15 10 3494 https://omeka.ibu.edu.ba/files/original/43ac604140166a423d1f160b7537e33f.pdf 809c0c05604f7e21080d7fab4ea13105 PDF Text Text THE EFFECTS OF FAMILY AND NURSERY COOPERATION IN THE NORTH SANDZAK REGION Zehra Hasanović International University of Novi Pazar Serbia zehra.hasanovic@live.com Summary: For normal growth and development of a child, particular, is cooperation of preschool institution (nursery, infant nursery) and family (parents). Better cooperation of these two institutions, the way of harmonization educational influence with individual and group contacts are opened. Objectives of this cooperation is better informing to stay of children in family and preschool institution was more substantial. Results of this research will be support to better solving of these problems, and it will open possibilities for getting acquainted all protagonists of this process with possibilities and perspectives for building strong connections and relations between family (parents) and preschool institutions (preschool teachers). The research on theme “The effects of family and nursery cooperation in the North Sandzak region” ,was realized in preschool institutions on the North Sandzak region (Novi Pazar, Sjenica, Tutin, Prijepolje). In the research participated 140 examinees, 80 parents of the children attending preschool institution and 60 preschool teachers who are employees of preschool institutions. Key words: cooperation, family, nursery, child, partnership Introduction In order to achieve a direct cooperation, special responsibility is on teachers, (but also on preschool teachers, psychologists, social workers and medical personnel). The same responsibility in the process of establishing good cooperation between families and preschools is on parents who are obliged, among other things, to make preschool teachers familiar about the status and activities of the child in the family, about the conditions of child’s life and work, the abilities and possibilities of its development in the family. Good and bad opportunities in the family are often the cause of the child’s special features in behavior which is a clear sign that the child needs the support and assistance. Parents will provide the necessary information to the preschool teachers in order to avoid the possibility of insincere or imagined children’s stories about the real situation in the family. Thus, parents and teachers together are obliged to exchange opinions about the child and his behavior, in order to overcome inappropriate behavior of a child. Parents and teachers will communicate during individual parentteacher meetings, visits to the parental home, and through adequate educational seminars and forums. The most common form of cooperation of the family (parents) and preschools (nursery schools) is individual informing that takes place during the meetings of preschool teachers and parents when they meet each other in person and exchange the necessary information and agree on methods and contents of the joint work of each of these institutions. ICESoS 2016 - Proceedings Book 193 �International Conference on Economic and Social Studies (ICESoS’16) With the cooperation, both sides are getting close to each other, they talk, they learn and create a joint strategy with the aim of better growth and development of the child. The teacher and parents on both sides gain experience based on the experiences of the other. Preschools should work on a constant conversations with the family of a child who goes to preschool, which will mean a lot for a child. The teacher will look for reasons and initiate a visit to the child’s home, during occassions such as illness or family member, the enlargement of the family and so on. When visiting the home of the child, teacher will have the opportunity to get to know the conditions in which the child resides and develops, and finally meet the child’s family. In the overall life and work (content) of the preschools, the relationship (cooperation) between the preschools and schools is significant in order for a child to have less painful transition from preschool to school environment. The continuous monitoring of the child’s vertical development is developing and strengthening cooperation between preschool teachers and teachers of the class teaching school the child will attend after their stay in preschool. It can be direct or indirect. First, a direct cooperation between preschools and schools needs to be realized, and then the level of cooperation reduces down to preschool teachers and school teachers who will take over the child out of preschool in the next year. The cooperation is achieved in a way that school teachers organize joint visits to old school educational groups and share their experiences about the problems that are common. On the other hand, school teachers can organize visits to preschools (nursery schools) with the aim of exchanging experiences on issues of common interest for children who are students of the school, and previously stayed in the preschool. With such cooperation, preschool teachers acquire the necessary experience to contribute to their quality of work, and on the other hand, teachers in schools get to know children better, as well as the forms and methods of work in preschools. Society, community, and especially parents expect from educational institutions for children of preschool age to be open to the educational environment, including in its scope of work of all the factors of society who show interest, and family as well. Therefore, we believe that cooperation (partnership) of the preschools and family is very important in order to achieve, above all, unified educational influence in the way of the planned program content. In the large part of their daily activities, child remains within the family that leaves a strong influence on its development. The influence of the family does not stop regardless of the absence of the family, and its presence remains in the preschool upbringing and educational institutions. The importance of cooperation between the family and preschool institutions Society, community, and especially parents, expect from educational institutions for education of children of preschool age to be open to the educational environment, including in its scope of work of all the factors of society who show interest, and family as well. Therefore, we believe that cooperation (partnership) of the preschools and family is very important in order to achieve, above all, unified educational influence in the way of the planned program content. In the large part of their daily activities, child remains within the family that leaves a strong influence on its development. The influence of the family does not stop regardless of the absence of the family, and its 194 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation presence remains in the preschool upbringing and educational institutions. How much success we will have in the upbringing of the child largely depends on the compliance of corrective actions of the families and preschool institutions. Noncompliance and non-cooperation of the two institutions (family and preschools) can result in a lack of proper development of the child and the inability to set the society goals. Only joint action, working together of families and preschools can result in a positive outcome recognized in the substantial achievements of preschool education. Upbringing activity in preschools must not be a substitute for family, but should stand for continuity in the upbringing of the child. Educational work in the family should provide support to the family and the two environments should have unique requirements that will be put in front of a child. In order to prevent the upbringing imbalance, the two institutions must cooperate directly. Preschool institution is more organized than family, more comprehensive and more professional. Programming work and expertise of educational staff is a characteristic of education of children in preschool institutions. But the family certainly achieves a particular impact on preschool institution. It is therefore important to introduce the family (parents) with the program content, content, goals and objectives and the overall possibilities of educational work in preschool, so that parents can be able to define their goals. Family (parents) in different ways can provide help and support to preschool in the realization of the planned program content. For Stevanovic (2001), this help can be identified in familiarizing teachers with the “basic terms of temperament and habits of the child, interpreting its cultural, civilizational and value judgments that they want to convey to the child, suggest program content, assist in the development of appropriate teaching materials and directly participate in the implementation of certain program content. “ (Stevanovic, 2001, p. 137) The ability of teachers to ensure cooperation with parents of the children who go to preschool and to earn the trust of parents as a way of mutual understanding is of a particular importance. Kamenov (1999) considers that “parents have more benefits from cooperation with the preschool institution if they are not prone to get involved in its life and work, and even if they get involved, their presence can create the problem to the preschool teacher, because he\she has to share the attention between the children he\she is primarily responsible for, and parents who need help in order to successfully manage within the terms of preschool institutions “(Woodhead, 1979. According to E. Kamenovo 1999) According to Omerovic, successful cooperation of parents and teachers is “contributed by the human qualities which every preschool teacher should possess, ability to grasp the deeper meaning, empathy and tolerance. Since preschool institution is the first one with which parents establish cooperation to ensure proper upbringing of their child, it is one more reason for its successful functioning“. Research methodology The base of the realization of the object in this study is the attitudes of parents and preschool teachers regarding the parental cooperation with the preschool in the North Sandzak. Thus, the subject of this study is to research, analyze and to present the following views: a) The views of parents about the communication of parents and preschool teachers, about the need to exchange information about the child with respect ICESoS 2016 - Proceedings Book 195 �International Conference on Economic and Social Studies (ICESoS’16) to gender, age and place of residence, on the participation of parents at parent-teacher conferences, their participation in deciding important issues of preschool, all in regards of their gender, age and place of residence. b) The views of preschool teachers regarding the communication of parents and preschool teachers, about the need to exchange information about the child, on the participation of parents at parent-teacher conferences, their participation in deciding important issues of preschool, all in regards of their gender, age and place of residence. The main hypothesis: There is no statistically significant difference in the perception of parents and preschool teachers to parental cooperation with the preschools within the area of the North Sandzak. Research Techniques The techniques used in this research are: - Analysis of the pedagogical documentation Interviewing Scaling Statistical analysis of the data. The software package SPSS 16.0 (Statiscical Package of Social Sciences-for Windows). Research Instruments During this study a questionnaire and Likert five-point scale assessment were used. The questionnaire contains closed questions with multiple choice, from which we see gender, age, educational background and work experience, and with the scale of assessment we got answers that led us to the factors of cooperation of the family and preschool (nursery schools), communication of parents and preschool teachers, ability to provide good information for parents, participation in parent-teacher conferences, parental participation in the activities of the preschool, as well as issues that are involved because of the insufficient cooperation of teachers and parents. The sample The sample comprised 60 teachers from preschools (nursery schools) from the municipalities of Novi Pazar, Sjenica, Tutin, Prijepolje, and 80 parents of children in preschools (nursery schools) from the territory of the same municipalities. Analyis and interpretation of the research results Checking the reliability of the scale according to the assessment of parents, from the 7 indicators of communication of the parents with preschool Table 1 Cronbach’s coeffici ALPHA = 0.751, indicates a good reliability and internal approval of the scale for this sample of respondents, regardless of measuring gauge having less than 10 items. The average value of the correlation between pairs ofthe value of the scale is 0.39 (optimum between 0.20 and 0.40). 196 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Table 1: Measures of central tendency, variability and distribution of the frequency features of communication of parents with preschool teacher. 1 2 3 4 5 Indicator N M SD )%( )%( )%( )%( )%( KRSU1 80 4,59 74, 2,60 0,00 0,00 31,20 66,20 KRSU2 80 4,46 75, 0,00 3,80 3,80 35,00 57,40 KRSU3 80 4,64 51, 0,00 0,00 1,20 33,80 65,00 KRSU4 80 4,64 53, 0,00 0,00 2,60 31,20 66,20 KRSU5 80 4,58 50, 0,00 0,00 0,00 42,50 57,50 KRSU6 80 3,79 1,36 8,80 13,80 10,00 25,00 42,40 KRSU7 80 4,02 1,07 5,00 5,00 10,00 42,50 37,50 A calculated arithmetic mean (M) of all indicators of 4.39 indicates that the communication of parents with preschool teachers, as assessed by parents, is very important. The value of the standard deviation (SD) of 0.78 indicates that the scattering around the arithmetic mean is very little, as confirmed by the coefficient of variation (CV) of 17.77 and thus confirms a very good homogeneity of the results for this sample of respondents. With the analysis of the results in Table 1 we can see that parents respond mainly with 4 and 5 (agree and strongly agree), while two parents (2.60%) did not agree with this assertion. Therefore, we conclude that the respondents (parents) in the vast majority believe that the teacher is always ready to listen to parents and that parents can talk openly with a preschool teacher about the child. The analysis of the results in Table 1 shows that parents mostly responded with the answer given under number 5 (strongly agree -57.40%), therefore most of them are satisfied with informing on the progress of the child by teachers, 35.00% agree, while 3.80 % of parents had no opinion (neutral), and 3.80% of parents do not agree with this assertion. Therefore, we conclude that respondents (parents) mostly believe that parents are kept continually informed of the progress of their child. The analysis of the results in Table 1 shows that parents mostly gave an answer under number 5 (strongly agree) (65.00%), 33.80% of parents agree with this assertion, a small number of parents (1.20%) is neutral (no opinion) on topics related to their child. Therefore, we conclude that parents respect the opinion of teachers on topics related to their child. The analysis of the results in Table 1 shows that most of the parents answered with number 5 (66.20%), 31.20% of them agree, 2.60% is neutral. Therefore, we conclude that parents mostly believe that the teacher is ready to listen to parents and to talk to them openly. ICESoS 2016 - Proceedings Book 197 �International Conference on Economic and Social Studies (ICESoS’16) The analysis of the results in Table 1 shows that most parents answered with number 5 (57.50%), 42.50% of them agree with this assertion. Therefore, we conclude that parents mostly believe that the teacher respects the opinion of the parents of the child. The analysis of the results in Table 1 shows that the majority of parents (42.40%) totally agree that they preschool teacher calls them only when a problem arises, 25.00% of them agree, 10.00% is neutral, 13.80% disagree and 8.80% of them do not at all agree that the preschool teacher contacts them only when a problem occurs. Therefore, we conclude that the majority of respondents believe that the preschool teacher contacts them only when a problem occurs. The analysis of the results in Table 1 shows that the majority of parents (42.50%) agree that preschool teacher sees them as partners, 37.50% fully agree, 10.00% of the parents is neutral (no opinion), 5.00% disagrees and 5.00% do not at all agree that the preschool teacher sees them as partners. Therefore, we conclude that the majority of respondents believe that the preschool teacher sees parents as partners. T-test Table 2: Communication of the parents with the preschool teacher Parameters KRSUZ gender N M SD M 23 4,31 50, Ž 57 4,42 54, Razl. M -,11 F .Sig .t-value .Sig ,156 ,694 -,826 ,411 The value of t = -, 826 and its significance Sig. = 411 show that there is no statistically significant difference between the attitudes of parents in regards to their gender in the perceptions of communication of the parents and preschool teachers. So, based on the results we conclude that the sub-hypotheses confirmes that there is no statistically significant difference, as estimated by the parents, regarding the communication of parents and teachers in regards to gender, age and education level. ANOVA Table 3: The views of parents about the communication with the preschool teacher –F-test Parameter N df F .Sig Communication 80 3 2,646 ,055 The value of F-test and its significance (Sig.) show that there is no statistically significant difference between the parents in terms of age. 198 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Table 4: The views of parents on communicating with the preschool teacher comparing significance AGE MD SE .SIG -,756* ,370 ,045 -,958* ,376 ,013 -,905* ,418 ,034 ,756* ,370 ,045 36-45 -,202 ,125 ,109 46-55 -,149 ,223 ,505 ,958* ,376 ,013 ,202 ,125 ,109 26-35 18-25 36-45 46-55 18-25 18-25 26-35 36-45 35 2646-55 ,053 ,231 ,820 ,905* ,418 ,034 26-35 ,149 ,223 ,505 36-45 -,053 ,231 ,820 18-25 46-55 Note: The level of significance from 0,05 * - there is a statistically significant difference at the level of p < 0,05 Based on the results from the Table 4 we can see that there are significant differences between the age groups of 18-25 years and 26-35 years, between 18-25 and 3645 years, and between 18-25 and 46-55 years when it comes to communication of parents with the preschool teacher. The difference between the other age groups was not statistically significant. Thus, we can conclude that sub-hypotheses is partially confirmed, saying that there is no statistically significant difference, as estimated by the parents, in the communication of parents and teachers with respect to gender, age and education level Table 5: F-test in regards to the level of education Parameter N Df F .Sig Communication 80 4 ,704 ,592 With the analysis of Table 5 we can see that there is no statistically significant difference between respondents according to education level when it comes to the first subhypotheses. ICESoS 2016 - Proceedings Book 199 �International Conference on Economic and Social Studies (ICESoS’16) Table 6: Comparing the significance in regards to the level of education LEVEL OF EDUCATION MD SE .SIG ,146 ,176 ,410 Higher ,007 ,283 ,980 Faculty -,023 ,191 ,906 MA and PHD ,464 ,407 ,257 -,146 ,176 ,410 Higher -,138 ,253 ,586 Faculty -,168 ,142 ,239 MA and PHD ,319 ,386 ,412 -,007 ,283 ,980 Secondary ,138 ,253 ,586 Higher -,030 ,264 ,910 MA and PHD ,457 ,445 ,308 ,023 ,191 ,906 Secondary ,168 ,142 ,239 Higher ,030 ,264 ,910 MA and PHD ,487 ,393 ,219 -,464 ,407 ,257 Secondary -,319 ,386 ,412 Higher -,457 ,445 ,308 Faculty -,487 ,393 ,219 Primary Secondary Higher Faculty MA and PHD Secondary Primary Primary Primary Primary Note: The level of significance from 0,05 On the basis of the results obtained, we can conclude that there is no statistically significant difference between the examinees in regards to the level of education when it comes to communication of parents with the preschool teachers and thus confirmed the third part of the first sub-hypotheses that there is no statistically significant difference, as estimated by the parents, about the communication between parents and teachers with regard to gender, age and place of residence. Based on the results of research, we can conclude that the sub-hypotheses is confirmed that there is no statistically significant difference, as estimated by the parents, about the communication of parents and teachers with respect to gender, age and education level. 200 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Conclusion Cooperation and communication of the family (parents) and preschool institutions is very important. This opens the way of harmonizing the educational impact of individual and group contacts. Preschool teachers have a big responsibility in performing a direct cooperation with parents. There are, of course, preschool teachers, psychologists, social workers and doctors. Preschool teachers and school departments inform parents (family) on special preferences (and talents) of their children, as well as about the unexpected change of behavior because of the known or unknown causes. Events in the family are often the cause of the child’s special features in behavior which is a clear sign that the child needs the support and assistance. Parents will provide the necessary information to preschool teachers in order to avoid the possibility of insincere or imagined children’s stories about the real situation in the family. So on the basis of the results we can conclude that the main hypothesis of this research is partly confirmed and it says: There is no statistically significant difference in the perception of parents and preschool teachers to parental cooperation with the preschools in the North Sandzak. Bibliography • Bašić, J., Hudina, B., Koler-Trbović, N., Žižak, A. (2005): Integralna metoda, Aliea, Zagreb. • Brajša, P. (2003.), Roditelji i djeca, Glas Koncila, Zagreb • Einon, D. (1999). Učenje rano. Oznaku Knjige. ISBN: 0816040141 • Gudjon, H. (1994) Pedagogija temeljena znanja (93-107; 143-160). Educa. Zagreb • Lew, A.& Bettner, B. (1996) A roditelja vodič za razumijevanje i motiviranje djece. Sheffield, Velika Britanija: Connexions Press. (ISBN: 0962484180). • Holt. J.(1974). Kako deca uče. Predškolsko dete. Beograd: 1974/4.341-343. • Ivic, I.(1969). Razvoj saznajnih funkcija u predškolskom periodu, Pedagogija, Beograd. • Kamenov, E.(2006): Vaspitno-obrazovni rad u pripremnoj grupi dečjeg vrtića, Dragon, Novi Sad. Sally • Kamenov, E.(1987). Predškolska pedagogija, Knjiga I. Beograd: Zavod za uđbenike i nastavna sredstva • Milanović, M. (1997) Pomozimo im rasti. MOZS. Zagreb • Mitrović, D. (1981). Predškolska pedagogija. Sarajevo: Svjetlost. • Omerović, M. i drugi. (2009). Predškolska pedagogija, Ofset, Tuzla. • Selimović, H., Rodić, N. i Selimović, N. (2013). Metodologija istraživanja, Edukacijski fakultet, Travnik • Seligman, M.(2005) Optimistično dijete. Zagreb. IEP • Stevanović, M. (2001). Predškolska pedagogija, knjiga I. Tuzla: Denfas. • Stojaković, P. (1999). Taksonomija vaspitno-obrazovnih ciljeva u kognitivnom području i njen značaj za efikasniju individualizaciju učenja i nastave. U knjizi: Interaktivno učenje I. Banja Luka:Ministarstvo prosvjete I UNICEF. 119. • Suzić, N. (2005). Pedagogija za XXI vijek. Banja Luka: TT-Centar.129. • Suzić, N. (2006). Uvod u predškolsku padagogiju i metodiku, Banja Luka: XBS.202140. • Prodanović, T., Ničković, R. (1980): Didaktika, Beograd, Zavod za izdavanje udžbenika. ICESoS 2016 - Proceedings Book 201 �� Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3338 Title A name given to the resource THE EFFECTS OF FAMILY AND NURSERY COOPERATION IN THE NORTH SANDZAK REGION Author Author Hasanovic, Zehra Abstract A summary of the resource. Summary: For normal growth and development of a child, particular, is cooperation of preschool institution (nursery, infant nursery) and family (parents). Better cooperation of these two institutions, the way of harmonization educational influence with individual and group contacts are opened. Objectives of this cooperation is better informing to stay of children in family and preschool institution was more substantial. Results of this research will be support to better solving of these problems, and it will open possibilities for getting acquainted all protagonists of this process with possibilities and perspectives for building strong connections and relations between family (parents) and preschool institutions (preschool teachers). The research on theme “The effects of family and nursery cooperation in the North Sandzak region” ,was realized in preschool institutions on the North Sandzak region (Novi Pazar, Sjenica, Tutin, Prijepolje). In the research participated 140 examinees, 80 parents of the children attending preschool institution and 60 preschool teachers who are employees of preschool institutions. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/37e978cf4ff09117c1045deec0a58515.pdf f756b0d603e556316fcddca5d288d4cd PDF Text Text USING DATABASE AUDIT FOR ANALYZING ON HISTORICAL DATA Adnan Hodžić International Burch University Bosnia and Herzegovina adnan.hodzic@ibu.edu.ba Adem Karadag Turkey nuhadem@gmail.com Abstract: Database auditing is one of the biggest issues in data security. Absence of information auditing drives the business applications to the lost trail of business procedures. To cope with auditing and in order to track operations and the actors of those operations in time, we need historical data or temporary database. Legitimate and exchange times are two important time-stamps in temporary database. In this paper, we show the methods to handle database auditing in business exchange operations, accurate times, and performers of the operations. These strategies are separated in two sets; utilizing relational databases, and utilizing semi-structured information. Keywords: Database Audit, Historical Data Introduction It is very crucial that a company no matter how big is it maintains the security of its information. Since there are many stealing of valuable data such as customers’ credit card data, designs and maybe source codes, the data should be protected all the time. Keeping safe your data is protecting its confidentiality, integrity, and availability. To ensure the data security, there should be a security plan. Authentication and administration can facilitate the security at a point (Mullins & Craig, 2002). However, there is a need to keep log files and check them separately from the database. Thus database audit was introduced to inspect the trail maintenance. Data servers help to create a database audit policy to protect the database safe. In this way, user entries can be controlled. There will be some techniques showing how to make database auditing depend on historical data. This paper divided into 4 parts. In part 2 and 3, there is literature review of historical data and auditing. The outline of auditing of database was described in some ways. We used a relational database (Grad, 2013) to represent the row, column based and log-file auditing strategies. Database Auditing Database auditing includes inspecting a database to control and view the actions of database users. In this way, auditor can see the manipulations, corruptions or glitches on the data. Database audit also refers to a professional database auditing resolutiongiving chance to track and inspect of any database activity involving accessing, login, protection breaches, user activities, insert-delete-change the data. Recently, to supply accurate data auditing a framework has been introduced in respect to data retention strategies. (Lu & Miklau, 2009) Under retention restriction a formula applied to audit data in the protected history. In this way database audit would be more accurate. ICESoS 2016 - Proceedings Book 283 �International Conference on Economic and Social Studies (ICESoS’16) It is important to detect changes that are deviates from standard. To differentiate the normal behaviors on the data and have better results in audit, data mining techniques are generally applied. This method can only detect the static actions of the user. This disadvantage can be affected by tracking all activities of user in an data audit system. As a result, anomaly detection method was introduced to model the normal behavior of the user. (Park & Lee, 2008) In this way normal behaviors can be easily differentiated from suspicious ones. To teach database security and auditing and make the students have better understanding about it, hands –on lab studies are set (Luebbers, Grimmer, & Jarke, 2003) In these studies various database scenario are set to integrate theories of database protection into practices. Historical Data Historical data is the information outlining activity, conditions and trends in a company’s past database. Historical data is often archived, and may be held in non-volatile, secondary storage. Historical data can be useful in helping to predict the future of a company and a market, as when conducting predictive analyses. Table 1: Operational Student Table Referenced By Student-History Table For RowBased Auditing Student Number Name Birth Adress Registration Date Fee 445 Zeynep 10.10.1988 Ankara 15.01.2008 2400 822 Mahmut 12.09.1990 Istanbul 01.09.2010 2600 544 Ayşe 15.05.1991 Istanbul 01.09.2011 2600 It is very significant to detect who made the changes like insertion of a new data, data manipulation or deletion on the database. In this way, a good data audit can be retrieved. The time and the user is important issue to analyze the modification of data. When was the action happened can be answered by valid and transaction times. In a study it is mentioned that valid and transaction times should assure no data loss. (Bhargava & Gadia, 1993) Arranging Historical Data For Auditing On Relational Database There are some ways to design historical data in a relational database (Margaret Rouse, 2015) like separated tables for recording past data and transaction log files. The idea of arranging separated tables for each relational database table is easy way to track to changes for each item. With both strategies there is no change on the original data tables. There are 3 ways that we represent here to supply historical data for auditing database. They are auditing on a row level, column level and logtable. Database Audit on a Row Level Our original relational tables stay same but we create a separate table for each table to apply data audit. Operational “Student” table as shown in Table 1 supplies the current data of each student for operations. There are 2 kinds of data type in this table; 284 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation static and operational data. Static data stays same or rarely change like Student Number, Registration date or Name. Historical or operational data continuously can be updated like address of the student. Static query, which is always used, already stays same to call the data from “Student”. Table 2 is an auditing table that includes all students’ data in the operational table. Two time intervenes needed for valid times. We need to know the beginning and ending time to sustain the life cycle of the data. Besides the valid time, we acquire to have operation type to diminish the complexity of comparison among histories of the same data and the user to make him responsible from the action. History of “Student” table is shown in Table 2. It can be seen from history table that Ali Oz has been a student since 01.09.2005. The user Mustafa updated his fee 2 times by increasing by $100 each and updated address by changing it from Istanbul to Adana. Ali has finished the school