Personal Data Protection Policy Impact on the Company Development
OLGA YU. GUSEVA
Department of Economics
State University of Telecommunications
7 Solomenska Street, Kyiv, 03110, UKRAINE
INNA O. KAZAROVA
Department of Thermophysics, Molecular Physics and Energy Efficiency, Educational and Scientific
Institute of Computer Physics and Energy
V. N. Karazin Kharkiv National University
4 Svobody Square, 61022, Kharkiv
UKRAINE
ILONA Y. DUMANSKA
Department of International Economic Relations, Faculty of International Relations
Khmelnytskyi National University
11 Instytutska Street, 29000, Khmelnytskyi
UKRAINE
MYKHAYLO A. GORODETSKYY
Indi.vision
23a Pushkinska Street, 01004, Kyiv
UKRAINE
LINA V. MELNICHUK
Department of Management
State University of Telecommunications
7 Solomenska Street, 703110, Kyiv
UKRAINE
VOLODYMYR H. SAIENKO
Department of Innovation Management, Faculty of Economics and Pedagogical
Academy of Management and Administration
18, Mieczysława Niedziałkowskiego, 46020, Opole
POLAND
Abstract: - This research paper deals with identifying the basic prerequisites for the IT companies’
development in terms of tightening requirements for personal data protection. The article aimed at assessing the
impact of personal data protection policy on the company development through the assessment of the efficiency
of the use of intangible assets. The following methods were used in achieving this aim: comparative analysis,
the method of horizontal analysis of company performance, correlation and regression analysis, graphical
analysis, as well as the method of expert survey of the impact of macro-environmental factors on the company
profitability level. It is established that the degree of personal data protection of customers of IT companies
directly affects the financial performance of companies and contributes to the development of IT companies.
The article proves that poorly developed personal data protection system of Ukrainian companies is related to
the regulatory framework of the creation and registration of personal databases. The main world trends in the
development of personal data protection were identified through the study of the provisions of international
policy frameworks as compared to the legislation of Ukraine. The main area of application of the results
obtained by the author are IT companies, in particular in the management of profitability in the context of
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
E-ISSN: 2224-3496
232
Volume 18, 2022
strengthening the personal data protection. The obtained results are a contribution to scientific achievements in
the field of personal data protection and business development for Central European countries. This is primarily
due to the novel research objective.
Key-Words: - Personal Data Protection System; Legal Regulation; International Policy Frameworks; Expert
Assessment; Macro-Environmental Factors; Profitability.
Received: June 15, 2021. Revised: November 15, 2021. Accepted: December 19, 2021. Published: January 17, 2022.
1 Introduction
The widespread use of information and
communication technologies (ICT) in economics,
politics, and social relations creates the potential for
development, while creating information challenges
and security threats. The problem of information
security of the organization of work of the IT branch
companies is actualized. Due to the complexity of
the information sphere, information security cannot
be provided at the level of individual enterprises and
requires intersectoral cooperation and a unified state
policy. In recent years, the issue of information
security has attracted much attention at the expert,
academic and political levels [1].
Companies operating in the technology sector
lead the digital economy. They all process large
amounts of information. The digital economy allows
carrying out billions of operations and transactions
by both legal entities and individuals in the field of
exchange of ideas, funds, goods or comments [2].
It should also be noted that the modern society
lives in the epicenter of the spread of the knowledge
society concept, which aims at the data exchange.
An example is the availability and development of
services through social networks, which consists in
the disclosure of confidential data and the exchange
of personal (personalized) information. As users of
Facebook, Twitter, Instagram, Pinterest and other
types of content on the Internet, companies and their
customers, as well as other stakeholders not only
consume these opportunities, but also become
intangible assets for companies that use social
networking resources to acquire or create a
customer database [3].
The speed of collection and processing, as well
as commercialization of information, undermines
the credibility of the digital market and the personal
data protection. Concerns about the misuse of
personal data raise fundamental issues of
confidentiality, data ownership. Therefore, the main
problem of company development in the context of
building effective personal data protection systems
is to increase credibility in their activities and the
legitimacy of the use of personal data of customers
and other groups of stakeholders [4].
