=Paper=
{{Paper
|id=Vol-2805/short16
|storemode=property
|title=Modeling of the Investment Risks in Human Capital as the Factor of Enterprise Safety in the Context of the Stakeholder Theory
|pdfUrl=https://ceur-ws.org/Vol-2805/short16.pdf
|volume=Vol-2805
|authors=Nataliia Burennikova,Vyacheslav Kavetskiy,Oleksandr Lesko,Roman Akselrod,Oksana Adler,Michal Greguš
|dblpUrl=https://dblp.org/rec/conf/citrisk/BurennikovaKLAA20
}}
==Modeling of the Investment Risks in Human Capital as the Factor of Enterprise Safety in the Context of the Stakeholder Theory==
https://ceur-ws.org/Vol-2805/short16.pdf
Modeling of the Investment Risks in Human Capital as
the Factor of Enterprise Safety in the Context of the
Stakeholder Theory
Nataliia Burennikova1[0000-0002-2529-1372], Vyacheslav Kavetskiy1[0000-0001-8752-0807],
Oleksandr Lesko1[0000-0003-3716-9822], Roman Akselrod2[0000-0001-7643-7194], Oksana
Adler1[0000-0002-4673-366X], Michal Greguš3[0000-0002-8156-8962]
1Vinnytsia National Technical University, Vinnytsia, Khmelnytske shose 95, Ukraine
n.burennikova@ukr.net, kvslavoff@gmail.com,
lesko@vntu.edu.ua, oksana_adler1983@ukr.net
2Kyiv National University of Construction and Architecture, Kyiv, Ukraine
akselrod.knuba@ukr.net
3Comenius University in Bratislava, Bratislava, Slovakia
Michal.Gregusml@fm.uniba.sk
Abstract. The paper presents the results of a study of the investment risks in
human capital of an IT-sector enterprise as a factor of its safety, taking into ac-
count the aspects of the stakeholder theory. It is determined that the safety of
the enterprise operation is the protection of the interests of this enterprise from
the internal and external threats, the components of the safety system are inter-
connected, they are placed on the same hierarchical level and interact with each
other. Of all the components of the enterprise safety, economic safety can be
considered to be the most informative, as it reflects the consequences of all the
processes occurring at the IT-sector enterprise. Provision of the economic safety
of the enterprise is aimed at a comprehensive impact on potential and actual
risks. It was found that the highest risk is associated with the human factor and
investment in human capital of the IT-sector enterprise. It is proposed to assess
the magnitude of the investment risks in human capital of the enterprise on the
basis of an agreed purpose, which takes into account the coincidence of the
goals of the IT-sector enterprise with the personal goals of stakeholders.
Keywords: safety of IT-sector enterprise functioning, investment risks, invest-
ments in human capital, agreed purpose, modeling of investment risks, econom-
ic safety.
1 Introduction
One of the basic conditions for the operation of the IT-sector enterprise is safety.
Trends in global economic systems provide a transition from the extensive ways of
Copyright © 2020 for this paper by its authors. This volume and its papers are published under
the Creative Commons License Attribution 4.0 International (CC BY 4.0).
economic development to new processes that focus on the intensification and applica-
tion of knowledge and the use of stakeholders interaction as a basis for IT-sector en-
terprise management.
IT-sector enterprise engineering belongs to the industries with a high level of in-
vestment risk due to certain properties of the industry, which include the significant
demand fluctuations for products, periodic process and product changes in innovation
activity and other features that negatively affect the investment risk of engineering
companies.
At the same time, the highest risk among the main investment entities experiences
the company due to the dual nature of human capital and the inability to separate the
owner of human capital – a person from the labor process – its implementation [1, p.
17].
Consistent study of the threats, components of the safety system of the IT-sector
enterprise operation, the risks associated with the human factor and investment in
human capital of an IT-sector enterprise allows to consider the human capital in the
light of stakeholder theory.
Managers, employees and the staff of the enterprise are its stakeholders and they
and their activities form the human capital of the IT-sector enterprise (personal, alien-
able and collective). Studying the goals and interests of these stakeholders, more in-
formation is obtained about the implicit desires of employees, opportunities to moti-
vate them and intensify their activities for the benefit of the company and to achieve
the goal of the enterprise activities. According to E. Freeman, only in a coherent mul-
ti-vector management policy we can find the answer to the threats posed by the mod-
ern market environment [2].