and his record deleted from the Student table by Semih. Ahmet moved from Hatay to Ankara on 23.09.2008 and his record terminated on January 2009 by Mustafa. Zeynep’s fee was increased by $100 by Mustafa. Finally, Semih added two new students Mahmut and Ayşe to the Student table. Table 2: Operational Student Table Referenced By Student-History Table For Row-Based Auditing Student Number Name Birth Address 966 Ali 21.04.1986 Istanbul 966 Ali 21.04.1987 966 Ali 855 Regist. Date Fee Begin End O p User 01.09.2005 2300 01.09.2005 01.09.2007 I Mustafa Adana 01.09.2005 2300 01.09.2007 U Mustafa 21.04.1988 Adana 01.09.2005 2450 01.09.2007 23.06.2008 D Semih Ahmet 11.05.1986 Hatay 01.09.2006 2350 21.09.2007 01.09.2008 I Semih 855 Ahmet 11.05.1986 Ankara 01.09.2006 2350 23.09.2008 15.01.2009 D Mustafa 445 Zeynep 10.10.1988 Ankara 15.01.2008 2300 15.01.2008 15.06.2010 I Mustafa 445 Zeynep 10.10.1988 Ankara 15.01.2008 2400 15.01.2008 U Mustafa 822 Mahmut 12.09.1990 Istanbul 01.09.2010 2600 01.09.2010 I Semih 544 Ayşe 15.05.1991 Istanbul 01.09.2011 2600 01.09.2011 I Semih Operational table and audit table records are identical. Data is repeated in different rows but this is kept for the sake of historical query. Database audit on a row level has some advantages and drawbacks. It is easier to apply auditing. When the user wants to insert, update or delete something from the operation table, the program can simply copy the all value in the record into the historical table. Besides, the end column should be updated with the operation. This operation can be achieved by the database as used in (Yang, 2009) article. Drawbacks can be mentioned that redundancy makes the system complicated. Also, calling historical data is needed to the comparison between operational table and auditing table by using recursive query. ICESoS 2016 - Proceedings Book 285 �International Conference on Economic and Social Studies (ICESoS’16) SELECT S1.fee, MINS, MAXS, S1.USER, OPERATION FROM Student_HISTORY_R S1, ( SELECT S2.fee, MIN(S2.begin) MINS, MAX(S2.end) MAXS FROM Student_HISTORY_R S2 WHERE Student Number = 966 GROUP BY fee) S3 WHERE S1.fee = S3.fee Database Audit on Column Level Column level audit is not including redundant data as seen in the row level audit. This historical table does not contain static data like birth date and registration date. The auditing table just sustains the changed data except primary key like student number. This is required to save the data in the operational table. Student history in Table 3 keeps just the changed data and it is less redundant than the Table 2. The student number 966 Ali moved from Istanbul to Adana on 01.09.2007 got raised fee from 2300 to 2450 on 01.09.2007. Selecting not-null value on a particular auditing column in SELECT statement would display only the actual change. For example, SELECT fee, begin, end, USER, OPERATION FROM Student_HISTORY_C WHERE Student Number = 966 AND fee IS NOT NULL The query displays the auditing of Ali’s fee. Comparing with row-based auditing on the same query, the SELECT statement is much less complex. Each record in column-based auditing table cannot contain more than one value of historical data because of the uncertainty of end time of each auditing data. Table 3: Student_History_C Table Using Column-Based Auditing Student Number Address 966 966 Begin End Operation User Istanbul 01.09.2005 01.09.2007 I Mustafa Adana 01.09.2007 U Mustafa 966 Fee 2450 01.09.2007 23.06.2008 D Semih 855 Hatay 21.09.2007 01.09.2008 I Semih 855 Ankara 23.09.2008 15.01.2009 D Mustafa 445 Ankara 2300 15.01.2008 15.06.2010 I Mustafa 2400 15.01.2008 U Mustafa 445 822 Istanbul 2600 01.09.2010 I Semih 544 Istanbul 2600 01.09.2011 I Semih 286 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Since it is less complicated column level audit is faster. Less disk space is used also. However, many NULL values would cause other issues when writing queries Auditing on Log Table A log table that tracks changes to a system are also referred audit as it gives a bunch of information like user, data, time of execution that can be used to audit a system. Relational Database Management Systems (RDBMS)’s like audit option like in DB2 (IBM Knowledge Center, 2015), SQL (Stankovic, 2016) and ORACLE Servers (Stackowiak, Bales, & Greenwald, 2004) and facilitate database administrators to sustain an audit trail (Logging, Auditing, and Monitoring the Directory) and saved it in a log file. However, log tables are not keeping the finished time to program. To prevent this, there may be two ways. Column Based Log Audit Tables for Operation Logs We need to isolate auditing log data from the operational data. To do this, we make additional table for each auditing column. For instance, if ADDRESS and FEE columns in the STUDENT table are auditing columns, we make ADDRESS and FEE tables for auditing purposes as appeared in Table 4 and Table 5. There are some advantages about this way. First, it decreases the amount of auditing data and it makes it easier to analyze the tables. However, the number of independent tables may increase. Table 4: Audit Log Table For Address PK Student Number Adress Begin End 1 966 Istanbul 01.09.2005 01.09.2007 2 966 Adana 01.09.2007 3 855 Hatay 21.09.2007 4 855 23.09.2008 5 822 Istanbul 6 544 Istanbul OP User I Mustafa U Mustafa 01.09.2008 I Semih 15.01.2009 D Mustafa 01.09.2010 I Semih 01.09.2011 I Semih ICESoS 2016 - Proceedings Book 287 �International Conference on Economic and Social Studies (ICESoS’16) Table 5: Audit Log Table For Fee PK Student Number Fee Begin 1 966 2300 01.09.2007 2 966 2450 01.09.2007 3 445 2300 15.01.2008 4 445 2400 5 822 6 544 End Op User U Mustafa 23.06.2008 D Semih 15.06.2010 I Mustafa 15.01.2008 U Mustafa 2600 01.09.2010 I Semih 2600 01.09.2011 I Semih One Log Audit Table for Operation Logs To join audit data into one spot, we coordinate each auditing column from all operational tables into one single auditing log table. The audit log table makes out of name of table and column, Student ID of the record in the operational table, changed value, begin time, operation that causes the change and name of user who controls this data. Case of single audit log table of the database containing Student and Faculty tables is appeared in the Table 6. All changes made on the tables is built into the single audit log table. A solitary insertion of Student number 966 into Student table makes the insertion into audit log table two times; one log record for ADDRESS and another for Fee if Student table has two auditing columns. Upgrading on an auditing trait will embed an auditing record into the log table. You can see same action like in insertion; deletion of a record will be logged twice into audit log table if there should be an occurrence of two auditing columns, for example, deletion of Student 966 in Table 6. Table 6: One Audit Log Table For Every Table; Student And Faculty In Database PK Student Number Table Column Value Begin 1 966 Student Address Adana 01.09.2007 2 966 Student Fee 2450 4 855 Student Address Hatay 5 855 Student Fee 6 445 Student 7 445 8 9 Op User I Mustafa 23.06.2008 D Mustafa 21.09.2007 01.09.2008 I Semih 2350 23.09.2008 15.01.2009 D Semih Address Ankara 15.01.2008 15.06.2010 I Mustafa Student Fee 2300 15.01.2008 I Mustafa 445 Student Fee 2400 01.09.2010 U Semih 822 Student Address Istanbul 01.09.2010 I Semih 288 ICESoS 2016 - Proceedings Book End 13.04.2011 �Regional Economic Development: Entrepreneurship and Innovation 10 822 Student Fee 2600 01.09.2010 I Mustafa 11 544 Student Address Istanbul 01.09.2011 I Mustafa 12 544 Student Fee 2600 01.09.2011 I Semih 13 221 Faculty Manager 108 01.01.2012 I Semih 14 103 Faculty Manager 120 21.06.2013 U Mustafa Audit log table is expansive if there are numerous auditing columns from various tables. Separating the data in columns and having a solitary audit log table for every subsystem are suggested. Both methodologies require additional handling for each operation at the databases, particularly, the auditing data. Of course, database motors have as of now controlled log tables. With this additional handling, the general framework will be slowed down. Conclusion Operation tables and auditing tables should be apart from each other. In this way database engine could be much faster in running the auditing query when we compare a table includes both operational and auditing data. Overhead of checking which partition will be used against the query is added to execution time. Also, database administrator would manage the database management system easier. There are many options for auditing database. Some solutions are appropriate for relational databases. On the other hand, marketing databases are mostly using semistructured databases. Database auditing is one of the crucial issue for a company to maintain its’ not only security-related concerns but also performance and reliability. Monitoring and recording of selected user database actions determine the future of the company’s business. Overall, security and reliability of the data can be sustained by a good database auditing method References • Bhargava, G., & Gadia, S. K. (1993). Relational Database Systems with Zero Information Loss. 5 (1), 76- 87. • Grad, B. (2013). Relational Database Management Systems: The Business Explosion. IEEE Annals of the History of Computing archive , 35 (2), 8-9. • IBM Knowledge Center. (2015, January 15). Retrieved April 30, 2016, from ibm. com: http://www.ibm.com/support/knowledgecenter/#!/SSEPGG_8.2.0/ welcome.html • Lu, W., & Miklau, G. (2009). Auditing a Database Under Retention Restrictions. IEEE Inter. Conf. on Data Eng. (pp. 42-53). ICDE. • Luebbers, D., Grimmer, U., & Jarke, M. (2003). ystematic Development of Data Mining- Based Data Quality Tools. proc. of the 29th VLDB Conference, (pp. 548 - 559). Berlin. • Margaret Rouse. (2015). Relational database management systems (RDBMS). Retrieved April 5, 2016, from TechTaregt: http://searchsqlserver.techtarget.com/ definition/relational-database-management-system ICESoS 2016 - Proceedings Book 289 �International Conference on Economic and Social Studies (ICESoS’16) • Mullins, & Craig. (2002). Database administration: the complete guide to practices and procedures. Addison-Wesley. • Park, N. H., & Lee, W. S. (2008). Anomaly Detection over Clustering Multidimensional Transactional Audit Streams. IEEE International Workshop on Semantic Computing and Applications (pp. 78-80). IWSCE. • Stackowiak, R., Bales, D., & Greenwald, R. (2004, August 26). Oracle Docs. Retrieved April 30, 2016, from docs.oracle.com: http://download.oracle.com/ docs/cd/B14099_19/idmanage.1012/b14082/logging.htm#i126963 • Stankovic, I. (2016, April 5). SQL Server Audit (Database Engine). Retrieved April 30, 2016, from msdn.microsoft.com: https://msdn.microsoft.com/en- us/en%20 us/library/cc280386.aspx • Yang, L. (2009). Teaching Database Security and Auditing. SIGCSE, (pp. 241-245). 290 ICESoS 2016 - Proceedings Book � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3307 Title A name given to the resource USING DATABASE AUDIT FOR ANALYZING ON HISTORICAL DATA Author Author Hodzic, Adnan Karadag, Adem Abstract A summary of the resource. Abstract: Database auditing is one of the biggest issues in data security. Absence of information auditing drives the business applications to the lost trail of business procedures. To cope with auditing and in order to track operations and the actors of those operations in time, we need historical data or temporary database. Legitimate and exchange times are two important time-stamps in temporary database. In this paper, we show the methods to handle database auditing in business exchange operations, accurate times, and performers of the operations. These strategies are separated in two sets; utilizing relational databases, and utilizing semi-structured information. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/49c638afaab4f7884c5f976f85b9cc75.pdf aa2806ee70d36f9ce713776c1ae3f233 PDF Text Text COMPARISON OF MACHINE LEARNING TECHNIQUES IN PHISHING WEBSITE CLASSIFICATION Adnan Hodžić International Burch University Bosnia and Herzegovina adnan.hodzic@ibu.edu.ba Jasmin Kevrić International Burch University Bosnia and Herzegovina jasmin.kevric@ibu.edu.ba Adem Karadag Turkey nuhadem@gmail.com Abstract: Phishing is one among the luring strategies utilized by phishing artist in the aim of abusing the personal details of unsuspected clients. Phishing website is a counterfeit website with similar appearance, but changed destination. The unsuspected client post their information thinking that these websites originate from trusted financial institutions. New antiphishing techniques rise continuously, yet phishers come with new strategy by breaking all the antiphishing mechanisms. Hence there is a need for productive mechanism for the prediction of phishing website. This paper described comparison in classification of phishing websites using different Machine­learning algorithms. Random Forest (RF), C4.5, REP Tree, Decision Stump, Hoeffding Tree, Rotation Forest and MLP were used to determine which method provides the best results in phishing websites classification. All instances are categorized as 1 for “Legitimate”, 0 for “Suspicious” and ­1 for “Phishy”. Results show that RF with REP Tree show the best performance on this dataset for classification of phishing websites. Keywords: Machine Learning, Phishing Websites Introduction Internet is not only significant for individual users but also for online business organizations. These organizations usually offer online trading(Liu & Ye, 2003). Nevertheless, Internet­ users can be prone to different types of web­threats that can make financial damages, identity theft, loss of private information, brand reputation damage and loss of client’s trust in e­commerce and online banking. Therefore, Internet appropriateness for commercial sales becomes doubtful. Phishing websites is a semantic intrusion which targets the user instead of computer. It is a fairly new Internet crime when compared to other forms, such as virus and hacking. The phishing problem is a tough problem due to the fact that it is extremely easy for an attacker to make a replica of a good website, which looks very authentic to users. ICESoS 2016 - Proceedings Book 249 �International Conference on Economic and Social Studies (ICESoS’16) Phishing attacks usually aim to acquire confidential information like usernames, passwords and financial IDs by tricking users. Phishing attacks typically start by sending an email that appears to come from authentic company to victims requesting them to update or validate their information by visiting a link within the email. The idea is that bait is dropped out hoping that a user will take it and bite into it just like the fish. Usually, bait is an instant messaging website or an e­mail, which will take the user to hostile phishing websites(James, 2005). The motivation behind this study is to make a strong and effective technique which uses Data Mining algorithms and mechanisms to detect phishing websites. Associative and classification algorithms can be very helpful in identifying Phishing websites. It can give us answers about what the most important phishing website features and indicators are and how they link to each other. Comparing between various Data Mining classification and association systems and techniques is also a goal of this study since there are only few investigations that compares different data mining methods in predicting phishing websites. Literature Review Numerous methodologies are being implemented at present to classify phishing websites.(Aburrous, Alamgir, Keshav, & Fadi, 2009) suggests a method for intelligent phishing detection using fuzzy data mining. In this study, e­banking phishing website detection degree is achieved based on six attributes: URL & Domain Identity, Security and Encryption, Source Code and Java script, Page Style and Contents, Web Address Bar, and Social Human Factor. Fuzzy logic and data mining algorithms are applied to classify e­banking phishing websites. (Basnet, Ram, Srinivas, & Sung, 2008) adopts machine learning way for identifying phishing attacks. Support vector machine, biased support vector machine and neural network are used for the effective prediction of phishing e­mails. The objective of this study is to classify phishing emails by combining basic features in phishing emails and utilizing several machine learning algorithms for the classification process. (Mohammad, Fadi, & Lee, 2013) suggested an intelligent prototype for predicting phishing attacks based on Artificial Neural Network. Same authors shed light on the key features that classify phishing websites from real ones and evaluate how good rule­based data mining classification methods are in detecting phishing websites and which classification approach is proven to be more reliable (Mohammad, Lee, & Fadi, 2014). Methodology ● Dataset Dataset used for the research is “Phishing Websites Data Set” (“UCI Machine Learning Repository: Phishing Websites Data Set,” 2016). This dataset was gathered mainly from: PhishTank archive, MillerSmiles archive, Google’s searching operators. 250 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation The authors shed light on the key features that have been proven to be solid and efficient in predicting phishing websites while proposing some new features, experimentally assigning new rules to some well­known features and updating some other features. The dataset is divided into 3 parts, training set and 2 test sets. The training set has 11055 and test sets have 2456 and 2670 instances. All instances are categorized as 1 for “Legitimate”, 0 for “Suspicious” and 1 ­ for “Phishy”. Dataset phishing criteria is divided into 4 sections (Address Bar based Features, Abnormal Based Features, HTML and JavaScript based Features and Domain based Features) and it has 30 attributes. Table 1: Phishing features Features group Features Factor Indicator Using the IP Address Long URL to Hide the Suspicious Part Using URL Shortening Services “TinyURL” URL’s having “@” Symbol Redirecting using “//” Adding Prefix or Suffix Separated by (­) to the Domain Address Bar based Features Sub Domain and Multi Sub Domains HTTPS (Hyper Text Transfer Protocol with Secure Sockets Layer) Domain Registration Length F avicon Using Non­Standard Port The Existence of “HTTPS” Token in the Domain Part of the URL Request URL URL of Anchor Links in <Meta>, <Script> and <Link> tags Abnormal Based Features Server Form Handler (SFH) Submitting Information to Email Abnormal URL Website Forwarding HTML and JavaScript based Features Status Bar Customization Disabling Right Click Using Pop­up Window IFrame Redirection Age of Domain DNS Record Website Traffic Domain based Features PageRank Google Index Number of Links Pointing to Page Statistical­Reports Based Feature ICESoS 2016 - Proceedings Book 251 �International Conference on Economic and Social Studies (ICESoS’16) ● Algorithms Several different machine learning algorithms were used for experiments. 1. Multilayer Perceptron (MLP) Multilayer Perceptron is the most frequently used neural network classifier. MLP is a neural network and a neural network can be described as an artificial neural network which consists of a huge number of interconnected processing components known as neurons that act as a microprocessor. It is a mathematical model for classification of non­linear data into distinct classes. Multilayer Perceptron is the most popular and frequently used neural network design (Bishop, 1995). The MLP is feed­forward network architecture which involves two layers with one or more than one hidden layers; the layers are named as the input layer, hidden layer, the output layer. 2. Random Forest Random forests are a mixture of tree predictors where each tree depends on the values of an arbitrary vector sampled individually and with the same allocation for all trees in the forest. The generalization error for forests converges a.s. to a limit as the amount of trees in the forest becomes great. The generalization error of a forest of tree classifiers hangs on the strength of the individual trees in the forest and the relationship between them (Breiman, 2001). 3. Decision Trees Decision Tree Classification produces the output as a binary tree like construction called a decision tree. A Decision Tree model includes rules to predict the target variable. This algorithm scales well, even where there are changing numbers of training examples and significant numbers of attributes in big databases. a) J48 J48 algorithm is an implementation of the C4.5 decision tree algorithm. J48 uses the greedy technique to induce decision trees for classification (Chen, Zheng, Lloyd, Jordan, & Brewer, 2004). A decision­tree model is built by examining training data and the model is used to classify hidden data b) Reduced­Error Pruning (REPTree) REPTree is a quick decision tree learner. Constructs a decision/regression tree utilizing data gain/variance and prunes it adopting reduced­error pruning (with backfitting). REPTree only sorts values for numeric features once. Missing values are dealt with by splitting the related instances into pieces (i.e. as in C4.5). c) Decision Stump Decision stump is an algorithm for building and using a decision stump. It is typically used in combination with a boosting algorithm. Decision stump algorithm does regression (mean­squared error) or classification (entropy). Missing is handled as a separate value (“DecisionStump”, 2016). 252 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation d) Hoeffding Tree A Hoeffding tree (VFDT) is an incremental, anytime decision tree induction algorithm that can learn from great data streams, supposing that the distribution generating examples does not vary over time. Hoeffding trees uses the fact that a small sample can often be adequate to choose a best splitting attribute. This idea is supported by the Hoeffding bound, which quantifies the number of observations (Hulten, Geoff, Laurie, & Pedro, 2001). 4. Rotation Forest Rotation Forest is an ensemble technique which trains L decision trees separately, using a different set of obtained features for each tree. Rotation Forest (Rodriguez, Kuncheva, & Alonso, 2006) draws upon the Random Forest idea. The base classifiers are also separately built decision trees, but in Rotation Forest every tree is trained on the whole data set in a rotated feature space. While the tree learning algorithm constructs the classification regions using hyperplanes parallel to the feature axes, a small rotation of the axes may guide to a very different tree. ● Feature Ranking Feature ranking was applied through WEKA software using Correlation Attribute Evaluation(“CorrelationAttributeEval,” 2016). It evaluates the value of an attribute by measuring the correlation (Pearson’s) between it and the class. Nominal attributes are measured on a value by value basis by regarding each value as an indicator. A general correlation for a nominal attribute is reached at via a weighted average. We selected all attributes whose weight is above 0.1. Those are: ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ ❏ HTTPS URL of Anchor Adding Prefix or Suffix Separated by (­) to the Domain DNS Record Sub Domain and Multi Sub Domains Request URL Domain Registration Length Server Form Handler (SFH) Links in <Meta>, <Script> and <Link> tags Google Index Age of Domain PageRank ICESoS 2016 - Proceedings Book 253 �International Conference on Economic and Social Studies (ICESoS’16) Experiments and Results All experiments were conducted in WEKA tool (“Weka 3 ­Data Mining with Open Source Machine Learning Software in Java,” 2016) which is an open source data mining application created in JAVA at Waikato University. Table 2: Full training set results Classifier Test 1 Test 2 MLP 85.5% 85% Random Forest 85.7% 84.5% C4.5 74.6% 73% REPTree 88.4% 88% Decision Stump 86.1% 87% Hoeffding Tree 87.3% 88.4% Rotation Forest (REP Tree) 89.1% 88.5% Rotation Forest (Hoeffding Tree) 88% 84.6% The results show that Rotation Forest algorithm with REP Tree as a classifier give the best results for both test sets with 89.1% and 88.5% accuracy respectively. Other classifiers were not far behind, except C4.5 with 74.6% and 73% for two test sets. After doing the ranking features with Correlation Attribute Evaluation, we applied the same classifiers. The results are very close to the ones with full training set. Surprisingly, MLP results improved for both test sets to 89% and 86.4%. MLP is also the best classifier for first test set with just 0.1% drop in comparison to Rotation Forest with REP Tree results with the full training set. REP Tree was the best classifier for test set 2 with 87.6% correct classification. The drop in correct classification after feature reduction is applied is 1.17%. 254 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Table 3: Reduced training set results Classifier Test 1 Test 2 MLP 89% 86.4% Random Forest 81.8% 80.2% C4.5 73.9% 73% REPTree 87.1% 87.6% Decision Stump 86.1% 87% Hoeffding Tree 82.1% 83.4% Rotation Forest (REP Tree) 88.9% 87% Rotation Forest (Hoeffding Tree) 87.5% 84% If we compare two result tables, we can see that Rotation Forest with REP Tree as a classifier gives the overall best results with 88.37% correct classification, while MLP outshines all other classifiers when feature reduction is applied. Discussion (Mohammad et al., 2014) conducted the similar feature selection where they selected nine features (Request URL, Age of Domain, HTTPS and SSL, Website Traffic, Long URL, Sub Domain and Multi Sub Domain, Adding prefix or Suffix Separated by (−) to Domain, URL of Anchor and Using the IP Address). If we compare their selected attributes with ours, we can see that we share 6 same features: Request URL, Age of Domain, HTTPS and SSL, Sub Domain and Multi Sub Domain, Adding prefix or Suffix Separated by (−) to Domain and URL of Anchor). Moreover, all of the 30 features fall within 4 different feature groups: Address Bar based Features, Abnormal Based Features, HTML and JavaScript based Features, and Domain based Features. However, none of the 12 selected feature falls within “HTML and JavaScript” based Features. This raises the question whether this group of features is relevant in classification of phishing websites. Conclusion Phishing websites detection has gotten a colossal consideration by greater part of the individuals as it serves to recognize the undesirable data and dangers. Hence, the greater part of the analysts focuses in discovering the best classifier for recognizing phishing websites. This work models the phishing website prediction as a classification task and presents the machine learning approach for predicting whether the given website is legitimate website or phishing. Multilayer perceptron, Decision tree classifiers, and Rotation Forest have been applied for training the prediction model. Training set of 11055 and two test sets of 2456 and 2670 instances with 30 attributes have been ICESoS 2016 - Proceedings Book 255 �International Conference on Economic and Social Studies (ICESoS’16) prepared in order to facilitate training and implementation. From the results it has been found that the Rotation Forest algorithm with REP Tree as a classifier and MLP performs the best on a full training and on reduced set, respectively. When training set was reduced from 30 attributes to 12, the overall results for all classifiers dropped for 1.17%. In the meantime, MLP’s overall results increased from 85.5% to 87.7%. It is hoped that more interesting results will follow on further exploration of data. References • Liu, Jiming, and Yiming Ye. E­commerce Agents: Marketplace Solutions, Security Issues, and Supply and Demand. Berlin: Springer, 2001. Print. • Aburrous, M. R., Alamgir, H., Keshav, D., & Fadi, T. (2009). Modelling Intelligent Phishing Detection System for E­ banking Using Fuzzy Data Mining. In 2009 International Conference on CyberWorlds. http://doi.org/10.1109/cw.2009.43 • Basnet, R., Ram, B., Srinivas, M., & Sung, A. H. (n.d.). Detection of Phishing Attacks: A Machine Learning Approach. In Studies in Fuzziness and Soft Computing (pp. 373–383). • Bishop, C. M. (1995). Neural Networks for Pattern Recognition. Oxford University Press. Breiman, L. (2001). Random Forests. Machine Learning, 45(1), 5–32. • Chen, M., Zheng, A. X., Lloyd, J., Jordan, M. I., & Brewer, E. (n.d.). Failure diagnosis usingdecision trees. In International Conference on Autonomic Computing, 2004. Proceedings. http://doi.org/10.1109/icac.2004.1301345 • CorrelationAttributeEval. (n.d.). Retrieved May 9, 2016, from http://weka. sourceforge.net/doc.dev/weka/attributeSelection/CorrelationAttributeEval. html • DecisionStump. (n.d.). Retrieved May 9, 2016, from http://weka.sourceforge.net/ doc.dev/weka/classifiers/trees/DecisionStump.html • Hulten, G., Geoff, H., Laurie, S., & Pedro, D. (2001). Mining time­ changing data streams. In Proceedings of the seventh ACM SIGKDD international conference on Knowledge discovery and data mining ­KDD ’01. http://doi. org/10.1145/502512.502529 • James, L. (2005). Phishing Exposed. Syngress. • Liu, J., & Ye, Y. (2003). E­Commerce Agents: Marketplace Solutions, Security Issues, and Supply and Demand. Springer. • Mohammad, R. M., Fadi, T., & Lee, M. (2013). Predicting phishing websites based on self­structuring neural network. Neural Computing & Applications, 25(2), 443– 458. • Mohammad, R. M., Lee, M., & Fadi, T. (2014). Intelligent rule­ based phishing websites classification. IET Information Security, 8(3), 153–160. • Rodriguez, J. J., Kuncheva, L. I., & Alonso, C. J. (2006). Rotation Forest: A New Classifier • Ensemble Method. IEEE Transactions on Pattern Analysis and Machine Intelligence, 28(10), 1619–1630. • UCI Machine Learning Repository: Phishing Websites Data Set. (n.d.). Retrieved May 9, 2016, from https://archive.ics.uci.edu/ml/datasets/Phishing+Websites • Weka 3 ­Data Mining with Open Source Machine Learning Software in Java. (n.d.). Retrieved: May 9, 2016, from http://www.cs.waikato.ac.nz/ml/weka/ 256 ICESoS 2016 - Proceedings Book � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3308 Title A name given to the resource COMPARISON OF MACHINE LEARNING TECHNIQUES IN PHISHING WEBSITE CLASSIFICATION Author Author Hodzic, Adnan Kevric, Jasmin Karadag, Adem Abstract A summary of the resource. Abstract: Phishing is one among the luring strategies utilized by phishing artist in the aim of abusing the personal details of unsuspected clients. Phishing website is a counterfeit website with similar appearance, but changed destination. The unsuspected client post their information thinking that these websites originate from trusted financial institutions. New antiphishing techniques rise continuously, yet phishers come with new strategy by breaking all the antiphishing mechanisms. Hence there is a need for productive mechanism for the prediction of phishing website. This paper described comparison in classification of phishing websites using different Machinelearning algorithms. Random Forest (RF), C4.5, REP Tree, Decision Stump, Hoeffding Tree, Rotation Forest and MLP were used to determine which method provides the best results in phishing websites classification. All instances are categorized as 1 for “Legitimate”, 0 for “Suspicious” and 1 for “Phishy”. Results show that RF with REP Tree show the best performance on this dataset for classification of phishing websites. