SciPap, Volume 28, Issue 3 (2020)

Open Access Article SciPap-1209
Innovation Processes and Economic Growth in the Context of European Integration
by Oksana Zhylinska, Olena Bazhenova, Tetiana Zatonatska, Oleksandr V. Dluhopolskyi, Givi Bedianashvili, Ihor Chornodid

Abstract: The paper explores the influence of innovations on economic growth in countries, which are candidates to membership in the European Union. For empirical research, we have chosen nine countries such as Albania, Bosnia and Herzegovina, Georgia, Montenegro, North Macedonia, Serbia, Moldova, Turkey, and Ukraine. To investigate the impact of innovation factors on economic performance we have constructed three panel data models with fixed effects. The results of models estimation show ICT service exports (% of total service exports) and number of researchers in R&D (per million people) affect GDP per capita of the countries – candidates for membership in the EU with a lag of one year. Besides this, all control variables are significant except government expenditure on education. Given the ceteris paribus clause, an increase in the ICT service exports by 1% will lead to the rise of GDP per capita by minimum 0.09 and maximum 0.16 percent points. At the same time, an increase in the number of researches in R&D with a lag 1 by 1% – to the rise of GDP per capita by minimum 0.22 and maximum 0.25 percent points. Insignificance of high-technology exports and patent applications of residents and significance of ICT service exports and number of researchers in R&D in countries – candidates for membership in the EU might indicate that these countries are ones with preferably low-processed exports but potential for driving the innovations production activities
Keywords: Economic Growth, European Union, Innovations, High-Technology Exports, Panel Data Models
JEL classification: E01, E62, O11, O30, O41, O52

Open Access Article SciPap-1192
Social Inclusion as an Instrument for Reducing Socio-Economic Inequality
by Olena Krasota, Tetiana Melnyk

Abstract: Socio-economic inequality is growing on both local and global levels. It harms economic growth and welfare. As governments do not have enough resources to invest in education, healthcare, etc., reducing inequality is challenging. Income redistribution is a widespread means of limiting social differentiation. In this case, people are passive members of the process and lack motivation for productive activity. Therefore, reducing inequality has to be conducted in a way other than through social protection system. We consider social inclusion to become an effective instrument of inequality reduction. It includes giving all the society members equal rights regarding access to all resources and goods and involving people in economic, social, and political changes.
Keywords: Economic Growth, Social Inclusion, Socio-Economic Inequality, Gini Index, Social Exclusion
JEL classification: O15, D63, H53, I30

Open Access Article SciPap-1149
Making Sense of a Change Management in Public Sector Organizations: Change Imitation as Employee Response to Radical Decisions
by Žilvinas Židonis, Agota Giedrė Raišienė

Abstract: Macro-level reforms of public administration in Central and Eastern Europe (CEE) countries is discussed broad range in scientific studies. However, the adoption of innovative management tools that have proved their worth in the private sector has received only limited attention. This paper presents probably the first study on the role of emotions and sensemaking in managing radical changes in the public administration institutions in CEE. We found that instead of leading to active resistance and change rejection, as confirmed in earlier research proceeded in Western Europe countries, negative emotions led to passive resistance based on behaviour of change imitation. By drawing on the theory of sensemaking, we also divulge how the archetype of the “Soviet times” is employed to explain novel and contradictory events caused by change implementation.
Keywords: Public Administration, Emotions, Sensemaking, Central And Eastern Europe, Change Management, Psychological And Behavioural Response, Lithuania
JEL classification: D73, H83

Open Access Article SciPap-1154
Applying Advanced Scenario-Based Dynamic SPACE Analysis: A Case Study of Ukrainian Energy Company
by Valeriy Balan, Inna Tymchenko

