PhD Thesis Presentation

Saturday, January 14, 2011, I made the public presentation of my PhD thesis entitled “Entrepreneurship in Times of Economic and Financial Crises. Methods of Adaptation and Survival.” The ceremony took place at the School of Economics and Business Administration from Lower Danube University of Galati, Romania. It has been a period of intensive research that helped me understand the entrepreneurial phenomenon better. I also analyzed the most appropriate behavior needed to stimulate business and social entrepreneurship both by managers and public officials.

Companies begin to have problems when clients loose confidence in their ability to provide goods and services of higher quality. This behavior is affecting their solidity. Entrepreneurs – those who take the risks to transform a business idea into deliverables to be sold on markets – have a very difficult task: to initiate, to organize and to maintain a company on the market, offering salaries, paying taxes and developing local communities. In order to establish a company, the entrepreneur needs courage, but to keep it, he needs to identify an opportunity. Many times, he will not succeed from the first attempt, but has the strength to transform failure into new opportunities, learning from his past mistakes. To be entrepreneur requires vigilence and talent, but also adequate education.

ICBA 2011 at the School of Law from the University of Bucharest

The International Conference on Administration and Business (ICAB) is organized every year by the School of Administration and Business from the University of Bucharest. The Conference is offering an adequate venue for researchers, science people, specialists, and students to meet and discuss about all areas of economics and administration. This year, I have participated with the paper  “Entrepreneurship in times of economic and financial crises; methods off adaptation and survival.” The paper was accepted to be published in the “Manager” journal of the School of Administration and Business of the University of Bucharest and was indexed in EBSCO database.

Here are some of my conclusions: “The problems that small and medium-sized enterprises face during economic and financial crises have direct and strong implications on the local communities. These are affected by increased social problems generated by the measures that the companies are taking. The research has shown that the adaptation and survival methods of SMEs during crises is a function of layoffs, reduced activity and reduced to none investment. Layoffs determine greater pressure on the social protection policies and diminish the local expenditure on goods and services. The diminished expenditures on goods and services determine a chain effect that spreads to other consumer-goods businesses, credit reimbursements, and various services. This situation requires governmental intervention to protect the increasing number of poor. The measures that were successful in Thailand’s response to the 1997 economic crisis and that seem to work in the Romanian environment include “an improvement to the strategic design and coordination of the social policy, protection measures to the poor and to the elderly, strengthened social protection of workers, and improved monitoring of living standards.”  These measures require intervention at the macroeconomic level, with results to be seen on a short to a medium period of time. From this regard, managers that were interviewed seem to have been objective when stating that recovery is to be seen within the next two years.”

The International Conference on Administration and Business

The Faculty of Business and Administration from the University of Bucharest is organizing the International Conference on Administration and Business during June 4-5, 2010. I am attending the Education, Administration and Law Section, with the paper “Online vs. Offline vs. Mixed Participation for Better Governmental Policy-Making.” This paper is focusing on the area of participative democracy from my thesis. Here are some conclusions:

SolveNet (term referring to a hypothetical better citizen engagement model) is a combination of online and offline citizen engagement. It benefits from advantages specific to the online dialogue like little to no cost of use, flexibility of participants to give solutions to problems of public concern, educational approach, and interactivity among the participants. At the same time, SolveNet is coping with the disadvantages of offline engagement, like the lack of accountability of the end result of a participation endeavor, limited time and money of participants to offer input in pressing community problems, polarization of discussions, and lack of knowledge about issues.

As the majority of the work is done online, the policy-making process is pushed further using the authority of a legally established

nonprofit organization. This way, the most feasible, valuable and sustainable solution proposals from citizens, are sent to the desks of elected and appointed officials.

The participation model lacks the advantages of face-to-face discussions between the participants, but the online citizen engagement platform offers an interactive participation experience that allows people from different regions to work together creatively in solving community problems. The people who participate are not representative for any given community. That is why the main focus is on the quality of the solutions that are exchanged on the platform and not on the background of the citizens.