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/cced2548fdbbcb7c0db8ff18d6522e72.pdf 55fc6d26a7a9744ee75c37a9679eb99f PDF Text Text THE CHARACTERISTICS AND DYNAMICS OF MANAGEMENT CONTROLS IN SMALL AND MEDIUM ENTERPRISES: MEASURING PERFORMANCE ACCORDING TO EMPLOYEE STIMULATION Lejla Huseinbašić International Burch University Bosnia and Herzegovina lejla.huseinbasic@hotmail.com Abstract: This paper begins with explanation of importance of the control management in organisations and how controlling aspect of organisations plays an important role in achieving organisational’s best interests and goals that are strategically planned. Set of controls need to be implemented in order to decrease undesirable behavior and to encourage desirable actions. Individuals don’t generally comprehend what is anticipated from them nor how they can best perform their employments, as they might do not have some essential capacity, preparing, or data. Also, individuals have various inalienable perceptual and psychological predispositions, for example, a failure to prepare new data ideally or to settle on reliable choices, and these inclinations can decrease hierarchical viability. This paper suggests that the proper stimulation of employees in terms of different types of rewarding can result in higher achievements, both for the employee and the organisation. Keywords: Management, Control, SME, Performance, Employee Introduction Individuals at work actually have a tendency to receive instinctual methods of conduct that are self-defensive as opposed to open and synergistic. This clarifies why feeling is a solid power in the work environment and why administration frequently responds fiercely to reactions and as a rule looks to control as opposed to go out on a limb. Along these lines, keeping in mind the end goal to dispense with this sort of viewpoint and to build representative inspiration, it is best that you impact conduct as opposed to change identities. The world of business administration is not all about income, spreadsheets, and advertising, there is the precarious business of human conduct that must be gone to. Most business supervisors who examined administration in school invested significantly more energy in bookkeeping and financial aspects class than they did in psychology class and in some cases human conduct can be a significant riddle. In an organization not just authority, the workforce is likewise an imperative segment. We ought to treat individuals similarly, no preference. Motivation is a worker’s inborn eagerness about and drive to perform exercises identified with work. Motivation is that inner drive that causes a person to choose to make a move. An individual’s motivation is impacted by natural, scholarly, social and passionate components. In that capacity, motivation is a complex, not effectively characterized, inborn main impetus that can likewise be impacted by outer components. Each representative has exercises, occasions, individuals, and objectives in his or her life that he or she discovers rousing. In this way, motivation about some part of life exists in every individual’s cognizance and activities. ICESoS 2016 - Proceedings Book 181 �International Conference on Economic and Social Studies (ICESoS’16) The trap for businesses is to make sense of how to move representative motivation at work. To make a workplace in which a worker is roused about work, includes both inherently fulfilling and extraneously promising components. Worker motivation is the blend of satisfying the representative’s needs and desires from work and the work environment considers that empower worker motivation - or not. These variables make inspiring representatives testing. Businesses comprehend that they have to give a workplace that makes motivation in individuals. Be that as it may, numerous businesses neglect to comprehend the essentialness of motivation in achieving their central goal and vision. Notwithstanding when they comprehend the significance of motivation, they do not have the ability and learning to give a workplace that encourages representative motivation. Choices to hold, advance, or fire individuals must be made in each association. What is the most exact approach to settle on these choices? Traditionally, these choices were made through support and nepotism, where individual connections inside the association largy affected advancement and terminating choices. While individual connections are still vital today, numerous commercial enterprises attempt to deliberately survey specialist execution, so as to build efficiency (and at last, benefits). Productive employees are the soul of each enrolling business, however what method can be used to survey their execution levels? Do they comprehend objectives and desires of the organisation? Is it accurate to say that they are meeting their own destinations? Each organization ought to ceaselessly screen and assess their workers. Assessing worker execution ought to be completed on an on-going premise and incorporate all zones of their hard working attitude and individual accomplishments. Keeping in mind as well, that poor execution or negative practices can likewise be symptomatic of a basic issue with organisation’s way of life, so have an arrangement set up to address any issues that can be find. Motivation methods There are the same number of various techniques for spurring workers today as there are organizations working in the worldwide business environment. Still, a few procedures are common over all associations endeavoring to enhance representative motivation. The best worker motivation endeavors will concentrate on what the representatives regard to be critical. It might be that representatives inside the same division of the same association will have distinctive motivation. Numerous associations today find that adaptability in occupation plan and compensate frameworks has brought about representatives’ expanded life span with the organization, enhanced efficiency, and better spirit. Empowerment Giving workers more obligation and basic leadership power builds their domain of control over the assignments for which they are considered mindful and better prepares them to complete those errands. Subsequently, sentiments of disappointment emerging from being considered responsible for something one doesn’t have the assets to do are reduced. Vitality is occupied from self-protection to enhanced assignment achievement. 182 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Creativity and Innovation At numerous organizations, representatives with imaginative thoughts don’t express them to administration for trepidation that their info will be overlooked or criticized. Organization endorsement and toeing the organization line have turned out to be so instilled in some workplaces that both the worker and the association endure. At the point when the ability to make in the association is pushed down from the top to line work force, representatives who know a vocation, item, or administration best are given the chance to utilize their thoughts to enhance it. The ability to make rouses representatives and advantages the association in having a more adaptable work power, utilizing all the more admirably the experience of its workers, and expanding the trading of thoughts and data among representatives and divisions. These upgrades additionally make an openness to change that can give an organization the capacity to react rapidly to market changes and support a first mover advantage in the commercial center. Learning On the off chance that representatives are given the apparatuses and the chances to achieve all the more, most will tackle the test. Organizations can propel representatives to accomplish more by focusing on never-ending upgrade of worker aptitudes. Accreditation and authorizing programs for representatives are an undeniably prominent and powerful approach to realize development in worker learning and inspiration. Regularly, these projects enhance representatives’ states of mind toward the customer and the organization, while reinforcing self-assurance. Supporting this statement, an examination of components which impact inspiration to-learn found that it is specifically identified with the degree to which preparing members trust that such interest will influence their employment or profession utility. At the end of the day, if the group of information picked up can be connected to the work to be refined, then the procurement of that learning will be a beneficial occasion for the worker and the employer. Quality of Life The quantity of hours worked every week is on the ascent, and numerous families have two grown-ups working those expanded hours. Under these circumstances, numerous specialists are left thinking about how to meet the requests of their lives past the work environment. Frequently, this worry happens while at work and may decrease a worker’s efficiency and confidence. Organizations that have established adaptable worker game plans have increased spurred representatives whose profitability has expanded. Programs consolidating strategic scheduling, dense work filled weeks, or occupation sharing, for instance, have been fruitful in centering overpowered representatives toward the work to be done and far from the requests of their private lives. Monetary Incentive For all the championing of option inspirations, cash still possesses a noteworthy spot in the blend of helpers. The sharing of an organization’s benefits offers motivating force to representatives to create a quality item, perform a quality administration, or enhance the nature of a procedure inside the organization. What advantages the organization straightforwardly advantages the representative. Financial and different prizes are being given to representatives for creating cost-investment funds or processICESoS 2016 - Proceedings Book 183 �International Conference on Economic and Social Studies (ICESoS’16) enhancing thoughts, to support profitability and lessen truancy. Cash is successful when it is specifically fixing to a representative’s thoughts or achievements. All things considered, if not combined with other, non-money related inspirations, its spurring impacts are fleeting. Further, fiscal motivations can demonstrate counterproductive if not made accessible to all individuals from the association. Other Incentives Study after study has found that the best inspirations of laborers are non-money related. Fiscal frameworks are lacking helpers, to a limited extent since desires frequently surpass results and in light of the fact that uniqueness between salaried people may separate instead of join workers. Demonstrated non-money related positive inspirations foster cooperation and incorporate acknowledgment, obligation, and headway. Administrators who perceive the “little wins” of representatives, advance participatory situations, and treat workers with decency and admiration will observe their representatives to be all the more exceptionally energetic. One organization’s administrators conceptualized to think of 30 effective prizes that cost little or nothing to actualize. The best compensates, for example, letters of recognition and time off from work, improved individual satisfaction and sense of pride. Over the more drawn out term, true acclaim and individual signals are much more powerful and more sparing than recompenses of cash alone. At last, a project that consolidates money related prize frameworks and fulfills inherent, self-realizing needs might be the most strong worker spark. Ilustration 1: Employee motivation principles 184 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Entirely separated from the advantage and good estimation of an unselfish way to deal with regarding associates and representatives as individuals and regarding human poise in all its structures , looks into and perception demonstrate that well motivated workers are more gainful and innovative. What is the stimulation of the employees? Numerous managers still hold the old feeling that an employee will complete his occupation constrainted by good and cash. Obviously, both are viable for pulling the occupation off. Else they could complete it without productivity. It is set to trust that capable work genuinely influence the venture’s proficiency. Despite what might be expected, with a higher work excited, individuals can effectively perform work, in order to upgrade the organization in this appreciation advantage. What we ought to do is simply given each representative a chance to be keen on his work and stir his excitement to make the organization’s advantages the entire upgrade. The purported faculty consolation implies the enterprise invigorates from outside to actuate the staff’s needs, longings and inspirations. Structure a particular objectives and protect when the representative achieve his objective he remains a high spirits, supportable positive state and discharges the boundless mechanical potential. The mental studies demonstrate that individuals are spurred while they encounter some unsatisfied needs or uncompleted objectives. In this way, the necessities or objectives, can be either physical and material, or mental and otherworldly. As a general rule, individuals’ interest is not single. Workers are “trainable”- at one level, people are just creatures and the practices can be comprehended as a progression of boost and reaction designs. At an extremely fundamental level, we rehash practices that have worked for us in the past and neglect to rehash practices that have not worked for us. This idea is called behaviorism and it says that when representatives are compensated for good conduct, they will rehash the conduct. In an awful occupation, the main compensate a representative gets is a paycheck and he or she will do as meager as could reasonably be expected to continue getting that remunerate. In a great job, there are steady remunerates; even acclaim can be viewed as a spurring compensate that supports great conduct. An intriguing thing to note about behaviorism is that discipline is just used to decrease conduct. In the event that you need any kind of conduct to expand, you have to compensate the conduct, not rebuff a man for absence of it. For instance, on the off chance that you need a worker to tidy up their range toward the end of the movement, discipline for not cleaning won’t ingrain the conduct (despite the fact that it may work for some time). On the off chance that you really need to change conduct, you have to give a prize for cleaning the region. This doesn’t mean you have to chase after your representative’s tossing treats throughout the day. The prize can be, “when your zone is cleaned, you can go home”. In the event that going home is remunerating, that will soon get to be connected with cleaning the region. You would prefer not to get in the propensity for treating representatives like pets, however it regards comprehend the essential way of human conduct and how support functions. ICESoS 2016 - Proceedings Book 185 �International Conference on Economic and Social Studies (ICESoS’16) Employees need to feel engaged enormous conduct issues can come about because of workers feeling weak in their parts. Feeling weak can show itself in various courses with various workers; some will take a uninvolved forceful position, picking up force by what they don’t do as opposed to what they do. Different workers may react to sentiments of frailty by more forceful means, such as tattling and abusing the organization. Still others may take out the sentiments on subordinates or even on their clients. 5 ways to encourage employee behaviour through motivation 1. Adjusting individual financial interests to organization execution It takes more doing at the most elevated administration levels than the rest. In any case, impetus pay programs that give workers at all levels of an association an opportunity to advantage when an organization succeeds can actually support inspiration (accepting strong individual execution with the goal one should partake in money related prizes). 2. Taking a real enthusiasm for the future way of a employee’s vocation It does ponders for a worker’s state of mind to trust that a supervisor truly thinks about where his or her profession is going. Tutoring, instructing, proposing extra preparing or coursework - these can be useful to workers, and very esteemed. 3. Taking a sincere enthusiasm for their work-life equalization To the degree that administrators can offer some adaptability in timetables and to be understanding about family duties, medical checkups et cetera – such affectability can be enormously refreshing. Little motions regularly have a major effect. 4. Giving a purpose Managers need to be ready to motivate its workers by giving them a reason. When achieving that, they comprehend the vision better and can execute all the more emphatically. What’s more, by comprehension their motivation and the reason for the business, a worker is better ready to see how they fit into the 10,000 foot view. 5. Being Transparent Trying to be exceptionally open with workers about what’s going on at the most abnormal amount so there are no curve balls and everybody has an opportunity to make inquiries and give input. The representatives need to feel incorporated into major choices and focused on the bearing our organization takes. This has managed inspiration and expanded organization faithfulness and pride. Data When it comes to demographic data, I found out that the percentage of males and females are almost the same (51,06% of males). From the age point of view, the majority was between 18 and 40 years old (57, 45%). Further on, i found out that the majority have finished high school (34, 04%) and graduated from faculty (34, 75%). Looking at income, the majority have an income between 801 and 1600 KM. (50, 35%). The most 186 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation respondents in my research were married (54,61%). At the end, the biggest number of respondents have working experience 10 or more years (35,71%). See Table 1. Table 1: Demographic profile of respondents Demographic profile of respondents Categories Gender Age Level of education Status Monthly income Martial status Working experience Number (#) Percentage (%) Male 72 51,06 Female 69 48,96 18-40 81 57,45 41-60 57 40,34 61 or more 3 2,13 Elementary school or lower 2 1,42 1 - 3 grades of high school 9 6,38 Finished high school 48 34,04 1 - 3 years of faculty 19 13,48 Graduated 49 34,75 Master studies 10 7,09 Phd 4 2,84 Less than 800 KM 43 30,50 801 - 1600 KM 71 50,35 1601 – 2400 KM 20 14,18 2400 KM or more 2 1,42 Single 25 17,73 In relationship 30 21,28 Married 77 54,61 Divorced 6 4,26 Widowed 3 2,13 Less than 1 year 13 9,29 1 – 3 years 34 24,29 3- 5 years 20 14,29 5 – 10 years 23 16,43 10 or more years 50 35,71 ICESoS 2016 - Proceedings Book 187 �International Conference on Economic and Social Studies (ICESoS’16) Average satisfaction among respondents is aroud 3,87 on scale from 1 to 5 and the most frequent grade for satisfaction is 4 (mode). The lower standard deviation is the more data points are centerd around the mean, in this case the standard deviation is 1,1 which means that the numbers in the range are clustered near mean. See Table 2. Table 2: Average job satisfaction I am satisfied with status in firm where I work. Valid 141 Missing 0 Mean 3.87 Median 4.00 Mode 4 Std. Deviation 1.101 Minimum 0 Maximum 5 N Average response in survey which respondents choose when it comes to equal behaviour toward manager and employees processes is 3,82 on scale from 1 to 5 and the most frequent grade for satisfaction is 5 (mode). The standard deviation is 1,29 which means that the numbers in the range are clustered near mean, but less than in previous example. For more details, see Table 3. Table 3: Fair treatment between manager and employees The company where I work treats fairly when it comes to equal behaviour toward manager and employees processes. Valid N Missing 141 0 Mean 3.82 Median 4.00 Mode 5 Std. Deviation 1.291 Minimum 1 Maximum 5 188 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation From Table 4 it can be seen that 31, 9% agree and 23, 4% of respondents strongly agree that their company is constantly improving in employee motivation in order to gain organisational benefit. Table 4: Effects of motivation on organisation The company where I work is constantly improving in employee motivation in order to gain organisational benefit. Cumulative Frequency Percent 4 2.8 2.8 2.8 Disagree 23 16.3 16.3 19.1 I don’t know 36 25.5 25.5 44.7 45 31.9 31.9 76.6 33 23.4 23.4 100.0 141 100.0 100.0 Strongly disagree Valid Agree Strongly agree Total Valid Percent Percent From the Table 5. we can see that 35, 5% agree and 17% of respondents strongly agree that their companies are doing the right thing while controlling the environment in which employees operate on a daily basis. Table 5: Control of the environment The company where I work is doing the right thing while controlling the environment in which employees operate on a daily basis. Valid Cumulative Frequency Percent Percent Percent 6 4.3 4.3 4.3 Disagree 19 13.5 13.5 17.7 I don’t know 42 29.8 29.8 47.5 50 35.5 35.5 83.0 24 17.0 17.0 100.0 141 100.0 100.0 Strongly disagree Agree Valid Strongly agree Total In Table 6. we can see that 37, 6% agree and 27% of respondents strongly agree that their company rationally stimulate and motivate their employees in order to create more productive business environment. ICESoS 2016 - Proceedings Book 189 �International Conference on Economic and Social Studies (ICESoS’16) Table 6: Stimulation and motivation of employees The company where I work rationally stimulates and motivates their employees in order to create more productive business environment. Cumulative Frequency Percent 5 3.5 3.5 3.5 Disagree 17 12.1 12.1 15.6 I don’t know 28 19.9 19.9 35.5 53 37.6 37.6 73.0 38 27.0 27.0 100.0 141 100.0 100.0 Strongly disagree Agree Valid Strongly agree Total Valid Percent Percent Conclusion Employee engagement is drawing in a lot of enthusiasm from businesses over various areas. In some regards it is an exceptionally old yearning – the craving by businesses to discover approaches to expand representative inspiration and to win more duty to the occupation and the association. In some ways it is “new” in that the connection inside which engagement is being looked for is changed. One part of this distinction is the more prominent punishment to be paid if specialists are less connected with than the representatives of contenders, given the condition of worldwide rivalry and the raising of the bar on productivity measures. A second perspective is that the entire way of the significance of work and the guidelines for vocation relations have moved and there is an open space concerning the character of the relationship to work and to association which managers sense can be loaded with more advanced methodologies. In any case, there is motivation to stress over the absence of thoroughness that has, to date, frequently portrayed much work in worker engagement. On the off chance that we keep on referring to “engagement” without comprehension the potential antagonistic results, the centre prerequisites of achievement, and the procedures through which it must be executed, and on the off chance that we can’t concur even to a reasonable meaning of what individuals should be occupied with doing any other way at work (the drew ‘in what’ question), then engagement may simply be one more ‘HR thing’ that is here for a brief span. On a positive note, there is presently a more extensive cluster of estimation methods with which to evaluate patterns in engagement and a related exhibit of ways to deal with impact some change. In this manner, goal can all the more plausibly be deciphered enthusiastically. Making a work environment with brilliant resolve and persuaded representatives is a long haul venture, and should be installed inside the fabric of an organisation’s every day operations. Profoundly energetic and connected with faculty are a colossal advantage for any organisation. Growing all around spurred employees prompts more fulfilled clients and higher deals; this thus prompts more prominent employee inspiration and makes an idealistic circle. Exceptionally energetic employees are liable to be locked in workers, willing to run the additional mile with clients, and to remunerate their managers with dedication, abnormal amounts of profitability, and more prominent development. 190 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Many economic theories recommend that independent from anyone else proprietorship is unrealistic to enormously influence specialist exertion and execution. Proprietorship must be consolidated with employee association and different approaches that give labourers the ability to follow up on possession motivations and the attitude to oppose the propensity to free ride. My examination of labourer reported exertion crosswise over firms and of specialists inside two firms underpins these contentions. I find critical contrasts in specialist evaluation of work exertion crosswise over ESOP firms, demonstrating that even in firms with significant representative possession, different components impact results. Relating specialist reported results to their feeling of proprietorship and a file of HR arrangements demonstrates that possession and HR approaches are both emphatically connected to worker reports of working environment execution, which is itself identified with organization execution. My analysis of employee’s reaction to colleagues who perform inadequately demonstrates that specialists on employee contribution boards of trustees or who generally report being included in setting objectives for their work gathering will probably talk specifically with non-performing labourers and are less inclined to do nothing. Thoughtfully, a comprehension of how representative proprietorship functions requires a three-pronged examination of: (1) the motivators that possession gives; (2) the participative instruments accessible to specialists to follow up on those impetuses; and (3) motivators/corporate society that balances inclinations to free ride. All organizations, whether representative possessed or not, need to consolidate these three components to inspire labourers to execute admirably well. Representative proprietorship gives an unmistakable answer for the impetus issue, however should at present manage the investment and free-riding issues. References • Abadi, F. E., Jalilvand, M. R., Sharif, M., Salimi, G. A., & Khanzadeh, S. A. (2011). A Study of Influential Factors on Employees’ Motivation for Participating in the In-Service Training Courses Based on Modified Expectancy Theory. International Business and Management, 2 (1), 157-169. • Ali, R., & Ahmad, M. S., (2009). The Impact of Reward and Recognition Programs on Employee’s Motivation and Satisfaction: An Empirical Study. International Review of Business Research Papers, 5 (4), 270-279. • Battisti, Pete. Reward to Motivate. Walls & Ceilings. December 2005. • Hohman, Kevin M. A Passion for Success: Employee buy in is the key. Do-It-Yourself • Retailing. February 2006. • Houran, J., & Kefgen, K., Money and Employee Motivation. Retrieved May 10, 2016 from www.2020skills.com • Jun, M., Cai, S., & Shin, H. (2006). TQM practice in maquiladora: antecedents of employee satisfaction and loyalty. Journal of Operations Management, 24, 791812. • Rynes, S. L., Gerhart, B., & Minette, K. A., (2004). The Importance of Pay in employee Motivation: Discrepancies between What People say and what they do. Human Resource Management, 43 (4), 381-394. • Viorel, L., Aurel, M., Virgil, M. C., & Stefania, P. R., Employees Motivation Theories Developed at an International Level. Labor Management, JEL article code:M54: Labor Management, 324-328. • White, Carol-Ann. Expert’s View on Managing Demotivated Employees. Personnel Today. 15, November 2005. ICESoS 2016 - Proceedings Book 191 �� Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3327 Title A name given to the resource THE CHARACTERISTICS AND DYNAMICS OF MANAGEMENT CONTROLS IN SMALL AND MEDIUM ENTERPRISES: MEASURING PERFORMANCE ACCORDING TO EMPLOYEE STIMULATION Author Author Huseinbasic, Lejla Abstract A summary of the resource. Abstract: This paper begins with explanation of importance of the control management in organisations and how controlling aspect of organisations plays an important role in achieving organisational’s best interests and goals that are strategically planned. Set of controls need to be implemented in order to decrease undesirable behavior and to encourage desirable actions. Individuals don’t generally comprehend what is anticipated from them nor how they can best perform their employments, as they might do not have some essential capacity, preparing, or data. Also, individuals have various inalienable perceptual and psychological predispositions, for example, a failure to prepare new data ideally or to settle on reliable choices, and these inclinations can decrease hierarchical viability. This paper suggests that the proper stimulation of employees in terms of different types of rewarding can result in higher achievements, both for the employee and the organisation. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/048a9efe3c59d6a2c46a4be59f578348.docx 86b01a2358d3272bddfe53b348c8e2d0 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3622 Title A name given to the resource Nedostatnost srodstva i (van)bračnog odnosa kao ključnih kriterijuma prilikom normiranja nasljednih redova Author Author Husejinspahić, Ajdin Abstract A summary of the resource. Sažetak: Članak koji se nalazi pred nama opservira pitanje kriterijuma kojima su se rukovodili zakonodavci prilikom kreiranja zakonskih nasljednih redova u BiH. U tom smislu u radu smo analizirali dvije ključne činjenice, i to: srodstvo i (van)bračnu vezu. Iako smo ukazali na razlike koje i po tom pitanju postoje u našim zakonodavstvima, detaljnije smo se fokusirali na dodatne kriterijume koji su neopravdano zapostavljeni kod formulisanja zakonskih nasljednih redova. Među tim činjenicama najvažnijom nam se činilo zakonsko izdržavanje, a koje su zakonodavci propisali pridržavajući se određenog redoslijeda (od roditelja do braće i sestara). Tako su u slučaju postojanja bližih srodnika (davalaca izdržavanja) zakonodavci oslobodili dalje srodnike. No, da li su se sličnog kriterijuma zakonodavci pridržavali i prilikom formulisanja zakonskih nasljednih redova, istražili smo u članku koji je pred vama. Publisher An entity responsible for making the resource available Social Sciences Research Center Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Article PeerReviewed K Law (General) https://omeka.ibu.edu.ba/files/original/bd56e6062d552bce02fd7b685f534a5a.pdf f2b13835bf2ad5245e08b1059391c161 PDF Text Text Aroma Marketing Concept and the Level of Awareness Among Bosnia and Herzegovina population Irma Imamović International Burch University Bosnia and Herzegovina irma.imamovic93@gmail.com Abstract: Smell certainly arouses emotions and memory. In marketing, however, scent is proven to be very effective in helping contrast one brand from another. It triggers a desire that strongly influences our buying behavior and purchase decision. The right aroma can help to recall some pleasant association, people or events, whether it is great memory from childhood, or an enjoyable time spent in friend’s home. This is the reason why so many companies use scents as marketing tool to attract customers and distinguish themselves from competition. After theoretical part of the study, the interviews showed that level of awareness of scent or aroma marketing concept among Bosnia and Herzegovina population is high and they perceive scents to have substantial influence on consumer behavior and purchase decisions. Keywords: scent marketing, emotions, memory, marketing tool, behavior Introduction Online environment is steadily replacing brick-and-mortar marketing world which happens to be more appealing to consumers. It is very important for company to keep and maintain its customers in traditional stores, while, at the same time, serving their online presence. A one tool that can be used to attract customers is the use of scent marketing. It is more than just spreading pleasant fragrance in the air. It is actually the art of blending the firm’s brand image and identity, target market and all marketing communications and link them with a scent that amplify these branding features. The result is happier customer who remembers your brand. Businesses are constantly seeking innovative ways to differentiate themselves from competition, attract new customers and retain the loyal ones. The point of scent marketing is the control of aromas, where many industries such as hospitality, retail, financial services and many others embraced this tactic of using smells as a way to better present their brand and communicate to their target audience. Car industry recognized long time ago how important is to cover up the smell of a new car and many of them sprayed their own aromas into the new automobiles- for example, Cadillac had custom made scent Nuance which they spread in car interior. Westin Hotels also use this marketing strategy, pouring their lobbies with a white tea fragrance, because of its ability to both relax and energize. Singapore Airlines introduced scented towels in their services, where Sony poured mandarin and vanilla odors into their showrooms. When planning your marketing strategy, managers consider number of factors such as strong communication, target market, distribution channels, but also, they should consider to include aromas as additional part. Awareness for this successful marketing tool is becoming even higher today, where many companies and retail stores use scents and odors to increase sales and build their brand identity. ICESoS 2016 - Proceedings Book 83 �International Conference on Economic and Social Studies (ICESoS’16) In this paper, we are going to explain the most important aspects of research methodology and the data we collected will be processed with SPSS. The one-sample t test is used, along with independent t test, ANOVA, MANOVA and Chi- square test. Research methodology Research Design According to Burns and Bush (2014), research design or research plan encompasses advanced decisions that create the master plan specifying the methods and procedures for collecting and analysing the needed information. I decided to conduct a primary research, with quantitative nature and focus on gathering enough information from a large number of respondents. Further, survey was being used, which involves interviews with a large number of people answering on a predesigned questionnaire, as a method of data collection. Given the fact that the survey is online, which implies that computer technology plays an important role in conducting the interview, research took place in an online environment, or more precisely, in an online setting. Research Objectives Defining the problem is of major importance as it is the starting point of any scientific research. That being said, the research was conducted to have an insight of the level of awareness of scent marketing concept among Bosnia and Herzegovina’s population, as it is the latest trend recorded in marketing and it was very appealing to know whether is it represented among B&H society. The next thing we should consider is research objectives which are aimed to: 1. Determine what is the level of awareness of scent marketing concept in Bosnia and Herzegovina; 2. What is opinion about importance of using scents as marketing tool? In regard to that, primary research was conducted and focused on gathering and analyzing primary data. The sample ranging from 100 to 170 respondents was chosen and I employed a quantitative approach by using online questionnaire as a main method of data collection. Therefore, the setting of this research is an online environment, or more precisely Facebook pages and e-mails. This particular setting was chosen in regard to extensive internet presence of young and adults and high response rate as one of the main features of online questionnaires. Furthermore, ethical dilemmas that I stumbled upon during this research process were lack of monitoring due to computer-administered survey and the possibility of respondents to answer in an untruthful manner. Moreover, 168 respondents took part in questionnaire. Taking into consideration that research was organized as online survey, lack of monitoring as one of the significant disadvantage has made it difficult to recognize the ones who were not interested, even though they have said they would willingly fill out the survey. Further, online questionnaire was created by Google Forms (free, online tool for survey collection and analysis) and gathered data was analyzed by SPSS program. Questions are made to be as simple as possible, so respondents would easily give their answers. It is also important to mention that some responses were partial or inconsistent, despite the fact that respondents were given certain instructions and explanations, such as that the data gathered by this research will be used specifically for the purpose of a research project and that respondents’ response anonymity is assured. The survey was created in English and was accepting responses from December 19th to December 84 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation 21st in 2015. Data Collection Regarding this research study, quantitative research was conducted, that is, online questionnaire, as it is perceived to be the most convenient for this type of the research. The main advantage to use questionnaire is that they are quick and cheap to administer. It enables us to collect data from a large number of respondents and to get certain reliability and suitability. Moreover, questionnaires avoid influences on the respondents’ answers where they fill the questionnaire by themselves. The questionnaire consists of 16 questions designed in English. Questions are made as short and clear as possible, so they can be easily understood and answered. It will be provided in the appendix at the end of the paper. First five questions deal with demographic aspects of each respondent. Questions five to eleven deal with individual respondents, their income level and preference for scents in retail stores. The last five question deal with the Aroma marketing concept. This task was approached with great preparation and detailed research on all available secondary data to get better insight about this topic in Bosnia and Herzegovina. Wellstructured questions, substantial sample group and having proper perspective and clarity in judgments lead to better decisions in every step of the research process. As it was stated, respondents were noticed about the purpose of the questionnaire, so they feel confident and provide us with valuable information, hence there is no space for useless data. To avoid biases and negative impacts on outcome, steps were taken to ensure the reliability of research. So, in respect to that, research was carried out in the following manner: 1. Preparation took place before designing the questionnaire, that is, the basic objectives of the study were reviewed and relevant information visualized, 2. Each respondent was given with information and intent of the online questionnaire, 3. Each respondent was informed of his/her anonymity, 4. Questions are delivered in appropriate type and sequence that is best suited to answer the question, 5. Cautions for time length to fill the questionnaire were considered. It is also important to mention ethical behavior because it is a requirement in conducting marketing research, such as fairness, respect, openness, honesty and responsibility. Results One sample t-test One sample t- test is used to determine whether a sample comes from a population with a specific mean. Here we asked respondents whether they think scents influence buying behavior. They were offered with the rate response depending on the intensity of agreement and disagreement. Scale was between 1 (strongly disagree) and 10 (strong agree). Hence, we assume that level of agreement regarding scent’s influence on buying behavior is more than six. ICESoS 2016 - Proceedings Book 85 �International Conference on Economic and Social Studies (ICESoS’16) So, we can state null and alternative hypothesis: Ho: there is no evidence that the level of agreement among respondents is more than 6; Ha: there is evidence that the level of agreement among respondents is more than 6 One-Sample Statistics N Agreement level Mean 167 Std. Deviation 5.1437 Std. Error Mean 2.36255 18282. One-Sample Test Test Value = 6 t Agreement level -4.684 df 166 Sig. Mean Differ- Confidence Interval of 95% )(2-tailed ence the Difference 000. 85629.- Lower Upper -1.2172 4953.- The first table “One- sample statistics” gives descriptive statistics for the variable “Agreement level”. We can see that number of respondents N is 167 and it has Mean of 5.1437. The second table, labeled “One- sample test” gives the result of the t- test analysis. The first column represents the value of the t- statistics which is -4.684 and the next one is degrees of freedom of 166. In the column Sig. (2- tailed), we can see the corresponding two- tailed p value of 0.000. Here we took the significance level of 5%, so it can be seen that p < 0.05. Therefore, we reject the null hypothesis (Ho) at α = 0.05, which means that sample mean is not significantly different than hypothesized value. Hence, we say that there is no enough evidence to accept null hypothesis which states that the level of agreement among respondents is less than 6. Independent sample t-test The independent t- test is used for testing the difference between the means of two independent groups. Here we compare variables obtained from two independent samples. This test assumes that two groups are independent of one another, the dependent variable is normally distributed, and the distribution of the dependent variable for one of the groups being compared has the same variance as the distribution for the other group being compared. In this example two groups of respondents regarding their age categories were asked the question: “Are you aware of Aroma or Scent Marketing concept?”. The first group belongs to age category of 18-25 and the second one belongs to age category of 2645. Based on this, we wanted to determine is there a difference in knowledge about Aroma Marketing between these two groups. So, we can state null and alternative hypothesis: Ho: There is no difference between two groups of respondents’ knowledge about Aroma Marketing concept; 86 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Ha: There is a difference between two groups of respondents’ knowledge about Aroma Marketing concept. The assumption of variance homogeneity has not been disturbed, since the Levene statistic is F = 0.020 and the corresponding significance level is low (p < 0.05), and we can use the row equal variances assumed t test statistic for evaluating of null hypothesis of equality of means. T statistic shows value of 0.067 with 154 degrees of freedom. We can say that there is no difference between two age groups regarding the knowledge about Aroma Marketing concept due to the fact that corresponding p value is greater than significance level of 5%, that is p > 0.05. However, the mean values indicate that age group of 18-25 recorded more positive answers (M = 1.4696) than second age group of 26-45 (M = 1.4694). Paired sample t-test The paired sample t test is used when two groups are tested twice, that is, they are subjects of repeated measures. This student t- test assumes normality of sampling means’ distribution. In this part of the paper, we chose twenty respondents and collect their answer regarding the question whether they believe that retail stores can use scents to make people enter the shop. After the study they were presented with the Aroma marketing concept and its use in marketing and management in general. After seven days, the same groups of people were asked to answer to the same questions. They were offered with the rate response ranging between 1 (Strongly Disagree) and 10 (Strongly Agree). So, we can state the null hypothesis: Ho: The respondents’ opinion is same before and after going through Aroma marketing presentation. ICESoS 2016 - Proceedings Book 87 �International Conference on Economic and Social Studies (ICESoS’16) To test normality we look at figure Normal Q-Q Plot, that compares cumulative distribution of the observed values with the expected values derived from the normal distribution. The normal distribution forms a straight line and if a variable’s distribution is normal, the data distribution will fall more or less on the diagonal, which is the case here. It shows very little departure from normality for both Before and After variables. Also, figure Detrended Normal Q-Q Plot shows little deviation from normality for both Before and After variables. 88 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation The result of this test shows us there is significant difference in the opinion before and after the given presentation on the topic. We see that degrees of freedom is 19 and t statistics shows value of -11.315. At significance level of 0.05 there is enough evidence to reject the null hypothesis which states that there is no difference between before and after opinion of respondents (p < 0.05). ANOVA The one- way analysis of variance (ANOVA) is an extension of independent sample t test and is used determining whether the means from several independent groups differ. In this case we want to find out whether difference exists among four sets of educational background (High school, Bachelor degree, Master’s degree, PhD degree) on the opinion that use of scent is a good marketing tool. This test assumes again, that dependent variable is normally distributed and that groups have approximately equal variance on the dependent variable. In the online survey, respondents answered on the question “The use of scent is a good marketing tool” with the rate response ranging from 1 (Strongly disagree) to 10 (Strongly agree). Therefore, the null hypothesis states: Ho: There is no difference among four sets of educational background; Test of Homogeneity of Variances Opinions Levene Statistic df1 492. df2 3 .Sig 162 688. ANOVA Opinions Sum of df Mean Squares Between Groups F .Sig Square 14.697 3 4.899 Within Groups 1142.749 162 7.054 Total 1157.446 165 694. 557. The assumption of homogeneity of variance has not been violated due to the fact that Levene statistic and corresponding significance level are high. The first row named Between groups shows the variability between groups , second row Within groups shows variability due to the random error and the third row gives the total variability (Ho & Ho, n.d.)1 The result from the One- way ANOVA test confirms that respondents’ opinion is same among all three groups of educational background that is p > 0557. 1 Ho, R. & Ho, R. Handbook of univariate and multivariate data analysis with IBM SPSS. ICESoS 2016 - Proceedings Book 89 �International Conference on Economic and Social Studies (ICESoS’16) Factorial analysis of variance The factorial univariate ANOVA includes the analysis of two or more independent variables. It allows us to assess the effects of each independent variable individually and joint effect of variables, also. This test assumes that samples are independently drawn from the source population and the dependent variable is normally distributed. Also, distribution of dependent variable for one of the groups being compared has the same variance as the distribution for the other group being compared. 2 In this part, we want to determine how gender and educational background influence the opinion of using scents as efficient marketing tool. Respondents were asked the same question as in the previous example; “The use of scent is a good marketing tool” and could choose from 1 (Strongly disagree) to 10 (Strongly agree), depending on the intensity of agreement and disagreement. We wanted to do 2-way factorial analysis; hence we choose two type of educational background: high school and bachelor degree. The null hypothesis states: Ho: The educational background and gender do not have effect on respondents’ opinion that scent is good marketing tool. 2 Ho, R. & Ho, R. Handbook of univariate and multivariate data analysis with IBM SPSS. 90 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation The assumption about homogeneity of variance is again tested by Levene’s test of equality of error variances which tests the hypothesis that the population error variances are equal. Here we can see that Levene statistic is F = 0.415 and the corresponding level of significance is large p > 0.05. Hence, assumption about homogeneity of variance has not been violated. In this example, neither gender, educational background nor combination of gender and educational background has effect on the respondents’ opinion.3 The main effect of Gender is not significant (p > 0.05). From the estimated marginal means, the males’ opinion (M = 5.298) is not significantly different from the females’ opinion (M = 5.453). Also, marginal means of educational background show that respondents with high school diploma (M = 5.505) and respondents with bachelor diploma (M = 5.245) have slightly same opinion of viewing scent as a good marketing tool. Hence, the main effect of educational background is not significant (p > 0.05). The interaction effect of Gender*Educational Background neither have significant effect on respondents’ opinion (p > 0.05). Also, we wanted to determine whether gender (In SPSS 1- Female; 2- Male) and age (In SPSS 1: 18-25; 2- 26-45) have effect on respondent’s preference of scents in retail stores. The null hypothesis is that gender and age do not influence respondent’s preference of scents in retail stores. 3 Ho, R. & Ho, R. Handbook of univariate and multivariate data analysis with IBM SPSS. ICESoS 2016 - Proceedings Book 91 �International Conference on Economic and Social Studies (ICESoS’16) Tests of Between-Subjects Effects Dependent Variable: Response Source Type III Sum df of Squares Corrected Mean F .Sig Square 532a. 3 177. 186. 906. 106.093 1 106.093 111.107 000. Gender 291. 1 291. 305. 583. Age 005. 1 005. 005. 943. Gender * Age 005. 1 005. 005. 943. Error 46.788 49 955. Total 284.000 53 Corrected Total 47.321 52 Model Intercept )a. R Squared = .011 (Adjusted R Squared = -.049 Again, Gender does not influence respondent’s preference, neither as age or combination of gender and age Chi square test Chi-square test is usually used for comparison of observed data with the data one’s expect to acquire according to certain hypothesis. Here we wanted to determine with a significance level of α = 0.05whether relations exist between respondents’ age levels (18-25; 26-45; 46-65) and knowledge (familiarity) about Aroma Marketing concept. In the table, Familiarity with Aroma Marketing concept is the row where responses are recorded with Yes and No (in SPSS it was coded like this: 1-Yes; 2-No). The Respondent’s age is the column (in SPSS it was coded like this: 1: 18-25; 2: 26-45; 3: 46-65). So, we can say that null hypothesis is: Ho: there is no relation between respondent’s age and familiarity with Aroma Marketing concept. Chi-Square Tests Value df Asymp. Sig. (2-sid)ed Pearson Chi-Square 043 . 2 979. Likelihood Ratio 043. 2 979. Linear-by-Linear Association 008. 1 930. N of Valid Cases 166 a .a. 1 cells (16.7%) have expected count less than 5. The minimum expected count is 4.70 The table labeled Familiarity with Aroma Marketing concept * Respondent’s age Cross tabulation shows descriptive statistics that was required in analysis. We requested for actual and expected count, which is produced for each row (Familiarity with Aroma Marketing concept) and each column (Respondent’s age). Row Count shows actual frequencies for particular cell and Expected Count shows expected frequencies for each cell assuming no association. The last table represents the result of Chi-square test. In this case, the p value is 0.979 (p > 0.05) which is higher than corresponding 92 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation significance level 5%. So, we cannot reject the null hypothesis. In other words, there is no significant relationship between respondents’ age and the knowledge about Aroma Marketing concept. Discussion Before we discuss the results of this study, we are going to recall two previously mentioned research objectives: - Determine what is the level of awareness of scent marketing concept in Bosnia and Herzegovina; - What is opinion about importance of using scents as marketing tool? The independent sample t- test showed that respondents belonging to two different age groups (18-25 and 26-45) do not differ in their knowledge about Aroma marketing concept. It is important to mention that most of them are familiar with this term. However, one research from Sweden showed that large number of shops in Umea are not quite familiar with the use of aromas in their business and even dough number of stores are no aware of its implications as marketing tool, some of them use aromas empirically. Chi square test also showed that no relations exist between respondents’ age levels (18-25; 26-45; 46-65) and knowledge (familiarity) about Aroma Marketing concept. Zoladz and Raudenbush (2005) were investigating the influences of ambient aromas on magnifying cognitive performance and the results indicated improved participants’ activities and tasks such as attention level, memory and visual motor response speed, by both cinnamon and peppermint fragrances. Here is important to mention that participants specified their energy and mood level higher, but their tiredness level lower when were surrounded by peppermint aroma. People working in the pleasantly scented environment reported better task execution, better efficiency and being more ambitious regarding work goals than participants who worked in non-scented environment (Herz 2002). Regarding these studies, we can say that one sample t- test in our case showed similar findings regarding respondents’ opinion whether scents influence buying behavior. Most of them confirmed that they strongly believe that aromas indeed affect buying behavior. Many previous researches proved that scents are able to affect retail performance, as well. Several studies showed there is congruence between aromas and other factors present in the ambient, such as positive influence on product evaluation, money and time spent in the shop. The paired sample t- test showed that after the respondents were presented with the Aroma marketing concept and its use in management, their responses showed strong agreement toward the fact that retail stores can use scents to make people enter the shop. The result from One- way ANOVA test confirms that respondents’ opinion regarding the question whether the use of scents is a good marketing tool is same among all three groups of educational background. However, it must be highlighted that most of the respondents reflected quite strong agreement with this statement. Also, in factorial analysis of variance we want to determine how gender and educational background influence the opinion of using scents as efficient marketing tool. Respondents were asked the same question as in the previous example, and the results were quite the same as it was the case with Anova. ICESoS 2016 - Proceedings Book 93 �International Conference on Economic and Social Studies (ICESoS’16) Crowely and Henderson (1996) come up with idea to make an experiment where different odor was released each day for the total 20 weeks into retail environment. Two aromas were used: neutral and pleasant. They observed and tracked participant behavior and were then asked to fill in the questionnaire. The major findings from this research were that people had more positive shop appraisal, they were more likely to visit the retail store again, they would linger longer and possibility of actually purchase something was increased. Spangenberg, Grohmann and Sprott (2005) investigated how gender relates to scent recognition and evaluation, where male customers found rose fragrance more appealing, but women preferred vanilla scent more. Both genders evaluated the shop, employees and environment in general, more favorably, stayed much longer, and spent more money than they were intended to spend. We can notice that all these previous studies on this particular topic involve experimental study which is not the case with this research paper. However, one more Anova result showed that gender and age of respondents in this case did not have effect on respondent’s preference of scents in retail stores. Furthermore, many of participants in online survey stated that they in most cases prefer fresh smells. Most of the people said that only sometimes they like scented environment. The findings from this research give us an insight into the awareness of scent marketing concept among Bosnia and Herzegovina population and can be useful both for retailers and for upcoming researches on this particular topic. However, using scents as a part of marketing strategy does not fit the same for every business, and mainly depends on company’s’ structure, culture, organization and size, its customers and many other factors. Aroma and its effects on customers’ purchase behavior and decision making process is recognized just recently, and this new marketing trend can, if used precisely, create competitive advantage for the firm and boost brand identity, if we take into consideration that there are not so many businesses that are aware of this strategy and its implications. That being said, it important to highlight that it may not be sustainable in the long run, because other retail shops may use it as well. As it was mentioned previously, aromas are used to grasp customer’s emotions and memory and managers should know what kind of fragrance to use. People will enjoy and remember pleasant odor, but can also remember the bad one and be dragged away, because not all people react in the same way when exposed to scented area, so appropriate market research should be conducted to deeply investigate target markets’ characteristics. If there are future researches to come, one suggestion for researchers would be to pay attention about well explained concept of scent marketing, given the fact that there can be confusion about this term among respondents, especially if information is going to be collected from people that do not have a solid marketing knowledge. Hence, they should give an explanation about the term or provide few questions to actually test what is the true knowledge about scent or aroma marketing. 94 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation References • Air Aroma. (n.d.). Retrieved Fall, 2015, from http://www.air-aroma.com/scentmarketing • Blondeau, M., & Tran, A. (2009). Scent Marketing: What is the impact on stores in Umeå? (Unpublished master’s thesis). Umeå School of Business. Retrieved Fall, 2015, from http://umu.diva-portal.org/smash/get/diva2:224612/FULLTEXT01.pdf • Bradford, K. D., & Desrochers, D. M. (2009). The Use of Scents to Influence Consumers: The Sense of Using Scents to Make Cents. J Bus Ethics Journal of Business Ethics, 90(S2), 141-153. • Brown, R. B. (2006). Doing your dissertation in business and management: The reality of researching and writing. London: SAGE. • Burns, A. C., & Bush, R. F. (2013). Marketing Research (7th ed.). Prentice Hall. • Douce, L., & Janssens, W. (2011). The Presence of a Pleasant Ambient Scent in a Fashion Store: The Moderating Role of Shopping Motivation and Affect Intensity. Environment and Behavior, 45(2), 215-238. • Durst, L. D. (2007, January 30). Scent Branding: Smell of Success? Retrieved Fall, 2015, from http://www.marketingprofs.com/7/duncan9.asp • Herz, R. S. (2002). Influences of Odors on Mood and Affective Cognition. Cambridge University Press, 160-177. • Hirsch, A. R. (1990). Preliminary Results of Olfaction Nike Study. Smell and Taste Treatment and Research Foundation. • Hirsch, A. R. (1995). Effects of ambient odors on slot-machine usage in a las vegas casino. Psychology and Marketing Psychol. Mark., 12(7), 585-594. • Ho, R. (2014). Handbook of univariate and multivariate data analysis with IBM SPSS (2nd ed.). Boca Raton, Fla.: CRC Press. • How does in store scent influence our shopping behavior? (n.d.). Retrieved Fall, 2015, from http://hubpages.com/education/How-does-in-store-scent-influenceour-shopping-behavior • Kotler, P., & Lindstrom, M. (2005). Brand Sense: Build Powerful Brands Through Touch, Taste, Smell, Sight, and Sound. The Free Press. • Laird, D. A. (1932). How the consumer estimates quality by subconscious sensory impressions. Journal of Applied Psychology, 16(3), 241-246. • McDonnell, J. (2002). Sensorial Marketing for Those Who Can Wait No Longer. 1st International Conference on Sensorial Marketing. • Morrin, M., & Ratneshwar, S. (2000). The Impact of Ambient Scent on Evaluation, Attention, and Memory for Familiar and Unfamiliar Brands. Journal of Business Research, 49(2), 157-165. • Ravn, K. (2007, August 20). Smells like Sales. Los Angeles Times • Saunders, M., Lewis, P., & Thornhill, A. (2009). Research methods for business students (5th ed.). Pearson Education;. • Scent Marketing Institute : Scent in the News. (n.d.). Retrieved Fall, 2015, from http://www.scentmarketing.org/trends/ • Science of Scenting - Prolitec - Home & Commercial. (n.d.). Retrieved April 27, 2015, from https://prolitec.com/scenting/science-of-scenting • Smiley, M. (n.d.). Dollars & Scents: From Clothes to Cars to Banks, Brands Seek Distinction Through Fragrance. Retrieved Fall, 2015, from http://adage.com/ article/cmo-strategy/smell-money-marketers-sell-scent/296084/ • Spangenberg, E. R., Crowley, A. E., & Henderson, P. W. (apr., 1996). Improving the Store Environment: Do Olfactory Cues Affect Evaluations and Behaviors? Journal of Marketing, Vol. 60, no. 2, 67-80. • Spangenberg, E. R., Grohmann, B., & Sprott, D. E. (2005). It’s beginning to smell (and sound) a lot like Christmas: The interactive effects of ambient scent and ICESoS 2016 - Proceedings Book 95 �International Conference on Economic and Social Studies (ICESoS’16) music in a retail setting. Journal of Business Research, 58(11), 1583-1589. • Toth, D. (1989, September 24.). What’s New in Fragrances; To Relax or Stay Alert, New Mood-Altering Scents. The New York Times. Retrieved Fall, 2015, from http:// www.nytimes.com/1989/09/24/business/what-s-new-in-fragrances-to-relax-orstay-alert-new-mood-atlering-scents.html • Zoladz, P. R., & Raudenbush, B. (april 2005). Cognitive Enhancement through Stimulation of the Chemical Senses. North American Journal of Psychology, Vol. 7(Issue 1), 125-125. Apendix 96 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation ICESoS 2016 - Proceedings Book 97 �International Conference on Economic and Social Studies (ICESoS’16) 98 ICESoS 2016 - Proceedings Book � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3326 Title A name given to the resource Aroma Marketing Concept and the Level of Awareness Among Bosnia and Herzegovina population Author Author Imamovic, Irma Abstract A summary of the resource. Abstract: Smell certainly arouses emotions and memory. In marketing, however, scent is proven to be very effective in helping contrast one brand from another. It triggers a desire that strongly influences our buying behavior and purchase decision. The right aroma can help to recall some pleasant association, people or events, whether it is great memory from childhood, or an enjoyable time spent in friend’s home. This is the reason why so many companies use scents as marketing tool to attract customers and distinguish themselves from competition. After theoretical part of the study, the interviews showed that level of awareness of scent or aroma marketing concept among Bosnia and Herzegovina population is high and they perceive scents to have substantial influence on consumer behavior and purchase decisions. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/6b44556640a0f559c18ca5d32b1f6942.pdf 7363d82c054e10cab0bef902e13bd170 PDF Text Text A HOLISTIC APPROACH TO INNOVATIONS IN TOURISM Slobodan Ivanović Faculty of Tourism and Hospitality Management in Opatija University in Rijeka Rijeka, Republic of Croatia sivanov@fthm.hr Vedran Milojica Faculty of Tourism and Hospitality Management in Opatija University in Rijeka Rijeka, Republic of Croatia vedran.milojica@gmail.com Vasja Roblek Fizioterapevtika College Medvode, Republic of Slovenia vasja.roblek@gmail.com Abstract: This paper is focused on the importance and influence of the innovations in the time of the fourth industry revolution for the creation of value added in tourism industry. Innovative technology solutions solve problems in a tourist destination, as in the case of the effects of climate change as well as the revival of cultural heritage. New products that are connected with the Internet (e.g. Internet of things) and digital solution services invites small and medium sized firms, and other relevant actors, to apply for funding of co-operative tourism innovation projects. The proposals should primarily focus on the development of innovative products, services and concepts to accelerate the tourism sector. Innovative products and services form the framework of marketing efforts to encourage consumers to decide for the purchase and thus affect the sales success of tourist firms. Innovations that are intended to satisfy the wishes and needs of consumers, based on existing knowledge. Usually it is a technological innovation with features that provide additional solutions compared with the existing ones. Firms want to attract customers who have different needs from the existing customers. The contribution of the paper is mainly conceptual. With the development of the digital innovations (web 2.0., web 3.0., internet, the internet of things) that is central to the new industrial revolution, has led to “Industry 4.0” in tourism. The aim of this paper is to provide answers to RQ1: To present the known theory and practices of innovations in tourism; RQ2: To investigate the changes that will result from Industry 4.0 in tourism. Keywords: innovations, tourism industry, industry revolution 4.0, digital technologies, internet JEL Classification: O33, Z33 1. Introduction The paper deals with the questions about the investments policies in the field of hospitality and indirectly tourism. First, it is necessary to explain the relation between tourism and the hospitality industry. Distinction between hospitality and tourism can be discussed with quantitative (the capacity of each hotel) and qualitative terms (standard of ICESoS 2016 - Proceedings Book 367 �International Conference on Economic and Social Studies (ICESoS’16) arrangements, the diversity of services and products, additional services). Hospitality industry is a field within the service industry, and represents the economic benefit for tourism. It is connected to the environment and people traveling. Mass movements of people represent the importance of tourism. In the process of traveling tourists fulfil their needs through the use of hospitality. Thus, it can be said that the hospitality infrastructure represents a precondition for tourism. Thus, the economic effects of tourism reflect through the hospitality industry where technological innovations play a significant role in the creation of the value-added (Ivanović, 2012). In a global and highly competitive tourism environment runs a tough battle for the favour of the customers and their purchasing power. Hospitality industry needs to ensure its strategic positioning. It is recommended that the hospitality companies grow on the basis of sustainable policies that include economical sustainable growth as well as organic and social perspective. Managers of hospitality companies must therefore be aware of the importance of managing growth, that must be sustainable (viable) and it should not fall into the trap of unsustainable growth (Bertoncelj et al. 2016). Sustainable growth rates are in fact those where companies provide long-term sustainable simultaneous growth in revenue, profits and returns. Companies that operate under healthy corporate philosophy, follow the mission of creating sustainable value creation. They build their own sustainable development, balanced with the pressures of internal and external environment, mainly in core activities. Finding and creating opportunities for sustainable growth and corporate profitability are at the heart of reflections of every (pro) active management. Many companies do not create value for shareholders and stakeholders, often due to lack of emphasis on basic, core activities of businesses or inadequate diversification (Dominici and Roblek, 2016). Business growth is derived from the fundamental bonding companies and should be planned and properly managed. The company must have a strategic business plan for sustainable growth, which is an excellent communication tool for the management of change at all levels of management. Under the concept of diversification, it is understood as a growth strategy while introducing new products or services and / or operating in new markets (Lockyer, 2013). Well-used potential of basic and supplementary activities creates market power in the strategic position they can form the basis for expansion into other products/services and geographical areas (Hollensen and Opresnik, 2015). For the hospitality companies present the key growth projects that are related in creating a new (added) value. Hospitality companies can achieve new value with the transformation of potentials and expertise in institutional skills, by integrating the customer into the business processes, new patents, increased brand awareness, advanced information solutions, using all the available information and strategic alliances, which in the long term increase the yield of the company (Chathoth et al, 2013; FitzPatrick et al., 2013). First, the hospitality companies shall consider and use their development as a way of internal growth (Murphy, 2013). Its intensity depends on the breadth and quality of the business program offered by the market, organizational structures and processes as a whole and managerial competence of the management team. The companies should be focused on their core business, which is due to rapid technological developments and the rapidly changing needs of customers at all times under severe competitive pressures (Mowforth, and Munt, 2015; Tarí, Heras-Saizarbitoria and Dick, 2014). 368 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation In the modern operating systems where people are the key creators and performers, the evolutionary laws are valid, independently of the degree of automation and computerization (Pfeffer and Sutton, 2013). Irrespectively of the forms of business systems, we encourage thinking about new opportunities towards the sustainable development of companies (Epstein and Buhovac 2014; Senge, 2014). Old paradigms and patterns of behaviour that were effective in the previous system are no longer appropriate. Source of creating new value in the situation of the “innovation” economy becomes creativity, leverage for the creation of the winning factors in the market innovation and intuition (Kuula, Putkiranta and Toivanen, 2012). Developing skills, professional attitude towards work and conquest of modern Information and Communication Technologies (ICT) have become a stable basis for creativity and innovation processes as a way of increasing efficiency and effectiveness (Bisson, Stephenson and Vigurie, 2010; Kaplan and Mikes, 2012). The innovative environments are a challenge of our time, leaders are increasingly concerned about the working environment and rules and less for the processes (Roblek et al., 2013). Only the effective use of intellectual resources allows continuous improvements. Therefore, the behaviour of business systems at all levels of leadership, management and implementation of changes to what is necessary to provide creative employees who are involved in the processes of strategic thinking and are able to compare values creativity and innovation. (Botha, Kourie and Snyman, 2014; North and Kumta, 2014). A human thus becomes the most important resource that must be managed effectively. A characteristic of the present time is the innovation entrepreneurship, based on research and development, deregulation, increased funding with venture capital and international protection of intellectual property (Gummesson, 2014). Innovation is a key lever for the emergence of economic trends and the impact on the dynamics of business cycles (Schumpeter, 1939). The ratio between the innovation and dynamism of economic development is known as a period of the long wave (Mensch, 1979; Freeman, 1984; Tylecote, 1992: Perez, 2002). This period is characterized by profitable investments in research and development, which is the main part of the commercial success of the product. Keynes (Lawlor and Keynes, 2006) and Schumpeter agree that the decision to invest in economic patterns plays a key role. Keynes and his adherents emphasize in particular the role of investment as one of the most dynamic and volatile components of aggregate demand. Schumpeter and his followers believe that the nature of the investment is as important as the creation of economic trends. Freeman Schumpeter’s economic theory was developed on the argument that the adverse economic environments due to lower margins and general pessimistic atmosphere investments decreased, while economic expansion offers opportunities for the development of new technological breakthroughs. Economic innovation system includes the critical factors, such as social capital and innovation as well as reverse innovation vice versa the globalization. Innovative products and services framework of marketing is trying to encourage consumers to opt for the purchase and thus effect on the sales success of companies. Innovation is intended to ensure that the wishes and needs of consumers are based on the existing knowledge. ICESoS 2016 - Proceedings Book 369 �International Conference on Economic and Social Studies (ICESoS’16) Usually it is going for the technological innovation with features that provide additional solutions compared with the existing ones. Companies want to acquire customers who have different needs from the existing or additional customers. 2. Innovativeness of Entrepreneurship Sector in Eastern European countries Saving and decrease of government investment in research and development, education systems and infrastructure are leading to the deterioration of the national innovation system, and the final result is the reduction of economic growth. In micro and small enterprises, the success of innovation activities depends largely on innovation strategies, free cash flow, the development phase of business and relationship management to innovation (Bertoncelj et al., 2016). Following, table 1 and figure 1 presents six innovativeness indexes (scored from 1 to 7); these form the 12th pillar named Innovation in the The Global Competitiveness Report 2015–2016. Table 1: Innovativeness indexes for nine South European countries AL BIH BG CRO MK MNE RO SRB SLO Capacity for innovation 3.6 3.0 3.8 3.3 3.6 3.7 4.0 3.1 4.4 Quality of scientific research institutions 2.3 3.1 3.7 4.0 3.8 3.9 3.7 3.8 4.8 Company spending on R&D 2.9 2.5 3.1 3.1 3.1 3.3 2.9 2.4 3.7 University-industry collaboration in R&D 2.3 4.3 3.0 3.4 3.9 3.7 3.6 3.2 4.0 Government procurement of advanced tech products 3.8 2.4 3.1 2.7 3.2 3.9 2.9 2.8 2.7 Availability of scientists and engineers 3.2 3.1 3.7 3.9 4.0 3.8 4.1 3.8 4.1 Source: The Global Competiveness Report 2015 – 2016 (2015). Table 1, figure 1 as well as the information from The Global Competitiveness Report 2015–2016 (2015) show that Albania, Bosnia and Herzegovina, Bulgaria, Macedonia, Montenegro and Serbia are efficiency driven. Croatia and Romania are in transition from the efficiency driven into innovation driven. Slovenia is the only country in the region that is innovation driven. 370 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Figure 1: Innovativeness indexes for nine South European countries Source: The Global Competiveness Report 2015 – 2016 (2015). Figure 2 presents the most problematic factors that influence on development of a more innovative business environment in all nine countries. Respondents were asked to select from the list of factors five most problematic ones for doing business in their country and to rank them between 1 (most problematic) and 5 (the least problematic). The score corresponds to the responses weighted according to their rankings (The Global Competiveness Report 2015–2016, 2015). Figure 2: The most problematic factors for innovative environment development by the country Source: Authors´ analysis according to data available from The Global Competiveness Report 2015 – 2016 (2015) ICESoS 2016 - Proceedings Book 371 �International Conference on Economic and Social Studies (ICESoS’16) From the Pareto diagram (figure 3) it can be estimated which factors influence the most on development of a more innovative business environment in all nine countries. Figure 3: The most problematic factors for innovative environment development Source: Authors´ analysis according to data available from The Global Competiveness Report 2015 – 2016 (2015). It is visible from figure 3 that higher tax rates, complexity of a tax regulation, access to finance, endemic corruption and inefficient government bureaucracy contribute mostly to all nine countries poor business environment. All countries need to continue with the implementation of structural reforms. Governments have to increase the flexibility of their labour markets, develop the financial sector, and reduce red tape, which is reported as one of the most problematic factors for developing the business environment in South European Region (The Global Competiveness Report 2015 – 2016, 2015). 3. The paradigms of the Innovations in Tourism and Hospitality Industry In the 21st century innovation represents one of the key factors in ensuring competitive advantages in the field of tourism and hospitality industry. Only through innovative solutions tourism will continue to contribute to further sustainable regional development, which is reflected in the performance multiplier effect from tourism related industries (Haxton, 2015; Sloan, Legrand, and Chen, 2013). For tourism it is important that it is closely related to a number of other sectors and thus can generate positive externalities. Tourism development requires moderate investment and has quick and immediate impact on regional economic growth especially in less developed regions (Seckelmann, 2002). Tourism tends to distribute development away from the industrial centres and towards undeveloped regions (Williams and Shaw, 1991). Less developed or rural regions have more intrinsic motivation to adjust the industrial structure: wider productivity disparities between industries and relatively low industrial switching cost (Alkier, Milojica and Roblek, 2015). 372 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation All nine south European countries are influenced by different sociological, cultural, political and economic characteristics. Their economies were influenced by the socialist economic system from 1945 to 1990. The former socialist economy in its economic doctrine was not aware of the concept of innovation. The consequences of socialist economy are still visible in a high level of centralisation, lack of proper regional policies and institutions and top-down planning approach employed for a long period (Alkier, Milojica and Roblek, 2015). The tourism sector provides countless development opportunities for lower and middle income south European countries and has a significant positive impact on their GDP and national economies (table 2). The data in table 2 show that investments in tourism are an important factor for the economic growth. Countries with higher level of investment in 2014 (Croatia, Montenegro and Slovenia) have the highest GDP total contribution of tourism. Table 2: Key facts about the importance of tourism for regional development comparison of the nine south European countries Country GDP direct contribution % GDP total contribution % Employment: direct contribution % Employment total contribution % Visitors exports % Investment % 2014 2025 2014 2025 2014 2025 2014 2025 2014 2025 2014 2025 AL 5.9 6.2 21 21.8 5.3 5.8 19.2 20.4 30.4 24.2 4.3 4.5 BIH 2.5 3.0 9.3 11.0 3.0 3.8 10.7 13.1 13.0 13.2 4.7 6.6 BG 3.7 3.9 13.1 12.9 3.4 4.3 12.1 12.9 12.3 9.6 6.1 5.8 CRO 12.5 16.8 28.3 36.2 13.6 16.3 30.2 35.3 43.7 48.3 10.2 10.4 MK 1.4 1.4 5.2 5.7 1.3 1.4 4.7 5.2 5.6 4.2 2.2 2.6 MNE 9.5 14.8 20.0 31.9 8.6 13.4 18.5 29.6 54.3 51.6 30.1 53.2 RO 1.6 1.6 4.8 5.1 2.4 2.5 5.5 5.9 2.5 2.6 7.3 7.6 SRB 2.1 5.2 6.1 7.2 2.6 3.2 6.4 7.5 6.5 7.0 4.4 4.2 SLO 3.5 3.8 12.7 13.8 3.9 4.5 13.0 14.6 8.0 8.8 9.4 10.0 Europe 3.4 3.6 9.2 9.8 3.6 4.1 9.0 9.9 5.6 5.8 4.7 5.0 World 3.1 3.3 9.8 10.5 3.6 3.9 9.4 10.7 5.7 5.6 4.3 4.9 Source: Travel & Tourism: Economic impact 2015 (editions: Albania, BIH, Bulgaria, Croatia, Macedonia, Montenegro, Romania, Serbia, Slovenia). The analysis of statistical data in table 2 indicates that for all nine countries tourism and travel industry represents an important segment of the economy. All countries have undergone a transition from socialism to a market economy system at the end of the 20th and in the beginning of the 21st century, after which tourism companies slowly started to reposition themselves. All nine countries are registering an increase in the number of international tourism arrivals and the total contribution of tourism industry to the GDP. According to these positive results, it can be agreed that all destinations have been effective in attracting tourists, but they fail to improve their competitiveness and therefore better transformation of tourism opportunities into economic benefits. ICESoS 2016 - Proceedings Book 373 �International Conference on Economic and Social Studies (ICESoS’16) Innovation in the tourism sector includes the introduction of advanced technological solutions with a view to the implementation and promotion of tourism products and services. These solutions are used throughout the tourism sector, which covers the transportation, mobility, cultural heritage, hotels and other hospitality suppliers and promotion of destinations (Pechlaner and Innerhofer, 2016). It should be noted that the development of innovation in the field of tourism should arise from perception of innovation, which has to strain the corporate sector and government regulation, which should be aimed at promoting innovation environments, tax exemptions and financial incentives (Kahn and Kawasaki, 2014). Innovative solutions in the field of tourism include the creation or improvement of existing conceptual solutions in the areas of transport, hotel and other services, the development of new destinations, the use of Information and Communication Technologies, new forms of management and organizational activities (strategic alliances and networking and the development of tourism businesses) (Iordache, 2015). Inter-regional spill over effects occur through various channels such as technology, knowledge, investment, human capital and competition (Yang and Fik, 2014). Tourism may also generate demand-side spill overs (Yang and Wong, 2012). It should be noted that government policy is important in channelling spill over effect. Innovations in tourism and hospitality can be divided with regard to the structure of investment (figure 2) and innovations that enable sustainable growth or classified as (i) technological or non-technological innovations, (ii) product or process innovation, (iv) organizational or market innovation, or “ad hoc” innovation (nature of the innovation), (v) radical, incremental or architectural innovation (innovation and intensity of discontinuity). Figure 3: Innovations in tourism and hospitality industry according to the nature of assets Source: Authors´ analysis The following chapters are focused on the importance of the development of information and communication technology solutions and influence of the innovations on the value added model in tourism and hospitality industry. 374 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation 4. Characteristics of the Entrepreneurial Investments in Innovativeness of Information and Communication Technologies in Tourism and Hospitality The development of the Information and Communication Technologies (ICT) in the second decade of the 21st century has enabled the creation of strong mutually cooperating web communities, which are peers sharing digital products and information. The growth of small technology companies is extremely important for youth employment and development of the environment, so young technology companies are developing digital platforms and software and technological solutions that have a significant impact on changes in the marketing chain in tourism and hospitality industry. However, it is necessary to be aware that the rate of development of technological solutions depends on the development of both entrepreneurial culture and information society in each country. Table 3 presents the estimated ability of technological readiness of each analyzed country. Table 3: Technological readiness Factors of the technological readiness AL BIH BG CRO MK MNE RO SRB SLO Availability of latest technologies 3.9 4.2 4.6 5.0 5.0 4.6 4.6 4.9 5.5 Firm-level technology absorption 4.1 4.4 4,4 4.6 4.2 4.4 4.4 4.7 4.9 FDI and technology transfer 4.5 3.3 4,4 3.8 4.4 4.0 4.7 4.2 4.1 Individuals using Internet % 60.1 60.8 55.5 68.6 68.1 61.0 54.1 54.3 71.6 Fixed-broadband Internet subscriptions/100 pop. 6.6 14.1 20,7 23.0 16.2 15.2 18.5 12.7 26.6 Int’l Internet bandwidth, kb/s per user 26.1 43.0 138.3 58.0 41.8 77.0 153.8 28.9 121.1 Mobile-broadband subscriptions/100 pop. 30.9 27.8 66.4 68.5 47.7 31.0 49.4 12.7 46.7 Source: The Global Competiveness Report 2015 – 2016 (2015). Gaps are wide on technological readiness, with the Slovenian outperforming followed by Croatia and Romania in ICT adoption and innovation, with less promising trends in Albania and Bosnia and Herzegovina (table 3). To achieve new technological solutions and consequently regional tourism development, governments of all nine countries should prepare concept of economy development according to the German phenomenon Industry 4.0., which is based on the implementation in industry, the human environment and scientific research. For all nine countries it is important that the German government stimulates the political-economic initiative to help industrial manufacturing keep its competitive edge against the labor-cost advantages of developing countries and resurgence in U.S. manufacturing (Weber, 2015). The European Union has therefore decided to encourage research into the field of smart technologies. The research program Horizon 2020 offers funding programs for research and development projects such as smart cities and communities’ information, strategic roles of smart cities for tackling energy and mobility challenges, analyzing the potential for wide-scale roll-out of integrated smart cities and communities’ solutions, etc., (European Commission, 2015). The role of Industry 4.0 in tourism and hospitality is increasing competitiveness through smart ICESoS 2016 - Proceedings Book 375 �International Conference on Economic and Social Studies (ICESoS’16) equipment, making use of information about customer characteristics, resources, energetic efficiency and urban production – smart destinations/smart cities (Hecks and Rogers, 2014). 5. Influence of Innovations on the Value Added Model in Tourism and Hospitality Industry ICT innovation factors are changing customer behavior and the traditionally structured tourism supply chain, which is now forced to adopt a comprehensive infrastructure based on a more flexible organizational structure in order to implement on-demand marketing and technological innovations. Information technology is becoming an important factor in companies’ business models. With platforms like Airbnb the information technologies are competing with the hotel industry. Hotel managers need to be aware of the influence of ICT, including social media platforms that create opportunities for improvement of the entire value chain of the hospitality industry. New technologies create value added in terms of financial benefits and intangible assets such as improved networking, communication and customer services. ICT innovations have to enable connection between a customer and a service provider. The process begins with customer expectations about the technology abilities that influenced on customer satisfaction which is reflected in customer retention (Roblek, 2015). In regard to Industry 4.0, one cannot be thinking only about robotics and the automation of production, because it is a digitization of business processes as a whole; it involves the adoption of a contract over the procurement of materials and how the product “gets” through production and is finally delivered to the customer. In this area, we expect automating processes that will require a certain automaticity of the workers. People will still have to use their brains. Added value will be found in new products and new solutions - handling figures are not productive work (Kane et al., 2015; Schlechtendahl et al., 2015). Kagermann (2014) defined the Internet of Things and the Internet of service as parts of the manufacturing process that has ignited the fourth industrial revolution. The IoT includes “things” and “objects” like RadioFrequency Identification (RFID), sensors that will send storage, processing and analysis information, and smart phones which interact with each other and cooperate with smart components (Dutton, 2014). What can be done for regional technological entrepreneurship development and consequently for the tourism development is shown in the figure 4, which presents the innovation of a sensor in traveler’s luggage by using the Barcet model that reflects a more synthetic vision of innovation for tourism and regional development (Barcet, 1996). 376 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation Figure 4: Barcet innovation model for a sensor in traveller’s luggage Source: Authors´ adaptation of the Barcet model (1996) Figure 4 shows the present (and future) importance of new technologies in enabling for tourism and hospitality industry to meet new tourist demand. RFID-chips will replace bar codes, and will play a large part in the upcoming wave of technology implementation at airports, and other service providers in the tourism industry. The present model is suitable for the tourism industry and includes all steps of organizational changes because all objects can be potentially connected and networked. This mode is coming to the step that “smartness economy” is going to change the way of creating value added (steps from 2 to 4 in the figure 4). The sources of services are changing, but all service process is accessible via the internet. One of the most important roles of the IoT is changing the environment and launching new strategic choices. It is going for a new expression of the relations between customers and producers. The relation will include also the manufacturer of the product (e.g. chip) and multiple partners who will ensure the development of built-in components and software. This cooperation is influencing the rebuilding of the knowledge value chain (Porter and Heppelmann, 2014). On the demand side customers will increase their awareness in regard to the importance of the quality and reliability of the acquired and given information and technical condition of the products and services. This will affect the accumulation and analysis of information in real time and consequently influence coming guidelines of value creation for the customers. It is opening a question of how will the customers adapt the new IoT and control over their private life? (Roblek, Štok and Meško, 2016). 6. Discussion and conclusion The growing interest in development of the ICT and an increasing number of organizations which develop and adopt the new ICT into their business leads to the value added of society as a whole. The main challenge in an innovative country ICESoS 2016 - Proceedings Book 377 �International Conference on Economic and Social Studies (ICESoS’16) towards the transition countries is equitable economic growth which is not being understood as an innovation only from an economic, but also from a social and environmental dimension. Countries and tourist organizations should be aware that only the investment in new innovative concepts or institutional, governance and organizational innovation are increasingly regarded as the markets and societies that move towards societal progress. References • Alkier, R., Milojica, V., & Roblek, V. (2015). A holistic framework for the development of a sustainable touristic model. International Journal of Markets and Business Systems, 1(4): 366-387. DOI: http://dx.doi.org/10.1504/IJMABS.2015.074213 • Barcet, A. (1996). Fondements culturels et organisationnels de l’innovation dans les services. Research Report for French Ministry of Higher Education and Research. Ecully: CEDES-CNRS. • Bertoncelj, A., Bervar, M., Meško, M., Naraločnik, A., Nastav, B., Roblek, V. & Trnavčevič, A. (2016). Sviluppo sostenibile: aspetti economici, sociali ed ambientali (1st ed.) Avellino: Business Laboratory Bisson, P., Stephenson, E., & Viguerie, S. P. (2010). The global grid. McKinsey Quarterly. Retrieved from http://www.mckinsey.com/business-functions/ strategy-and-corporate-finance/our-insights/the-global-grid • Botha, A., Kourie, D., & Snyman, R. (2014). Coping with Continuous Change in the Business Environment: Knowledge Management and Knowledge Management Technology. England: Oxford Elsevier. • Chathoth, P., Altinay, L., Harrington, R. J., Okumus, F., & Chan, E. S. (2013). Co-production versus co-creation: A process based continuum in the hotel service context. International Journal of Hospitality Management, 32, 11-20. doi:10.1016/j.ijhm.2012.03.009 • Dominici, G. & Roblek, V. (2016). Complexity Theory for a New Managerial Paradigm: A Research Framework. In Vrdoljak Raguž, I., Podrug, N., Jelenc, L. (Eds.), Neostrategic Management (223-241). Switzerland: Springer International Publishing • Dutton, H.W. (2014). Putting things to work: social and policy challenges for the Internet of things. Info, 16 (3), 1 – 21. • Epstein, M. J., & Buhovac, A. R. (2014). Making sustainability work: Best practices in Managing and Measuring Corporate Social, Environmental, and Economic Impacts (2nd Completely Revised and Updated Edition). San Francisco: BerrettKoehler Publishers. • European Commission (2015). Horizon 2020. Retrieved from https://ec.europa. eu/programmes/horizon2020/ • FitzPatrick, M., Davey, J., Muller, L., & Davey, H. (2013). Value-creating assets in Tourism Management: Applying marketing’s service-dominant logic in the hotel industry. Tourism Management, 36, 86-98. • Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman • Gummesson, E. (2014). Commentary on “The role of innovation in driving the economy: Lessons from the global financial crisis”. Journal of Business Research, 67(1), 2743-2750. • Haxton, P. (2015). A Review of Effective Policies for Tourism Growth. OECD Tourism Papers, 1: 1-72. DOI: http://dx.doi.org/10.1787/5js4vmp5n5r8-en • Heck, S., & Rogers, M. (2014). Are you ready for the resource revolution? McKinsey Quarterly, 2, 32-45. 