General information
Code: J5-6820
Period: 1.7.2014 - 30.6.2017
Range on year: 1.06 FTE | 2016
Project leader at FDV: prof.dr. Rado Bohinc
Research activity: Social sciences
Abstract
The subject of research shows the diagram in the Annex 2.
Improving corporate governance
Weak corporate governance (CG) contributed substantially to the emergence of financial and economic crisis, which follows also from the results of an on-going project “Legal and economic aspects of corporate governance in the public and private sector as a tool for overcoming economic and development crisis”, financed by Slovenian Research Agency.
Unfortunately, weak CG is still very present in Slovenia, which can be seen in Communication, adopted by Commission in 2014, about macroeconomic imbalances, stating that the substantial risks are still present due to weak CG, high level of state involvement in the economy, losses in cost competitiveness and the corporate debt overhang.
As seen, there is strong necessity towards a new model of CG. Therefore, some recommendations for an improved framework in Slovenia will be provided, by introduction of some changes, such as:
a) DIVERSIFICATION OF THE CONCEPT OF THE UNIFORM PROPERTY RIGHTS
This anachronism has been resulting to distortions in the structure of the modern society, significant for predominant contribution of innovations and qualified human skills to added value, known today as world economic and financial crisis. Adaptation of classical tools of capitalism is more than needed. One of the issues researched in this project is whether the transformation of property relations can be achieved. Such a transformation would change the contemporary economic paradigm and is therefore condictio sine qua non for reforms needed for the implementation of innovative modern society. That is why the subject of the project will be to diversify uniform private property to new types of property, such as:
- private property right,
- public (state/municipal) property right,
- corporate property right and
- social (social undertakings) property right.
b) INTRODUCTION OF APPROPRIATE INCENTIVES FOR INTRODUCTION OF FINANCIAL AND STRUCTURAL PARTICIPATION
European Commissioner Barnier emphasized that employee financial participation enhances social cohesion which encourages long-term economic growth; enhances CG, improves employees’ motivation and enterprises’ profitability and creates more jobs.
The great importance of this issue at present is seen in recent documents, adopted by Commission and by European Parliament as well as in the conference which took place in Brussels this year.
c) ENHANCEMENT OF CORPORATE SOCIAL RESPONSIBILITY (CSR)
One of the important parts of the research project will deal with thorough analysis of legal and economic incentives for ensuring long-term interest of wide range of stakeholders, stemming from the key findings of the recent project: "Impact Measurement and Performance Analysis of CSR".
d) ESTABLISHMENT OF SOCIAL ENTERPRISES AND COOPERATIVES
CG related to deleveraging the real sector
As mentioned before, the corporate debt overhang seems to be one of risk presented in Slovenia. Inefficient corporate governance has led to increased debt and to an inappropriate structure of financing resources. Therefore, we will try to find if there is some possibility to establish a project group under the auspices of competent institutions to restructure the economy and preserve the healthy company cores. Furthermore, we will make some proposals for the formation of legal bases enabling the functioning of organisations dealing with these activities.
Financing SMEs
More than 99% of all European businesses are SMEs which are the true back-bone of the European economy, being primarily responsible for wealth and economic growth.
Being aware of the their importance, we will try to find what are the ways in which the institutional conditions for its financing in Slovenia and EU could be improved.
The phases of the project and their realization
First Year
1. Analysis and comparative overview of certain most successful European and other regions and countries which managed to establish a successful development model (in terms of preserving and strengthening international competitiveness and cohesion, in terms of social cohesion, as well as in terms of inclusion and plurality of relevant societies); based on the analysis of legal, economic, financial and other limitations, imposed by the global legal framework and, especially, the legal framework of European integration, an assessment and a representation of possible future development of European integration will be given.
2.Analysis of the state and understanding of social responsibility in Slovenia, EU and worldwide, the role of ethics and the rule of law affecting economic and social development, and comparative and EU analysis of establishing elements of European social market economy for the 21st century; vision of competitive economy and economic growth, which should be reasonable, sustainable and inclusive.
3. Analysis of legal, economic, financial and other restrictions, determined by the global legal framework and analysis of legal and economic incentives for ensuring long term interest of wide range of stakeholders.
4.Analysis of crucial weaknesses in functioning of corporate governance of enterprises in the Republic of Slovenia, particularly regarding corporate governance of stateowned and parastate enterprises and, especially, banking and finance organizations compared to experiences, rules and recommendations within the EU and OECD.
5. Analysis of corporate governance concerning deleveraging of the real sector, and an overview of the functioning of structures or groups of corporations and financial organisations in certain EU member countries which have included restructuring of enterprises in difficulties and the preservation of healthy company cores, including the representation of operations of venture capital funds, into their business activities framework (both in financial and development terms).
