Social Responsibility as a Contextual Component of the Enterprise Economic Security

Liliya Korchevska, Ganna Zhosan, Sergii Kavun

  Open Access OPEN ACCESS  Peer Reviewed PEER-REVIEWED

Social Responsibility as a Contextual Component of the Enterprise Economic Security

Liliya Korchevska1, Ganna Zhosan1, Sergii Kavun2,

1Management and marketing, Kherson national technical university, Kherson, Ukraine

2Department of Information Technologies, Kharkiv Institute of Banking of the University of Banking of the National Bank of Ukraine, Kharkiv, Ukraine

Abstract

Economic security of the enterprise from a position of iterative approach is considered, namely its structure, functions, processes, the purposes and features of the microsphere, the macrosphere and the metasphere is investigated in the article. This approach also allowed allocating exogenous, endogenous and contextual components that promoted definition of a place of social responsibility in ensuring of the enterprise economic security. In addition, the concept social responsibility of the enterprise is considered in this article. The role of social responsibility of the enterprise in preservation of the vital values of socio-technical system is studied. The analysis of the purposes of realization of strategy is provided in the sphere of corporate and social responsibility depending on a branch orientation of the enterprises.

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Cite this article:

  • Korchevska, Liliya, Ganna Zhosan, and Sergii Kavun. "Social Responsibility as a Contextual Component of the Enterprise Economic Security." Journal of Finance and Economics 1.4 (2013): 95-104.
  • Korchevska, L. , Zhosan, G. , & Kavun, S. (2013). Social Responsibility as a Contextual Component of the Enterprise Economic Security. Journal of Finance and Economics, 1(4), 95-104.
  • Korchevska, Liliya, Ganna Zhosan, and Sergii Kavun. "Social Responsibility as a Contextual Component of the Enterprise Economic Security." Journal of Finance and Economics 1, no. 4 (2013): 95-104.

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1. Introduction

In modern time the majority of the Ukrainian enterprises, working in the unstable economic and political environment, endure decline in production and are in a serious financial condition. All this facts and events in this area are actualized a problem of ensuring of the enterprises economic security. Only under conditions of achievement of high level of economic security, the company can pay attention of social responsibility of business and construct dialogue between the enterprise and society, to cause respect from authorities and business partners, to provide support of balance of interests of workers, local communities, the region and society as a whole. Sooner or later, but before the head there is a question of social responsibility, after all in modern conditions it is a necessary component of competitiveness of the enterprise. Therefore special value the problem of development of theoretic, methodological and methodical bases, which would consider features of functions, gets structures, processes, is more whole than economic security of the enterprise and transformed them to a complex of the corresponding procedures.

2. Historical Fundamentals

Being based on methodology of system thinking of the American scientist Jamsheed Garayedagi, who combines four elements, namely: beauty of interactive modeling, magic of iteration of structure, function and process, power of planimetric thinking and understanding of the hidden sense of self-organizing behavior [4], applied iterative approach to research of enterprise economic security (iterative model of which is show in Figure 1) that allows to reveal a place of social responsibility.

Process of iterative research is a studying something a method of the consecutive approximations which essence consists in repeated repetition of certain actions and operations.

So, Russian scientist Novikov D. A. determines iteration (from armor. iterativus – repeats) as studying of internal processes of any phenomenon, its knowledge in general [12].

Authors group as a part of E.G. Yakovenko, M.I. Bass, N.V. Мahrova [14] considers that the economic content of process of iteration is consolidated to consecutive calculation of the same iterations. They differ only processed information, but not structure of computing operations. Generally iteration - a stage of realization of computing algorithm. Process of the iterative analysis comes to the end if the error of approximation appears in admissible limits. Possibilities of economic interpretation of process of approximation of curve cycles, the accounting of structural features of this task, use of any initial approximations belong to number of advantages of methods of the iterative analysis, including that are not in practice admissible [1].

At the same time, iterative approach to studying of economic security of the enterprise was not applied that causes relevance of research in the theoretical and practical plan.

Interesting research of the Ukrainian scientist N.O. Simchenko [13] of rather social responsibility is represented. Results of research of the Ukrainian practice of management are given in its monograph by socially responsible activity of the enterprises.

