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Units o f analysis

Having identified research questions formulated propositions and having selected a research strategy, points of direct interaction between government agencies and enterprises were selected as the units of analysis.

A point of direct interaction as the unit of analysis provides a clear procedure involving both officials and enterprise. It has clear structure in terms of being a tangible relationship between two players. It also has, or should have, rules that are supposed to regulate that interaction. The scope of the subject matter is manageable and is less risl^ than focussing specifically on one or the other participant of the interaction. Using this unit of study offers the chance to examine the official version of the interaction versus the practical version of the same in the same study. This offers a balanced means of examining the relationship between officials and enterprise. The purpose of the study, once again, is to understand the specific difficulties faced by business in their direct relations with official structures. Thus the interaction point is the preferable choice. This thesis will examine five interaction points, where business and official structures interface directly: Official registration, certification, obtaining a sales permit, tax inspection, and fire inspection.

Elements within these interactions are subsequently explored in greater detail. These elements become the sub-units of study and they are determined by the enterprises themselves through the interview process. In other words, a certain procedural point is identified by an enterprise as problematic this point is taken up and becomes the elemental part of the sub-unit of stucfy to be compared with the official version of the procedure. The elements used in the study are those that were found to be part of the collective experience among the interviewees.

Among those interviewed and within each case study, several sub-units of study will be examined in an effort to determine in the first place if certain parts of the interactions are

obstructive or non-obstructive to the enterprise, and secondly, whether these can be identified as possible opportunities for corrupt behaviour.

The principle criteria for selection of the points of interaction were their constant exposure in research by international organisations and mass media, as problematic."^ Secondly, interactions were selected where direct interface between the authorities and enterprise was necessary. Where individuals representing each side had to meet and exchange information or documents in some form, rather than through policy creation or other such means that do not involve face-to-face meetings. Finally, where access to information and interviews was believed to be available.

It is necessary to explain that the units of study are not of the same type. One set of interactions involves officials making on-site visits and the contact is direct, the other set contains interaction where the entrepreneur goes to the official bureau in order to obtain a document in the form of registration, permit, or certificate. Thus the units of study and their respective sub-units of study are divided into two slightly different lists, though both lists have comparable themes. The first set of interactions is made up of those elements of study related to certification of business activity, licensing and obtaining sales permits."^ Differing only to reflect the type of interaction they make up, they include “the paper chase”, “payment”, “waiting for the man”, “getting it all back and moving on”, and “the behaviour

136 Daniel Kaufmann, “Why is Ukraine’s Economy - and Russia’s - N ot Growing?” in Transition (April 1997) 5- 7, Simon Johnson, John McMillan and Christopher Woodruff, “Why D o Firms Hide? Bribes and Unofficial Activity After Communism.” in CEPR Discussion Paper N o.2105 (March 1999), Martin Raiser, “Informal institutions, social capital and economic transition: reflections on a neglected dimension”, KH Institute Jar World Economics WorkingPapers No. 25 (August 1997), Inna Pidluska, “Corruption Versus Clean Business in Ukraine” http://www.cipe.org/e28/pidle28.htm

of officials”. As with the first set of elements, several specific points to be examined include: requirements of the applicant; availability of information/application forms; requirements (documents), arrival at official bureau; costs; time requirement; frequency of visits to complete one interaction; communication with office; behaviour of officials; frequency of renewal of documentation, and the like.

The second set includes tax inspection and fire/safety inspection. The elements of the interaction are “the paper chase”, “on-site inspections”, “the relationship continues”, “payment”, and “the behaviour of officials”. Within each of these elements a number of specific points are examined, among them: the selection of enterprises for inspection; frequency of inspection; notification of inspection; unannounced inspections; protocol of inspection; provisions for inspectors; premises inspection; duration of inspection; repeat / subsequent inspections; fines and penalties; behaviour of officials.

Contacts

Pragmatism and convenience guided the search for individuals to comment and interview on these points of interactions. Selected enterprises had to be domestic firms with no overseas investment, and had to qualify as small firms, that is under 25 employees and with a small turnover of under 250,000 UAH annually. Selection of small independent enterprises (SIEs) was chosen primarily to attempt to ensure an indiscriminate SIE viewpoint. Interviews were conducted with selected firms whose experience with government institutions varied though all had some experience at some stage of their development. It was however hoped that a

significant number of the interviewees had experience with all interactions chosen for the case studies.

Traditional methods of approaching both business and official contacts such as corresponding with prospective interviewees in advance were not applicable. Letters sent in advance were beheved to have litde use. First because it was suggested, and experience has shown, that people in Ukraine prefer to meet face to face through introductions, and second, appointments made well in advance are often not kept or delayed. The method of ‘showing- up-and-waiting’ seemed to be most effective.

Officials were approached using connections through the Canadian Embassy, the American Chamber of Commerce in Ukraine, the law firms of Baker & McKenzie and Squire, Saunders & Dempsey, as well as Peter Hadsett and Partners, a UK property management firm. Further contacts were made through private connections in Ukraine.

Interviews with bureaucratic officials had to be conducted with a degree of stealth and luck. Access to higher authorities was relatively straightforward, though less desirable than discussions with operational level officials. In every instance, higher management proceeded to explain the points of interaction from a policy perspective without reference to the actual details of the procedure. Moreover, they were reluctant to have their subordinates participate in interviews. Several meetings were set up out of working hours or during on site visits. Few operational level officials were prepared to make any comment about the procedures and insisted on the researcher talking to their superiors.

official documents were found in a variety of places. The laws of Ukraine and many of the supporting documents were found on-line through the Verkhouna Rada website. Other documents were obtained either through the official contacts made in Ukraine, through publishers’ offices and from news kiosks in Kyiv.

Bri^description of infiyrrnation somxes

The enterprises selected cover a broad range of activities. Although a random pattern of selection was of primary interest, the broad nature of their experience was also a factor.

Table VI. 1 - Number o f SIEs in the survey by number of employees

1-3 11

4-6 9

7-10 3

10-b 4

Table VI.2 - Number o f SIEs in the survey by sector See also Ch VI, Appendix 2

Manufacturing 4 (B4, BIO, B20, B25

Trade 5 (B5, B7, B16, B17,

B19)