PhD, Associate Professor Olifirenko L. D.

Chernihiv National Technological University, Ukraine

Institutional Bases of Governmental Regulation of Knowledge-Intensive Corporations Development

The results ofdomesticand foreign studies have found a direct correlationbetween the level of technology development, the environmental security, the economic growth and accumulation of national wealth. Government regulations should take into account modern trends of technological and social componentsof scientific and technical progressthat can provide the increase of the investments into material production and its growth, the expansion of resource base, the movement of capital, the increase of workresources and goods at market, economic and environmental security and lead to the disclosure of human potential [1, 2]. In the context of globalization the extremely powerful toolof state economy regulation isthe institutional-investment policy that assumes the involvement of public and private investments, the rights protectionof capitalowners, the financial management developmentof the integrated industrial corporationsdevelopment base.

 The objective of the research is the identification and systematization of the main factors of governmental regulation influence on the development of industrial corporations in the globalization context.

The reorganization of industrial corporations which production is characterized by high science-intensive together with the program-targeting and institutional approachescombined with the institutional mechanisms of governmental regulation (fiscal, financial, credit, pricing, etc.) preventthe deformation of objectivemarket processes and relations while the recession and economic recovery[3].

Management mechanisms of industrial corporations development include various methods of implementation [4].

The subject of influence is state, regional and local governments as well as national and foreign investors, financial and credit institutions, suppliers, contractors, customers and community organizations.The aim of influence isto encourage the companiesdevelopment towardsinnovative development programs, fiscal, dividend,credit and financial policy, the anti-crisis program and the reorganization of productive capacity.Thereorganizationof companies considered as an integrated component of the state industrial policy; the duration and efficiency of which is crucial.

The effectiveness of the usage of the institutional mechanisms of state regulation of corporations development is to provide compromise between different interest groups from the owners, a state, creditors, suppliers and customers. The anti-crisis concept of governmentalpolicy is based on this concept as well as management mechanism between the subjects of financial and economic relations is being built.

Considering the management mechanism as a set of methods and tools it should be noted that this mechanism is to a greater extent formed by the influence of external factors of institutional environment than by intra corporate factors [4].

The ability to use an adequate mechanism to increase the capitalization level is largely dependent on the institutional termsof business development, in which state and private decisions are implemented.Such termsare foundedby state laws and regulations governing the corresponding relations.However, the reorganization requiresnot only the usage of new instruments and mechanisms of governmental regulation, but also providingits effective implementation.

So, in terms of efficiencyof investment activity in Ukraine only theindustrial corporations of the first technological structures are continuingits development.Such companies productionscommonly have low value added, lacksignificant innovations andarecharacterizedby a high resource-intensitythat indicatesthe prolongation oftrendsextension towardsthe preservation of hypertrophied sectoral structure of the economy [1, 2].

The adaptation of enterprises to WTO and EU standards and requirements is fundamental condition for the development of industrial corporations and the formation of a new quality of relations betweenthe state and business.The institutional barriers towards further relationsoptimizationarepalliative formal institutional mechanisms and their unacceptance in informal norms of business communication, which explains the low efficiency of institutional mechanisms of specifications and property rights protection. Moreover, the policy of protectionism and excessive state control causes thedeformation of institutional mechanisms for the implementation of market opportunities through the opacity of corporate control that in terms of low institutionalization of competitive environment only increases the concentration of capital within certain insider groups of influence and leads to the inhibition of corporate development.

The state as an owner of strategically important businesses must consider the safe functioning and have the appropriate legal normative regulations.Thisbecomes an incentive forinvestments attractionand expansion of financial instruments, as well as for the positioning of the significant state intentions on the international market concerning to the expanding of integration into the world economy.

Multidirectional interests of shareholders, owners, and the state do not allow efficient implementation of innovation and investment policy to the companies development. Due to such state of affairs the state budget receives less fiscal funding from business.In all of these matters the priority to provide the security andassurancesof investment activities to all market participants should belong to the state.The state as sub-owner should control the effectiveness of financial strategies of businesses and main national companies in perspective to make them a transnational.Chosen direction depends on the efficiency of the governmentalprograms implementation concerning theselectivity of technology intensive corporations towards the advanced type of development.

In terms of systemic restructuration of the economy of Ukraine towards its adaptation to the international standards of market economy, where the social orientation should dominate, it is necessary to create the institutional mechanisms to stimulate corporations towards the optimizationof institutional interaction through the creating of legitimate, generally accepted and transparent communication rules for market relation participants.In this context the model of corporate governance should be considered as one of the most important mechanisms ofinstitutional environment harmonization that is possible only in the case ofa consolidation of state, business andsociety in the formation process of national development strategy based on governmentallegal partnership institute. The state principles of corporate and social responsibility, as well as the social partnership that govern the development of the national economy towards the leveling of the conflictness of institutional environment and balancing social and economic objectives as the ground of sustainable development of society are designed to be the conceptual foundationsof such strategy

References:

1. Fedulova L. Technological readiness of Ukraine to face new challenges in the absence of technological policy [Tehnologіch nagotovnіst Ukrainy do novih vyklykіv v umovah vіdsutnostі tehnologіchnoi polіtyky] / L. Fedulova // Economy of Ukraine. – 2010. – № 11. – P. 12-26.

2. Yakubovskiy M. Industrial policy: problems and prospects of modernization [Promislova polítika: problemy ta perspektyvy modernízacii] / M. Yakubovskiy // Economy of Ukraine. – 2010. – № 10. – P. 21-26.

3. Olifirenko L. D. Determinants of state regulation of corporations development: institutional aspect [Determinanty derzhavnoho rehuluvanya rozvytku korporacii: instytucionalnyi aspekt] / L.D. Olifirenko // Economika ta derzhava. – 2012. – № 5. – P. 141-143.

4. OlifirenkoL.D. Fundamental determinants of governmental regulation policy of industrial companies development [Osnovopolagayushchiye determinanty gosudarstvennoy politiki regulirovaniya razvitiya promyshlennykh korporatsíy] [Electronic resource] / L.D. Olifirenko // Modern management technologies. – 2013. – № 09 (33). – ISSN 2226-9339. – [Access mode] : http://sovman.ru/all-numbers/archive-2013/september2013/item/188-03-33.html.