateness of selected EU countries for a membership in the Eurozone according to the OCA criteria. The criteria are based on the optimum currency area theory. Another important instrument is the optimum currency area index, which is also based on this theory and which was created by Bayoumi and Eichengreen (1997). The remainder of the paper is organized as follows. Next section deals with the theoretical basis of this paper, methods and data are introduced in the next section. Then, results are discussed. The conclusion is offered in the final section. 2 Literature Review Optimum currency area is a relatively young economic theory dating back to the 60s of the 20th century. In this period, the first landmark studies were written. These studies formed the basis of this theory and enable its further development. Namely it is the work of Robert Mundell (A Theory of Optimum Currency Areas, 1961), Ronald McKinnon (Optimum Currency Area, 1963) and Peter Kenen (The Theory of Optimum Currency Areas: An Eclectic View, 1969) 2. Based on these studies, three basic criteria for the optimum currency area were also established: Mundell criterion of workforce mobility, McKinnon criterion of openness of the economy and Kenen criterion of the diversification of production. These criteria are often accompanied by the criterion of alignment of economic cycles. When examining individual criteria, however we run into a major problem. Empirical testing of fulfilling the criteria of the OCA does not give a clear answer to the question whether the ground for adoption of the single 1 The Eurozone member states: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, Netherlands, Portugal, Slovakia, Slovenia, Spain. 2 The issue of optimum currency area is also engaged in a number of other, respectively recent studies. Their authors are e.g. Bayoumi and Eichengreen (1997), Fidrmuc and Korhonen (2003), Cincibuch and Vávra (2000), Mongelli (2002), Horváth and Komárek (2002), Kučerová (2005), Mink, Jacobs and Haan (2007), Bachanová (2008), Eichengreen (2008), Skořepa (2011) or Hedija (2011). [393] Faculty of Economics, VŠB - TUO

401 Section S7: Public Economy and Administration currency is advantageous or not. It is very difficult to assess what degree of fulfilment of the criteria and what combination of their performance is satisfactory, and what is not. The optimum currency area index is trying to overcome these problems (Hedija, 2011). Optimum currency area index (OCA index) assesses the costs and benefits of adopting the single currency. The index was first used by Bayoumi and Eichengreen (1997) in their article Ever Closer to Heaven? An Optimum Currency Area Index for European Countries. The authors wanted to develop a tool that would allow knowledge based optimum currency area to assess whether the country suitable candidate for adopting the single currency. Hedija (2011) suggests that the optimal currency area index is constructed as a bilateral index, which assesses the appropriateness of introducing a single currency in the two countries. It is built on the OCA theory and comes to the realization that the country's adoption of the single currency the better, the smaller the tendency has nominal exchange rate to oscillate countries. Mutual fluctuations in nominal exchange rates of the currencies in the index are examined, depending on the level of fulfilment of the four criteria of optimum currency area: 1) the alignment of business cycles, 2) similarity of economic structure, 3) the interdependence of trade, and 4) the size of the economy. The OCA index was originally compiled from a sample of 21 countries 3 during the period using a panel regression method. The index includes variables that are important in deciding the country's entry into the monetary union. 3 Methods and data The research of this paper is based on traditional approaches of the optimum currency area theory while the method of Bayoumi and Eichengreen (1997) is used. They estimated the OCA index. Their equation is defined as follows: SD(e ij ) = β 0 + β 1 SD( y i y j ) + β 2 DISSIM ij + β 3 TRADE ij + β 4 SIZE ij, (1) where SD(e ij ) is the standard deviation of the exchange in the logarithm of bilateral exchange rate at the end of the year between countries i and j, SD( y i y j ) is the standard deviation of the difference in the logarithm of a real GDP between countries i and j, DISSIM ij is the sum of the absolute differences in the shares of agricultural, mineral, and manufacturing trade in a total merchandize trade, TRADE ij is the mean of the ratio of bilateral exports to domestic GDP for two countries i and j, SIZE ij is the mean of the logarithm of the two GDPs measured in U.S. dollars. The OCA index has many supporters, but also many critics. Undoubtedly, it is an appropriate instrument by which it is possible to quantify the criteria for a country's readiness to join the monetary union. That is also the reason why the original index was modified several times. For example, Horváth and Komárek (2002) modify the original equation of Bayoumi and Eichengreen when they calculate the OCA index. They use the variable OPEN ij (openness of the economy) instead of the variable SIZE ij (size of the economy). The reason is that Bayoumi and Eichengreen (1997) find relatively little correlation between the size of the 3 European Union countries that were members at the time the article was published, without Luxembourg (i.e. Belgium, Denmark, Finland, France, Ireland, Italy, Netherlands, Portugal, Austria, Greece, the United Kingdom, Spain, Sweden), followed by Norway, Switzerland, USA, Canada, Australia, New Zealand and Japan. 18 th International Scientific Conference [394] Faculty of Economics, VŠB - TUO

402 economy and trends in the transition to a fixed exchange rate regime. In contrast, the openness of the economy is one of the traditional optimum currency area criteria, and therefore Horváth and Komárek (2002) include this variable in their regression model: SD(e ij ) = β 0 + β 1 SD( y i y j ) + β 2 DISSIM ij + β 3 TRADE ij + β 4 OPEN ij, (2) where SD(e ij ) is the standard deviation of the exchange in the logarithm of bilateral exchange rate at the end of the year between countries i and j, SD( y i y j ) is the standard deviation of the difference in the logarithm of a real GDP between countries i and j, DISSIM ij is the sum of the absolute differences in the shares of agricultural, mineral, and manufacturing trade in a total merchandize trade, TRADE ij is the mean of the ratio of bilateral exports to domestic GDP for two countries i and j, OPEN ij is the mean of the ratio of the trade, i.e. export and import to their GDP. The OCA index is not computed because of some problems. For example, problem can be that Bayoumi and Eichengreen in their study Ever Closer to Heaven? An Optimum Currency Area Index for European Countries assume stability equation in time. Regression equation was estimated using data from the years 1983 to This period is different from present days. Another problem is that the original equation of Bayoumi and Eichengreen (1997) includes incoherent countries European countries, then Japan, USA, Canada, Australia and New Zealand. So the regression coefficients can be biased. This might lead to different estimations and different OCA indexes which are not possible to compare (for more see Horváth and Komárek, 2002). For these reasons, only the individual components of the OCA index are computed: SD(e ij ), SD( y i y j ), DISSIM ij, TRADE ij, SIZE ij and also OPEN ij. The variable SD( y i y j ) is the standard deviation of the difference in the logarithm of real GDP of two countries. The real GDP (in prices of year 2005) is measured in U.S. dollars. It is computed as the difference of annual real GDP for each country: SD( y (3) i y j RGDP ) SDln RGDP i( t ) RGDP ;ln RGDP j( t ) i( t 1) j( t1 ), where SD is standard deviation, RGDPi(t) is real GDP of country i in time t, RGDPi(t-1) is real GDP of country i in time t-1, RGDPj(t) is real GDP of country j in time t and RGDPj(t-1) is real GDP of country j in time t-1. The variabledissim ij is the sum of the absolute differences in the share of individual components 4 in total bilateral trade. It attains values from 0 to 2. The value 0 means the same structure of bilateral trade. The value 2 means that commodity structure of bilateral trade of two countries is absolutely different. In this case, lower value implies better conditions to adopt a common currency. The variable has the following specification: 4 The variable DISSIM ij is computed using the UN`s Basic Economic Categories (BEC) classification which distinguishes economic categories into 7 parts: 1) Food and beverages, 2) Industrial supplies, 3) Fuels and lubricants, 4) Capital goods, 5) Transport equipment, 6) Consumption goods and 7) Others. [395] Faculty of Economics, VŠB - TUO

