Electronic Library of Scientific Literature
Electronic Library of Scientific Literature
Volume 45 / No. 10 / 1997
Dagmar LESÁKOVÁ
Nowadays, as in the past, relatively few research papers have been dedicated
to the area of the scientific status of marketing as a functional economic
discipline. As early as two hundred years ago the philosopher Ludovici
meditated on the prestige of economic and social sciences and concluded
that the prestige of economic and social sciences is lower than that of
natural sciences. Ludovici claimed that it is debasing for serious scientists
to be concerned with economics.
The argument on whether marketing is a science at all was opened fully
in the sixties of this century. Opponents or sceptics point out at the
difficulties with definitions and measurement of virtually important factors
concerning mainly human behaviour. They stress also the singularity of
problem situations, which rules out almost totally any generalization.
As an extreme, they consider marketing as a craft or an art, depending
to a great extent on the marketer's personality.
Marketing in Europe is regarded as a special function and section of the
theory of enterprise economics whereas in Anglo-Saxon countries it is considered
to be economic discipline sui generis. The potential object of research
includes social life as a whole with all types of enterprises, and human
being in the centre - that means that the theory of enterprise economics
and marketing appear to be (just as applied sociology and psychology) in
a certain sense a relation against other disciplines. The problem of whether
division into individual disciplines, or admissibility of interdisciplinary
subjects (such as marketing) are meaningful has been often discussed since
the 1960s. The complexity of the subject marketing brings about
the necessity of „borrowing" from other sciences, and this cannot
be avoided. That is the reason why a great part of the methods of research
in marketing consists currently of methods used in sociology.
Every science deals with the concentrate independent of common language
- e. g. it deals with terms and statements. Considering the criteria imposed
on the use of scientific terms, mainly exactness (e.g. whether the
events and facts can be unequivocally assigned to a certain term), consistency
(if a certain term can be used singularly) and validity (whether
the term indeed expresses what was meant by it), one can even today state
(at least in part) some weak spots of marketing.
Particularly at the beginning the term marketing, moreover taken
from a foreign language a fashionable word, which appeared to many critics
as being hollow, and even to many interested it sounded rather uncertain.
The interpretation of marketing as a „concept of management" did not
ease the seeking of indicators that could help to understand marketing.
The neglect of terminology was the symptom of a mainly empirical and inductive
approach.
A special problem in marketing in particular - and in economy sciences
in general - is presented by examination of hypotheses. Marketing processes
and phenomena are an extraordinary complex, influenced by many factors
and determined by human behaviour, e.g. changing and unstable. Plurality
of aims and behaviour patterns often enable to formulate only stochastic
statements.
At the beginning of the sixties, the conviction prevailed that one can
fully understand the laws of the market and consecutively thus a perfect
marketing theory can be created as a closed and generally valid system,
useful not only for science but applicable above all in decision making
practices in enterprises. As time went by, this enthusiasm gradually disappeared.
Marketing is a real applied science, it is the „theory of politics",
which pronounces neither generally valid valuations nor definitive conclusions.
Marketing as a science oriented at practice aims - aside from its illustration
task - to provide within the framework of creative task also recommendations
for action/behaviour, and thus undoubtedly mediate certain evaluating statements.
From the point of view of the whole society, the marketing discipline has
led to the improvement of competition, to greater market transparency and
to faster adaptation. Better reviews of producers and consumers influence
improved satiation of hardly measurable needs. The decrease of prices,
stimulation of competition, technical progress, luxury goods now available
to lower classes too, are further important impacts ascribable to marketing.
From the point of view of the enterprise economy, marketing provides
the following positive effects:
growing market transparency decreases the risk of wrong decisions and widens
opportunities for action;
effective flexibility means that the enterprise adapts itself to the chosen
market (promising from the long-term point of view) and reacts in time
to challenges in the market;
bids„tailor-made" to meet selected object groups make the enterprise
particularly attractive, in the ideal case unique and bring about permanently
satisfied customers;
sensitivity and candidates improve relations between enterprise and public
rational, strategic and coordinated steps aimed at the market ensure reaching
profit goals and long-term enterprise life.