The aim of this study is to assess the impact of
IT companies’ policies on profitability in the
context of tightening requirements for personal data
protection.
The hypothesis of the study was as follows: the
stable company development is influenced by the
efficiency of the use (including profitability) of the
intangible asset. For the purpose this article, an
intangible asset shall mean personal data. We
assume that strengthening the personal data
protection policy increases the credibility of the
company, and hence the growth of intangible assets
in the form of personal data of customers [5].
Due to the fact that the problem of security
significantly affects all spheres of society for the
development of research, it becomes important to
identify the specifics of this area. Analysis of the
impact of personal data security on enterprise
development and the reverse impact of
entrepreneurship on personal data protection policy
is one of the most important issues of the modern
economy. This study thus contributes to the
conceptualization of the global information society
and information security. Research shows that
security issues are embedded in a broader political
context and their technological characteristics are
largely the product of policies, including
international ones. Thus, the scientific relevance is
due to the presentation of the conceptualization of
the global information society and its impact on
policies in the field of personal data protection.
This aim was achieved through the following
research objectives:
determine the impact of investment in personal
data protection policy on the growth of trust in IT
companies (exemplified by software developers);
prove or disprove assumptions about the impact of
personal data protection policy on the company
development through the growth of the
profitability of the use of intangible assets;
prove that the poorly developed personal data
protection system in Ukrainian companies is
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DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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connected with the legal regulation of creation and
registration of personal databases;
confirm the need to implement the provisions of
international policy frameworks to the legislation
of Ukraine by identifying key trends in the
development of personal data management.
2 Literature Review
The review of research allowed identifying the
following main areas of study in the field of
personal data protection and their impact on the
company development (Table 1):
• optimization of company’s business processes in
the context of digital transformation [2-9];
• marketing activities and the use of customer
personal databases in the context of digitalization
[10-20];
• government action and company development in
the context of digital transformation of the
economy [8, 21, 22]
• theoretical background for the use and their
protection of personal data [23-25];
• marketing and analytics of personal data in the
context of digitalization of supply chains and
creation of value.
It is also important to note the issue of the impact
and creation of the digital economy and measures
to bridge the gaps which manifest themselves as
information asymmetry. For example, [8] identify
the following areas for solving these problems:
• development of digital infrastructure;
• development of a highly effective system for
identification and protection of personal data;
• development of applications and services;
• formation of competencies in the field of personal
data protection of employees of companies for the
implementation of international convention
policy;
• protection of intellectual property and personal
data as a guarantee of innovative development;
• integration of national legislation into global
legislation to comprehensively ensure the
reliability and security of personal data
processing. Such a policy helps to increase
investment attractiveness in the international
arena.
Table 1. Studies on Digitalization and Digital Transformation of Personal Data Protection Systems, as well as
Other Goods and Services Presented in Journals Indexed in International Scientometric Databases (Scopus,
WoS)
Authors
Object of research
Natorina (2020)
Optimization of business activity in the context of digitalization
Popova et al. (2019)
Increasing confidence in marketing activities in a digital society
Tleppayev (2019)
The impact of digitalization on energy companies
Melnyk et al. (2019)
Assessing the impact of disruptive technologies on the business institutions in
developing economies.
Pecheranskyi and
Revenko (2019)
Budanov and Aseeva
(2019)
Research of influence of manipulative marketing technologies on application of
data of potential consumers in the context of digitalization
Polozhentseva et al.
(2019)
The effects of digitalization and its impact on the business institution in the
context of modern social transformation
Trusova (2019)
Government socio-economic policy in the context of digital economy development
Mayakova (2019)
Digital transformation of a modern quality management system
Victor et al. (2019)
Features of company pricing in the era of digitalization and consumer behaviour
evaluation in Poland
Line et al. (2020)
Features of application and ownership of Big Data.
Petrenko and
Shevyakova (2019)
The impact of digitalization on the economy and management of business
institutions
Kuznetsova et al.
