ASSESSMENT AND ENSURING GROWTH OF FUNDAMENTAL CAPITALIZATION OF INDUSTRIAL ENTERPRISES IN UKRAINE

Оксана Володимирівна Мельник

Abstract


The article presents the results of the evaluation of fundamental capitalization of domestic industrial enterprises as well as the analysis of the key factors in its calculation, suggesting basic pathways to ensure growth of financial and economic outcomes in capital formation. Fundamental capitalization refers to the fundamental amount of capital, and the calculations are performed using the residual operating income concept (ReOI-model). However, despite the increasing dynamics of fundamental capitalization of industrial enterprises, the value added trends during 2010-2018 turned negative which has been underpinned in the first place by low competitiveness of domestic industrial products (directly affecting the spread of sales profitability and product sales volumes which are the key factors that drive value creation. It is argued that the main reason for the above negative trend is weak innovation activity of industrial enterprises in Ukraine. Critical dependence of competitiveness upon the technological level of development of modern enterprises triggers the need to implement a consistent industrial policy in Ukraine based on the concept of neo-industrialization which implies the transition to a new technological mode through boosting technological, managerial and product innovations. The implementation of the neo-industrialization concept in Ukrainian realia can also be carried out by exploring and copying foreign technology and become a major source of economic growth for industrial enterprises as well as a method to reduce the gap with high-tech international companies. The basic premises to entry into the domestic business space of technological capital in the form of foreign direct investment assume the creation of favorable investment environment, the source and guarantor of which should be the government. It is argued that the roots of economic growth of industrial enterprises are embedded directly inside the companies, thus following the principles of "smart organizations" will contribute to gaining the desired performance and the outcomes that ultimately affect the fundamental capitalization of industrial business.


Keywords


capitalization; neo-industrialization; innovative development; industrial enterprises; fundamental value



DOI: https://doi.org/10.30857/2413-0117.2019.5.4

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