IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v14y2021i1p15-d473510.html
   My bibliography  Save this article

Economic Calculus Qua an Instrument to Support Sustainable Development under Increasing Risk

Author

Listed:
  • Grzegorz Drozdowski

    (Department of Economics and Finance, Faculty of Law and Social Sciences, Jan Kochanowski University in Kielce, 25-369 Kielce, Poland)

Abstract

Investment decisions in the field of sustainable development should be taken based on an economic calculation, taking into account the analysis of a diverse economic environment. The economic calculus of an enterprise is treated as a kind of way of thinking about the rationality of decisions made by an entrepreneur. In the case of sustainable development, the economic calculus serves as an instrument to support the selection of the investment measure. The result of the economic calculus is based on various types of economic parameters, which are subject to frequent changes and high risk. A risk-based financial account may be of little use in the context of the unpredictability of the forecasted situations. In the article, I attempted to determine the importance of a variable interest rate in the economic calculus of a company as an instrument to support sustainable development. For this purpose, I modified the Net Present Value (NPV) meter, which contains actual (variable) discount rates.

Suggested Citation

  • Grzegorz Drozdowski, 2021. "Economic Calculus Qua an Instrument to Support Sustainable Development under Increasing Risk," JRFM, MDPI, vol. 14(1), pages 1-12, January.
    • Handle: RePEc:gam:jjrfmx:v:14:y:2021:i:1:p:15-:d:473510
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/14/1/15/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/14/1/15/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Lee D. Parker & Deryl Northcott, 2016. "Qualitative generalising in accounting research: concepts and strategies," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 29(6), pages 1100-1131, August.
    2. Rajkovic, Tijana, 2020. "Lead independent directors and investment efficiency," Journal of Corporate Finance, Elsevier, vol. 64(C).
    3. Audrey Gramling & Arnold Schneider, 2018. "Effects of reporting relationship and type of internal control deficiency on internal auditors’ internal control evaluations," Managerial Auditing Journal, Emerald Group Publishing, vol. 33(3), pages 318-335, March.
    4. Anthony J. Evans, 2016. "The unintended consequences of easy money: How access to finance impedes entrepreneurship," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(3), pages 233-252, September.
    5. Iuliana Militaru, 2016. "Utility Of Net Present Value (Npv) For Firms In Today’S Economy," Romanian Economic Business Review, Romanian-American University, vol. 11(4), pages 80-84, december.
    6. Terje Aven & Frederic Bouder, 2020. "The COVID-19 pandemic: how can risk science help?," Journal of Risk Research, Taylor & Francis Journals, vol. 23(7-8), pages 849-854, August.
    7. Stefan Dierkes & Imke de Maeyer, 2020. "Valuation with mixed financing strategies," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 1317-1341, November.
    8. Alexi Thompson & Henry Thompson, 2021. "Six decades of inflation and money demand," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(2), pages 240-251, April.
    9. Walter Leal Filho & Luciana Londero Brandli & Amanda Lange Salvia & Lez Rayman-Bacchus & Johannes Platje, 2020. "COVID-19 and the UN Sustainable Development Goals: Threat to Solidarity or an Opportunity?," Sustainability, MDPI, vol. 12(13), pages 1-14, July.
    10. Chia-Lin Chang & Michael McAleer & Wing-Keung Wong, 2020. "Risk and Financial Management of COVID-19 in Business, Economics and Finance," JRFM, MDPI, vol. 13(5), pages 1-7, May.
    11. K. S. Sujit & B. Rajesh Kumar & Sarbjit Singh Oberoi, 2020. "Impact of Macroeconomic, Governance and Risk Factors on FDI Intensity—An Empirical Analysis," JRFM, MDPI, vol. 13(12), pages 1-14, December.
