ASSESSMENTEKONOMISTÓW
OF AN IMPACT OF COMPETITIVE
FIRMS ON
ECONOMIC ACTIVITY...
STOWARZYSZENIE
ROLNICTWA
I AGROBIZNESU
Roczniki Naukowe ● tom X
●
zeszyt 5
65
Halina Ka³u¿a, Wanda Zaremba
University of Podlasie in Siedlce, Poland
ASSESSMENT OF AN IMPACT OF COMPETITIVE FIRMS ON
ECONOMIC ACTIVITY ON THE LOCAL AND REGIONAL MARKET
OCENA WP£YWU FIRM KONKURENCYJNYCH NA DZIA£ALNOŒÆ
GOSPODARCZ¥ NA RYNKU LOKALNYM I REGIONALNYM
Key words: economic activity, competitive firms, competition, competitiveness local and regional
market
S³owa kluczowe: dzia³alnoœæ gospodarcza, firmy konkurencyjne, konkurencja, konkurencyjnoœæ,
rynek lokalny i regionalny
Abstract. The work aimed at determining relationships between an assessment made by entrepreneurs of an
effect of competitive firms on economic activity and success factors as well as the factors that hinder starting up
and running a firm. The study included 137 entrepreneurs conducting economic activity in urban-rural gminas
(communes) of the Warmiñsko-Mazurskie Voivodship. Analysis of empirical material was carried out utilizing the
rank correlation coefficient with one dichotomic variable. According to the entrepreneurs who run businesses on
both the local and supra-local market, the factors that hinder starting up and running a firm included competitive
firms and unfair competition. Entrepreneurs gain information about the market from local sources and conducting activity on local markets ranked higher an impact of competitive firms.
Introduction
Economic competition is perceived as a fundamental mechanism of market economy. The first
definition was provided by A. Smith who used this term meaning „competition in rivalry” with
respect to limiting the amount of goods or selling their larger amounts [Koœmicki 1988].
Competition can be defined as rivalry between economic entities in a certain area (sector,
market) [Szymañski ed. 1995]. Its role and essence is connected with both the economy as a whole
and the subjects operating in it.
The mechanism of competition does not exist as a separate notion in economy functioning. It
operates next to, or rather in interaction with, other mechanisms (which co-influence the interaction).
It is multidimensional in character and the dimensions (especially as regards its results and influences) are not solely economic. It is worth noticing that competition as a mechanism cannot be easily
separated from other phenomena and impacts of the environment (policy of the State, law, social
axiology). In real economy the competition is realized not so much in terms of products (or services)
characterized by the same standardised quality parameters as other products that are new, modified,
equipped with new functions, gadgets (supplied as a special offer) accompanied by better purchase
conditions, under extended guarantee, etc., not to mention diversified prices [Zacher 2006].
Competition can be analysed at four different levels of [Herman 1996]:
– world economy where competition takes place between countries, groups of countries or
supranational organisations,
– national economy where competition is limited by the country territory’s borders,
– regional economy relating to entities operating at a limited area,
– an individual enterprise and its competition with other firms.
Competition is obviously the factor that most visibly influences the entrepreneurs’ situation.
Through competition the process takes place of emerging on the market of enterprises that are
operating most efficiently in the competitive environment. Firm adaptability, that is ability to adapt
to changes taking place in the environment, is one of indicators of competitive firms. As a result of
competition and the market mechanism resulting from it, entrepreneurs are allowed a lot of leeway
66
Halina Ka³u¿a, Wanda Zaremba
whereas consumers are given freedom to choose a market [Herman 1996]. Under market economy
conditions every enterprise strives at success but it is possible only when the enterprise undertakes actions that allow them to assume more favourable market position compared with competitors. This, in turn, places them in a permanently advantageous position compared with the competitors [Wrzosek 1993].