Abstract: We offer methodology for forming a strategy for energy company based on the use of dynamic SPACE analysis which provides an opportunity to formulate strategic recommendations for possible scenarios (optimistic, most probable and pessimistic) and calculated on the basis of β-distribution of the expected future. We have identified nine stages of the formation process of strategic recommendations for strategic business units of our case company. The methodical toolkit is developed by considering the dynamic approach taking into account possible scenarios (optimistic, most probable and pessimistic) of the future development, obtaining predicted integral estimates based on -distribution. The matrix of strategic recommendations is formed depending on the basic trajectories and values of the model parameters, which enables to identify "basic" strategic decisions and recommendations for each strategic business unit of the enterprise taking into account predicted trajectories as superposition of single basic vectors.The methodology of forming a strategy for a power company is a flexible and effective tool for strategic diagnostics for making managerial decisions about choosing a development strategy not only for a power company, but also for other enterprises by adapting evaluation criteria in accordance with their relational space. The presentation of the predictable trajectories of business units in the form of S-vectors by means of the superposition of the basic unit vectors for each of the possible development scenarios, as well as for the expected b-distribution of expected future, enables managers to increase the validity of the proposed strategic recommendations and increase the effectiveness of their implementation.
Keywords: Strategic Diagnostics, Portfolio Analysis, Dynamic Space-Analysis, Scenario Analysis, Basic Trajectories, S-Vector, Matrix Of Strategic Decisions, -Distribution.
JEL classification: L21

Open Access Review SciPap-1129
An Economic Analysis of Public Choice: Theoretical Methodological Interconnections
by Jolana Volejníková, Ondřej Kuba

Abstract: Public choice theory is an established part of general economic theory. It emerged as an offshoot of the mainstream in the 1940s and deals with applying economic methods to political analysis and decision making within political institutions. Today, the public choice approach is being used successfully in a wide spectrum of social sciences, as well as in politics at the macro- and international levels. At the theoretical level, we feel that public choice theory is of wide importance relating to the change in definition of its traditional place in economic theory. Approximately, this change began to occur during the 1980s, and it documents an interpretative shift from public choice theory being a relatively independent economic discipline to a discipline that is presented as an immanent part of the new political economy, a newly created school of opinion. This paper’s goal is to analyze and discuss the paradigmatic, historically conditioned theoretical-methodological concept of public choice by using research into the literature. Concurrently, our ambition is also to define key points of overlap that link public choice theory to the economic mainstream (neoclassical economics) on one hand and the new political economy on the other. We have developed the conclusions of this analysis and intellectual comparison into a wider discussion of public choice theory’s significance and its role in the formative process of economic theory’s development and future trajectory.
Keywords: Economic Theory, Public Choice Theory, Economic Mainstream, Methodology, New Political Economy
JEL classification: A1

Open Access Article SciPap-1114
Socio-Economic Indicators and Income Inequality: Lesson from West Java in Indonesia
by Farida Rahmawati, Fikita Putri Ananda, Bagus Shandy Narmaditya

Abstract: This study is aimed at investigating the impact population, human development index, and economic growth in determining the income inequality in West Java of Indonesia. This paper used a panel regression to gain insight into comprehensively understanding the relationship between variables. This study engaged eight years of time series data from 2011 to 2018 and cross-section data of 27 districts/cities in West Java Province from Statistics Indonesia (BPS). The findings indicate that population, human development index and economic growth affect income inequality altogether. In partial, total population and human development index can explain the income inequality. Meanwhile, economic growth failed in influencing income disparity of West Java Province. This finding suggests that the Kuznets hypothesis of the “U-Reverse” curve in West Java Province was not proven for the period 2011 to 2018. This study emphasizes the significant impact of having strategies in suppressing the population in West Java Province both through programs and binding regulations relating to births and immigration. Also, the synergy between stakeholders in providing jobs opportunities that potentially reduce inequality in the West Java province of Indonesia.
Keywords: Economic Growth, Human Development Index, Regional Development, Population, Income Inequality
JEL classification: O15, R23, D63

Open Access Article SciPap-1112
Corporate Governance and Performance of Non-Financial Firms in Nigeria
by Emmanuel Mitaire Tarurhor, Enoh Hilda Olele