    12. Tobias Adrian & Hyun Song Shin, 2009. "Money, Liquidity, and Monetary Policy," American Economic Review, American Economic Association, vol. 99(2), pages 600-605, May.
    13. Gabriel-Andrei Donici & Cristian Incaltarau, 2010. "Public Goods And The Problem Of Economic Calculus," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 2(2), pages 37-42, June.
    14. Nathalie Joly, 2016. "Educating in economic calculus: the invention of the enlightened peasant via manuals of agriculture, 1830--1870," Accounting History Review, Taylor & Francis Journals, vol. 26(2), pages 131-160, July.
    15. Zbyslaw Dobrowolski, 2020. "After COVID-19. Reorientation of crisis management in crisis," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(2), pages 799-810, December.
    16. Michael C. I. Nwogugu, 2016. "Anomalies in Net Present Value, Returns and Polynomials, and Regret Theory in Decision-Making," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-44698-5, December.
    17. Romeo Victor Ionescu & Monica Laura Zlati & Valentin Marian Antohi & Silvius Stanciu, 2018. "Reduced Inequalities as Factor of Sustainable Development: The Analysis Under Econometric Models," Sustainability, MDPI, vol. 10(10), pages 1-23, September.
    18. Rammel, Christian & van den Bergh, Jeroen C. J. M., 2003. "Evolutionary policies for sustainable development: adaptive flexibility and risk minimising," Ecological Economics, Elsevier, vol. 47(2-3), pages 121-133, December.
    19. Terje Aven & Ortwin Renn, 2009. "On risk defined as an event where the outcome is uncertain," Journal of Risk Research, Taylor & Francis Journals, vol. 12(1), pages 1-11, January.
    20. Lukka, Kari, 2014. "Exploring the possibilities for causal explanation in interpretive research," Accounting, Organizations and Society, Elsevier, vol. 39(7), pages 559-566.
    21. Ma, T. & Grubler, A. & Nakamori, Y., 2009. "Modeling technology adoptions for sustainable development under increasing returns, uncertainty, and heterogeneous agents," European Journal of Operational Research, Elsevier, vol. 195(1), pages 296-306, May.
    22. Luigi Marengo, 2020. "Organizational politics and complexity: Coase vs. Arrow, March, and Simon," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(1), pages 95-104.
    23. Marcin Rabe & Dalia Streimikiene & Yuriy Bilan, 2019. "The Concept of Risk and Possibilities of Application of Mathematical Methods in Supporting Decision Making for Sustainable Energy Development," Sustainability, MDPI, vol. 11(4), pages 1-24, February.
    24. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
    25. Gilles Hilary & Gary C. Biddle, 2006. "Accounting Quality and Firm-Level Capital Investment," Post-Print hal-00481720, HAL.
    26. Andreas Ziegler, 2017. "Economic calculus or personal and social values? A micro-econometric analysis of the acceptance of climate and energy policy measures," MAGKS Papers on Economics 201716, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    27. Peter J. Boettke & Ennio E. Piano, 2019. "Capital, Calculation, and Coordination☆," Research in the History of Economic Thought and Methodology, in: Including a Symposium on Ludwig Lachmann, volume 37, pages 9-24, Emerald Group Publishing Limited.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zbysław Dobrowolski & Grzegorz Drozdowski & Mirela Panait & Arkadiusz Babczuk, 2022. "Can the Economic Value Added Be Used as the Universal Financial Metric?," Sustainability, MDPI, vol. 14(5), pages 1-14, March.
    2. Grzegorz Drozdowski & Joanna Rogozińska-Mitrut & Jacek Stasiak, 2021. "The Empirical Analysis of the Core Competencies of the Company’s Resource Management Risk. Preliminary Study," Risks, MDPI, vol. 9(6), pages 1-12, June.
    3. Luiz Moreira Coelho Junior & Amadeu Junior da Silva Fonseca & Roberto Castro & João Carlos de Oliveira Mello & Victor Hugo Ribeiro dos Santos & Renato Barros Pinheiro & Wilton Lima Sousa & Edvaldo Per, 2022. "Empirical Evidence of the Cost of Capital under Risk Conditions for Thermoelectric Power Plants in Brazil," Energies, MDPI, vol. 15(12), pages 1-12, June.