(2019)
Development of human capital as the main driving force of innovative economic
development
Mexmonov (2020)
Development of e-commerce and use of customer personal data in the context of
digitalization
Bilozubenko et al.
(2020)
Analysis of different approaches to the development of the digital economy.
Discovering the nature of digital economic transformation
Shen et al. (2020)
Marketing in social networks of IT service companies: analysis involving the
approach to obtaining personal data
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DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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Hung, He and Shen
(2020)
Big Data analytics in the supply chain.
Source: [7-9, 17-20, 23-25, 27-33]
A separate aspect of personal data digitalization is
the study of building business processes and
mechanisms for the personal data use. Every
company must have effective mechanisms for
monitoring and managing internal processes. This
allows not only to effectively organize production
processes, but also to respond quickly to
problematic issues.
On the other hand, personal data management is
also a subject of improvement and close attention
for the spread of digitalization. This is evidenced by
the opinion of practitioners, which was expressed in
2016 at the Strategic Policy Forum on Digital
Entrepreneurship [26]. Figure 1 illustrates the main
needs and business processes that require
improvement in the implementation of information
technology in the context of digitalization.
Fig. 1: Ranking of Business Process Areas that Require Improvement
Summing up the review of recent publications, we
can conclude that the issues of the impact of the
personal data protection system development on the
company profitability, its overall financial and
property status remain insufficiently covered. Given
that the system of personal data protection is a
company’s intangible asset, it is advisable to
consider it from the standpoint of effective asset
management.
3 Materials and Methods
On the one hand, the study is based on the analysis
of the impact of macro-environmental factors on the
companies’ activities, and on the other —the impact
of management efficiency of personal data
protection as company’s intangible asset on the
company profitability. The study was conducted in
two stages:
Stage 1. Comparative analysis of the
requirements of the national legal framework with
the provisions of international policy frameworks.
Stage 2. Assessment of the impact of personal
data protection on companies’ profitability.
2.1. Ten IT companies operating in the Ukrainian
and global IT services markets were selected. They
had approximately the same number of employees
and of financial performance. In particular, the
sample of the study consisted of the following IT
companies: Ciklum, NIX, Evoplay, DataArt,
Infopulse Ukraine, ZONE3000, Ajax Systems,
ELEKS, Intellias, Genesis.
2.2. The data of the officially published annual
financial statements of the companies selected for
the study, which are prepared in accordance with the
international financial reporting standards
(hereinafter — “IFRS”) were analysed;
2.3. The dynamics of changes in the profitability
of the selected enterprises for the study is analysed;
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Olga Yu. Guseva, Inna O. Kazarova,
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2.4. The dependence of the use of customer
personal data of IT companies and the amount of
profit of IT companies is determined.
2.5. Predicted values indicating the efficiency of
intangible assets (personal data) use of selected IT
companies are built.
To study the impact of personal data protection
policy on the company development, we selected
the following methods: the methods of horizontal
analysis of companies’ performance in the IT sector
in the dynamics of three years, the method of
correlation and regression analysis to determine the
relationship between customer personal of the
studied IT companies and companies’ development
data, as well as graphical analysis to determine the
specification of the required regression model of
data dependence and visual representation of
indicators illustrating the efficiency of using
intangible assets of IT companies in the form of
customer personal data. An expert method of
assessing the impact of macro-environmental factors
on the companies’ profitability was also used.
Let’s identify the main aspects of the application
of the latter method (expert method):
1. Expert assessment was conducted by
interviewing 5 experts from the companies of the
study group;
2. The method of expert assessment was
questionnaire-based.
3. Scores and their normative value in the study
were calculated using the Fishburne rule.
4. Table 2 provides the normative values of
assessments of the impact of macro-environmental
factors on the companies’ activities in the selected
industry, which were proposed to experts to apply.
Table 2. Normative Values of the Expert Assessment Scale
Assessment values range
From 1 to 3; 1 — the lowest importance of the factor’s impact on the relevant
field; 3 — the highest importance.
