Microeconometrics in Business Management

3 Econometric modeling of a large- and medium-sized enterprise’s economic system

3.1 Specification of a large- and medium-sized enterprise’s econometric model

Study of company’s production process, in large part, is falls within a realm of econometrics applicability. Productive process is a structure created by a person equipped with means of production. In market economy, it adapts the production profile to services and customer’s expectations. Requirement of rationality in all decision-making and actions means that this person must be aware of cause and effect relationships occurring between various relevant economic variables in a given enterprise.

In company-management practice, strong multilateral relationships between various economic processes exist. Such links occur only within a company. They are subject to influence of various external factors. A mechanism of economic links that occur in large- and medium-sized enterprise is presented in Figure 3.1.¹

Figure 3.1 Economic interrelations in a large-sized (medium-sized) enterprise.

Source: Wiśniewski, J. W. Econometric Model of a Small Enterprise, chapter two³ [2003].

Production is the final process described in a mechanism of inter-relations in a large (medium)² enterprise. This type of a company has a complex structure containing specialized services, which deal with individual elements occurring in Figure 3.1. The ...