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National Intellectual Capital Taxonomy

Abstract

The concept of national intellectual capital (NIC) is in its early stage of development. NIC has a complicated and heterogeneous nature with NIC models displaying varying levels of aggregation and structure as well as inconsistent accuracy. As a result, the authors’ standpoints differ according to definition and NIC taxonomy. The aim of this article is to analyze NIC taxonomy and to organize and classify the scattered and often inadvertent intangible generators of the country’s wealth. The results of the research confirm a lack of a generally accepted definitional and taxonomic approach to NIC making a search for an acceptable solution necessary since without it the measurement and comparability of results or even the management and control of the intellectual capital of the country will not be possible. Besides contemplating the existing approaches of NIC division, the authors create their own NIC taxonomy and describe its components by presenting an original understanding of NIC components. This is extremely important because the subject of NIC has not yet been scientifically sufficiently exhausted.

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Ethical Behavior and Organizational Innovation: Analysis of Small and Medium-Sized Enterprises in Latvia

Abstract

Innovations can provide small and medium-sized enterprises (SMEs) a significant competitive advantage considering the ambiguous business environment. SMEs may face lower capacity and more constrained funding for long-term investments, however, understanding innovation in a broader sense and looking into organizational structures, behaviors and processes, SMEs have an opportunity to become more competitive. This study analyzes the impact of ethical behavior as a part of an organizational culture on organizational innovation performance in SMEs. Six hundred SMEs in Latvia were surveyed to assess whether employees follow the principles of business ethics in their work and what is the organizational innovation performance in these enterprises. We found that more ethical behavior leads to better organizational innovation performance, and that the size of enterprise is the most significant factor affecting this relationship. The study proposes insights that contribute to theoretical and practical discussions on fostering small businesses innovation in small economies.

Open access
Management of Tax Payments Under the Definitive Value Added Tax Regime

Abstract

There is a large value added tax fraud in the European Union. The current value added tax system is universal as tax is applied to all parties involved in the chain transactions, thus creating a risk of tax losses if one of the parties involved in the chain transaction does not pay tax in good faith. There is the action plan to introduce the definitive value added tax to prevent tax fraud in intra-community transactions. However, in order to ensure normal value added tax administration in all member states, a number of measures are needed to be done. It is necessary to develop a mutual settlement mechanism in cases of intra-community transactions. The aim of this research is to develop a possible solution for the management of tax payments under the definitive value added tax regime. The results of the research show that to manage tax payments, several payment management systems can be used. However, as a solution, a special clearing system could be introduced. Quantitative research methods such as statistical methods were used in order to analyze the situation of tax fraud in EU and its main causes, as well as mathematical modeling methods to analyze the definitive VAT system and to calculate the balance between countries in an example for clearing mechanism.

Open access
The Day-of-the-Week Effect: Evidence from Selected Balkan Markets

Abstract

The main aim of this paper is to investigate the existence of the “day of the week” financial effect in select Balkans stock markets indices. Many findings of market anomalies have corroborated the presence of the “day of the week” effect in developed markets; however, so far scarce research has been presented on this subject for the Balkan capital markets. Hence, an additional objective of this paper is to examine the impact of this market anomaly on the market efficiency hypothesis. The methodology used in this paper employs a regression including dummy variables which will help determine the existence of the effect. The authors use daily mean returns of selected stock indices found to be lower at the beginning of the week but not necessarily on Monday. The results are interpreted and expounded taking into consideration the history and market development. The paper provides academia and investors as well as policy makers new perspective of the market anomalies linked to the financial behavior of the capital markets in select Balkan countries.

Open access
The Environmental Responsibility of the World’s Largest Banks

Abstract

Sustainability transition is changing the role and function of banks, specially their products and services also in relation to stakeholders. Banks are one of the main actors supporting the transition to sustainable economy. The purpose of this study is to emphasise the role of world’s largest banks in that process. Banks are slowly responding to the new demand of sustainability and responsibility, and they try to align with it. The paper is based on an overview of the world’s five largest banks that employ corporate social responsibility (CSR) reporting standards, together with detailed enumeration of pro-environmental activities included in the reports. The first section of this paper presents the most popular approaches to the problem at hand, as reported in professional literature. Section two presents the characteristics of the CSR actions in banks. The third section discusses the environmental actions of the biggest banks in Global Reporting Initiative (GRI) reporting the most popular standard for reporting non-financial information. And the last part of the paper presents the conclusions resulting from the article. The research was conducted using a variety of sources, such as scientific articles, statistical data, CSR reports of the world’s largest banks, as well reporting principles and standard disclosures. The basic method used in the process of writing was a critical analysis of literature and reports concerning the CSR reporting standards, environmental responsibilities of different kinds of entities, as well as own observations based on special reports of banks. In the article, also the analysis of financial market data, induction method and comparison method have been used. The main conclusions of the analysis of the CSR reports disclosed by the world’s largest banks confirm all three of the theses presented in the article. The findings suggest that the banks under study can be regarded as environmentally responsible entities. Their reports and disclosures are produced according to the internationally recognized standards. There are also critical opinions about the standards for reporting environmental information, but the weaknesses of reporting these aspects do not undermine the benefits of using the GRI guidelines.

