Electronic Library of
Volume 47 / No. 5 / 1999
The end of the second millenium is characterized by the emerging historically qualitative changes in the social-and-economic development of mankind. Developed countries have been putting a great effort in progressing towards the global information society stage (GIS), or towards the information economy (IF), the economy based on knowledge (EZZ), or the learning economy (or docile economy) (UE), etc.
The other, however not less important process which is typical for the recent years of the 20th century and having no precedence in the history, is the transition of the former socialist countries from their state-run centrally planned dirigism (regulation) towards a new mechanism of running both society and economy. This step has been in majority of political platforms indicated as “transformation” and later by the term “transition towards the market economy”.
The above mentioned processes and many other related with them has pose a great challenge for the economic research. It has been obvious that during this breakthrough period, not only because of the millenium, but also from the point of view of the historical development, we will have to overcome the impacts of the growing gap between the authentic vital economy and the needs for research and explanation of new problems brought by the progress in science and technology. The new progress has dramatically affected not only the specific economic reproduction processes, but also the political sphere thus influencing economical, social, psychological, cultural and other related processes.
Even the best developed countries are also having problems to cope up with the task understandably enough, the post-communist countries have thus been found at even more difficult position. This is the reason why the author is convinced that the qualitatively new problems to be solved during the coming years would ask for a new appropriate approach and for new methods offered both by the economic science and the applied research on the objective economic reality like in case of developed countries, but in addition it will be necessary to develop methods and tools for positive normative learning of the specific trends in economies which are found in the transition trajectories.
The author points at the fact that also in the Central-European environment the processes invoked by the massive penetration of computers, new communication equipment and procedures, of Internet, etc. into businesses, banks, bourses or insurance companies as well as into economic relationship between people, institutions and companies have been still more and more spontaneous. These processes should be professionally better supported and accommodated in the economy demanding a new non-conventional approach. The author sees the negligence to the new tasks as a big drawback within the Slovak economic thinking. In addition, some university departments or research units, as well as non-school research institutes let themselves deceive that with the help of the empirical research, maintaining the platform of the beaten paradigm they can still functioning successfully in the new conditions. The article laid open that the policy of “head in the sand” would not win any success not even temporary.
New challenges in the sphere of social-and-economic, or political-and-economic research require introduction of such an economic paradigm, of such methods and approachs which would support and provide solutions for newly emerged questions and challenges brought by the new national economies evolution, by integration alliances, and generally by the economy worldwide. In his article, the author attempted to answer some open question and indicated new methods and approaches for solutions. However, due to limited space, some open question has only been indicated or the author pointed at a possible approach to solutions on a selective level. He is also referencing his articles published in the Journal of Economics (Ekonomický časopis) during recent 3– 5 years, which could appropriately amend the grey places on the selective mosaic. Except for that, the author also drew attention to the articles of his colleagues from KEM FEI STU published in the Economic Journal covering the same subject under the working title “a non-conventional simulation of economic systems” which was introduced at the FEI STU after (1996) the author joined the university. He does not explicitly quote their works, but provides the most important information for readers’ references.
The author is warning that this research did not end up in a deadlock in the world, and that especially on Internet home pages we can see the boom in the field of the theory of complex systems, tools of auto-organizing modeling, i. e. mainly cellular automata (CA), artificial neural networks (ANN), genetic algorithms (GA) etc. If the Slovak economic science and research is not able to keep up pace it can be hit by serious bad impacts on the development of the Slovak economic science, research and educational process, but it also may negatively impact a broader frame of the social-and-economic processed, as well as the practical economic policy, and finally, it may also affect the results or the overall performance and outcome of the real economy.
The author, in separate sections, presented the reader with his (personal) research on non-conventional stimulation of economic systems and computer experiments on this field, he also described the partial outcomes achieved by the grant research he has been leading at the KEM FEI STU within the VEGA 1/4221/1997 grant. In the first section he is dealing with theoretical, methodical and modeling question within the “knowledge based” economies. He explained a non-conventional approach towards information or knowledge. The author underlined the need to distinguish between endosomatic and exosomatic information and knowledge, he said exosomatic information and knowledge are the fundament for the so called “knowledge based” economy, but the theory which has been newly created does not pay enough attention towards endosomatic processes which are affecting the economic and social behaviour of the national economy subjects.
The next section analyzed the basic question of the non-conventional modeling of the so called complex economic systems. The author, in favour of a logical context, selected well known CA models as an example. He highlighted the difference between the architecture and anatomy of a single agent and of the population of agents (simulated econo-my). This section also contains the original author’s model of a self-creating and self-learning economic system. In order to make it more understandable and bringing it closer to a standard reader, the system was introduced in its simple form using Excel.