378 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation • Hollensen, S. & Opresnik, M. O. (2015). Marketing: A relationship perspective. München: Verlag Franz Vahlen GmbH. • Iordache, C. (2015). Innovation in tourism-between desideratum, development and braking. Strategic policy innovation. Romanian Journal of Marketing, 1, 53– 66. • Ivanović, S. (2012). Ekonomika ugostiteljstva. Opatija; University in Rijeka. • Kagermann, H. (2014). Change Through Digitization—Value Creation in the Age of Industry 4.0. In Albach, H., Meffert, H., Pinkwart, A. & Reichwald, R. (Eds.), Management of Permanent Change (pp. 23-45). Wiesbaden: Springer Fachmedien Wiesbaden. • Kahn, R. & Kawasaki, Y. (2014). Brave new world of abenomics. Asia Today International, 32(5), 50–51. • Kane, G. C., Palmer, D., Phillips, A. N., & Kiron, D. (2015). Is Your Business ready for a Digital Future? MIT Sloan Management Review, 56(4), 37 - 39. • Kaplan, R. S., & Mikes, A. (2012). Managing risks: a new framework. Harvard Business Review, 90(6), 49-60. • Kuula, M., Putkiranta, A., & Toivanen, J. (2012). Coping with the change: a longitudinal study into the changing manufacturing practices. International Journal of Operations & Production Management, 32 (2), 106-120. • Lawlor, M. S., & Keynes, J. M. (2006): The Economics of Keynes Inhistorical Context: an Intellectual History of the General Theory. Houndmills: Palgrave Macmillan. • Lockyer, T. (2013). The international hotel industry: Sustainable management. New York: Routledge. • Mensch, G. (1979). Stalemate in technology. Cambridge: Ballinger • Mowforth, M., & Munt, I. (2015). Tourism and Sustainability: Development, Globalisation and new tourism in the third world. New York: Routledge. • Murphy, P. E. (2013). Tourism: A Community Approach (RLE Tourism). New York: Routledge. • North, K., & Kumta, G. (2014). How to Put Knowledge Management into practice. In North, K. & Kumta, G. (Eds.), Knowledge Management (304-279). Berlin: Springer • Pechlaner, H., & Innerhofer, E. (2016). Competence-Based Innovation in Hospitality and Tourism. London: Routledge. • Perez, C. (2002): Technological revolutions and financial capital: the dynamics of bubbles and golden ages. Cheltenham: E. Elgar • Pfeffer, J., & Sutton, R. I. (2013). The Knowing-doing gap: How smart companies turn knowledge into action. Boston: Harvard Business Press. • Porter, E.M. & Heppelmann, E.J. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(3), 65-88. • Roblek, V. (2015). Impact of Internet and Social Media on Organisational Change of OTC medicines Marketing Management. Int.J. Electronic Marketing and Retailing, 6(3), 239 – 258. • Roblek, V., Pejic Bach, M., Meško, M., & Bertoncelj, A. (2013). The impact of Social Media to Value Added in Knowledge-Based Industries. Kybernetes, 42(4), 554-568. • Roblek, V., Štok, Z. and Meško, M. (2016). The Complexity View on the Changes in Social and Economic Environment in the 21st century. In Kaplanova, P. (Ed.), Selected topics in modern society (5 – 24). Novo Mesto: Faculty of Organization Studies. • Schlechtendahl, J., Keinert, M., Kretschmer, F., Lechler, A., & Verl, A. (2015). Making existing production systems Industry 4.0-ready. Production Engineering, 9 (1), 143-148. ICESoS 2016 - Proceedings Book 379 �International Conference on Economic and Social Studies (ICESoS’16) • Schumpeter, J. A. (1939). Business cycles A Theoretical, Historical and Statistical Analysis of the Capitalist Process. New York: McGraw-Hill. • Seckelmann, A. (2002). Domestic tourism—a chance for regional development in Turkey? Tourism Management, 23(1), 85-92. • Senge, P. M. (2014). The Fifth Discipline Fieldbook: Strategies and tools for building a learning organization. New York: Crown Business • Sloan, P., Legrand, W. and Chen, J. S. (2013). Sustainability in the Hospitality Industry 2nd Ed: Principles of Sustainable Operations. London: Routledge. • Tarí, J. J., Heras-Saizarbitoria, I., & Dick, G. (2014). Internal and external drivers for quality certification in the service industry: Do they have different impacts on success? Service Business, 8 (2), 337-354. • The Global Competiveness Report 2015 – 2016. (2015). In Schwab, K. (Ed.). Geneva: World Economic Forum. • Tylecote, A. (1992): The long wave in the world economy. London: Routledge. • Weber, E. (2015). Industrie 4.0 – Wirkungen auf Wirtschaft und Arbeitsmarkt. Wirtschaftsdienst, 95 (11), 722-723. • Williams, A. & Shaw G. (1991). Tourism and Economic Development. London: Belhaven Press. • World Travel & Tourism Council. (2015). Travel & Tourism: Economic impact 2015 (editions: Albania, BIH, Bulgaria, Croatia, Macedonia, Montenegro, Romania, Serbia, Slovenia). Retrieved from https://www.wttc.org/ • Yang, Y., & Fik, T. (2014). Spatial effects in regional tourism growth. Annals of Tourism Research, 46, 144–162. • Yang, Y., & Wong, K. K. (2012). A spatial econometric approach to model spillover effects in tourism flows. Journal of Travel Research, 51(6), 768-778 380 ICESoS 2016 - Proceedings Book � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3339 Title A name given to the resource A HOLISTIC APPROACH TO INNOVATIONS IN TOURISM Author Author Ivanovic, Slobodan Milojica, Vedran Roblek, Vasja Abstract A summary of the resource. Abstract: This paper is focused on the importance and influence of the innovations in the time of the fourth industry revolution for the creation of value added in tourism industry. Innovative technology solutions solve problems in a tourist destination, as in the case of the effects of climate change as well as the revival of cultural heritage. New products that are connected with the Internet (e.g. Internet of things) and digital solution services invites small and medium sized firms, and other relevant actors, to apply for funding of co-operative tourism innovation projects. The proposals should primarily focus on the development of innovative products, services and concepts to accelerate the tourism sector. Innovative products and services form the framework of marketing efforts to encourage consumers to decide for the purchase and thus affect the sales success of tourist firms. Innovations that are intended to satisfy the wishes and needs of consumers, based on existing knowledge. Usually it is a technological innovation with features that provide additional solutions compared with the existing ones. Firms want to attract customers who have different needs from the existing customers. The contribution of the paper is mainly conceptual. With the development of the digital innovations (web 2.0., web 3.0., internet, the internet of things) that is central to the new industrial revolution, has led to “Industry 4.0” in tourism. The aim of this paper is to provide answers to RQ1: To present the known theory and practices of innovations in tourism; RQ2: To investigate the changes that will result from Industry 4.0 in tourism. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/889d8e878eb545782b2ed0d8dbeb0141.pdf 3031cd2179efb0841b6e693d9bff1878 PDF Text Text SECURITY SYSTEMS AT THE AIRPORT WITH ACCENT ON DATA LAYER SECURITY Amila Jasari International Burch University Bosnia and Herzegovina amilajasari1@gmail.com Abstract: Great number of population use air terminals consistently. This presents potential attraction for terrorism and different types of wrongdoing. Correspondingly, the high convergence of individuals on huge carriers, the potential high passing rate with assaults on flying machine, and the capacity to utilize a seized plane as a deadly weapon might give a charming focus to terrorism. In this paper we will investigate air terminal security. It alludes to the systems and strategies which are utilized as a part of ensuring travelers, staff and flying machine which utilize the air terminals. Airplane terminal security incorporates assurance from inadvertent/vindictive damage, wrongdoing and other dangers. Airplane terminal security endeavors to keep any dangers or conceivably perilous circumstances from emerging or entering the nation. All things considered, airplane terminal security fills a few needs: To shield the air terminal and nation from any undermining occasions, to console the voyaging open that they are sheltered and to ensure the people using them. It is necessary to comprehend the significance of security in each part of airplane terminal operations. It is entwined into the design fabric of airplane terminal operations - securing travelers, workers, data and base. Convenient and precise database and programming upgrades are vital to guarantee operational proficiency. Keywords: airport, security, databases, security systems, security operations. Purpose and objective of research Air transport is the transport sector, which is rapidly beginning to develop in the 20th century. Due to the specifics of the traffic branch, great attention is paid to safety. However, due to deregulation and liberalization of the market of air traffic safety aspects are becoming more complex, and represent a contradiction in relation to the economic aspects. The aim of any aviation organization, including the organization of air navigation is to provide services for which the organization was originally created. The development of air transport, particularly with international character, has started to develop and regulations which are primarily based on safety. The regulation has been developed together with the technical development of aviation, and the rules were brought on the basis of analyzed accidents happened in the past. The main purpose of this work is to study the safety management system at the international and national level. We will also consider the Research and development methodology that is based on security management. The impact of new technology is ICESoS 2016 - Proceedings Book 243 �International Conference on Economic and Social Studies (ICESoS’16) to create a system that can perform quality control of security, but also the awareness of all employees to the implementation of high standards of safety in accordance with the characteristics of a safety culture. The aim of this paper is to investigate the level of implementation of International Safety Management in air traffic control, and identify possible technological, operational and economic solutions to improve the safety management system. 1. ICAO This topic is an important area of research for all experts dealing with safety of air traffic. The International Civil Aviation Organization (ICAO) defines the regulations, standards and guidelines for security management, as well as other relevant factors affecting the operation of the air traffic control. Also in the world there are a large number of non-governmental organizations dealing with the study of the problem of air traffic safety. This includes relations between the security management system and quality management system, as well as the policy and objectives of security and methods of risk management security. Guarantee the security is intended to ensure a balance between meeting the goals of safety standards and goals of satisfying user to maintain an effective and efficient business organization. Figure 1: The evolution of safety thinking (James Reason; ICAO 2009) Also disclosed are methods of promoting safety achieved by training, i.e. Highquality and effective training and education which aims to develop professional and adequate staff in this business segment. For successful security management is of great importance and communication of safety among employees and beyond. We also researched and implementation process safety management system that takes place in four phases. ICAO’s summary explanation of safety: “Safety is the state in which the possibility of harm to persons or of property damage is reduced to, and maintained at or below, an acceptable level through a continuing process of hazard identification and safety risk management.” (ICAO 2009, Chapter 2.2.4). 244 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation The Parties to the Chicago Convention have pledged to implement the common accepted standards and recommended practices developed by ICAO, covering all aspects of aviation, including security. Standards and Recommended Practices have been developed in accordance to Article 37 of the Chicago Convention, to ensure the highest degree of equality regulations, standards, procedures and organization that regards the aircraft, personnel, airways and auxiliary services in cases that will improve aircraft navigation. 2. EUROCONTROL With regard to air safety is also an important European Organization for the Safety of Air Navigation shortly called EUROCONTROL. This is an organization established in 1960 to integrate and uniform administration of air traffic control in the upper airspace, and participates in the standardization of equipment and systems for controlling the air space, a unique education and training of staff of air traffic control. The multilateral air movement administrations organizer, which executes much of the European Commission’s strategy, is Eurocontrol. It is formally known as the European Organization for the Safety of Air Navigation. Eurocontrol is an global association, and started from the same hypothetical roots as much of Europe’s multilateral air regulation (Balfour & Chataway, 2005). Picture 1: EUROCONTROL Member States Also at the European level there are a number of organizations that participate and assist in the development and implementation of safety requirements and standards of civil aviation. ICESoS 2016 - Proceedings Book 245 �International Conference on Economic and Social Studies (ICESoS’16) 3. Heinrich’s pyramid concept The first scientific papers related to the resolution of the problems of industrial safety can be attributed to H. W. Heinrich. In the book “Industrial accident prevention: Scientific Approach” (1931), it is explained the concepts of the triangle events. The concept known as “pyramid security” or “Heinrich pyramid”. This concept is today used to illustrate the theory of causality by Heinrich. Unsafe practices can lead to minor incidents, and so far as they do not pay attention, they eventually can lead to serious incidents or accidents. Picture 2: Heinrich, H.W. Industrial Accident Prevention – A Scientific Approach, 3rd Edition, 1950. Heinrich pyramid security shows that the 300 accidents in which there had been no injuries nor damage following 29 accidents and one accident, as shown in Picture 2. According to the statistics, it can be concluded that these events preceded this remarkable situation with hundreds where there has been a reduction in safety, but because of their failure to log nothing done to avoid future events off the charts. Modern methodology required by operational staff and management to recognize conceivably threatening situations before they evolve into an accident. 4. Human factor A broad assortment of examination on human watchfulness has prompted the unavoidable conclusion that people are poor screens and that an assortment of intercessions and countermeasures coordinated toward enhancing observing execution in various settings and undertakings have shown little advantage (Davies and Parsuraman, 1982; Mackie, 1987). The human factor in aviation is the most flexible, the most flexible and the most valuable element of aviation systems, but also the most vulnerable to external factors that can hinder the performance of duties. Human error is impossible to completely exclude, because man is found in all stages of the design, development, deployment, and therefore the work in the ATM system, which consists of human resources, available tools and procedures. 246 ICESoS 2016 - Proceedings Book �Regional Economic Development: Entrepreneurship and Innovation A significant collection of confirmation recommends that any linkage in the middle of pay and execution is shaky, best case scenario and is presumably immaterial notwithstanding substantially more capable determinants of administrator execution, for example, work plan, execution estimation and criticism, and the match between administrator aptitudes and undertakings (Filipczak, 1996; Guzzo, 1988). The text in itself human error no decisive importance, but are crucial factors that led up to it, with that, all the investigations focus on how equipment and procedures. The text in itself human error no decisive importance, but are crucial factors that led up to it, with that, all the investigations focus on how equipment and procedures can help, that is, to reduce the “imperfections” of man. Technological progress has greatly facilitated and contributed to the construction and management of systems of air traffic control, more accurate weather forecasting, aircraft and airports, but still the final decision made by the people (especially the pilots and the air traffic control service providers), and therefore great attention during the selection and training of adequate staff. SHELL 5. SHELL model was developed to assist investigators in the expansion of the investigation with the traditional system. It describes the interference between man, machine and its working environment. SHELL model devised by Elwyn Edwards in 1972 and modified by Franz Hawkins in 1987. There are a few ways to deal with investigate mishaps and occurrences. SHELL model, goes for gathering in a proficient way security data highlighted amid the examination process and at controlling the agent into the investigation of the event. The objective is then to have the capacity to disperse this data through information trade, security studies or measurements, chiefly centered around human components and to recognize mischance antecedents. (Hawkins, 1987) SHELL model was named after the initial letters of four elements: • • • • • 6. S (Software) - regulatory support, which includes: procedures, training, computer programs, rules, etc. H (Hardware) - machinery and equipment E (Environment) - environment, can refer to the physical working environment, but also on economic, social and cultural environment. L (Liveware 1) - the man in the workplace (operator) L (Liveware 2) - Man at work (all other relevant for a particular case) Information processing Although technological advances allow greater efficiency and safety, when air traffic management, however, the same technology still relies primarily on a man who works within the system. People process information in a quick and complex manner, and have the versatility and flexibility to address the dynamic and difficult problems. It can be concluded that human information process in many ways superior to the most powerful computers. ICESoS 2016 - Proceedings Book 247 �International Conference on Economic and Social Studies (ICESoS’16) A system of perusers set along transport lines could read the labels’ steering data and give input to a framework that could then direct the sacks onto the right way (Nath; Reynolds; Want, 2006). So that decision could properly make and implement extremely important awareness of the situation. Awareness of the situation is the product of short-term and long-term memory. Information coming from long-term memory has acquired knowledge, procedures and methods, as long as those of short-term memory connected to the perception of the current circumstances, understanding and projecting the same for the future. One of the greatest difficulties for an aeronautical association is to make and keep up a positive well-being of society. Dr. Robert Helmreich, an authoritative clinician, portrays three critical social situations: national society includes the worth arrangement of specific countries, authoritative/corporate society separates the conduct found in different associations, and expert execution separates the conduct found in various expert gatherings (Helmreich, 1998). References • Balfour, J., & Chataway, C. (1995). European Community air law. • Davies, D., & Parasuraman, R. (1982). The psychology of vigilance. London: Academic. • Federal Aviation Administration [FAA] (2006). Introduction to Safety Management Systems for Air Operators. Advisory Circular AC 120-92. • Filipczak, B. (1996, January). Can’t buy me love. Training, pp. 29–34. • Guzzo, R. A. (1988). Productivity research: Reviewing psychological and economic perspectives. In J. P. Campbell & R. J. Campbell (Eds.), Productivity in organizations (pp. 63–81). San Francisco: Jossey-Bass. • Helmreich, R. (1998). Building Safety on the Three Cultures Of Aviation. Proceedings of the IATA Human Factors Seminar, p. 39-43. • International Civil Aviation Organization [ICAO] (2009). Safety Management Manual (SMM), 2nd edition. (Doc 9859 AN/474). Montréal, Canada: ICAO. • Mackie, R. (1987). Vigilance research –Are we ready for countermeasures? Human Factors, 29, 707–724. • Nath, B., Reynolds, F., Want, R. (2006) RFID Technology and Applications, IEEE Pervasive Computing 5, 1 (Jan. 2006) 22. 248 ICESoS 2016 - Proceedings Book � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3312 Title A name given to the resource SECURITY SYSTEMS AT THE AIRPORT WITH ACCENT ON DATA LAYER SECURITY Author Author Jasari, Amila Abstract A summary of the resource. Abstract: Great number of population use air terminals consistently. This presents potential attraction for terrorism and different types of wrongdoing. Correspondingly, the high convergence of individuals on huge carriers, the potential high passing rate with assaults on flying machine, and the capacity to utilize a seized plane as a deadly weapon might give a charming focus to terrorism. In this paper we will investigate air terminal security. It alludes to the systems and strategies which are utilized as a part of ensuring travelers, staff and flying machine which utilize the air terminals. Airplane terminal security incorporates assurance from inadvertent/vindictive damage, wrongdoing and other dangers. Airplane terminal security endeavors to keep any dangers or conceivably perilous circumstances from emerging or entering the nation. All things considered, airplane terminal security fills a few needs: To shield the air terminal and nation from any undermining occasions, to console the voyaging open that they are sheltered and to ensure the people using them. It is necessary to comprehend the significance of security in each part of airplane terminal operations. It is entwined into the design fabric of airplane terminal operations - securing travelers, workers, data and base. Convenient and precise database and programming upgrades are vital to guarantee operational proficiency. Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Conference or Workshop Item PeerReviewed H Social Sciences (General) https://omeka.ibu.edu.ba/files/original/9dce68ac59232299bf0a35401e0fec93.pdf 6e10051a7bea7709fdd392badd7c3076 PDF Text Text Journal of Economic and Social Studies Volume 6 Number 2 Fall 2016 Refereed Articles 27 Trade liberalization and product structure: The case of Western Balkans Edward Molendowski and Łukasz Klimczak 43 Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Zana Pekmez 57 Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Remzije Rakipi and Shpressa Syla 79 Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Merim Kasumović, Sanela Meholjić-Kalajdžić and Harun Meholjić 81 Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Mesut Bozkurt and Emrah Özkul 109 List of Reviewers for this Issue Journal of Economic and Social Studies JECOSS Volume 6 Number 2 Number 2 Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Amra Babajić and Meldina Kokorović Jukan Volume 6 5 Journal of Economic and Social Studies JECOSS Fall 2016 Print ISSN: 1986 - 8499 Online ISSN: 1986 - 8502 Fall 2016 �INSTRUCTIONS FOR CONTRIBUTERS Journal of Economic and Social Studies (JECOSS) is published by International Burch University in Sarajevo, Bosnia and Herzegovina. 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ÜÇ, Mustafa WITKOWSKI, Jaroslaw Massey University, NEW ZEALAND University of Belgrade, SERBIA International Burch University, BOSNIA AND HERZEGOVINA Florida International University, UNITED STATES OF AMERICA University of Sousse, TUNISIA York University, CANADA Virginia Commonwealth University, UNITED STATES OF AMERICA The University of Nottingham, Malaysia Campus, MALAYSIA Indiana University at Bloomington, UNITED STATES OF AMERICA Carnegie Mellon University, UNITED STATES OF AMERICA Pennsylvania State University, UNITED STATES OF AMERICA Sacramento State University, UNITED STATES OF AMERICA Trinity Saint Davis University, UNITED KINGDOM University of Central Florida, UNITED STATES OF AMERICA The University of Melbourne, AUSTRALIA Syracuse University, UNITED STATES OF AMERICA Sarajevo University, BOSNIA AND HERZEGOVINA University of Belgrade, SERBIA Zagreb School of Economics and Management, CROATIA University of Tuzla, BOSNIA AND HERZEGOVINA Sarajevo Graduate School of Business, BOSNIA AND HERZEGOVINA Sarajevo University, BOSNIA AND HERZEGOVINA The British University in Dubai, UNITED ARAB EMIRATES University of Belgrade, SERBIA Zenica University, BOSNIA AND HERZEGOVINA University of California, Berkeley, UNITED STATES OF AMERICA University of Warwick, UNITED KINGDOM University of Delaware, UNITED STATES OF AMERICA Zirve University, TURKEY Illionis Institute of Technology, UNITED STATES OF AMERICA Epoka University, ALBANIA University of Economics, POLAND �JECOSS Volume 6 Number 2 Fall 2016 Refered Articles 55 Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Amra Babajić and Meldina Kokorović Jukan 27 Trade liberalization and product structure: The case of Western Balkans Edward Molendowski and Łukasz Klimczak 43 Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Zana Pekmez 57 Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Remzije Rakipi and Shpressa Syla 79 Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Merim Kasumović, Sanela Meholjić-Kalajdžić and Harun Meholjić 103 Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Mesut Bozkurt and Emrah Özkul 131 List of Reviewers for this Issue �Journal of Economic and Social Studies Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Amra Babajić Faculty of Economics, University of Tuzla Bosnia and Herzegovina amra.babajic@untz.ba Meldina Kokorović Jukan Faculty of Economics, University of Tuzla Bosnia and Herzegovina meldina.kokorovic@untz.ba Abstract: This paper provides theoretical background and empirical research on state’s role in financial sector development, focusing on state’s role in achieving pro-poor economic growth through its activities in development of the financial sector. To this end, in the theoretical part of the paper, it is explained that pro-poor growth depends on the strong private sector, while at the same time private sector development is dependent on the degree of financial sector development. The empirical part of the paper discusses the role of the state in financial sector development and its contribution to economic growth and poverty reduction in Bosnia and Herzegovina (BH), arguing that this growth needs to be pro-poor oriented as BH is the poorest country in Europe. In order to assess the state’s role in financial sector development and its implication to pro-poor growth in BH, surveys among small and medium enterprises (SMEs) and government representatives were conducted. The research shows significant disagreement between the two surveyed groups about the efforts currently being implemented by BH government in supporting the private sector through financial sector development. It is concluded that government needs to work more closely with the private sector as well as with the financial sector so as to better identify the private sector needs and then create policies and take actions necessary for the private sector to develop, which would consequently lead to poverty reduction. Volume 6 | Number 2 | Fall 2016 Keywords: state, financial sector, pro-poor growth, Bosnia and Herzegovina (BH) JEL Classification: O40, G00, I32 Article History Submitted: 9 April, 2016 Resubmitted: 20 September 2016 Accepted: 14 October 2016 http://dx.doi.org/10.14706/JECO SS16621 5 �Amra Babajić, Meldina Kokorović Jukan Introduction The year 2015 was set as the target year by the United Nations (UN) to implement the Millennium Development Goals (MDGs), with halving absolute poverty set as the first most important goal. Unfortunately, evidence shows that in many developing countries, mostly in Sub-Saharan Africa and Oceania, this goal would not to be met (UN, 2015). In order to reduce poverty, governments need to take necessary actions to assure what in academic literature is referred as the pro-poor economic growth. Broadly, pro-poor economic growth can be defined as one that enables the poor to actively participate in and significantly benefit from economic activity. Promoting pro-poor growth requires a strategy that is deliberately biased in favor of the poor so that the poor benefit proportionally more than the rich (Kawani 2000:3). Pro-poor economic growth can be achieved through private sector development (e.g. promotion of entrepreneurship) as the generator of work places. Government role in private sector development is of crucial importance, since the government is responsible for policies and regulations promoting positive environment for private sector development. One of the aspects of promoting pro-poor growth through private sector development is by means of support and development of the national financial system (creating adequate financial market structure and stable financial institutions, as well as assuring adequate prudential supervision). Financial system development requires government support to provide stable and favorable environment for different types of financial institutions to develop, and furthermore, to provide incentives for financial institutions to create financial products/services tailored to the needs of private enterprises and of poor people to be able to selfemploy. The main goals of this paper are twofold. The first goal is to investigate the role of the state in financial sector development with the main focus to establish the link between government efforts to achieve sustainable pro-poor growth and its efforts to develop the financial system which will be in the function of pro-poor growth. The second goal is to analyze the current state of government intervention in the financial sector oriented to poverty reduction in Bosnia and Herzegovina (BH). Also, the paper is to provide guidelines and recommendations for the improvement of 6 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina government policies regulating financial sector and for greater involvement of the state in providing financial support to private sector development. BH is a rather dysfunctional country with a relatively high poverty rate. According to UNICEF’s poverty measure AROPE (At-Risk-of-Poverty and Social Exclusion), BH has the greatest risk of poverty and social exclusion among European countries. AROPA for BH is 58.6% (of population), and it fairly deviates from the EU-27 AROPE that totals to 24.2% as well as from the new member countries whose AROPE totals to 30.6%. This evidence shows that BH needs the shift in current economic policies. The first part of the paper provides the theoretical background on the financial sector impact on poverty reduction. It focuses on establishing the link between state’s role in financial sector development and state’s role in contributing to poverty reduction by creating policies (among other policies) that ensure the development of the financial sector. In the second part of the paper a review on the existing literature and previous research on the subject is presented. In the third part of the paper empirical research results on the state’s role in financial sector development in BH are presented. Using discriminant analysis, it was found that a huge gap exists between government perceptions of their influence on financial sector development and perceptions of private sector participants on the government role in financial sector development. Theoretical Background on State’s Role in Poverty Reduction through Financial Sector Development Economic growth, which is in the function of poverty reduction, requires macroeconomic stability, efficient investment in human and physical capital including infrastructure, regulation of enterprises and well-functioning financial sector (financial institutions as well as financial markets). Private sector, dominated by small and medium enterprises, is perceived as the most important key for assuring economic growth and job creation. In that respect, government efforts should be directed to enforce policies and create positive environment for promoting private sector development which, in the end, will deliver pro-poor economic growth. Moreover, an important precondition for strong private sector development and its ability to deliver pro-poor growth is the existence of a sound financial system. According to the UK government’s Department for International Development, the Volume 6 | Number 2 | Fall 2016 7 �Amra Babajić, Meldina Kokorović Jukan financial system contributes to factors needed for private sector to deliver pro-poor growth by the following activities (DFID, 2004:4-5): - Mobilizing savings for productive investment, and by facilitating capital inflows and remittances from abroad. The financial sector has a crucial role to play in stimulating investment in both physical and human capital, and hence increasing productivity; - Reducing transactions costs, facilitating inward investment, and making capital available for investment in better technologies. The financial sector can promote technological progress, thus increasing productivity, and improving resource use; - Enabling the poor to draw down accumulated savings and / or borrow to invest in income-enhancing assets (including human assets e.g. through health and education) and start micro-enterprises, wider access to financial services generates employment, increases incomes and reduces poverty; - Enabling the poor to save in a secure place, the provision of bank accounts (or other savings facilities) and insurance allows the poor to establish a buffer against shocks, thus reducing vulnerability and minimizing the need for other coping strategies such as asset sales that may damage long-term income prospects. Developed financial sector contributes to poverty reduction in two different ways: directly and indirectly (see Figure 1). 