The Development of Social Investment and Responsibility of Business in Ukraine
The article considers the nature and role of social investment in the overall business strategy. The comparative characteristic of the volume and scale of investments by foreign and domestic companies in the social sphere. The features of the construction of the social responsibility policy of the U...
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irk-123456789-1093402016-11-25T03:02:16Z The Development of Social Investment and Responsibility of Business in Ukraine Parkhomenko, Yu.M. Management of Labour and Safety The article considers the nature and role of social investment in the overall business strategy. The comparative characteristic of the volume and scale of investments by foreign and domestic companies in the social sphere. The features of the construction of the social responsibility policy of the Ukrainian companies. Established the key problems hindering the development of Ukraine in a socially responsible business. Identified reserves and prospects for increasing the volume and scope of social investment. В статті розглянуто сутність та роль соціального інвестування в загальній стратегії бізнесу. Проведено порівняльний аналіз обсягів та масштабів інвестиційних вкладень закордонних та вітчизняних компаній в соціальну сферу. Розглянуто особливості побудови політики соціальної відповідальності провідних українських компаній. Визначено ключові проблеми, що стримують в Україні розвиток соціально відповідального бізнесу. Виокремлено резерви та перспективи збільшення обсягів та масштабності соціальних інвестицій. В статье рассмотрена сущность и роль социального инвестирования в общей стратегии бизнеса. Проведена сравнительная характеристика объемов и масштабов инвестиционных вложений зарубежных и отечественных компаний в социальную сферу. Рассмотрены особенности построения политики социальной ответственности украинских компаний. Установлены ключевые проблемы, сдерживающие в Украине развитие социально ответственного бизнеса. Определены резервы и перспективы увеличения объемов и масштабности социального инвестирования. 2015 Article The Development of Social Investment and Responsibility of Business in Ukraine / Yu.M. Parkhomenko // Економічний вісник Донбасу. — 2015. — № 4 (42). — С. 182-185. — Бібліогр.: 7 назв. — англ. 1817-3772 http://dspace.nbuv.gov.ua/handle/123456789/109340 369.04:316.42+330.322(477) en Економічний вісник Донбасу Інститут економіки промисловості НАН України |
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Management of Labour and Safety Management of Labour and Safety Parkhomenko, Yu.M. The Development of Social Investment and Responsibility of Business in Ukraine Економічний вісник Донбасу |
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The article considers the nature and role of social investment in the overall business strategy. The comparative characteristic of the volume and scale of investments by foreign and domestic companies in the social sphere. The features of the construction of the social responsibility policy of the Ukrainian companies. Established the key problems hindering the development of Ukraine in a socially responsible business. Identified reserves and prospects for increasing the volume and scope of social investment. |
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Article |
| author |
Parkhomenko, Yu.M. |
| author_facet |
Parkhomenko, Yu.M. |
| author_sort |
Parkhomenko, Yu.M. |
| title |
The Development of Social Investment and Responsibility of Business in Ukraine |
| title_short |
The Development of Social Investment and Responsibility of Business in Ukraine |
| title_full |
The Development of Social Investment and Responsibility of Business in Ukraine |
| title_fullStr |
The Development of Social Investment and Responsibility of Business in Ukraine |
| title_full_unstemmed |
The Development of Social Investment and Responsibility of Business in Ukraine |
| title_sort |
development of social investment and responsibility of business in ukraine |
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Інститут економіки промисловості НАН України |
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2015 |
| topic_facet |
Management of Labour and Safety |
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http://dspace.nbuv.gov.ua/handle/123456789/109340 |
| citation_txt |
The Development of Social Investment and Responsibility of Business in Ukraine / Yu.M. Parkhomenko // Економічний вісник Донбасу. — 2015. — № 4 (42). — С. 182-185. — Бібліогр.: 7 назв. — англ. |
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Економічний вісник Донбасу |
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| fulltext |
Yu. M. Parkhomenko
182
Економічний вісник Донбасу № 4(42), 2015
UDC 369.04:316.42+330.322(477)
Yu. M. Parkhomenko,
Donetsk national university
THE DEVELOPMENT OF SOCIAL INVESTMENT
AND SOCIAL RESPONSIBILITY OF BUSINESS IN UKRAINE
The intensification of globalization processes, re-
quiring the introduction of unified norms and standards
of entrepreneurial activity, the limited traditional
sources of financing the social sphere, the emergence of
a new type of consumer, the choice of which is based
not only on qualitative characteristics of the offered
goods, but also on the ethical behavior of the company,
– all this leads to the formation of new targets for the
enterprise that needs to focus not only on market de-
mand for high quality products and services, but also on
universal values. In these conditions the special urgency
is acquired the distribution and creation of systems of
social responsibility of business, as one of the key forms
of its strategic development, as well as escalating the
need to develop qualitatively new approaches to for-
mation of investment policy of business entities in the
social sector, based on internationally agreed principles
taking into account the peculiarities of modern Ukrain-
ian society.