Figure 1. Iterative model of economic security of the enterprise

Results of the analysis of specifics of development of social orientation of the industrial enterprises allowed creating generalized scientifically valid conclusion that at the Ukrainian enterprises there is a process of development and introduction of values and the principles of socially responsible management. Thus, as results of estimation of extent of development of social orientation of the industrial enterprises testify, in Ukraine formations of system of socially responsible management by activity of the enterprises occurs mainly in big corporations [13].

3. Time-frequency Analysis for Some Definitions of the Enterprise Economic Security

It should been mentioned that in nowadays we can see a strengthening of a popularization for some definitions or key aspects in this area [8], for example, it covers the following definitions – Enterprise Economic Security (EES), Social Responsibility (SR), Contextual Component (CC), Social Responsibility of the Enterprise (SRE), Socio-Technical System (STS), etc. For those and some other similar definitions, the authors have carried out a research for all these definitions about their distribution on the time line (2000-2013). This research is based on the method of Internet-analysis [7]. At the same, this distribution was based on their popularization or demand; also, it can called as time-frequency analysis. Some results with their normalizing of this research (for better presentation) were shown in Table 1. Source data of Table 1 were made based on the author's data received by experimental way of own research [7].All of these submitted data has been normalized for better visualization and to receive a possibility of comparing those results between themselves.

As we can see from Figure 2, which is showing very clearly and graphically. The most popular of these definitions were used since 2004. Figures 2-6 are constructed based on data Table 1, with use internal Excel-mechanisms, and are a pilot study of authors.

Table 1. Results of the demand distributions with their normalizing

Figure 2. Map’s frequency distribution of these definitions from
Figure 3. Linear 3D-frequency distribution of these definitions

In addition, only for the definitions “Enterprise Economic Security (EES) and Social Responsibility (SR)”, we can look a big growth since 2009 over 2013. For remaining definitions, we can see some fields of their “activity” in average since 2007-2009. Especially it is not concerns for the following definition “Contextual Component (CC)”, which has a distribution, which not more than an average estimation for other definitions during all researched time period. Therefore, this area has become not interesting for the most specialists and professionals in this area. For the others definitions, which were studied in author’s research, we can see a quite variable interest [8]. At the same time, this interest is confirming a fact that notwithstanding that situation these areas (based on similar definitions) are remaining in the sphere of some interests for the most specialists and professionals.

Based on those data from Table 1, we could built some graphics (map’s frequency distribution and linear 3D-frequency distribution), which are shown in Figure 2- Figure 3.

As a continue of our research for those definitions and similar security areas, we could built some distributions for separated definitions with forecasting on the next time period (for next several years) based on the well-known trend models [7]. For these trend models, we also are shown their approximation functions with the accuracy of the approximation (R2), as it are shown in Figure 4-8. In Figure 3 (also as in the next figures), the general distribution (distribution graph) is shown with help of a solid bold line and a trend line is shown with help of a thin line.

Figure 4. Distribution graph of “popularity” or “demand” for the definition “Socio-Technical System, STS” with forecasting based on a trend model (the polynomial model of 4th degree)
Figure 5. Distribution graph of “popularity” or “demand” for the definition “Social Responsibility, SR” with forecasting based on a trend model (the polynomial model of 6th degree)
Figure 6. Distribution graph of “popularity” or “demand” for the definition “Enterprise Economic Security, EES” with forecasting based on a trend model (the polynomial model of 3rd degree)
Figure 7. Distribution graph of “popularity” or “demand” for the definition “Contextual component, CC” with forecasting based on a trend model (the polynomial model of 4th degree)
Figure 8. Distribution graph of “popularity” or “demand” for the definition “Social Responsibility of the Enterprise, SRE” with forecasting based on a trend model (the polynomial model of 4th degree)

Based on the approximation function and its accuracy of the approximation (R2, this accuracy is high enough) we can say that nowadays the popularity of the “Social Responsibility”, “Social Responsibility of the Enterprise”, “Enterprise Economic Security” is decreasing, but it almost does the fact that we have some reduction of some other area – “Contextual component”. Certainly, we can speak about those facts only with quite big probability based on quite high accuracy of the approximation for those definitions. Moreover, we have not any suggestions or confirmations about distribution for the “Socio-Technical System” area, because we have enough small accuracy of the approximation, as it shows in Figure 4. For each point of all set of data in these Figure 4-8 are shown some limits of standard accuracy (of error), which is determining an area of precision of our measuring [8].