Open access
Have Public Finances in the OECD Area Been Sustainable?

Abstract

The aim of this article is to test, from an empirical standpoint, the existence of sustainable public finances in the Organisation for Economic Co-operation and Development (OECD) area as a whole, over the most recent period of the world economy, 1973-2016. The research methods include not only standard stationarity tests, but also tests, which allow for a structural break. The relevant results of this research are a stationary public budget balance expressed as a percentage of GDP and a debt to GDP ratio that is stationary in first differences. According to the literature, this means that a “necessary and sufficient” condition is fulfilled for proving the existence of a strong sustainability. We hope this research can make a valuable contribution to the debate regarding public finances in the world economy. To obtain other relevant conclusions, additional tests will need to be performed in the future in order to assess which members are contributing to the fiscal sustainability of the OECD aggregate.

Open access
The Interaction between American and European IRS Interest Rates

Abstract

European interest rates movements are affected by various internal and external factors. This paper studies the link between European and American short- and long-term interest rates. In particular, we consider the forward interest rates coming from euro and dollar IRS term structures. The econometric techniques employed are co-integration, Granger-causality, OLS and GMM. Our results indicate that European remote settlement forward and long-term interest rates are primarily driven by US rates and confirm that the causality acts mainly from the US to the Eurozone. This was true even during the recent periods of European Central Bank quantitative easing. These factors weaken the ECB’s ability to intervene. In fact, we found the impact of American monetary policy on long-term interest rates to be also relevant for European bonds.

Open access
The Organisational Justice as a Human Resources Management Practice and its Impact on Employee Engagement: The case of the Prefecture of Attica (Greece)

Abstract

Organisational justice is a key component in the practice of human resources management in any work environment. The aim of this research survey is to highlight the meaning and importance of organisational justice and its impact on employee engagement. To achieve this aim, except for the literature review, the survey examines the extent to which the distributive, procedural and interactional justice impact on work and organisational engagement, through a research in a certain Greek public organisation. As regards the statistical analysis of the research hypotheses, we used methods of the SPSS 17.00 statistical package. The results showed that the distributive justice significantly impacts on both types of engagement, while no effect was detected between procedural justice and the two types of engagement. The interactional justice was found to determine, partly, only the organisational engagement. The findings overwhelmingly verified the existing bibliographical references, resulting in a noteworthy empirical precedent which could contribute to the field concerning the impact that organisational justice exerts on certain aspects of organisational behaviour.

Open access
A Perspective on Industry Classification and Market Reaction to Corporate News: Evidence from India

Abstract

In this paper, we provide a cross-industry perspective on the market reaction to different corporate news in the context of Indian stock market. We have studied the price and volume movements associated with eight broadly defined news categories namely Analyst Calls, Earnings, Earnings Forecasts, Finance, Legal and Regulatory, Management, Operations and Restructuring. We have employed the standard event study methodology on a sample of stocks listed on the National Stock Exchange of India for the purpose of our study. We observe that the market reaction to firm specific corporate news varies according to the type of news across different industry groups. We also observe that the sentiment of the news is a critical factor which influences the market reaction to such news flow across industry groups. We also provide a cross-industry perspective on the relative importance of different corporate news categories after taking into account the sentiment of the news in the context of Indian stock market.

Open access
Rethinking Microfinance in a Dual Financial System: An Agent-based Simulation

Abstract

Critics concerning the real impact of traditional microfinance as a tool for poverty alleviation are becoming frequent. In contrast, the financial crisis brought out interest for Islamic finance, whose models have been increasingly studied. Today, the real challenge lies in evaluating the impact of microfinance in a complex environment, where both Islamic and conventional microfinance institutions exist and address evolving clients in constant interaction. New methods and models are therefore needed in order to test the efficacy and assess the impact of introducing Islamic microfinance products, compared to the conventional system. In this context, this paper proposes an approach to build an Agent-Based Modeling (ABM) framework, which is aiming to test the effects of such products implementation using Islamic interest-free group loans. It also helps assess the impact of the behavioral biases as well as agents’ interactions within the repayment process.

Open access