In the context of the issue discussed, the present work focuses on the enterprise-level competition which can be considered from a few standpoints, that is:
– market monopolisation and getting into a dominant position defined as a level of ability and
possibility of every seller’s exerting an impact on actions undertaken by competitors [Stankiewicz 2002],
– sources of market competitiveness defined as factors forming an ability to compete [Niedokas
1999],
– scope of competition: is it local, regional or international [Tkaczyk 2000]?.
In the opinion of Porter [2001], in order to take up a dominating position on the market as well
as gain long-term profits from the firm’s activity a firm has to overcome a few entrance barriers, that
is: scale effect, product differentiation, capital needs, unfavourable cost situation that is independent on the firm’s size, access to distribution canals and policy of the authorities. Depending on
enterprise resources, branch or market, the basic competitiveness sources are: technologic, production, distribution and marketing sources, position on the market, management quality, uniqueness of the enterprise and its products, knowledge and information and time management [Niedokas 1995].
At the enterprise level what matters, as far as competition is concerned, is the scope of the
enterprise’s operation. Firms representing the SME sector usually operate on the local and regional market. In this case competition is perceived as rivalry between entities on the above-mentioned markets.
The aim of the work was to determine relationships between an assessment made by entrepreneurs of an impact of competitive firms on economic activity, and two kinds of factors: success
factors and factors hindering starting up and running a firm on local and supra-local (regional,
national) markets.
Materials and methods
Analyses were based on results of empirical research conducted in the first three months of the
year 2007. The research included interviews carried out with entrepreneurs of urban-rural gminas
of the Warmiñsko-Mazurskie Voivodship, that is Nidzica in the Nidzicki Poviat, and Lidzbark in the
Dzia³dowski Poviat. The research included 137 entrepreneurs (88 persons operating on the local
market, and 49 persons operating on the supra-local market) who assessed an impact of competitive firms on economic activity. They applied a 1-5 scale, 5 indicating a very low influence and 5
reflecting a very high impact. Analysis of the empirical material included calculating the rank
correlation coefficient for ordinal variables as well as the rank correlation coefficient with one
dichotomic variable [Ferguson, Takane 1999].
Research results
Characterisation of gminas examined
Differences in the structure of the farms in the gminas examined were reflected in agricultural
production as 22.3% of Nidzica farms specialised in market-oriented production whereas in Lidzbark the indicator’s value was 40.9%.
The share of sown arable land was similar for both gminas (72.5-71.9%), however, it was very
variable among individual farm groups established according to the farm’s area. The largest differences were noticed for farms whose areas ranged from 5 to 10 ha agricultural land (44.0% for the
Nidzica gmina and 75.8% for the Lidzbark gmina) or exceeded 50 ha (respectively, 74.0% and
54.5%). A low level of arable land utilization in Nidzica by small-area farms was likely to be associated with a relatively high share in this group of units which conducted both agricultural and nonagricultural activity (8.5%), and a high percentage of farms that conducted no economic activity
67
ASSESSMENT OF AN IMPACT OF COMPETITIVE FIRMS ON ECONOMIC ACTIVITY...
Tabela 1. C haracterisation of agricultural farms in N idz ica and Lidz bark gminas
Farm area
[ha]
Agricultural
farms
N idz ica
number
%
Agricultural land/
farm
Lidz bark
number
%
Arable land [% ]
agricultural land
Sow n arable
land*
N idz ica Lidz bark N idz ica Lidz bark N idz ica Lidz bark
ha
%
Total
1 005 100
1 174
100
11.8
12.1
87.8
78.1
72.5
<1
478
47.6
298
25.4
0.4
0.4
81.1
88.1
42.8
1 to 5
254
25.3
378
32.2
2.2
2.3
73.5
82.9
46.2
5 to 10
71
7.1
168
14.3
7.1
7.5
77.8
78.0
44.0
10 to 20
109
10.8
200
17.0
14.4
14.2
77.1
77.0
69.3
20 to 50
58
5.8
107
9.1
31.0
28.2
83.9
74.1
85.6
50 and >
35
3.5
23
2.0
208.0
263.6
93.0
79.8
74.0
* Sown arable land expressed as % total arable land
Source: Personal elaboration on the basis of data from NSR (Polish Agricultural Census). 2002.