Problems of corporate social responsibility of en-
terprises and effectivesize directions of social invest-
ments is quite topical and popular subject not only
among domestic and foreign scientists and researchers,
but also among the modern management practitioners.
Leading researchers in this sphere are among domestic
scientists: V. Bocharova, O. Grishnova, V. Kovalev, A.
Kolot, E. Libanova, V. Livshits, V. Novikov, A. Shere-
met. Among foreign scientists, the most important are:
K. Wicksell, E. Domar, E. Class, J. Lindsay, P. Masse,
F. Ramsey, G. Solou, D. Stone, J. Tobin, E. Phelps, G.
Harrod, and others.
The aim of this work is to study the current state,
characteristics and development trends of social invest-
ment and social responsibility of Ukrainian enterprises
and development of directions for improving the system
of their regulation.
In modern conditions of social investment are
building blocks for sustainable business development.
Solving social problems of the region through social in-
vestment, enterprises first of all create conditions for
their future, enhance competitiveness of their products,
image in society, solvency and the quality of life of the
population.
There is a range of studies on the relationship be-
tween the volume of social investment of companies and
the trends of their development, they are polar. Some
scientists and managers of practice think that social in-
vestments are a separate kind of expense enterprise, that
brings no economic effect for its development and is
only a manifestation of corporate social responsibility
before state and society. On the other hand, establish a
close relationship between the level of development of
the company and the introduction of social investment.
It is manifested in such indicators as increasing the effi-
ciency of the workforce, the growth of sales and profit-
ability of investment, reduce energy consumption busi-
nesses and others.
One of the studies that confirms the vision of the
tightness of the relationship of social investment and en-
terprise development is carried out at the Harvard busi-
ness school survey of more than 650 companies in the
world operating in the sphere of production. The find-
ings are based on analysis of the annual financial state-
ments of enterprises over the past 15 years and of exist-
ing social programs, which are implemented by them.
Among the objects of the study included not only com-
panies that implement social programs, but also those
that do not invest their funds in the social sector. The
results of the study show that businesses that implement
social programs have the greatest growth in the rate of
economic development than those that are less active in
social responsibility towards society.Thus, in accord-
ance with the ratio of return on assets $1USD invested
in 1995 has allowed investors to gain profit in 2014 to
$7.1 USD. Thus $1 USD invested in companies that do
not implement social programs brought profit in the
amount of 4$ USD [3]. Dynamics of changes in indica-
tors of profitability of own capital shows that socially
responsible companies are more efficient, so $1USD in-
vested by these companies in their own projects in 15
years converts to a 25$ USD profit. Changing and gross
sales of the relevant social companies, he is 5-10 percent
higher than the companies competitors. The greatest im-
pact social investments have on the efficiency of the
workforce, which increases productivity, staff loyalty to
the company motivation to work (37.9 % excess) [3].