2 Literature review and problem statement
Stable functioning and growth of the economic potential of the IT-sector enterprise, in
difficult and changeable conditions, largely depends on the ability to counteract
threats. Lack of stability makes society and businesses constantly seek not only ways
to adapt to ever-changing conditions, but also to take active steps to ensure operation-
al safety.
The development of the IT-sector enterprise operation system is directly related to
the safety of the enterprise and is characterized by the presence of a large number of
factors affecting the viability of the enterprise. G. Becker, V. Nikolaychuk,
O. Zakharova, E. Freeman, O. Shelest, K. Koerselman, D. Levhari and others studied
the issues of investing in human capital and the risks associated with this process, as
well as the corresponding impacts of stakeholders.
G. Becker (1962) analyzed the impact of investment in human capital on earnings
and distribution of personal income [3]. The risks associated with investing in human
capital have been analyzed in the works of D. Levhari and Y. Weiss (1974). The au-
thors included the element of risk in the standard theory of human capital, focusing on
the impact of risk and uncertainty, while pointing out the existence of both positive
and negative relationship between risk and investment [4]. O. Shelest (2015) pointed
out the risks of investing in human capital taking into account the mobility of workers
(at the macroeconomic level), determining the specific risk of the occupational group
and conducting a descriptive analysis of expectations of the impact on mobility in
occupational groups with different levels of risk [5]. In most studies, carried out [3-7]
the attention was paid to educational processes at the macro level, as the ways of
forming human capital and investments and risks associated with them.
Despite numerous publications in these areas, the problems associated with the def-
inition of the notion “safety of the enterprise functioning”, with the composition of
the structural elements that determine the state of the enterprise safety , the impact of
the stakeholders on these components and the corresponding level of risk associated
with the investment in human capital of the enterprise remain an urgent challenge.
The aim of the study is the analysis of the essence of the notion of “safety” and the
composition of its structural elements as well as expediency of introducing human
capital as safety component of the enterprise operation and the formation of the ap-
proaches to the process of modeling the value and the impact of the risks of the in-
vestment in human capital associated with meeting the needs of the internal stake-
holders.
3 Research results
Stable activity and potential growth of economic characteristics of the IT-sector en-
terprise largely depends on the ability to counteract threats. By the threat to the safety
of the enterprise operation is meant the changes in the internal and external environ-
ment of the entity, which lead to negative changes in the subject of safety. The subject
of threats are the components of the economic system of the enterprise, the parame-
ters of which may exceed the permissible values. The most common classification of
safety threats is their division into internal and external. External threats do not de-
pend on the production activities of the enterprise, they arise outside the organization.
Internal threats are directly related to the activities of the IT-sector company and the
qualifications of its staff.
By the notion of the safety of the enterprise operation system we will mean the
protection of the business structure, environmental state, information, employees,
capital and profits and interests from internal and external threats. Classification of
safety components, in our opinion, is expedient to perform by the areas of enterprise
management, which are often reflected in the organizational structure of management:
ecological, social, legal, force, information, economic. All these components form a
single system that ensures the economic and social interests of the owner of the prop-
erty of the enterprise and the interests of each employee, based on meeting the needs
of consumers and society in certain products. The relationships of the safety compo-
nents of the enterprise and its composition are shown in Fig.1.
Let us determine the functional load of the main components of the safety system
of the enterprise:
─ legal safety means comprehensive legal support of the enterprise activity, compe-
tent legal work with contractors and the authorities, the solution of other legal is-
sues;
─ force safety deals with the modes, physical protection of objects and personal pro-
tection of the senior managers, counteraction to crime, interaction with law en-
forcement and other state bodies;
─ information safety is based not only on the protection of own information, includ-
ing confidential, but also provides business intelligence, information and analytical
work with external and internal entities, etc;
─ ecological safety involves meeting environmental needs in all aspects of life activi-
ty, both from the standpoint of protection of the environment and people from the
negative impact of the enterprise and the protection of the enterprise against eco-
logical threats;
─ social safety reveals the content of social processes taking place in labor organiza-
tions from the standpoint of four components: human mobility, continuity of the
development, involvement in the management process, the stability of the social
status;
─ economic safety is a complex characteristic, by this is meant the level of protection
of all types of enterprise potential against internal and external threats, which en-
sures stable operation and effective development and requires management by the
company’s top executives.