Discussions on the question of what is the position of marketing within
the economics of the enterprise must be conducted in line with the basic
decision, whether to consider enterprise economics as pure basic science
or as applied technology. Supporters of the second approach often argue
with the undisputed link between science and technology. Here we have an
often unidentified problem of which particular basic scientific information
relates to the application route. It seems that the science theory alone
is unsuitable for deciding from a certain metatheory position the dispute
between the theoretic route and applied orientation of marketing.
We analyze in the paper certain tendencies that exist towards the institutional
classification of marketing into theoretical, and manager oriented lines,
at the same time both these lines reject this classification for tactical
reasons. While analyzing the relation between applied science and scientific
theory of marketing, doubts were cast on the problem of whether scientific
theory has the task to provide normative statements at all. From the special
applied science point of view, one cannot demand that the scientific theory
of marketing should provide normative criteria and recommendations. Marketing
researchers can provide only model solutions of certain ideal situations.
Ladislav UNČOVSKÝ - Ivan BREZINA
This paper is the output of research within the framework of PHARE ACE
project P-95-2035-R as the so called Country Report for the Slovak Republic,
auditing the degree of concentration in relevant country.
Concentration of the Slovak industry was developed in the framework of
the Czecho-Slovak industry; its degree of concentration, even compared
with other post-communist economies, was extremely high. The process of
deconcentration took place mainly in the era of the Czech and Slovak Federal
Republic particularly in the years 1990 - 1992.
The measurement of concentration and its influence can be accomplished
by various indicators. Best available of these, yet not most effective,
are number of enterprises, and their average size expressed by numbers
of manual workers, number of employees etc. For the period preceding the
year 1993 these data are the only ones related to the concentration of
industry in the Slovak Republic, that can be used to monitor the deconcentration
process.
The situation in concentration of industry in the year 1989 and in the
year 1991 and the classification of enterprises into size groups is presented
in tables 1 and 2.
Process of deconcentration of the Slovak industry over the period 1989
- 1995 expressed by the number of enterprises, their classification
into size groups and by the average enterprise size is demonstrated in
table 3. Similar development survey for the main industry branches followed
continuously throughout the whole period is presented in tables 4 -
7.
Table 8 indicates the number of enterprises with less than 25, and over
25 employees, as well as their average size by number of employees.
Specific indicators for the analysis of the concentration are shown in
the following tables. They deal with the shares of 3 and 4 biggest enterprises,
or one biggest enterprise in the market (CR3, CR4, CR1). Table 11 presents
the calculated Herfindahl-Hirschmann index for two digit industry branches.
In the Annex values of this index for three digit branches are presented.
All in all, each of indicator types demonstrates gradual deconcentration
of industry branches, which is manifested by the increase of the number
of enterprises and the decrease of their average size on the one side,
and by the slow decrease of the share of big enterprises in the market
on the other side. The evidence of this presents table 12; it shows, that
the share of enterprises with more than 1000 employees still holds about
50% of the market. In the year 1994 159 enterprises with more than 1000
employees constituted 10,94% of the total number of enterprises, but produced
52,8% of goods, in 1995 152 enterprises with over 1000 employees constituted
8,82% of the total number of enterprises, but produced 49,46 % of the production
of goods.
As for individual branches, the highest level of concentration exists in
branches 23 (NACE classification) e. g. manufacture of coke, refined petroleum
products and nuclear fuel, 25 (manufacture of rubber and plastic products),
27 (manufacture of basic metals), 30 (manufacture of business machines
& personal computers), 32 (manufacture of radio, TV and communications
equipment and appliances), 34 (manufacture of motor vehicles, trailers
and semi-trailers).
While analyzing concentration and deconcentration process in the Slovak
industry one can say that the basic tendency is represented by the deconcentration
of the strongly concentrated branches. Original concentration, however,
was achieved almost entirely by administrative decisions, while substantially
lesser part played the increase of equity capital and share in the market,
never fusion actuated by enterprises themselves. To this „old" concentration
has been recently added „new" concentration activated by impulses
specific for market economy. Branch 34 (manufacture of motor vehicles,
trailers and semi-trailers) is such a case.
Second problem sphere related to concentration in open economies is connected
with the problem of foreign trade. As indicator of „import penetration"
(IP) the proportion of import to sources (domestic sales and import) was
accepted. If there is a branch with high share of imports (high IP indicator),
market share of domestic producers which forms the basis of concentration
indicator, does not express real concentration in the market. For evaluation
of export the ratio of „export performance" (EP) was chosen, which
is the proportion of sales for exports to total sales.