Volumes and directions of social investments of
enterprises increasingly depend from the sector in which
they carry out their economic activities and the estab-
lished development strategy. Overall direction of social
investments can be roughly distributed among such
groups as:
social investment in education, the most common
among large industrial enterprises in the USA and Eu-
rope that invest in the development of local educational
institutions, through total or partial reimbursement of
the cost of training, improve the quality of personnel
training, providing the bases for practice, funding edu-
cational programs students during the holidays, tailor-
made support of talented youth, stimulation of develop-
ment of professional qualities and creative abilities, the
educational distribution of rural infrastructure, creation
of modern computer and remote training systems etc.
social investment in health is also one of the most
common segments of the investing company in the
world, its main areas of focus are combating socially
Yu. M. Parkhomenko
183
Економічний вісник Донбасу № 4(42), 2015
dangerous diseases in the world and disease on a mass
scale, medical assistance to the poor population and few
developed countries, mostly in Africa and Asia, improve
the infrastructure of health services in the country, staff-
ing them with the necessary modern medical equipment,
providing customized care to patients with severe dis-
ease, and more.
in the development of social potential of an enter-
prise is to invest in coaching, ensuring adequate income
and opportunities for staff development, improving
working conditions, providing opportunities of free
medical care, recreation and health maintenance, family
support staff, implementation of motivation mecha-
nisms to encourage personnel development social sup-
port of employees, retirees etc.
in the sphere of maintenance of ecological safety
of the country, is the most relevant in today's world and
are evenly spread in all countries of the world, lies in the
implementation of the environmental technologies in-
stalled wastewater treatment facilities at enterprises
manufacturing products with the lowest decay rates, the
funding of scientific research in the sphere of protection
and support environmental protection and so forth.
in the field of improvement of social infrastructure
of the city and the region, providing funds to create
funds free housing or partial compensation of their cost,
to support the development of the network of kindergar-
tens, especially in rural areas, financing of cultural insti-
tutions, the establishment of a network of agencies to
support people without homes and those that are in dif-
ficult positions, generate more jobs, development of cul-
tural institutions and enhancing their availability, the
maturity structure of public recreation etc.
the development of the local community, assis-
tance to vulnerable populations, the provision of mate-
rial assistance to persons in need, promoting healthy
lifestyles, social responsibility of individuals, sustaina-
ble development, improve the level of social capital, the
development of sport and art, the restoration of histori-
cal and architectural monuments.
aid to victims of natural disasters, is one of the most
common areas of investment abroad, is to offer material
assistance to the population in a certain period of time
in hard weather conditions which led to the loss of hous-
ing, resources, and threatening their lives. This area of
investment can be expressed in direct monetary aid and
in things, replenishing stocks of food and drinking wa-
ter.
Ukrainian socially responsible companies in most
cases, investing their resources in community develop-
ment, support to patients, disabled children and children
deprived of parental care, support of culture, arts and
sports development, especially for children. The world's
leading enterprise key the most effective directions of
social investments is considered: internal social assets
of the enterprise, the education sector of the country, in-
ternational aid to victims of natural disasters or infec-
tious diseases that is objective, because these compo-
nents allow you to cover a wider category of investment
objects and further makes it possible to provide the high-
est level of return both in the long and in the short term.
If you compare the volume of social investments of
the ukrainian and foreign enterprises they differ. For ex-
ample, USA companies invest in social projects 3-5% of
its net profits, for european companies approximately 2-
4% annual return, russian-about 1%, and ukrainian, on
average, 0.7 to 1.2%. The total number of domestic and
foreign enterprises that are socially responsible are, re-
spectively, 40% and 90% of the total number of business
entities [3].
In addition, radically different from the principles
of social investments of the ukrainian and foreign enter-
prises from the standpoint of their output abroad the
country in which they reside. Word companies are more
internationalized in the process. Almost 40% of social
investments they direct to the development of infrastruc-
ture and support of the poor of the developed countries
or those that need help in a certain time period.