403 Section S7: Public Economy and Administration DISSIM (4) ij N A1 XA X ij ij XA X ji ji, where XA is the export of each economic category, Xij is total export from country i to country j and Xji is export from country j to country i. The variable TRADE ij is the mean of the ratio of bilateral trade (import plus export) to nominal GDP of countries i and j. This nominal GDP is also measured in U.S. dollars. The variable TRADE ij was computed as follows: X ij X ji TRADE ij MEAN ;, (5) GDPi GDPj where Xij is nominal export from country i to country j, Xji is nominal export from country j to country i, GDPi is nominal GDP of country i and GDPj is nominal GDP of country j. Higher value of this variable means better conditions to adopt a common currency because common currency is more convenient for countries which have higher level of bilateral trade. The variable SIZE ij represents the size of the economies. It is computed as the mean of the logarithm of real GDP of countries i and j. Again, the real GDP (in prices of year 2005) is measured in U.S. dollars. ij SIZE MEAN ln RGDP;ln RGDP, (6) where RGDPi is the real GDP of country i and RGDPj is the real GDP of country j. The last variable OPEN ij measures the rate of openness of each economy. It is computed as the mean of the share of nominal trade (import plus export) on nominal GDP (measured in U.S. dollars) of two countries: X i M X j M i j OPEN ij MEAN ;, (7) GDPi GDPj where Xi is total nominal export of country i, Mi is total nominal import of country i, GDPi is nominal GDP of country i, Xj is total nominal export of country j, Mj is total nominal import of country j, GDPj is nominal GDP of country j. 3.1 Data Variables SD( y i y j ), SIZE ij and OPEN ij are calculated with the use of the data from World Bank Database (World Bank, 2016). Data for variables DISSIM ij and TRADE ij were used from United Nations Commodity Trade Statistics Database (Comtrade, 2016) and World Bank Database (World Bank, 2016). For all calculations, an annual data from the period are used. i j 18 th International Scientific Conference [396] Faculty of Economics, VŠB - TUO

404 4 Results In this case, the inspiration comes from the paper from Adámek and Kappel (2015) who compute similar variables but for different countries (they compute variables for the Eurozone, NAFTA and MERCOSUR). Selected time series are divided into two periods: pre-crisis period ( ) and crisis and post-crisis period ( ). First, averages for both selected periods are computed and then averages for the whole period are computed too. All variables are computed for nine EU countries outside the Eurozone, and they are computed for pairs. This pairs consist of each candidate for the Eurozone membership and the Euro Area. There is a problem, because some data are not available for the Eurozone. So, in the case of variables DISSIM ij and TRADE ij, Germany is used instead of the Euro Area. The empirical results are introduced in following Tables Variable SD( y i y j ) The variable SD( y i y j ) presents the degree of alignment of business cycles. The more business cycles of two countries are inked the more convenient it is for them to adopt a common currency. In other words, the lower the value of the variable, the higher degree of alignment of business cycles. The results for indicator SD( y i y j ) are shown in Table 1. Tab. 2 Variable SD( y i y j ) in comparison to the Euro Area from 2000 to 2014 Country Bulgaria 0,0183 0,0077 0,0134 Croatia 0,0111 0,0097 0,0105 Czech Republic 0,0124 0,0031 0,0074 Denmark 0,0038 0,0024 0,0031 Hungary 0,0104 0,0069 0,0088 Poland 0,0099 0,0156 0,0126 Romania 0,0186 0,0149 0,0169 Sweden 0,0056 0,0071 0,0063 United Kingdom 0,0045 0,0062 0,0053 Source: World Bank (2016), own calculations The best values are observed in Denmark, United Kingdom and Sweden. Conversely, the worst values are in Romania and Poland. It is quite important to note that since 2008 the variable SD( y i y j ) has significantly improved especially in Bulgaria and in the Czech Republic. And on the other hand, since 2008 the variable has significantly worsened in Poland. 4.2 Variable TRADE ij and DISSIM ij Variables DISSIM ij and TRADE ij are related to bilateral trade. Table 2 shows results for indicator TRADE ij. Only in this case, higher value of this indicator means better conditions for adopting a common currency. It is because common currency is more convenient for those countries which have higher level of bilateral trade. The best values are obtained in the Czech Republic and Hungary. The worst trade partners are Croatia, Bulgaria, Denmark, Romania, Sweden and the United Kingdom. The significant improvement in this variable after crisis is observed in the Czech Republic and Poland. [397] Faculty of Economics, VŠB - TUO

405 Section S7: Public Economy and Administration Tab. 2 Variable TRADE ij in comparison to Germany from 2000 to 2014 Country Bulgaria 0,0192 0,0264 0,0225 Croatia 0,0121 0,0122 0,0122 Czech Republic 0,1000 0,1237 0,1111 Denmark 0,0279 0,0304 0,0291 Hungary 0,0963 0,1038 0,0998 Poland 0,0430 0,0629 0,0523 Romania 0,0226 0,0319 0,0270 Sweden 0,0204 0,0245 0,0224 United Kingdom 0,0224 0,0373 0,0293 Source: Comtrade (2016), World Bank (2016), own calculations The variable DISSIM ij attains values from 0 to 2: value 0 means the same structure of bilateral trade, value 2 means absolutely different structure of bilateral trade of two countries. Results for variable DISSIM ij are presented in Table 3. Tab. 3 Variable DISSIM ij in comparison to Germany from 2000 to 2014 Country Bulgaria 0,6623 0,5000 0,5866 Croatia 0,5662 0,3112 0,4472 Czech Republic 0,1714 0,2569 0,2113 Denmark 0,4258 0,4080 0,4175 Hungary 0,3077 0,2887 0,2988 Poland 0,5243 0,3946 0,4638 Romania 0,7075 0,5482 0,6332 Sweden 0,5305 0,5458 0,5376 United Kingdom 0,3801 0,4472 0,4114 Source: Comtrade (2016), World Bank (2016), own calculations The worst values are found out in Bulgaria, Romania and Sweden. Only Hungary and the Czech Republic have the most similar structure of bilateral trade with Germany. But on the other hand, the Czech Republic is one of three countries which values got worse after the crisis. 4.3 Variable SIZE ij The variable SIZE ij measures the size of the economy using the real GDP. Countries with higher GDP reach higher values. In general, for larger countries it is better to have own currency while smaller countries should adopt a common currency. Tab. 4 Variable SIZE ij in comparison to the Euro Area from 2000 to 2014 Country Bulgaria 26, , ,0754 Croatia 27, , ,2573 Czech Republic 31, , ,8311 Denmark 28, , ,1463 Hungary 27, , , th International Scientific Conference [398] Faculty of Economics, VŠB - TUO

406 Poland 28, , ,2695 Romania 27, , ,6830 Sweden 28, , ,3534 United Kingdom 29, , ,2561 Source: World Bank (2016), own calculations Based on the results of this indicator, the common currency should be adopted in countries such as Bulgaria or Croatia. But it should be mentioned that the value of this indicator became smaller after the crisis only in the case of the Czech Republic. 4.4 Variable OPEN ij The variableopen ij represents the rate of openness of the economy respectively it measures the mutual openness of two economies. The results for this indicator are described in Table 5. In this case, the least open economies are: the United Kingdom, Romania and Poland. On the other hand, the most open economies are Hungary, the Czech Republic and Bulgaria. Tab. 5 Variable OPEN ij in comparison to the Euro Area from 2000 to 2014 Country Bulgaria 0,8130 1,0053 0,9028 Croatia 0,7673 0,8105 0,7874 Czech Republic 0,9008 1,0898 0,9890 Denmark 0,7888 0,8968 0,8392 Hungary 1,0135 1,2142 1,1072 Poland 0,6953 0,8294 0,7579 Romania 0,7268 0,7723 0,7481 Sweden 0,7632 0,8351 0,7968 United Kingdom 0,6204 0,7009 0,6580 Source: World Bank (2016), own calculations It should also be noted that there is no country whose value of variable OPEN ij is smaller after the crisis. All nine countries have become more open since 2008 than before. Conclusion Probably the most famous monetary union is the Eurozone, which consists of nineteen European countries. Another nine EU member states are in the statute of candidate countries. The aim of this article was to evaluate an appropriateness of these nine EU states for a membership in the Eurozone according to the OCA criteria. The research was based on traditional approaches of the optimum currency area theory. It was used the methodology of Bayoumi and Eichengreen (1997) who estimated the optimum currency area index. But the OCA index was not computed because of some problems (for more see Horváth and Komárek, 2002). So, only the individual components of the optimum currency area index were computed. The best values of variable SD( y i y j ) were observed in Denmark, United Kingdom and Sweden. The worst values were in Romania and Poland. Since 2008 this variable has [399] Faculty of Economics, VŠB - TUO

