Economic complexity and its influence on the firm’s and region’s resilience to economic crisis

Abstract

The economic crisis has become an integral component of the modern world economy, which requires an analysis of the possibility of countering it, primarily at the level of companies. In the face of changing demand structure, an important factor may be the company's ability to implement innovative projects. A company with experience in innovative activities has the skills to identify (create) the needs of consumers, the ability to manage knowledge, has necessary resources, staff motivation tools, etc. However effective implementation of truly large-scale innovative projects is impossible within the framework of one company, even a large one. This makes it necessary to analyze the regional environment in which the company exists. The structure of the dissertation research assumes the characterization of the essence of a key and relatively new category of research in the scientific field - the level of complexity of the economy; conducting an empirical analysis revealing the influence of the regional economic complexity on the stability of the regional economy and the parameters of its development, the efficiency of the company and the likelihood of its bankruptcy during the economic crisis. A key feature of this study is the emphasis on the role of the fundamental variable characterizing the level of complexity of the regional economy, its technological capabilities, as explaining the dynamics of development of firms, calculating this variable and substantiating its influence. This is justified, since any firm is part of the territorial system of the division of labor and largely depends on it. The contribution of the thesis to the scientific knowledge is made in the following areas. In the field of regional studies it is shown that it is necessary to use spatial regression models, because indirect effects i.e. influence of other regions on a focal region is significant. It is confirmed that the influence of the economic complexity is non-linear. The explanation of the nonlinearity based on the idea of the region as a part of the country's production system is proposed. It is shown that the influence of the complexity of the economy during the economic crisis persists and even increases. The regional economic complexity affects firm’s development, but only on the efficiency of capital utilization. At the same time, the state of the economic crisis enhances this relationship. The idea that the growth of the firm depends on the regional capacity is being confirmed. The complexity of the region's economy is also a significant parameter in the model for predicting the bankruptcy of a company. This conclusion is consistent with the results of a number of authors who consider not only financial indicators as predictors, but, for example, variables characterizing management practices in a company, i.e. its fundamental parameters. The results obtained lead to the conclusion that it is reasonable to use variables that characterize the resource capacity of the regional economy in research at the micro level.