Shareholders, Strategy and Value Creation: The Case of the IT Sector

Muras, Wojciech; Szczepańska-Woszczyna, Katarzyna Book Shareholders, Strategy and Value Creation: The Case of the IT Sector Routledge Research in Strategic Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Muras, Wojciech; Szczepańska-Woszczyna, Katarzyna (2024) : Shareholders, Strategy and Value Creation: The Case of the IT Sector, Routledge Research in Strategic Management, ISBN 978-1-032-65084-5, Routledge, London, https://doi.org/10.4324/9781032650845 This Version is available at: https://hdl.handle.net/10419/290430 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0/legalcode Shareholders, Strategy and Value Creation The central task of contemporary strategic management is to look for sources of value and to achieve aboveaverage firm performance. The effective implementation of a value creation strategy requires a comprehensive approach, including the creation of a systemic management structure aimed at increasing company value. The concept of valuebased management involves consciously inspiring, undertaking, and implementing valueoriented actions. Value creation takes place at all levels of management and in all organisational units of the company; therefore, the implementation of all management functions should be assigned to this goal. Thus, the role of managers is gaining importance, especially those who are capitallinked to companies, who set goals and verify them by means of informed decisions aimed at maximising value in the long term. The book presents a multidimensional analysis of shareholders’ impact on company value creation. The authors chose the IT sector as the area of study; this sector, being one in which modern technologies are essential, acquires special significance for the global economy. The book features a review of notions and concepts related to the management of company value and methods of measuring it, the shareholder’s impact on the creation of company value, and factors affecting longterm value creation; an analysis of the places of occurrence, power and direction of a shareholder’s impact on building the longterm capacity of an IT sector company for creating the value thereof, as well as the conceptualisation and operationalisation of such impact; an analysis of the role of shareholders in IT sector companies, a profile of shareholder competence which makes the role of a shareholder unique to the company and fulfils the “valuecreating owner” postulate; an analysis of the role of hired managers cooperating with the shareholders with an indication of the significance of mutual development and the supplementation of one’s own skills. The book is dedicated to scientists in the field of strategic management, valuebased management, and leadership; shareholders; students of EMBA and MBA programmes; practitioners in strategic management; and current shareholders of modern technology companies (in particular from the IT sector) and future investors, for all of whom it may offer a valuable outlook on the management principles and practices in the sectors, particularly with respect to the longterm creation of company value. Wojciech Muras is a shareholder, Cofounder, and President of the management board of Netology, Poland. Katarzyna SzczepańskaWoszczyna is a professor, Vice Rector for Science and Education, and Dean of the Faculty of Applied Sciences at WSB University, Poland. Routledge Research in Strategic Management This series explores, develops and critiques the numerous models and frameworks designed to assist in strategic decision making in internal and external environments. It publishes scholarly research in all methodologies and perspectives that comprise the discipline, and welcomes diverse multidisciplinary research methods, including qualitative and quantitative studies, and conceptual and computational models. It also welcomes the practical application of the strategic management process to a business world inspired by new economic paradigms. Strategic Management and Myopia: Challenges and Implications Wojciech Czakon Business Strategy and Competitive Advantage: A Reinterpretation of Michael Porter’s Work Jovo Ateljević, Dženan Kulović, Filip Đoković and Mirza Bavčić Competitive Advantage, Strategy and Innovation in Africa: Issues and Applications Edited by Mohammed El Amine Abdelli, Nawal Chemma, Soudani Ahlem, Samir B. Maliki and Gurmeet Singh Strategic Management and Sustainability Transitions Theory and Practice Edited by Michael W. Zhang Shareholders, Strategy and Value Creation The Case of the IT Sector Wojciech Muras and Katarzyna SzczepańskaWoszczyna Shareholders, Strategy and Value Creation The Case of the IT Sector Wojciech Muras and Katarzyna SzczepańskaWoszczyna First published 2024 by Routledge 605 Third Avenue, New York, NY 10158 and by Routledge 4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2024 Wojciech Muras and Katarzyna SzczepańskaWoszczyna The right of Wojciech Muras and Katarzyna SzczepańskaWoszczyna to be identified as authors of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. ISBN: 9781032627533 (hbk) ISBN: 9781032650838 (pbk) ISBN: 9781032650845 (ebk) DOI: 10.4324/ 9781032650845 Typeset in Times New Roman by Newgen Publishing UK The project “PERFECT – Regional Initiative of Excellence in WSB University”. This project is funded under the programme of the Minister of Science and Higher Education titled “Regional Initiative of Excellence” in 2019– 2023, project number 018/ RID/ 2018/ 19, the amount of funding PLN 10 788 423,16. Contents List of figures ix List of tables x Introduction 1 1 Shareholder in a company vs. the longterm capacity of the company to create its value 7 1.1 Shareholder and stakeholder: a review of corporate governance 7 1.2 Shareholder as manager and/ or leader – different roles and methods of action 16 1.3 Shareholders in the creation of company value 25 1.4 Organisation: the factors that contribute to shareholder salience 31 1.5 Transformation of a shareholder role in light of company development 34 2 Valuebased management – case of IT sector companies 46 2.1 Valuebased management 46 2.2 The IT sector in strategic economic development 54 2.3 Economic environment of the IT sector: directions of changes, impact on the development potential of the sector 58 3 The shareholder’s role in value creation of IT sector companies – research methodology 67 3.1 Methodology of empirical research: applied approach and research methods 67 3.2 Conceptualisation and operationalisation of the research model for the general approach 84 DOI: 10.4324/9781032650845-1 Introduction The paradigm of enterprise management based on the subordination of the management system to the requirements of effective value creation has made the maximisation of company value a determinant of the concept of doing business and a guarantee of the longterm existence of the company on the market (Lichtarski, 2000; Jensen, 2002). The central task of contemporary strategic management is to look for sources of value and to achieve aboveaverage firm performance. The effective implementation of a value creation strategy requires a comprehensive approach, including the creation of a systemic management structure aimed at increasing company value (Dyduch et al., 2021). The observation of economic practice leads to the conclusion that increasing interdependencies occur between the core areas of strategic enterprise management and the ability of companies to pursue longterm development. The concept of valuebased management involves consciously inspiring, undertaking, and implementing valueoriented actions. Value creation takes place at all levels of management and in all organisational units of the company; therefore, the implementation of all management functions should be assigned to this goal (Jaki, 2015). Thus, the role of managers is gaining importance, especially those who are capitallinked to companies, who set goals and verify them by means of informed decisions aimed at maximising value in the long term. Nowadays, modern technology sectors, which also include the IT sector, are particularly important to the global economy. This view is supported by the constantly growing share of the IT sector in the national GDP and the growing number of employees in the sector. Despite the rapidly growing importance of the IT sector, research into the influence of shareholders of capital companies on effective and efficient value creation in IT companies is only partially described in the literature. Research interest is limited to areas related to technological changes and their impact on social changes or the effectiveness of individual economic sectors, completely disregarding the importance of company founders and shareholders in this process. 2 Introduction The authors observe that despite the popularity of issues related to entrepreneurs, valuebased management and the IT sector (where the publications of consulting companies are predominant), the problem areas are addressed separately, without the detailed examination of mutual relationships. By undertaking research in selected areas of the relationship between entrepreneurs and the effectiveness of company value creation, researchers seek an understanding of the power of relationshipforming factors both at the level of the shareholding structure (as the elements of shareholder influence) (Morck, Shleifer, & Vishny, 1988; Demsetz, 1983) and at the level of the approach to risk proposed by Carlsson (2001), or other areas identified by researchers, such as the approach presented by Hecking and Tarrazon Rodon (2002), who point to factors related to shareholder development orientation that may contribute to the creation of company value. R. Carlsson proposed an attempt to design a holistic approach for the examined relationship between the influence of shareholders on the creation of company value. He asks the following questions at the stage of the conceptualisation of these relationships: Why is the role of the owner important? What makes this role, the importance of the owner in the organisation, unique? What skills and competencies should an active owner offer to the company in order to fulfil the requirement of “valuecreating owner”? How can the owner contribute these values? The dynamic progress in the economy over the last 30 years has made this postulate both topical and valuable. Therefore, attempting to better understand where this impact occurs, whereby shareholders can increase the effectiveness and efficiency of the creation of company value in the IT sector, may result in new and valuable knowledge contributed to the theory of management sciences. The issue of the holistic approach to the importance of the influence of IT sector shareholders on the creation of company value, as well as the identification of where this influence occurs, constitutes an important cognitive and research gap. The aim of the research was to identify areas where shareholders have an influence on building the longterm ability of an IT company to create its value, to conceptualise and operationalise this influence, and to attempt to investigate the strength and direction of this influence by means of selected research methods and tools. The practical purpose was to demonstrate such areas of activity to the owners and shareholders of IT companies where they can most strongly support their companies in the longterm creation of value. The simultaneous aim was to develop a prototype of an IT tool which uses the research results and supports shareholders in their choices. The research problem pursued by the authors is strongly embedded in the perspective of the owners of capital companies, i.e. shareholders who have to decide on their role in the company as part of the decisionmaking process, and do so over the long term. It is strongly embedded in strategic management and the evolutionary theory of the firm. The ability to increase company value is an Introduction 3 important criterion for the assessment of managers and, consequently, decisions taken by shareholders. In this way, it can be observed that in pragmatic terms, the research problem is located in the strategic choices made by shareholders. At the same time, the research problem fits snugly into the theory of economic development described by Schumpeter (1934), who pointed to the role of internal forces as the main cause of economic development. According to this theory, it is important to satisfy the conditions including the existence of a creative entrepreneur, the development of innovation and credit, which places the shareholder squarely at the centre of company development. Longterm observation of the IT sector and the experience of companies make it possible to see how shareholders who neglect valuebased management areas or demonstrate lowquality management can have an adverse influence on the creation of company value. In turn, positive examples show how the capitalisation of companies is increasing as a result of courageous decisions taken by shareholders who compete in global markets. It is therefore crucial to identify the influence of shareholders on the ability of IT companies to create longterm company value (it was assumed that a company shareholder means a person (persons) associated with the company through a capital relationship resulting from the shares held (in a jointstock company or limited liability company)). As a result, two main research questions were formulated: In what managerial roles are shareholders most conducive to building the longterm ability of the IT company to create its value? Which of the tasks that shareholders perform for the company and their attitudes presented towards it are most effective in building the longterm ability of the IT company to create its value? The research objects of the monograph are IT companies in the significant position of a company shareholder represented by a natural person, in the context of the possibility of their influence on strategic and operational decisions taken. At the same time, it is possible to observe a strong focus on longterm valuebased management in the decisions taken by this group of shareholders. The goal of the research was to examine the impact of these shareholders on the effective creation of the value of their companies in the long term. Many years of observation of the economic environment, in particular the IT sector, confirm the need to collect empirical data and attempt to describe the potential locations of shareholder influence on building companies’ ability to create their value in the long term. An equally important premise of scientific research is the belief that the basic goals of shareholders, which result from the investor approach, include the creation of the conditions for ensuring the continuity of business sustainability and changing business models in accordance with technological, social, political, or demographic changes. However, in order 4 Introduction to achieve their goals, they must constantly find their place in companies and do so effectively and efficiently. The research process uses a critical literature review approach, which, according to BarnettPage and Thomas (2009), is characterised by a distinctive approach to synthesising multidisciplinary research conducted by means of different methods when the review of available literature is required. The systematic review included the literature since 1930. Triangulation of research methods and data sources was used to achieve the highest possible reliability of the scientific inference process. In the general structure of the monograph, two layers can be distinguished, namely theoreticalmethodological and empirical. The entire monograph consists of the introduction, five chapters, and the methodological appendix. Chapter 1 introduces the term corporate governance as a set of rules, reports, processes, and corporate systems that define the distribution of rights and responsibilities within the company, describes the role of shareholders in a modern company, the functions which they fulfil, along with the key challenges, including shaping behaviours in the process of value creation in an enterprise. The role of shareholders in a modern company was described, the functions which they fulfil, along with the key challenges, including shaping behaviours in the process of value creation in an enterprise. Dominant areas of shareholders’ impact on value creation in the IT companies were identified. The general (holistic) and narrow approach were proposed to describe the areas of potential implication of the shareholders on the effectiveness of value creation in the IT sector. In the general (holistic) approach, the impact of the managerial role performed by the shareholder on the effectiveness of value creation was proposed. The narrow approach takes into account a set of activities and shareholders’ involvement towards the effectiveness of value creation in the IT sector. A review of the directions of transformation of the significance of shareholders in the light of company development was also made. The authors reviewed the literature within the scope of entrepreneur theory, models of company orientation, including shareholders’ significance, the shareholder in the concept of corporate governance, and characteristics of shareholders in terms of a catalogue of managerial traits and roles. The significance of managerial maturity of shareholders was characterised, along with their personal brand, in the context of building a company’s capacity to create its own value. Chapter 2 presents a valuebased management (VBM) approach as the paradigm of enterprise management, based on the subordination of the management system to the requirements of effective creation of company value. The second part of the chapter presents an overview of the IT sector in a broad economic perspective, on both a macroand the micro scale, in the context of its significance for the development of other sectors of the economy. Introduction 5 Positioning the research in the IT sector results from the ongoing information revolution which strengthens the significance of information in the development of the global economy. Development of the IT sector may offer an opportunity to build the capacity of companies from this sector for the longterm creation of their value (with benefits for their shareholders) and inspiring challenges (with benefits for their employees and the business environment). Chapter 3 presents the methodology of the research, the manner in which the research process was conducted, the methods, research tools, data analysis, and methods of scientific inference. The inspiration for undertaking empirical studies derives from the observation of actual decisionmaking dilemmas of IT sector shareholders. As a consequence, extended interviews based on the Delphi method were conducted with shareholders from the IT sector and stakeholders of the economic environment (representatives of IT clients), who comprise an expert team actively engaged in sharing observations, remarks, views, and experiences within the scope of shaping a relationship between a shareholder and the value of a company operating in the IT sector. The dilemma related to the identification of the best potential places/ areas of impact of the shareholders on the effective creation of company value emerged during the research. The proposed triangulation of research methods and data sources is of value, in the context of an attempt to understand the relationships between shareholders, valuebased management, and the rules of competition in the IT sector. Chapter 4 describes the results of empirical research regarding the identification of places/ areas of occurrence of the shareholders’ impact on the effectiveness of company value creation, quality of leadership in IT companies; a comparative analysis of a leader/ shareholder and a leader/ hired manager in the context of the effectiveness of leading changes that aim to build the longterm capacity of a company to create its value. The final part of the chapter presents an assessment of the relationship between shareholders and the effectiveness of value creation of IT companies in light of the authors’ own studies. Chapter 5 presents model assumptions of the instrument supporting shareholder decisions. The second part of the chapter presents theoretical and practical implications of the study. Using the managerial role of shareholders as a tool for strategic and operational management and creating the value of an IT company is concluded. Choices made by shareholders related to the tasks performed for the company and attitudes towards it versus the company’s ability to create its longterm value is discussed. Manager type – a shareholder – entrepreneur or an intrapreneur versus the effectiveness of value creation in the IT sector is shortly described. The final conclusion concerns the leadership skills of shareholdersentrepreneurs versus the effectiveness of value creation of an IT company. 6 Introduction References BarnettPage, E. and Thomas, J. (2009). Methods for the synthesis of qualitative research: A critical review. BMC Medical Research Methodology, 9, 1– 11. Carlsson, R. (2001). Ownership and value creation. Strategic corporate governance in the new economy. New York: Wiley, p. 176. Demsetz, H. (1983). The structure of ownership and the theory of the firm. Journal of Law and Economics, 26, 375– 390. Dyduch, W., Chudziński, P., Cyfert, S., and Zastempowski, M. (2021). Dynamic capabilities, value creation and value capture: Evidence from SMEs under Covid19 lockdown in Poland. PLoS ONE, 16(6), e0252423. https:// doi.org/ 10.1371/ jour nal.pone.0252 423 Hecking, S. and Tarrazon Rodon, M.A. (2002). The relation between shareholder value orientation and shareholder value creation. Bellaterra: Universitat Autonoma de Barcelona Departament d’Economia de I’Empressa, pp. 35– 42, online access: 10 October 2019. Jaki, A. (2015). Provalue paradigm and value based management concept – lessons from the global economic crisis. In: G. Radosavljević (Ed.), Contemporary issues in economics, business and management – EBM 2014. Kragujevac: University of Kragujevac – Faculty of Economics. Jensen, M.C. (2002). Value maximization, stakeholder theory, and the corporate objective function. Business Ethics Quarterly, 12(2), 235– 256. https:// doi.org/ 10.2307/ 3857 812 Lichtarski, J. (2000). The relations between theory and practice in improving organization and management in a company. Argumenta Oeconomica, 1– 2(9), 77– 88. Morck, R., Shleifer, A., and Vishny, R.W. (1988). Management ownership and market valuation: An empirical analysis. Journal of Financial Economics, 20, 293– 315. https:// doi.org/ 10.1016/ 0304405X(88)900487 Schumpeter, J. (1934). The theory of economic development. Cambridge: Harvard University Press. DOI: 10.4324/9781032650845-2 1 Shareholder in a company vs. the longterm capacity of the company to create its value 1.1 Shareholder and stakeholder: a review of corporate governance Corporate governance is recognised as one of the most important issues in the business world (Loughrey, Keay, & Cerioni, 2008) and is the core of business and investment. It has a very wide scope and covers all the features of the way that stakeholders in a company relate to one another (Prentice & Holland, 1993). Farrar (1993) said that it is a subject which involves consideration of “the legitimacy of corporate power, corporate accountability and standards by which the corporation is to be governed and by whom”. Nearly all developed and developing countries have adopted corporate governance regulations or issued new company laws (Tricker, 2015). The introduction of corporate governance into AngloSaxon theory and practical discussion in economics, management, finance, law, and politics was related to the growing importance of the new social phenomenon associated with the increased complexity of the activities of primarily stock companies, which were described by means of concepts at the time, as in the pioneer work of A. Berle and G. Means in 1932 (Berle & Means, 1932). Corporate governance results from the separation of the financing and management of a company’s activities. In the narrower sense, since the days of A. Berle and G. Means, it has been claimed that it results from the separation of ownership and management (Mesjasz, 2013). Currently, the main cause of the problems referred to as corporate governance is the separation of risk arising from company financing from management (Shleifer & Vishny, 1997). Owners or shareholders, i.e. those who bear risk, wish to gain the opportunity to influence its operations independently of the managers whom they have hired. Corporate governance concentrates on the policy of controlling and guiding a firm. Specifically, it focuses on the structures and processes of governance (Adeyeye, 2010). There are different theories concerned with corporate governance, for instance, shareholder value theory and stakeholder value theory, stewardship theory, and enlightened shareholder value (ESV), which was recently adopted in the UK with the Company Act 2006 (CA, 2006). 8 Shareholder vs. the long-term capacity of the company A business organisation is a coalition of diverse interests (Mitchell, Agle, & Wood, 1997). The concept defined by A. Rappaport as the shareholder value approach means that the focus in enterprise management and a choice of an action strategy is based on the criterion of shareholder value (Rappaport, 1995). The main goal, therefore, is to maximise shareholder value. The measure of assessment is increased shareholder wealth expressed by increased company value. The concept of stakeholder value derives from the model of the coalition of R.M. Cyert and J.G. March in 1963. An important observation of stakeholder theory is that organisations are part of a broader system that includes both business and social interactions. According to this concept, the objective of the company and at the same time the means of achieving thereof are, to the same extent, the interests (often conflicting) of its partners (Post et al., 2002). The measure of evaluation is the satisfaction of all stakeholders. Both concepts have advantages as well as disadvantages (Rappaport, 1999, 2006; Lazonick & O’Sullivan, 2000; Engelen, 2002). The advantage of the shareholder value concept is the unambiguous, measurable objective of the company, which is the estimated, discounted free cash flow of owners and creditors minus the market value of the debt or the discounted free cash flow belonging only to owners (Skoczylas, 2011). Its volume makes it possible to compare different strategies and thus choose the most advantageous, from this point of view, the direction of company development. Advocates of maximising shareholder value treat profits that the corporation generates as rewards for critical economic functions that, allegedly, shareholders perform and without which these residuals would not be possible. Shareholder returns are regarded as incentives for waiting and risk bearing. In another version, they are seen as rewards for shareholder monitoring of managers (Lazonick & O’Sullivan, 2000). The economic argument for making distributions to shareholders is an argument concerning the efficiency of the replacement of corporate control over the allocation of resources and returns with market control – according to the logic of shareholder value theory, if corporate managers cannot allocate resources and returns to maintain the value of the shareholders’ assets, then the “free cash flow” should be distributed to shareholders who can then allocate these resources to their most efficient alternative uses (Lazonick & O’Sullivan, 2000). Engelen (2002) highlights that ownership describes and prescribes a certain set of social relations surrounding the object that is supposedly “owned”. Ownership constitutes a relationship between the owner and other agents and demarcates relational rights instead of absolute ones. In that sense, ownership does not so much concern things or objects as relations. Property does not say so much “this is mine” as “I can do this with it and not that, whereas you can do that and not this”. W. Skoczylas (2011) believes that a clear focus on shareholder value creation can only be a source of longterm success if their demands are maximised when the objectives of other stakeholders interested in the Shareholder vs. the long-term capacity of the company 9 company’s activities are maximised. Therefore, it requires equal treatment of all stakeholders interested in the future of the company, i.e. shareholders, managers, or creditors. Shareholders invest their capital and bear the risk of losing it. They are also the last, after customers, employees, suppliers, cooperators, creditors, and the state, to participate in the amount of the surplus. Shareholders also have the strongest incentive to manage resources so that the company can achieve a competitive advantage in the long term. The basis for decisionmaking lies in the planning process. The drawback is that society and the various goals of managers and owners (agency theory) approve the assumptions of shareholder value only to a limited extent. Unlike the concept of shareholder value, the stakeholder value concept treats a company as a public institution which also bears social and political responsibility. For this reason, all stakeholder groups must be involved in the strategic planning process. The focus on value creation that has recently materialised in both the theory and practice of business management has sparked discussions about the entities served by an enterprise and attempts to determine whether an enterprise should counterbalance the interests of all related entities (stakeholders) or to act for the benefit of its shareholders (Rappaport, 1998). In response, two models of business operation have been distinguished: • the financial model, where the goal of operation of an enterprise is to increase the value for shareholders (the shareholder value perspective); here, the enterprise is treated as an instrument used to generate income for the shareholders; • the social model, adopting the stakeholder value perspective; here, a business is perceived as a joint enterprise, where the suppliers of capital, knowledge, capacity, labour, and services cooperate as equals with a view to accomplishing success together. The above leads to two perspectives in the operation of businesses: • shareholder interest focus – characteristic of the economies of the United States and Great Britain (the socalled AngloSaxon model); • focus on the interests of diverse entities engaged in the operation of an organisation – characteristic of the economies of countries such as Germany, France, and Japan (the socalled continental model) (Wrońska, 2004; Blair, 1995; Yoshimori, 1995). Depending on the perspective adopted, the expectations of groups of interest underlie the business strategy and adoption of a specific perspective for company value creation with respect to diverse expectations among interested groups: consumers want competitive prices and high quality; employees want high wages, good work conditions, and stability of employment; suppliers want low risk and a high rate of return, while the wider community wants high subsidies for the environment and charity actions. As a result of these discrepancies, 16 Shareholder vs. the long-term capacity of the company main premise of the developed managerial theories of the firm, which are an attempt to explain the functioning of corporations which operate on oligopolistic markets. The concept of Berle and Means (1932) emphasised the separation of ownership from management in a company. In his concept, R. Marris supplemented the managerial theory of the firm with a fairly detailed analysis of the company’s financial policy and included a risk element in the managerial decisionmaking and the previous experience of the company in conducting risky activities, e.g. in the implementation of a new product on the market (Rogalska, 2014). Managerialism considered a different goal of business functioning than the traditionally adopted one, namely maximising the value of profit. The authors of managerial theories were convinced that companies achieve the differently defined goals of their managers. In the assumptions which underpin these trends, the main role of a manager results from the growing importance of professional management in companies and from the dispersion of ownership in increasingly complex organisations (the separation of the roles of an owner, an entrepreneur, a manager, and a customer). Managers can play the role of the entrepreneurs, as much as be only technocratic administrators. Effective business management is the result of leadership opportunities, learning managerial skills, methods and techniques, but also motivation (or lack thereof) to effectively use the company’s resources (e.g. in the case of poor owner supervision, the lack of a manager market, and so on). 