407 Section S7: Public Economy and Administration improved especially in Bulgaria and in the Czech Republic. The best trade partners were the Czech Republic and Hungary and the worst trade partners were Croatia, Bulgaria, and Sweden. Hungary and the Czech Republic had the most similar structure of bilateral trade with Germany. Bulgaria, Romania and Sweden had the least similar structure. Based on the results of the indicator SIZE ij, the common currency should be adopted in countries such as Bulgaria or Croatia. But the value of this indicator became smaller after the crisis only in the case of the Czech Republic. The least open economies were the United Kingdom, Romania and Poland. The most open economies were Hungary, the Czech Republic and Bulgaria. But all of the nine countries had become more open since 2008 than before. According to these results it may be concluded that there were some countries, which were more appropriate for the membership in the Eurozone. These countries were especially the Czech Republic and Hungary. Romania and Bulgaria were not appropriate for the membership in the Eurozone. All nine countries can be divided into three groups. First group, the main candidates for the membership in the Eurozone, consists of the Czech Republic and Hungary. These countries reach satisfactory values. Second group consists of Croatia and Denmark. These countries gradually converge to the Eurozone. Third group of countries has a small degree of convergence. This group includes of course the United Kingdom, Sweden and then also Romania, Bulgaria and Poland. Of course, the candidate countries must fulfil all the convergence criteria if they want to join the Eurozone. But the optimum currency area criteria (or the OCA index) can be used as a convenient additional instrument by which it is possible to determine the appropriateness of countries for the membership in the Eurozone. References ADÁMEK, Emil and Stanislav KAPPEL (2015). Empirical Results for Some Monetary Areas According to Optimum Currency Area Criteria. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 63(3): BACHANOVÁ, Veronika (2008). Index optimální měnové oblasti pro Českou republiku. Ekonomická revue - Central European Review of Economic Issues, 11(3): BAYOUMI, Tamim and Barry EICHENGREEN (1997). Ever Closed to Heaven? An Optimum-Currency-Area Index for European Countries. European Economic Review, 41(3-5): CINCIBUCH, Martin and David VÁVRA (2000). Na cestě k EMU: Potřebujeme flexibilní měnový kurz? Finance a úvěr, 50(6): COMTRADE (2016). UN Comtrade database. [online database]. [cit ]. Available at: < EICHENGREEN, Barry (2008). Sui Generis EMU. NBER Working Paper No National Bureau of Economic Research. FIDRMUC Jarko and Iikka KORHONEN (2003). Similarity of Supply and Demand Shocks Between the Euro Area and the CEECs. Economic Systems. 27(3): th International Scientific Conference [400] Faculty of Economics, VŠB - TUO

408 HEDIJA, Veronika (2011). Index OCA aplikace na země EU10. Ekonomická revue - Central European Review of Economic Issues, 14(2): HORVÁTH, Roman and Luboš KOMÁREK (2002). Teorie optimálních měnových zón: rámec k diskuzím o monetární integraci. Finance a úvěr, 52(7-8): KENEN, Peter B. (1969). The Theory of Optimum Currency Areas: An Eclectic View. In: Mundell, R. A. Swoboda A. K. (eds.). Monetary Problems of the International Economy. Chicago: University of Chicago Press. KUČEROVÁ, Zuzana (2005). Teorie optimální měnové oblasti a možnosti její aplikace na země střední a východní Evropy. Praha: Národohospodářský ústav Josefa Hlávky. ISBN McKINNON, Ronald I. (1963). Optimum Currency Areas. American Economic Review, 53(4): MINK, Mark, Jan P.A.M. JACOBS and Jakob de HAAN (2007). Measuring Synchronicity and Co-movement of Business Cycles with an Application on the Euro Area. CESifo working paper, No. 2112, October MUNDELL, Robert A. (1961). Theory of Optimum Currency Areas. American Economic Review, 51(4): MONGELLI, Francesco Paolo (2002). New Views on the Optimum Currency Area Theory: What is EMU Telling us? European Central Bank Working Paper, no. 138, April SKOŘEPA, Michal (2011). A Convergence-Sensitive Optimum-Currency-Area Index. IES Working Paper 23/2011. IES PSV. Charles University. WORLD BANK (2016). World DataBank. [online database]. [cit ]. Available at: < [401] Faculty of Economics, VŠB - TUO

409 Section S7: Public Economy and Administration HIERARCHICAL RESONANCE FRAMEWORK FOR REGIONAL COMPETITIVENESS ESTIMATION 1 Roman Guliak VŠB - TU Ostrava, Faculty of Economics, roman.guliak@vsb.cz Abstract Regional competitiveness due to its complexity and topicality requires further substantive analysis of its meaning and composition. The first theoretical aim of the paper is to emphasize the magnetic vision of regional competitiveness. The second methodological aim is to develop the system resonance approach to improve regional competitiveness accounting multilevel territorial hierarchy of a country. Basically, this approach is based on the resonance effect and includes three levers of regional competitiveness management. Namely, the first one is to raise a resource level, the second one is to enhance a technical efficiency of a particular resources usage and the third one is to improve structural effectiveness of the regional performance. Keywords: Competitiveness, Resonance effect, Efficiency, Resource level, Effectiveness JEL: R58, R15 Advisor: prof. Ing. Zdeněk Zmeškal, Dr This article has been funded by INFINITY project in the framework of the EU Erasmus Mundus Action 18 th International Scientific Conference [402] Faculty of Economics, VŠB - TUO

410 1 Introduction It is generally known that appropriate managerial influence in the frame of complex social and economic systems can be formed and made only after carrying out the certain evaluation procedures. The ability to improve regional performance depends on a theoretical and a methodological framework underlying an estimation process. Ordinarily it is sorted out several most popular composite performance indicators, such as, for example, index of development, of competitiveness, of efficiency. So far, under the aegis of competitiveness the analytical reports are prepared by different organizations and institutions, such as Competitiveness Council (US), Organization for Economic Co-operation and Development and European Union (EU), Department of Trade and Industry (UK). During the past 35 years, after Porter (1990) first had defined national competitiveness, a large and growing body of literature has been investigated concerning this concept. Despite such a long period of competitiveness popularity at different levels (micro, mezo, macro) the ambiguous of this term at the country and region levels remains still present. The possible explanation for this is the reasoning of famous skeptic Krugman, that if competitiveness has any meaning then it is simply another way of saying productivity. He believes that world's leading nations are not competing with one another and that there is no significant degree of competition among them (1994). Porter also states, The only meaningful concept of competitiveness at the national level is productivity. (1990). However if we compress competitiveness only to productivity, then we will loose the export aspect of the regional activity and the target of expanding a market share. Another question can arise about truthfulness of region competition. While countries use their comparative advantages and with macroeconomics policy are able to avoid zero-sum scenario, regions being under mobility of growth factors conditions really compete with each other. The nature of such competitiveness is an attraction, maintaining firms with stable or rising market shares, while maintaining stable or increasing standards of leaving for those who participate in it (Storper, 1997; Aiginger, K., 2006; Pessoa A., 2013). Basing on such aspects, it is quite justified to capture competitiveness as a magnet of all necessary factors of regional growth, such as investment, capital, labor, knowledge and innovations. A great number of definitions can be presented to support this magnetic vision (Pооt, 2000; Cooke, 2004; Porter and Ketels's definition, 2003; Storper, 1997; Aiginger, K., 2006; Pessoa A., 2013). Behind revealed more or less consensus about essence of competitiveness between different authors, one worth aspect concerning the variability of the structure still exists. Relying on the stressed above magnetic vision of the regional competitiveness essence, the hypothesis of the paper is following: regional competitiveness depends on and can influence competitiveness of such higher hierarchical systems as NUTS 1 regions or a country; what means that the strategic targets of NUTS 2 regions should be congruent with weaknesses or strengths of the NUTS 1 regions. The twofold purpose of the paper is to suggest new vision of regional competitiveness and to design the system resonance approach to increase competitiveness in an effective way considering an increase of competitiveness of the higher hierarchical systems (NUTS 1 and country). The structure of the paper is following: the theoretical aspects of competitiveness are outlined in the second section; methodological aspects of the suggested approach to strategy formulation based on resonance principal are presented in the third part; the final fourth part contains main conclusions received in the research. [403] Faculty of Economics, VŠB - TUO