Based on the approximation function and its accuracy of the approximation (R2), as it is shown in Figure 5 and Figure 8, we can say that nowadays the popularity of social responsibility in the enterprises and in generally is increasing, and besides, the distribution of the social responsibility in generally has this growth from 2001 to 2010, but especially for the enterprises this growth was started only from 2012 to nowadays. Therefore, it is a good tendency and, it will be able to acknowledge about some success in those areas of some different government and private organizations. However, we cannot trust enough of this distribution graph and its forecasting, because we have the accuracy of the approximation, which is not big, so this forecasting we can consider only in approximate form.

For the following definition “Enterprise Economic Security”, its distribution graph is shown in Figure 6. Based on the approximation function and its accuracy of the approximation (R2), as is shown in Figure 6, we can say the time-frequency distribution for the definition “Enterprise Economic Security”, in general, we also have a common positive linear tendency during all researched time period with the large enough accuracy of the approximation (> 0,9). This fact is confirming our forecasting for this area, so we can use this forecasting for our next researches.

We can see a decreasing of a growth of popularity of the area “Contextual component” for the confirmation of a necessity for increasing of a popularity growth of some other similar researches in this area, as opposed of this fact and as it is shown in Figure 7. Moreover, this negative tendency is observed for any kind of the trend models, as for the linear, and for polynomial models. In addition, this recession is began since 2001 and this recession is finished only in 2011, when, as we can see in the Figure 7, was started some addition researches in this area, so was became some interest for this sphere. The not enough high accuracy of the approximation is increasing of our confidence and an independence level of forecasting, but only for determination of the general tendencies.

Thus, we could described the common tendencies in this and other areas based on using of developed by one from authors method of Internet-analysis [7]. The method of Internet-analysis developed by the authors can be applied in any given area of an activity, regardless of its properties and features. The purpose of using this method is to get some assessment or collection of selected concepts (terms or definitions), which form the so-called categorical apparatus of a scientific research. According to estimates, authors can formulate a conclusion about the need for a further research in this area, show the urgency and demonstrated the importance of the calculations, to allocate a narrow major for a further research of young scientists. The proposed method can be used to study the activities of prominent scientists, professionals from designated areas of activity. Secondly, this method can be used for demonstrating the importance and the relevance of a research, and the conclusions and recommendations drawn, for example, to select consultants (leaders) in their scientific activities.

For a more complete openness, authors could show the possibilities of the research conducted by the authors on the example of a field of the economic security, which was selected, because of its global relevance. Using of this method based on the specifics of the query language that is supported by all search engines and the shape of the query, the results on the set of selected search engines are averaged at a given time interval. Thereby, the dynamism of the study is achieved. The authors are showed as an example of some limited areas of interest an interpretation of the developed method with the help of graph theory to be able to use known techniques of optimization and further analysis [7]. Thus, the scope of the developed method of Internet-analysis is multi-faceted in its specificity and tolerance in limited areas of an interest [8].

4. Theoretical Fundamentals

Social responsibility of the enterprise should be understood as enterprise interaction with participants of business processes, which is realized through the voluntary obligation of owners and the management to enter actions concerning compliance socially significant expectation of society due to balance of economic, ecological and social productivity of the enterprise. To define its place in ensuring economic security of the enterprise it is necessary to develop iterative model.

Therefore, the iterative model of economic security of the enterprise (Figure 1) is developed based on the description of a certain set of elements, their values in the general process of functioning of system and assumptions of sheaves between them. The model is rather abstract, is based on intuition and appeals to reason.

Iterations of structure, function and process in a certain environment allow learning properties of each element separately, and then - in its interrelation with others. Consecutive iterations have to establish validity of our assumptions of these properties and further check them on compatibility and liquidate the conflicts. For the sake of the solution of the conflicts reconsideration of variables, which are studied can be necessary. In addition, at the end consecutive approximations will give a complex image whole [4].