From 0 to 3; 0 — the lowest impact of the factor on the relevant field; 3 — the
highest impact.
Experts determine it as positive or negative (quantitative assessment of the
previous items becomes positive or negative)
Summation of all received points. Value range: (-6) to (+6).
3.1 Research Limitations
Given that the study aims to identify the type of
relationship between the functioning of the personal
data protection system in the company and its
profitability, one of the assumptions is that the
personal data protection system is the company’s
intangible asset. In view of the above, the personal
data protection system is considered from the
standpoint of asset management: the effectiveness of
the personal data protection system and the impact
on the level of profitability of the selected
companies. This necessitates an intermediate stage
of research aimed at confirming and identifying
signs of personal data as companies’ separate asset
in modern business conditions. The aim of the study
and the hypothesis necessitate the analysis of policy
frameworks issued by international organizations,
which determine the strategic guidelines for the
digital development of personal data and its
implications for businesses. The limitations of the
study were due to the objective factor of insufficient
data on companies, which would contribute to a
comprehensive analysis of economic activity and
identify correlations with data protection. These
restrictions are established by law and are aimed at
protecting trade secrets. Disclosure of some issues
of internal organization of production would be
contrary to ethical principles. The research must
meet both the requirements of the law and the
principles of academicity and ethics.
4 Results
Modern society has undergone significant changes
as a result of the rapid digital transformation.
Technological innovations have brought a new
reality to the anthropology of everyday life - digital.
Digitalization of communications and information
has given rise to a large number of methods of data
exchange. People share details about their location,
their mood and their activities on many platforms.
Digital culture emerges in the digital space and
masters its features: it is virtual, communication
processes in it are accelerated at times, the time of
information exchange in it is reduced to minutes.
Despite the fact that digital culture involves the
transition of man to a new level of knowledge
of the world through digital technology, in fact, man
is becoming a target in the global world. The
amazing paradox of digital culture is its hypocrisy:
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on the one hand the living world, on the other the
technological world. And in this world, everyone
strives to protect their personal data.A separate
aspect of digitalization is the issue of data protection
and the impact of regulatory requirements on the
companies’ activities through the creation of
conditions for the protection of customer personal
data.
Peculiarities of administration and regulation of
the personal data protection system show that the
lack of regulation by the state will lead to the
development of the shadow economy and the lack of
an institutional framework for ensuring an effective
system of personal data protection (Table 3).
Table 3. Regulatory and Legal Support of the Personal Data Protection System
Source
Content
African Commission
on Human and
Peoples' Rights
(2013, 2016, 2019)
Personal data is any information concerning the person (personal data subject),
including his/her full name, year, month, date and place of birth, address, family,
social, property status, education, profession, income, other information. Legal
remedies for personal data protection include administrative and judicial instruments
to restore the violated right to personal data protection.
EU General Data
Protection
Regulation (GDPR)
One of the main areas of legislation is to ensure transparency and accountability to
minimize the risks of individuals’ data misuse. It also imposes obligations and
additional burdens on businesses by regulators.
Law of Ukraine “On
Personal Data
Protection” dated
01.06.2010
The composition of personal data and the requirement for mandatory registration of
personal databases owned by enterprises are determined. Practice shows that the most
common types of personal databases of Ukrainian companies are: databases of
personal data of employees and personal databases of customers or other contractors.
The reports with information about individuals who were part of the databases are not
subject to registration as an object of personal databases.
Source: [35-39]
In order to identify global trends and tendencies, we
will also consider other analytical reviews and
documents issued by international organizations.
Table 4 summarizes the main topical issues of
development of systems of protection and
counteraction to illegal use of personal databases.
Table 4. Trends in the Development of Systems to Protect and Combat the Illegal Use of Personal Databases
Source
Covered issues
2019 UN
Digital
Economy
Report
Protecting personal data is a way to help platform users to balance the power of global digital
platforms. This approach gives the latter ownership of their data and the ability to sell (or not
sell) it.