411 Section S7: Public Economy and Administration 2 Theoretical aspects of regional competitiveness During the last decade or so, the concept competitiveness has been extensively used with obvious controversies among different authors. After getting acquainted with lots of researches devoted to competitiveness, we can establish the lack of the consensus on what is meant by the term competitiveness and how it can be measured. This section points out at present models of competitiveness and its essential features needed to be accounted in estimations. 2.1 Existing models of regional competitiveness Competitiveness as an economical and mostly managerial concept has to lead to some practical results, therefore the next step after theorizing will be the brief description of the models. The results of the models investigation show that there are three most specific conceptual frameworks with a practical orientation. The first most cited model belongs to Porter (1998). His Diamond model describes and links between four determinants of growth paying attention that the country growth depends on and is concentrated in territories including clusters. Porter s work about nation competitiveness launched a sequence of researches developing and modifying his original model (Budd and Hirmis, 2004; Kitson et al., 2004; Steinle, 1992). The second class of models is more formalized from the process point of view and presents the input-output-outcome division (Huggins, 2004; Greene et al., 2007). The last class of models is the most detailed and specific. Being tailored to the policy making it has pyramidal structure embedding the input-output-outcome elements (Begg, 1999; National Competitiveness Council, 2007; Gardiner et al., 2004; Lengyel 2000, 2003). Though these models are fully accepted by majority, we can sort out one in our opinion drawback underlying all of them. The main disadvantage is that models are in no way connected with the direct final consumers of competitiveness. Basically these missing in the models consumers (namely, business group and human capital group) are the main concerned users of competitiveness. Another week point is that models made by Porter and are even too detailed, what might be fulfilling from theoretical point of view, but not compiling from practical one being followed with lack of statistical date. Even both Lengyel and Rechnitzer write at their work (2013, p. 110) that it is often the case when the supply of data is also incomplete, a part of soft type information (e.g. social capital) is not included and as a result it is not possible to conduct a full-scale analysis of all the competitiveness factors. 2.2 Essence and composition of regional competitiveness Diversity and incomprehensibility of competitiveness inclined us to try to clarify its essence and composition relying on the formal logic and the method of abstraction. As a starting point, we can pick up the definition for regional competitiveness coming from the Sixth Periodical Report on the Regions: [Competitiveness is defined as] the ability to produce goods and services which meet the test of international markets, while at the same time maintaining high and sustainable levels of income or, more generally, the ability of (regions) to generate, while being exposed to external competition, relatively high income and employment levels (The Sixth Periodic Report on the Regions, 1999)]. 18 th International Scientific Conference [404] Faculty of Economics, VŠB - TUO

412 Using the formal logic for verifying the definition of the concepts we define a genus and a species of the term: 1. the genus ( WHAT is it? ) an ability; 2. the species ( What kind of ability? ) to produce something on a certain level and under a test. Basing on it, we see that this logically correct definition is based on the main economical contradiction between abilities and desirable results. Moving further it s not out of the place to use such method like rise from abstract to concrete to analyze the composition of competitiveness generally understood as abilities (figure 1). In the process of a rise the competitiveness is reproduced as a difficult dialectical dismembered system where all parts are mutually causal and occupy the certain place. From the figure 1 we can state that any ability underlying possible system performance directly depends on two integrated parts. First part can be called as the attributive (resource) part, namely resource level presented by inputs. The second part is named as the situational part and related to the conditions of the resource usage (operating and developing conditions). This situational aggregated part of abilities comprises all factors which are hard to measure (including hard and soft infrastructure) and which predetermines technical efficiency of inputs usage. Separate estimation of the outputs does not have any value because both resources and outputs are included into the efficiency estimation. Thus situational part can be explored by total multi factor productivity of a region. To sum up shortly, competitiveness for sure goes beyond efficiency and productivity, and it will be the mistaken way to measure it only by its efficiency estimation. Efficiency can be a necessary condition in some contexts, but not a sufficient one for the region to be competitive. Of course, at the regional level the estimation of regional productivity can face a lot of empirical and methodological problems (Kitson, M. et al, 2004), but nevertheless it is possible to estimate technical efficiency of regional performance with multiple inputs and multiple outputs, thus and so we will call it productivity. It can be temptation for many authors to follow the productive approach using productivity or efficiency as a mirror of competitiveness. One can notice that productivity growth shows that either more outputs are produced using the same amount of inputs, or that less input was used to produce the same level of output. As Pessoa A. (2013) states: looking only to productivity can be misleading: a high productivity of labor can result from reductions in employment by, for instance, shutting down plants. So, it is more useful to look at competitiveness as a function of complex interrelationships between variables (Turok, 2004). That is why our vision of competitiveness is not limited by only productivity but supplemented with the level of regional resources. At length, we can state that competitiveness is the function of many factors, and it can be conceptualized as the function or set of two key elements, which can be called as dimensions of competitiveness, in particular, quality resource level and productivity. It should be mentioned that for more focused research each dimension can be explored for different actors. The structure of competitiveness can be specified by introducing consumers or actors of competitiveness. The fractal principal is the basic underlying principal to be followed here. It will simplify the benchmarking of regions at different levels (NUTS 1, 2) keeping the composition of the actors and components of competitiveness scale-free (similar). According to the idea of place attractiveness (Tetsuya, Matsumoto, 2010) newly-emerging businesses and highly-skilled workforces are the driving force in the global economy. So, an inspiration of competitive business and people s climates will attract and retain highly skilled labor impeding people and firms from draining to the outside (Pessoa, 2013, Florida, 2002). Paraphrasing, high level of a regional competitiveness is oriented on the attraction and providing better conditions for the businesses and population. Consequently, reasonable will be to stress on different groups of actors which interest are going to be satisfied more with higher competitiveness. Thus, the first division element is a group of human capital (labor) interests, the second one is a group of [405] Faculty of Economics, VŠB - TUO

413 Section S7: Public Economy and Administration business interests and the third one is a general meso-level group of regional or community interests. 3 Methodological aspects of the competitiveness estimation Mechanism of competitiveness improvements has not been fully understood yet and the set of impactful tolls have not been enough developed. Many complexities exist in the designing tailored policies and strategies. In this section we are tending to rely on the systemic emergence property underling resonance effect being reveled. 3.1 Resonance effect of vertical target integration To launch the description of resonance effect we have to start from the Luhmann s statement about system nature, as regions are considered to be super complex social and economic systems. His idea is that to be a system for any complex object is not inherent property, but in contrast it is an extrinsic characteristic of the structure (N. Luhmann, 2002). The system becomes apparent in its uniqueness only by interactions with an external environment. Regions within a country and a country itself are also conceived to have the system property as the emergence of competitiveness created by its regions interactions: where: Q s C s C1, С2,... Сn; Qs; R, when Q s q i, (1) emergence, competitiveness of an element; n i 1 q i property of competitiveness of an element, C s competitiveness of a system; R relations between C. Emergence phenomenon being understood as synthesis of synchronization and synergetic effect plays an important role in the understanding of competitiveness management. Basically an emergency of the territorial systems is a source for the rise of the synergetic effects of regions interactions. Exactly the synergetic effect should be the first concept underlying regional improvements based on competitiveness, but to find out properly such effects is really challenging work. In this study we form the assumption about the regional management which should be based on the usage of emergence property increasing effectiveness of improvements. Further we suggest the following of the resonance strategic approach during the regional strategy formulation. The main idea of the resonance approach is that the combined effect of the congruent competitiveness improvements based on a territorial synergy will be greater than the improvements elaborated in isolation for each region. Simply saying, what is urgent for the subsystem (NUTS 2 region) should also be necessary for the system (NUTS 1 region), what gives for both not only new quantitatively different properties but also qualitatively ones. It also means that none of the regions contributing to the emergence property has the potential to realize the maximum competitiveness increasing effect being in a horizontal (between NUTS 2 regions) or vertical (between NUTS 2 and NUTS 1) isolation. The main focus of synchronization of the regional strategic improvements is made on the establishing of main targets which would lead ultimately to the synergetic effect. At this stage we are pressed by the contradiction between two levels of the interests within such super system as country: to improve the equity of the regional development or to make economic growth of a country faster. The efficiency-equity trade-off discussion was made by Perroux (1955), Kuznets (1955), Myrdal (1957) et al. and has been deepen recently by contemporary scientist, such as Martin (1999, 2002), Ottavino (2001), Puga (2002), Midelfart (2004), Meyer (2005). С i 18 th International Scientific Conference [406] Faculty of Economics, VŠB - TUO