6. Analysis of crucial weaknesses in the status structure, financing and functioning of corporate governance of noncommercial organizations in the public sector sphere. Due to urgent systemic harmonisation of corporate governance of noncommercial organisations (schools, healthcare, culture, sports, child care and care of the elderly) with the regulations in the economic sphere, the research shall be directed towards no longer considering institute councils as the highest decisionmaking bodies, but rather transferring this role totheir supervisory or administrative boards (depending on whether a one or two tier management system was chosen as an example from the field of economy). The proposed structure shall be devised on the basis of analysis de lege lata regulation of corporate governance of noncommercial entities in EU countries, as well as on the basis of analysis of causes for legal and economic inefficiency of regulations in this field in the Republic of Slovenia.
7. Analysis of establishing modern alternative entrepreneurial and ownership structures within the EU such as workers’ stock ownership, social enterprises, cooperatives, and other incentives for the purposes of greater motivation of workers to complete their assignments and be creative, along with the analysis of causes of setbacks in this field in Slovenia; analysis of successful tools enabling structural and financial participation, and various forms of worker owned and social enterprises and cooperatives within the EU and in other countries worldwide.
8. Analysis of legal and organisational structures governing the performance of public services in Slovenia 20 years after privatisation compared to other EU countries, as well as a representation of lessons learned and good practices.
9. Analysis of the state and understanding of social responsibility in public institutes, state owned enterprises, public funds, public agencies in comparison with other EU countries, as well as a representation of lessons learned and good practices.
10. Analysis of functioning of corporate governance of public law entities in the Republic of Slovenia with the emphasis on public institutes; analysis of modern ways of efficient and socially responsible corporate governance of public law entities in Slovenia, and in comparison with other countries.
11. Analysis of furthering private and partnership based such as social entrepreneurship, cooperative forms of business, publicprivate partnership, etc.
Second Year
1.Presentation of possibilities offered by the future development model for Slovenia on the basis of lessons learned, comparative experiences, and within the context of dynamic processes of Europeanization and globalization, plurality of ownership forms (various funds, local communities, employees, small shareholders,...), as well as in the context of establishing development alliances among stakeholders and presentations of alternative forms of ownership: among others, cooperatives and social enterprises.
2. Proposals via legal and economic incentives for ensuring long term interests of a wide range of stakeholders by means of establishing socially responsible corporate governance, for developing social responsibility within enterprises, strengthening the responsibility of corporate governing and control bodies for the promotion of interests of all stakeholders (including employees and group units of society) during decision making processes and pursuance of corporate goals.
3. Development of corporate legislation in the Republic of Slovenia with the introduction of the most up to date approaches to corporate governance in Slovenia (disqualification and responsibility of corporate executives, conflict of interests, independent monitoring, topmost professionalism and diverse composition of corporate bodies, corporate governance in affiliated business systems, banks,...).
4. Designing proposals for a more effective corporate governance in noncommercial organisations in the fields such as education, healthcare, culture, sport, child care and care of the elderly. Considering the future proposed model of one or two tier governance in non-commercial entities, institutes will be able to have not only a supervisory board, but also a management or a uniform management board. As an additional option, the research will also envisage a council of experts and a user council.
Third Year
1.Designing proposals for a more efficient corporate governance in commercial banks, aims at achieving success in financial and development restructuring, as well as in deleveraging the economy, including proposals for the formation of legal bases enabling the functioning of commercial or financial organisations dealing with complete restructuring of the economy and preserving healthy company cores (so called turnaround management), as well as legal bases for setting up a venture capital fund.
2. Development of rules relating to motivation of workers to complete their work and be creative, as well as to promotion of modern forms of financial and structural participation of workers and workers’ legal organisational forms such as worker owned enterprises, workers' stock ownership, social entrepreneurship, cooperatives, etc.; proposals for strengthening flexicurity as a factor in encouraging workers' motivation and increasing productivity levels.
3.Proposals for changes in legislation regulating legal and organisational structure of public law entities providing public services in the Republic of Slovenia (in particular the legal status of public institutes, public agencies, public funds and enterprises), with the objective of increasing management independence and thus increasing responsibility for providing public services and for quality results.
4. Legal bases for developing social responsibility, integrity and directors’ liability for damages within the public sector, while providing public services this means changes in the legislation regulating public institutes, stateowned enterprises, public funds and public agencies.
5. Bases for changing legislation related to corporate governance of public law entities in the Republic of Slovenia, with a special emphasis on public institutes (competencies and responsibilities of official bodies, separation of management roles from the competencies of the founder, as well as strengthening the significance of independent supervisory roles).
6. Designing legal bases for development and promotion of provision of public services by private entities such as publicprivate partnership, social entrepreneurship, cooperatives, etc.
Research Organisation
http://www.sicris.si/public/jqm/prj.aspx?lang=eng&opt=2&subopt=403&hits=1&id=9306&search_term=J5-6820
Researchers
http://www.sicris.si/public/jqm/prj.aspx?lang=eng&opt=2&subopt=402&hits=1&id=9306&search_term=J5-6820
Citations for bibliographic records
http://www.sicris.si/public/jqm/prj.aspx?lang=eng&opt=2&subopt=400&hits=1&id=9306&search_term=J5-6820
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