8 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Figure 1: Financial Sector Development and Poverty Reduction Source: Zhuang J. et al., 2009:10 Directly, financial sector contributes to poverty reduction through improving the access to financial service for poor and underprivileged people. Government may enforce policies which promote and create opportunities for self-employment and SMEs development. Furthermore, government can invest in better education and human capital development. Through better allocation of fiscal revenues for social spending, government can contribute to consumption smoothening among different population groups. Indirectly, the financial sector contributes to poverty reduction through boosting economic growth. In most developing countries, the major challenge of financial systems development is to provide access to formal financial sources (products and services) to the poor. Poor people are usually deprived of accessing commercial bank loans and financial services since poor people are observed as risky clients. For that reason, poor people mostly rely on the informal or semi-formal financial institutions which, in general, offer much more expensive financial products/services. Empirical evidence (Beck, Demirgüç-Kunt, and Martinez-Peria, 2007) confirms that the most important direct channel through which financial sector development impacts on poverty reduction is better access to financial services. Furthermore, it is important to emphasize that state’s role in financial system development is extremely important. Through regulation and supervision, the state Volume 6 | Number 2 | Fall 2016 9 �Amra Babajić, Meldina Kokorović Jukan creates secure and stable environment for financial institutions and markets to develop. To assure poverty reduction, governments need to implement policies which would lead to the increase in economic growth rates. But, efficiency of economic growth in poverty reduction depends on the capacity of the poor to participate in the growth (WB, 2005). Poor people can participate in achieving the economic growth only if they are given an active role in job creation. This is confirmed by the World Bank study titled ”Pro-Poor Growth in the 1990s: Lessons and Insights from 14 Countries”, where it is emphasized that policymakers who seek to reduce poverty should implement policies that enable their countries to achieve a higher rate of growth. But growth is more effective in reducing poverty in some countries than in others, depending on the capacity of poor people to participate in and benefit from growth. 1 As emphasized, development of the private sector as the new job creator is of key importance. The biggest responsibility for private sector development is on the government, because they need to create stimulative environment for development of the existing and the opening of new enterprises. There is persuasive evidence from all over the world confirming that rising levels of competition have been unambiguously associated with increased economic growth, productivity, investment and increased average living standards (OECD, 2006:41). Therefore, based on the modern regulatory regimes for development of the private sector which include competition policy regimes, economic growth model based on the pro-poor principles is desirable in BH. The existing model of economic growth in BH is not pro-poor oriented, because the Strategy for poverty reduction in BH adopted in 2004 is not fully implemented. Literature Review Literature review shows that early researches aimed to understand the relation between financial system and social welfare, while more recent studies (last decade) are more oriented to find the link between financial sector development and poverty reduction/alleviation. 1 We argue that the private sector, if properly supported by the government (especially in terms of development of entrepreneurship culture), is in the function of building the capacity of the poor people to participate in the country’s economic growth. 10 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Vast theoretical and empirical academic literature exists on the subject of financial sector impact on the social welfare. The majority of the papers in the 1990s debated mainly on the relation between financial system development and economic growth in general (Bencivenga & Smith, 1991; King & Levine, 1993; Levine, 1997) and on industrial growth in particular (Rajan & Zingales, 1998). Levine (2004) argues that countries with better functioning banking sector and financial markets grow faster. Bencivenga and Smith (1991) found positive relation between financial intermediation development and increase in real growth rates. Furthermore, they conclude that regulation policies (such as reserve requirements and interest rate caps) might have an impact on economic growth and need to be considered by developing countries. King and Levin (1993) formulated and empirically proved the model showing that better (more developed) financial systems stimulate economic growth by accelerating productivity rates. It is shown that more developed systems make more efficient selection for financing entrepreneurial activities and, therefore stimulating faster economic growth. Fields (2001) argues that through better access to finance poor people have better opportunities to participate in economic activities. Most recent empirical studies shows the existence of a significant positive effect of financial system development on poverty reduction, where countries with more developed financial systems are more likely to have lower poverty rates. (e.g. Akhter et al. 2010; Ho S. and Odhiambo, N. M , 2011; Azra. D et al. 2012; Uddin, G. S. et al. 2012). Honohan (2004) shows that correlation between financial development and sustainable economic growth needs to be drawn by more comprehensive statistics than merely banging sector depth. Furthermore, Quartey (2005) investigated the relation between savings mobilization and poverty reduction showing the existence of correlation between the two variables, but emphasizing the role of the government and its policy in stimulating domestic savings. It was also observed that institutional quality and adequate regulation of financial institutions play a crucial role in positive relationship between financial system development and poverty reduction (Dhrifi, 2013a.) Moreover, Dhrifi concludes that government must cooperate closer with the financial market and the banks acting as the regulator for formalizing models for the poorest access to formal and informal finance. Such actions of policy intervention should normally facilitate institutions providing financial services to the poor. In Volume 6 | Number 2 | Fall 2016 11 �Amra Babajić, Meldina Kokorović Jukan addition, it should foster cultures of households to invest in profitable projects. Political solutions must be tailored to the problems of the financial sector. (Dhrifi, 2013b:477). Having in mind the importance of government involvement in financial sector development aiming to achieve pro-poor economic growth, further research focuses mainly on the government role in BH in reducing poverty through financial sector development. Contribution of Financial Sector Development to Poverty Reduction in BH Overview of the Institutional Framework in BH Supporting the Private Sector and SMEs The general climate in the society should lead individuals to consider the option of starting their own business as attractive, and acknowledge that SMEs contribute substantially to employment growth and economic prosperity (EC 2008:3). In that respect, institutional infrastructure is necessary to support SMEs in proving growth and economic prosperity. When it comes to creating stimulative environment for private sector development in general, government’s role is of the utmost importance. Nevertheless, institutions forming infrastructure for private sector development are not just governments, but also non-government, private and non-profit organizations. There is no unique institutional infrastructure for private sector development and it differs from country to country. Support provided by government institutions is usually related to providing consulting and professional services, presenting good practices, etc. The majority of countries have developed different types of institutions such as government agencies, ministries, associations, chambers, and financial institutions. These institutions operate on different levels, from local, regional, state to international level. In context of creating adequate institutional infrastructure for supporting the private sector, especially for supporting SMEs, the European Union (EU) has made significant improvements. By adopting “Small Business Act” for Europe, the European Commission has laid a set of principles for implementation of policies both at the EU and Member State level in order to improve the legal and administrative environment throughout the EU for SMEs. These principles are the following (EC, 2008:4): 12 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina • • • • • • • • • • Create an environment in which entrepreneurs and family businesses can thrive and entrepreneurship is rewarded, Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance, Design rules according to the “Think Small First” principle, Make public administrations responsive to SMEs’ needs, Adapt public policy tools to SMEs’ needs: facilitate SMEs participation in public procurement and better use State Aid possibilities for SMEs, Facilitate SMEs access to finance and develop the legal and business environment supportive to timely payments in commercial transactions, Help SMEs to benefit more from the opportunities offered by the Single Market, Promote the upgrading of skills in SMEs and all forms of innovation, Enable SMEs to turn environmental challenges into opportunities, and Encourage and support SMEs to benefit from the growth of markets. By turning these principles into practice, many different institutions supporting SMEs have been established across the EU with coordinating efforts to provide better institutional framework for SMEs. By adopting EU Acquis Communautaire, BH has accepted these principles to create adequate institutional setting for SMEs development. Currently, there are several institutions that provide institutional support for SMEs in BH. This infrastructure is rather complicated due to the elaborate olitical and legal system in the country. BH operates on the state level with two entities: Federation of BH (FBH) and Republic of Srpska (RS), and Brcko District. FBH is further divided into ten cantons, each operating as a state within the state. The overview of BH government institutions and governmental financial institutions supporting SMEs is given in Table 1. On the state level, development of SMEs is coordinated by the Ministry of foreign trade and economic relations. Within this Ministry the Sector for Economic Development and Entrepreneurship is responsible for SMEs development and is in charge of the following basic activities: normative-legal, study-analytical, technicaloperational, information-documentary, and administratively-technical. These activities include different areas such as: macroeconomic analysis and economic Volume 6 | Number 2 | Fall 2016 13 �Amra Babajić, Meldina Kokorović Jukan growth forecast of BH; collaboration with international institutions and organizations; collaboration with domestic and foreign scientific and research institutions; preparation of treaties, agreements, and other acts for projects and programs of economic restoration and development; projects and programs of bilateral and multilateral donations and credits for economic restoration and development; coordination of international economic assistance to BH except the part regarding the European Union assistance; preparation of bilateral and multilateral agreements and other acts regarding economic restoration and development of BH; development of entrepreneurship, support to the development of SMEs; SMEs promotion. 2 Nevertheless, the fund for financial support for SMEs on the state level does not exist. Financial government support for SMEs is under the jurisdiction of the entities. On the level of FBH, SMEs are supported by the Ministry of Development, Entrepreneurship and Crafts and Development and the Development Bank of FBH. Furthermore, each of the ten cantons has cantonal ministry which deals with SMEs. In RS, SMEs development is supported by the three following institutions: the Ministry of Industry, Energy and Mining of RS, the Agency for SMEs and the Development Bank of RS. Table 1: The overview of BH government institutions supporting the private sector and SMEs Level of government State level Entity level Federation of BH Entity level Republic of Srpska Cantonal level Brcko District 2 Government institution Ministry of foreign trade and economic relations of BH Ministry of development, entrepreneurship and crafts Ministry of industry, energy and mining of RS Agency for SMEs Designated ministry for SMEs Government of Brcko District – Government financial institution Does not exists Development Bank of FBH Development bank of RS Development bank of RS. Development Grant Fund of Brcko District www.mveteo.gov.ba 14 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Besides the government institutions, there is a wide network of non-government institutions providing support to SMEs development in BH, such as REDAH Regional Development Agency for Herzegovina, REZ – Regional Development Agency for Central BH region, NERDA - Regional Development Agency for North-East BH, SERDA – Sarajevo Regional Development Agency, etc. This existing legal infrastructure in BH, with different laws adopted on different government levels (state, entities, and cantons) and problems in the implementation of the Strategy for SMEs development, is rather complicated and does not provide proper conditions for enterprises to operate. Laws adopted on different government levels are not harmonized. Furthermore, there is no single state register of SMEs. Other infrastructural problems are related to complicated public administration, high costs of maintaining public administration, redundancy in functions of different institutions on all government levels with unclear responsibilities, etc. The number of registered enterprises in BH is reduced year by year, and conditions for the operation of the existing enterprises are worsened. Overall, it can be concluded that the current infrastructure supporting SMEs in BH is not in favor of achieving sustainable growth in the country. The Strategy of SMEs development is not being implemented properly and Strategy for poverty reduction is nothing more than cold facts on paper, as government is doing nothing to enforce and achieve strategy objectives. These strategies are not producing pro-poor growth. Overview of the BH Financial Sector The BH financial system is bank centric, where the dominant role is played by the commercial banks. The non-bank financial sector is relatively underdeveloped with the following financial institutions operating within the sector: microcredit organizations, leasing companies, investment funds and insurance companies. As Figure 2 shows, commercial banks account for 84% of the total financial asset within the BH financial system, while the remaining financial institutions account for 5% or less of the total assets. Volume 6 | Number 2 | Fall 2016 15 �Amra Babajić, Meldina Kokorović Jukan Figure 2: Structure of financial institutions of the BH financial sector in 2013 5% 4% 4% 3% Banks Leasing companies 84% Insurance companies Investment funds Microcredit organisations Source: CBBH (2014) Stability and security of the overall banking sector is adequate, according to the data provided by the Banking Agencies of Federation of BH and of Republic of Srpska. In 2012, capital adequacy rate of the banking sector, as the most important measure of banking sector performances, was 16.4%, which is substantially above the regulatory minimum of 12%. Regardless of the financial crisis, the financial system of BH remains strong in terms of its ability to provide financial support to nonfinancial sector (companies and households). On the other hand, statistical data shows that credit activity of banks was decreased during 2012, where 51.6 % of total credits (approx. BAM 16 billion) was granted to non-financial companies (public and private), 42.6% to households and 5.2% to the government. In the same period, microcredit financial institutions in Federation BH granted only 2% of the total credits (BAM 400 million) to companies and 98% to households. According to the Annual Report for 2012 of the Central Bank of BH, there were 28 licensed banks in BH, with 18 of them operating in FBH and 10 in RS. There were 19 microcredit financial institutions (13 in FBH and 6 in RS), with 15 of them 16 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina organized as microcredit foundation and 4 as microcredit organizations. 3 Leasing companies are less developed financial institutions with only 9 being licensed for providing leasing contracts (7 in FBH and 2 in RS). Furthermore, capital markets in BH are not used to their full potential. Organized capital markets exist within two securities exchanges (Sarajevo Stock Exchange and Banja Luka Stock Exchange), but the annual turnover at these exchanges is rather symbolic. The structure of the securities exchanges turnover shows the lack of foreign investors and dominance of government debt securities. Private companies do not use securities exchanges to raise capital funds through stock or bonds issuing or initial public offerings. Research Methodology and Sample For the purposes of assessing government involvement and policies impact on strengthening the financial sector oriented to poverty reduction and pro-poor growth, we conducted the research among SMEs and government bodies. The aim of the research was to better understand the perceptions of SMEs as the most important creators of work places, as well as of the perceptions of government agencies representatives about the level of government involvement in financial sector development. In order to collect the research data two types of questionnaires were created, one for SMEs and other for government representatives. The questionnaires were structured to collect data about government policies and actions impact on private sector development and poverty reduction focusing on the financial sector impact. 4 The questionnaires were created consulting the OECD document - Promoting Pro-Poor 3 One of the main differences between microcredit foundations and microcredit institutions is related to the maximum amount of granted credit. Microcredit foundations can grant a credit in the maximum amount of BAM 10,000 (approx. EUR 5000 ), while microcredit organizations can grant a credit in the maximum amount of BAM 50,000 (approx. EUR 25,000 EUR). 4 The research results, presented in this paper, are part of the broader research on government role in poverty reduction in BH which, besides its role in strengthening the financial sector, covered government role in strengthening entrepreneurial environment and the overall support to the private sector by eliminating different barriers, such as regulatory, administrative and financial. Volume 6 | Number 2 | Fall 2016 17 �Amra Babajić, Meldina Kokorović Jukan Growth: Private Sector Development and the European Commission document - The European Platform against Poverty and Social Exclusion: A European framework for social and territorial cohesion. The questionnaire for SMEs included thirteen questions, while the one for government bodies included eighteen questions. The sample of the surveyed SMEs was created based on the partial data on the number and types of SMEs from the Indirect Taxation Office of BH and the Agency for Statistics of BH, since the state level database of SMEs operating in BH does not exist. Having in mind that the sample would be rather large to collect the data, it was decided to include 250 SMEs in the sample. The size and structure of the sample is shown in Table 2. The response rate among SMEs was 50%. Table 2: Size and structure of the sample of the surveyed SMEs Group Number of employees 1 0 – 10 2 10 – 50 3 50 – 250 ∑ Type of SME Micro Enterprises Small Enterprises Mid-sized Enterprises Stratums Number of enterprises % Sample Number of enterprises 31,102 78.58 196.45 6,539 16.52 41.3 41 1,938 4.90 12.25 12 39,579 100.00 250.00 250 Number of enterprises in the sample 197 Source: Authors’ research The survey of government institutions included the following institutions and agencies: Federal Ministry of Development, Entrepreneurship and Crafts, FBH Development Planning Institute, Agency for Development of Small and Midsized Enterprises of Republic of Srpska, Government of Brcko District – Development Grant Fund of Brcko District, Federal Ministry of Energy, Mining and Industry, Ministry of Foreign Trade and Economic Relation of BH, and ten cantonal ministries of entrepreneurship. The response rate among government institutions was 81%. 18 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina The data was collected in the period from May to November 2014, by e-mail, phone and direct contact. Research Results and Discussion As it was indicated in the previous part of the paper, economic pro-poor growth implies orientation to poverty reduction through different government measures, including financial sector development. Financial sector development contributes to pro-poor growth by creating a network of different types of financial institutions as well as a variety of financial products/services for the private sector and supporting entrepreneurial development, which contributes to poverty reduction by increasing employment and self-employment. SMEs Perceptions of State’s Role in Financial Sector Development in BH In general, the survey shows negative SMEs perceptions of the state’s role in financial sector development and its contribution to entrepreneurial development and, therefore, to poverty reduction. Figure 3 shows the results of the level of the surveyed SMEs agreement with different aspects of government (state) support to financial sector development. Figure 3: Perceptions of SMEs on the state’s role in financial sector development State regulates microcredit organization and… 24,3 State creates positive business environment… 25,7 32,9 State works continuously on development… State ensures guaranties and subventions… State creates conditions for development of… 35,7 State encourage entrepreneurial and… Supporting financial institutions,… 0% Strongly disagress Disagree 28,6 38,6 14,3 14,3 41,4 21,4 40 27,1 21,4 41,4 35,7 25,7 34,3 40% Agree 10 2,9 7,1 4,32,9 47,1 32,9 20% 7,12,9 47,1 31,4 Undecided 14,3 0 28,6 44,3 27,1 State finances investment in equipment,… 28,6 15,7 60% 80% 7,10 7,12,9 4,3 1,4 4,3 1,4 14,3 0 100% Strongly agree Source: Authors’ research Volume 6 | Number 2 | Fall 2016 19 �Amra Babajić, Meldina Kokorović Jukan As Figure 3 shows, 23% to 44% of the surveyed SMEs strongly disagree, while 28% to 41% of the surveyed SMEs disagree that the state supports financial sector development oriented towards helping SMEs and entrepreneurial firms. The majority of the surveyed SMEs disagree that state: • ensures guaranties and subventions for debt financing of the companies (85.7% of the surveyed SMEs), • creates conditions for development of different types of financial products/services for micro/small/mid-sized companies (78.5% of the surveyed SMEs), and • works continuously on development and strengthening of the financial sector (72.9% of the surveyed SMEs). Furthermore, the research results show that most of the surveyed SMEs have either a negative or neutral attitude towards the state regulations on microcredit organizations and prevention of misuse of these organizations, state’s role in creating positive business environment and support to microcredit organizations, and state’s support to financial institutions. It is interesting to observe that less than 15% of the surveyed SMEs expressed a positive attitude towards the state’s role in financial sector development and its impact on entrepreneurial development. Government Bodies Perceptions of its Role in Financial Sector Development in BH In contrast to SMEs negative perception, the survey shows a more positive attitude among government bodies of the state’s role in financial sector development. The results of the survey are shown in Figure 4. 20 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Figure 4: Perceptions of government bodies on the state’s role in financial sector development State regulates microcredit organization and prevent misuse of these… 7,7 7,7 76,9 State creates positive business 7,7 environment and support microcredit… State works continuously on development and strengthening of financial sector 53,8 7,7 State ensures guaranties and subventions for debt financing of the… 7,7 7,7 0% Strongly disagress Disagree 0 30,8 23,1 23,1 30,8 State encourage entrepreneurial and 07,7 investment activities Supporting financial institutions, 0 government contributes to… 15,4 46,2 23,1 38,5 23,1 Undecided Agree 15,4 0 0 23,1 0 7,7 7,7 69,2 40% 7,7 46,2 76,9 20% 15,4 0 61,5 23,1 15,4 State finances investment in equipment, technology and education 23,1 30,8 23,1 State creates conditions for development of different types of financial… 7,7 0 60% 7,7 0 80% 100% Strongly agree Source: Authors’ research The majority of the surveyed government bodies are undecided (neutral) towards the statements related to state policies and to the entrepreneurial development through strengthening the financial sector. Government bodies agree that the state does not create conditions for development of a wide range of financial products/services for micro/small/medium enterprises and, moreover that it does not create positive environment and financial support for microcredit organizations. In contrast to the perceptions of the surveyed SMEs, government bodies express a positive attitude towards the state’s role in creating the conditions for debt financing for start-ups and enterprise development, as well as towards the state’s role in ensuring grants and subventions for debt financing of SMEs. Volume 6 | Number 2 | Fall 2016 21 �Amra Babajić, Meldina Kokorović Jukan Using discriminant analysis existence of the significant difference among attitudes between the private and government sectors on the state’s role in strengthening the financial sector was tested. In that respect, one discrimination function was determined, where the function describes 100% of the variation of the between groups variation, which is shown in Table 3. Table 3: Discrimination analysis for the state’s role in strengthening financial sector F eigenvaules λ % of Variance 1 0.278 100 Cumulative % 100 Canonical Correlation rc 0.467 Wilks’ Lambda λ 0.782 Chisquared χ2 18.788 df Sig. 9 0.027 Source: Authors’ research Squared canonical correlation (rc), the effect size for the discriminant functions, is (0.4672)=0.278. Wilks Lambda is rather high (Wilks λ=0.782) showing low discrimination strength of discriminant functions. Chi-squared test (χ2) for function 1 is statistically significant (χ2=18.788, sig.