Projects / Programmes
Analysis of firm-level investment in tangible and intangible capital from the perspective of future competitive advantages of Slovene firms
| Code |
Science |
Field |
Subfield |
| 5.02.01 |
Social sciences |
Economics |
Economy sciences |
| Code |
Science |
Field |
| S180 |
Social sciences |
Economics, econometrics, economic theory, economic systems, economic policy |
| Code |
Science |
Field |
| 5.02 |
Social Sciences |
Economics and Business |
tradable sector, non-tradable sector, tangible capital, intangible capital, productivity analysis
Researchers (20)
Organisations (2)
Abstract
In the past, Slovenia exploited advantages of the export-oriented growth model, based on development and comparative advantages of the tradable sector. Due to competition on international markets, it was forced to adapt quickly and invest heavily in order to maintain its competitiveness. However, for successfully long-term economic development it is crucial that both, tradable and non-tradable sectors develop and increase its productivity and efficiency. Productivity and efficiency factors are similar in both sectors: traditional factors (tangible capital, labor), we could especially highlight intangible capital, ownership structure, and management quality, as more recent one. All three of them are in the focus of recent empirical studies concerning growth and productivity.
The goals of the project are: (1) to analyze efficiency of tradable and non-tradable sector and comparative efficiency of both sectors, and (2) to determine causes of companies’ comparative inefficiency. The analysis will focus on approximately 400 companies from tradable and non-tradable sector in Slovenia, in period from 2006 to 2012. Analysis of tradable sector will focus on manufacturing sector, while the following sectors will be selected in non-tradable sector: tourism, land transport, retail trade, banks and insurance companies, marketing and consulting companies, telecommunication companies, water and sanitation utilities, energy companies, and real estate companies. We will also include education and health care companies.
The analysis will be conducted in two phases. First, we will identify the efficiency of companies based on data from balance sheets. This will be achieved with the help of DEA (data envelopment analysis) and SFA (stochastic frontier analysis). In the next phase we will analyze elements of comparative inefficiency in the tradable and non-tradable sector. To achieve this, we will collect suitable data on intangible capital from the annual reports and with the help of survey methodology, based on Corrado et al. (2006) definition of intangible capital. We have upgraded the methodology and developed questionnaires for the analysis of manufacturing sector (Prašnikar, ed., 2010). The questionnaire will be adapted for the need of the non-tradable sector. Data on ownership dynamics and management quality will be acquired from GVIN database, annual reports and partially from HRM questionnaire (intangible capital part). This data will be used as explanatory variables in efficiency analysis (in addition to traditional efficiency factors).
The research project will contribute to science in the following way: (1) this is the first such comprehensive analysis of non-tradable sector and its efficiency, (2) it is also the first comprehensive efficiency analysis of the economy as a whole since studies usually focus only on industrial production, (3) the original scientific contribution is also present in the field of intangible capital definition and methodology development, particularly in the field of questionnaire development for measuring intangible capital, (4) the analysis of ownership, and management quality is neglected in Slovenia, which is what this study tries to correct.
Significance for science
The research project “Analysis of firm level investment in tangible and intangible capital from the perspective of future competitive advantages of Slovene firms” systematically analyzes the components of intangible capital and focuses on the sources of competitive advantage of enterprises. Based on the analysis and comparison of the productivity of the tradable and non-tradable sector of the economy, we have identified factors of productivity with respect to the role of the intangible capital, role of management and ownership restructuring and gave guidelines for improving productivity. Analysis is one of the few that focuses on intangible capital, ownership and quality management as an additional explanatory factors in the firm productivity model. Based on the recent contributionon we developed own methodology and we have expended the theoretical aspect of the elements of intangible capital (ecocapital, design of teams, connection with the ownership of companies and information capital). The data was collected with a comprehensive survey and analysis of Slovenia was successfully expanded to Albania and Bosnia and Herzegovina. The project was among the first that focused on the impact of the ongoing economic crisis where we evidenced that the investment activity was pushed into the back and the issue of corporate indedebtedness was raised together with low export competition and slow adaptation of the Slovenian economy to changing economic conditions. We analyzed the behavior of firms that have begun to address the consequences of the reduction in bank lending and increased collateralization, undermining the normal process of deleveraging companies and the extension of credit and the consequent negative impact on economic growth. Given the drop in demand the responses of firms regarding adjustment of the number of employees was also subsequently analyzed and Slovenian companies were compared with companies in seventeen European countries. In this project, we analyzed the role of politically connected supervisors and the impact on the productivity of the company. In terms of building competitive advantages, we placed further attention to the impact of business ownership and completed a comprehensive study on the privatization of public property.
Significance for the country
The research project analyzed the behavior of Slovenian companies in the period before the crisis and after 2008, particularly in terms of their investment activities (the most attention is devoted to investment in intangible capital), the increase in debt before the crisis and deleveraging after 2008, adapting the number of employees and management from the perspective of different ownership structure and supervisory board members. The results of the research project highlight the role of intangible capital as a source of efficiency. The idea that was especially in Slovenian literature rather unknown. Therefore, its implications for productivity in terms of key changes and to evaluation of the ability of companies to succeed in the global marketplace is closely connected with the investment in intangible capital. Characteristics of the elements of competitiveness of businesses and intangible capital are important for the business community and the makers of economic policy measures, since the analysis is reflecting the contribution of individual elements to better company performance. Thus, the results are the basis for strategic development issues at the enterprise level, as they allow companies to think about products, services and production and service processes and formulate appropriate development strategies. In times of economic crisis, more than the investment, the company began to deal with the consequences of a reduction in bank lending and increased collateralization which was undermining the normal process of deleveraging companies and the extension of credit and had consequent negative impact on economic growth. We found that the incorrect sequence of economic policy measures in the process of deleveraging companies, their timing and calibration were the key reason for that. Thus, based on the application of theory and empirical calculations we found that the optimal deleveraging process requires that the central bank also focuses on the stability of the financial system. For the economic policy makers we suggested that the stability of the financial system should be a central part of the third macro-political pillar, namely macroproduential policy. Attention was also paid to the education sector, where we studied the investment in human capital through formal education and training system in the workplace as an important source of competitive advantage of enterprises.
Most important scientific results
Annual report
2011,
2012,
2013,
final report,
complete report on dLib.si
Most important socioeconomically and culturally relevant results
Annual report
2011,
2012,
2013,
final report,
complete report on dLib.si