414 On the highest country level, the highest importance is assigned to the economic effectiveness most of all influenced by the agglomeration growth or growth of the strong regions with the high concentration of the labor, capital and knowledge in the most developed regions. However, without any doubts regional policy should be firstly oriented on all people tending to have high living standards, what is regarded as the paramount strategic importance. But according to our hypothesis, the resonance effect during the strategy formulation will ensure a simultaneous increase in a regional equity and actualization of the local and territory development potentials. It means that we should find the balance between orientations on economic equity and overall country growth with economic inequalities. Speaking on the strategic formulation terms, the question is whether to establish primal targets benefiting the country development or each region according to even development. The way of how to decrease the confrontation and make these two extremes work together as entire system is just to introduce and activate the third hierarchical middle component (target of NUTS 1 region) (figure 2). From this figure we can conclude, that the crossing optimal point tells us that improvements of NUTS 2 regions directed on targets being in coincidence with development priorities of NUTS 1 regions, are able to balance economic performance of the country reaching both economic efficiency and equity. The coincidence of targets triggers the resonance effect of regional development. It should be mentioned as well that resonance effect has a positive synergetic influence on both NUTS 1 in a whole and on its constituent NUTS 2 regions. Eventually selected strategic targets will be both satisfying interests of NUTS 2 and NUTS 1 regions. In other words, that NUTS 2 region with certain targets is chosen to be improved, which development is the most wanted for the NUTS 1 regional development; or what is the best for the NUTS 2 should be the best for NUTS Key elements of the decision making procedure Here we are not eager to suggest the conceptual model of regional competitiveness based on factors or on the describing linkages between factors and outputs (outcomes). The simplest and the best way from practical point of view will be to outline and embed all key elements of competitiveness into the one decision making system. All variables taking part in the making conclusion about future improvements of regional development are presented in the decision making matrix (fig. 3). The visual image of the matrix will make easier understanding of elements interconnections in a decision making system. Form figure 3 we can see four key elements describing competitiveness interwoven into the decision making process. The first element B gives the answer to the question Which group (or actor) in regional economy suffers of competitiveness disadvantages or benefits from advantages?. Correspondingly, the suffering actors are to be the subject of the most urgent strategic improvements. Just to remind, the main actors using regional competitiveness are Business sector, Human capital sector (labor) and meso- level presenting the interests of region in the whole (community, government). The next aspect E is about How to measure competitiveness of the mentioned above actors (groups)?, but more precise question will be Which methodology to use for the measurement of competitiveness dimensions?. The answer, in our opinion, should be based on the methodological pluralism (Flood and Jackson, 1991; Jackson, 1991; Flood and Romm, 1996; Mingers and Gill, 1997). The wider the range of the available methods, the more flexible and responsive our systemic practice can be. No single methodology can make a comprehensive analysis of a phenomenon, especially when it comes to be regional competitiveness. Therefore, being able to draw upon multiple methods from different paradigmatic sources can enhance the systems thinking resource we have available for intervention (Midgley G., 2014). Such a [407] Faculty of Economics, VŠB - TUO

415 Section S7: Public Economy and Administration set of dimensions through which competitiveness is going to be grasped requires the corresponded methodological tools. We are going to suggest further three different methods processing the indices from input and output categories. The suggested methods for the estimation of different competitiveness dimensions are presented in the figure 4. Following the analysis of the first resource component, we get answers to question What does a region perform with?. For this purpose the Numerical Taxonomy Analysis can be applied. This method assessing or measuring the degree of development in regions is aimed at detecting homogenous groups (Harman, H.H., 1976; Hellwig, Z., 1968; Pluta W., 1977). Within this methodology using the principle of shortest (taxonomical) distance of an ideal object as a result we calculate the coefficients describing the development of resources belonged to the analyzed regions. The second productive efficiency component is related to technical efficiency and replies to question Is regional performance efficient enough to produce maximum outputs from the given quantity of inputs? To evaluate an efficiency of the resource usage we suggest such nonparametric method in operations research and economics as Data Envelopment Analysis (DEA), which was introduced by Charnes, Cooper, Rhodes (1978). The DEA models based on optimization platform can generate new alternatives to improve a performance compared to other techniques. The aim of this method is to divide regions into effective and not effective ones by amount of consumed inputs and produced outputs and to finally to get respective efficiency coefficients for each region. The efficiency coefficient is the ratio between the weighted sum of outputs and the weighted sum of inputs. Finally, the third current structural effectiveness component prepares answers for such question as Is the way of performance effective enough to produce indented or expected results?. Generally speaking, structural effectiveness is supposed to express and compare structural features of performance with the desirable (normative) ones. To estimate structural effectiveness, it is possible to use the method basing on the growth rates estimation. Method is aimed to investigate regional performance during the one-time period basing on comparisons of the attribute proportions by comparisons of attributes growth rates. The following element (C) is concerned with question: Which cluster is the most important in a strategy formulation?. The regions distribution has to be occurred in the following way basing on 6 variables (2 dimensions 3 aspects): level of resource (R1 human capital group, R2 business group, R3 meso-level group) and technical efficiency (E1 human capital group, E2 business group, E3 meso-level group). Structural effectiveness is not considered to be in the cauterization process, because it is a kind of combination of both included here dimensions and additional dimension for making final decision about competitiveness improvements. The regions fallen into the third cluster with highest level of a development would be called engines. An advantage of this group is that each region plays a role of country development reinforcement. Though, the most important thing in analysis of regional weaknesses and strengths is to concentrate all efforts for the purpose of strengthening the weakest regions called as outsiders which literally are considered to be brakes of a country economy. Such a development orientation of the clusters is grounded on the chain concept. According to this concept the power of the chain depends on the strengths of the weakest element. In a regional aspect such a negative meaning is supported by idea that such kind of regions creates negative multiplicative effects in regional performance and blocks a sustainable territory development. Besides, there will be other group of regions called middle link. The regions from this cluster could support their performance themselves and keep moving on the current way bringing in the country performance neither pronounced stops nor driving contributions. 18 th International Scientific Conference [408] Faculty of Economics, VŠB - TUO