1.2 Shareholder as manager and/ or leader – different roles and methods of action In the literature, the terms leader and leadership (Cucović, 2016; Graham, 1988; Jacobs, 1970; Katz & Kahn, 1978; Kibort, 2004; Kożusznik, 2002; Roberts, 2005; Zaleznik, 1989) are widely used next to the terms manager and executive. Although they are often used interchangeably, they do not mean the same. In a sense, they reflect the evolution of the perception of the main subject of the management process and the tasks set for it. According to J. Penc’s concept, a manager is a person employed to manage, to perform all the functions using all or selected resources to achieve all or part of the goals of the organisation (Penc, 2002). On the other hand, a leader is a person who is able to influence (affect) the behaviour of other people without using coercive measures and who is accepted by them as a leader (Griffin, 2004; Grzesiak, 2022; Zabolotniaia, Cheng, & DackoPikiewicz, 2019). He or she is a “person with supporters” (Drucker, 2006). Leadership is defined as the ability to “lead” more or less numerous supporters (Koźmiński & Jemielniak, 2011). James MacGregor Burns (2003) explains leadership as “empowering engagement with followers, that remains leadercentric” (SzczepańskaWoszczyna, 2021). Shareholder vs. the long-term capacity of the company 17 According to Couto (2015) “an initiative, whether effective or ineffective, is leadership as long as it is taken on behalf of shared values and the common good”. Managers are – next to subordinates – one of the parties in the management process connected by the relationship of power and submission, while the parties to leadership are leaders and their supporters, between whom there is a relationship of influence and subordination not based on coercion (Kożusznik, 2005). The main difference between managers and leaders lies in the disparateness of their roles and tasks as well as the competencies needed to perform them (Table 1.1). Table 1.1 Manager and leader – different roles and methods of action Manager Leader Manager – a person with formal authority and a position resulting from the nomination, being a formal authorisation from the owner to dispose of the company’s resources, i.e. to manage it; Leader – both formal and informal; rather, a certain ability, skill or feature of uniting and motivating people to act, develop, give direction, and lead; Focuses on systems and structure; manages running processes, focuses on observation of results, compares them with goals and corrects deviations; Focuses on people; sets a distant and ambitious goal and mobilises subordinates to follow this direction; Sets policy and strategy; Agrees on values – leadership through inspirations; The following processes are the managers’ domain of activity: (1) planning and budgeting, focusing on defining goals in the short term, (2) organising and staffing, creating organisation structure and resource allocation, (3) controlling and problem solving by monitoring compliance of results with previous plans; Three processes are the domain of activity: (1) establishing directions by developing the vision, (2) aligning people to the organisation’s vision through communication, (3) motivating and inspiring employees to act despite obstacles they may encounter, through empowerment; Prefers working with people, but with minimal emotional involvement; communicates by sending ambiguous signals; employees perceive them as enigmatic, manipulative; Attracts and arouses interest; addresses others directly, intuitively, and empathetically; Actions based on control; sets parameters, creates control rules and procedures; Builds trust; creates rules supporting employees’ professional development; Asks: how? and when?; Asks: what? and why?; Accepts status quo; avoids risk; Introduces changes; takes the risk if the opportunities which arise seem to be promising; Results: order, consistent actions; Results: change, innovation; Feels part of the organisation. Feels separated from the organisation. Source: Own study based on Kotter (1990); Zaleznik (1992). 18 Shareholder vs. the long-term capacity of the company A manager should primarily manage operational processes, while the task of a leader is to set ambitious goals and to mobilise and motivate subordinates to follow this direction (Kostera, Kownacki, & Szumski, 2000). Managers perform management functions. These include defining goals, organising work, ensuring adequate motivation and communication, analysing the organisation’s activities, and improving staff qualifications. According to the above concept, managers perform their tasks by setting company goals, specifying fragmentary goals for each area of the strategic goal, deciding what actions to take to achieve these goals, mobilising employees to work effectively, and providing them with necessary information about strategic plans – and are aware that the company’s success depends on their performance. Managers organise work while creating adequate structures. They specify the necessary actions, decisions, and relationships, classify the work, divide it into activities and group subordinates into organisational units, and these together with tasks into organisational structures. They select people to whom they entrust the task of managing units and for tasks that must be performed. They motivate and inform people responsible for tasks and create a team. They use awards for good employees, create conditions for their development and improvement, and lay the poor ones off. They introduce innovations, create a knowledgebased partner organisation, and anticipate the future. They also measure and evaluate and set evaluation measures. They analyse performance, assess and interpret it, and inform subordinates and superiors alike of the results of the analyses (Drucker, 1994, 119– 126). Leadership, on the other hand, occurs when, through leaders, supporters strive for goals that represent values and motivations relevant to both the goals of the group or the organisation. The art of leadership is based on the ability to see and achieve common goals, extract the potential of other people, and direct the talents, knowledge, and abilities of the group towards predetermined results (Mrówka, 2005). An effective leader can be compared to an excellent selector who correctly chooses the people with whom he or she is to work, is able to reliably assess their progress at work and apply appropriate motivational systems. He or she is a negotiator who solves emerging problems and suggests solutions. He or she is also an integrator, harmonising the goals and activities of various groups in the process of change in the company. A significant role in the discussion on the differences between leadership and management was played by A. Zaleznik’s publication, in which the author, noting the importance of the contribution of both managers and leaders to the functioning of the organisation, emphasises their diversity, from personal motivation to the way of thinking and acting. In 1977, when A. Zaleznik published the article Managers and leaders: Are they different?, the traditional view of management focused on organisational structures and processes, while the view of leadership development focused, in particular, on building competencies, control, and balance of power. Such a view, according to A. Zaleznik, bypassed important leadership elements, inspiration, vision, and passions of people, thanks to whom Shareholder vs. the long-term capacity of the company 19 organisations achieve success. According to A. Zaleznik, managers focus on maintaining stability and the status quo, performing duties, exercising power, and achieving goals, while leaders focus on changing and searching for new solutions, understanding people’s beliefs and gaining their commitment. Numerous authors have devoted their efforts to the comparison of managers and leaders, but the conclusion is that they are not a kind of substitute. A manager and a leader have many common traits, but at the same time there are significant differences between them, and each of these management groups has their own advantages and disadvantages; as A. Zaleznik has opined, it cannot be stated that either of them is better. Despite many differences, traits, functions, and peculiarities appearing in theory, one should express the belief that both groups are considered necessary in the practice of economic life. (SzczepańskaWoszczyna, 2021). Various management concepts – from Frederick Winslow Taylor to Charles Barnard, to representatives of the Human Relations school, to contemporary concepts of New Public Management or the Strategic Performance Management System — have defined managerial functions, emphasised ever newer aspects of an organisation, and equipped managers with the knowledge and tools for the effective implementation of the goals imposed on them (Górski, 2009). The quality of actions of professional managers is determined by numerous factors, in particular competence, which plays an essential role. When looking for the model of a shareholder in capital companies, the authors decided to review the literature in the context of managerial competence, in particular the catalogue of managerial and personality traits. The concept of competence appears in the work of Robert White (1959) as “a skill acquired in the deepest sense (…), directed, selective and persistent action taken (…) because such action assumes an innate need to manipulate the environment”. D.C. McClelland (1973) indicated competence as the key category for forecasting employee results, while R. Boyatzis (1982), an expert on organisational behaviour and psychologist, defined competence as a capacity, a basic and primary feature and a characteristic that offers effective and/ or better fulfilment of professional duties. The individual range of competence reflects the potential of a given person: competence was identified with the features of a manager who performs his/ her work very well. Competence encompasses motives, personal traits, skills, mode of thinking about oneself, one’s social role, and the resources of knowledge that a given person uses – while being aware of having such features or not. Elena Antonacopoulou and Louise Fitzgerald (1996) believe that for a manager to be competent, they need to have a number of features and characteristics, thanks to which the abilities held and the internalised knowledge can be translated to efficient action. The proper level of competence allows for the efficient performance of managerial roles and simultaneously makes it possible to meet the special business goals of an enterprise. Summing up various approaches and definitions referring to the competence structure of managerial 20 Shareholder vs. the long-term capacity of the company personnel, it may be assumed that it consists of ingredients such as knowledge, skills, personality, experience, and stances (the conceptual content of individual ingredients is presented by SzczepańskaWoszczyna, 2021; Marrelli, Tondora, & Hoge, 2005). Knowledge comprises elements such as education, foreign languages, and years of service. Skills are manifested in efficient management, use of the acquired knowledge for management, filtering the information from the environment, conflict resolution, team management, and delegation of powers. Stances include readiness to acquire new knowledge, to learn and to improve, assertiveness, openness to other people, and management style (SzczepańskaWoszczyna & DackoPikiewicz, 2014). Management competencies are a combination of the manager’s professional knowledge, skills obtained, experience, characteristics, as well as the proper approach and motivation to act. For the manager to be competent, he must have numerous characteristics and attributes, thanks to which it is possible to translate skills and knowledge into effective action. A proper level of competencies allows one to effectively fulfil management roles, and at the same time achieve the company’s defined business roles (Antonacopoulou & Fitzgerald, 1996). Professional knowledge, the skill of making proper decisions at the appropriate time, cooperation, experience, as well as observance of the rules of ethics and culture play a very important role nowadays in regard to management competencies (KurowskaPysz, 2014; SzczepańskaWoszczyna, 2014). A combination of these elements ensures authority, which allows one to competently manage a very diversified structure and culture. Rakowska and Cichorzewska (2016) and SitkoLutek and Jakubiak (2014) note that competencies generally cover knowledge, skills, and approaches, meaning that a competent manager will want to, and be able to, positively use knowledge and skills gained, thanks to a suitable approach and personal characteristics. This set of components of competencies needs to be supplemented with values which, in her opinion, constitute the basis of the modern manager’s understanding, assessment, and sensitisation to another individual (Moczydłowska, 2012). The process of shaping managerial competencies is determined by changes in the business environment and the conditions of the labour market. Factors which determine the profile of managerial competencies include: • moving away from the traditional organisation of companies which prevailed in the 20th century (a high degree of centralisation and formalisation, multilevelling, a high degree of work specialisation, strong formal hierarchical bonds, focus on the evaluation of individual performance, and the instrumental treatment of a person); • moving away from the traditional role and functions of a manager, shaping a company manager as a team leader organising, motivating, and coordinating his or her work, using his or her own actual competencies, as well as the Shareholder vs. the long-term capacity of the company 21 competencies of his or her colleagues in the pursuit of the mission, strategy, goals, and tasks of the company; • shaping the modern types of organisations which are suitable for the current and future conditions of the functioning of the company. J. Collins points to five core levels in managerial development that can be the inspiration for and path of managerial development, and thus provide guidance for management structures in developing the managerial potential of company managers (Collins, 2007). A level 1 manager is merely a highly capable individual (good knowledge and organisation); level 2 – a contributing team member (helps the team to achieve better results); level 3 – a competent manager (organises people and resources to achieve goals). A level 4 manager is an effective leader who evokes commitment and pursues a vision. A level 4 executive is defined by J. Collins as making the transition from a good leader to a great one (manager), who is characterised by a mentality of the order of questions. According to this concept, the level 5 manager asks himself who (with whom) will accomplish tasks and goals rather than what (the task list), which clearly distinguishes them from lower levels more focused on tasks or themselves rather than on the environment of the manager and his or her potential. A level 5 manager can build lasting power by combining humility with strength and determination. A similar concept is presented by J. Maxwell, who defines the individual levels as a position (level 1 – you are the boss), permission (level 2 – you have built relationships, you are liked), production (level 3 – people follow the boss, because he/ she gets things done), employee development (level 4 – the development of the team through the action of the boss), and the pinnacle (level 5 – big company, happy people) (Maxwell, 2013). In order to understand the shareholder model, a review of managerial roles is valuable. From a theoretical point of view, a manager is a person who conducts the management process by performing managerial functions, planning and controlling, and making decisions (Zbichorski, 1997). In simple terms, the work of managers comes down to decisionmaking, team management, and the continuous improvement and adaptation of organisations to changes in the environment (Nogalski & Śniadecki, 2001). In the 1970s, H. Mintzberg conducted a study of U.S. managers who were perceived favourably by their superiors, distinguishing three groups of roles most often performed by managers, namely interpersonal, informational, and decisional roles (Mintzberg, 1973). In the interpersonal role, the manager, as a representative of the company, performs representative tasks (the figurehead); as the leader, he or she influences employees (motivation, inspiration), and as the liaison, he or she maintains relations between the external (business environment) and internal (company) worlds. In the informational role, the manager seeks valuable information for the company (the monitor), distributes it to decisionmakers (the disseminator), and, if necessary, performs the function of the company’s spokesperson. In decisional 22 Shareholder vs. the long-term capacity of the company roles, the manager shows the entrepreneur’s instinct (seeking opportunities, making changes), allocates resources to effectively achieve goals (the resource allocator), while improving the organisation’s structures, and performs conciliation and negotiation functions (the negotiator). According to P.F. Drucker, additionally, the roles played by managers are changing, and as a result, the sources of motivation and job satisfaction are changing, too. The study shows that a way a manager plays a role in the organisation depends on personality traits, qualifications and skills, management style, social status, or tolerance (Drucker, 1994). The work of managers is considered most often through the prism of managerial functions, where two groups can be distinguished, namely internal functions related to management activities within the team and external functions related to tasks performed by management activities outside the team (Lachiewicz, 1994). The literature points out that team management requires considerable activity and entrepreneurship in action, which leads to the belief that managerial work is associated with specific personality predispositions, talent, and professional qualifications. At the same time, management work is characterised by the considerable complexity of the activities performed, the variability of their course, and the difficulty of programming thereof (Lachiewicz, 1994). The changing economy, the growing role of technology, global interorganisational networks, and changes in organisational behaviour resulting from the generational change among employees are the reasons why many of the management methods used today have lost their raison d’être. This also means the necessity of changing managers’ work and their approach to management because, although their role will not change, the way they will play that role is changing. The only aspect that loses its raison d’être is giving instructions and staying outside the team. Modern managers will have to set directions and be exemplary leaders, paving the way for their employees’ success. This is because the key to success will not be the success of the manager but of the team he or she leads (SzczepańskaWoszczyna, 2021). The traditional norms of the vertical style of management practised in the 20th century, referred to as Management 1.0 – which is particularly characteristic of enterprises with hierarchical structures (such as uniformed services) – have become obsolete in the context of the knowledgebased economy. This paradigm of management was developed on the basis of the conviction that a manager should control the performance of the employees using quality standards (McDonald, 2011, 798). In response to the challenges of dynamically developing work virtualisation, opensource work practices, the questioning of hierarchical management, Ygeneration values, the global market, and the imperative of sustainable business, the concept of Management 2.0 was created in the 21st century, the keyword for which is innovation (McDonald, 2011, 797). It is being developed with a view to create (rather than control) an environment that will support the creativity and innovation of employees. Shareholder vs. the long-term capacity of the company 23 The observation of managers’ and owners’ behaviour in IT companies indicates, in terms of the roles assumed by shareholders, the need to take the period of their implementation into account. The potential impact of the emergence of a new business scenario as a factor which implies a change of role (often in the shortor mediumterm) has been observed. In the relevant literature and interviews with IT sector representatives, generators (triggers) of such business scenarios as financial crisis, negotiation of key (breakthrough) contracts, leading significant changes in the company or regaining reputation can be observed. The shortterm management of an enterprise bears the characteristics of interim management. The importance of the roles of interim managers in the IT sector is evidenced by research conducted by the Interim Managers Association (SIM), where the IT sector constitutes the second most frequent interim manager engagement. Companies report missing competencies, organisational change, and restructuring, which together account for more than 60% of cases, as a primary reason for the application of interim management. In the category of company size, those with up to 250 employees accounted for 55% of the use of the concept of interim management, which is the justification for such a high position of the IT sector, where most companies are in the SME group. H. Dźwigoł makes a similar claim, at the same time emphasising that interim management is a solution that is used in crisis, which requires very difficult decisions, mainly related to the restructuring of the company (Dźwigoł, 2018). At the same time, according to A. Baczyńska, in difficult business scenarios, there are stronger differences between managerial and leadership attitudes. A review of the relevant literature indicates the importance of specific skills, experiences, or personal qualities of a manager, shareholder, which can effectively contribute to making better decisions. Pointing to managerial maturity, A. Kozak states that a mature manager is referred to as a person who is primarily a mature man (Kozak, 2011). This is a person who successfully pursues set goals, doing so with high levels of determination. A mature manager is also a person with a sense of selfidentity, which, enriched by the strength of the intellectual potential of a manager, enables him or her to manage the team well and achieve the goals. A mature manager should also be characterised by a healthy personality, which is described in R.E. Franken’s publication as a homogeneous personality, with an objective view of oneself, being active in his or her immediate environment (Franken, 2012). A manager with healthy personality is a confident and predictable person. J. Zamorski reviewed the criteria of the mature personality of the manager, which include openness to gaining experience, lack of defensive attitude, awareness characterised by accuracy and clarity, unconditional selfesteem in an autonomous rather than reactive way, relationships with other people which are harmonious, focus on intuition rather than inference, a choice of experiences which facilitate the development of flexibility and the ability to adjust attitudes in the future (Zamorski, 2003). 