Naslov
Surviving in an environment of financial indiscipline: a case study from a transition country

Autori
Pejić-Bach, Mirjana

Izvornik
System dynamics review (0883-7066) 19 (2003), 1; 47-74

Vrsta, podvrsta i kategorija rada
Radovi u časopisima, članak, znanstveni

Ključne riječi
simulation ; system dynamics ; small business ; financial indiscipline

Sažetak
In transition countries there is a large number of public enterprises making heavy losses that are allowed to survive at the expense of the rest of the economy. Their losses are financed to a great extent at the expense of their suppliers, banks and taxpayers. These firms are unable to repay their debts either in the short or the long term. In a fully functioning market economy their debts would be repaid during a process of reorganisation or liquidation. In transforming economies this is not the case becuase bankruptcy laws or restructuring mechanisms are not efficient. The question is how a small business can survive in such an environment. If its buyers do not pay on time, the firm will initially face liquidity crises and will eventually go bankrupt. The additional problem is that small businesses have restricted access to financial markets. This paper describes a system dynamics study of a small firm in the transitional Croatian economy striving to succeed in an environment characterised by severe financial indiscipline and with restricted access to financial resources. The goals of the study were to help the owners of the firm to decide which financial policy would be best in the situation of financial indiscipline and to demonstrate an application of system dynamics methodology in a small business environment. This article also makes a contribution to the publications that describe how models are designed, and particularly how small business managers can become involved, how their ideas are incorporated in the model, and how simulation experiments are used in small business decision-making.

Izvorni jezik
Engleski

Znanstvena područja
Ekonomija, Informacijske i komunikacijske znanosti

POVEZANOST RADA