71.9
36.7
55.4
75.8
89.6
97.5
54.5
(33.9%). In the Lidzbark gmina the indicators amounted to, respectively, 4.9% and 27.3% (according to the NSR data, 2002). In the gmina as well as in the whole Dzia³dowski Poviat there occurred
an important and difficult problem of reclaiming agricultural land and developing devastated buildings that used to be owned by PGRs (State Agricultural Farms). They could be perceived as
potential workplaces for local inhabitants.
Basic characteristics of entrepreneurs, that is sex, age and education, did not influence their
assessment of an impact of competitive firms on economic activity carried out on both the local
and supra-local market (tab. 2).
The factors that significantly differentiated respondents were as follows: the size of the firm
and form of business establishment ownership for the local market, and work experience gained in
other branches for the supra-local market. Self-employed entrepreneurs (not employing workers
on permanent contracts) who carried out economic activity on the local market and were not the
business establishment owners assessed relatively higher an impact of competitive firms. It can be
assumed that family business owners who found themselves in a difficult situation felt that they
were much more affected by an impact of competitors.
The same holds true for the entrepreneurs who operated on the supra-local market, and who
did not have work experience gained while working in a different branch (tab. 2).
An assessment of an impact of competitive firms made by entrepreneurs operating on the
supra-local market did not depend on the way they perceived factors that determine successful
economic activity. The same situation was observed among respondents running businesses on
Tabela 2. R elationships betw een characteristics of entrepreneurs and an assessment of an impact
of competitive firms on economic activity
Specification
S ex
A ge
Activity at the place of inhabitation (1 – yes)
Education
Work experience in the same branch
Work experience in a different branch
Year of starting up the firm
Kind of firm (1 – trade)
The firm employs permanent workers (1 – yes)
The firm employs qualified workers
Form of business establishment ownership (sole ownership – 1)
* Critical value of Z statistic = 1.96
Source: Own elaboration on the basis of study results.
Market
L o cal
Supra-local
0.29
-1.79
-0.67
-1.39
0.99
0.60
1.17
-0.28
-2.97
-1.91
-2.17
1.21
-0.29
1.43
-0.33
1.81
-2.38
0.77
0.02
0.10
-0.13
0.55
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Halina Ka³u¿a, Wanda Zaremba
the local market as far as success factors pertaining to personality traits, that is: persistence,
competence, skills and knowledge, were concerned. In contrast, entrepreneurs operating on the
local market, who believed that money and random factors such as good luck and contacts determine success, noticed a larger impact of competitive firms on the economic activity carried out.
An analysis of factors that hinder starting up and running a firm indicates that, in most cases,
their choice did not depend on as assessment of an impact of competitive firms on economic
activity. Significant relationships occurred only in the case of competition-related factors. Respondents pointing to unfair competition as a factor that hindered starting up and running a firm,
assessed relatively high an impact of competitive firms on economic activity conducted on local
and supra-local markets. The same assessment was made by entrepreneurs operating on regional
markets. They pointed to high competition as the factor that hindered starting up and running a
firm.
Analysis of data presented in table 5
Tabela 3. R elationships betw een perceiving success
indicates that an impact of competitive
factors in carrying out an economic activity and an
firms was assessed relatively higher by
assessment of an impact of competitive firms on the
entrepreneurs performing activity on the
activity
local market and who got information
Specification
Market
about the market from local-scale sourLocal Supra-ces: friends, co-workers, customers, and
local
by entrepreneurs performing activity on
Industriousness
0.10
0.76
the regional market who gained informaProfessional competence
-0.09
0.09
tion by observing competitors.