24 Shareholder vs. the long-term capacity of the company According to G. Allport, maturity is a manifestation of curiosity about the world (Allport, 1988). The manager with this trait is characterised by openness to new experiences. Immaturity, on the other hand, is characterised by the manager’s defence of only his or her own ideas, the dominance of the logic of “I am right”. A mature manager is able to specify and pursue distant plans in the future, which is important in business. Maturity also manifests itself in how a manager builds relationships with people from his or her environment; relationships focused on respecting diversity amongst colleagues. Building close, warm relationships, treating each person as valuable and unique, and commitment to building deep relationships are the characteristics of a mature manager. An important aspect in managerial maturity is emotional stability. Resistance to stressful situations and their acceptance, selfacceptance, and the expression of feelings without fear of judgment are features that facilitate safety in a team managed by the manager (Kozak, 2011). The importance of personal brand as important managerial competency is also highlighted. Following L. de Chernatony’s proposal to understand the brand, a personal brand can be considered an identifiable person, representing the lasting values recognised by the recipient as those that best meet his or her needs. In this perspective, it is important to identify a specific personal brand and values that are valuable from the point of view of the brand’s customer (de Chernatony, 2003; Wróblewski & Grzesiak, 2020; Grzesiak, 2017). T. Peters adopts, as its starting point, the state in which each individual has a personal brand. Obviously, not everyone manages it consciously, consistently, and effectively (Rampersad, 2010). The distinction formulated by P. Montoya and T. Vandehey can be used to understand the essence of the brand concept and the importance of building thereof (Montoya & Vandehey, 2009). Personal branding can be seen not only as a way of promoting people who perform public roles (politicians, artists, celebrities) but also as an essential component of an intangible asset of an enterprise, if the personal branding can be directly related to the company’s brand (own company – personal brand of the entrepreneur, other – personal brand of the employee). In terms of management, brand is one of the most important intangible resources, which often determines the competitiveness and growth opportunities of the company. Since for many years brand management has been dominated by socalled corporate branding, which requires the involvement of all its members in the building thereof, it can be said that organisations need employees, people with strong personal branding (Kotler, 2003). The relevant literature addresses the issue of the impact of the personal brand of the shareholder (in particular in the position of the President/ CEO) on the value of the company. Core areas where the strength of the CEO’s personal brand is analysed include authenticity, courage in taking risks, consistency of vision and management style, coherence of declared and respected values, and effectiveness in communication with stakeholders. Shareholder vs. the long-term capacity of the company 25 1.3 Shareholders in the creation of company value A unique task for shareholders is the active creation of value (Carlsson, 2001). Such an approach may be a kind of obligation for shareholders as active participants in economic and social life. The determinants of the company’s development can be divided into (Mitek): • external factors, which include the international environment (the globalisation of the economy, the liberalisation of markets), the national environment (the level of economic growth, the innovativeness of the economy), and the local environment (composed of sectoral factors), • internal factors, which include competitive potential (including tangible resources, intangible resources, and competitiveness of products and services) (Mitek & Miciuła, 2012). It is possible to shape external factors through activities within industry associations and groups of entrepreneurs, which can build areas for tasks performed by the shareholder. Shareholders have the largest share in the area of internal factors that directly affect the competitiveness of the company. The effectiveness of these activities may be influenced by factors shaping the potential of the shareholder (or group of shareholders), in particular those identified by J. Karpacz, such as their knowledge, skills, and personal factors (Karpacz, 2011). The company’s prodevelopment approach, implemented through the search for competitive advantage or taking a higher risk than its competitors in pursuing strategies or changing business models, leads to the search for the strength and directions of the influence of shareholders on shaping and supporting such strategic choices. As S. Hecking and M.A. Tarrazon Rodon point out, it is possible to identify several key determinants and their influence on the level of shareholder orientation in the context of supporting the development and creation of the shareholder value orientation (Hecking, Tarrazon, & Rodon, 2002). In their opinion, factors that are directly related to decisions or attitudes of shareholders include a moderate dividend policy aimed at company investment needs, willingness to make longterm investments aimed at building an element of competitive advantage or adjusting to market requirements (which forces the shareholders’ patient attitude in anticipation of results, while reducing the shortand mediumterm benefits of ownership). At the same time, they indicate attitudes and skills such as flexibility in approaching longterm projects and investments, openness to risktaking (often higher than competitors), building and supporting (motivating) the potential of colleagues, skilful recognition of opportunities in synergies between companies through partnerships or capital investments. R. Carlsson proposed an approach to shaping the relationship between the shareholder and company value through a degree of openness to risk. Based on the assumption that the source of business development is a cyclical strategic 32 Shareholder vs. the long-term capacity of the company manage with an iron fist, send their companies plunging to the bottom, and the culture of a “superherd” created by teams of specialists with high IQ generates unfair methods of operation, leading to victory at all costs and the appropriate financial reward (Heffernan, 2015). The symptoms of a leadership crisis have been slowly penetrating public awareness for several years now. Insightful observers of the functioning of companies are starting to undermine the stereotype of an orderly organisation with a dominant model: management determines the vision, outlines the action plan, and makes sure that employees implement it. M. Heffernan’s inquiry proves that a rigid hierarchy is destructive to an organisation. Ideas for improvement, new solutions to old problems, and creative inventions do not usually magically appear at one’s desk, in a predetermined period, in a mind tired from everyday work. In the culture of the “superherd”, availability is fuelled by managers who, by their example of continuous readiness and absolute devotion to the company, encourage followers (SzczepańskaWoszczyna, 2021). The conditions that lead to the organisational context of the shareholder influence are a combination of processes within the organisation that result from internal and external dynamics. It can be assumed that successful innovation is the effect of many factors, including: • strategies based on system thinking; • internal and external communication systems, the creativity of managers and employees, their ability to learn and use tacit knowledge resources, the openness and ability of managers to accept and implement employees’ ideas, incentives and pressure, and a favourable atmosphere; • no resistance to changes (attitudes towards risk, novelties, participation in decisions). Among the main elements which form the context of the shareholder influence in shaping the potential of capital companies, particular attention should be paid to the role played by organisational structure, organisational culture, and strategy. These elements are crucial in the process of maintaining (or recovering) organisational balance, which occurs in every organisation (Koźmiński & Obłój, 1989). The organisational structure determines the dispersion of control and responsibility in the organisation, and the creation of teams, coordination, and division of tasks between organisational units and employees in the organisation. It assigns employees their place in the organisation and also includes interpersonal relationships and the nature of authority. In dynamic terms, the structure is understood as a system which consists of sequences of processes structured in time that constitute the company; it defines functional connections as well as the circulations of supply, material, and information streams. The creation of organisational structures that make interorganisational sharing of knowledge and Shareholder vs. the long-term capacity of the company 33 resources possible is a key element for companies, providing the opportunity to make strategic decisions, resolve contradictions, and actively and effectively coordinate the innovation process (Olson, Walker Jr, & Ruekert, 1995). Managers have the opportunity to influence the innovation of an organisation by directly controlling the organisational structure. The organisational structure is a multidimensional construct, examined in terms of various subdimensions such as formalisation, centralisation, specialisation, functional diversity, and hierarchical (vertical) diversity (Damanpour, 1991), as well as variables related to resources, processes, and culture. Organisations differ according to hierarchical order, relationships between superiors and subordinates, etc. Standardisation and specialisation, which arise with an increase in the size of an organisation, lead to greater efficiency, but in exchange for rigidity and bureaucratisation. Organisational culture, which many authors consider crucial, is the factor that determines processes in an organisation (Jassowalla & Soshittal, 2002; Loewe & Dominiquini, 2006; Lyons, Chatman, & Joyce, 2007; Chang & Lee, 2007; Lau & Ngo, 2004). In order to successfully implement changes or adopt technological solutions, companies must fulfil certain conditions in terms of their internal behaviour and external relationships. The elements of culture have an impact on processes in an organisation through socialisation and coordination (Tesluk, Farr, & Klein, 1997). Organisational culture focused on spreading behaviours which support organisation is a source of norms, values, and ways of conduct and thinking that will support the process of innovation creation. The community of norms and values creates a strong social and internal balance, which consequently also stabilises the organisation in the material dimension. The creation of culture is associated with the activity of managers – “leaders of change”, creative people able to integrate people around the mission, and affect the rational and emotional sphere of employees (ZbiegieńMaciąg, 1999). Research by Ruth Alas et al. (2011), conducted in Estonian companies from the electricelectronic, machine, and retail industries, concerned the relationships between organisational culture, leadership, and the innovative climate; it was found that the type of organisational culture determines various leadership behaviours, including those which create an innovative climate. Agnieszka ZakrzewskaBielawska (2014) studied the importance of organisational culture as a factor in the development of hightech companies; she stated that, in high technology companies, the importance of organisational culture increases along with the increase in their ability to create and implement innovations, while the features of organisational culture which support development include flexibility, open communication and trust, cooperation, and appreciating diversity. Kim S. Cameron and Robert E. Quinn believe that a change in culture is a must in view of the dynamics of change in the organisation. They argue that stability is more often understood today as a sign of stagnation, and companies which are not evolving are considered ossified. The change in the organisation 34 Shareholder vs. the long-term capacity of the company must be followed by a change in the organisational culture, and managers must be promoters of these changes, provided that a change in culture also entails personal change, a deep change in their attitudes (Cameron & Quinn, 2006). Organisational culture is inseparable from strategy. Culture follows strategy, including strategic decisions on business expansion; innovation and personnel strategies shape attitudes and thus change values and norms. However, the influence of culture on strategy is equally important. Culture can also be created through the process of action. Here, the impact is also bidirectional. Organisational culture also has a significant impact on the functioning of a company’s operating systems and the way its structures are organised, including the degree of flexibility within structures, the flexibility of communication channels, the extent of the decentralisation of power, the number of levels in the organisation hierarchy, the scope of managerial control, and individual/ group decisionmaking (Armstrong, 2008). 1.5 Transformation of a shareholder role in light of company development One of the models of company growth that captures the role of the owner is the model of the five phases of organisational growth. The basic assumption of L. Greiner’s model is to observe the evolutionary phases during the company’s growth (Greiner, 1998). These phases are characterised by stability and a steady growth rate. The core assumption of the fivephase model also includes the periods of organisational problems that force radical action. According to the creator of the model, the duration of the steady growth phase varies from four to eight years, provided that the external environment is stable and critical problems inside the company do not occur. This period is followed by a period of turbulent changes in the application of management methods, proven models that turn out to be wrong in the case of company’s growth. The growth phase at the beginning of the company’s life is growth through creativity. The first crisis, i.e. the leadership crisis, occurs when a business management crisis takes place. The emergence of a leader gives the company the opportunity to enter the growth stage through guidelines. Another crisis, called the crisis of autonomy, occurs when it is necessary to separate power in the company. At this point, if the quality of decisions taken by the lower management improves, the company enters the growth phase through delegation. In this phase, a phase of control crisis occurs, caused by a shortage of information that employees at a higher level of the company have. In order to overcome this, mechanisms are introduced designed to coordinate actions at the various levels of the company and the organisation is introduced into the growth stage through coordination. As the company grows, a crisis of bureaucracy takes place. Another known phase of growth is teamwork, which allows for the better use of the coordination of company employees. Shareholder vs. the long-term capacity of the company 35 Another growth model is proposed by L.L. Steinmetz, and it is called the model of critical stages of small business growth (Steinmetz, 1969). Like in the L. Greiner’s model, growth stages and crisis moments have also been distinguished here. Stage 1 is the direct supervision of the company owner over employees, who, through his or her experience, builds relationships with customers and also takes advantage of market opportunities, which results in the company’s success. As the company grows, the emergence of additional problems or threatening competition results in the owner’s perception of lack of control over the company. At this point, the first critical point comes, the moment which determines the development or collapse of the company. Determination and introduction of new methods in the company help overcome the crisis. It can be observed here how the shareholder greatly influences company development, how important their role (tasks) is. Stage 2 of this model is supervised supervision. At this stage, employees control other colleagues and goaloriented management methods are introduced. The offer of products for company customers is also changing. In this phase, an entrepreneur is the person who manages, introduces methods to monitor company indicators. The critical point occurs when the company has about 300 employees. The reasons include making spectacular decisions by the owner, lack of contact of subordinates with the owner, resulting in behaviour contrary to the interests of the company, lack of responsibility for unsuccessful projects, fight at all costs for the success of the company, which results in increased costs of the company and the emergence of trade unions’ changing relations between employees and the owner for worse. The introduction of mechanisms that allow for control, ensuring the independence of the company from the power of the owner, is a factor that facilitates the indirect control stage. Stage 4, called the divisional organisation, is characterised by the professional management of the company by professional managers. At this stage of company development, the entrepreneur does not act as the head of the company but performs control functions without operational management. N.C. Churchill and V.L. Lewis jointly developed a model based on different assumptions. This is a model of the five stages of small business growth. In this model, greater emphasis has been put on the initial stage of the company’s operation, and the degree of its growth is considered in terms of the diversity and complexity of the organisation’s operation (Lewis & Churchill, 1983). The stages in the proposed model are existence, survival, success, takeoff, and the final stage is resource maturity. R. Carlsson also points to the importance of the transformation of the role of shareholders, which, within the company’s management structures, indicate those who are in the area of supervision – board (informational roles) and executive management (decisional and interpersonal roles). He argues that shareholders who act as management boards (which corresponds to the informational role) should provide a wealth of experience, manage risk, or have a holistic perspective. In turn, those who act as executive management 36 Shareholder vs. the long-term capacity of the company (corresponding to decisional and interpersonal roles) should be characterised by high personal energy, courage to take new challenges and executive skills (Carlsson, 2002). C. Zook and J. Allen (2017) also identified the types of crises in the various phases of the company’s life cycle. The first one, overload, is the crisis of losing the momentum that managers who want to change their own business in a short period of time experience. The second crisis, called stallout, refers to a sudden slowdown in the development of the company by creating many organisational layers in the company through its rapid development. This is one of the most difficult crises for a company, which most companies are unable to cope with. Another crisis, free fall, is when the company with the wrong business model has completely stopped growing. This is one of the most dangerous stages of the company, in which managers get the impression of lack of control over the company. As the authors emphasise, these most dangerous stages for the company are foreseeable and avoidable. The authors also conducted an analysis aimed at verifying the view that success, both in terms of the benefits of the founder’s mentality, the measure of the internal strength of the company and its culture, as well as benefits resulting from the company’s economies of scale – the external measure of the company, leads to sustainable growth. C. Zook and J. Allen call the process that leads to this growth a journey north from the land of rebel startups to the world of mature rebels. In the context of the transformation of founding roles in companies, P. Drucker’s view is valuable, which states that company value can increase provided that highquality managers are educated in the company, and this requires the focus of shareholders on shaping successors as well as the potential of direct collaborators. He also adds that building company value requires building a topclass management team long before a new venture really needs such managers and before it can afford it. This unambiguously gives a hint to current and future shareholders regarding the required attitudes or areas of concentration of their activity. It is therefore possible to see that the immediate environment of the shareholder helps overcome further challenges, and at the same time may determine the company’s potential to make the right choices, creating opportunities for effective and longterm creation of company value. The issue of the founder’s mentality in the company’s choices, and shaped through organisational culture, strongly indicates the approach of shareholders, especially founders, to planning their longterm engagement in the company. This approach is strongly reflected in the decisions made by the leaders of global technology companies, who openly inform the market about their longterm approach and express this in their roles and tasks for their companies. This is particularly evident in the actions of Michael Dell (Dell, Dell Technologies, active in managerial roles in the company (group) since 1984), N. Robert Hammer (Commvault, active in managerial roles from 1998 to 2018), and Bill Gates (Microsoft, active in managerial roles from 1976 to 2006) while transforming their role in companies. Shareholder vs. the long-term capacity of the company 37 References Adeyeye, A. (2010). The limitations of corporate governance in the CSR agenda. Company Lawyer, 31(4), 114– 118. 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As research is conducted in the IT sector, it applies strategic and operational management methods due to the high competitiveness of the sector and the strong impact of innovation on the longterm position of the company. In addition, the growing role of the dependence of most sectors of the economy on information technology provides IT companies with strong growth dynamics and at the same time contributes to constantly growing expectations from suppliers, and thus from their shareholders, who are forced to take on new challenges, accept new development projects and new risks. Thus, the economic environment affects both the business model and the assessment of ROI for investors (shareholders), where company value becomes one of the measures. Taking these factors into account and observing market participants, it can be seen that VBM is one of the leading management concepts in the analysed sector. A review of the literature gives grounds for stating that VBM means making strategic, operational, and investment decisions to increase company value. It also means setting goals for the company, responding to the company’s performance and, above all, maximising shareholder value. In order to ensure increased company value in the long term, value drivers should be applied, which are closely related to VBM. Their identification, introduction to management, and monitoring together with optimal management result in increased company value. Then the basic condition that, according to the concept of A. Rappaport, VBM should satisfy, i.e. the maximisation of value, is met. Following this thread, M. Marcinkowska (2000, 23) proposes the following division of value drivers: 1 factors related to financial statements (balance sheet): unregistered assets, undervalued assets, synergy effect, cost of capital, profitability, risk, and growth, 2 factors unrelated to financial statements (offbalance): a external factors: location, access to natural resources, resource control, weak competition, monopolistic position, infrastructure development, and owners; b internal factors: human capital, intellectual capital, organisational culture, vision, mission, strategy, loyal customers, product, innovation, knowhow, research, development and quality, brand, trademarks, information, data, information systems, strategic alliances, mergers, acquisitions, environmental impact, effective advertising, and public relations. Value-based management 49 VBM requires the development of a measurement tool that could answer the question of shareholder value created over a given period. A fundamental measure of shareholder value creation is considered to be EVA proposed by Stern Steward & Co. in 1982. According to A. Cwynar and W. Cwynar (2004), this measure was based on the criticism of accounting profit and other accounting profitbased traditional measures. EVA is based on a model that assumes that the amount of income generated should exceed the amount of the risk incurred, and its core value factor, as emphasised by J. Jeżak (2010), is the socalled economic income. EVA was also critically analysed by T. Dudycz (2005), who points out that the value of EVA depends on the invested capital (IC). At the same time, the management board can manipulate future growth by increasing the current value of EVA at the expense of reducing it in future investments (Nowicki, 2018). The combination of balance (financial) and offbalance methods is an important factor in the creation of company value in the context of the components of business models. One example is the relationship between EVA and intellectual capital valuation and management models (Mouritsen, 1998). Researchers are searching for the valuation methods of intellectual capital, in particular during research into knowledgebased companies as an alternative method to other methods of company valuation. Another tool for measuring value creation is MVA proposed by T.A. Stewart as a method of measuring intellectual capital. This method assumes that intellectual capital is the difference between the market value and the book value of the company (Kicińska, 2006, 199). In the literature, in addition to the MVA method, the markettobook ratio (MV/ BV) is mentioned (Staniewski & Szczepankowski, 2012, 2) in the context of the valuation of intellectual capital, which is also referred to as the indicator of intellectual capital company saturation (Urbanek, 2004, 183). The presented principle of MV estimation (expressed by the formula: MV = IC + BV) is a consequence of the fact that when selling a company, the following are subjectively priced: customer loyalty, brand knowledge, or longterm trading contracts. While management theorists define this difference as intellectual capital, in financial accounting this difference is called “goodwill”. The difference arising from the acquisition or sale of a company is defined by the accounting rules as goodwill and is recognised in the buyer’s balance sheet. In the practice of MVA application, the following formula is used: MVA = V − K where K is the value of capital invested by owners and creditors in operating assets. Traditional financial indicators based on accounting data do not take into account all factors affecting goodwill. VBM created the need for additional 50 Value-based management measures to assess company performance. The measures of increase in the value of a company are MVA and EVA. The capital invested in operating assets includes the book value of longterm debt (the book value of this debt is approximately equal to its market value D), the adjusted book value of equity Ke, i.e. K = D + Ke. MVA is defined as a surplus of the company market value over the value of the capital invested in the company. MVA is the difference between the value of the total cash inflows that all shareholders could obtain by withdrawing their capital from the company and the amount they had previously invested by purchasing shares issued and reinvesting profit. The relationship between the market value of invested capital (V) and its carrying amount (K) can be presented by means of the socalled economic balance. This is a “statement which shows the state of capital and net operating assets according to their market value” (Duliniec, 2011, 70– 71). The balance is used in managing the capital invested in the company. The economic balance is expressed by the formula (Duliniec, 2011, 70– 71): Ve + Vd = V = K + MVA where Ve – the market value of equity, i.e. the current market price of one share multiplied by the number of all issued shares, Vd – the market value of the foreign capital, i.e. the market value of the interestbearing debt; Vd can only be determined if it is listed on a stock exchange or an overthecounter market; V – the market value of the company; it is the sum of the market value of equity and foreign capital, in parallel it is the market value of the net operating assets, K – balance sheet value of the invested capital. At the same time, the MVA method is criticised by some researchers who believe it is wrong to define intellectual capital as a difference in market and book value, as it should be defined as higher value. First, according to J. Mouritsen (2003), intellectual capital cannot be the value of the difference in market and book value, since all changes in accounting policy would affect its value. The book value of the components of the balance sheet depends, inter alia, on the method used to value assets and liabilities, which consequently makes the value of intellectual capital dependent on the accounting policy adopted in the company. Another shortcoming of MVA is that book value is based on historical cost, which is updated at the balance sheet date, which means that its value may differ from current asset value (Kicińska, 2006, 206). In the literature, there is a strong current approach to measuring MVA in relation to EVA. As J. Jeżak (2001) points out, MVA is a surplus of the company market value over the book value of the share capital. He adds that there is a close link between EVA and MVA in the sense that the EVA ratio always refers to a specific period (t), current or future. Therefore, the assessment of Value-based management 51 a company’s ability to create value added by the capital market depends on the development of economic valueadded indicators in the future. The sum of the discounted values of EVA indicators, which the company, according to its development plans, is expected to achieve in the future, determines MVA. A condition for the correctness of the above equation is the assumption about the effectiveness of the capital market, i.e. that share prices correctly reflect all information on the effects of the company’s future activities. According to A. Cwynar and W. Cwynar, this measure may also serve as an external measure of the assessment of managerial performance by investors and the capital market. According to M. Kacprzyk, M. Ruchter, and R. Wolski (2009), there is a relationship between EVA and MVA, where the value of MVA is equal to the sum of the discounted EVA. If shareholders expect the positive EVA in future, this means that company value will increase by EVA. Therefore, the total value of the company is equal to the sum of the discounted future EVA and the current MVA. The relationship between MVA and EVA shows the expected results of investors’ profits resulting from the investment in shares issued by the company. MVA is used to assess the management board’s activities by the market. If it is positive, it indicates the company’s investment in its assets. On the other hand, the management board’s work is assessed by shareholders based on EVA. EVA is a good tool for this purpose because it is not related to the share price, but it takes into account operational and financial management. The review of the literature on the approach to measuring company effectiveness by means of financial measures indicates a wide set of ratios used in the measurement process. This approach strongly hampers the longterm assessment of companies, taking into account the views of researchers who point to the dynamics of the business environment as a key reason. This leads to a multidimensional look at the issue of measuring the effectiveness of company value creation. K. Obłój argues that the survival of the company for a period of more than three years should be assessed as a success of foundersshareholders. This view can be evidenced by data on the survival scale of companies, which shows that only 18% of companies are likely to survive in the first three years since their establishment. Consequently, companies with a lengthy track record of activity on the market, in particular those with