SciPap, Volume 25, Issue 3 (2017)

Open Access Article SciPap-903
Managing the Costs of Quality in a Czech Manufacturing Company
by Marie Čermáková, Petr Briš

Abstract: One approach to increasing the quality of products and services in companies is the application of a management system of quality costs. This tool is applied to improve the economic results in the company and is considered also as a tool that identifies key areas where the company should direct investment into quality improvement programs. The following article focuses on markets for optical equipment, using action research. The chosen Czech company’s management approach included the implementation of cost management, with the aim of reducting costs of prevention and costs of appraisal and failure. This approach is known as the PAF model. The implementation of the PAF model revealed the true cost structure of quality costs and their real evaluations over time, in this case the period of 2010 – 2014; it also identified key areas for improvement.The greatest potential for improvement was hidden in a category of internal failure costs. In this category the annual costs amount to an average of 7,174 % of sales during the period. In the last part of the article, the costs of quality were analyzed against the sales of company (including material losses). Ultimately, the hypotheses in sections 4.3.1 and 4.3.2 were validated and based on these analyses the current state of the process was assessed and recommendations to streamline were presented.
Keywords: Czech Republic, Cost Of Quality, Management Cost Of Quality, Paf Model
JEL classification: L69, M11, L60

Open Access Article SciPap-881
The Mediating Role of Brand Reputation: The Analysis of Discrepancy Between Theory and Fact
by Zulganef Zulganef, Yudhi Julianto

Abstract: The aim of this research is to investigate the role of brand reputation as a mediating variable in the relationship between service quality and loyalty. The MRI’s survey shows that there is a degradation in the ranking of the Oversea Chinese Bank Corporation- Nilai Inti Sari Penyimpan Bank (OCBC-NISP Bank) from 2009 to 2011, while the number of customers has increased over the same time frame. This indication highlighted the fact that although the quality of service decreased, the consumer’s loyalty increased. This shows a contradiction in regard to previous research into the relationship between service and loyalty, such as Al-Rousan and Mohamed (2010), and Akbar et al., (2010). The authors suggest the existence of a variable that mediates the relationship between service (service quality) and consumer loyalty, which is brand reputation. The sample size of this research was determined at 125 respondents. The data were collected by self-administered questionnaires. Results showed that a partial mediation, performed by brand reputation, occurred in the relationship between service quality and loyalty. This research shows that brand reputation is still deemed to be the cause of loyalty. The authors also made some recommendations.
Keywords: Bank, Service Quality, Brand Reputation, Loyalty, Partially Mediated
JEL classification: M30

Open Access Article SciPap-892
Requirement Analysis of Agile Information Systems and Business Processes: An Agricultural Case Study
by Athanasios Podaras, Tomáš Žižka

Abstract: The development of modern information systems is demanding and characterized by agility. Consequently, the extensive requirement analysis of these systems and the supported business processes has become vital for analysts, developers and the participating stakeholders. Use Cases are tested tools for analyzing the requirements of information systems. However, the difficulty in capturing use cases has triggered the proposal of methodologies which can derive use cases from business models. Nevertheless, modern agile information system development demands the reverse transformation as well. The current paper proposes the latter transition for analyzing business process requirements and describes it via a computer based pest scouting business process case study. The target business model for depicting business process representation workflows is the Business Object Relation Modeling method. The agricultural case study was selected because both the Business Object Relation Modeling method and the Use Case method have been already proposed for agricultural, food supply and environmental business process representation, and they are both easily comprehensible by all the involved stakeholders including farmers, growers and agronomists.
Keywords: Use Cases, Business Object Relation Modeling (Borm), Use Case To Borm Transformation Algorithm (Ucbta), Pest Scouting, Business Process Models
JEL classification: Q16, M15

Open Access Article SciPap-898
Long-Term Care in Selected OECD Countries in the Context of Demographic Changes
by Renata Halásková, Martina Halásková

Abstract: With respect to demographic changes and population ageing, all OECD countries will be tackling issues of long-term care (LTC) associated with the need for professional services, collaboration between the formal and informal long-term care systems, and the adjustment of the mix of public and private resources playing part in long-term care financing. The paper aims to evaluate the potential of long-term care in selected OECD countries in connection with population ageing. The majority of the selected countries have seen a rise in the number of long-term care recipients along with total expenditures on long-term care. Nevertheless, these countries differ fundamentally in total expenditures allocated on long-term care per recipient. Results of evaluation using selected indicators of long-term care, by use of two-step cluster analysis, in years 2008 and 2013 also showed a variety of approaches in the provision of long-term care among the analysed countries (mainly in terms of LTC recipients aged 65+ as percentage of total LTC recipients) and in financing of long-term care (mainly in terms of LTC expenditures on institutions as percentage of total LTC expenditures).
Keywords: Long-Term Care, Long-Term Care Expenditure, Recipients Of Care, Demographic Changes, Population Ageing, OECD Countries
JEL classification: H41, H51, H75, J11