SolveNet faces however the problem that every participation model has: effectiveness in generating a change of policy. It is ultimately up to the decision-makers to consider the results of any participative democracy exercise or not. The main advantage of SolveNet is in this case the little effort that every-day people make, in order to make their voices heard in the community.

A mixed participation model to support governmental decision-making seems to work the best, in order to benefit the most from citizen engagement. This model has to provide for authority, accountability, creativity, exchange of constructive ideas, educational approach, and perseverance. Future research could identify such a model and showcase it.

Some conclusions of the paper presented at the 6th CEU Conference in Social Sciences

Seven papers were presented in the first day of the Conference, in Panel 2 called “Are They Drifting Into Adulthood? Past, Present and Future of New European Democracies” that was chaired by Daniela Sirinic (CEU). In my paper presentation, entitled “Entrepreneurship in times of economic and financial crises. Methods of adaptation and survival,” I drew some conclusions regarding the level of adulthood of the Romanian democracy. The answer is very complex. From my point of view, it is both a “yes” and “no” answer. Here are my arguments:

• It’s a “no” at a macroeconomic level because the research that I presented showed that there is a lack of a visionary development program that would boost economic recovery. The lack of vision however is persistent across all sectors of the Romanian economy.
• The “yes” side is only partially satisfactory and applies to the microeconomic level. The Romanian democracy allows the entrepreneur to take the necessary measures to adapt the activity of the company to the new economic circumstances. However, entrepreneurs engage very little in shaping favorable public policies in the communities they belong to. They simply do not engage in participative democracy projects, in a constructive way. However, the lack of success stories of participation does not encourage them to dedicate time and effort to this behavior.

Here is the video of my presentation:

Vera Scepanovic (CEU) was the panelist who made a very thorough and pertinent critique of my paper. She gave me good insights into what I should consider in my final PhD paper. Here’s what she said:

And some photos:

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The 6th CEU Conference in Social sciences is entitled “Social Science Perspectives on Global Transformations and Social Change”. The conference will take place at Central European University in Budapest, during April 16-18, 2010. I’ll be presenting the paper “Entrepreneurship in times of economic and financial crises. Methods of adaptation and survival” which is based on research conducted over 117 small and medium-sized enterprises from the South-East region of Romania. The official schedule can be found on the Conference’s website.

Here are some of the conclusions from my paper:

The problems that small and medium-sized enterprises face during economic and financial crises have direct and strong implications on the local communities. These are affected by increased social problems generated by the measures that the companies are taking. The research has shown that the adaptation and survival methods of SMEs during crises is a function of layoffs, reduced activity and reduced to none investment.

Layoffs determine greater pressure on the social protection policies and diminish the local expenditure on goods and services. The diminished expenditures on goods and services determine a chain effect that spreads to other consumer-goods businesses, credit reimbursements, and various services. This situation requires governmental intervention to protect the increasing number of poor. The measures that were successful in Thailand’s response to the 1997 economic crisis and that seem to work in the Romanian environment include “an improvement to the strategic design and coordination of social policy, protection measures to the poor and to the elderly, strengthened social protection of workers, and improved monitoring of living standards.” These measures require intervention at the macroeconomic level, with results to be seen on a short to medium period of time. From this regard, managers that were interviewed seem to have been objective when stating that recovery is to be seen within the next two years.

Thailand instituted a comprehensive social protection program for workers, aimed to strengthen labor demand, reverse the unemployment trend, and halt the decline in wages. “A variety of market labor policies were implemented to promote re-employment of laid-off workers through training and job placement services. The government established a task force, with representation from workers, employers, and government, to design, target and rigorously evaluate the cost-effectiveness of training programs for unemployed workers.” Also, a reform of the social security policy needs to be revisited and adjusted to cope with the new social problems in a more effective manner.