Big problems were linked with data procurement on exports, and above all
on imports in NACE branch classification. Data for 1993 use statistic sources
[5]. Data for 1994 were obtained in similar way of calculation and are
presented in table 13. For the period of 1994 and 1995 Slovak Statistical
Office followed the data on exports and imports in NACE 2 classification.
In spite of shortcomings mainly at imports, these data formed the basis
for table 14. Data for 1994 in both tables are based on different methods
of calculation.
At an application of data from publication [5], where production is expressed
in commodities and consumption in branches NACE 2 at the same level of
aggregation one could assume that commodities appertaining to certain industry
branch would be produced in the same branch. It came out, however, that
large part of commodity production is produced by other industries as well.
This production can be labelled as „secondary production". It is listed
in table 15, where the names and codes of commodity groups correspond to
the NACE 2 branches. Table 15 presents also global production and production
implemented inside relevant branch. The rate of primary production is the
share of production implemented in the relevant branch. Complementary rate
of secondary production expresses the share of production implemented outside
its own industry.
Third problem sphere concerns relation of structure, which is expressed
by concentration, and efficiency, usually expressed by profit rate. Within
the framework of industrial economy is this problem very intensely treated.
Within the scenario of the current project, and by means of econometric
equations, the correlation between profit (variable PROF), or economic
result equal to the difference of income and costs, concentration rate
CR4, ratio of investments to sales IS, import penetration IP, and export
performance EP were studied. These data are cross-sectional, where individual
observations refer to the data for individual NACE 2 branches. Data for
the years 1994 and 1995 were studied. The values of variables in the years
mentioned were denoted as PROF, IP etc., PROF5, IP5 etc. respectively.
The first two simulation experiments comprising the whole set of surveyed
data provided results, that were not too satisfactory. The rate of model
interpretation is very low in both cases, the significance of individual
variables and of the equations as a whole is unsatisfactory. Thus the two
following experiments were based only on data of the industries with profit
(with positive economic result).
In case of equation for the year 1994 this adjustment lead to considerable
improvement of results both in case of model interpretation rate and significance
of individual variables. This improvement of results, however, cannot be
stated for data from the year 1995. Further two equations were assessed
only on the basis of data from the 8 most concentrated branches. The results
remained unsatisfactory. The same result was gained from the last two experiments,
where the variable for profit was modified. The conclusion must therefore
be that the correlation between structure and profitability in this case
was not confirmed in general.
Eleonóra FENDEKOVÁ - Michal FENDEK
In compliance with the transformation of the Slovak economy into a market
economy type, a number of urgent and important tasks related to the new
principles of operation of the market economy mechanism had to be solved.
The existence of the market structure of imperfect competition is linked
as a rule with the direct and hidden effects affecting negatively the implementation
of economic competition. The observance of conditions for economic competition
is monitored institutionally in the EU countries and other developed countries
of the world and one ascribes great importance to this item of economic
development.
The protection of economic competition in the Slovak Republic and related
tasks are insured by the Anti-Monopoly Office of the Slovak Republic. This
Office during its relatively short existence has fixed its attention first
on the preparation and then to the guarantees of adherence to Law No 188/94
„On the Protection of Economic Competition".
While solving the whole series of tasks related to the evaluation of the
status of competition background in the branches of Slovak economy, the
Department of Analyses of the Anti-Monopoly Office of the Slovak Republic
started in 1996 the solution of how to propose and experimentally test
methods applicable for quantitative analysis of the status of competition
background within the branches of the economy of the Slovak Republic.
The paper presents possibilities of exploitation of model approaches, mathematical
and economics methods and computer techniques for the evaluation of competition
background in the branches of the Slovak national economy. Basic terms
of methods to measure the concentration in individual branches are presented.
The indicators of economical effectiveness of individual enterprises are
characterized. Selected quantification methods of the degree of concentration,
e.g. indicators of absolute and relative concentration implemented in presented
case study, are explained. The values of indicators for extreme cases of
the degree of concentration in the industry branch are quoted.
Measurement of Concentration in the Branch - Problems of Methodology
Development and the degree of concentration in an industry branch is
an essential factor that defines the level of competition background; its
exact demarcation is based on the system of quantitative characteristics
included in analytical materials of State institutions that inspect adherence
to the rules of economic competition in the majority of developed economies.