A separate issue here is the formal and informal creation of user personal databases by
companies. In the UN report, increasing confidence in data was seen as a tool for recognizing the
purely collective nature of data value. Instead of individualizing ownership, data companies seek
to build trust between different stakeholders (individuals, businesses, governments) so that they
can share data freely and openly with each other. This can take the form of a recurring
framework aimed at building trust between those who store data and those who need the data;
and can be a more permanent organizational structure with an established management
mechanism.
OECD
The growing interaction between personal data, algorithms and big data analytics, related things
and people opens up new huge opportunities. But they also raise questions about data
management at the national and international levels. These include issues of data availability,
accessibility, usability, integrity and security management, as well as concerns about ownership,
implications for trade and competition, as well as for privacy, and so on. The government’s
political bodies are struggling with these issues. The use of digital technologies and data is at the
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heart of the digital transformation in all sectors of the economy and society, which means that
any policy decision on data can have far-reaching implications.
Source: [40-41].
A separate problem of company development in the
context of the personal data protection systems
development is to determine the value and
recognition of personal data as a separate intangible
asset. However, the value of personal data is quite
difficult to determine. UN officials believe that
personal data should be considered a public resource
[40]. This would mean that data collected within a
particular jurisdiction must first belong to that
jurisdiction, even if the authorities are unable to
extract, collect, store or analyse the data.
The rights to control over access, copying, use
and deletion of data — fundamental rights related to
the concept of “personal data ownership” — are
currently affected by different legal frameworks,
such as copyright and related rights, or in the case of
personal data — the Privacy Framework [41].
As a summary, we can conclude that, the
development of personal data protection systems in
Ukraine requires additional work to consider in
advance the ownership of data and its implications
for policy, which will also lead to additional
restrictions and administrative burdens for
businesses. Figure 2 contains the main proposals for
consideration when generalizing the results of the
comparative analysis of the institutional
environment in Ukraine in the field of personal data
protection and the positions of international
organizations. At the second stage of our study, we
obtained data on the activities of the studied IT
companies from open sources and specialized
Internet resources (Table 5). Based on these data,
we can calculate the efficiency of intangible assets
by companies, namely the profit per customer
(Table 6).
Fig. 2: The Directions Identified by the OECD to Be Taken Into Account in Ukrainian Practice
Table 5. Initial Data for the Analysis of the Impact of Personal Data Protection Policy on the Company
Development
Item
No.
Company
Number of specialists in
Ukraine, persons
Net profit of the
company, thousand UAH
Number of customers of the
company, firms/persons
2017
2018
2019
2017
2018
2019
2017
2018
2019
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Item
No.
Company
Number of specialists in
Ukraine, persons
Net profit of the
company, thousand UAH
Number of customers of the
company, firms/persons
2017
2018
2019
2017
2018
2019
2017
2018
2019
1
Ciklum
2,654
2,692
2,725
2,937.4
8,505.5
4,723
845
1,023
1,207
2
NIX
2,136
2,271
2,390
302.3
968.6
1,856.3
712
845
1,063
3
Evoplay
1,963
2,050
2,188
1,254.9
1,063.7
1,745.3
516
678
701
4
DataArt
1,741
1,900
2,100
632.5
1,258.6
1,512.3
469
763
1,012
5
Infopulse
Ukraine
1,875
1,940
1,991
103.6
569.7
1,012.6
230
450
780
6
ZONE3000
1,598
1,640
1,815
136.8
489.7
986.7
196
374
500
7
Ajax Systems
602
900
1,600
405.8
596.7
963.7
230
310
450
8
ELEKS
1,478
1,514
1,594
236.8
471.3
693.8
241
413
493
9
Intellias
1,489
1,510
1,570
196.7
397.4
854.3
180
270
390
10
Genesis
1,475
1,528
1,536
296.7
487.6
798.3
150
280
370
Table 6. Analysis of the Effectiveness of Using Intangible Assets of the Studied IT Companies, Thousand
UAH/Company
Item No.