relatively low share capital, must be assessed as those which have created value effectively over the long term. This led to the search for such measures that would allow for alternatives to financial methods or measures defined by the principles of the financial market, methods of value estimation that will allow for the supplementation of the inference process regarding the company’s ability to create value in the long term. In this context, it is also valuable to pay attention to the views expressed by J. Hausner (2017) on the approach to the importance of tangible and intangible assets in companies. He points out that in new technology companies (and 52 Value-based management such a group includes IT companies), where the issue of development is more important than the issue of growth, the relationship between tangible and intangible assets and their interdependence play an important role in the longterm corporate strategy. He also stresses that intangible assets often account for more than 80% of company value. According to this concept, only companies where intangible assets, which also include employees, are treated subjectively, and shareholders and management boards create opportunities for development and increase their chances of longterm creation of company value. This leads to a situation where a significant part of company value is not included at all in the company’s balance sheet, which makes it very difficult to assess their real value for researchers, investors, and capital markets. This approach is defined in the concept of the companyidea. Through indepth interviews with entrepreneurs and representatives of sectors which finance and invest in entities in the IT sector, W. Muras (2022) made an attempt to develop a simplified valuation model, based on factors (in particular those related to intellectual capital), which are not directly visible in the financial statements of companies, and in the opinion of the interviewees, are important in the real valuation of companies. The analysis shows that the approach of investment funds is dominated by the division of factors into those related to future events (the future) and past events (the past). The author’s proposal for the model of valuation of IT companies in terms of offbalance factors (intellectual capital) is shown in Table 2.1. In the opinion of experts, it is important to identify determinants that reduce company value, and often even block investments. According to experts, key determinants include the reputation of shareholders and corporate reputation, in particular in explicit and implicit areas, and identified at the stage of estimating company value by auditing the entity and shareholders. At the same time, the conditions for the use of the above model have been agreed and they concern the type of acquirer of the company. It concerns the valuation of the company in order to maintain its business continuity, further development aimed at value creation, assuming that the acquirer determines and implements a controlling model relevant to its business activity and leaves operational activities to company representatives (management board). The model does not take into account individual factors pertaining to the significant strategic objectives of the acquirer (e.g. elimination of a competitor, time pressure related to capturing the market or employees or contracts). The analysis indicates differences in the level of mentality of the financial investor and the natural person (in particular the founder). The level of expected valuation of companies, the time or the manner of obtaining income from holding corporate rights are factors of which the strength (meaning) thereof is significantly different for the types of investors (owners). In the shareholder’s perspective, expectations of benefits in terms of their volume are shaped by personal needs, and in the case of an investment fund, it is the fulfilment of Value-based management 53 obligations towards its shareholders. These distinguishing features may be a guideline for shareholders on the search for higher benefits from corporate rights than before. By adopting the model of “soft” valuation based on the future (75 %) and the past (25%), it can be assumed that in the alternative mixed valuation model proposed (compared to valuation by means of financial measures), the relationship between the factors responsible for the shaping thereof is as follows: wp = kw + EBITDA * wb * [wdm] Table 2.1 Model of valuation of IT companies in terms of offbalance factors (intellectual capital) Period of analysis Category of capital Identification of the determinants of company value Share (weight) of estimation FUTURE Human capital Management potential (independence, experience, leadership) and shareholder motivations (excessive and unjustified diversification of assets while maintaining activity in the company) 12.5% Team potential (motivation, bravery, knowledge and skills, scale (size) of the team) 12.5% Structural capital Organisational culture (focused on cooperation, strategic renewal, courage, customer focus) 10% Quality of customer portfolio (level of diversification, permanent contracts) 10% Elements of competitive advantage (value added and the size of the barrier to achieving this value by competitors, level of innovation) 25% Potential to scale the company’s offer (services, products) 5% PAST Human capital Reputation of shareholders (business ethics) 5% Structural capital Ability to achieve operational and strategic objectives (evidence of strategy and operational objectives) 10% Brand reputation (recognition, market relations, activities in accordance with applicable law) 5% Other: activity in the area of CSR (including reporting), company awards which build the position of a reliable partner, company certifications 5% Source: Muras (2022). 54 Value-based management where, wp – company value; kw – equity; EBITDA – operating profit before interest, taxes, and depreciation; wb – industry indicator (often interpreted in stock valuations as multiple profits and depends on the potential of the IT subsector where the company operates); wdm – soft determinant vector. Thus, the indicator method, with the use of the EBITDA indicator, is reliable and achieved through the use of soft management methods and gives grounds for use in the valuation of private companies and those which are not listed on the stock exchange. This model strongly refers to the model proposed by L. Edvinsson (1997), which takes into account the distribution of the company market value – these are financial and intellectual capital factors, divided into structural capital and human capital factors. The above described author’s original proposal for estimating the effectiveness of value creation of an IT company can be an inspiration and direction of further research into estimating the value of companies which operate in the IT sector as a representative of modern economic sectors. 2.2 The IT sector in strategic economic development The importance of conducting research in the information technology sector is supported by a progressive information revolution, which strengthens the significance of information in the development of the global economy. Hence, an increasing number of proposals to distinguish the fourth sector of the knowledgebased economy, namely the acquisition, processing, and provision of information (advanced services) emerge. The proper typology of IT services as a specific subsector belonging to the group of advanced services sector (for business) is valuable. Today the goals of information and communication technology (ICT) development are one of the most important areas of efforts for both business owners, who have already highly appreciated the benefits of digitisation of their activities, and the government that has an appropriate intent. The IT sector is classified in a group of modern sectors of the economy, which today, and in particular in the following years, will significantly contribute to the creation and implementation of innovations at the level of processes, products, and services. Such positioning of the IT sector can provide opportunities for their shareholders and employees (and other stakeholders) in the context of prospects for building the capacity of IT companies to create their value in the long term (to the benefit of their shareholders) and inspiring challenges (for the benefit of their employees and the business environment). Such a combination can encourage strong cooperation between shareholders and coworkers, taking into account opportunities in development domains and personal financial goals. At the same time, the achievement of the ambitious goal of creating company value and dynamic personal development requires courageous and wise decisions taken by shareholders, managers appointed by them, and coworkers following their visions. In turn, high competitiveness in the IT sector forces their participants, Value-based management 55 both leaders and partners, to constantly search for the elements of competitive advantage. Consequently, it becomes possible for such rules and conditions of competition in the IT sector, due to a strong focus on innovation, to provide improved solutions to the economy and, at certain intervals, to implement updated business models using modern technologies. In technological terms, the IT sector provides a catalogue of information and knowledge (by replacing the collected data) from individual business processes, ensuring their circulation, supporting decisions, and automating repetitive activities. From the perspective of the recipients of IT services, technology companies bring significant changes in the context of building new possibilities for the implementation of business processes or channels of reaching and cooperating with customers, while enabling their measurement. The condition for a lasting competitive advantage of modern companies is therefore the ability to consistently perceive and develop the IT potential in a faster and cheaper manner and with higher value added than competitors do. The adaptation of IT goals to business goals is not only a matter of achieving a competitive advantage but also determining the survival of the organisation. Although the importance of IT in creating a competitive advantage is widely discussed, in practice it is difficult to identify and assess all the benefits achieved through IT. For companies functioning in the conditions of global competition, with a high level of uncertainty and market chaos, the core success and survival factor is to have an effective and efficient business model that, on the one hand, ensures continuity of running a business and its growth and development at the same time, and, on the other hand, enables the implementation of strategies based on the use of opportunities (Sobińska, 2015). It assumes several business models in the company. Each of them has its own rationale, and companies compete by means of innovative business models, not only innovative products or services. The engine of change in the context of creating new business models is primarily ICT and, as it develops, better and more effective tools for exchanging, diffusing, and developing organisational knowledge through expanding networks of relations and business environment cooperation emerge. As a result, the IT teams of modern organisations are increasingly dependent on external suppliers (customers), hardware and software manufacturers, telecommunications service providers, or cloud computing service providers. The skilful use of IT resources can determine the market success of companies in each sector. Organisations should therefore pay a lot of attention and effort to improve IT management, which requires the constant adaptation of the range of processes and services to current needs, capabilities, and constraints. The review of the literature and the authors’ own observations indicate a high share of the application of IT solutions in the implementation of the company’s development strategies (including the implementation of digital transformation), planning and implementation of new business models based on modern technologies, which creates new areas for the development of IT companies 56 Value-based management and their further development. This, in turn, results in a further increase in the share of IT companies in the local economy (measured in GDP). C.K. Prahalad and M.S. Krishnan conducted interesting research into IT suppliers in India, the leader in providing IT services in the outsourcing model, which shows an unambiguous trend (Prahalad & Krishnan, 2010). According to the research, the impact of adding value in the economy (and provided by IT companies) over the long term was identified. According to researchers, the decisionmaking measures of companies (the recipients of the IT sector) in the 1980s were a cost criterion, and the value provided by the IT sector was the maintenance of IT systems and applications. In the 1990s, the decisionmaking criterion was supplemented with quality (a provided service), and at the same time, support for the efficiency of business processes became an added value. In turn, since the beginning of the 21st century, the decisionmaking criterion of cost and quality has been gradually supplemented with technological maturity and the ability to create innovation, and the expected effects (adding value) have been extended by participation in research and development projects (R & D) and data analysis. This leads to the conclusion that innovation strategies require appropriate qualifications and that the ability to dynamically select talent from around the world to meet the needs of specific tasks can become a source of competitive advantage for companies in many sectors of the economy. Global companies focus their attention on markets such as India and China due to their rapid growth and access to talent. On the other hand, transnational corporations such as Tata Group, ICICI, and Infosys focus on Western markets. It can be noted, therefore, that the search for talent is not limited only to lowcost markets, but it covers the whole world and its main motive is no longer just costs, e.g. Indian companies offering IT services in the field of software development. Although at the beginning their advantage was based on low personnel costs, they began to build an advantage based on quality and innovation over the years and while gaining experience and continuously improving processes. The spectacular increase in exports of this branch indicates the emergence of comparative advantages of the economy, which, in the case of this type of activity, involve the availability of specific human capital, i.e. highly qualified personnel (Glapiński, 2018). At the same time, the review of consulting reports indicates that the value of companies is shaped through new information technologies. According to IT experts, four core areas of value delivery are identified, namely company efficiency, increased agility, shaping new products and services, and updating and building new business models. As a consequence, it is possible to implement a new paradigm of the management of a datadriven company. This view is strongly in line with the digital transformation trend, which, when implemented by cloud computing, big data, artificial intelligence, and 3D printing effectively changes internal processes and the quality of cooperation with customers, and also facilitates business model updates. At the same time, it is increasingly Value-based management 57 recognised that the effective application of computer science (especially the indicated trends) requires strong change leaders, who will not only lead the changes in a thoughtful way but also will do so in building the understanding and motivation of colleagues. According to N. Hatalska, business representatives observe that digital transformation will change the nature of industries and give them new opportunities for growth. At the same time, digital transformation is a big challenge, as evidenced by the numerous failures of the undertaken projects (seven out of ten projects fail). At the same time, only 34% of respondents asked whether organisations analyse nontechnological social, economic, environmental, legal, and regulatory areas to a large extent while working on the transformation gave a positive response (Hatalska, 2019). According to IDC research firm, global expenditure on digital transformation reached $1.8 trillion in 2022, which is 50% more than over the previous five years. Companies primarily invest in technologies such as the Internet of Things (IoT), cloud computing, Big Data and Business Intelligence, and Machine Learning. Digital transformation is increasingly called the most important civilisation megatrend of our time. Not only the economic but also social consequences of these changes become the subject of advanced research projects of the European Commission or programmes implemented under the auspices of the World Economic Forum in Davos. In order to understand current changes, it is worth going back almost half a century to the works of Alvin Toffler, an American writer, sociologist, and futurologist. His and his wife’s Heidi publications entitled “Future Shock” (1970) and “The Third Wave” (1980) identified technology as one of the fundamental factors of civilisation and social change, signalling the coming third wave of fundamental changes for our civilisation. The first, agrarian wave transformed humanity from collectors and hunters to farmers and breeders. The second, quite recent wave is industrialisation and the world of mass production, mass media, mass education, and mass communication. In recent years, we have been strongly experiencing the third wave of civilisation changes and the dawn of a new era. Toffler described it as postindustrial, and the adjective “digital” is increasingly used, especially with regard to technology that drives these changes. Numerous predictions which previously evoked disbelief are now obvious to us. In turn, K. Schwab, the founder and chairman of the World Economic Forum, called the emerging challenges the fourth industrial revolution. The first and second industrial revolutions are the drivers of industrialisation, leading to the industrial phase of the agrarian phase. The fourth revolution is born on the foundations of the third industrial revolution and will result in the creation of new social and economic paradigms of the third postindustrial era. Organisational and technological changes characterising the transition between these phases are referred to as the digital transformation due to the dominant importance of digital technologies. 64 Value-based management a company to be a valuedriven company, which is defined as building the market position and efficiency, thanks to clearly declared values. And in this trend, a relational approach, focused on longterm cooperation, responsibility for obligations, and cooperation in the search for value as the core values of the company, is an opportunity for hightech companies to create their value in the long term. The observation of the IT sector indicates that the relational approach is gaining importance, as can be increasingly seen in the choices made by clients, in particular where the goal is longterm cooperation and there is a willingness to share potential benefits in the future. However, this requires honesty in relationships and readiness for longterm commitment, which, in some way, is contradictory to the opportunistic approach. 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Rynek Energii, 4(101), 52– 60. 66 Value-based management Urbanek, G. (2004) Kapitał intelektualny [Intellectual capital], w: A. Szablewski and M. Panfil (Eds.), Metody wyceny spółki. Perspektywa klienta i inwestora [Company valuation methods. Customer and investor perspective]. Warszawa: Wydawnictwo Poltext, p. 183. ZakrzewskaBielawska, A. (2010). Strategie przedsiębiorstw wysokich technologii – ujęcie retrospektywne [Strategies of hightech enterprises – a retrospective approach]. Studia i Prace Kolegium Zarządzania i Finansów, 98, 224– 234. DOI: 10.4324/9781032650845-4 3 The shareholder’s role in value creation of IT sector companies Research methodology 3.1 Methodology of empirical research: applied approach and research methods The specific nature of individual sciences determines the choice of adequate scientific methods, such as induction, hypotheticaldeductive methods, and deduction (Lisiński, 2013; Such & Szcześniak, 1999). This leads to the differentiation of methods used in empirical sciences and methods applied in formal sciences. In line with S. Nowak’s view, induction methods are applied in empirical sciences, where management science belongs. In induction methods, socalled observation statements, frequently based on the individual and intuitive opinions of the researcher, play a decisive role (Nowak, 2012). Generalisations are formulated in this model based on empirical studies and adopt the form of concepts, proposals, and explanations, which simultaneously ensures their reliability and universality (Czakon, 2006). The basic task of research methods is to efficiently solve the scientific problem that is being addressed. The researcher’s task in the process of choosing the methodology is to account for both the feasibility aspect (in the selected area of research) and to ensure the unequivocal verification of research hypotheses. Hence, the chosen methods should ensure objectivity (independence from circumstances and the researcher), reliability (reproducibility), and accuracy (results that do not give rise to doubts). At the data compilation stage, quality methods (which provide answers to the question “why?”) and quantity methods (which provide responses to the questions: “how much?” and “how often?”) are distinguished. The research process is the consequence of a logical analysis divided into research stages. The performance of actions based on specific research rules and procedures is of key significance for the quality of the research procedure, with a simultaneous critical approach to assumptions and continuous verification and control of the process. The purpose of these actions is to procure results of the analysed phenomena which will fully and reliably reflect the examined reality. Hence, the next stage is the choice of detailed research methods. 68 The shareholder’s role in value creation of IT sector companies Some researchers postulate an increased share of qualitative methods in the research on management sciences. The projected and postulated development of interpretive methods stems from the possibility of providing the researcher with an answer to the question of “why”. Qualitative research is more explanatory than conclusive. It is used for descriptive and narrative reproduction of a certain element of reality (Silverman, 2013) and for explaining, decoding, or searching for meanings of individual phenomena. The main premises for the application of qualitative research are building a new theory, capturing the life experiences of individuals and interpreting such experiences, and a comprehensive understanding of causeandeffect relations (Graebner, Martin, & Roundy, 2012). One of the interpretive methods is case study research. According to J. Dul and T. Hak (2007), a case study is research where a selected case or a small number of cases set in an actual, daily context of functioning are subjected to a quality analysis. W. Czakon (2015) claims that a case is “an individual research object examined on account of a specific purpose, situated in a specific place and time, in observance of the circumstances that are relevant with respect to it”. This definition highlights the contextuality of a case study by adopting an assumption about the high impact of situational determinants and features of the environment of an entity in the form of the final conclusions in the research. Case study analysis is one of the methods widely used in management science. Its specificity fits with the idiographic research approach and the qualitative context of scientific research, allowing at the same time for a precise description of selected phenomena in a complex organisational reality. Case study allows for a very detailed description and analysis of the examined phenomenon on account of a significant number of variables and dependences among them. Such a description and analysis are often much more comprehensive and accurate than those obtained through quantitative research (Matejun, 2012a). In the context of research methods used to compile information about a given subject, the authors see the justifiability of applying the Delphi method (heuristic method), where the participants represent a selected social or professional group. The group forms a panel of experts from a given area. The heuristic method relies on an assumption that the accuracy of group opinions is higher than that of individual experts. A more indepth look into the purpose of the technique makes it possible to note that the Delphi method is designed to facilitate structured group communication in order to gather a consensus of expert opinions in the face of complex problems, expensive endeavours, and uncertain outcomes. The principles of the method are that more minds are better than a single mind, and – when used as a forecasting tool – that structured group efforts lead to more accurate forecasts than unstructured ones (Grime & Wright, 2016). According to M. Wójciak (2015), indepth and exceptional expert knowledge in a given field may compensate for the ignorance and lack of knowledge of other experts who are experienced in other areas. If the experts are properly chosen, the effect of opinion balance will be created, which is of special significance in The shareholder’s role in value creation of IT sector companies 69 the Delphi method, where consistency of opinions, defined by the methodology and the decisions of the research author, is sought (Rogalska, 2010). S. Sudoł (2016) narrows down the core of proceedings in the Delphi method to several points, which encompass questions for the group of experts asked by the research manager, the compilation of answers, along with interaction by means of sharing the research results as part of the group and seeking a joint opinion. As a result of the research process the results and conclusions received are a product of the collective, i.e. a team of experts. In line with the underlying premises of the method, the data sought from the experts are subjected to a statistical analysis, which encompasses the designation of measures of location for the purpose of assessing the consistency of experts. The researchers indicate the application of the Delphi method to estimate the time range of occurrence or performance of the examined phenomena or specific states. However, according to S. Sudoł, the Delphi method may also be applied in the analysis of the existing reality. Hence, the Delphi method retains its universal character, and limiting its application only to the examination of the future is unjustified. It may be applied to studies in the area of social life, the economy, science, and technology. M. Matejun (2012b) claims that the Delphi method fulfils the criteria of application in the research process and research areas such as the identification and analysis of factors in the general development of an enterprise, problems on the functional, process, or resource levels, and management dilemmas on the strategic, tactical, and operational levels. However, specific advantages and disadvantages of this method are also discussed. The advantage of this research approach is the possibility of the synergistic use of the knowledge and experience of experts to solve problems for which no answers are currently available. Nevertheless, the unwillingness of economic practitioners to take part in surveys may pose a threat. The observation of the economic environment leads one to the conclusion that the paradigms of organisational management undergo dynamic changes in the course of time. This is visible in both the implementation and evolution of enterprise management methods and in scientific disputes conducted in parallel. On the theoretical level, conceptualisation is dominant, while in the milieu of practitioners, operationalisation is. With the specific instruments at their disposal, researchers look for optimum methods of scientific research in order to respond to strategic questions of management. These instruments are set, among others, in quantitative and qualitative research, case studies, experimental research, and simulation research based on triangulation and longitudinal studies. Arguments in favour of applying longitudinal studies in management sciences emphasise that research devoted to the dynamics of organisational and management processes should, by its nature, be longitudinal. In such research, searching for mechanisms of change becomes important to understanding the process, instead of determining the stage of development (Kimberly, 1976; Miller & Friesen, 1982; StańczykHugiet, 2014). According to A. Jabłoński 70 The shareholder’s role in value creation of IT sector companies (2016), it is very difficult to draw conclusions about the operation of an organisation by looking at snapshots from studies of various organisations. In the cognitive context, it is more valuable to look at some of them in operation, to see how their components depend on one another from the perspective of their initial and final position. This allows one to capture the changing and static elements alike; every researcher needs such knowledge. Companies’ ability to manage business continuity, including their abilities related to strategic revival or restructuring, is acquiring special significance which should contribute to ensuring the continued