This phenomenon of economic analyses will be fundamentally significant
for Slovakia in the near future because of the expected formal and institutional
integration of Slovakia into the European economic zone and the marked
opening of the Slovak economy. One can therefore expect that protection
of economic competition will become a high priority factor for the guarantee
of harmonic operation of economics.
Anti-Monopoly Office of the Slovak Republic as similar institutions in
EU countries, plans to utilise methodical analysis of the status of
competition background, and while using exact methods applied in developed
industrial countries, aims to quantify the degree of concentration in individual
branches of the national economy. Based on this analysis the Office will
prepare for Government bodies qualified information for the following two
decision levels:
for a long term point of view, information for generation of an economic
policy concept;
for a short term point of view, information for actual corrections of this
policy.
In the long-term horizon, the standard task of the Anti-Monopoly Office
of the Slovak Republic will be to monitor systematically the status
and development of the competition background within the whole of Slovak
economics and to prepare for decision-makers scientifically based and
recommendations quantified by exact methods for the preparation
of an economic policy concept dealing with the development of the economy
for the protection of a competitive environment in the branches of the
Slovak national economy.
A number of methods more or less suitable for the evaluation of the
degree and effects of concentration in conditions of imperfect competition
can be found in special literature. The essence of most of the methods
is quantification of indicators, which describe in a certain way the position
of an individual producer within the framework of a production branch in
the relevant market for a certain commodity, and eventually characterize
the state of competition background in the monitored branch.
Ultimately one can split these methods into two groups:
methods that measure the degree of concentration in the branch in the
relevant market for a monitored commodity, and
methods that measure the degree of economic strength of an individual
producer.
With some simplification one can say that all methodological tools for measuring concentration in fact quantify the share of relevant characteristics (for instance turnover share) of a certain subject of a particular hierarchical structure (for instance an enterprise within the framework of an industrial branch) in the total value of these characteristics summed up for all analysed subjects.
Data Base of the Model
By means of the case study, we illustrate possibilities for the exploitation
of quantitative methods the evaluation of the state of competition background
in the branch of furniture manufacture in the Slovak Republic, based on
the 1995 data. In spite of the fact that available data base provided data
for the year 1995 only and therefore did not allow to execute dynamic analyses
of the degree of concentration development in the relevant branch throughout
a certain time period, the results are by no means uninteresting. During
this relatively short period, e.g. during the year 1995, two allowed concentrations
were implemented in the branch of furniture production, thus allowing research
into the reaction of individual concentration indicators on this development
trend in the branch.
The manner of respecting the import of monitored commodities into the relevant
Slovak market presented some problems. This import into the Slovak Republic
during the year 1995 represented more than 20% of the market. It is obvious
that such a share is significant for the position of individual producers
in the relevant Slovak market. We therefore included furniture imports
into the analysis as an aggregated item within a tentative enterprise.
Based on the analysis of the situation and development of concentration
in the branch of furniture production from the point of view of export
sales of the branch, one can state interesting conclusions on the social
effects of the concentration of production subjects within the branch.
Data base of tangible data from the 26 most important furniture producers
in Slovakia, and aggregated unspecified data from a further 71 producers
are available. The latter aggregated data were in this analysis denoted
as „other producers" with the attribute of the independent producing
subject under the serial number 27.
Information on the imports of this commodity class into the relevant Slovak
market is available in the same structure as data for Slovak producers
with the attribute of an independent producing subject under the serial
number 28. Just the consideration of imports in the analyses mediates a
more realistic view of the structure of producers' market shares in the
relevant Slovak market.
Development of Concentration from the Domestic Market Sales Point of View
Data base of the file „sales to domestic market" and the situation
of the competition background in the furniture production branch before
concentration is described in Table 1. The following characteristics needed
for analysis of the situation of the competition background following each
concentration phase are quantified and presented in Table 2:
volume of supplies to the domestic market;
share in the market of the producer in branch production Kr;
degree of concentration CR3, CR6, CR10;
Herfindahl index H;
Herfindahl index at hypothetically uniform distribution of production of
„other pro- ducers" H*;
degree of dispersion DR5, DR6, DR10;
variation coefficient V2.
Graphic interpretation of the situation of concentration in the branch
from the point of view of sales to domestic market for individual production
subjects including items „other producers" and „import" after
the second phase of concentration is presented on Figure 1.