Today's trends in the sphere of social investments
in Ukraine are fairly positive, over the past 10 years,
spending on social infrastructure development and im-
proving the quality of life of the population increased
almost three times, with a fairly spread number of inves-
tors and scale of social programs implemented by.
The most socially responsible company of Ukraine
is the System Capital Management (SCM), in 2014 in-
vested in the social sphere of the country more than 100
million UAH, that in 2 times more than in 2012, the vol-
ume of the declared future of social investment for the
period 2015-2016 is over 480 million UAH, the main
areas and principles of investing this company is the de-
velopment of local society, maintaining an appropriate
level of life of the population of cities in which are rep-
resented the departments of the enterprise. The priority
social programs today SCM is the development of edu-
cation, ensure its high quality and availability, the train-
ing of competent and competitive specialists, energy ef-
ficiency and utilities sector, development of social infra-
structure in towns, support the development of chil-
dren's and youth football, and many others [4, 5].
The second place among Ukrainian companies in
the ranking of socially responsible companies of
Ukraine is Kyivstar GSM, costs this company to social
programs account for about 20% of total income, the
most well-known social projects: "The child safety
Online", which includes a whole range of areas, which
are embodied at different levels and aims to teach chil-
dren the rules of online security, facilitating the creation
of safe areas on the Internet for communication, learning
and development; "For people, for country" - is aimed
at supporting orphans and disabled children, in their ed-
ucation, health and creating the most comfortable con-
ditions for their upbringing and development; mainte-
nance of ecological safety of the country, use energy-
saving technologies, gardening and landscaping cities of
Ukraine and others [2].
The group of companies NIKO takes the third
place in the ranking of social responsibility. It differs
from other separately created in the framework of the
charitable foundation "Krona", the main mission of
which is to create a socially oriented society in the coun-
try by assisting vulnerable groups of society to achieve
Yu. M. Parkhomenko
184
Економічний вісник Донбасу № 4(42), 2015
a decent standard of living and equal opportunities for
development [1], the main targets of social investment
and aid are the children with deficiencies and those that
are deprived of parental care (draft "Special children",
"My cozy house" and "Big heart little life"). In addition,
NICO is implementing certain social programs that are
outside the scope of the charitable foundation are: edu-
cational program on behavior on the road and promote
the observance of traffic rules and cash assistance na-
tionwide children's Hospital center, for the purchase of
necessary medical equipment and medicines to children
affected by traffic accidents.
Among the above three leaders in the field of social
investment, it is possible to mention such ukrainian
companies as MTS Ukraine, Obolon, Kraft Foods
Ukraine, Group of companies "Foxtrot", Microsoft
Ukraine, Ernst&Young Ukraine, Sandora, METRO
Cash & Carry Ukraine, Nemiroff holding and others [5].
It should be noted that a sufficiently high recent in-
vestments of foreign companies in the social sphere of
Ukraine. The main areas of investment in this case most
often are: the fight against socially dangerous diseases,
the staffing of health care institutions with modern med-
ical equipment, assistance to vulnerable categories of
population (children orphans and children with disabili-
ties), support of talented youth etc.