416 The following element (D) is concerned with question: What is the main target orientation? On which hierarchical level basic targets should be established?. The rationale of the answer to this question was explained at the section 3.1, where we reached the following conclusion about importance of the coincident of the strategic targets between basic NUTS 2 level and correcting NUTS 1 level. The structure of the target vector is presented in the figure 5. The selected improvements will be both satisfying needs of NUTS 2 and NUTS 1 regions and making joint contribution to the country development. In this figure we showed the threelevel target coincidence. The basic targets come out from the lowest NUTS 2 level and the main correcting target level is NUTS 1 level. If the strategic targets at NUTS 1 level coincide with the targets at NUTS 2, that brings the best result for both of them making a reinforcing loop perceived as synergetic effect. For instance, if the strategic priority is directed on the decreasing of weak points, the weakest and the most urgent NUTS 2 region to improve will be the weakest NUTS 2 region placed in that NUTS 1 region, which has the same weak points. The optimal point describes the main rule governing the formulation of the improvement alternatives. The resonance effect is the central concept of this rule. The rule is about conditional target priority at the higher vertical level and the domination of the highest resonance effect. It means that, if the NUTS 1 region does not have the same disadvantage as the weakest NUTS 2 region has, then the priority will be given to another NUTS 2 region with the coincidence of disadvantages on both vertical levels. In case of NUTS 1 data absence or presence of country benchmarking the corrective target selection is going due to next country targets (shift of the optimal point), likewise keeping basic targets at the lowest level. 3.3 Systemic partly aggregated differential resonance approach In this paper we suggest Systemic Partly Aggregated Differential Resonance approach to outranking and defining points of regional growth on the competitiveness estimation base. The main task of the proposed approach is to define what dimension and what aspect of competitiveness should be the subject to regulate in the defined NUTS 2 region as a subsystem of the NUTS 1. General characteristics of the approach shortly uncovering its essence are presented below: systemic: alternatives (regions to be improved) are not fully independent, they are subordinate elements (with their specific role) contributing into development of the one system. partly aggregated: sub criteria of competitiveness are already composite indices, but they are not a subject to further total aggregation leading to one competitiveness index. It is based on the statement that the more complex system we investigate the more differential approach to its characteristics should be applied. It means that each estimated latent characteristic should be personally treated during a strategy making. differential: the determination of intervention direction is based on dimensions (resource level, productive efficiency, structural effectiveness), aspects of competitiveness (business, human capital, meso-level) and estimation s positions (NUTS 1 and NUTS 2). Each cluster, where a NUTS 2 region is occurred, requires a specific way of improvements necessary for system (NUTS 1) and super system (country). The regions from the best cluster are supposed to reinforce the economy, so the policy actions should be enhancing strengths of a region. resonance: comparison of alternatives is conducted out in a way of finding out the coincident of best or worst characteristics on extra (NUTS 1) and inter (NUTS 2) levels of a region. Such kind of multilevel target identification aids for the determination of the [409] Faculty of Economics, VŠB - TUO

417 Section S7: Public Economy and Administration necessary congruent regional improvements and allows avoiding of the one synthetic competitiveness criterion. In addition, the peculiarity of this approach can be accentuated by four NO : no best or worst alternatives (all of them are acceptable), no experts, no weights, no full numerical aggregation (or synthetic function). Conclusion In the light of aforementioned, we can conclude that theoretical concept of competitiveness was clarified and its structure was developed due to the highlighting of its dimensions and aspects. From methodological side we have suggested three different methodological tools able to catch the highlighted theoretical dimensions of competitiveness, through which competitiveness is going to be estimated. Each revealed component of the competitiveness needs particular method to be estimated. The resource level requires taxonomic aggregated indicator based on the relative indices characterizing the quality of regional resources. The second component technical efficiency best of all can be estimated by DEA methodology using CCR output oriented model. The third component describing the structural effectiveness needs to measure and compare regional performance proportions between factual and constructed normative etalon of the regional proportions. Such comparison answers the question whether the way of regional performance is effective. In addition, we have elaborated estimation framework of the hierarchical regional competitiveness basing on the special systemic partly aggregated differential resonance approach to the strategy formulation. Suggested approach is grounded on the group principle giving the preference to the group performance, but no to a single region. Such a holistic group orientation from the managerial point of view shifts the focus from just a choosing of the best alternative with a rejection rest worst ones. A strategic attention according to the principle of the weakest element of the chain is paid firstly to the worst undeveloped regions and then, in the second turn, to the developed ones. The criterion of the region selection for the future interventions is the power of a resonance effect. This effect is basing on the idea of the maximal target coincidences between different levels from which a regional competitiveness is estimated. Such a target coincidence points out at the possible multiple synergetic effects arising in a regional performance. Such effects as well allow enhancing of competitiveness of the higher hierarchical systems (such as NUTS 1). From methodological point of view the offered resonance effect gives the opportunity to avoid a full aggregation of all sorted out components of competitiveness. As the result of it such a partial aggregation lets us to consider the systemic competitiveness complexity with out elimination of its peculiarities due to the complete aggregation. Finally, it should be mentioned that all regions being compared are outranked from the system performance (group) point of view, but not using standard logic of a choosing at the one level the best or the worst region to improve. This logic of outranking accounts the peculiarities and requirements of all regions as one system, making a decision for the development of the whole country at deferent hierarchical levels. 18 th International Scientific Conference [410] Faculty of Economics, VŠB - TUO

418 References AHNER, Dirk (2009). What do you really know about European Cohesion Policy? Notre Europe, Brussels. (Accessed 20 February 2013). Available at: < BEGG, Iain (1999). Cities and Competitiveness. Urban Studies 36(5/6): Available at: < >. BUDD, Leslie and Hirmis AMER K. (2004). "Conceptual Framework for Regional Competitiveness." Regional Studies 38(9): Available at: < >. CHARNES A., COOPER, William; RHODES, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, Vol. 2, No. 4, pp Available at: < >. Council on Competitiveness (2001). U.S. Competitiveness 2001: Strengths, Vulnerabilities and Long-term Priorities. Council on Competitiveness, Washington, DC. Available at: < x% pdf>. CООКЕ, Philip (2004). Competitiveness as cohesion: Social capital and the knowledge economy. Y: Boddy, M. & Parkinson, M. City Matters: Competitiveness, Cohesion and Urban Governance, Available at: < >. Department of Trade and Industry (2002). A Modern Regional Policy for the United Kingdom. DTI, London. Available at: < member/departement_of_trade_and_industry_mar_03.pdf >. European Commission (2011). European Competitiveness Report. Brusel. Available at: < f >. European Commission (1999). Sixth Periodic Report on the Social and Economic situation of Regions in the EU. Brussels: European Commission. Available at: < FLORIDA, Richard (2002). The Rise of the Creative Class and how it s transforming work, leisure, community, & everyday life. The Perseus Books Group, New York. ISBN GARDINER, Ben, RON, Martin, and Tyler PETER (2004). Competitiveness, Productivity and Economic Growth Across the European Regions. Regional Studies 38(9): Available at:< [411] Faculty of Economics, VŠB - TUO

419 Section S7: Public Economy and Administration GREENE, Francis J., PAUL, Tracey and MARC Cowling (2007). Recasting the City into City-Regions: Place Promotion, Competitiveness Benchmarking and the Quest for Urban Supremacy. Growth and Change 38(1): Available at: < >. HARMAN, Harry H. (1976). Modern factor analysis. The University of Chicago Press, Chicago. 423 p. ISBN HELLWIG, Zdzisław (1968). Usage of taxonomic methods for the typological divisions countries, Stat Overview, Vol. 15, No. 4, pp HUGGINS, Robert (2003). "Creating a UK Competitiveness Index: Regional and Local Benchmarking." Regional Studies. 37(1): Available at: < KITSON, Michael; RON, Martin and Tyler PETER (2004). Regional Competitiveness: An elusive yet key concept? Regional Studies 38(9): Available at: < KRUGMAN, Paul (1994). Competitiveness: A Dangerous Obsession. Foreign Affairs, Vol. 73(2), pp Available at: < 01/competitiveness-dangerous-obsession>. KUZNETS, Simon (1955). Economic growth and income inequality. American Economic Review, 45, pp LENGYEL, Imre (2000). A regionális versenyképességről. Közgazdasági Szemle. XLVII. évf. Decem-ber. pp Available at: < LENGYEL, Imre (2003). The Pyramid Model: Enhancing Regional Competitiveness in Hungary. Mimeo. Available at: < LUHMANN, Niclas (2002). Introduction to Systems Theory. Polity press. Cambridge: 65 Bridge Street. ISBN , MARTIN, Philippe (1999). Are European regional policies delivering? EIB Papers, 4, pp Available at: < MARTIN, Philippe and Gianmarco I. P. OTTAVIANO (2001). Growth and agglomeration. International Economic Review, 42, pp Available at: < >. MEYER, Dietmar and Jörg LACKENBAUER. (2005). EU Cohesion Policy and the Equity Efficiency Trade-Off: Adding Dynamics to Martin s Model. Andrássy Working Paper Series No. XIII. Available at: < 3lackenbauermeyer.pdf>. 18 th International Scientific Conference [412] Faculty of Economics, VŠB - TUO