Open Access Article SciPap-899
IT Utilization Rate When Determining Corporate Strategic Goals
by Romana Hajkrová

Abstract: This article assesses current level of the information support tools for a specific area of the corporate process. Under this area we understand strategic planning and determination of corporate strategic goals. The mentioned area is perceived quite differently by the plant owner than for instance employee of the same company. But the fact is that this area is the major axis that passes through the entire corporate structure and, if set correctly, it is the very key to success and especially to long-term development and stability of the company. From the historical point of view, creation of corporate strategic objectives was a certain foretelling from the crystal ball for a number of managers, depending on the corporate life cycle phase, or stereotypical raising the goals. Based on this way created corporate strategic goals, it is not surprising that fulfilment of these objectives reflects the reality rather by accident in many cases. Creating truly realistic strategic goals of the company with respect to its life cycle is a much more complex process and therefore one wonders at the low level of responsibility applied by certain managers to it.
Keywords: Analysis, Information Technologies, Strategic Goals, Strategic Plans, Company / Plant, Software
JEL classification: M15, M21

Open Access Article SciPap-896
Corporate Life Cycle Identification: A Model Based on Relationship Between Return on Equity and Cost of Equity
by Zdeněk Konečný, Marek Zinecker

Abstract: The theory of shareholder value maximisation implies that the ultimate aim of each entrepreneur is to increase the market value of the company, i.e. to maximise the wealth of shareholders. This concept assumes that the returns to shareholders should outperform the cost of capital. The higher the spread is, the better the position of shareholders. The capital assets pricing model has been very often used for calculation the cost of equity as implicit costs, where the risk-free rate, the expected return of the market and the premium to operational and financial risks in the form of beta coefficient is considered. Moreover, the return on equity is significantly dependent on the corporate life cycle. The purpose of this paper is to develop an innovative model identifying stages of the corporate life cycle while using two variables: the rate of economic profit and the share of operational and financial risk within the total entrepreneurial risk. The model is verified by using data of a selected company. Identifying stages of the corporate life cycle should simplify the risk management and subsequently raise the capital access.
Keywords: Return On Equity, Cost Of Equity, Financial Risks, Operational Risks, Rate Of Economic Profit
JEL classification: D24, G32

Open Access Article SciPap-883
Management of Emissions Permits: Threats of the European Emissions Trading System
by František Zapletal, Jan Ministr, Petr Řeháček

Abstract: Since the beginning of the millennium, heavy industrial companies in the EU must face the threat related to duty of emissions trading. The aim of this paper is to assess an impact of selected indicators of the emissions trading system (EU ETS) – number of grandfathered permits (allowances) to a company for free and emissions price for different type of permits. That is enabled by the parameterization and sensitivity analysis of the simple linear programming model which maximizes the total profit margin of the company. Analyses in this paper are performed using the data of one real iron and steel producing company in the Czech Republic. The influence of the chosen factors is explored for the second and the available part of the third trading phase of the EU ETS.
Keywords: EU ETS, Risk Management, European Union Allowance, Linear Programming
JEL classification: C44, C61

Open Access Article SciPap-886
On Reporting Performance of Binary Classifiers
by Pavel Škrabánek, Petr Doležel

Abstract: In this contribution, the question of reporting performance of binary classifiers is opened in context of the so called class imbalance problem. The class imbalance problem arises when a dataset with a highly imbalanced class distribution is used within the training or evaluation process. In such cases, only measures, which are not biased by distribution of classes in datasets, should be used; however, they cannot be chosen arbitrarily. They should be selected so that their outcomes provide desired information; and simultaneously, they should allow a full comparison of just evaluated classifier performance along, with performances of other solutions. As is shown in this article, the dilemma with reporting performance of binary classifiers can be solved using so called class balanced measures. The class balanced measures are generally applicable means, appropriate for reporting performance of binary classifiers on balanced as well as on imbalanced datasets. On the basis of the presented pieces of information, a suggestion for a generally applicable, fully-valued, reporting of binary classifiers performance is given.
Keywords: Machine Learning, Binary Classification, Class Imbalance Problem, Performance Measures, Reporting Of Results
JEL classification: C45, C83

Open Access Article SciPap-893
On the Inconsistency of Pairwise Comparisons: An Experimental Study
by Jiří Mazurek, Radomír Perzina