The experience of social investment for enterprises
of Ukraine is not new. The beginning of its development
is still at soviet times when there was a clear patronage-
mechanism of enterprises over educational institutions,
healthcare and culture. In addition, the company was re-
sponsible for the development and maintenance of an
appropriate level of social infrastructure in the surround-
ing areas, providing recreation and educational develop-
ment workers and members of their families. A negative
feature of this stage of development was the orientation
of enterprises to the needs of the state and not increase
the possibilities of obtaining the company a certain re-
turn on these investments. With the adoption by Ukraine
of the status of independence of social investing, as a
separate element of costs has almost disappeared and re-
sumed its existence only in the early 2000s. For the first
time in most cases it was incidental and spontaneous in
nature and there was no certain software in their imple-
mentation and their scale covered only a narrow circle
of persons. Today, social programs are a separate seg-
ment of the development strategy of most companies,
especially those that develop in accordance with the re-
quirements of sustainable development, they are cycli-
cal, gradual, covering a wide range of people and is con-
structed in such a way as to provide some return on in-
vestment in the short or long term. However, despite the
relatively positive trends, there are a number of prob-
lems hindering the social activity of companies and, in
turn, support the social infrastructure of the country is:
insufficient awareness of society about the social
activity of ukrainian companies, the volumes and direc-
tions of social investments, covering the essence of ex-
isting and future social programs of enterprises, their in-
fluence well the development of social infrastructure
and communities;
rather narrow field of social investment, social pro-
grams of ukrainian enterprises in most cases is aimed at
supporting vulnerable segments of the population, with
little focus on strategic areas of social development, ed-
ucation, health, the formation of social responsibility in
young people, the education of future generations, the
social infrastructure of the country;
small and medium enterprises are the main actors
in the implementation of social investment, social pro-
grams are being implemented the largest domestic com-
panies or companies with transnational business in
Ukraine;
the lack of a clear understanding of the manage-
ment of enterprises on the clear relationship between the
volumes of social investment and future economic rev-
enues;
the lack of a clear national model of corporate so-
cial responsibility in Ukraine, which makes it impossi-
ble to build a clear mechanism for strategic action of the
enterprise in the social sphere according to modern
Ukrainian realities;
low level of responsibility of the enterprises for the
provision of comprehensive, reliable and relevant infor-
mation on their financial statements and taxes;
the lack of clear legislation in the field of social re-
sponsibility and the regulation of social investment, the
lack of a flexible mechanism for providing benefits to
businesses that implement social programs and build a
socially responsible business;
the lack of uniform national standards in the field
of infrastructure development social investment;
low attractiveness of segments of the social infra-
structure of the country for investments, high level of
corruption and toning of the economy.
Comparative analysis of the development of social
investment abroad and in Ukraine, examines the trends,
status and problems in the development of social re-
sponsibility and social investments of national business
revealed the following perspectives and resources to in-
crease their scope and breadth. Among them are the fol-
lowing:
the construction of incentive mechanism of media,
a relatively constant illumination of issues of social re-
sponsibility of business and the development of social
investment in the country;
creating a legislative base aimed at stimulating en-
trepreneurs to increase the level of investment revenues
to the social sphere of the country. In this case, an ex-
ample would be the existing USA experience in this
area. In accordance with the legislative acts, the enter-
prises are entitled to tax benefits in the amount of 10%
if they are regular investors in the social environment of
the country and take part in solving critical social prob-
lems of the country;
creation on the basis of large companies of such
funds, to empower the participation of small and me-
dium-sized enterprises in large social projects. Alterna-
tively, it is possible to combine resources of medium and
small enterprises, to implement certain priority social
programs;
Yu. M. Parkhomenko
185
Економічний вісник Донбасу № 4(42), 2015
the development of corporate volunteering staff, is
a common mechanism in foreign countries, implemen-
tation of this direction is developing of local society, in-
creases the company's image as a socially responsible
business, strengthens corporate culture that supports
staff development, reducing the direct financial costs of
enterprises in social investment. The implementation of
this approach involves encouraging staff to get involved
in social volunteer programs, for example, participation
in charity, visiting orphanages and nursing homes, at-
tending charity shows and concerts, conducting lectures
in schools, assistance to young professionals in acquir-
ing the necessary skills;
assistance to development in Ukraine "banks of
time", the essence of which consists in the generation
and accounting of time that an individual spends on
providing them with volunteer help, 1 hours equal to one
credit. If in your lifetime there are situations when the
investor will require help, he can ask to "bank of time"
and receive help from another person in the amount of
credits he amassed during their volunteer activities. This
method is widely used in developed foreign countries
and declared itself as quite effective;
encouraging companies to use charitable non-
profit organizations as a separate generating facility of
the total volume of social investing allows you to accu-
mulate and spend funds purposefully allocated for the
social support of the community;
increase transparency of charity foundations and
social costs of the enterprise, allows to increase the de-
gree of trust funds and advocate of socially responsible
business in the country.