creation of company value. In the authors’ opinion, the triangulation of research methods and data sources is of value in the context of an attempt to understand the shareholder dependencies, company value management, and the terms of competition in the IT sector. Simultaneously, the role of shareholders with respect to the longterm creation of company value does not have the nature of a oneoff assessment (limited exclusively to a point in time) or averaged for a specific period of analysis. Such an approach would not allow one to capture important aspects of shareholder impact such as the transformation of their role. The choices made with respect to the research procedure in the context of the proposed research problem and the objectives of the study are presented in Table 3.1. Table 3.1 Basic information about the process of empirical research Area of research process Research characteristics Methodological model Induction logic (qualitative research) as dominant Research approach – comprehensive (hybrid) approach Nomothetic Idiographic Research sample – data triangulation Purposeful sample Purposeful sample Research analysis Qualitative (interpretive) Qualitative (interpretive) Research sampling (data compilation) – research method triangulation Delphi method (team of 30 experts) Content analysis (literature sources) Case studies for five IT sector companies Research tools and techniques Questionnaire survey and followup interview Analysis of entries Questionnaire survey with an indepth interview, analysis of company documentation, and longitudinal studies Research methods (data analysis) Intuitive inference (interpretive analysis) with elements of statistical analysis Intuitive inference (interpretive analysis) with elements of statistical analysis Source: Authors’ own study. The shareholder’s role in value creation of IT sector companies 71 Simultaneously, the choice of the heuristic method is confirmed by the active presence of one of the coauthors in the IT sector and direct access to people of high repute and authority in the sector, which allows for the study to be conducted in a mode ensuring reliability in the context of the choice of the group of experts. Capturing the phenomena in a long time horizon, the identification of factors subject to change, and their impact on the examined relationship may constitute a fragment of new knowledge and thus offer a better understanding of the research problem. At the same time, the case study creates possibilities for indepth interviews, which will offer a more efficient solution for the research problem than carrying out a limited (in terms of the research area) study on an extensive group of companies (statistical sample approach). The work has been organised in several stages and produced a research model and tools that allow for the commencement of proper empirical research: • an overview of the literature pertaining to the typology of shareholders and their significance in enterprises, company value, and a discussion of the IT sector and its prospects; • an overview of the views of economic practitioners on the problems related to the role of shareholders and challenges related to company development, creation of company value, operational and strategic management – an overview of scientific publications was carried out, along with papers, interviews, and multimedia comments, overview of collective reports about the IT market and its participants; • the identification of features of publicly held IT companies (shareholding structure, financial results, capitalisation of companies, report publications) in the context of relations of changes in the shareholding structure and company capitalisation – an indepth analysis of 25 companies listed on the main floor and on the NewConnect market was made, along with the identification of the role of shareholders and any changes in the capitalisation of companies, including the available public information for the period of the last five years. An analysis of changes in stock exchange indexes was also made (including WIGINFO, which belongs to the IT sector) in correlation to changes in the capitalisation of the analysed IT companies; • interviews with a group of experts as part of the pilot study – an indepth interview was performed, based on a questionnaire survey comprising 14 diagnostic questions pertaining to the role of shareholders in companies and their impact on longterm value creation, distributed to a group of 22 experts; • the analysis of the views of IT sector participants (shareholders, recipients, company managers): the performance of freeform interviews (seeking opinions) about the role of shareholders, the stances manifested by them, actions taken from the perspective of employees of companies in the IT sector, managers (outside of the shareholding structure), representatives of 72 The shareholder’s role in value creation of IT sector companies global suppliers or key clients for IT services. The study encompassed 80 people with whom direct conversations were held during industry meetings or via telephone. At the subsequent stages, the conceptualisation and operationalisation of the concept of shareholder impact on the efficiency of value creation in an enterprise were undertaken. The problem referred to the sector of IT companies. The objects of the study were companies from the IT sector operating internationally, and fulfilling the criteria of the company category, while their shareholders fulfil the criteria of the shareholder typology category (Tables 3.2 and 3.3). Considering the fact that the interpretive method was applied in the research procedure, an indepth overview of IT sector companies in the context of the Table 3.2 Basic criteria for the research sample in the category of companies Assessment criterion Definition of minimum requirements Service sector The company is classified and provides services or manufactures products that belong to the category of IT services and/ or related services as part of its core business. Good governance model The company confirms, via its binding corporate documents or declarations of senior officials, that management mechanisms are applied, with a degree of use of modern methods and management concepts in management. Company duration The company is classified as mature, i.e. fulfilling the criterion of presence on the market for a minimum of five years. Company size Definitions of the assessment of company size were adopted (in the micro- , small- , mediumsized, and large categories) on the basis of financial data (net revenues and balance sheet total) and the number of employees, in compliance with the legal basis. The study includes companies fulfilling the criterion of company size such as SME (smalland mediumsized) and large companies. Place in the supply (value) chain Companies participating in the value chain in the following places: producer (systems, software, hardware), distributor (financial and logistics partner for the offer of a global producer), integrator (resale of a producer’s offer as a commercial partner, system design services, system implementation, system maintenance), IT service provider (competence services, system management, training services), and additionally (as a form of operation) startups (new companies with an innovative business model or innovative products/ services). Form of ownership Private company: limited liability company, limited liability company limited partnership, joint stock company. Publicly held company: joint stock company. Source: Authors’ own study. The shareholder’s role in value creation of IT sector companies 73 identification of such cases where the impact of shareholders is relatively clear and there is a strong orientation towards value management from a longterm perspective – or the neglect of such an approach – is of the essence. At the same time, taking into account the application of heuristic methods (the Delphi method), an element of the research process was the choice of principles and selection of the members of the expert group (Table 3.4). The profile of the potential expert was qualified for the expert group if no fewer than one condition was met in a given group (according to the expert sampling factors column, i.e. CBD, CMO, CAZ). Next, the expert group that fulfilled the basic acceptance criteria was selected (Table 3.8). The initial list of candidates for the group of experts included over 120 people. A study of the business environment was also undertaken, encompassing clients and the recipients of IT companies’ products and services. According to this classification, a position criterion was assumed (KS), as was an experience criterion (KD), understood as the period of activity on the IT market. The position criterion was defined as the role of a team director/ IT division or a member of the management board, while in terms of the experience criterion, a period of not shorter than five years was designated with respect to cooperation with IT suppliers. As a result of the process of selecting experts being carried out in this way, the number of experts was increased to 30 persons (Table 3.5). The selected team of experts comprises both outstanding representatives of the IT sector who work in firstrate enterprises and efficiently create their value, as well as opinion leaders often quoted in the industry press. The inspiration for taking up empirical studies derives from the observation of actual decisionmaking dilemmas faced by IT sector shareholders. The Table 3.3 Basic criteria for the research sample in the category of shareholder typology Assessment criterion Definition of minimum requirements Approach to participation in management An active shareholder, i.e. performing actual managerial roles (decisionmaking, interpersonal, information) Duration of investment A shareholder (or stockholder) with longterm goals, i.e. has worked at the company for no less than five years Level of corporate rights held A majority shareholder, a dominant shareholder, or a minority shareholder (where, in the opinion of company managers or other shareholders, a significant contribution is made by the shareholder to financial, relational, or product capital) Economic entity approach A person (or a legal entity with a dominant corporate right of a natural person) or a group of persons/ entities cooperating with a view to accomplishing a joint strategic objective, namely the longterm creation of company value. Source: Authors’ own elaboration based on the literature review. 80 The shareholder’s role in value creation of IT sector companies Table 3.6 Review of literature related to the formation of the relationship between ownership and company value: the general approach Literature review Key views on the formation of the relationship between ownership and company value Carlsson (2001) Schumpeter (1975) The source of enterprise development is strategic renewal, which is affected by market destruction (creative destruction = incessant renewal) and skilful comprehension thereof by an enterprise with learning competence (learning centre). Simultaneously, setting this relationship in motion requires efficient decisions of a company headed by an owner (shareholder). Thus, R. Carlsson identifies the impact of an owner via market relations, company skills, and owner stances (identifying the approach to risk and risk management as being of key importance). Karpacz (2011) The freedom of an entrepreneur’s actions is conducive to strategic renewal, which efficiently leads to the creation of company value from a longterm perspective. In terms of determinants shaping the relationship with the freedom of the entrepreneur’s actions, Karpacz points to those related to the entrepreneur’s potential (owner, active shareholder) and the company’s potential as complex components. The measures of the entrepreneur’s potential are the level of knowledge, skills, and personal qualities of the entrepreneur. Lee and Rye (2003) Morck Shleifer, and Vishny (1988) The ownership structure of enterprises is an endogenous variable with respect to the efficiency of company value creation. Simultaneously, Morck, Shleifer, and Vishny show different findings. Such observations highlight the holistic nature of the issue of the relationship between the owner (in the case of researchers, a focus on ownership structure) and the efficiency of value creation. Schumpeter (1934) By means of the theory of economic development, J. Schumpeter indicates the role of a shareholder (entrepreneur) who – as the company’s inner force – makes a greater contribution to economic development than external factors. Mintzberg (1973) Three groups of roles that are most often performed by managers: decisionmaking (distribution of resources, management of disruptions), interpersonal (leader, connector between the internal and the external world), and information (representative, supervision). Nehring (ed.) (2007) Stankiewicz (2002) The total potential of a company is primarily determined by certain causeandeffect dependences occurring among its individual components. Such dependences require proper coordination. Thus, the manager (in particular of smalland mediumsized enterprises), the owner or the shareholder should efficiently use the existing components of the potential (causes) to guarantee the best possible condition of such components in the future (effects). Source: Authors’ own study based on the literature review. The shareholder’s role in value creation of IT sector companies 81 (Continued) Table 3.7 Review of literature related to the formation of the relationship between ownership and company value: the specific (narrow) approach Literature review Key views on the formation of the relationship between ownership and company value ZakrzewskaBielawska (2009) According to the author, some of the most important features of a small enterprise manager are a manager’s engagement, desire for success, desire to grow and ability to make sacrifices, market demand for a product or service offered and managerial competence (and highlevel professional qualifications), individual mental and physical predisposition and personality, the accomplishment of goals, positive personal qualities, fostering positive motivation or value and personal significance as well. Carlsson (2001)An owner’s (shareholder’s) approach to risk and ability to manage shape the company’s capacity to understand the market, and thus to create opportunities for the strategic renewal of the company. The key management skills identified by the researchers are risk management, operational management (motivation, crisis management, choice of associates), creation and implementation of ideas and vision (along with the development of organisational value and a culture supporting development), and the development of a strong institutional position of a company. Hall (2012) The researchers, looking to conceptualise shareholders’ impact on value management, indicate key areas where shareholders’ impact is realised. They identify areas such as a company’s investment priorities (resulting from the shareholders’ approach), flexibility in company management rules, moderate dividend policy, an exclusive focus on company growth in the context of its development, openness to new risks, cost control, and searching for competitive edges as an element of strategy. Schumpeter (1934) Langrish Gibbons, Evans, and Jevons (1972) J. Schumpeter listed the following fundamental features of an entrepreneur: leadership skills, dynamism, and a constructive approach, acting against set views. This view is supplemented by J. Langrish, who claims that a manager is a person whom 40% of the success of a company depends on. Hecking (2002) The researchers note that the factors directly related to the decisions or stances of shareholders include moderate dividend policy accounting for the company’s investment needs, readiness to make longterm investments aimed at building an element of competitive advantage or aligning with market requirements (in the author’s opinion, this calls for patience on the part of shareholders in terms of waiting for the results, at the same time reducing shortand midterm profits from property rights), flexibility in approaching longterm projects and investments, openness to risk (often at a higher level than that of competitors), building and supporting (motivating) employees’ potential, skilfully capturing opportunities in synergies among enterprises and those pursued via partnerships or capital investments. 82 The shareholder’s role in value creation of IT sector companies • the significance of business maturity in key choices made (choice of associates, rules of motivating them, type of strategic orientation, type of organisational culture). At the same time, the experts raised the significance of understanding the company’s potential and the value contributed thereby for clients’, the managers’, and the shareholders’ capacity to selfreflect (in the area of decisions Literature review Key views on the formation of the relationship between ownership and company value Zook and Allen (2016) The researchers defined the concept of the founder’s mentality, describing those features of the manager (shareholder/ founder) which, when promoted and cultivated in an enterprise, significantly affect the preservation of dynamics and agility of an enterprise, permanently shaping its culture and contributing to the preservation of the ability for cyclical strategic renewal, which is conducive to the longterm efficient creation of value. C. Zook indicates the significance of managers’ and owners’ activities pertaining to the renewal of a rebellious stance (bold mission, insurgency), owners’ approach (focus on action), or frontline obsession (support, experimentation). Obłój (2010) K. Obłój indicates the concept of dominant company logic, a specific cognitive map of managers (a set of beliefs, values, and filters), which acts as a navigator in the complex world of excess information. Mole and Mole (2010) The potential of entrepreneurs is revealed in the actions they take, related to searching for, creating, and using opportunities and chances that emerge. Liker and Morgan (2006) Above all, the researchers indicate the significance of taking a longterm perspective among factors shaping highly efficient companies. This leads to the replacement of shortterm and direct profits with the approach to continuity (a longterm perspective), which is conducive to the construction of relations with shareholders and a focus on clients. SzczepańskaWoszczyna (2021) In order to be efficient, a manager who creates value through innovations should manifest competence within the scope of creative problem solving, be able to work conceptually, and possess managerial competences. At the same time, such a manager must be able to combine management and coordination of work with people in such a way as not to suppress the employees’ creativity – but, on the contrary, to reinforce it to the greatest possible degree. An innovative manager requires three levels of competence: prospective thinking, diagnosis of the present, and problem resolution, including, in particular, handling changes. Source: Author’s own elaboration based on the literature review. Table 3.7 (Continued) The shareholder’s role in value creation of IT sector companies 83 made and personal values contributed to the company) or readiness to “compare themselves” to competitors (on the level of the company’s results and roles of shareholders), personal brand, as well as patience when it comes to waiting for the effects of the designated strategic goals. The significance of the power of a “mandate” to implement shortterm tasks (managerial roles performed) as part of new business challenges on the part of shareholders as compared to outsourced managers was also indicated. It was assumed that the conceptualisation of shareholder impact on the efficient creation of company value in the IT sector should be defined in terms of two key paths of making such an impact (Figure 3.1). Figure 3.1 Interpretation of the identified paths of shareholders’ impact on IT companies in the context of the efficient creation of company value. Source: Authors’ own elaboration based on the literature review and own pilot studies. 84 The shareholder’s role in value creation of IT sector companies In the first path of shareholder impact on the efficient creation of company value proposed above, the essence is the designation of the managerial role performed by the shareholder in a company as the cause, while the effect is the level of efficiency of company value creation measured by the adopted value creation measures. Simultaneously, the causeandeffect implication proposed in this way offers extensive possibilities of searching for the factors that may shape the force and direction thereof, which fits the proposed general (holistic) approach of shaping the relationship between shareholders and company value management. In the second proposed path of the impact, the essence is the designation of actions taken by the shareholders or the stances adopted by them with respect to the company as a cause that potentially shapes the efficient value creation of a company from a longterm perspective, understood as an effect of shareholders’ actions. In the opinion of the author, such an approach to said dependence fits well into the narrow approach. Hence, both the holistic approach (managerial role) and the narrow approach (shareholder tasks and stances) were taken into account in the studies. The applied research approach differs from that proposed by A. Rappaport (1998) and the approaches to shareholder value creation variously represented in the literature, which indicate factors such as increased sales, improved profitability, efficient tax rate, the cost of capital and the size thereof, and investment capital as value drivers. In the approach taken in this discussion, the value drivers are the owners (shareholders) of companies, who – by means of the designated paths of exerting their impact – shape the efficient creation of company value. In the interviews carried out with representatives of economic practice, the evolution of the role of a shareholder was also indicated, both with respect to the duration and the dynamic development of a company, along with market changes (technological trends, strategy updates and new business models, preferences, and business requirements of clients in relation to the IT sector). Such an approach may be an element of the new knowledge which contributes to the process of decisions made in terms of the transformation of the role of shareholders in companies from the IT sector. 3.2 Conceptualisation and operationalisation of the research model for the general approach The stage of transformation of the decisionmaking problem into a research problem delivered evidence for the complexity of the issue as a whole. The research process, accounting for the critical overview of literature, numerous interviews with IT sector representatives and the initiated pilot studies, provided the basis for formulating the initial assumptions of the research model describing The shareholder’s role in value creation of IT sector companies 85 the relationship between shareholders (with managerial role as the cause) and the efficiency of company value creation (as the effect). The emphasis was placed on searching for the direct and unequivocal dependence of shareholders and the role played by them, as well as the capacity of an IT company to create its value from a longterm perspective. Relying on the accomplishments of researchers and numerous reviews with representatives of the IT sector, a descriptive and simplified concept for the presentation of the research model was sought, which describes the relationship between the shareholder and company value in the most holistic way possible. The search for strategic renewal (as a source of building competitive advantage) was adopted as the source of value creation, which is justified in the works and views of Carlsson (2001), Obłój (2017), Jabłoński (2013), and Karpacz (2011). The strategic renewal of the company’s potential is an effect of utilising the opportunities to introduce changes to the current layout of resources. These changes depend on the size of the potential at the disposal of an organisation and the impact of external forces stimulating not only the level of such potential but also the mode of its use. Hence, it is possible to conclude that these determinants may belong to the external environment, and may be related to the person acting as the entrepreneur and the economic entity operated by said entrepreneur (a company) (Lichtarski & Karaś, 2003). J. Karpacz (2011) lists the following determinants of strategic renewal of enterprise potential (for smalland mediumsized enterprises): external (exogenous), defined by the determinism of the competitive environment, manifested by the impact of business partners and competitors on the company; and internal (endogenous), defined by the knowledge, skills, and personal qualities of the owner managing a company (defined as the entrepreneur’s potential) and an organised set of tangible and intangible resources used to conduct business activity. The review of reference books shows that the formation of a given dependence (managerial role of a shareholder – company value creation) is affected by factors related to: • shareholders and their personal potential (Karpacz, 2011), business maturity (Baczyńska, 2018), approach to risk (ZakrzewskaBielawska, 2009), personal brand (Grzesiak, 2018), approach to risk (Carlsson, 2001), market capital (Carlsson, 2001), and vision formation (Carlsson, 2001); • enterprise and its organisational culture (Obłój, 2017), the owner’s mentality with respect to the company’s choices and its culture (Zook & Allen, 2017), the capacity for implementing changes and innovation (Carlsson, 2001; K. SzczepańskaWoszczyna, 2021), leadership (SzczepańskaWoszczyna, 2015), and the potential of immediate environment of the entrepreneur/ shareholders (Rutka, 2001); • the market and existing creative disruptions (Carlsson, 2001). 86 The shareholder’s role in value creation of IT sector companies The abovementioned factors were supplemented with additional ones, indicated by the representatives of economic practice as part of the pilot study. The most frequent factors impacting the strength and the direction of the relationship were the visionary approach of the managers, the rules of competing on the market (new market creation, joining an existing market), market potential (power of recipients), consistency of goals in the shareholding structure (and mutual trust and support), moderate dividend policy, the level and type of capital contributed (financial, relational, competence), and the personal potential of direct associates of a shareholder (shareholder environment) coshared (or handed over to) outsourced managers as part of the division of rights. In turn, following the studies of D. Kahneman, entrepreneurs indicate that the activities that they perform for the sake of a company significantly affect the effects visible in the company, to a degree no lower than 80% of overall importance. Entrepreneurs are convinced that the company’s fate is entirely in their hands. There is no doubt that they are mistaken, as the results of their actions depend on the actions of companies, as well as the conditions of competition on the market and market changes. At the same time, the researcher proves that people are prone to overestimating their skills in order to cope with specific challenges (Kahneman, 2011). Following D. Kahneman’s views, one can find indications of dependence between the potential of an entrepreneur (shareholder) and an enterprise (company) in reference material. Entrepreneurs play a significant role because they impact various factors that determine the duration of a company to varying degrees from a longterm perspective (Drucker, 2012). The interaction between the potential of an entrepreneur (shareholder) who manages a company and his internal environment (an organised set of tangible and intangible resources), as well as the competitive environment, is manifested in actions (Gudkova, 2015). Simultaneously, there is feedback between the potential of entrepreneurs and the actions which they take. Hence, actions depend on the potential at the disposal of a given entrepreneur at a given moment, and this in turn changes under the impact of feedback pertaining to the actions taken (Boyatzis, 1991). At the same time, some of the problems related to the operation of a company follow from the characteristics of an entrepreneur. That is why – as researchers stress – it would be good if the entrepreneurs were not only aware of this fact but also used such impact to multiply their potential. To this end, it is important for entrepreneurs to “regularly reflect on themselves and listen to what others have to say”. Only a significant failure makes them question what they have previously done or thought (Obłój, 2004). Such postulates are also noted by experienced shareholders (forming a group of experts as part of one’s own initial studies), who indicate the high level of significance of the capacity and ability to selfreflect (with respect to one’s decisions) and readiness to continually question the values contributed by oneself as a shareholder to the construction of a company’s capacity for development and thus a longterm capacity for value The shareholder’s role in value creation of IT sector companies 87 creation (fragment of an interview with Zbigniew Szkaradnik, owner and president of the management board of one of the largest ICT companies in Poland). The researchers note that in smalland mediumsized enterprises where there is no division into managerial roles and accountabilities, the owner (often the dominant shareholder) must make decisions pertaining to both the present set of circumstances and the future (SzczepańskaWoszczyna, 2014). In such a case, it is easy to fall into a trap: given the excessive burden arising from current affairs, the entrepreneur is not able to make strategic decisions or makes them too late. A way to avoid this trap is to separate the areas of rights and accountabilities of operating directors (Rutka, 2001). They also note that an entrepreneur managing a company not only exerts significant impact on the formation of its potential but is also more bound to it than an outsourced manager. That is why he is greatly intent on not having his own assets and those of his company reduced; on the contrary, when an opportunity emerges, he attempts to increase them. A proposal for the conceptualisation of the research model for the relationship between the managerial role of a shareholder and company value creation is presented in Figure 3.2. The significant dependence of factors on the part of the entrepreneur (shareholder) and the enterprise on the capacity of said enterprise to carry out strategic Figure 3.2 Demonstrative outline of the research model for the relationship between the managerial role of a shareholder and company value creation – the general (holistic) approach. Source: Author’s own elaboration. 