IMPACT OF BUSINESS ENVIRONMENT ON THE DEVELOPMENT OF REGIONAL IT SECTOR: CASE EASTERN CROATIA

The Information technology sector (IT) is one of the most important economic sectors by its contribution to the operational efficiency of all other industries and consequently to the overall economy. There is no other business activity that equally affects the development of all spheres of society, business sector and public administration. As well, this sector was one of the few in the course of the last economic crisis, which did not have a strong decline of the business revenues and employment. However, despite the above, the publications on the Croatia IT sector emphasized the existing obstacles to the continuation of its progressive development. Some of those are non-stimulating business environment, the inflexibility of the education system (resulting in the inadequate supply of skilled labour), the low level of available financial supports utilization, the absence of double taxation agreements with some of the largest world markets etc. The aim of this paper is to determine the impacts of the existing business environment on the regional IT sector performance, measured by selected financial indicators. Therefore, this paper presents the review of relevant literature and the results of the financial analysis of the largest IT companies of Eastern Croatia (that includes 62 and 63 codes of NACE classification) for the period 2012 to 2016. In accordance with stated above, the research comprises financial and statistical analysis of selected financial indicators including variations of business revenues, EBITD, EBITDA, NPM, CapEx, NIPE, RoA, total assets horizontal analysis, etc. The research gave the insight of the development trends of regional IT sector and insight of possible development obstacles, which can in the future be the basis for designing the recommendations for policymakers.