Certain the study areas will have certain social and
economic effect, which is manifested in the increase in
the degree of confidence of enterprises social invest-
ment would increase the level of their impact, will help
to develop social infrastructure and improve the overall
quality of life of the population of Ukraine.
References
1. Charity Foundation KRONA [Electronic re-
source]. – Mode of access: http://www.niko.ua/social-
responsibility/index.php/ 2. Annual social report Ky-
ivstar Ukraine for 2014 [Electronic resource]. – Mode
of access: http://www.kyivstar.ua/f/1/about/responsibil-
ity/SocialRU_Annual.pdf/ 3. Koroleva O. Cash interest
/ O. Koroleva // The Algorithm of success. – 2015. –
No. 1. – P. 4-5. 4. The sustainability report of SCM
Group for 2014 Investing in the present we build the fu-
ture [Electronic resource]. – Mode of access:
http://www.scm.com.ua/m/documents/SCM_Sustaina-
bility_Summary_Report_2014_Ru.pdf/ 5. The rating
of socially responsible companies of Ukraine – 2014.
[Electronic resource]. – Mode of access: http://kon-
trakty.ua/rankings2014/147/ 6. Pankov A. Moderniza-
tion of the system of social relations in the labor sphere
on the principles of social responsibility /A. Pankov //
Economics industry. – 2014. - No. 2. – P. 131-135.
7. Moroz O. Social responsibility of business in
Ukraine: problems and solutions / O.Moroz // Econom-
ics industry. – 2013. – No. 4. – P. 136-140.
Пархоменко Ю. М. Розвиток системи соці-
ального інвестування та соціальної відповідаль-
ності бізнесу в Україні
В статті розглянуто сутність та роль соціаль-
ного інвестування в загальній стратегії бізнесу. Про-
ведено порівняльний аналіз обсягів та масштабів ін-
вестиційних вкладень закордонних та вітчизняних
компаній в соціальну сферу. Розглянуто особливості
побудови політики соціальної відповідальності
провідних українських компаній. Визначено клю-
чові проблеми, що стримують в Україні розвиток
соціально відповідального бізнесу. Виокремлено ре-
зерви та перспективи збільшення обсягів та мас-
штабності соціальних інвестицій.
Ключові слова: соціальні інвестиції, соціальна
відповідальність, ефективність, віддача від інве-
стицій, соціальна сфера.
Пархоменко Ю. Н. Развитие системы соци-
ального инвестирования и социальной ответ-
ственности бизнеса в Украине
В статье рассмотрена сущность и роль социаль-
ного инвестирования в общей стратегии бизнеса.
Проведена сравнительная характеристика объемов и
масштабов инвестиционных вложений зарубежных
и отечественных компаний в социальную сферу.
Рассмотрены особенности построения политики со-
циальной ответственности украинских компаний.
Установлены ключевые проблемы, сдерживающие в
Украине развитие социально ответственного биз-
неса. Определены резервы и перспективы увеличе-
ния объемов и масштабности социального инвести-
рования.
Ключевые слова: социальные инвестиции, со-
циальная ответственность, эффективность, отдача
от инвестиций, социальная сфера.
Parkhomenko Yu. M. The Development of So-
cial Investment and Responsibility of Business in
Ukraine
The article considers the nature and role of social
investment in the overall business strategy. The compar-
ative characteristic of the volume and scale of invest-
ments by foreign and domestic companies in the social
sphere. The features of the construction of the social re-
sponsibility policy of the Ukrainian companies. Estab-
lished the key problems hindering the development of
Ukraine in a socially responsible business. Identified re-
serves and prospects for increasing the volume and
scope of social investment.
Keywords: social investments, social responsibil-
ity, efficiency, return on investment, social sphere.
Received by the editors: 26.11.2015
and final form 28.12.2015
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