88 The shareholder’s role in value creation of IT sector companies renewal is also indicated by J. Karpacz. Karpacz (2011) concludes that the strategic renewal of the potential of smalland mediumsized enterprises is determined by the potential of a purposefully organised set of tangible and intangible resources used by the entrepreneur to conduct business activity, the potential of the entrepreneurs, and the freedom of their operation. In turn, R. Carlsson (2001) points out the impact of creative destruction, following the views of Schumpeter. Carlsson claims that introduction of a new, renewed offer of an enterprise may change the rules of a market game, where new entities conquer the market and others disappear. In effect, when describing the dependence of the managerial role of a shareholder and the efficiency of value creation of an IT company, the following groups of factors (diagnostic variables) shaping the examined relationship may be indicated: • the potential of shareholders (PA), such as the personal potential of shareholders, their business maturity, shareholders’ code of conduct, their approach to risk, shareholders’ capital (financial, relational, product), the mode of thinking of shareholders, investor relations, and personal brand; • the potential of the company (PS), such as the potential of the shareholders’ environment (direct associates), the potential (capacity) of the company to introduce changes (strategic renewal), the presence of the owner’s mentality in selected companies (and its organisational culture), the type and quality of leadership in the company, the logic of company management, and other balance sheet and offbalance sheet factors; • the potential of the market (PR), such as the market’s purchasing potential, elements of competitive advantage of the company, and the rules of competing in the sector. The conceptual constructs proposed for the purpose of conceptualising and operationalising the research models, such as the shareholders’ potential (PA), the company’s potential (PS), and the market potential (PR), are aimed at ensuring legibility and explicitness in the identification of a group of factors and the features assigned to them (diagnostic variables) and are used exclusively for the purpose of organising the research process. Table 3.8 presents operational definitions (quoted directly according to the researchers or as interpretations derived on that basis) for the features studied (diagnostic variables). To formalise the research model, four categories of variables were used; the first category acts as a dependent variable with respect to the second. The variable that was explained was the dependent variable. In turn, the variable that was used to explain the value of the dependent variable was the independent variable. The remaining two categories comprise the intervening variables (mediators and moderators) and control variables (ZakrzewskaBielawska, Lis, The shareholder’s role in value creation of IT sector companies 89 (Continued) Table 3.8 Conceptual definitions applied in the research model Name of the studied feature Operational definitions of the features studied (diagnostic variables) Shareholder’s potential The approach proposed by J. Karpacz (2011) was used, whereby the shareholder’s potential comprises his knowledge, skills, and personal qualities. Shareholder’s capital It was assumed that the capital contributed by the shareholder comprises the following types of capital: financial, relational, and product (knowhow) capital. Investor relations It was assumed that the measure is the level of the shareholders’ capacity to set joint goals and support the management board in the implementation of strategic goals. Shareholder’s environment Understood as the level of potential (personal, as defined for the shareholder’s potential) of the immediate associates of the shareholder, supplemented by the offered (guaranteed) level of joint liability for performance of the entrusted operational tasks and strategic goals. Business maturity Understood as the identified level of a shareholder’s skills and expressed in the following domains: awareness (among others, liability and sense of impact), understanding the goals, building relationships, defining them, and applying methods of task performance. The author extended the above approach to the aspect of the level of experience in the implementation of tasks related to investment activity and management, which led to the division of business maturity into two subgroups: managerial maturity and investor maturity. Shareholder’s personal brand It was assumed that the power of a brand is determined by the recognisability of shareholders in the milieu of stakeholders in the following domains: competence (level of expertise resulting from knowledge and experience) and reliability (confirmation in action). Visionary competence It was assumed that the power of visionary competence is the shareholder’s capacity to shape the vision and to inspire both the stakeholders (in particular associates) and shareholders, as a measure of competence and reliability (confirmation in action). Shareholder’s role The views of H. Mintzberg (1973) were adopted, which indicate that a shareholder in an enterprise performs managerial roles: interpersonal, decisionmaking, and information. Shareholder’s approach to risk The approach of K. Jajuga (2007) was adopted in the approach to risk, where aversion to risk (as a value on one side of the approach to risk axis), indifference and inclination to risk (at the other end of the axis) are distinguished. Shareholder’s mode of thinking The views of C. Dweck (2017) were adopted, where individuals (people) are classified in two extreme categories (agreed mode of thinking and prospective thinking). 96 The shareholder’s role in value creation of IT sector companies (M28), shareholders’ approach to risk (M29), shareholders’ capital (M30), shareholders’ mode of thinking (M31), investor relations (M32), shareholders’ personal brand (M33), shareholders’ visionary competence (M34) – and independent variables on the company side (enterprise) – such as shareholders’ environment (Z21), the company’s potential for changes (Z22), the owner’s mentality in actions taken by the company (Z23), leadership in the company (Z24), and the logic of management in the company (Z25) – was proposed. A potential relationship was indicated between each variable on the shareholder side (variables marked M) and each variable on the company side (marked Z). However, elaborating on the issue of preparation of a research model proposal as a concept by means of which to describe and set out the rules of relationship formation, a further indepth analysis of potential relationships identified among variables in the research model was made. It was assumed that the variables related directly to the shareholder would form a group of mediating variables, while the ones related to the company, the market, and choices would act as mediators of the analysed relations (Gao et al., 2010). Furthermore, potential additional accompanying variables were noted in the model – described as weights (w1, w2), which simultaneously moderate the value drivers of basic variables (marked as Z and M), related to the shareholder, the company and the market (w1 weights), and the strategic choices made (w2 weight). The resulting research model is a theoretical construct, and as a proposal for describing the research problem through the application of research variables and their mutual relations, it may provide inspiration for further directions of research. Inference indicators are frequently applied in empirical management science studies. The use of a set of questions instead of a single question allows one to better capture the intentions of the respondent. Every indicator in the study may be treated as a variable, but not every variable is an indicator. Only measurable variables are indicators, i.e. empirically accessible. According to J. Juszczyk (2018), measurable variables may only be assigned to nonmeasurable variables via operationalisation. Hence, nonmeasurable variables are indicator variables, meaning that they can be measured only with the use of other variables, the socalled descriptors, which in turn are directly measured and refer to the observed features of an item. According to J. Karpacz (2011), the solution most frequently applied in the measurement of nonobservable notional constructs – and such are the constructs in this research problem – are summary scales. Due to this, it is possible to build indicators operationalising the definitions of these categories, thanks to the construction of measuring tools relying on the Likert scale and used in the questionnaire survey. The application of a scale of this type in measurement tools requires the use of statements as part of a given statement indicator which is characterised by the intensification of a feature described by such an indicator. No standard methods of measuring the impact of the role of a shareholder on the creation of value of an enterprise operating in the IT sector have been formulated to date. Hence, the degree of statistical data aggregation The shareholder’s role in value creation of IT sector companies 97 and the type of source that generates factors influencing the relationship, i.e. the shareholder, company value, and the IT sector, were adopted as the criteria for their classification. The indicator classification criterion is the degree of data aggregation which results in a division into analytical indicators (characterised by a lowand medium degree of measurement aggregation) and synthetic indicators (characterised by a high degree of measurement aggregation). In the course of the research process, synthetic and analytical indicators which make it possible to describe and measure the model were proposed. The highlevel synthetic indicators are: • indicators of the power and potential of shareholders, their relationships, approaches and business experiences, and the attributed corporate rights, which were marked “PA” in the research model, • an indicator of the power and potential of the company and the tangible and intangible assets of which it is comprised, defining the company value, which was marked “PS” in the research model, • a market potential indicator for the company’s products and services and market competition conditions, which was marked “PR” in the research model. As a consequence, it is possible to apply mediumlevel synthetic indicators, where each of the research variables is an independent indicator (e.g. a “visionary competence indicator” – PAW), aggregating to adequate highlevel indicators (e.g. shareholders’ potential – PA). In the course of the empirical study (conducted by means of case studies, according to the Delphi method), the designation of variables was applied (with the exception of the designation of the direction of aggregation) as the designation of indicators for the sake of the legibility of individual studies. 3.3 Conceptualisation and operationalisation of the research model for the narrow approach In the course of prior research, it was determined that the occurrence of dependence among the tasks performed by the shareholders for the sake of the company or the stances adopted with respect thereto (as the cause), shaping the power and the direction of efficient value creation of a company (as the effect), is possible. In the course of the analysis of the research problem, such an approach focused on the selected factors shaping the efficiency of creation was called the narrow approach (as opposed to the previously described broad and holistic relationship between a shareholder and company value creation). Following this thread of thought, the identification of actions and tasks performed by the shareholders for the company’s sake, which provides them with an adequate (according to the shareholder’s knowledge, skills, or willpower) level of engagement or a stance adopted with respect to the company, 98 The shareholder’s role in value creation of IT sector companies may become an equally significant and valuable proposal by means of which to determine the purpose of the work. Numerous indications of selected stances or actions initiated by the owners and managers are perceived by researchers, which may contribute to the formation of company value, either fostering opportunities for it or significantly degrading it. Table 3.10 shows the result of a synthesis of views of researchers that are Table 3.10 Review of research issues addressed in the context of impact of actions and stances of owners and managers on company value management in light of the literature review List of research issues Review of researchers addressing the indicated research issue Shareholders’ focus on longterm company development Hecking and TarrazonRodon (2002); ZakrzewskaBielawska (2009); Liker and Ross (2018) Openness to risk Carlsson (2001); ZakrzewskaBielawska (2009) Suppliers of capital for enterprise development Gruszecki (1994) Openness to new opportunities, searching for them, creative innovation Karpacz (2011); Rakowska and SitkoLutek (2000); Obłój (2017) Motivation to build one’s “own kingdom” to conquer Schumpeter (1995) Leadership ZakrzewskaBielawska (2009); Hawkins (2002); Zabolotniaia Cheng, and DackoPikiewicz (2019) Openness to changes, creativity, and implementation of innovations ZakrzewskaBielawska (2009); Zamorski (2003); SzczepańskaWoszczyna (2021) Readiness for continuous learning and personal development Prahalad (1998) Common goals of managers and owners ZakrzewskaBielawska (2009) High standards of conduct Prahalad (1998) Development of organisational culture Obłój (2017); Kostera and Koźmiński (1995) Building wise (efficient) synergies with other business entities Obłój (2017) Support for cyclical strategic renewal (addressing market changes and searching for competitive advantage) Karpacz (2011); Obłój (2017) Resolving conflicts and problems Cacciatori (2012); Cloke, Goldsmith, and Cloke (2000) Honesty and openness in company management ZakrzewskaBielawska (2009) Authentic engagement, managerial robustness ZakrzewskaBielawska (2009); Woodruffe (1991); Boyatzis (1982) Control of cost to revenue relationship Hecking (2002) The shareholder’s role in value creation of IT sector companies 99 dominant and allow for inclusion in the conceptualisation and operationalisation of the research model. The most frequently listed actions of owners and shareholders for the sake of a company and stances adopted with respect thereto included leading key changes, the contribution and construction of relational capital, the construction of compromise culture as part of the shareholding structure in the context of building common goals, as well as openness in relations supported by authentic engagement in the actions performed. At the same time, the significance of understanding the company’s prospects on the market was indicated, as was the capacity for selfreflection pertaining to one’s own role and area of actions in the company (How do I or can I contribute to the creation of company value?), the ability to think in terms of companybased categories and not exclusively in the context of one’s own (often shortterm) goals, to guarantee a longterm perspective for accomplishing goals or noticing (and taking decisions that support the List of research issues Review of researchers addressing the indicated research issue Owner’s mentality in company choices (and its organisational culture) via an aversion to bureaucracy and complexity, enforcing liability among collaborators, bold mission, and strong focus on clients Zook and Allen (2016) Formation of the immediate environment, stimulation of development of others, fostering positive motivation ZakrzewskaBielawska (2009); Armstrong (2000); Armstrong and Baron (2005); Hecking (2002) Owners’ capacity for selfreflection and their understanding of the company’s prospects Baczyńska (2018); Zamorski (2003); Obłój (2004) Loyalty of owners and managers to the company Woodruffe (1991); Boyatzis (1982); Hecking (2002) Setting longterm goals and choice of priorities conducive to company development Lumpkin Brigham, and Moss (2010) Patience in accomplishing business goals ZakrzewskaBielawska (2009); Obłój and Sengul (2012) Emotional maturity of managers and stress resistance Luthans (2002); ZakrzewskaBielawska (2009); Baczyńska (2018) Personal brand Langrish, Gibbons, Evans, and Jevons (1972); De Chernatony and SegalHorn (2003); Carlsson (2001); Grzesiak (2018) Source: Author’s own elaboration based on the literature review. Table 3.10 (Continued) 100 The shareholder’s role in value creation of IT sector companies management board) market opportunities and guarantee the brand of the company with the personal brand of stakeholder. Simultaneously, the paths for shareholders to exert an impact on the efficient creation of company value, in particular by accepting and assigning adequate priorities for the tasks performed for the company, form a strong part of the praxeological approach. According to L. von Mises (1949, 1960), economics is strongly related to the general theory of human action. Following this discussion, it may be concluded that if praxeology is an a priori and deductive science, verbal deduction resulting from the observed assumptions is a cognitive method. If, in turn, such assumptions are considered certain, then by creating axioms, they allow for the adoption of the axiom of human action as obvious (Rothbard, 1973; Bowley, 1949; Hutchinson, 1973). In turn, in the context of the presented research problem, this leads to the conclusion that the shareholders become engaged in conscious actions to accomplish the goals they have set. The mental argument revealed the possibility of constructing a research model describing the implications of shareholders’ choices (Figure 3.3). As a consequence of the literature review, a synthesis of the researchers’ views supplemented with the results of the researchers’ own initial (pilot) studies, a signature proposal of a “catalogue of tasks” and a “catalogue of stances” of shareholders was proposed. The compiled catalogues were applied in the research tools as diagnostic variables (Table 3.11). 3.4 Premises of instruments supporting shareholder decisions To prepare a concept of a prototype instrument supporting shareholders’ decisions in the context of the role performed for the company’s benefit, it was necessary to establish a method allowing for the application of results Figure 3.3 Implications of shareholders’ choices in the context of shaping the company’s capacity for longterm value creation. Source: Authors’ own elaboration based on literature review. The shareholder’s role in value creation of IT sector companies 101 (Continued) Table 3.11 List of diagnostic variables of the research model (“catalogue of tasks” and “catalogue of stances”) – the narrow approach Name of catalogue (group of variables) Description of diagnostic variable Designation of diagnostic variable* Catalogue of tasks Building a network of relations (relational capital) zd1 Observing the economic environment and asking what should be changed in the company to improve competitiveness zd2 Supply of financial capital zd3 Taking interest in opinions about the company zd4 Noticing emerging opportunities and acting to take advantage of them (analysis of market trends and competitors’ actions) zd5 Supervising the cost and revenue relationship zd6 Recruiting talented managers and associates zd7 Searching for own successors zd8 Stimulating the immediate environment of associates to help them develop, maintaining their high engagement in terms of accepting new challenges zd9 Building the recognisability of the company’s brand by building a guarantee of trust in the company zd10 Ensuring diversity in management zd11 Acting as the negotiator (arbiter) in crisis situations zd12 Renewal of rebellious stance (bold mission, insurgency) zd13 Owner’s approach (focus on action, strong concentration, aversion to bureaucracy) zd14 Frontline obsession (support, experimentation) zd15 Ongoing development of the personal potential of a shareholder (to understand the surrounding world and the rules governing it better) zd16 Developing leadership in the company (charismatic leadership in the context of the role of the management board and distributed as part of HR teams) zd17 Building a strong organisational culture based on healthy principles, allowing it to last and to grow zd18 Catalogue of stances Loyalty through longterm engagement in the obligations accepted with respect to the company ps1 Readiness to put the company’s goals above personal goals (shaped by the company’s goals) ps2 Ability to rekindle one’s own passion for new challenges ps3 Meeting obligations towards stakeholders ps4 102 The shareholder’s role in value creation of IT sector companies from various case studies. By means of the extraction of features of diagnostic variables, it was possible to work out such measures that allowed for the performance of comparative analyses, the process of conclusion and their implementation in the constructed instrument (prognostic tool). When attempting to normalise the research periods, decisions were made about the use of groups of moderating variables for each examined case, in terms of the company’s potential and the market potential, identified at the stage of conceptualisation and operationalisation of the research model (as part of the general approach). At the same time, the variable of shareholders’ potential was applied as equivalent to the “company potential” (PS) variable and the “market potential” (PR) variable as moderating variables instead of the mediating variable, as indicated in the model for shaping the dependence of the shareholder’s role and the efficient creation of company value. Such an approach is justified for the simplification of the adopted model and the goal of the study that was set. A graphic representation of the updated research model is presented in Figure 3.4. As a consequence of the arrangements above, an updated (normalised in the context of source data) research model for the purpose of comparative analyses (attempts to shape generalisations from case studies) and the preparation of a prototype of an instrument supporting the shareholders’ decisions, accounting for the diagnostic variables, was applied (Table 3.12). The proposed model retains its validity as a significant improvement on the research model describing the narrow approach (“catalogue of tasks” and “catalogue of stances” of a shareholder). Name of catalogue (group of variables) Description of diagnostic variable Designation of diagnostic variable* Readiness to verify own views (logic of understanding the economic environment) and capacity to adjust own views and actions ps5 High levels of mental and physical resistance ps6 Open manifestation of trust in associates ps7 Focus on the ongoing development of the enterprise (company) ps8 Patience in waiting for results combined with consistency of tasks performed and obligations ps9 Source: Authors’ own elaboration based on the literature review and own pilot studies. Note * For the proposed variables, the Likert (fivepoint) scale was adopted as the research tool. Table 3.11 (Continued) The shareholder’s role in value creation of IT sector companies 103 (Continued) Figure 3.4 Simplified outline of the updated research model accounting for the relationships between tasks performed by shareholders and the stances adopted by them – narrow approach. Source: Own study based on the conceptualisation and operationalisation of the research model. Table 3.12 List of variables in the updated research model: narrow approach Type of diagnostic variable Description of diagnostic variable Auxiliary (information) variable Observation index (optional) Auxiliary (moderating) variable – alternative approach Stage of company development* (categorical variable – class) Auxiliary variables (moderating in the model) Level of aggregate research variable Shareholders’ Potential** (not included in the prognostic model) Level of aggregate research variable Company Potential*** Level of aggregate research variable Market Potential**** (not included in the prognostic model) Independent variables (basic) Group of variables X1– X18 (numerical variable) Dependent variables (basic) Y variable (MVA) (categorical variable – class) Source: Own study based on the conceptualisation and operationalisation of the research model. Notes * Nominal scale: entrepreneurship, growth, maturity (including stabilisation), and decline and revival (including transformation). 