Company
2017
2018
2019
Deviation 2019 to 2017
1
Ciklum
3.48
8.31
3.91
0.44
2
NIX
0.42
1.15
1.75
1.32
3
Evoplay
2.43
1.57
2.49
0.06
4
DataArt
1.35
1.65
1.49
0.15
5
Infopulse Ukraine
0.45
1.27
1.30
0.85
6
ZONE3000
0.70
1.31
1.97
1.28
7
Ajax Systems
1.76
1.92
2.14
0.38
8
ELEKS
0.98
1.14
1.41
0.42
9
Intellias
1.09
1.47
2.19
1.10
10
Genesis
1.98
1.74
2.16
0.18
Thus, as the studied indicators show, the level of
efficiency of using intangible assets of IT
companies has increased for all companies over the
past three years. At the same time, the highest
absolute growth rates are observed in NIX,
ZONE3000, Intellias and others. Among the
surveyed IT companies, Ciklum (UAH 3.91
thousand/customer as of 2019), Evoplay (UAH 2.49
thousand/customer) and Intellias (UAH 2.19
thousand/customer company) have the highest level
of efficiency of using intangible assets in the form
of personal customer data (Figure 3). The figure
shows that Ciklum uses intangible resources most
efficiently. All other market participants who
participated in the study are at the average level of
use of intangible resources. This is primarily due to
the low information culture that is inherent in
economies that are moving from industrial to digital.
According to the results of the analysis using the
Trend Equation tool in Excel, we obtained the
following regression coefficients and elasticity
coefficients (Table 7).
Thus, at the stage of specification we chose a
third degree polynomial model (Figure 4). It was
found that in the studied situation 93.2% of the total
variability Y is explained by the change of X. It was
also found that the parameters of the model are
statistically significant (Fcalc.> Fcrit,
13.70588235>4.102821).
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We will forecast the net profit and efficiency of
intangible assets of the surveyed IT companies in
2021 based on the use of the developed model,
provided sustainability of the personal data
protection policy of the surveyed IT companies
(Table 8).
Fig. 3: Indicator of the Efficiency of Using Intangible Assets of the Surveyed IT Companies As of 2019, UAH
Thousand/Customer
Table 7. Summary Indicators of Regression Models to Determine the Dependence of IT Company
Development Indicators on the Degree of Customer Personal Data Protection and the Corresponding
Forecasting
Form of trend
Trend equation
Correlation
coefficient r
Coefficient of
determination R2
F-test
r R2 F
Linear
y = 3,0462x -604,88
0.77711003
0.6039
0.381153749
Exponential
y = 410, e0,0016x
0.86608314
0.7501
3.00160064
Logarithmic
y = 1974,1n(x) -11238
0.71944423
0.5176
1.072968491
Second degree
polynomial
y = 0,0082x2 -9,594x +
3508,9
0.88741197
0.7875
3.705882353
Third degree polynomial
y = 0,0000x3 -0,0661x2 -
44,3404x -8399,7525
0.96540147
0.932
13.70588235
Power
y = 1,1601x1,0828
0.8286133
0.6866
2.190810466
Fig. 4: Dependence of the Use of Customer Personal Data of IT companies and the Profit of IT Companies
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DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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Table 8. Forecast Values of the Efficiency of Intangible Assets of the Studied IT Companies, Thousand
UAH/Firm in 2021
Item
No.
Company
Number of customers
of the company,
firms/persons
Net profit of
the company,
thousand UAH
The efficiency of intangible
assets of the surveyed IT
companies in the forecast 2021
1
Ciklum
1,207
4723
4.32
2
NIX
1,063
1,856.3
1.98
3
Evoplay
701
1,745.3
2.71
4
DataArt
1,012
1,512.3
1.69
5
Infopulse
Ukraine
780
1,012.6
1.56
6
ZONE3000
500
986.7
2.13
7
Ajax Systems
450
963.7
2.54
8
ELEKS
493
693.8
2.00
9
Intellias
390
854.3
2.59
10
Genesis
370
798.3
2.60
Let’s clearly show the comparative volumes of
forecast values of the efficiency of use of intangible
assets of the studied IT companies in 2019 and 2021
(Figure 5).