    4. Andrzej Pawlik & Paweł Dziekański & Jarosław W. Przybytniowski, 2021. "Influence of Financial Variables on the Development of Rural Communes of Eastern Poland in 2009–2018," Risks, MDPI, vol. 9(8), pages 1-22, August.
    5. Zbysław Dobrowolski & Grzegorz Drozdowski & Mirela Panait & Simona Andreea Apostu, 2022. "The Weighted Average Cost of Capital and Its Universality in Crisis Times: Evidence from the Energy Sector," Energies, MDPI, vol. 15(18), pages 1-15, September.
    6. Liangang Li & Pingyu Zhang & Chengxin Wang, 2022. "What Affects the Economic Resilience of China’s Yellow River Basin Amid Economic Crisis—From the Perspective of Spatial Heterogeneity," IJERPH, MDPI, vol. 19(15), pages 1-20, July.
    7. Qing He & Yaqin Liu & Qian Yu & Chao Wei, 2022. "Risk Dominance Analysis of R&D Investment Cooperation in Dynamic Option Game," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    8. Yonglian Wang & Lijun Wang & Changchun Pan, 2022. "Tourism–Growth Nexus in the Presence of Instability," Sustainability, MDPI, vol. 14(4), pages 1-11, February.
    9. Paweł Dziekański & Piotr Prus & Mansoor Maitah & Magdalena Wrońska, 2021. "Assessment of Spatial Diversity of the Potential of the Natural Environment in the Context of Sustainable Development of Poviats in Poland," Energies, MDPI, vol. 14(19), pages 1-27, September.
    10. Yanli Li & Jiayuan Li & Luyao Gan, 2022. "A Meta-Analysis of the Relationship between Environmental Regulations and Competitiveness and Conditions for Its Realization," IJERPH, MDPI, vol. 19(13), pages 1-12, June.
    11. Hui Wang & Shu Xu, 2022. "Heterogeneity Effect of Corporate Financialization on Total Factor Productivity," Sustainability, MDPI, vol. 14(11), pages 1-17, May.
    12. Abhishek Sharma & Chandana Hewege & Chamila Perera, 2022. "Violations of CSR Practices in the Australian Financial Industry: How Is the Decision-Making Power of Australian Women Implicated?," Sustainability, MDPI, vol. 15(1), pages 1-21, December.
    13. Zbysław Dobrowolski & Grzegorz Drozdowski & Mirela Panait, 2022. "Understanding the Impact of Generation Z on Risk Management—A Preliminary Views on Values, Competencies, and Ethics of the Generation Z in Public Administration," IJERPH, MDPI, vol. 19(7), pages 1-13, March.
    14. Grzegorz Drozdowski & Paweł Dziekański, 2022. "Local Disproportions of Quality of Life and Their Influence on the Process of Green Economy Development in Polish Voivodships in 2010–2020," IJERPH, MDPI, vol. 19(15), pages 1-26, July.
    15. Alexey Bilgaev & Erzhena Sadykova & Fujia Li & Anna Mikheeva & Suocheng Dong, 2021. "Socio-Economic Factor Impact on the Republic of Buryatia (Russia) Green Economic Development Transition," IJERPH, MDPI, vol. 18(20), pages 1-17, October.
    16. Diamando Afxentiou & Peter Harris & Paul Kutasovic, 2022. "The COVID-19 Housing Boom: Is a 2007–2009-Type Crisis on the Horizon?," JRFM, MDPI, vol. 15(8), pages 1-22, August.
    17. Vargas-Hernández José G. & Rakowska Joanna & Vargas-González Omar C., 2022. "Green Economic Development as the Framework for Green Finance and Green Investment," Economic and Regional Studies / Studia Ekonomiczne i Regionalne, Sciendo, vol. 15(3), pages 304-322, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:ers:journl:v:xxiv:y:2021:i:2:p:165-174 is not listed on IDEAS
    2. Zbyslaw Dobrowolski & Grzegorz Drozdowski & Monika Dobrowolska & Janusz Sobon & Dariusz Sobon, 2021. "Economic Calculus and Weak Signals: Prevention Against Foggy Bottom," European Research Studies Journal, European Research Studies Journal, vol. 0(2 - Part ), pages 165-174.
    3. Grzegorz Drozdowski & Joanna Rogozińska-Mitrut & Jacek Stasiak, 2021. "The Empirical Analysis of the Core Competencies of the Company’s Resource Management Risk. Preliminary Study," Risks, MDPI, vol. 9(6), pages 1-12, June.
    4. Arkadiusz J. Derkacz, 2020. "Fiscal, Investment and Export Multipliers and the COVID-19 Pandemic Slowdowns Uncertainty Factor in the First Half of 2020," Risks, MDPI, vol. 8(4), pages 1-21, November.