Let us now interpret the meaning of individual indicators of the status
of competition background in the branch of furniture production in the
Slovak Republic.
The degree of market share concentration by the three biggest producers
in the branch CR3 did not reach 23%, the market share
concentration of the six biggest producers CR6 did not
reach 29% and the market share concentration of the ten biggest producers
CR10 did not reach 37% neither before the two permitted
concentrations nor after them.
Similar favourable values reflected the standard indicator of the degree
of concentration in the branch, the so called Herfindahl index. At the
starting point, e.g. before concentration of two or three subjects, the
value of Herfindahl index defined as the sum of the squares of market shares
of all producers in the branch was H = 1 180.92. Thus the degree
of concentration did not reach the standard risk boundary for the conditions
of economic competition H0= 1 800 points. Let us remark that
the value of Herfindahl index did not exceed the boundary 1 800 points
after two phases of concentration either; it then reached the values of
1 280.7 or 1 456.23 points respectively.
Development of Concentration from the Export Sales Point of View
Data base of the file „sales for exports" and the situation of
the competition background in the furniture production branch from the
export sales point of view is described in Table 1. To analyse the situation
of the competition background following each concentration phase one used
the same analogical characteristics as those used in the analysis of the
state of competition background for sales to the domestic market, with
the exception of the Herfindahl index H* calculated for the hypothetically
uniform distribution of production of „other producers". There is
no need to analyse particularly the data base of the volume of sales for
exports for the whole file of the Slovak furniture producers, e.g. also
for those 71 producers not specified in detail, as the „other producers"
did not take part in furniture exports from Slovakia in the monitored year.
The values of individual characteristics are presented in Table 3.
Graphic interpretation of the situation of concentration in the branch
from the point of view of export sales for individual production subjects
including item „other producers" after the second phase of concentration
is presented on Figure 2.
One can characterise the meaning of individual indicators of the situation
of competition background in the furniture production branch in the Slovak
Republic in the case of export sales in the following way. The values of
all indicators used are, in the analysis of the situation of competition
background in the production branch of furniture, assigned for exports
less favourable not only after the implementation of the two listed permitted
concentrations, but at the starting point of the branch as well. The degree
of market share concentration by the three biggest producers in the branch
CR3 increased from the value of 54% to 58%, the market
share concentration of the six biggest producers CR6 exceeded
after concentrations the value of 70.9%, and the market share concentration
of ten biggest producers CR10 increased from the value
of 77.6% to 84.06%.
Similar non-ideal values were yielded by the standard indicator of the
degree of concentration in the branch, the so called Herfindahl index.
At the starting point, e.g. before the concentration of the two, or three
subjects respectively, the value of the Herfindahl index in the furniture
production branch was H = 1 445.07, meaning that the degree of concentration
did not reach the standard risk boundary for the conditions of economy
competition, H0= 1 800 points. The value of the Herfindahl
index however, after the implementation of each of the concentration phases,
exceeded the 1 800 point boundary and reached the values of 2 158.9 and
3 087.26 point respectively. The important question is what aspect we choose
while evaluating these results. It is necessary to stress that the standard
method for this type of analysis, e.g. for the evaluation of export sales,
has another interpretation meaning. The indicators in fact express the
measure of economic strength of individual economic subjects from the point
of view of their exporting possibilities , and here the strengthening of
the export potential of producers can, in the end, be appreciated as a
socially desirable trend.
Conclusion
Based on the presented analyses, one can positively evaluate the development
of concentration in the furniture production branch in the Slovak Republic
in the year 1995. Good conditions for the protection of economic competition
in the furniture production branch were guaranteed in the relevant Slovak
market on one side, and on the other one can consider the implemented concentration
as bringing socially positive effects strengthening the export ability
of producers.
Basic indices presented here, as well as further tools published in special
literature, enable to review very competently the degree of concentration
in the branch. General conventions are existing, for instance the American
or German, that define boundary values for these indices. When exceeding
the values of these indices, one can expect the eventual constraint of
economic competition.
An area of equal importance in utilizing this methodology lies not only
in the analysis of the actual situation of the concentration in
the branch mentioned, but also in the evaluation of the long-range impacts
of appraised concentration of the producing subjects in the branch. This,
or another analogical methodology, could then serve as an effective
supporting criterion for making decisions whether to permit concentration.