Abstract: A problem of the inconsistency of pairwise comparisons is of focal interest in the analytic hierarchy process (AHP), but, up to date, we know only little about how much are real decision makers inconsistent, and whether the number of objects to be compared influences the inconsistency of their judgments. Therefore, the aim of this paper is to experimentally assess how the inconsistency of pairwise comparisons in the AHP framework changes when the number of objects to be compared (alternatives and/or criteria) increases. In our study, the method of a blind experiment was selected: subjects of the study, who were familiar with the AHP, were instructed to pairwise compare from 3 to 7 objects not knowing the true objective of the study. The main result obtained via ANOVA method is that the consistency ratio was not affected by the increasing number of compared objects, the result that might be likely attributed to the apparent redundancy of pairwise comparisons in the AHP which “corrects” inconsistent judgments. Also, it was found that only 3% of pairwise comparison matrices provided by decision makers were fully consistent, while for 36% of pairwise comparison matrices the consistency ratio CR exceeded the threshold of 0.10.
Keywords: Ahp, Pairwise Comparisons, Consistency Index, Consistency Ratio, Experiment, Inconsistency
JEL classification: C44, C92

Open Access Article SciPap-895
Econometric Analysis of Machine-Building Enterprises´ Sustainability in the Context of Neosystem Paradigm
by Maryna Kravchenko

Abstract: Sustainability of business entities is one of the most actual unsolved problems in economics and management. Our research was devoted to its elaboration in the context of a new system-structural (neosystem) methodological paradigm, which implies a priori separation of all economic systems into four types depending on their spatial and temporal localization. Thus just a set of four different types of systems may be economic sustainable. The purpose of this work was to test the hypothesis that the economic sustainability of the enterprise caused by the level of balance of its four subsystems and can be determined on the basis of its measurement. It represents the results of the econometric analysis of 16 machine-building enterprises of Ukraine for the period of 2004-2015, conducted by the methods of Data Mining technology. We have determined the indexes of the enterprises’ subsystems, estimated their mutual balance and on the basis of all estimates – the indexes of system balance of the enterprises. To test our hypothesis, we have compared the indexes of system balance with the results of traditional estimation of sustainability conducted on the basis of generally accepted financial ratios. This allowed to confirm the hypothesis and to identify the systemstructural character of the imbalances of the subsystems inherent to the machinebuilding enterprises.
Keywords: Balance Of Economic System, Economic Sustainability Of Enterprise, Neosystem Methodological Paradigm, Machine Building
JEL classification: B49, C12, C23, L60

Open Access Article SciPap-880
Development of Cities and Its Financing
by Elena Žárska, Oliver Rafaj

Abstract: The importance of cities in the economic system of the country is unquestionable. They group and attract a large number of economic actors and allow them to realize intense economic interactions between them. To offer long-term benefits for inhabitants and entrepreneurs and remain attractive for them, cities need to develop continuously. Ensuring the development of the city means to create and acquire resources to increase its capacity and use of the available potential. This article deals with the financial capacity of Slovak cities, which reflects their ability to ensure their development. The financial capacity of Slovak cities was investigated in time period 2009 – 2014. Investigated were all 138 Slovak cities and they were divided into three size groups: small cities with population up to 20 000 inhabitants, medium-sized cities with population between 20 001 and 50 000 inhabitants and large cities over 50 001 inhabitants. The evaluation of financial capacity was realized on six indicators: current account balance, capital account balance, total debt, debt service, immediate liquidity and net worth. The comparison of the calculated values of each group showed that the highest amount of resources allocate to their development the group of largest cities. On the other hand, that group has also the highest debt.
Keywords: Current Account, Development Of Cities, Financial Capacity, Capital Account, Total Debt
JEL classification: R51, G32, H63

Open Access Article SciPap-882
Visual Evaluation of Changes in Regional Growth and Disparities: Usage of a Pareto Chart
by Pavel Zdražil, Petra Applová

Abstract: This paper shows how to evaluate a development of regional disparities with the Pareto chart. Explanation of chart principles is followed by its application to the regions of Visegrad Group countries. To present the usability of Pareto chart, we applied it on three different situations – involving both convergence and divergence. In addition, to confirm the estimates resulted from charts, we used the σ- convergence approach as a benchmark. Our results found that the chart has very good predicative ability, since virtually all conclusions of its application have been confirmed by σ-convergence analysis. The benefit of Pareto chart is involvement of extra information about changes in some sample sections, growth and order. Based on this information one can find more comprehensive conclusions about changes in disparities over time. Besides, the Pareto chart has a very easy interpretation which calls for no special knowledge in methods for disparity measurement. This is a great advantage for other fields’ researchers, political-bureaucratic apparatus and both expert and inexpert public. That is why we believe the Pareto chart is a very interesting tool to evaluate development of regional disparities, which can be used solely or in combination (complementary) with other approaches of disparity measurement.
Keywords: Pareto Chart, Visegrad Group, Disparity Measurement, Evaluation Of Regional Policy, Development
JEL classification: R12, O47, Y10