104 The shareholder’s role in value creation of IT sector companies Including the supplementary studies in the research procedure (apart from the examination of the strength and direction of dependence of diagnostic variables indicated in the research model) that are related to the quality analysis of conditions of shaping the shareholder– company value relationship provides new evidence for the process of drawing scientific conclusions. In particular, the performance of a comparative analysis for a manager/ shareholder and an outsourced manager with respect to the business challenges identified (business scenarios) in the context of the impact on the efficiency of longterm creation of company value is a valuable research issue. Such an approach also underlies the premise that the location of the study in the Polish IT sector results in the fact that companies fulfilling the SME criteria are a definite majority of companies operating in the sector, where the managerial roles are performed by their coowners. An overview of the research methods and tools, including simplified characteristics, is presented in Table 3.13. In the process of empirical studies, an expert sample was selected and participants’ acceptance was sought for cooperation as part of such studies; cyclical meetings were held, along with telephone conversations and electronic correspondence, the purpose of which was to compile opinions about the presented research issue. Given the high complexity of the research problem, the broad range of the research tools and the limited availability of participants, the period of data compilation exceeded 12 months. Each participant was invited to give an opinion on more than 100 diagnostic questions, usually during several sessions of meetings and conversations, which simultaneously inspired the author to engage in further indepth studies. ** Fivepoint Likert scale (1 – very low, 5 – very high), where the level was estimated as the arithmetic mean of independent variables of the research model, assigned to the group of variables “Shareholders’ Potential”. *** Fivepoint Likert scale (1 – very low, 5 – very high), where the level was estimated as the arithmetic mean of independent variables of the research model, assigned to the group of variables “Company’s Potential”. **** Fivepoint Likert scale (1 – very low, 5 – very high), where the level was estimated as the arithmetic mean of independent variables of the research model, assigned to the group of variables “Market Potential”. If no answers allowing for the estimation of the aggregate variable were forthcoming, then the value of the variable was estimated during the interview with the respondent as part of the simplified study with the application of a comparative scale in relation to the immediate competitors (also with the application of a fivepoint Likert scale, where 1 – definitely lower than that of the competition, 5 – definitely higher). Table 3.12 (Continued) The shareholder’s role in value creation of IT sector companies 105 Table 3.13 Overview of applied research tools along with their characteristics: own empirical studies Data compilation method Research issue Research tool Characteristic of designed research tool Delphi method (a team of up to 30 experts) Identification of a shareholder’s role in the IT sector Questionnaire survey (diagnostic questions) In total, 12 main cafeteria questions were applied that required ordering the answers on a fivedegree Likert scale (1– 5) or a bipolar scale (applied in supplementary studies) Notional definitions – critical approach and assessment of the IT sector’s potential In total, five main cafeteria questions were applied that required ordering the answers on a fivedegree Likert scale (1– 5) or the estimation of significance (weight) for the indicated characteristics (applied in supplementary studies) Analysis of the relationship between shareholders and the company’s capacity for longterm value creation In total, 16 main cafeteria questions were applied that required ordering the answers on a fivedegree Likert scale (1– 5) or a bipolar scale (applied in supplementary studies in and research models for “Managerial role” and “Catalogue of tasks”/ ”Catalogue of stances”) Company case study (netology) and subsequent case studies of four IT companies Analysis of the relationship between shareholders and the company’s capacity for longterm value creation Questionnaire survey (diagnostic questions) Ten chapters were used with the main diagnostic questions (in line with the indicated groups of diagnostic variables in the research model) containing over 100 diagnostic questions measuring the applied measures (strength of the research variable) (applied to research models “Managerial role” and “Catalogue of tasks”/ “Catalogue of stances”) Source: Own study based on the planned and completed process of empirical study. newgenrtpdf 112 Shareholders vs. efficiency of value creation in IT companies The study was divided into research issues, with two or three interactions between the researcher and the expert. This mode of study performance guaranteed effectiveness, a high level of engagement, and the continued interest of experts. A significant advantage of the research process was taking the results into account and holding discussions with selected representatives of the expert group about the results received, which offered considerable support in the process of the analysis of results and scientific reasoning. At the same time, it provided an element of deliberation and indepth consideration, both for the authors and the representatives of the group of experts. The results of the study were processed with the use of descriptive statistics (measures of location and measures of variation) for each of the diagnostic questions included in the empirical study. A broad perspective of the IT sector was adopted for every question (category of location in the supply chain in the IT sector), as was a longterm assessment horizon (category of longitudinal studies) not shorter than 10– 15 years (or five years in exceptional cases), calculated for both companies and their shareholders. Taking into account the methodological restrictions with respect to the application of the results of the expert group in the process of analysing the results, the formulation of generalisations and the verification of research hypotheses, the adopted research method was verified with respect to the levels of compliance of the expert opinions (as sources of empirical data). Simultaneously, the complexity and breadth of the studies required a sample for the verification of results. In the context of the validity of the issues addressed, as well as the number of diagnostic questions applied, the authors chose two areas that may allow for the formulation of opinions in the context of the verification of the level of compliance. The data sourced from the experts were subjected to a statistical analysis encompassing the determination of measures of location and the evaluation of the compliance of a given opinion. The most frequently applied measures of location are position measures, i.e. the median and the mode. Following the opinion of M. Cieślak, expert compliance may be characterised by means of measures of variation. The choice of the measure to assess the compliance of expert opinions is made depending on the scale on which the experts’ statements are measured. If strong scales were used, i.e. an interval scale or a ratio scale, the interquartile range is used to assess the compliance (for the first and third quartile) (Cieślak, 1997). To assess the compliance of expert opinions, the authors included studies undertaken according to a narrow approach of the formation of shareholders’ impact and company values in the process of verification (shareholders’ tasks and stances in the context of shareholders’ impact on efficient value creation). To this end, a statistical analysis was undertaken. The authors assumed that the respondents’ opinions were compliant if the average interquartile distance did not exceed 1.00 (20% of the value on the measurement scale used). For the relationship between shareholders and the Shareholders vs. efficiency of value creation in IT companies 113 efficient creation of company value in the narrow approach (catalogue of tasks, catalogue of stances) in the research model a result below 1.00 was received, which proves that the respondents’ views are compliant. With respect to the assessment of compliance, Z. Bobowski voices a similar opinion, claiming that a level of variation below 25% should be considered low (Bobowski, 2004). Given the results of empirical studies, the authors estimated the arithmetic mean and the standard deviation for each of the research questions. Such an approach allows for the assessment of the level of variation in applying the variation coefficient, defined as the quotient of standard deviation from the sample and the arithmetic mean of the sample (Krysicki, Bartos, Dyczka, Królikowska, & Wasilewski, 2006). In the context of empirical studies, the sample is a group of experts who assess a quality (diagnostic question). As manifested by J. Mucha, if the variation coefficient is within the range of 0%– 20%, it may be assumed that the level of variation among the results is low, for the range of 20%– 40% it is average, and above 40% it is high (Mucha, 1994). Following this approach, the authors verified the level of variation for randomly selected diagnostic questions (no less than 30% of the research questions). From the authors’ viewpoint, the level of compliance of the experts’ opinions, obtained during the empirical studies with the use of the Delphi method, offers a basis for assuming that the level of compliance is high. This is confirmed by the variation results (Vśr) that are at a “low” level (values within the range of 0.07– 0.16), where, in turn, the maximum value does not exceed 0.36 (average) for each of the analysed results of diagnostic questions. As a consequence of the process of verification of expert compliance, the authors assumed that the results obtained make it possible to deem the outcomes of empirical studies valuable and reliable in terms of application in the process of scientific reasoning. Shareholders in managerial roles In line with the views of H. Mintzberg, in the context of the tasks performed and powers held, managerial roles may be assigned to three key areas: decisional, interpersonal, and informational (Mintzberg, 1973). In the expert study, the significance of managerial roles in the IT sector was determined as being at high (sector of large enterprises, level 4.46 on a fivepoint Likert scale) and moderate (SME sector, level 3.58) levels. These data corroborate prior assumptions of the authors about the necessity of extending the research areas to the narrow approach (conceptualisation of the research model, Chapter 3), which indicates the tasks performed by the shareholders for the benefit of the company or stances adopted with respect to the company. It is also supplemented by business scenarios and comparative analyses of managers (categories of capital links with the company). At the same time, the high level of experts’ (managers’) approach to management is a valuable observation, with separation of management areas 114 Shareholders vs. efficiency of value creation in IT companies through managerial roles in large enterprises, which may testify to the high level of maturity of the IT sector. Following this trail of thought, the authors verified whether the identification of managerial roles that result from new business scenarios performed by the shareholders in companies in the short term is also significant in the context of company value creation. The results obtained may confirm the conclusion pertaining to the maturity of the Polish sector of large IT enterprises, where the practice of separating managerial areas by holding managerial roles in both shortand longterm horizons tends to be predominant. In turn, in the SME sector, the model of dynamic changes in managerial roles as a result of adjustment to new challenges and situations was applied more often than in large enterprises. In the course of the studies, the authors also verified whether a shareholder’s managerial role (in line with H. Mintzberg’s theory) in a company must be clearly defined in the context of its impact on the company’s capacity for value creation from a longterm perspective for defined types of companies (the company size criterion). The results show that: • large companies with a higher level of maturity clearly strive to professionalise managerial roles (understood as the separation of management areas); • flexibility in the adopted managerial roles is essential – meeting the shortterm objectives set in new business scenarios (organisational challenges, external circumstances) as a factor conducive to building the agility required for survival in a dynamic business environment. At the same time, the authors verified whether the absence of clearly determined managerial roles performed by a shareholder does not adversely affect value creation for business and organisational scenarios. In cases where the managerial role has not been clearly identified, the scenario approach to the areas and categories of accountability (scope of managerial competence) shows a variety of dependences, both with respect to company size and acquired experiences: • in large enterprises, the level of compliance with the thesis (i.e. the lack of clear specification of the role does not adversely affect the capacity for value creation) is assessed as being at a low or very low level, which shows that, in large enterprises, importance of managerial roles is significant in the context of efficient value creation; • in the case of SMEs, if positive experiences of managers’ associates (4.08 on a fivepoint Likert scale) and a high level of compliance of shareholders’ objectives (3.46) are present, then flexibility in the formation of managerial roles performed by the shareholders, along with the specification of the scope Shareholders vs. efficiency of value creation in IT companies 115 of managerial competence (e.g. an organisational area in an enterprise) may be of value for the company when it comes to building its operational agility. As a side note, the authors also studied the specific dependence affecting the decisions on keeping a shareholder within the structure of a company’s management or outside of it as a relationship of dependence of two factors: the level of compliance of the management board’s objectives (and modes of conduct) and the amount (whether financial capital or estimated company value) that a shareholder has invested in a given company. The study was conducted in the form of brainstorming, and a certain recommendation for the shareholders was formulated, which may influence the initial decision pertaining to the rules of choosing managerial roles in a company. The study offers a premise for reaching the conclusion that, together with an increase in the scale of investments in a company, the shareholders’ focus on assuming strong managerial roles (decisional, interpersonal) is growing; it is moderated by the level of compliance of objectives (both on the shareholder level and manifested by the management board that was appointed). If this level is high, the shareholders are more ready to share the areas of management with others. Change of shareholders’ managerial roles in a company: barriers and factors conducive to change The identification and analysis of the strength of barriers to the introduction of changes by the shareholders and the factors that motivate them to decide on a change have been shown to be valid in the context of the analysis of the impact of managerial roles assumed by shareholders on the efficiency of longterm company value creation. In the course of the study, the authors verified the strength of the impact of factors (on the part of a shareholder and described as business scenarios) on the potential disruption of a company’s (for the SME category) capacity for value creation when a shareholder decides not to change his/ her role. It was noted in the course of the study that: • a change of managerial roles by shareholders (in the SME sector) was combined with the search for the point at which such a change increases the company’s potential to efficiently create its value (or slow down the speed of its degradation); • the impact of change of the managerial informational role assumed by the shareholders was the weakest (most often defined as low). The significance of the impact of a change of roles – managerial, interpersonal, and decisional – in the context of company value creation was estimated on a similar level, which may offer a premise for positioning the interpersonal role in the IT sector on a par with the managerial decisional role. Such an opinion also 116 Shareholders vs. efficiency of value creation in IT companies seems to be confirmed by the view that in the technology and service sectors, people and their talents are the key resource, while HR management poses a significant challenge for managers. The significance of human capital in company value creation is highlighted by a number of authors. The key triggers for the change of the role, in the context of preserving the company’s opportunities for value creation that the shareholders should account for, include deterioration of health (4.91 on a fivepoint Likert scale), failure to understand the current rules of competition in the sector (4.45), exhausting the known methods of management (in particular with respect to the decisional role), and the deterioration of one’s personal brand (in particular with respect to the interpersonal role). The authors also investigated the strength of barriers to a change in managerial roles in the context of consequences of omissions or failure to notice the necessity of the decision pertaining to such a role change (value degradation, strategic drift). High and very high levels of barriers related to personal concerns and convictions were observed in the course of the study: nobody is going to handle the company’s business better (4.41 on a fivepoint Likert scale), a low level of trust in associates and the direct environment of the shareholder (3.50). A clear barrier, and at the same time a limitation of the decisional area, was the shareholder’s strong position as a leader with a clear personal brand (4.41) and treating the company as a “founding father” (4.59). When compared across SMEs and large enterprises, a higher level of barriers was found in SMEs (one level higher on a fivepoint Likert scale) with one exception referring to the observance of confidentiality as it pertains to the modes of conduct; in such a case, the barrier is higher for large enterprises. Simultaneously, the respondents indicated that the highest impact of barriers in the context of a company’s capacity for creating its value refers to these factors that are strongly related to the unfulfilled tasks (duties) of shaping the personal potential of direct associates (no successors – level 4.18), which is particularly visible in SMEs. In the course of the study, it was also noted that the transformation of the managerial role may be a tool of strategic and operational management on the part of the shareholders. Hence, an assessment of market experiences (management practices) was made with respect to the change of managerial roles by the shareholders. The authors verified whether there was an actual (not only formal, but also with respect to the level of demonstrated competence) change of managerial roles fulfilled by shareholders in IT companies. The results show a moderate (average) level of actual transformations of managerial roles held by the shareholders. With a view to further identifying the transformation of managerial roles (or the absence thereof), an attempt was made to assess the frequency of positive effects of the transformation of managerial roles (by shareholders) and scenarios where the absence of such a transformation does not reduce the company’s efficiency in terms of longterm value creation. The results obtained may offer a basis for the conclusion that the transformation of the managerial role translates Shareholders vs. efficiency of value creation in IT companies 117 to a significant threat to the company’s ability to retain its capacity for value creation in the future. An observation was made during the initial studies that there is a lower risk of change – in particular in the SME sector – when the transformation of managerial roles is made with the use of direct associates rather than searching for candidates on the market and appointing them to managerial positions (in particular the successors of shareholders). At the same time, it was noted that in some cases the absence of the transformation of the role does not necessarily have to reduce the company’s capacity for efficient and longterm value creation. The key aspects listed by the respondents included the leader’s ability to share decisional powers (3.50 for SMEs and 4.14 for large enterprises on a fivepoint Likert scale) and the strong visionary competence of the shareholder, combined with trust in the ability to meet obligations (3.77 in SMEs and 4.23 in large enterprises). At the same time, the respondents stressed that in case no transformation was identified on the level of a managerial role with a simultaneous clear division of duties and sharing of liability, such a transformation may be the first step towards the full transformation of managerial roles in the future. The key conclusion that follows from the data compiled is that transformation is necessary in companies; if conducted efficiently (wellprepared and communicated), it may significantly affect the company’s longterm capacity for value creation. 4.2 Shareholders in the context of value creation The value of a company operating in the IT sector When looking for determinants shaping company value in the context of the place of an IT company in the supply chain, the authors verified the strength of impact of the identified groups of factors (financial, marketing, intangible) on longterm company value creation. The strongest impact of financial factors is visible in IT distributors (0.6 on a scale from 0.00 to 1.00, where 1.00 is the total for the specified groups of factors) and producers (0.4), which determined the dominant share of the factor in the company’s capacity for value creation. In turn, in companies that deliver added value, the intangible factor was predominant (for a startup, the level was 0.7, while for an IT provider it was 0.6, and for an integrator 0.5). From the authors’ viewpoint, this is a valid observation that may offer the shareholders a guide to which factors are most conducive for building the company’s capacity for value creation. IT sector: current status and prospects When attempting to assess the condition of the IT sector and the directions of further transformation, the ways in which the potential (ability to accept new 118 Shareholders vs. efficiency of value creation in IT companies challenges) and the competitive position of companies would change were verified by taking a comparative approach for the category of position in the supply chain in the IT sector (and stage of operation: startup) in the next three to five years. In the assessment of experts, the IT sector is currently undergoing a thorough transformation which will be ever more intense in the coming years. In Chapter 2 of this paper, the authors presented the transformation cycle of an IT company from a reseller (partner of global suppliers, limited to a commercial representative) to the role of a strategic partner, an adviser and a supplier of services in IT projects (strategic service provider [SSP]). In the course of the study, low development potential was noted for hardware suppliers, in contrast to the good prospects for those IT companies that are intent on delivering IT as a service in their business models and strategic choices (4.00 on a fivepoint Likert scale), offering advice (4.17) and data distribution (4.39), together with suppliers of applications (3.89). This view was confirmed by studies on which of the identified models of IT companies (system producer, reseller, VAR, software house, data sources, CSP, SSP, hybrid company client – IT supplier) increase the company’s chances of building longterm value in the nearest future (three to five years). The dominant model is that related to management and data supply (data sources – 4.28, which is consistent with the type of activity, namely that of a data distributor) and service provision (CSP – 3.94, and SSP – 4.06). Shareholding in the IT sector: current status and prospects A look into the future is also of the essence, in terms of a reliable resolution of the research problem in the context of IT companies, by investigating the following question: which values should IT companies contribute to the economic environment? as well as enquiring about their shareholders: who should be the future shareholder in the IT sector? In the opinions of experts, the areas of activities that are predominant for current shareholders in IT companies (valid at the time of preparation of the research process) are as follows: a shareholder guarantees relationships (level 3.72 on a fivepoint Likert scale) and innovative ideas (3.83). In the future, the abovementioned areas of activity will remain predominant, yet the area of leadership will have greater potential for exerting a growing impact in the context of the efficient creation of company value (current level 3.06, future – 3.83). The above observation may offer inspiration for shareholders as to the areas on which they should focus their personal activities and areas that they should delegate to other economic operators or direct associates. At the same time, the respondents noted that the limited role of capital suppliers is valid in the current macroeconomic situation (the wide availability of debt capital and financing with the use of investment funds for the assessment performed in 2019). If the central banks change their approach, this factor, namely capital suppliers, may Shareholders vs. efficiency of value creation in IT companies 119 moderately increase their significance to a level exceeding 3.00 (on a fivepoint Likert scale). Shareholders in the context of value creation: the narrow approach of the research model (catalogue of tasks) When examining the formation of dependence between the efficiency of longterm value creation and the activities (tasks) performed by the shareholders for the benefit of the company, an attempt was made to determine the strength of this relationship. In the catalogue of tasks, the following actions of a manager/ shareholder were identified and designated as independent variables: building a network of relations (relational capital); observing the economic environment and asking what should be changed to improve competitiveness (to understand the business); taking interest in opinions about the company; noticing emerging opportunities and acting to take advantage of them (analysis of market trends and competitors’ actions); supervising the relationship between costs and revenue; recruiting talented managers and associates; searching for one’s own successors; stimulating the immediate environment of associates to help them develop, maintaining high levels of engagement in terms of accepting new challenges; building the recognisability of the company’s brand; noticing negative perspectives for the company; ensuring diversity in management; acting as the negotiator (arbiter) in crisis situations; the renewal of a rebellious stance (bold mission, insurgency); the owner’s approach (focus on action, strong concentration, an aversion to bureaucracy); frontline obsession (support, experimentation); the ongoing development of the personal potential of a shareholder, developing leadership in the company (charismatic leadership in the context of the role of the management board and distributed as part of human resource teams); and building a strong organisational culture based on healthy rules allowing it to last and to grow. The results obtained show that the strength of impact (of the tasks performed on the efficiency of value creation) is higher in SMEs (for the majority of the identified actions) than in large enterprises, which leads to the conclusion that SME shareholders must manifest a higher level of vigilance and engagement in their tasks so as not to overlook significant decisional moments, as well as continually searching for and contributing value to the environment of associates and the potential of the company. The highest level of significance of actions taken, in the context of building the company’s capacity for value creation, was indicated for actions such as the observation of the economic environment and asking what should be changed in the company to improve competitiveness (level 4.09 in SMEs and 3.59 in large enterprises on a fivepoint Likert scale), building a strong organisational culture (4.09 in SMEs and 3.45 in large enterprises), noticing emerging opportunities (4.14 in SMEs and 3.73 in large enterprises) and factors related to the founder’s mentality (4.14 in SMEs and 120 Shareholders vs. efficiency of value creation in IT companies 3.77 in large enterprises) in the choices made by the company (frontline obsession, renewal of a rebellious stance, the owner’s approach), the recruitment of managers (4.23 in SMEs and 4.04 in large enterprises), and ensuring diversity in management (3.95 in SMEs and 4.05 in large enterprises). Shareholders in the context of value creation: business scenario approach The authors also analysed business scenarios in which shareholders should remain within the management structure (in managerial roles, even with a limited area of accountability) in order to preserve the company’s capacity for value creation (or for halting the degradation of such value). Furthermore, unique moments were sought in the life of companies and shareholders which affect – whether positively or adversely – the company’s capacity to create its value from a longterm perspective. The following business and organisational scenarios were listed in the study: the strong personal brand of the shareholder in internal relations (managers’ and employees’ trust in the company); the strong personal brand of the shareholder in external relations (stakeholders’ trust in the company); the shareholder’s unique ability to lead; planned or conducted processes of acquisition of other entities that are significant to the company; and visionary stances presented by the shareholder (confirmed by the environment). Assuming that a shareholder performing a managerial role and the company’s capacity for value creation from a longterm perspective constitute a positive approach, the greatest likelihood of success comes when a shareholder is a visionary and the founder of the company and the name of the company is frequently related to his/ her name (e.g. Michael Dell). This is particularly clear in the context of an external personal brand (4.17 on a fivepoint Likert scale), as well as a guarantee of trust with respect to acquisitions (4.22) for large enterprises, where it reaches higher levels than in SMEs. This results from the level of engaged capital, the scale of challenges and liabilities, which is often higher by an order of value than in SMEs. The significance of a high level of unique change management competence (leadership) was also noted for both categories of companies. At the same time, it was observed that the strongest degrading impact with respect to the company occurs when a shareholder with limited knowledge of the IT sector assumes a management role (3.83 in SMEs on a fivepoint Likert scale). Such results were confirmed by the observations of experts, who listed numerous cases of failing companies where such a scenario was pursued for an extended period of time. Shareholders in the context of value creation: the narrow approach of the research model (catalogue of stances) With respect to the catalogue of stances as the independent variable of the studied relationship, the following stances of a manager/ shareholder were identified Shareholders vs. efficiency of value creation in IT companies 121 and studied: loyalty through longterm engagement in the obligations accepted with respect to the company; patience in terms of waiting for results combined with the consistency of tasks performed and obligations; the readiness to put the company’s goals above one’s personal goals (shaped by the company’s goals); focus on the ongoing development of the enterprise; the ability to rekindle one’s own passion for upcoming challenges; the open manifestation of trust in associates which, at the same time, forms a model of stances in an organisation at every level; meeting obligations towards stakeholders; the readiness to verify one’s own views (logic of understanding the economic environment) and the capacity to adjust one’s own views and actions; and high levels of mental and physical resistance. Based on the comparative approach (according to the size of the company), a higher level of impact of the stances identified (by one level on a fivepoint Likert scale) on the efficient creation of company value was noted in SMEs as compared to large enterprises. The results favour a view that shareholders in SMEs must demonstrate a higher level of vigilance, engagement, and flexibility in assuming (adjusting) their stances with respect to the company, so as not to miss significant decisional moments, as well as continually contributing value to the environment of associates and the company’s potential. The highest level of significance for the stances adopted was indicated with respect to those related to patience in terms of waiting for results combined with the consistency of tasks performed and obligations (4.8 on a fivepoint Likert scale), readiness to put the company’s goals above one’s personal goals (4.54), meeting obligations towards stakeholders (4.29) or focusing on the ongoing development of the enterprise (4.13). 