Abstract: The study examined corporate governance and the performance of non-financial firms in Nigeria within the canonical correlation analytical framework. The study validated the relationship between set of corporate governance variables and set of firm’s performance variables using relevant data extracted from the firm’s published annual financial statements and various issues of the Nigerian stock exchange fact books spanning 2011-2018. The results from this study provided evidence to prove the existence of a statistically significant association between sets of corporate governance and sets of firm’s performance variables using the Wilks’ Lambda, Pillai’s trace and Lawley-Hotelling trace at the 5 percent significance level and Roy’s Largest root at the 1 percent significance level. The implication of this study is that corporate governance is highly instrumental in improving the performance of non-financial firms in Nigeria. In other words, an improvement in corporate governance indices will inevitably boost the profitability of non-financial firms in Nigeria.
Keywords: Corporate Governance, Firm’s Performance, Canonical Correlation Analysis, Non-Financial Firms, Agency Problem.
JEL classification: C18, G3, L25, M21, M41

Open Access Article SciPap-1107
Government Accrual-Based Accounting Standards Implementation in Indonesia: The Role of Local Government Internal Audit
by Muhtar Muhtar, Payamta Payamta, Sutaryo Sutaryo, Prihatnolo Gandhi Amidjaya

Abstract: This study aims at investigating the effect of local government internal audit characteristics on government accrual-based accounting standards (SAP) implementation in local government in Indonesia, as represented by the level of non-compliance with SAP of local government audited financial statement. Indonesian local governments with accrual accounting standards non-compliance findings during 2015-2018 are analyzed with OLS regression, equipped with sensitivity analysis to test the robustness of the research model. This research presents empirical evidence that the capability, maturity, and size of local government internal audit plays a role in lowering non-compliance with accrual-based SAP. Sensitivity analysis reveals that the effects remain consistent for all variables. The limitation of this study is that local governments with adverse and disclaimer audit opinions are not employed as samples due to data availability, in which there is a possibility for more issues in implementing accrual-based SAP. This study brings implications for local governments in Indonesia and the State Development Audit Agency (BPKP) to be able to improve local government internal audit function capability and maturity and human resource availability through various supporting policies.
Keywords: Complexity, Local Government, Non-Compliance With Accrual-Based Sap, Internal Auditor Capability, Internal Auditor Maturity, Internal Auditor Size, Financial Factors
JEL classification: H83

Open Access Article SciPap-1105
Sentiment on the Stock Markets: Evidence from the Wavelet Coherence Analysis
by Zuzana Janková

Abstract: In this paper we propose to use wavelet analysis to determine the relationship between investor sentiment and stock index. Based on stock indices in various markets and alternative indicators, sentiment using wave analysis uses the intensity and correlation between sentiment and stock index returns in the short and long term. Initially a strong relationship identified by wavelet coherence and phase difference gradually becomes less intense with increasing time horizon. This suggests that overestimation or underestimation in the short term is gradually corrected in the long run. In addition, a stronger relationship can be observed between investor sentiment and stock indices in times of crisis, including COVID-19 pandemics.
Keywords: Sentiment Index, Stock Index, Stock, Market, Wavelet Analysis, Wavelet Coherence
JEL classification: G12, G15, G17

Open Access Article SciPap-1099
Performance Measurement in Education Public Services Based on the Value for Money Concept
by Beáta Mikušová Meričková, Jana Štrangfeldová, Nikoleta Jakuš Muthová, Nikola Štefanišinová

Abstract: The growing interest in the performance of public services by citizens and public authorities force public service organizations to seek justification in the use of public resources. The public also require reassurance that public services provide value for money. This reflects the need for a comprehensive measurement and assessment of performance in the utilities sector. The selection of appropriate performance indicators is a key process in managing and monitoring the performance. However, this requires the participation of those organizations which this measurement concerns. The aim of the study is to present a proposal of possible performance indicators in education public services based on the Value For Money concept. The outcome of the study, in the form of a proposal for possible performance indicators, is enriched by feedback from education professionals and school heads through conducted structured interviews. The proposal of possible performance indicators can be an initial outline of appropriate performance indicators for the model for measuring and assessing the performance of public grammar schools in the future. It can also be an inspiration for other public service organizations in how to set appropriate performance indicators in relation to their objectives.
Keywords: Slovak Republic, Education, Performance Management, Value For Money, Public Service Organizations
JEL classification: H75, I21, I22