Fig. 1. Relationships of safety components of the IT-sector enterprise
As it can be seen from the given interaction chart (Fig. 1), the components of the
above-mentioned safety system are interconnected, and they all interact with the eco-
nomic safety system of the enterprise. Therefore, maximum attention is often paid to
economic safety in the functioning of the enterprise, although in the economic litera-
ture there is still no consensus on the nature and content of this notion.
Of all the components of the enterprise operation safety, the economic safety can
be considered to be the most informative, as one that reflects the consequences of all
processes occurring in the enterprise. The aim of the economic safety of the enterprise
is to realize a comprehensive impact on potential and actual risks, which is the basis
for maximum stability of its operation.
Analyzing the content of economic safety the following functional components of
economic safety of the enterprise are distinguished: market; scientific; technical and
technological; resource; production; financial; investment; foreign economic; intellec-
tual; organizational, etc.
However, in our opinion, the safety of human capital more deeply characterizes the
relationship, problems and trends, risks and prospects of cooperation between em-
ployees and enterprises in the economic sphere, the formation of intangible assets and
profits. Schematically, the impact of human capital on the components of the safety
system of the enterprise operation is presented in Fig.2.
Fig. 2. Impact of human capital on the components of the safety system of the enterprise
operation
Effective human resource management occupies a leading position in the develop-
ment of the enterprise as a whole. The human being is the basic element of function-
ing of the enterprise, therefore the risks connected with its activity have to take a pri-
ority position to prevent threats. Part of the stakeholders of the enterprise (as human
capital) occupy a leading position in the system of development resources of each
organization and is therefore the main source of the uncertainty.
Experience has shown that more than two-thirds of all threats to the enterprise
safety come from or are associated with employees. The process of identifying the
company's stakeholders enables to identify certain risks arising from them and mini-
mize the possible losses. Taking into consideration the fact that the human factor
mediates all aspects of the relationship at the enterprise, it is possible to identify the
risks associated with internal stakeholders as complex ones.
The list of such risks includes:
─ educational risks, i.e. causing the direct material damage to the enterprise due to
the dismissal of the employee who received education at the expense of the enter-
prise;
─ risks of the theft of material resources of the enterprise associated with low morale
level of employees, lack of proper control and accounting of the use of material re-
sources, nonobservance of the legislation in the organization, both by employees
and employers;
─ risks of penetration of people who have connections with criminal structures;
─ risks of loss, distortion, theft of information by employees in the process of its
obtaining, processing, storage, transmission;
─ risks of antisocial behavior, or the formation of a category of employees who do
not meet the norms of organizational culture, that may cause damage to the enter-
prise, which will manifest itself in degradation of moral and psychological envi-
ronment, conflicts, relaxation of labor and performance discipline.
As it was noted by O. Zakharova [8], the emergence of risk in the process of in-
vesting in human capital is mainly stipulated by the human factor and the inability to
identify and assess possible changes in the level of individual efficiency as a result of
certain types of investment costs.
Thus, for the company the risk of investing in human capital is a combination of
the probability of the risk of the irreversible full or partial loss of funds invested by
the company in human capital and the probability that the company will not receive
economic return from the investment in human capital in modern conditions of the
investment process and in future. This risk constantly accompanies management deci-
sion-making processes needed for the assessment of the socio-economic feasibility of
a particular type of investment at different stages of investing in human capital and
cannot be completely eliminated.
We will consider the possibility of the determining and modeling of risks, taking
into account the impact of the stakeholders on the processes of enterprise operation,
namely, the investment in human capital of the enterprise. In the course of their op-
eration, machine-building enterprises can form goals that depend on the interests or
influence of a certain group of stakeholders who control the enterprise activity. The
strategic goal of the stakeholders is formed on the basis of usefulness or individual
interest, and each group of stakeholders tries to subordinate the activities of the enter-
prise to its own goal. The enterprise may also form for itself different groups of goals
that will coincide in part or in full, and/or even conflict with the goals of the stake-
holders. Therefore, at some point it is necessary to accommodate such goals. Taking
into consideration the above-mentioned, we propose the definition of the agreed pur-
pose.