The important parts of the article offer fundamental information the author provided on introduction of the ANN and GA, evolution algorithms, genetic programming and various hybrid “technologies” developed on their basis for researching abstract economical models, and also for real life, practical, pragmatic and utilitarian problem solution both on the macroeconomic and also on the microeconomic level. For the reader who, in the future wants to study this field, a note about important world research institutions and Internet addresses of institutions or outstanding experts who have made a considerable move in introduction of the above mentioned non-conventional systems, may be of great importance, after contacting research group leading by author.
This paper is based on a 1999 survey of the largest foreign investors in the Slovak Republic. The main objective of the study is to measure the impact of foreign investors' human resource management practices on local companies and their environment in a more detailed way, to identify key problems in the human resource function in FDI-invested companies in Slovakia, and to describe the strategies that companies use to handle these problems.
The survey, the first of its type in Slovakia, was conceived rather broadly in order to get as much information as possible about HR issues in FDI-invested companies. It cove-red the following areas: (1) basic information about companies from an HR perspective, such as type and origin of company, investment in HR development, average age of employees, average pay, number of local managers, number of expatriates, localization, and postings of local managers in regional or corporate headquarters; (2) information about specific HR issues, such as sourcing, training and development, performance appraisal, and compensation; key HR challenges with respect to local employees and strategies used to address these challenges; and (3) assessment of the contribution of foreign investor’s know-how in HRM to the restructuring of local companies, including numbers on productivity growth and the opinions of local managers about the change brought by foreign investors and their impact on productivity growth.
The questionnaire format was used for all companies with foreign capital investment exceeding the SKK 10 million (about 250,000 USD). According to the database provided by the National Bank of Slovakia in March 1999, there were 291 such companies. Despite the fact that there are thousands of FDI-invested companies in Slovakia, these 291 firms make up 90% of all foreign investment when measured in dollar volume. The assumption was that the role and the experience of the largest investors would have much higher explanatory power than that of small investors, most of whom invested the amount up to SKK 100,000 (2,500 USD).
The questionnaires were distributed to the human resources managers at these 291 companies or to other managers responsible for HRM in the company. The response rate was 38%.
The survey yielded some interesting, even paradoxical results: Slovakia as well as other CEE countries can boast about a well-educated labour force, but on the other hand, expenditures of FDI-invested companies on HR, including training and development, gradually grow over time. Another feature is high reliance on internal training and internal recruitment in these companies. Companies usually declare that one of their major problems in the HR area is to find the appropriate labour force, especially high-quality managers, but on the other hand, they have already started with their posting in other CEE or in regional or corporate headquarters, (although in limited number) which proves the quality of local management. High unemployment and low labour force mobility do not result in low turnover – companies ranked retention together with compensation as rather high among their “local HR problems.” It is also interesting to see that ten years of transition have not been enough to change labour morale, especially among workers: companies still complain about old work behaviour or ethical issues. On the other hand, despite a long union tradition, “the union problem” is not ranked among the most important issues.
The overview of “HR problems” indicates one important conclusion: no problem is ranked too high, because the most important problems were ranked only at the value of about 3 from a five-point scale. We can conclude that companies are generally satisfied with the labour force and even on a special role of labour force in transition of companies.
According to the experience of more than half of all HR managers in FDI-invested companies in Slovakia, the new approach to HRM implemented by foreign investors has raised the productivity of their company. One third of the companies estimate that HRM practices account for 25–50% of their productivity growth, 15% of the companies give an even higher estimate in the range of 75–100%, and 5% of them even think that the appropriate HRM practices alone led to the total productivity growth in the company. These results show that human capital handled and motivated in the right way can be a significant if not the decisive factor for change in local companies.
According to the experience of FDI-invested companies, three factors are of major importance for involving people in the management of their own companies and changing them from a passive audience into drivers for change:
Based on the results of the survey, there are some important lessons for local companies with no foreign capital involvement:
while compensation levels depend on the performance of the company, the amount for training and development should be shared by companies and the state through state subsidies and the utilization of state institutions (technical institutes, universities).
This study presents partial results of our ongoing research focused on analysis of corporate groupings and governance structures. Since there have been various streams and contradictory tendencies in development of governance models in Slovakia and the Czech Republic we tried to put emphasis especially on the situation existing in mid-90s. Using Japanese model of corporate governance and its corporate grouping structure as a benchmark for our analysis, the comparison gives a better picture to what extent the Czech Republic and Slovakia move toward or from the Japanese model.