Persistence
1.55
1.20
All the factors analysed determining
selection of suppliers on the local market
Ability to risk
0.63
0.46
did not depend on an assessment of an
Appropriate information about the market -0.22
0.08
impact of competitive firms. In contrast,
Ability to plan
-0.39
0.53
entrepreneurs who indicated financial
Knowledge how to manage a firm
0.96
1.39
factors, such as dates of paying off fiMoney
3.80
0.31
nancial obligations and prices, assessed
Good luck, contacts
2.21
-0.72
relatively higher an impact of completive
* Critical value of Z statistic = 1.96
firms on supra-local markets.
Source: Own elaboration on the basis of study results.
Actions undertaken by respondents
Tabela 4. R elationships betw een perceiving factors hindering starting up and conducting economic
activity and an assessment of an impact of competitive firms on the activity
Specification
Limited demand in the gmina and the region
High level of taxes
High local payments
Unfair competition
Marked competition
No clear concept of gmina development
Unfavourable gmina's image
Unfavourable policy of the local authorities
No institutions providing entrepreneurship support
Communication infrastructure
Bureaucracy and officiousness of public officials
Complicated and unstable formal-legislative regulations
Complicated procedures of obtaining European Union subsidies
Limited access to credits (high formal-legislative requirements and costs of
obtaining a credit)
* Critical value of Z statistic = 1.96
Source: Own elaboration on the basis of study results.
Market
L o cal
Supra-local
1.56
1.27
0.63
3.76
0.93
-0.30
-0.66
0.38
0.72
-1.07
-0.41
0.38
0.06
0.32
-0.58
-0.11
0.22
2.65
3.25
-0.87
0.29
-1.12
0.53
-1.75
-0.72
-0.41
-0.96
-0.27
ASSESSMENT OF AN IMPACT OF COMPETITIVE FIRMS ON ECONOMIC ACTIVITY...
69
to win and maintain customers on supra-local markets did not depend on an assessment of an
impact of competitive firms whereas on local markets the entrepreneurs who provided friendly
service in order to win and maintain customers indicated a higher impact of competitive firms on
the economic activity carried out.
Conclusions
1. The firm’s size and form of business establishment ownership were the factors that significantly differentiated entrepreneurs performing economic activity on the local market. For the
supra-local market the factors included professional experience gained while working in a
different branch.
Tabela 5. R elationships betw een market characteristics and an assessment of an impact of
competitive firms on economic activity
Specification
Market
L o cal
Supra-local
Personally obtained information
Friends, co-workers, consumers
Observation of competitors
Specialist magazines, reports, media
Internet
Factors determining the choice of present suppliers
-0.89
2.22
0.73
0.82
0.21
0.02
0.08
2.87
0.17
-0.87
Quality of goods/services offered
Offer range
Supply dates
Dates of paying off financial obligations
Prices
Actions undertaken to w in and maintain customers
0.19
0.05
0.73
0.53
1.23
-1.12
1.90
1.36
2.01
2.41
Maintaining high-quality goods, products, services
Friendly service
Working hours (availability to customers)
Incentives (discounts, instalments, free delivery, cards, gifts)
* Critical value of Z statistic = 1.96
Source: Own elaboration on the basis of study results.
1.70
2.54
1.15
-0.90
0.15
0.77
1.83
0.29
Sources of information about market
2. Self-employed entrepreneurs who conducted economic activity on the local market and were
not business establishment owners assessed relatively higher an impact of competitive firms.
3. Competition between firms is connected with overcoming a number of barriers of various
kinds. Unfair competition is one of the most important sources of these barriers. Entrepreneurs
indicating unfair competition as a factor that hinders starting up and running a firm assessed
relatively higher an impact of competitive firms on their economy activity carried out on both
local and regional markets.
4. Entrepreneurs who carried out economic activity on local markets and got information about
the market from local sources assessed more favourably as impact of competitive firms. Such
an opinion was also expressed by entrepreneurs operating on regional markets and getting
information about the market by observing competitors.