One should realize, however, that high conclusiveness, high analytical
level, complexity and information value of papers on the situation
and development of the competition background in individual branches of
the Slovak Republic cannot be a short-term process, but that this problem
demands long-term systematic and conceptual work provided by a solid
level of organisational, material and personal resources.
In concluding, we can say that the results of the quantitative analysis
presented in the paper confirm that the concentration in the furniture
production branch in Slovakia in 1995 complied with standard criteria applied
in quantitative analyses of the competition background status both in the
Slovak Republic and abroad
Ladislav HÁJEK
The economic theory explores two alternative economic systems: market
economy and command (planned) economy. K. Engliš calls these pure abstract
types the individualistic (capitalistic and co-operative) and the solidaristic
(socialism). He regards crossbreeding of both systems as a historic rule.
According to him a real system is always a combination of individualism
and solidarism.
F. A. Hayek uses for compared economic systems the denotations, individualism
and collectivism. He calls to the attention that the term „liberal"
(primarily follower of the „laissez-faire" idea) expresses nowadays
nearly the contrary. He accentuates out market economy preferences, but
he does not understand by the market functioning absolutely. In his opinion
the government has to create conditions for enforcement of competition,
to substitute it in those situations where it cannot be efficient and to
ensure the basic securities of life that are the important precondition
for freedom.
Liberalism of the 20th century is of a very heterogeneous and
changing nature and the-refore it is difficult to distinguish precisely
particular streams and schools with various attributes. They are mutually
penetrating, changing names and content. For instance, neoconservatism
is gradually merging with the traditional conservatism from which it originally
arose.
The comparison of economic systems should be always done on the same level
of abstraction, i.e. either on a most general level, or as a comparison
of real economic systems. The goal of economic policy cannot be the implementation
of the economic model in its purest possible form. The main problem is
to determine a rational rate first of all in the field of taxation and
redistribution of income, in the extent and structure of social expenditures,
and in the position of the public sector in the economy.
Market and government regulation have their positive and negative consequences
in economic practice. For instance, Mexico and Turkey but also the USA
and Japan have the lowest tax burden and redistribution of income within
OECD countries. On the other hand, Denmark has the highest tax burden among
OECD countries, high social expenditures, but simultaneously higher economic
growth, labour productivity, lower budget deficit, and lower government
debt than many other countries with lower rates of income redistribution.
A particular tool and measure of economic policy is not good or bad by
itself, but it finds in every economic model its own concrete contents
and also its specific consequences.
Since about 1990´s various approaches to the economic policy have been
converging in various aspects. Nowadays, the succession of a new government
with a different political orientation does not necessarily mean sweeping
changes in economic policy; however a certain correction of economic policy
is enforced and greater continuity is preserved, as compared to the past.
However, the extent of redistribution of GDP during the last 30 years has
been increasing in all EU (or OECD) countries.
A modern economy can perform efficiently neither without market mechanisms,
nor without regulation by government. However, it is difficult to find
and change the relation between market and government regulation along
with changes of economic, social, political, and other conditions, both,
internal and external.
Alena ZEMPLINEROVÁ
The paper is dedicated to that part of the private sector, which shows
features of effective ownership, hence the sector of small and medium enterprises
(SME) and the sector of foreign enterprises. SMEs are supposed to be a
source of employment, value added and innovation. They are flexible and
adapt themselves quickly to market changes. Socially, SMEs are closely
linked to the middle class and contribute to the political stability. There
is the general feeling that foreign enterprises will speed up the process
of structural for a variety of reasons, including the lack of domestic
capital, managerial abilities and modern technologies in former centrally
planned economies. One expects generally that foreign enterprises will
contribute to the increase of work productivity and to the economy growth.
Foreign enterprises integrate domestic economy into world markets, improve
R&D level and product quality.
At the start of transformation the number of foreign enterprises was negligible
and the small business sector did not exist at all. Since 1989 SME sector
has expanded considerably to such an extent, that its share on employment
rate and on production is comparable to those in the EU countries. Due
to the rather imperfect statistics in small enterprises one cannot discuss
the quality and internal structure of SME sector in detail. Performance
of small enterprises has not yet been analyzed either. As for the foreign
enterprise sector, one can state that the number of foreign enterprises
in the Czech economy increases year after year, their share in economy,
however, does not reach proportions common in the EU countries. The activities
of foreign enterprises are also evaluated only on the basis of individual
cases, and systematic statistical analysis of their functioning is only
sporadic in spite of the capability of our statistics to identify enterprises
with foreign direct investment (FDI) participation.