Companies are diminishing their activity because they cannot sell as much as they used to, due to the lower purchasing power of the population. Those companies that made prior investment plans and relied on cash flow projections made before the crisis, found themselves in the situation to even close the business. Investment is slowed down or even reduced to zero because there are no liquidities. The jobs that were initially supposed to be created or kept with the initial development needs have halted, adding up to the pressure on the social protection system. Under these circumstances, the business environment needs to receive government support and to restructure. One major goal is to provide businesses with liquidities, to start to invest. But do accomplish this, the financial institutions need to be reformed first. Important lessons may be learnt from Thailand’s financial sector reform following the 1997 economic crisis. The objectives of such a reform would be to make troubled institutions leave the market in an orderly way, impose tighter supervision on the remaining players, and provide sufficient information to companies to analyze the risks of the available options. Macroeconomic steps have been taken at a European level in this regard, improving the rules of the activity of the credit rating agencies.

The Thai government first ensured that assets controlled by the affected financial institutions were not impaired and owners were held accountable for their mistakes. At the same time, the fiscal costs were kept so that to avoid the burden on the taxpayer, in an orderly and transparent manner. In the next step, the government reestablished the financial institutions on sound footing. This was done by identifying and addressing the problems like lack of power for the central bank, fraud, poor management of certain financial institutions, and action on non-compliance. Also, the Bank of Thailand established a principle that when it intervened, it would change the management of a financial institution or reduce its capital so that shareholders are the first to take losses. Trust for the financial sector was increased with two other important measures related to strengthening prudential regulations and strengthening supervision. The new regulations “obliged finance companies, like banks, to submit semi-annual credit plans to the Bank of Thailand that reflected portfolio diversification, risk profile, and growth planning and to issue loan-to-deposit, or promissory note, ratio guidelines.” Also, the government established an interagency task force to review and recommend changes in the legal and regulatory framework for supervision. These kinds of measures could be taken and adjusted to the Romanian macroeconomic environment in order to regain confidence in the financial sector and boost investment. The results though are to be seen on a longer period of time, but they form a solid foundation to tackle the chronic social problems.

"Lower Danube" University of Galati, Romania

I haven’t been writing lately, but I have a pretty good excuse: I am working and developing four papers for my PhD, to be published in various conferences’ proceedings and journals in Romania and abroad. Their titles are:

1. Online vs. Offline vs. Mixed Participation for Better Governmental Policy Making
2. e-Democracy Platforms for Governmental Decision Making. Case Study on “SMART Method of Public Policy”
3. Entrepreneurship in Times of Economic and Financial Crises. Methods of Adaptation and Survival
4. Better Policy Making for Businesses, Through Online Citizen Engagement

The papers are mostly related to participative democracy, which is a fascinating and creative field of study. My PhD thesis will have a chapter on this issue, that I hope to be very very interesting. I will publish abstracts of the papers, as well as photos and hopefully videos from the conferences that I plan to attend this Spring.

• The majority of the employees of the companies that were interviewed do not participate in training courses related to project management and personal development. However, company administrators consider that such courses are useful to increase competitiveness in times of economic and financial crises.
• Personnel under 40 years of age suffer from a lack of professional training and dedication to job requirements.
• Companies have expressed an interest in accessing European Union funding. However, they do not have complete information that would allow them to start a project and finalize it. This lack of information is mainly due to lack of access to specialists who would write the projects and submit them. The majority of entrepreneurs consider they can not write the projects themselves but on the other hand, they are not aware of consulting companies or other organizations that could help them. Their main information source is the mass-media.

As a result, companies have adjusted to the effects of the economic crisis, diminishing their activity and laying off people, decreasing the running expenses and stopping investing in their development. These measures have generated increased social unrest.

This report has been done with Cristi Dumitru, Communication Manager at Lower Danube University of Galati, Romania.

The research report is also an important activity in the project “Entrepreneurship competences for the young people of the South-East region of Romania – CA TINE” which is financed by the European Union. This project is coordinated by SMART Development Centre in partnership with “Lower Danube” University of Galati, Romania. We have also set up a website at www.catine.eu, where entrepreneurs that we can’t meet during our research, can fill out the survey online. This way, my research may be based on the answers of more that 100 companies.

Below there’s a clip that I made when Iulian Cazacu, the President of SMART Development Centre and I, launched the project at the Senate Hall of “Lower Danube” University. It’s in Romanian, but I’ll try to make some subtitles in YouTube. Iulian is presenting the whole project, while I am talking about the research activity only.