References
Ferguson G.A., Takane Y. 1999: Analiza statystyczna w psychologii i pedagogice. Wydawnictwo Naukowe
PWN, Warszawa, 441-442
Herman A. 1996: Charakter i ewolucja wspó³czesnych rynków. [W:] Przedsiêbiorstwo, rynek, konkurencja, pod
red. Szymañskiego W. SGH, Warszawa, 70-72.
70
Halina Ka³u¿a, Wanda Zaremba
Koœmicki E. 1988: Teoria konkurencji ekonomicznej. Próba oceny stanu badañ i koncepcji. Ruch Prawniczy,
Ekonomiczny i Socjologiczny, nr1.
Narodowy Spis Rolny 2002. GUS, Warszawa.
Niedokas K. 1995: ród³a konkurencyjnoœci firmy we wspó³czesnym rynku. [W:] Przedsiêbiorstwo, rynek,
konkurencja. SGH, Warszawa, 156.
Niedokas K. 1999: ród³a konkurencyjnoœci firmy na wspó³czesnym rynku. [W:] Przedsiêbiorstwo, rynek,
konkurencja. SGH, Warszawa, 156.
Porter M. 2001: Porter o konkurencji. PWE, Warszawa, 26.
Stankiewicz M.J. 2002: Konkurencyjnoœæ przedsiêbiorstwa. Dom Organizatora, Toruñ, 27.
Szymañski W. (red.) 1995: Przedsiêbiorstwo, rynek, konkurencja. SGH, Warszawa, 109.
Tkaczyk T.P. 2000: Wybrane problemy konkurencji. Wyd. Wy¿szej Szko³y Ekonomiczno-Informatycznej w
Warszawie, Warszawa, 33-34.
Wrzosek W. 1993: Formy oraz intensywnoϾ konkurencji a marketing. [W:] Marketing jako czynnik i instrument konkurencji. Monografie i opracowania, 376. SGH, Warszawa, 17.
Zacher L.W. 2006: Przysz³oœæ konkurencji. [W:] Polskie przedsiêbiorstwa wobec globalnej konkurencji. Instytut Funkcjonowania Gospodarki Narodowej. Materia³y i Prace T.XCV. SGH, 56-64.
Streszczenie
Celem opracowania by³o okreœlenie zwi¹zków miêdzy dokonan¹ przez przedsiêbiorców ocen¹ wyp³ywu firm
konkurencyjnych na prowadzon¹ dzia³alnoœæ gospodarcz¹ a postrzeganiem przez nich zarówno czynników sukcesu, jak i czynników utrudniaj¹cych uruchomienie i prowadzenie firmy. Badaniami objêto 137 przedsiêbiorców
prowadz¹cych dzia³alnoœæ gospodarcz¹ w gminach miejsko-wiejskich województwa warmiñsko-mazurskiego. Za
pomoc¹ wspó³czynnika korelacji rangowej z jedn¹ zmienn¹ dychotomiczn¹ dokonano analizy materia³u empirycznego. Zdaniem przedsiêbiorców prowadz¹cych dzia³alnoœæ gospodarcz¹ zarówno na rynku lokalnym jak i
ponadlokalnym czynnikami utrudniaj¹cym powstanie i prowadzenie firmy by³y firmy konkurencyjne oraz nieuczciwa konkurencja. Przedsiêbiorcy zdobywaj¹cy informacjê o rynku ze Ÿróde³ lokalnych i prowadz¹cy dzia³alnoœæ na rynkach lokalnych wy¿ej ocenili wp³yw firm konkurencyjnych.
Corresponding address:
dr hab. Halina Ka³u¿a, prof. AP
Akademia Podlaska
Instytut Zarz¹dzania i Marketingu, Zak³ad Ekonomiki i Organizacji Rolnictwa
ul. Prusa 12, 08-110 Siedlce
tel. (0 25) 643 13 17
e-mail: [email protected]
dr Wanda Zaremba
Akademia Podlaska
Instytut Agronomii, Katedra Nauk Ekonomicznych
ul. Bema 1, 08-110 Siedlce
tel. (0 25) 643 17 38
e-mail: [email protected]