As Singer E.A. was expressed: "The truth lies at the end, instead of at the beginning of complete research" [5]. To learn a whole, the judgment of its structures, functions and processes is necessary.

Therefore, the structure is the main concept of a sistemosophia, is a framework or an internal support of object, which keeps its main properties and interrelations in the presence of changeable conditions. If it is, then there is a sense about what to speak. In our case, the structure consists of fifteen components that is grouped behind three components of economic security, which define enterprise activity under existing objective conditions.

Function, in turn, causes the received results, opens comparative features and describes obvious or latent characteristics. Within our research, function will display a role of economic security of the enterprise which she plays in different spheres, that is it is a set of opportunities, which are peculiar to their.

Process is a consequence of activity of system which displays changes of object of research (from initial characteristics to final) and in details describes movement of consecutive actions which are necessary for achievement of the purpose. Its main task is the explanation how the structure carries out function.

All elements of iterative model function at the same time, create the circular relations and are interconnected the friend from the friend.

Therefore, at the first iteration it is possible to note that economic security of the enterprise carries out function (role) of the on-board computer, which represents the multipurpose government and is a plane or car brain. Its general characteristics, first, is that it is capable to register processes which happen constantly; secondly, at the same time to supervise structure (the main knots and systems) the vehicle and many different parameters of its work; thirdly, to distinguish internal threats and to warn about external dangers. By analogy, the role of economic security of the enterprise in the microsphere is similar. Its structure consists of six components endogenous components: financial, operational, intellectual and personnel, information, legal and power. It should be noted that many experts in the sphere of economic security of the enterprise distinguish from others: technological, innovative and technologic [5], scientific and technological [14], technical and technological [6] or technological [4] components which according to the author, aren't capable to display correctly specifics of activity of the organizations of all branches of economy (for example, the enterprises of the tourist sphere, wholesale and retail trade, motor transportation services and others). Therefore, it is expedient to enter into typical structure of economic security of the enterprise an operational component, which will include both technical, and technological, and production and marketing or trade activity, that is will display primary activity of the company for the sake of which it is created.

Process of the first iteration - regulation, includes such stages, as the following identification, diagnostics and elimination of deviations of the valid indicators from the necessary measures set by input. It is directed on achievement of the purpose of the microsphere of economic security of the enterprise, namely, growth of market cost of the enterprise based on guaranteeing timely protection of its assets against dangers.

At the second iteration, it is necessary to connect again function, structure and process for the purpose of judgment of sense of existence of economic security of the enterprise. Open sociotechnical it is possible to understand system of society only in a context of its environment, that is this interaction is informative, the system has to adapt and improve together with environment.

If to consider it in a context of the largest system (macrosphere), it is possible to draw a conclusion that economic security of the enterprise is a protection of a limited huge number of interrelations of the enterprise with subjects of a surrounding situation. Its structure consists from market, economic, political and legal, social and demographical, scientific and technical, ecological and international making exogenous components. Therefore, it carries out function of a tuning fork, which represents the government for control of musical instruments and is capable to recreate a sound of reference height. Yes, economic security of the enterprise plays an identical role in the macrosphere. How it occurs, speaks further. Process of the second iteration is based on harmonization of interests of different levels, which are in dynamic Ruse for the purpose of reduction of transaction expenses of the enterprise based on strategic effective interaction with subjects of environment and minimization of losses based on insurance of risks. However, it is necessary to specify that harmonization as coordination of vectors of an orientation of interests of different levels means not replacement and addition of interests of each other, and development and satisfaction own interests of the enterprise and the help in it to other subjects of an external environment.

At the third iteration, it is possible to check a working hypothesis that process of self-organization is process of ensuring economic security of the enterprise and has a direct bearing on it. After all, economic security at the enterprise plays a role to an attractor, which represents a point of balance, which answers a condition of tranquility of dynamic system to which she seeks to come or to which it is attracted.

The simplest type of an attractor is the point. Such dot attractor is characteristic for a pendulum. Irrespective of the initial speed and a condition, such pendulum will always come to a condition of tranquility that is to a point. The most difficult attractor is the country or chaotic attractor, what peculiar to difficult unpredictable variations, which are over time [15]. In synergetic an attractor call the purpose program of behavior of system in a condition of a homeostasis that is an equilibrium state of the dynamic environment.