Open Access Article SciPap-884
European Funds – Management of Risks in Public Education
by Kamila Turečková, Jan Nevima

Abstract: In the programming period 2007-2013, the Czech Republic was allowed to draw 26,7 billion euros from European funds. After joining the European Union in 2004, the Czech Republic gained an access to European funds by means of submitting individual or simplified projects within individual operational programmes. In the period 2007-2013, drawing funds from the European Union expanded to a great extent, but due to the initial project boom a great amount of projects failed to be successful as they were overwhelmed by the risks of project management. In the first part, risks of project management are introduced in general perspective which is universal for any other project. In the second part of the article, examples of risks in European funds are published. The last part of article deals "bad practices" in case of public education. Despite certain imperfections that can occur when drawing funds from the European Union, these funds represent an important financial tool for further growth of competitiveness of schools. The contribution is not only hypothetical, but also presents us with some relevant real-life examples from the sphere of public education in the Czech Republic.
Keywords: Programming Period, Project, European Funds, Risks
JEL classification: G32, H43, O22

Open Access Article SciPap-885
Regional Capitols in Slovakia and Their Financial Health
by Andrea Tkáčová, Peter Konečný

Abstract: This paper focuses on the comparison of the financial health of regional capitols in Slovakia. The theoretical part of the paper offers insight into the current understanding of the financial health of cities. The main focus is on differences in the understanding of this concept and the definition of basic financial indicators to be used to evaluate the financial health of cities. Subsequently, the selected 13 financial indicators that we used in creating their own comprehensive indicator of financial health. It is calculated separately for the regional capitols of Slovakia in the years 2011- 2014. In this paper we present the outcome of the main causes of the financial health of the regional capitol. Designed a comprehensive indicator is then compared with the results of indicator Institute Ineko who engages in assessing the financial health of all cities in Slovakia.
Keywords: Financial Health, Liquidity, Regional Capitols, Comprehensive Indicator, Indebtedness, Rentability
JEL classification: H70, H72, H75

Open Access Article SciPap-887
Performance Based Financing of Universities – Case Study of Slovakia
by Miroslav Šipikal, Valeria Nemethova

Abstract: Innovation and human capital play a crucial role in the economic development. Universities are one the main institutions influencing level of these factors, so states or other public institutions has spent substantial funds on their functioning. Due to political need to spend funds efficiently and effectively, for the last years previous, mainly trust based, funding regimes has been partially replaced by new ways of financing – performance based financing. These new forms have their own advantages and weaknesses, but they are used short time to be able to evaluate their longer term impacts. However, we could see how these forms change the distribution of funding. In this article, we empirically looked at different types of universities funding and compare how this funding affects different universities in case of Slovakia. We show that the different schemes lead to quite different allocations. More than type of funding is important how the criteria for funding are set up and how different sources are complementary to the needs of universities.
Keywords: Slovakia, Higher Education, University, Performance Based Financing, Project Financing
JEL classification: H52, I28

Open Access Article SciPap-888
Economic Regional Resilience and Measuring Complexity: Example of Europien Regions
by Ondřej Svoboda, Martin Ibl, Markéta Břízková

Abstract: This study aims to validate the relationship between the degree of complexity (e.g. the degree of chaos) in regional time series and economic resilience. The analysis builds on previous studies that tried to prove the relationship between Lyapunov exponent and regional resilience. Unlike previous empirical research, the goal of our investigation is to verify the usefulness of selected indexes of complexity for quantifying regional resilience in the context of the economic crisis of 2008. The research questions formulated in other studies quietly anticipated the existence of stochastic dependence between the degree of complexity and sensitivity of the region to the economic downturn. We will describe an empirical application, in which the resilience of the regional labour market at the level NUTS 2 from 12 EU’s countries in the period 1998 - 2014 is going to be investigated by use of an algorithm for business cycle detection and method for complexity measurement. The results suggest that the relationship between the regional resilience and the degree of complexity depends on the selection of the appropriate measure of complexity. In this work has been analysed the relationship of regional resilience with Lyapunov exponent and the generalised Hurst exponent.
Keywords: Complexity, Resilience, Engineering Resilience, Ecological Resilience, Evolutionary Resilience, Spatial Economics
JEL classification: B52, R11, O18, R10