Fig. 5: Comparative Values of the Indicator of Efficiency of Intangible Assets of the Selected IT Companies in
2019 and in 2021, Thousand UAH/Customer
Therefore, we see an increase in the efficiency of
intangible assets of surveyed IT companies in 2021.
Such growth will be economically justified if
continued investment in the customer personal data
protection of surveyed IT companies, which will
strengthen customer confidence and increase their
number.
The obtained data and tendencies, as well as the
dynamics of change of profitability of studied
companies, serve as a basis for carrying out an
expert assessment of influence of a
macroenvironment. Initial conditions for expert
observation:
1. Identification of macro-environmental
factors that have a direct or indirect impact on the
level of profitability of IT companies;
2. Determining the priority of each individual
factor of the macroenvironment (at the sectoral
level, the degree of importance and the nature of the
impact);
3. Determining the cumulative impact of
macro-environmental factors on the level of
profitability of the studied enterprises. Table 9
shows the main results of the assessment of the
impact of certain macro-environmental factors
conducted by 5 experts.
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Olga Yu. Guseva, Inna O. Kazarova,
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Table 9. Assessment of the Impact of the Macroenvironment on the Profitability of IT Companies
Experts
Macro-environmental factors
Importan
ce for the
industry
(1,2,3)
Degree of
influence
(from 0
to 3)
The
nature
of the
impact
(+/-)
Impact
assessment
Expert 1
Political instability
2
2
-
-4
Political situation in the country
2
2
-
-4
Cooperation with EU countries
1
2
+
+3
Increased cost of personal data protection due
to the tightening of legislation in this area
3
1
+
+4
Expert 2
Political instability
3
2
-
-5
Political situation in the country
2
3
-
-5
Cooperation with EU countries
1
2
-
-3
Increased cost of personal data protection due
to the tightening of legislation in this area
3
1
+
+4
Expert 3
Political instability
2
2
-
-4
Political situation in the country
3
3
+
+6
Cooperation with EU countries
3
2
-
-5
Increased cost of personal data protection due
to the tightening of legislation in this area
3
1
+
+4
Expert 4
Political instability
3
3
-
-6
Political situation in the country
3
3
-
-6
Cooperation with EU countries
1
2
+
+3
Increased cost of personal data protection due
to the tightening of legislation in this area
3
1
+
+4
Expert 5
Political instability
2
2
-
-4
Political situation in the country
3
3
-
-6
Cooperation with EU countries
1
2
+
+3
Increased cost of personal data protection due
to the tightening of legislation in this area
3
3
-
-6
Note: the expert assessment was conducted through a survey of experts from the studied companies.
Based on the expert assessments presented in Table
9, it can be concluded that the greatest positive
impact on the development of the IT industry has
cooperation with EU countries. There is also a
positive impact on the increased costs of personal
data protection due to the strengthening of
legislation in this area. This policy improves the
perception of the industry in the international
market, and thus improves investment
attractiveness.
The obtained average value of expert
assessments for such a factor of the
macroenvironment as “Increased cost of personal
data protection due to the tightening of legislation in
this area” is +2. That is, according to most experts,
this relevant factor has a direct impact on changing
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the companies’ profitability of moderate importance
for the industry and the degree of impact.
Therefore, the impact of regulatory requirements
that determine the development and strengthening
personal data protection systems as intangible assets
of companies, have a direct impact on the results of
their financial and economic activities.
5 Discussions
The development of the business institution in the
context of digitalization of personal data protection
is the subject of active scientific discussions.
Comparing the methodology of this study and
the methodology used by the OECD [42] in
assessing the prospects for economic and personal
data development, we note that both studies have
similar architectonics, but this paper focuses on such
an aspect of digitalization of personal data
protection as its impact on businesses and the nature
as a separate company asset. Significance and
scientific novelty in comparison with existing
approaches to the study of the impact of personal
data protection in the company in its development
level, is in particular the study of the impact of
profitability of both individual companies and the
industry as a whole.