    5. Ho, Po-Hsin & Huang, Chia-Wei & Lin, Chih-Yung & Yen, Ju-Fang, 2016. "CEO overconfidence and financial crisis: Evidence from bank lending and leverage," Journal of Financial Economics, Elsevier, vol. 120(1), pages 194-209.
    6. Constantin Anghelache & Mădălina-Gabriela Anghel & Ștefan Virgil Iacob & Mirela Panait & Irina Gabriela Rădulescu & Alina Gabriela Brezoi & Adrian Miron, 2022. "The Effects of Health Crisis on Economic Growth, Health and Movement of Population," Sustainability, MDPI, vol. 14(8), pages 1-22, April.
    7. Liu, Yin & Neely, Pamela & Karim, Khondkar, 2022. "The impact of CFO gender on corporate overinvestment," Advances in accounting, Elsevier, vol. 57(C).
    8. Bamber, Matthew & Tekathen, Matthäus, 2023. "Beyond the pages of the ‘how-to’ textbook: A study of the lived experiences of the accounting ethnographer," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 93(C).
    9. Zbysław Dobrowolski & Grzegorz Drozdowski & Mirela Panait, 2022. "Understanding the Impact of Generation Z on Risk Management—A Preliminary Views on Values, Competencies, and Ethics of the Generation Z in Public Administration," IJERPH, MDPI, vol. 19(7), pages 1-13, March.
    10. Anagnostopoulou, Seraina C. & Trigeorgis, Lenos & Tsekrekos, Andrianos E., 2023. "Enhancement in a firm's information environment via options trading and the efficiency of corporate investment," Journal of Banking & Finance, Elsevier, vol. 149(C).
    11. Masahiro Enomoto, 2018. "Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan," Discussion Paper Series DP2018-12, Research Institute for Economics & Business Administration, Kobe University, revised Dec 2023.
    12. Bo-Hung Chiou & Shen-Ho Chang, 2020. "Influence of Investment Efficiency by Managers and Accounting Conservatism on Idiosyncratic Risks to Investors," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 10(1), pages 1-8.
    13. Alexandridis, G. & Antypas, N. & Travlos, N., 2017. "Value creation from M&As: New evidence," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 632-650.
    14. Ali Zackery & Joseph Amankwah-Amoah & Zahra Heidari Darani & Shiva Ghasemi, 2022. "COVID-19 Research in Business and Management: A Review and Future Research Agenda," Sustainability, MDPI, vol. 14(16), pages 1-32, August.
    15. Chan-Jane Lin & Tawei Wang & Chao-Jung Pan, 2016. "Financial reporting quality and investment decisions for family firms," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 499-532, June.
    16. Luca Riccetti & Alberto Russo & Mauro Gallegati, 2015. "An agent based decentralized matching macroeconomic model," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(2), pages 305-332, October.
    17. Bárbara Galleli & Elder Semprebon & Joyce Aparecida Ramos dos Santos & Noah Emanuel Brito Teles & Mateus Santos de Freitas-Martins & Raquel Teodoro da Silva Onevetch, 2021. "Institutional Pressures, Sustainable Development Goals and COVID-19: How Are Organisations Engaging?," Sustainability, MDPI, vol. 13(21), pages 1-21, November.
    18. Blot, Christophe & Creel, Jérôme & Hubert, Paul & Labondance, Fabien & Saraceno, Francesco, 2015. "Assessing the link between price and financial stability," Journal of Financial Stability, Elsevier, vol. 16(C), pages 71-88.
    19. Crowe, Christopher & Dell’Ariccia, Giovanni & Igan, Deniz & Rabanal, Pau, 2013. "How to deal with real estate booms: Lessons from country experiences," Journal of Financial Stability, Elsevier, vol. 9(3), pages 300-319.
    20. Benbouzid, Nadia & Leonida, Leone & Mallick, Sushanta K., 2018. "The non-monotonic impact of bank size on their default swap spreads: Cross-country evidence," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 226-240.
    21. Fredric Mishkin, 2011. "How Should Central Banks Respond to Asset-Price Bubbles? The 'Lean' versus 'Clean' Debate After the GFC," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 59-70, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jjrfmx:v:14:y:2021:i:1:p:15-:d:473510. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.