4.3 Managers in the IT sector: entrepreneurs or intrapreneurs When performing a comparative analysis of tasks executed by a manager, whether an intrapreneur or an entrepreneur, the scenarios that – following a review of the relevant literature, as well as interviews with economic practitioners – were identified as the most important in the context of solving the research problem were taken into account. The study verified which of the identified actions (catalogue of tasks) taken by the manager as part of the assumed managerial roles (limited to decisional and interpersonal roles) have a higher strength of impact on (are conducive to) the longterm creation of company value if they are performed by an entrepreneur or an intrapreneur, who assume the same managerial role in an enterprise (simultaneously having similar levels of personal potential, which is the sum of one’s knowledge, skills, and personal qualities). The empirical data obtained confirm the conclusions drawn from the review of reference books (pertaining to an extensive perspective of economic sectors) that in the IT sector it is also possible to indicate these actions (tasks performed) 128 Shareholders vs. efficiency of value creation in IT companies renowned personal brand in the sector. As a consequence, the authors were able to state confidently that the data compiled in line with the adopted research process, as well as the analysis and interpretation thereof with the use of statistical methods, may offer reliable evidence for the initiation of scientific reasoning for the purpose of the research hypotheses that were put forward. Simultaneously, the scope of the research and the premises accomplished for the process of scientific reasoning may offer valuable inspiration to continue such studies as part of the presented research problem. 4.4 Managerial roles of company shareholders vs. efficient company value creation: case study Basic premises of empirical studies performed as case studies Taking into account the nature of the research problem and the proposed course (idiographic approach, interpretive analysis – case study), the basic research tools (a questionnaire survey) were prepared and supplemented with additional diagnostic questions for the purpose of an indepth interview. The goal was to ensure the highest possible reliability of the study; for that reason, it was undertaken with the participation of both company owners (shareholders, stockholders) and their longterm employees in order to compile information that was significant for the course of the research process. In this way, it was possible to assess the diagnostic variables listed in the research model from the perspective of different observers. This approach seems consistent with the approach proposed by D. Babińska, where the recordings of interviews may form a valuable source of information for the effective improvement of further research tools, while simultaneously fulfilling the requirements of a correctly performed research process (Babińska, 2003). Table 4.1 contains a description of the course of the research process for the case study. The authors were particularly interested in examining the causeandeffect relationship with respect to the managerial roles taken on by the company shareholders and the efficient creation of company value, measured by changes in market value added (MVA) in accordance with a longitudinal approach during the entire period of operation. With respect to the research issues arising from the holistic approach to the formation of the relationship between the shareholder and company value, the mode of assessment of the strength of qualities attributable to the shareholder (“shareholders’ potential”), the company (“company’s potential”), and the market (“market potential”) was adopted, relying on estimation by the shareholders and, if possible, supplemented with representatives of top executives (shareholders’ environment). As part of the estimation of values of diagnostic variables, a comparative criterion was applied, whereby the respondents undertake benchmarking with their closest competitors. A fivepoint Likert scale was Shareholders vs. efficiency of value creation in IT companies 129 applied where a value of 3 means a comparable assessment with the closest competitors, whereas values of 1 and 2 mean a lower assessment for the diagnostic variables examined (the qualities evaluated), while 4 and 5 are higher grades. When selecting companies – and also shareholders – for the study, attempts were made to make sure that at the moment of the assessment, the respondents had extensive business experience and an extremely thorough understanding of the market. The estimation of diagnostic variables (as part of the diagnostic questions that were asked) was made in the form of a direct indepth interview and the answers given to the diagnostic questions asked by the authors, along with the independent work of the respondents with the research tool, followed by a discussion with the authors after the completion of the work. If the estimation of the diagnostic variable separately for each of the founders in the diagnostic questions was necessary, the task was performed by working out an answer during a brainstorming session and determining a median value (Wawak, 2012). The dynamics of change in the value of a diagnostic variable were demonstrated by applying retrospective study for the entire period of operation divided into Table 4.1 Description of the case study process Identification of the stages of the case study Characteristics of the stages of the case study Formulation of the research question Which roles of shareholders, fulfilled via managerial functions, tasks performed for the company’s benefit, and stances presented with respect thereto, affect the efficiency of an IT company in terms of building a longterm capacity to create value better than others? Case sampling Individual case: netology Sp. z o.o. and no fewer than three supplementary case studies of companies operating in the IT sector List of data compilation tools Questionnaire survey as the basic tool, supplemented with an indepth interview with study participants Mode of compiling field studies Individual meetings and conferences with participants, attended by owners (founders, shareholders) of the companies analysed, supplemented by employees (for the individual case) Modes of data analysis Statistical testing and intuitive inference Rules for formulating generalisations Data interpretation, statistical data analysis, and initiation of scientific reasoning Approach to confrontation with reference books Searching for confirmation of conclusions in reference books (based on primary and secondary sources) Closing of the study (generalisation) Final conclusions and an attempt to formulate generalisations (limited to the analysed cases) Source: Authors’ own elaboration based on the literature review. 130 Shareholders vs. efficiency of value creation in IT companies periods of activity indicated by the company’s founders as having been of importance (in the context of the defined research problem). The analysis of the results of estimation of the value of individual diagnostic variables was used to construct the key synthetic indicators. These indicators were defined as the arithmetic mean of the value of measures of the diagnostic variables examined. In this way, the adopted measures – corresponding to the dependent and independent variables in the research model – facilitate attempts to draw conclusions from the case study. Based on the research model, a diagnostic survey was designed which accounts for the factors indicated therein (diagnostic variables), and adequate measurement scales were assigned as a result. The survey contains a set of cafeteria questions, representing ten problems: • investigation of managerial roles performed by the shareholders and, in the concurrent period, by the shareholders’ environment (management), along with an assessment of their personal potential in the company; • examination of the strength of factors shaping the “shareholders’ potential” (PA); • examination of the strength of factors shaping the “company’s potential” (PS); • examination of the strength of market factors (PR); • examination of the catalogue of tasks performed (“catalogue of tasks”) and the stances (“catalogue of stances”) adopted by the shareholders – as the outcome of applying a narrow approach – to measure the strength and the direction of dependence between shareholders and company value, along with additional issues (applied exclusively in individual cases): • investigation of choices made by the company; • examination of the efficiency of the creation of company value – in comparison to other companies (subjective assessment); • examination of the strength of factors shaping the choices of managerial roles of the shareholders in the company; • examination of the significance of the impact of the shareholder performing the role of a leader of change (change leadership) on the efficiency of the changes introduced; • examination of the impact of the level of business maturity of the shareholders on the efficiency of company value creation. Single case study: netology Sp. z o.o. Crosssectional characteristics of the analysed entity The study covered the founders (shareholders) of netology in the context of the efficient creation of company value with the use of a longitudinal approach Shareholders vs. efficiency of value creation in IT companies 131 for the entire period of economic activity of the company on the market (i.e. 15 years). At the time of research, the company was active on the market and was pursuing its development strategy entitled “strategy 2020+ ” as confirmed by the resolutions of the General Shareholders’ Meeting (GSM). Basic information about ‘netology Sp. z o.o.’: Headquarters (current status): Katowice, Warsaw/ Poland Form of operation: limited liability company Year of foundation: 2004 Shareholding structure as of the date of company incorporation: 52%/ 24%/ 24%. By means of indepth interviews with the company’s founders, the entire period of operation of the company was divided into shorter periods. The criteria for such a division included financial results (values, dynamics of changes), changes in managerial roles performed by the shareholders, and significant economic (external) or organisational (internal) events resulting in a significant (change of trend, strong creation, or degradation of value) impact on the efficient creation of company value. As a result, the following periods were distinguished for netology, which offered a temporal approach to measuring the impact of shareholders on the efficient creation of company value: 2004– 2006, 2007– 2009, 2010– 2012, 2013– 2015, 2016– 2018, and finally 2019 (the year of preparation of the paper). Based on the interviews performed with the company’s representatives, a review of the financial results and an assessment of the efficiency of the strategy pursued, the stages of development of the company were assigned to the periods of operation listed above.1 It was assumed that the years 2004– 2006 were the period of initial development; the years 2007– 2009 were a period of growth; the years 2010– 2012 were a period of decline; the years 2013– 2015 were a period of revival; the years 2016– 2018 constituted another period of growth; and 2019 was the beginning of the maturity phase. In the analysed periods, the level of employment in the company ranged from six (2005) to 50 (2015) and up to 80 individuals (2019). The company’s annual revenues ranged from EUR 1.5 million (2005) to EUR 5 million (2009– 2012), EUR 10– 12.5 million (2013– 2015) and up to EUR 31 million (2018). ESTIMATION OF COMPANY VALUE The estimation of company value relied on the estimation of MVA. In line with this approach, it was assumed that the sum of discounted economic value added (EVA) indicators that the company is meant to accomplish in the future, in line with the plans it has adopted, determines the MVA. A detailed questionnaire for the applied method of estimating the value of a company is presented in the annex. Based on this, it was concluded that in each of the analysed periods, the company efficiently generated value, yet on a significantly different level in the dimension of the MVA (from EUR 114,000 to EUR 325,000). 132 Shareholders vs. efficiency of value creation in IT companies The value estimation performed for individual periods of operation allows for the determination of the MVA for the entire period of operation (i.e. 2004– 2019), which amounts to EUR 1,894,531, offering an average value of over EUR 126,250 annually, assuming 15 accounting periods. The positive MVA during the entire period of operation proves that netology efficiently creates MVA on a longterm basis, increasing the value of the company and simultaneously providing a basis for distributing value among the shareholders by conducting a limited dividend policy. For the sake of comparison (with the market), an analysis of the WIGINFO index published by the Warsaw Stock Exchange was made in the research periods that were adequate with respect to the case of netology. Measurements from 2004 to mid2019 showed positive changes in the index at a level equal to 55%. In attempting to compare WIGINFO and netology, it was assumed that a comparison for the period of the last ten years, i.e. 2009– 2019, may be of value (and guarantee a more reliable conclusion). With respect to this criterion, the growth of the WIGINFO index was almost 100%, while for netology, the growth amounted to 175% (the reference value was the sum of MVA to 2009 and increased value to 2018). Hence, it may be assumed with due prudence that in the case of netology, company value creation was more efficient than the estimated average measure of the WIGINFO index for public companies. IDENTIFICATION OF MANAGERIAL ROLES PERFORMED BY SHAREHOLDERS AND BY THE SHAREHOLDERS’ ENVIRONMENT (MANAGEMENT) INCLUDING THE ASSESSMENT OF THEIR PERSONAL POTENTIAL The participants in the study – shareholders and people from the company’s managerial authorities separately – were asked diagnostic questions with the following opinion incorporated therein: the choice of managerial roles performed by the shareholders was optimal in the context of building the company’s capacity for longterm value creation, taking into account the company’s potential (in particular the shareholders’ environment) and the personal potential of shareholders (knowledge, skills, and personal qualities). Using a fivepoint Likert scale, the participants assessed the strength of compliance with the opinion contained in the questions according to the following scale: 1 – a very low level of compliance, 2 – a low level, 3 – an average level, 4 – a high level, and 5 – a very high level. Based on the data compiled and the statistical analysis (arithmetic mean and mode), a higher level of compliance was noted with the opinion presented in the assessment by the company’s managers (direct environment of shareholders) than in the assessment by the shareholders themselves. At the same time, a clearly lower value of assessment was noticeable for the period of 2010– 2015 than for the remaining periods of operation. The analysis of the empirical data shows that in the indicated period, there was a lower level of compliance of the Shareholders vs. efficiency of value creation in IT companies 133 shareholders’ goals in the context of further directions of the company’s development and the managerial roles performed. Simultaneously, the first effects of the global financial crisis became visible in the macroeconomic environment at that time (2008– 2012). In the context of this research problem, it should also be noted that in spite of a clear decline in the suitability of the choice of managerial roles in 2010– 2012, there was clear evidence of growth in the subsequent research periods. In the assessment of both the company’s founders and managers, the fulfilling managerial roles was significantly higher (4.00 in the assessment of founders, 4.67 in the assessment of company managers) than the market practice (3.00). Reference books testify to the existence of feedback between an entrepreneur (shareholder, stockholder) and the activities which he/ she performs (Schjoedt, 2009). Hence, it may be assumed that such a relationship also occurs between the personal potential of a shareholder and the potential of a company where the entrepreneur fulfils managerial functions, influencing the creation of opportunities and making use of them, which leads to the creation of company value. Following this opinion, the shareholders’ personal potential (for every shareholder separately) and the shareholders’ environment (company management) were examined with the application of measures of knowledge, skills, and personal qualities. The study was performed retrospectively for the periods of the company’s operation. A fivepoint Likert scale was applied as follows: 1 – a very low (negligible) level of potential (of the quality studied), 2 – a low level (perceptible deficiencies in quality), 3 – an average level (allowing for the efficient application of the quality, yet not offering a significant base for building an advantage over direct competitors), 4 – a high level of the quality studied, allowing the company to search for an advantage over competitors/ higher efficiency, and 5 – an expert level (unique), offering a significant advantage. The result of the assessment affecting the synthetic index, defined as the “personal potential” (of a shareholder/ shareholders’ environment) for each of the measures, was the arithmetic mean for the estimated values of the shareholders’ knowledge, skills, and personal qualities. Adopting this method of aggregation followed from the possibility of aggregation of the results derived from the Likert scale (Walesiak, 1996). The assessment was perfor med in the following professional areas: administration and management of the company (adm), sales of IT services and products (sale), and familiarity with the company’s technology and development of its offer (dev). The results obtained from observations led to the conclusion that the personal potential of the company’s founders – and simultaneously the people who perform managerial roles in the company – significantly differed in the analysed periods of operation. It should definitely be noted that the shareholders followed the rules of assigning areas of professional accountability based on the analysis of personal potential. Considerably more extensive competence in the administrative area (adm) and sales and development (dev) was attributed to 134 Shareholders vs. efficiency of value creation in IT companies people whose relevant knowledge or skills were clearly the best. It may thus be surmised that professional criteria were used in the choice of roles, relying on the analysis of personal potential. An equally valid observation is the positive dynamics of changes in the personal potential, which in the view of respondents grew from 1.33 (on a fivepoint Likert scale) at the beginning of operation to 4.00. In the authors’ view, this resulted both from new experiences acquired in the subsequent years of operation and a high level of engagement in tasks related to personal development, as indicated by the respondents. To better express the participation of shareholders in managerial roles in numerical values, the authors transformed the level of accountability (participation of shareholders) in individual managerial roles in the periods of business activity listed above. Percentage values, which express the relationship between the participation of shareholders (as individuals or a group of people) with respect to all individuals who held a given role in the company, were applied in the estimation. This means that if participation of less than 100% was listed for a selected role in a given period, some of the competences resulting from the attributed role were exercised by individuals who were not shareholders (in the research model, such individuals are labelled the “shareholders’ environment”). The results of such estimation are presented in Table 4.2. The key observation is a clear division both with respect to the managerial roles performed throughout the entire operation and accountability for professional areas in the group of shareholders. Taking the results of the study on the shareholders’ potential into account, a high level of awareness of strengths and weaknesses was noted and reflected in the division of managerial roles and areas of accountability that potentially guaranteed the most suitable adjustment of roles, especially between 2004 and 2006 and 2007 and 2009, in particular the adjustment of the professional areas of accountability to suit one’s personal potential. Table 4.2 Results of the study of shareholders’ participation in managerial roles from a longterm perspective: case study of netology Research period 2004– 2006 2007– 2009 2010– 2012 2013– 2015 2016– 2018 2019+ Decisional role 100% 100% 50% 50% 33% 33% Interpersonal role 100% 100% 100% 33% 33% 33% Informational role 100% 100% 100% 33% 33% 33% Source: Own study based on data collected in the case study. Shareholders vs. efficiency of value creation in IT companies 135 Such an adjustment, in the view of the shareholders, significantly contributed to the creation of development opportunities for the company which suited its potential in the analysed periods. At the same time, a growing trend of knowledge and skills in the professional areas was noted throughout the entire operation for all professional areas where growth (measured on a Likert scale) ranged from 10% to 37% of the value of assessment in the period of 2004– 2012 and exceeded 60% between 2004 and 2018. Hence, the authors concluded that the choice of managerial roles was underpinned by the level of personal potential identified and developed throughout the period of operation. This trend was justified by the studies performed in accordance with the narrow approach of the research model, where – with respect to the diagnostic question related to the level of engagement in personal development (Ongoing development of the personal potential of a shareholder – to understand the surrounding world and the rules governing it better) – it was clearly noticeable that this level remained above 3.33 (on a fivepoint Likert scale) with an average of 4.03 for the entire research period, i.e. 2004– 2018. From the authors’ viewpoint, this was confirmed in talks with other market participants, who claimed that the factor most conducive to such a situation is work in the modern technology sector, close to (and in cooperation with) global IT suppliers, which offers an opportunity to observe their decisions and mode of conduct, along with the consequences thereof and attempts to follow them. More importantly, such attempts to follow other companies refer not only to declarations of will and intentions but also to experimentation and the possibility of indirectly endorsing their guidelines and recommendations. This was also confirmed by the results of studies on the diagnostic question: the choice of roles performed by the shareholders was optimal with respect to the personal potential (of shareholders), the goals set, and the company’s potential in a given period. Based on the assessment of the potential of managerial roles represented by the shareholders and the shareholders’ environment, a clear transformation of managerial roles was noted from a longterm perspective, following the direction from the shareholders to their associates (shareholder’s environment), with the simultaneous preservation of or a gradual increase in their personal potential. In the company which was the subject of analysis, such a transformation began between 2010 and 2012 and continued over the subsequent periods, with a shift of decisional roles and decisional and interpersonal roles to the associates (shareholders’ environment) and a continuous increase of their potential, from the level of 2.83 (on a fivepoint Likert scale) when performed exclusively by the shareholders, to 3.56 when performed jointly, up to the level of 4.50 when predominantly performed by the associates. A similar tendency was observed for the interpersonal role which reached the level of 3.3 (on a fivepoint Likert scale) when performed exclusively by the shareholders, while after management joined forces with the associates and partially delegated responsibility for the area to the already developed potential of intrapreneurs, the figure grew to 4.33. 136 Shareholders vs. efficiency of value creation in IT companies This may (including the estimation of changes in the market value added of an enterprise) lead to the conclusion that the mode of selection of managerial roles by the shareholders and the transformation of roles were conducive to the efficient longterm creation of company value. EXAMINATION OF THE STRENGTH OF FACTORS AFFECTING SHAREHOLDERS’ POTENTIAL, COMPANY POTENTIAL, AND MARKET POTENTIAL Following the research model proposed for the formation of a relationship between the managerial role of a shareholder and the efficient creation of company value based on a general (holistic) approach, factors related to the shareholders, the company, and the market were listed as potentially affecting the strength and the direction of such a relationship. As part of the case study, the levels of these factors were studied (in the research model represented by diagnostic variables) separately for each of the study periods by means of a questionnaire survey and indepth interviews. Both founders (company shareholders) and key managers (shareholders’ environment) took part in the study. Estimation of the strength of the diagnostic variable (as a measure) was made with the use of a fivepoint Likert scale, which is to be interpreted as the strength of a quality in an individual or group approach (a group of shareholders or shareholders’ environment), where 1 means a very low (negligible) level of potential (of the analysed quality), 2 – a low level (perceptible deficiencies in quality), 3 – an average level (allowing for the efficient application of the quality, yet not offering a significant base for building an advantage over direct competitors), 4 – a high level of the quality analysed, allowing the company to search for an advantage over competitors/ higher efficiency, and 5 — an expert level (unique), offering a significant advantage. Whenever a bipolar scale was used, it should be interpreted as the strength of the relationship of the indicated quality values (A, B), which means: 1 – a clearly (dominant) value (A) defining the quality of the variable, 3 – equal, and 5 – a clearly dominant value (B) defining the quality of the variable. The result of the assessment that affects the synthetic indicator (each of the factors listed with respect to the shareholders) was an arithmetic mean for each measure assigned to a given factor (Table 4.3). Adopting this method of aggregation followed from the possibility of aggregating the results received from the Likert scale. The results (Table 4.19) show a very high level (over 75%) of positive dynamics of changes in the variable describing the “business maturity” of the shareholders (from 2.09 to 4.17 on a fivepoint Likert scale), “personal brand” (from 2.09 to 4.09), an average value of “shareholders’ potential” (from 3.28 to 4.17), and “shareholders’ capital” (from 2.5 to 3.56) in the research periods. In turn, the greatest decline referred to the variable describing “investor relations” (from 4.17 to 3.17 on a fivepoint Likert scale) which, in the shareholders’ Shareholders vs. efficiency of value creation in IT companies 137 Table 4.3 Summary of the results of empirical studies for the estimation of the level of diagnostic variables attributed to shareholders and the company: case study of netology Research period 2004– 2006 2007– 2009 2010– 2012 2013– 2015 2016– 2018 2019+ Factors attributed to shareholders (PA) Shareholders’ potential (M26) 3.28 3.67 3.45 3.67 4.17 4.22 Business maturity (M27) 2.09 2.59 2.83 3.5 3.75 4.17 Shareholders’ code of conduct (M28) 4.25 3.17 23.75 3.67 3.91 Approach to risk (M29) 4.17 43 3.84 3.84 3.67 Shareholders’ capital (M30) 2.5 3.06 2.84 3.11 3.39 3.56 Shareholders’ mode of thinking (M31) 4.33 3.84 1.84 3.67 3.84 3.84 Investor relations (M32) 4.17 3.67 2.34 2.75 3.17 3.17 Personal brand (M33) 2.09 3.34 2.59 3 4.09 4.09 Visionary competence (M34) 2.00 3.00 2.33 3.33 3.67 3.67 Factors attributed to the company (PS) Shareholders’ environment (Z21) 1.55 2.84 3.17 3.8 4.04 4 Company’s potential for changes (Z22) 2.5 3.13 2.67 3.25 3.63 4 Founder’s mentality (Z23) 4.22 3.78 2.89 3.67 3.89 3.67 Leadership in the company (Z24) 3.42 3.42 1.84 3.42 3.84 3.92 Logic of management (Z25) 3.5 42.84 3.67 4 4 Other balance sheet factors (Z20a) 1.67 2.67 1.67 1.67 2.83 3.17 Other offbalance sheet factors (Z20b) 1.58 1.92 2.08 2.42 2.83 2.67 Source: Own study based on the data collected in the case study. Note: The name of the diagnostic variable indicated in the research model was specified in brackets (identifying the factor that affects the shareholders’ impact on efficient company value creation as determined in the research model). newgenrtpdf