The structure metasphere economic security of the enterprise consists from cultural and spiritual making contextual components, which thanks to self-organization process, namely alternation the organizations and to disorganization, an order and chaos, evolutionary and revolutionary processes will help to succeed. The purpose of the third iteration is a harmonious social and economic development of society based on absolute self-preservation of the vital values sociotechnical systems.

Therefore, iterations work like a telescope through which it is possible to see stars, which are elements of larger systems, - galaxies, and larger system - the Universe. The increase in scale to the review stops when it is not possible to reach a limit, which is caused by the nature of that study.

If the microsphere and the macrosphere of economic security correlate with internal and enterprise environment, the metasphere demands further explanations. Yes, within this sphere of a question of ensuring economic security of the enterprise it is taken out on philosophical, highest general level at which it already accepts character of the private. Without the solution of the general questions, it is possible to wallow in trifles. Therefore, there is an urgent need for understanding, in what more global system, the highest order the studied question [3] enters.

So, the obvious moment of "jauntiness" can be seen in synergy understanding of the world as systems, as certain whole where there is a total interdependence and interaction of all its parts. There is a problem of responsibility of the person for destiny of Space, a noosphere as special new steps in self-organization of the Universe [2].

So, social responsibility of the enterprise should be understood as enterprise interaction with participants of business processes, which is realized through the voluntary obligation of owners and the management to enter actions concerning compliance socially significant expectation of society due to balance of economic, ecological and social productivity of the enterprise.

Social responsibility includes a cultural and spiritual component and acts as contextual components of economic security of the enterprise. In that case it influences endogenous and exogenous components or modifies interrelations (Table 2) between them.

Exists nothing for dependences on the context (to an order or chaos), it is more than that; the context is formed by the phenomenon or object. He allows to consider economic security of the enterprise at distance further a tip of a nose of the researcher moreover and lateral sight, through a prism of estimation and ethical measurement of activity of the person, it "integral outlook" (P.A. Florenskiy), who represents symbiosis of philosophy, religions, sciences and arts.

For example, the director resolves an issue: How to increase economic productivity? Let us pass to metalevel: whether "it is necessary to do it in general? How he wants it to reach? What problems he wishes to solve under conditions of increase of economic productivity? What actions it is necessary to introduce - to increase production or to ensure economic security of the enterprise for the purpose of reduction of losses"? That is at this level of a question it is necessary to solve so that the general situation improved.

Ensuring economic security of the enterprise is the perennial problem which decision is essential for any head and any society.

Therefore, economic security of the enterprise peculiar threefold character: on the one hand, it provides possibility of own functioning; on the other hand, ensures economic security of the region, the state that is part of systems of the highest hierarchical level. Moreover, from the third party, provides a noosphere, that is the sphere of interaction of society (culture) and the nature within which reasonable human activity becomes defining factor of development. That is, if to think scales of geological time, the humanity (each enterprise) bears responsibility for destiny of the Universe.

Table 2. Role of social responsibility in preservation of the vital values of sociotechnical system [10]

Main goal of enterprise economic security is guaranteeing harmonious social and economic development of society based on absolute self-preservation of the vital values of sociotechnical system.

Therefore, storing the vital values, the enterprise is socially responsible before own personnel, shareholders, owners, labor unions, employees of other enterprises, consumers, suppliers, competitors, whether together with which is carried out but other activity. The same the enterprise can reach a main goal of ensuring economic security. It is clear that for this purpose it is necessary to form trust from all listed subjects of internal and external environments of the enterprise, and also local population, mass media, social movements and others. After all, in the modern world the social position of the enterprise, its reputation and image is important.

Social responsibility displays historically caused compromise of interests of the main subjects of the modern socially focused market economy and expresses need of a social consent as one of the main conditions of political, social and economic stability.