Open Access Article SciPap-1092
The Choice of Collaborating with Fintech Entities for Competitive Advantage through Leadership Styles
by Steph Subanidja, Mercurius B. Legowo, Fangky Antoneus Sorongan, Eko Wahyudi

Abstract: Nowadays, the existence of a fintech entity is a necessity. The choice is disruption or collaboration. This study investigates the antecedents of fintech collaboration based on leadership styles and its consequence on competitive advantage. The study is a quantitative causality approach using a questionnaire to collect the data and use structural equation modelling to analyse it. There are 166 respondents, as samples, from 479 supervisors to directors of automotive, electronics, and food and beverage of medium and large companies. Results show that leadership styles have a positive effect on competitive advantage and fintech collaboration. This study's original value is that fintech collaboration is a necessity for managerial decisions as a mediator for competitive advantage based on leadership styles. It concludes that the primary antecedent choice in encouraging fintech collaboration is transactional leadership, and collaboration with the fintech entity to create a competitive advantage is necessary. Meanwhile, for further research, it is assumed that suitable leadership to encourage competitive advantage through fintech is transformational leadership, and collaborate with the fintech entity is a must.
Keywords: Competitive Advantage, : Fintech Collaboration, Leadership Styles.
JEL classification: G2, L21, M2, O32

Open Access Article SciPap-1084
Staff-Related Disclosures as an Element of Social Policies on the Model of Bulgarian Black Sea Hotels
by Daniela Ventsislavova Georgieva, Teodora Georgieva

Abstract: The main aim of the study is to analyse published information on staff-related social policies on the websites and in the annual financial statements of enterprises that manage hotels and provide hotel services in the territory of Varna and Burgas Black Sea regions in Bulgaria. In addition, analysed are some factors that impact disclosures in the financial statements of enterprises. The adopted research methods draw on the logical, deductive and comparative methods, as well as on the methods of analysis and synthesis. To verify the author hypotheses the IBM – SPSS Statistics software, ver. 19 has been used. The main results of the study show that the analysed hotel enterprises disclose scarce or no information on social policies and staff on their websites or in their financial statements. Disclosures mainly focus on compliance with legal requirements and they are most significantly influenced by available audit control and selected accounting basis. This could lead to asymmetry in the data, lowering the prestige of the organisation, problems with recruitment of qualified staff and unjustified economic decisions by data users.
Keywords: Financial Statements, Factors, Disclosures, Social Policy, Staff, Hotel Enterprises, Websites
JEL classification: M14, M4, M48, M49

Open Access Article SciPap-1070
Covid - 19 Pandemic and its Impact on Labor Force: A New Model Based on Social Stress Theory and Prospect Theory
by Manojkrishnan C G, Aravind M

Abstract: Human beings across the globe irrespective of caste and creed, culture, economic and geographic distances, are facing a very strange time, struggling and fighting against a pandemic COVID-19. On analyzing the literature, it is understood that most of the research scholars have confined their study to the clinical and therapeutic aspects of COVID-19 and there are a lesser number of studies related to the impact of COVID-19 on economic, psychological, social and behavioral perspective. This study is carried out to propose a new theory that can integrate the social and financial stress of the labor force during the pandemic situation. For this purpose, we have taken lessons from the social stress theory and prospect theory. The research extensively covers 420 samples duly collected from the labor force working across Kerala State, India. In this study, we have identified three major social stress constructs viz., Governance, Personal and Societal among the labor force through the Common Factor Analysis (CFA) method. We have also observed three major stressors using Cohen’s effect size; they are difficulty in diagnosing the disease, worry of the disease that it will get affected to the dear ones, and the fear of using public utilities. The general presumption of our theoretical model was identified stress constructs can create social stress among labor force, which was reconfirmed through the Covariance Based Structural Equation Modeling Approach (CB-SEM). The risk and benefit of the pandemic situation were further examined mathematically. It is interestingly observed that during COVID-19 pandemic the labor force across Kerala will value health and wellness as the most important gain than financial benefits.
Keywords: Covid 19, Social Stress Theory, Prospect Theory, Behavioral Finance, CB-SEM
JEL classification: C12, G4, I12, J08