In particular, the results obtained during the
application of the expert method (in contrast to the
methods of comparative analysis used in [7, 17, 24]
showed that the impact of increased costs of
creating an effective personal data protection system
in the company, as a consequence of the
implementation of legislation, have a direct impact
on the dynamics of profitability of companies
operating in the fields listed in the International
Classification of Economic Activities (NACE).
When analyzing the relationship between the
spread of personal data protection practices and the
profitability of companies, it was the first time when
the attention was paid to the impact of such a factor
as “Increased cost of personal data protection due to
the tightening of legislation in this area”, extending
the research by [43].
Despite the close attention to the subject,
scholars do not cover issues related to the creation
of the necessary institutional prerequisites for the
spread of personal data protection in developing
economies, as well as guidelines for assessing these
national prerequisites. The latter, in fact, should be
the object of further study. The analysis and
comparison of the obtained results with world
analogues and scientific developments proves their
novelty [44-46].
The task of the state policy of personal data
protection is to create institutions that would be the
main regulators of personal data circulation.
Responsibility for misuse and dissemination of
information containing personal data needs to be
strengthened. This will not only create a secure
information space for citizens, but also increase the
country's investment attractiveness. Thus, the study
proved the initial hypothesis that the main factor
influencing the level of development of companies
in the context of spreading personal data protection
systems is the underdeveloped institutional
environment for the regulation of this area.
6 Conclusion
The relevance of the topic of the article is due to the
active penetration of digital technologies in all
spheres of modern society. The business community
and governments of the world, including Ukraine,
are aware of the need to accelerate the processes of
digitalization and digital transformation of the
economy in order to achieve competitive positions.
The issue of personal data protection, incurring
costs for the development of the data protection
system is urgent, especially in the context of the
spread of digitalization processes to all spheres of
life. Besides the existing benefits, this also causes
hidden problematic aspects, including a decreased
customer confidence in the company’s activities and
other groups of stakeholders in terms of data
security. Thus, the problem of personal data
protection involves other consequences of today’s
widespread access to personal information of people
in the context of digitalization.
Increasing trust in the personal data use is a
prerequisite for the full realization of the benefits of
companies’ digital transformation. This, in turn,
requires policy makers to better understand and take
into account data heterogeneity, apply a strategic
approach to data management and ensure that all
policy objectives are taken into account, as well as
improve their ability to use data to better policy-
making.
Practice shows that the most common types of
personal databases of Ukrainian companies are
employee databases and databases of customers or
contractors. The reports with information about
individuals that were part of the databases are not
subject to registration as an object of personal
databases.
The obtained average value of expert
assessments for such a factor of the
macroenvironment as “Increased cost of personal
data protection due to the tightening of legislation in
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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this area” is +2. That is, according to most experts,
the relevant factor has a direct impact on changing
the company’s profitability of moderate importance
for the industry and the degree of influence.
The obtained results are a contribution to
scientific achievements in the field of personal data
protection and business development. This is
primarily due to the novel research objectives.
The practical value of the obtained scientific
results is the analysis of scientific approaches and
policy frameworks issued by international
organizations, as well as the expert assessment of
the impact of political and legal factors on the
companies’ profitability. The results obtained in this
work can serve as a methodological basis for further
sectoral research in order to assess the impact of the
requirements of the institutional environment on the
companies engaged in various economic activities.
Based on the data obtained, it is necessary to
recommend companies to deepen cooperation in the
field of data protection. It is necessary to study the
experience of major players in the IT market and
implement successful business solutions to protect
customer data. Also a necessary condition for
improving the investment attractiveness of the
company is the implementation of international
protocols in the field of personal data protection.
Further research may be aimed at studying the
effectiveness of the implementation of international
protocols in the production processes of domestic IT
companies.
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Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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DOI: 10.37394/232015.2022.18.25
Olga Yu. Guseva, Inna O. Kazarova,
Ilona Y. Dumanska, Mykhaylo Α. Gorodetskyy,
Lina V. Melnichuk, Volodymyr H. Saienko
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