To analyses a condition and features of management of socially responsible activity of the enterprises, the Ukrainian scientist N.O. Simchenko [13] were conducted certain researches on 157 industrial enterprises different by the size, form of ownership, branch accessory, a regional sign. It is revealed that the majority of respondents (83%) consider corporate social responsibility as a factor of achievement by the company of long-term competitive advantages. At the same time, 55% from them do not deny as a strategic objective of support of reputation in medium-term prospect, and also short-term decrease in risks of a task of harm to interested parties (38%). At the same time, it defines that the formulation whole "obtaining long-term competitive advantages" does not depend almost on belonging of the company to a certain branch cluster (raw, processing sectors or a services sector). At the same time, for a services sector characteristic orientation on achievement of medium-term reputation effects at simultaneous reduction of orientation by reduction of risks in short-term prospect (Table 3).

With the most effective actions which would extend the principles of social responsibility of business in the Ukrainian society and stimulated the commercial organizations to the solution of social problems the following: creation of favorable organizational and legal conditions for activity of subjects of housekeeping who participate in the solution of social problems; granting privileges on taxes, meetings, a rent both other payments to the enterprises and the organizations which are engaged patronage, sponsor's, charity; target financial support of non-state actors of social policy at the expense of budgetary funds; application of economic and other sanctions to those who acts to the detriment of social interests of territorial society; adjustment of cooperation with tax authorities and carrying out consulting and fact-finding work and so forth; accumulation of available information in the sphere of social business and adaptation of foreign experience of social business.

Table 3. The whole realization of strategy in the sphere of corporate social responsibility depending on a branch orientation of the enterprises of % [13]

It was established that the main obstacles for development of social responsibility of the enterprises are deficiency of financial resources and absence of the favorable legislation, which would regulate implementation of actions for development of socially responsible activity (Table 4). In addition, there are no incentives to introduction of the principles of social responsibility, which are substantially predetermined by shortage of the corresponding tax privileges from the state, and essential complexity of definition of economic effect of introduction of socially responsible programs.

Despite of a number of essential difficulties in development of socially responsible management in activity of the Ukrainian enterprises, Simchenko N. O. defined possible prospects of development of socially responsible business in Ukraine (Table 5).

Table 4. Factors which constrain development of social responsibility of business (% of the enterprises) [13]

Table 5. Stimulating actions for development of social responsibility of business (% of the enterprises) [13]

With the most effective actions which would extend the principles of social responsibility of business in the Ukrainian society and stimulated the commercial organizations to the solution of social problems the following: creation of favorable organizational and legal conditions for activity of subjects of housekeeping who participate in the solution of social problems; granting privileges on taxes, meetings, a rent both other payments to the enterprises and the organizations which are engaged patronage, sponsor's, charity; target financial support of non-state actors of social policy at the expense of budgetary funds; application of economic and other sanctions to those who acts to the detriment of social interests of territorial society; adjustment of cooperation with tax authorities and carrying out consulting and fact-finding work and so forth; accumulation of available information in the sphere of social business and adaptation of foreign experience of social business.

5. Conclusions

That economic security of the enterprise is the difficult phenomenon does not raise doubts. In our opinion, the apologia of iterative approach to research of economic security of the enterprise is justified by that for its help: first, it is possible to develop iterative (spiral) model in which the quantity of circles and the characteristic of communications between its components is important, after all the visual analysis can give a rich material for the formulation of hypotheses. Secondly, it is possible to comprehend structure, functions, processes, the purpose which will allow to come nearer to understanding of economic security of the enterprise as to system; thirdly, more precisely to define internal cause and effect sheaves and to coordinate the theory with practice. Therefore, distribution of economic security of the enterprise to spheres allows to understand, what its components it is possible to operate; which it is easy to influence but which are difficult for predicting and vice versa; and which can't be predicted, and only to estimate probability of emergence of threats and to create conditions for the sake of prevention of dangers. In this work, iterative approach to research of economic security of the enterprises understands in such expanded interpretation.

Therefore, high level of ensuring economic security of the enterprise is a preliminary condition for formation of social responsibility of business because only those companies can help which are profitable. In turn, formation of social responsibility will lead to increase of loyalty of consumers to the producer of production and to decrease in level of regulating influence of the state, which will promote ensuring economic security of the enterprise. The most successful company that which puts the means in implementation of social projects on advantage to society is considered.

Acknowledgement

The directions of further researches are formations of the principles of ensuring economic security of the enterprise that is generalization of all norms, rules, regularities and empirical experience in a type of certain requirements that will allow learning features of her behavior as purposeful multireasonable system.

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