420 MIDELFART, Karen Helene (2004). Regional policy design: An analysis of relocation, efficiency and equity. CEPR Discussion Paper No. 4321, Centre for Economic Policy Research, London. Available at: < >. MIDGLEY, Gerald (2014). Systemic Intervention. Research Memorandum 95, November Centre for Systems Studies, Hull University Business School. ISBN Available at:< MYRDAL, Gunnar (1957). Economic Theory and under-developed regions. London: Duckworth. PERROUX, Francois (1955). Note sur la notion de pôle de croissance. Economie appliquée, 1-2, pp PESSOA, Argentino (2013). Competitiveness, clusters and policy at the regional level: rhetoric vs. practice in designing policy for depressed regions. Regional Science Inquiry Journal, Vol. V, (1), 2013, pp Available at: < PLUTA, Wieslaw (1977). Multidimensional Comparative Analysis in economic research. National Economic Publishing House, Warsaw. PORTER, Michael (1990). The Competitive Advantage of Nations. Free Press, New York. Available at: < >. PORTER, Michael (1998). On Competition. (Michael Porter, ed.), Boston: Harvard Business School Press. ISBN PORTER, Michael, & KETELS, Christian (2003). UK Competitiveness: Moving to the Next Stage. DTI Economics Paper. Available at: < >. PUGA, Diego (2002). European regional policies in light of recent location theories. Journal of Economic Geography, 2, pp Available at: < >. PООT, Jacques (2000). Reflections on Local and Economy-Wide Effects of Territorial Competition. In: BATEY, P. FRIEDRICH, P.: Regional Competition, Springer. pp Available at: < >. RÓŻAŃSKA-PUTEK, Joanna, JAPPENS, Maaike, WILLAERT, Didier & VAN BAVEL, Jan (2009). Recoding the Regions of the European Social Survey into the NUTS 1 Regional Classification. Illustration: regional indicators of intergenerational solidarity. Interface Demography, Vrije Universiteit Brussel, Pleinlaan 2, B-1050 Brussel, Belgium. Available at: < SCHAFFER, Axel, SIMAR, Léopold and Jan RAULAND(2011). Decomposing Regional Efficiency, Journal of Regional Science, Vol. 51, No 5, 2011, p Available at: < statistics/search_database>. [413] Faculty of Economics, VŠB - TUO

421 Section S7: Public Economy and Administration STEINLE, Wolfgang J. (1992). Regional Competitiveness and the Single Market. Regional Studies 26(4): Available at: < STORPER, Michael (1997). The regional world: Territorial development in a global economy. New York, NY: The Guilford Press. ISBN TETSUYA, Shimomura and Tadashi MATSUMOTO (2010). Policies to Enhance the Physical Urban Environment for Competitiveness: A New Partnership between Public and Private Sectors, OECD Regional Development Working Papers, 2010/1, OECD Publishing, OECD. Available at: < guest&checksum=d3409f8f3ad2bf9287af886a1d40a330>. TUROK, Ivan (2004). Cities, Regions and Competitiveness Regional Studies 38(9): Available at: < 18 th International Scientific Conference [414] Faculty of Economics, VŠB - TUO

422 Appendix Fig. 3 Derived composition of competitiveness Source: own elaboration Fig. 2 Relationships between regional equity and country economic efficiency Source: own elaboration Fig. 3 The decision making matrix based on key elements of competitiveness [415] Faculty of Economics, VŠB - TUO

423 Section S7: Public Economy and Administration Source: own elaboration Fig. 4 Connection between methods and competitiveness components (dimensions) Source: own elaboration Fig. 5 The structure of target vector Source: own elaboration 18 th International Scientific Conference [416] Faculty of Economics, VŠB - TUO

424 VÝDAJE NA VÝZKUM A VÝVOJ A JEJICH VLIV NA EKONOMICKÝ RŮST VEŠPANĚLSKU, PORTUGALSKU A FRANCII R&D EXPENDITURE AND ITS IMPACT ON ECONOMIC GROWTH IN SPAIN, PORTUGAL AND FRANCE 1 Jana Hlawiczková Slezská univerzita v Opavě, Obchodně podnikatelská fakulta v Karviné JanaHlawiczkova@seznam.cz Abstract This article is focused on support for research and development in selected European Union countries. The aim of this article is to investigate impact of research and development expenditure on economic growth in Spain, Portugal and France. Regression analysis is used for examining this influence. The research period is from 2000 to The empirical analysis is focused not only on examining the impact of total expenditure on research and development (GERD) on economic growth, but also on impact of expenditure by sector of use (ie. business, government, higher education and private non-profit sector).conclusion of the article points out if was proven impact of research and development expenditure on economic growth in mentioned countries. Keywords: Research and development, economic growth, indicators of research and development, regression analysis Abstrakt Článek se věnuje podpoře výzkumu a vývoje ve vybraných zemích Evropské unie. Cílem článku je zjistit, zda výdaje na výzkum a vývoj ovlivňují ekonomický růst ve sledovaných zemích, kterými jsou Španělsko, Portugalsko a Francie. Ke zkoumání tohoto vlivu je použita regresní analýza pro časový horizont let Empirická analýza je zaměřena nejen na zkoumání vlivu celkových výdajů na výzkum a vývoj (GERD) na ekonomický růst, ale i na vliv podle sektorů jejich užití (tzn. podnikatelský, vládní, vysokoškolský a soukromý neziskový sektor). Závěr článku shrnuje zjištěné výsledky, tzn., poukazuje, zdali zde bylo jisté ovlivnění prokázáno. Klíčová slova: Věda a výzkum, ekonomický růst, ukazatele vědy a výzkumu, regresní analýza JELO38, H25, F63 Advisor: Ing. Irena Szarowská, Ph.D. 1 Tento článek vznikl za podpory grantu SGS SU 17/2015 Finanční nástroje veřejné podpory výzkumu a vývoje v Evropské unii. [417] Faculty of Economics, VŠB - TUO