Agreed purpose is a tactical goal of the enterprise operation, which is derived from
the strategy of the enterprise activity and helps to match the goals of the enterprise at
certain time intervals with the goals of the stakeholders of different hierarchical lev-
els. The agreed purpose should take into account the coincidence of the goals of the
enterprise operation with the personal goals of the stakeholders [9; 10; 11].
Mathematically, the agreed purpose can be written as an equality:
Z ( F , t ) = V ( P, t ) (1)
where Z(F,t) – is the function of the goals of the stakeholders at a certain point in time
t; F – is the level of financial satisfaction of the relevant group of the stakeholders;
V(P,t) – is the function of the goals of the enterprise at a certain point in time t; P – is
the level of investment provision of the enterprise for the formation (support) of hu-
[ ]
man capital; t – is the time, and t ∈ t1 ,t 2 , where t1 – is the minimum value of the
planning period; t2 – is the maximum value of the planning period.
Functions Z(F,t) and V(P,t) can be obtained according to the statistics of the previ-
ous period, using the method of regression analysis.
The set of complex risks associated with the company's internal stakeholders can
be reduced to two significant groups: the risks associated with the loss (dismissal) of
the employee (RE) and the risks associated with the loss of motivation (interest) of the
employee (RM). It is also possible to perform the ranking of the enterprise operation
risks, applying the method of efficiency evaluation [10; 12; 13].
To form the system of quantitative indices of risk level, we propose to use the utili-
ty function (Neumann-Morgenstern function) of two variables – W(E,M), where E – is
the growth of the employee productivity with the increase of the education level,
compared with the basic productivity; M – is the growth of the employee productivity
with the increase of the motivation (interest) level of the employee, compared with
the basic productivity. The instantaneous value of the utility function W(E,M) – is
taken as the probability of the risk [14; 15; 16].
As it is necessary to take into account in the process of cost assessing of the in-
vestment risks in human capital of all its possible negative consequences, we can
consider the following formula for the calculation of the average cost measurement of
the risk degree regarding the beginning of negative consequences as a result of the
loss (dismissal) of a group of employees:
RE = ∫ ∫ W ( E , M ) • VE dS (2)
S
where VE – is a function of cost measurement of the economic losses as a result of the
dismissal of a certain group of workers;
S – is the area of the intersection of the goals of the enterprise and the goals of the
corresponding group of stakeholders in the range from t1 to t2 (the area of the agreed
purpose).
The formula for the calculation of the average cost measurement of the risk degree
regarding the beginning of the negative consequences as a result of the loss of motiva-
tion (interest) of a certain group of employees will have the following form:
RM = ∫ ∫ W ( E , M ) • VM dS (3)
S
where VM – is a function of cost measurement of economic losses in the absence of
the motivation (interest) of a certain group of employees.
Then the total risk will be:
R = ∫ ∫ W ( E , M ) • (VE + VM )dS = RE + RM (4)
S
The calculation of the total risk will allow to perform risk management to reduce its
impact.
4 Conclusions
The basic condition for the stable and efficient operation of the IT-sector enterprise is
safety. By the safety of the enterprise operation system, it is expedient to understand
the protection of the business structure, environmental state, information, employees,
capital, profits and interests against internal and external threats.
All the components of the safety system of the enterprise operation are intercon-
nected and interact with the system of economic safety of the IT-sector enterprise,
which can be considered to be the most informative, and which reflects the conse-
quences of all processes occurring at the enterprise. The safety of human capital more
deeply characterizes the relationship, problems and trends, risks and prospects for
cooperation between employees and enterprise in the economic sphere. Human capital
occupies a leading place in the system of development resources of each specific or-
ganization and is, therefore, the main source of uncertainty and associated risks.
Modeling the risks of investments in human capital in the context of the stakehold-
er theory can be realized on the basis of the agreed purpose, which takes into account
the coincidence of the goals of the enterprise operation with the personal goals of
stakeholders.
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