Open Access Article SciPap-889
Time-Spatial Dynamics of Selected Demographic Indicators in Brno Metropolitan Area in 2001 and 2011 Using Spatial Autocorrelation
by Aleš Ruda, Kateřina Pavlíková

Abstract: Time-spatial dynamics illustrates a change of significant spatial patterns in time. These analyses help to identify spatial associations pointing at socio-spatial distribution. Reflecting important demographic changes during last decades a specific feedback of politicians is expected as a result of ongoing suburbanization process. Confirmed spatial autocorrelation among examined demographic variables approved to use a set of spatial statistic tools distinguishing the change between inner core and the periphery within Brno metropolitan area (BMA). In fact, Moran´s I criterion indicating the intensity of autocorrelation and Getis-Ord Gi* statistic generating hot spots and cold spots were applied. According to results it is clear that the city of Brno lost between 2001 and 2011 its population dominance. The age structure correlates with suburbanization process. It was also proved that spatial associations of indicators dealing with age structure, level of education and employment were detected in the periphery of BMA, especially in southern area the rise of population in productive age group, low level of education and high unemployment in agricultural sector is significant.
Keywords: Demographic Changes, Suburbanization, Hot Spot Analysis, Spatial Pattern, City Development
JEL classification: C46, D11

Open Access Article SciPap-890
Human Capital and Local Economic Growth in Slovakia
by Oliver Rafaj, Stefan Rehak

Abstract: Modern growth theories consider human capital as an important factor of economic growth. Cities play an important role in the production and concentration of human capital play. On their territories are located educational institutions such as universities or colleges that provide opportunities for economic actors to increase their education. They also create a space for the emergence and rapid spread of spill overs that spread inside and also outside of their territories. This article aims to examine the role of human capital in local economic growth in Slovak Republic. All 79 Slovak districts were examined and the observed time period was between the years of 2001 and 2015. For discovering the influence of the factor of human capital on the local economic growth a regression analysis was used. The main result is that the selected factor of human capital (represented by the growth index of inhabitants with tertiary education) had a positive and statistically significant influence on the economic growth of Slovakia’s districts (represented by the growth index of wages).
Keywords: Human Capital, Local Economic Growth, Spill Overs, Districts, Cities, Econometric Model
JEL classification: B13, C21, R11

Open Access Article SciPap-891
Determinants of the Number of Patents in the Czech Republic
by Viktor Prokop, Jan Stejskal, Beáta Mikušová Meričková

Abstract: Knowledge represents an important national, regional or firm asset that creates a source of competitive advantages. However, there are no standard methods that are able to determine the extent to which an economy is based on knowledge and to measure the outputs of knowledge economy. Economists had already begun to use the number of patents to investigate an entire range of relationships, for example, to analyse their relationship to company size, investment and innovation activities. Therefore, the aim of this paper is to analyse the influence of selected determinants of the knowledge economy that affect its output (the number of patents in the Czech regions). The analysis is realized by using own original multiple linear regression model. Data for the analyses were obtained from the Czech Statistical Office's databases between the years 2007- 2011. The results confirm the importance of the human factor during the process of patent creation. The role of increasing expenditure on research and development activities was proven to be insignificant in the Czech regions. In the Czech Republic, there is a lack of studies measuring knowledge economy and its determinants. Therefore, we provide an initial analysis of determinants influencing knowledge economy.
Keywords: Analysis, Patents, Human Capital, Czech Regions, Multivariate Regression Model
JEL classification: O11, O13

Open Access Article SciPap-894
Public Libraries´ Services and Their Economic Evaluation
by Veronika Linhartová, Jan Stejskal

Abstract: The goal of public library is to meet the cultural, educational, and social demands and requests of local society by providing information services to their residents. Economic valuation of public libraries is being carried out more frequently in recent times. Since the mid-nineties researchers attempted to quantify the value of library services and asked users of these services for their opinions regarding the performance of public libraries. The economic value of public libraries for local residents in Czech Republic was measured in this paper. Data for the analysis were collected from 37 public libraries in the Czech Republic. The public libraries’ benefit/cost ratio was calculated and it is 5,86 – 6,17 %. That means, for every USD 1.00 spent on analyzing Czech public libraries, provides on average USD 6.00 benefit value to taxpayers. The resulting value (USD 6.00) is quite comparable to results from similar studies conducted in other developed countries. It was also found that the library size does not affect the final value of the public libraries services, thus the efficiency of spent public funds is comparable in both large and small libraries.
Keywords: Public Services, Contingent Valuation, Public Library, Return On Investment, Cost Benefit Analysis
JEL classification: E62, H41