We have found that several features of the Japanese model are presented in both countries. Namely, origin/growing number of keiretsu-type corporate groupings, especially in industry, substantial control of banks and companies over other companies and weak capital markets. However, differences can be found between the Czech Republic and Slovakia in terms of ownership structure, structure of corporate financing, some regulation issues etc. Some of them stem from the different path of privatisation after the dissolution of both countries. Others simply reflects different views of policy makers how to create and form business environment.
For our analysis we selected the biggest firms in all three countries. For this from lists of Top 100 industrial companies some have been selected and compared. The supportive and explanatory framework uses Japanese, Slovak and other empirical and theoretical researches and more aggregated data as well.
Structure of the paper is as follows: First part provides brief overview and assessment of research in the area. Part two introduces sets of companies and theories and methods used for our analysis. The theories used in this paper are mainly those from area of strategic management, macro-organisational behaviour and of general economics. We have found useful to adapt, e. g., network intensity approach, which we have already used elsewhere. The main analysis is presented in part three.
In the economic policy of the Slovak Republic are two streams: Keynesian and Friedmanian. The discrepancies of the streams have brought the economy in current stagflation. The paper deals with the way of solving the current stagflation by choosing an appropriate economic strategy of tenable growth in the conditions of large financial and credit disequilibrium, when it’s necessary to act rationally, without destruction of human and economic resources. We describe the fuzzy information for the forecasting process of the economy.
The word “franchising” is of the French origin and in France it means exemption from state taxes or duties. Since 17th century, in Europe, the word “franchising” was used as an identification for the allocated privilege to run manufacturing or trading business activities where the monopoly has belonged to the state. Later, in the Anglo-Saxon countries the meaning of the word was translated to the commercial environment as a permission to use the rights which have belonged to someone else.
At present, the word franchising denotes a method of making business. In this new form it was for the first time introduced in the USA in 1860 in the Singer Sewing Machines company with the aim to support distribution network of the company during the Civil War. At the break of the century various automotive plants started to organize their supply on the franchise basis and they were joined by gas and soft drink traders (BP, Coca-Cola). The core or the systems was driven by the need to ensure supply of their products and this method has been up to date called as the industrial or product franchi-sing. In Europe, the distribution systems were organized on the basis of purchasing contracts, and despite of fact that at initial stages, the principle and the shape of both systems were quite close, in the course of the future development franchising systems differed by their still tighter relationship of the merchant/seller towards the manufacturing company.
There are several definitions of franchising, some of them admitting only one type of franchising, while the others are specified too broadly. In Europe, the definition of the European Ethical Codex is currently considered to be the official definition of franchising.
The development of franchising as a trading method started because was bringing many advantages for all participants supporting their business activities. Franchising can be beneficial both for the provider and for the customer and also for the whole national economy.
The development of franchising as a trading method in our country is rather different than in other countries in the world, and that is why we have to pay attention to the nature of these differences, mainly because we have to count on similar risks which the other more developed countries had to tackle in the past. The reason is obvious – there were 40 years of building the socialist system where the private ownership, individuality and business activities of an individual were strongly oppressive. Contracts signed with the state enterprises did not guarantee a sufficient motivation of the franchiser and due to that adherence to the system principles and quality check ups had been be much more difficult. Only some international hotel chains might serve as a good example.
Even at present, under a relatively high interest about franchising, the information about this method is rather poor and in many aspects also distorted. As a prove of that there is a gap in the corresponding literature which would offer a summary of steps to be taken both by the creator of the system, and by the franchise applicant before they can start running an efficient business activity.
A considerable role in spreading info among business people is played by the Czech Franchising Association. It is a non-profit organization which has been supporting and pushing up the development of franchising forms in businesses and at the same time preparing a positive environment for the introduction of this business method.
Some protection against fake franchisers, who are just pretending to run franchising business, was given by approving so called “Moral codex of the franchising association”. De facto, this document is very similar to the European Codex of Behaviour for Franchising. The Czech association, of course, cooperates with other national franchising unions and with the European Franchising Association.
There are mainly international franchising companies operating on our market, but first Czech franchisers have emerged recently. This is completely different picture of the development to compare other European countries and that deserved to be noticed and analyzed.
An obstacle on the road to a faster development of franchising in the Czech Republic is the lack of will to join the Czech franchising association. According to the recent research made by the students of the Department of trading business at the Economic University, the negligence has resulted from the lack of knowledge about services offered by the association. The polls also indicated, that people are not sure about the effect of their membership fee. Especially individuals among the Czech businessmen, who are interested in franchising, have not been able upon the given information to develop an efficient franchising. The situation may improve by the planned conference on franchi-sing and its development which is going to take place in the premises of the Economic university in Prague.