The aim of statistical analysis presented in the paper was to appraise
the role, structure and performance of the SME sector and the sector of
FDI in our economy and in the manufacturing industry, based on the combination
of several unique sets of statistical data from the Czech Statistical Office.
Small enterprises are compared with the big ones and FDIs are compared
with the level of domestic enterprises. Main variables used in the paper
are : number of workers, number of employees, sales, production, value
added, labour productivity, investments, incomes and export. Data presented
in the paper constitute careful adjustment of the data from the Czech Statistical
Office, they can, nevertheless, differ from the officially published data.
Our analysis of the statistical data confirmed that both SMEs and foreign
enterprises make important contributions to the restructuring and growth
of the economy and its stability. Different, and mainly positive economic
indicators, that are found in SMEs and foreign enterprises, signal their
considerable contribution to economy restructuring. SMEs helped to retain
low unemployment rate during transformation process and to mitigate the
GDP shock. At the same time they radically contributed towards economy
restructuring by the transfer of economic activities to the underdimensioned
sectors, above all into service sector.
In the year 1995 small enterprises (e. g. those with less than 50 employed
persons) provided jobs for 48% of the total labour force. In some sectors
the share of small enterprises on employment rate was even higher - in
trade and repair small enterprises employed 72 % of the total labour force,
in the sector of hotels and restaurants even 75%. By analysis one discovered,
that small enterprises are considerably represented in the manufacturing
industry too; not only in traditional labour intensive branches such as
metalworking, printing and woodworking industries, but also industry branches
characterized by progressive technologies, as for instance radio, TV &
telecommunications industry or production of optical & medical instruments.
Compared to the EU, small enterprises there employ on average 50% of the
total labour force. Judging by the number of enterprises per 1000 inhabitants,
the data for Czech Republic are very high. This is obviously caused by
the excessive number of very small firms with zero employee number. Such
firms are founded by persons, who the same time are full time employed
in another, usually state owned enterprise, and simultaneously carry out
another activity within „their own" firm. Another cause of the excessive
number of very small firms can be, that one or two persons (partners) found
several firms for various purposes and thus control several firms at the
same time.
The implemented analysis indicates, that small enterprises produce on average
more value added, and are more productive in more labour intensive branches.
These results are, however, only temporary. When comparing foreign enterprises
with domestic ones, unequivocal results were obtained. Foreign management,
which usually comes together with foreign investments, is oriented at enterprise
strategy and long term development which, with local management, has not
been usual case yet. Foreign enterprises usually have no problem of financing
their business and strategic plans, whereas domestic firms are often indebted
by old liabilities that originated in privatization process. These facts
were confirmed by an analysis. Foreign enterprises invest on average four
times as much as domestic enterprises, are more productive and their export
performance is higher. While domestic producers in the manufacturing industry
export on average a quarter of their output, foreign enterprises export
more than 40% of the output. Employees in foreign enterprises have on average
higher salaries than in-foreign enterprises by about 20 %. Foreign firms
are apparently able to attract more skilled workers and managers. The share
of foreign enterprises on employment rate in Czech economy is but 10% only,
their importance, however, continues to grow. Between 1993 and 1996 the
number of foreign enterprises increased in construction six times, in retail
four times, in real estate three times, it doubled in manufacturing and
transport.
Concluding the analysis, the author deals with conditions for enterprise
operation in the Czech economy. One pays attention to policies supporting
small enterprises, or supporting the inflow of FDIs. Despite of some efficiency
of fiscal and financial tools supporting small enterprises or FDIs, the
author means, that one cannot prove, whether the discrimination which is
a result of preferential treatment of some segments of economy is not causing
more damage (lost opportunities, indispensable redistribution of means
etc.) than eventual benefit from supporting tools can bring. For the decision
making of all investors, irrespective of whether big or small, domestic
or foreign, macroeconomic stability is absolute and fundamental priority.
Small and weak enterprises suffer by economy fluctuations and by the inflation
more, than strong and big enterprises. Expectations linked with stability
and economy growth are important for strategic decision making of foreign
investors.