425 Section S7: Public Economy and Administration 1 Úvod Moderní pojetí výzkumu a vývoje (VaV) se začalo v plné síle projevovat až ke konci 20. století, kdy začal být rozvoj států intenzivně svázán tím, jak země přistupovaly k oblasti získávání znalostí, jak je dokázaly využít, vytvářet a převádět do ekonomické praxe. Podpora vědy a výzkumu, potažmo vývoje, tak začala být v hledáčku zemí, které se chtěly nějakým způsobem odlišit, neboť právě ukazatele vědy a výzkumu vypovídaly o konkurenceschopnosti a technické vybavenosti ve srovnání s jinými zeměmi světa (Peková a kol., 2008). Proto i země ve fázi dohánění svých vyspělejších protějšků mohou těžit z investic do vědy a výzkumu (Hobza, 2009). Každá státní vláda by tak měla mít projednánu a akceptovánu svou vlastní politiku podporující výzkum a vývoj, a pokud má VaV splňovat své poslání, je nutné, aby byly státním aparátem podporovány (Rektořík a kol., 2007). Cílem článku je zjistit, zda výdaje na VaV ovlivňují ekonomický růst ve sledovaných zemích, kterými jsou Španělsko, Portugalsko a Francie. Tyto státy byly vybrány z důvodu, že jako takové jsou všechny členy Evropské unie, což je zavazuje k plnění společných cílů a integraci národních politik, tím máme v tomto ohledu na mysli splnění požadavku dle Agendy 2020 a dále také z důvodu srovnání vlivu výdajů na VaV na HDP Pyrenejského poloostrova, kde VaV nezaujímá tak silné postavení jako právě v případě Francie. Výběr zemí pro tento článek koresponduje se zaměřením aktuálně řešené diplomové práce a zaměřením projektu SGS. 2 Teoretická východiska Teoretická část shrnuje základní východiska z oblasti VaV a ekonomického růstu. Vysvětluje základní pojmy a proměnné, které jsou zkoumány v praktické části práce. Pozornost je věnována zejména financování VaV a vysvětlení koncepce ekonomického růstu. Formy státní podpory VaV jsou rozdělovány na tzv. přímou a nepřímou podporu. Zjednodušeně lze říci, že zatímco přímá podpora je definována jako poskytnutí veřejných prostředků (nejčastěji ve formě prostředků státního rozpočtu) na určité výzkumné záměry či projekty, nepřímá podpora představuje ze strany státu formu daňových pobídek, úlev, urychleného odpisování, zvýhodnění úvěrů, podpory rizikového kapitálu apod. (Herzánová a Kovářová, 2010). Přímá podpora probíhá nejčastěji formou dotací, grantů, subvencí či příspěvků, kterých mohou využít ty subjekty, které mají vědu a výzkum jako hlavní nebo vedlejší ekonomickou činnost. Každá země se k financování VaV staví jiným způsobem v závislosti na preferencích státní politiky. Některé země tak vkládají do podpory VaV nemalé částky, jiné jsou zase v tomto ohledu opatrnější. Bez ohledu na vložené finanční sumy, jsou bez pochyb důležité výsledky, které danému státu vznikají 2. Je tak zapotřebí analyzovat vliv vynaložených prostředků na VaV na ekonomický růst země. Dosažení ekonomického růstu je základním cílem každé státní politiky. Produkce většího množství výrobků a služeb, totiž přináší vyšší uspokojené potřeb svých obyvatel 3. 2 Webový portal Slezské univerzity v Opavě, Obchodně podnikatelské fakulty v Karviné [online] [vid. 5. září 2015]. Dostupné z: 3 Ekonomie 1 [online] [vid. 9. září 2015]. Dostupné z: 18 th International Scientific Conference [418] Faculty of Economics, VŠB - TUO

426 Průlom v teorii ekonomického růstu přinesla až 90. léta minulého století, kdy se začala naplno projevovat ekonomická globalizace, která způsobila obrovské změny v charakteru hospodářského růstu světové ekonomiky. Za ekonomický růst považujeme dlouhodobé zvyšování produktu, který bývá měřen pomocí HDP či HNP ve stálých cenách (Holman, 2011). O ekonomickém růstu mluvíme tehdy, jestliže je splněno, že HDP v čase t je vyšší než v čase předcházejícím, neboli v čase t-1 4. V případě, že v ekonomice dochází k takovému jevu, kdy ekonomický růst je přibližně roven nule, hovoříme o nulovém ekonomickém růstu (tzv. stagnaci). Poslední případ, který v tomto ohledu může nastat je, že míra růstu dosahuje záporných hodnot, pak hovoříme o negativním růstu (ekonomickém poklesu). Pro účely mezinárodního srovnání je používán vzorec k výpočtu míry ekonomického růstu. Vzorec pro její výpočet je následující: míra ekonomického růstu v % = Y t Y t 1 Y t % (1) Yt produkt v daném roce (konkrétně např. k roku 2015) Yt-1 produkt v předcházejícím roce (tzn. k roku 2014) 3 Metody a data Regresní analýza (zde klasický model lineární regrese) je nejčastěji užívaným ekonometrickým nástrojem, který slouží k popisu vztahu mezi ekonomickými a finančními veličinami označovanými jako proměnné. Podle Cipry (2008) je úkolem regresní analýzy vysvětlit změny hodnot jedné vysvětlované proměnné změnami hodnot jiných vysvětlujících proměnných. Vysvětlovaná proměnná se obvykle značí jako y a vysvětlující proměnné jako x1,x2,,xk. Lineární regresní model je definován ve tvaru: yt = β1+ β2xt2+ β3xt3+ βkxtk+εt (2) yt vysvětlovaná proměnná v čase t (zde konkrétně HDP) xt2, xt3, xtk hodnoty vysvětlujících proměnných v čase t (GERD a dále jednotlivé sektory užití) β1, β2,β3, βk neznámé parametry modelu εt reziduální (náhodná) složka modelu Při konstrukci lineárního modelu je nutno splnit tři základní podmínky, a to vyloučit multikolinearitu, dokázat neexistenci heteroskedasticity a v poslední řadě by model neměl být poškozen přítomností autokorelace. Empirická analýza používá roční údaje o ekonomickém růstu a výdajích na VaV z databáze Eurostat. Vzhledem k dostupnosti dat je empirická analýza provedena pro časový horizont Zkoumanými ukazateli jsou celkové výdaje vynaložené na vědu a výzkum (GERD) a dále jejich konkrétnější struktura, tj. výdaje na VaV podle sektoru užití. 4 Webový portál Slideplayer [online] [vid. 9. září 2015]. Dostupné z: [419] Faculty of Economics, VŠB - TUO

427 Section S7: Public Economy and Administration 4 Empirická analýza Zkoumanými zeměmi jsou Španělsko, Portugalsko a Francie. Všechny sledované země jsou členskými státy Evropské unie a jako národní měnu užívají jednotnou měnu euro. Procentuální vyjádření celkových hrubých výdajů na VaV jako % HDP ve zkoumaných zemích znázorňuje Obrázek 1. Obrázek 1 GERD/HDP ve sledovaných zemích (%) Zdroj: Vlastní zpracování na základě údajů databáze Eurostat Z Obrázku 1 je parné, že největší podíl celkových výdajů na HDP dlouhodobě udržuje Francie. Do roku 2007 převyšovaly procentuálně vyjádřené celkové výdaje jako poměr k HDP ve Španělsku oproti Portugalsku, k roku 2008 se však tento poměr mění, a právě Portugalsko vykazuje nárůst celkových výdajů v procentuálním vyjádření vzhledem k tamějšímu HDP. Pro Franci je evidentní pokles v rozpětí let , kdy byla ekonomika podlomena přítomností finanční krize. Od roku 2009 zde poměr GERD/HDP pozvolna narůstá. Největší nárůst je zaznamenán v Portugalsku, Španělsko však v tomto progresu nelze rovněž opomíjet. Největší celkové výdaje na vědu a výzkum, jsou dlouhodobě zaznamenávány ve Francii, k roku 2013 byly celkové výdaje na vědu a výzkum přes 47 mld. EUR (2,23% HDP), zatímco ve Španělsku 13 mld. EUR (1,2 % HDP) a Portugalsku jen okolo 2 mld. EUR (1,3% HDP). Ve všech zemích je finančně podporován zejména sektor podnikatelský a nejméně soukromý neziskový sektor. Vzhledem k požadavkům Agendy 2020, kdy bylo zavedeno, že výdaje na VaV mají dosahovat alespoň 3 % HDP (nejpozději k roku 2020), však sledované země dlouhodobě nesplňují. Skutečnost, zdali růst výdajů na VaV ovlivňují růst HDP, bude ověřena regresní analýzou. Regresní analýzy sledovaných zemí byly provedeny postupně. Nejdříve byly provedeny regresní analýzy znázorňující ovlivnění celkových výdajů VaV (GERD) na HDP a následně byla sestavena podrobnější analýza zabývající se jednotlivými sektory, kde byla opět zkoumána míra jejich ovlivnění HDP. Závisle proměnnou veličinou je v obou případech HDP neboli ekonomický růst. Nezávisle proměnnými jsou GERD a dále výdaje na VaV dle sektoru užití. Sledování bylo provedeno na hladině významnosti α=10 % (tj. 0,1) a byly ponechány pouze ty faktory (proměnné), které vykazovaly statistickou významnost dat. 4.1 Empirická verifikace - výsledky klasické lineární regrese ve Francii Po provedení regresní analýzy bylo dle Tabulky 1 zjištěno, že celkové výdaje na vědu a výzkum (GERD) neovlivňují HDP sledované země. 18 th International Scientific Conference [420] Faculty of Economics, VŠB - TUO