=0.027), showing that discrimination model is significant, and therefore can adequately measure group membership, but determined differences between groups are rather small. Table 4 shows discriminant function coefficients and group centroids for the state’s role in strengthening financial sector. Table 4: Discriminant function coefficients and group centroid for the state’s role in strengthening financial sector Discriminant Coefficient (DC) State encourages entrepreneurial and investment activities State ensures guaranties and subventions for debt financing of companies State creates conditions for debt financing of start-up/development of firms 0.629 State finances investment in equipment, technology and education 0.569 22 0.823 Group Centroid Private sector -0.225 Government 1.209 0.624 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Supporting financial institutions, government contributes to entrepreneurial development 0.536 * Difference does not exist Source: Authors’ research Table 4 shows differences between the observed groups for chosen variables in the hierarchical order. The mayor difference in perceptions among the private and government sectors is observed in respect to the following: state’s role in encouraging entrepreneurial and investment activities (DC=0.823), and state’s role in ensuring guaranties and subventions for debt financing of companies (DC=0.629). On the other hand, there is no significant difference between perception among the private and government sectors on the state's role in creating positive business environment and support to microcredit organizations. It can be observed that even though some differences in perceptions among the private and government sectors, on the multivariation level, do exists, where the private sector gives a lower grade than the government bodies for the state’s involvement and contributions to financial sector development, those differences are rather insignificant. Conclusions and Recommendations In order to reduce poverty, governments in developing countries need to take necessary actions to assure pro-poor economic growth. Pro-poor economic growth can be achieved by greater role of the state in developing private sector and creating environment for entrepreneurship. In that respect government needs to establish economic environment which would boost private sector to create more work places for the poor. Furthermore, the state needs to engage in development of the financial sector, as financial sector development is one of the preconditions for private sector to develop. Without proper financial sector infrastructure for private sector and entrepreneurs to obtain external financial sources (more precisely, without availability of different types of external financial sources tailored to their needs), it cannot be expected that a pro-poor growth can be achieved through private sector development. As the research shows, based on the BH experience, it is not enough to create the regulation framework of the financial system and regulation for SMEs, but it is Volume 6 | Number 2 | Fall 2016 23 �Amra Babajić, Meldina Kokorović Jukan important that regulations and government actions are in line with the expectation of the private sector. The research shows that private sector is not satisfied with actions undertaken by the state for supporting financial sector. The analysis of SMEs perceptions reveals that SMEs have negative perceptions towards the state’s role in financial sector development. The surveyed SMEs are of the opinion that the state interventions in financial sector are not contributing to entrepreneurial development in BH, regardless of the fact that BH financial sector is well developed and well regulated. On the other hand, the analysis of perceptions of government bodies at all levels (municipal, cantonal, entity and the state level) reveals that the state is not aware of the needs of private sector, as well as of entrepreneurial sector. It is obvious that a huge lack of understanding between the state and private sector exists. In that respect, it is important that government work more closely with private sector as well as with financial sector to identify the needs of private sector and create policies and take actions necessary for private sector to develop. In particular, when it comes to financial sector development, government bodies need to: • rethink and better distribute guaranties and subventions for debt financing of companies, • create conditions for development of different types of financial products/services specially tailored for the needs of SMEs, • work continuously on development and strengthening of financial sector, hold workshops or focus groups where all interested parties (the state, financial institutions and SMEs) would be able to discuss the problems in access to financial products and services. References Akhter, S., Liu , Y., & Daly, K. (2010). Cross Country Evidence on the Linkages between Financial Development and Poverty. International Journal of Business and Management, 5(1), 3-19. Azra, K. D., Ahmad E., & Ullah W. (2012). Financial Development and Poverty Reduction: Time Series Evidence from Pakistan. World Applied Sciences Journal 18(11), 1576-1581. 24 Journal of Economic and Social Studies �Role of the State in Financial Sector Development and Achieving Pro-Poor Growth: Evidence from Bosnia and Herzegovina Beck, T., A. Demirgüç-Kunt, & M. S. Martinez-Peria. (2007). Reaching Out: Access to and Use of Banking Services across Countries. Journal of Financial Economics, 85(1), 234–66. Bencivenga, V.R, & Smith, B.D. (1991). Financial Intermediation and Endogenous Growth, Review of Economic Studies, 58, 195-209. Central bank of Bosnia and Herzegovina (2014). Annual Report of CBBH for 2013. Retrieved from: http://www.cbBH.ba/files/godisnji_izvjestaji/2014/GI_2013_bs.pdf DFID (2004). The Importance of Financial Sector Development for Growth and Poverty Reduction Policy Division Working Paper, Department for International Development, UK. Retrieved from: http://ageconsearch.umn.edu/bitstream/12886/1/fi04im01.pdf Dhrifi, A. (2013a). Financial Development and Poverty: What Role for Growth and Inequality?, International Journal of Academic Research in Accounting, Finance and Management Sciences, 3(4), 119–129 Dhrifi, A. (2013b). Financial Development and the "Growth-Inequality-Poverty" Triangle: A Comparative Study between Developed and Developing Countries, International Journal of Economics, Finance and Management, 2(7), 472 -481. European Commission (2008). “Think Small First” - A “Small Business Act” for Europe {SEC(2008) 2101} {SEC(2008) 2102}, COM/2008/0394 final. Retrieved from: http://eur-lex.europa.eu/legalcontent/EN/TXT/?uri=CELEX:52008DC0394 Fields, G. (2001). Distribution and Development: A New Look at the Developing World. NY: Russell Sage Foundation, and Cambridge, MA: MIT Press. Ho, S., and Odhiambo, N. M. (2011). Finance and Poverty Reduction in China: An Empirical Investigation, International Business & Economics Research Journal, 10(8), 103 -114. Honohan, P. (2004). Financial Development, Growth and Poverty: How Close is the Links, World Bank Policy Research Working Paper 3203, February 2004, Retrieved from: http://www1.worldbank.org/finance/assets/images/3203.pdf Volume 6 | Number 2 | Fall 2016 25 �Amra Babajić, Meldina Kokorović Jukan King. R. G, and Levine R. (1993). Finance, Entrepreneurship and Growth: Theory and Evidence, Journal of Monetary Economics, 32(3), 513-542. Levine, R. (2004). Finance and Growth: Theory and Evidence. NBER Working Paper No. 10766, National Bureau of Economic Research, MA: Cambridge Levine, R. (1997). Financial Development and Economic Growth: Views and Agenda, Journal of Economic Literature, 35(4), 688-726. Quartey, P. (2005). Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana, UNU-WIDER. 2005, Research Paper No. 2005/71, United Nations University, Helsinki, Finland. Rajan, R.G. Zingales, L. (1998). Financial Dependence and Growth, The American Economic Review, 88(3), 559-586. Rajan. R.G, a Zingales L. (2003). The Great Reversals: The Politics of Financial Development in the 20th Century, Journal of Financial Economics, 69(1), 5-50. OECD (2006) Promoting Pro-Poor Growth - Private Sector Development. Retrieved from: http://www.oecd.org/development/povertyreduction/36427804.pdf Uddin G.S., Kyophilavong P., Sydee N. (2012). The Casual Nexus of Banking Sector Development and Poverty Reduction in Bangladesh, International Journal of Economics and Financial Issues, 2(3), 304-311. UN (2015). Millennium Development Goals: 2014 Fact Sheet. Retrieved from: http://www.un.org/millenniumgoals/2014%20MDG%20report/MDG%202014% 20Progress%20Chart_English.pdf WB (2015). Pro-Poor Growth in the 1990s: Lessons and Insights from 14 Countries. Retrieved from: http://siteresources.worldbank.org/INTPGI/Resources/3426741119450037681/Pro-poor_growth_in_the_1990s.pdf 26 Journal of Economic and Social Studies ���  �   �40,0 35,0 30,0 Raw materials Labour-intensive 25,0 20,0 15,0 10,0 5,0 0,0 Capital-intensive Technologyintensive, easily imitable Technologyintensive, difficultly imitable ������0,3 0,25 Albania 0,2 Bosnia & H. Croatia 0,15 Montenegro 0,1 Serbia (& M.) Macedonia 0,05 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 �0,12 Albania 0,1 Bosnia & H. 0,08 Croatia 0,06 Montenegro 0,04 Serbia (& M.) 0,02 Macedonia 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 �����Journal of Economic and Social Studies Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Zana Pekmez University of Sarajevo, Faculty of Economics Bosnia & Herzegovina zana_pekmez@hotmail.com Abstract: Paper intends to provide an expert view on the approach to transformation of business processes toward business sustainability, or sustainable business processes, with a focus on ecological thinking. Furthermore, it highlights the argument that approach to corporate sustainability is interdisciplinary process spanning from the fields of sociology to applied technological innovation and advances in the IT/IS sphere of influence. Through a review of an amalgam of very recent literature, a versatile business model is recommended bridging together most effective strategic information system planning (SISP) tools for building a sustainable business processes to be deployed in practice. This article intends to help high and middle management extend the notion of sustainable development to their every-day managerial activities while protecting the organization well-accepted business principles. Keywords: Corporate sustainability; Business process management (BPM); Information Systems (IS); Information Technology (IT) infrastructure, Green IT and IS JEL Classification: M15 – IT Management Article History Submitted: 21 March 2016 Resubmitted: 13 July 2016 Accepted: 5 September 2016 http://dx.doi.org/10.14706/JECO SS166110 Volume 6 | Number 2 | Fall 2016 43 �Zana Pekmez Introduction Information systems (IS) and Information Technology (IT) have in many significant ways contributed to the sustainability cause in the past decades as an instrument to raise awareness about ecological thinking, communicate and distribute information, increase productivity and optimize the use of natural resources, as well as reduce travel and transportation (Huang, 2009). However, all these deeds do not excuse these technological systems and constructs from continuing to stand up for the environment advocating and supporting sustainable business practices and systems. Powerful and wide-spread technology and significant role of information systems in our everyday lives are all reasons why IT and IS should be at the forefront of the battle for sustainability. For almost four decades it has been a greatest challenge for IT&IS professionals and business executives to align the overall business strategy with IS&IT development planning and investments. This goal became even more ambitious when executives faced the need to reconcile the corporate IS&IT planning with green strategies and sustainable and ecological thinking. The reality is that the use of IT and IS systems significantly impact the environment at every stage of its life and use cycle: consumption of raw materials, energy and water in the production phase and furthermore the consumption of electricity by use of computer, servers, displays and other hardware. Furthermore, waste of computer components has becoming a tremendous problem due to its toxic content (Murugesan, 2008). Green IS&IT strategy should encompass all the above mentioned stages of IT&IS system life, and at the same time be aligned with corporate business strategy. To achieve this goal companies, need a holistic, systematic and well-planned strategy, deep-seated in the principles of sustainable and ecological thinking toward addressing comprehensive set of environmental concerns. Reconciling the traditional companies’ objectives, such as profits, costs and competitive advantage with environmental and sustainability targets is by far greatest challenge of all, however the following text will demonstrate that there are common factors which inevitably lead in the same direction. Corporate Sustainability and IT&IS Infrastructure In the past two decades the fight for sustainability has expanded from regulators and government agencies to corporate world. Following the ecological thinking 44 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure principles, aware business executives have formed an organization – World Business Council for Sustainable Development which has grown in 2000 to count 150 international companies (Dyllick and Hockerts, 2002). However, the locus of their fight for sustainability has been mainly dominated by „eco-efficiency“, e.g. energy saving strategies, recycling, utilization of sustainable products, which have for sure colored most of the companies’ green (Dyllick and Hockerts, 2002, 131). Furthermore, companies have mostly focused on consumption of energy by the datacenters and extensive physical hardware machines and servers. According to the analyst from Gartner Research, IT departments of fairly large companies spend about 5% of their total budget on energy costs, however the IT's „dirty secret “is that more energy is consumed during the production and shipping process of hardware (PCs, servers etc.) than during its actual usage (cited in Saran, 2007). Progressively standards for achieving sustainable business practices are becoming more demanding. Besides the efficient use of resources and energy, companies should take into consideration the entire life-cycle of products and therefore reconsider many aspects of doing business to maintain the recognition of being compliant to sustainability standards. The decision to incorporate practices such as, life cycle analysis, environmental auditing and reporting, outsourcing decisions and choice of suppliers depending on their commitment to environment, are becoming a crucial element of companies’ strategy and competitiveness (Elkington, 1994, pp. 91). Environmental policies and guidelines have been primarily the task of government agencies and regulatory to be imposed on the corporates. In this arrangement, the corporate world has adopted by inertia a very reactive role, in addition to the obligation of compliance. However, due to a very dynamic and changing market conditions, companies require an innovative and unique business practices which will add value to the entire business model and products and thus grant these companies a competitive advantage in its respective industry (El- Gayar and Fritz, 2006). A competitive advantage could be measured by an additional value added to products, better cost-management practices, a robust and efficient information system and IT infrastructure. During last decade, many companies have discovered that incorporating sustainability into its overall long-term business strategy would possible grant them all the above, namely: additional value to products, better cost management and efficiency of IS&IT infrastructure. Achievement or retention of competitive Volume 6 | Number 2 | Fall 2016 45 �Zana Pekmez advantage in its respective industry and stable stream of income are much valued end-results of incorporating sustainability issues as important features of business processes and overall business goals. The following table summarizes some of the key success factors critical to achieve sustainable and versatile operating model. All these factors summarized below stem from various disciplines. Table 1: Summary of Key Factors IT INFRASTRUCTURE STRATEGIC IS PLANNING Virtualization and cloud computing – consumes less energy; prevents the need for a data centers and prevents the need for extensive cooling systems. CIO&COO awareness – Nexus between Operations and IT toward sustainable business practices Using virtualization software to divide servers into multiple machines BPM – a holistic management practices of measuring and re-designing the processes –transformation. Replacing the old equipment with new energy efficient one – EPEAT and ENERGY STAR certified systems (LCD monitors instead of CRT technology) LEAN methodology – elimination of all kinds of waste. Deployment of optimization systems Remote workers – less office space, less heat, less power, less commuting. Power management – activate the power management features on servers and devices; system settings to hibernate and shut down. Video-conferencing – with employees, customers and suppliers. Using thin-client computers Eco –metrics –measuring the use of energy & the levels of emission. Recycle IT equipment properly: not carefully recycling practices are for companies’ serious financial and information security liability. Corporate environmental 46 reporting Shared service centers Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Use of renewable energy Selecting a supplier according to their commitment to the environment (IS Value Chain) Use Green IT Standards – Epeat (www.epeat.net), the Energy Star 4.0 standard and the RoHS Directive (www.rhos.gov.uk) Eliminate printing and use of paper. Source: Table is compiled by the author from various sources listed at the reference list. Building the Theory of Corporate Sustainability Business Process Management (BPM) approach An approach to transformation and innovation in business practices is an interdisciplinary process with business-related and people-related content and issues concerning design and architecture. To measure the efficiency and effectiveness of processes in terms of the general behavior and practices, a maturity models have been introduced to the fields of Business Process Management (BPM) and Software engineering. These models guide organizations toward prioritizing activities and designing the roadmaps. De Bruin and Rosemann (2007) and Rosemann and vom Brocke (2010) developed a concept of BPM maturity model which contains six crucial components for successful and effective business management namely: strategic alignment of corporate goals, corporate governance, overall methods, information technology, people and culture (cited in Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis, 2012, 284). Thus, in order to get the most accurate diagnosis of companies processes to fix them and achieve better and more efficient business practices interdisciplinary approach as an amalgam of different fields of studies and perspectives are most needed. Since corporate sustainability is entire company's target/goal affecting all of the business practices and departments – from hygiene maintenance, operation processing and high level executive decision making – the most encompassing way to address this issue is through the Business Process Management (BPM). This phenomenon has been revolving throughout the decades and is very flexible to changes and innovation thus manager should use it as a tool to diagnose inefficiency and tailor the processes that will be highly efficient (supporting the main business Volume 6 | Number 2 | Fall 2016 47 �Zana Pekmez goals) and highly sustainable (supporting the environment)- all at the same time. Seidel, vom Brocke and Recker (2011) emphasize that only through the employment of business process change and BPM methodology (process analysis, process performance measurement and process improvement) the altering capability and function of IS and the subsequently the role of IT, will be fully effective in transforming the business toward sustainable practices. Coinciding roles of IS and IT in making of sustainable business It is important at the very beginning to make a distinction between IS and IT systems as both are integral tools to sustainable business, however they differ in terms of ways of contribution to the cause, for example: IT is a set of products, mostly hardware, that processes, transmits and stores the data and promotes sustainability with a focus on energy saving, reducing the equipment waste and optimizing utilization. On the other hand, IS (information systems) is an amalgam of organizational goals and strategies brought to life through information system and software to achieve sustainable business practices (Boudreau, Chen & Huber, 2008). For example, Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis (2012) discussed the process of IS engineering with the focus on energy efficiency pointing out that application could be more or less efficient depending in the infrastructure in which it is running (different platform would require different levels of energy). Therefore, it is crucial to discuss the existing theories on the role of the hardware components (IT) in the building process of sustainable business model. On the role of Information technology In IT processes consumption of power by data centers and hardware have been popular topics; however, the power usage by networks has not been mentioned that often in the context of sustainable IT infrastructure. The fact is that networks consume more energy than data centers and this trend will be constantly increasing. Thus it is of crucial importance to consider the organization of business practices and systematization of human resources in regard to information processing and information sharing (Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis, 2012). Huang (2009) defined the sustainable IT development as a set of principles that takes into account at the same time and with equal importance the business goals and the environment. He proposes a new theoretical approach for the lifecycle 48 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure analysis of IT equipment with an explicit focus on the sustainability and he calls it „sustainable system development lifecycle “(SSDLC). SSDLC includes six stages: sustainable planning, sustainable analysis, sustainable design, sustainable implementation, sustainable maintenance and sustainable disposal (Huang, 2009). At each of these stages environmental requirements should be in focus: energyefficient equipment and power-management software should be used in the planning and design stages; system testing for energy consumption, proper installation, proper system migration during testing and implementation and proper maintenance to ensure that system if working in the most efficient state to extend its endurance and detect any inefficiencies in time. In addition, effective and sustainable disposal of the equipment is a final, however, most important stage that has been in most cases neglected. (Huang, 2009). This theory of SSDLC should be guiding principles for all IS&IT and business executives in the process of transformation and changeover to sustainable business practices. A more dynamic theory approach through the classification of degrees of effects of IT infrastructure on the environment has been developed by Hilty at al. (2006) and Kohler and Erdmann (2004) isolating three types of effects: first-order, second-order and third-order. (Cited in Dedrick, 2010, pp. 175). First-order effect is direct impact on the environment from IT hardware and equipment through the entire product lifecycle - from production to disposal. Second-order effects are impacts on the subsidiary processes such as transportation and industry and third- order effects are more complicated constructs whose effects have a power to change people's lifestyle and the economy, such as an example of home-business built on ecommerce platform (Dedrick, 2010). Information systems Even though their means of contribution to the sustainable corporate practices differ, a well-designed IS shall not be successful without efficient hardware components and in the long run such business model will not be sustainable in every aspect of its functional performance and end-result. The overview of the following theories will demonstrate the operational interdependence of IS and IT in the process of reaching long-term sustainable business-model. Besides the Real Theory of Management, that represents the gold-standard guidelines for competitive and successful business practices, new theories have been emerging with a focus on ecological thinking and sustainability that besides the Volume 6 | Number 2 | Fall 2016 49 �Zana Pekmez obvious fight for the environment, still guards the traditional profit-making and competitiveness mantra: such theories revolve mainly around the ideas of ecoefficiency, eco-effectiveness, life-cycle analysis, Lean & Green methodologies etc. (ElGayar and Fritz, 2006). Hart (cited in Boudreau, Chen & Huber, 2008, pp. 7) identifies three major sustainability goals, namely: pollution prevention, sustainable product utilization and clean technologies. On the level of firm or organization there are many means by which IS and IT could effectively contribute to all three mentioned goals, such as; using virtualization instead of physical servers (to prevent pollution), recycling computer (sustainable product utilization) and video conferencing or SharePoint for clean technology (Boudreau, Chen & Huber, 2008). Among these three frameworks of integrating sustainability into SISP, Boudreau, Chen & Huber (2008) also mention the key concepts of strategic alignment of business processes by using IS to achieve „aggregation, adaptation and arbitrage “, as well as the principles of ecological thinking („eco-efficiency, eco-equity and eco-effectiveness “) as drives toward sustainability of business practices trough the IS/IT deployment (Boudreau, Chen & Huber, 2008, pp.16). Furthermore, Dyllick and Hockerts (2002) recognized the need to contribute to building a systematic theory of corporate sustainability and they introduced the model approach of six criteria defining three cases for sustainability, namely the business case, the natural case and the societal case. In most firms’ executives follow solely the principles of eco-efficiency in order to achieve positive net value (economic value) in contributing to environment. Dyllick and Hockerts (2002) add to this business case yet another important criterion, namely the socio-efficiency as a new concept that correlates the firm's value to social impact suggesting that when designing a business case besides the eco-efficiency, socio-efficiency should also be used as a guiding principle. In addition to business case, two authors presented the natural case for corporate sustainability driven by the concept of eco-effectiveness and the societal case defined by socio-effectiveness and ecological equity. (Dyllick and Hockerts, 2002). Belief-action-outcome (BAO) & Energy Informatics Nigel P. Melville (2010) adds to the theory of corporate sustainability by analyzing the role of IS and innovation through the prism of two new disciplines, namely behavioral science and design science. A micro-macro model, called belief-action50 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure outcome (BAO), has been developed with an intention to research sustainability issues on diverse levels of granularity and through the different theories and constructs since the field of IS applies many theories among which are some from its own field and many are from different disciplines such as behavioral studies, psychology, sociology, economics etc. (Melville, 2010). Watson, Boudreau and Chen (2010) contributed to theoretical background by demonstrating a new conceptual framework – Energy Informatics. It is a solutionoriented interdisciplinary idea on how IS should contribute to sustainability with a focus on reducing energy consumption. In other words, energy informatics is a concept that models the relationship between energy and information using the tools from management science, design science and policy formation. It also important to mention that their interpretation and understanding of ecological goals is driven by above mentioned Dyllicks and Hockerts (2002) theories of eco-efficiency, eco-equity and eco-effectiveness. (Watson, Boudreau and Chen, 2010). Besides developing groundwork for a new theory, Watson, Boudreau and Chen (2010) underlined a several fronts where IS scholars and business executives should practice energy informatics, namely: research (9 core research questions have been proposed), teaching, Journals (by migration to electronic format and by actively publishing issues in sustainable IS) and through IS Association (Watson, Boudreau and Chen, 2010). Competitive advantage: “undeniable” fallout of sustainable business practices Translating its business practices and infrastructure to ecological and sustainable processes most practitioners and executives identify with high costs and low returns, however sustainability has become a global goal and most of organizational and firms had recognized sustainability issues as critical by incorporating it in its overall longterm business strategy. Those companies that have not done this yet are exposed to high risk of competitive disadvantage for many reasons: costumers worldwide are more environmental consciousness and prefer to buy products with green labels. Furthermore, elimination of many forms of waste (waste of resources, time, and energy) will ultimately lead to lower costs, higher profitability and returns (Boudreau, Chen & Huber, 2008). Practitioners warn that also the outsourcing decision should include, as a grading criterion, vendor’s commitment to sustainable business practice. Companies will be ultimately more. Volume 6 | Number 2 | Fall 2016 51 �Zana Pekmez motivated to comply with the sustainable standards due to the increased disclosure from companies in relation to their ecological profiles which will directly impact label, image and ratings in their respective industries. Commoditization leading to sustainability Making economic value of goods and services eventually will lead to reducing overheads and transactions costs, however according to Editor in Chief of Computer Weekly Bryan Glick, such commoditization could be a fertile ground for innovation. Consequently, innovation boosts competitive advantage and cost advantage if it channeled in the right direction toward sustainable development. As an example of services being commoditized for greater good, Glick mentions “cloud services” – large and expensive to maintain IT infrastructure (storage, processors and physical servers) is now replaced by 1GB archive disk space for a one US cent on monthly basis. Thus, cloud computing directly eliminates investing heavily in expensive IT infrastructure which enables firms from very beginning to save on large capital costs which further reduces the barriers for market entry for many firms. (Sako, 2012). Conclusion There are many approaches to corporate sustainability and environmentally sound business practices, but the question remains how are we to select the business model that will be committed to the environment, profitable and affordable at the same time. The most recent literature on SISP declares this to be a scientific question suggesting that academic research will eventually reveal a manual for the practitioners on how to bring together the costs and benefits of corporate environmental initiatives and transformations (Dedrick, 2010). Current literature mostly agrees that the competitive advantage from new IT technologies and IS innovations will be assured once these are accompanied with other factors such as corporate governance focused on creativity and exploiting new opportunities introduced by competitive top and middle management. (Del Giudice and Straub, 2011) In the meantime, practitioners should keep in mind some of the key approaches to corporate sustainability highlighted in this paper. Most importantly, in designing a sustainable business model one should focus on interdisciplinary approach bringing 52 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure together sociological, psychological, economical, technological and financial components to construct efficient and lean processes with minimal waste. References Anandarajan M., & Lippert K.S. (2006). Competing Mistresses? Academic vs. Practitioners Perceptions of Systems Analysis. Journal of Computer Information Systems, Special Issue 2006, 114-126. Bansal, P., & Roth, K. (2000). Why Companies go Green: A Model of Ecological Responsiveness. Academy of Management Journal, 43 (4), 717-736. Boudreau, M.-C., Chen, A.J. & Huber, M. (2008). Green IS: Building Sustainable Business Practices in Watson R.T. (Ed.), Global Text Projects, Athens, GA, 247-261. Byrd, A.T, Lewis, R.B., & Bradley, V.R. (2006). 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Volume 6 | Number 2 | Fall 2016 55 ��Journal of Economic and Social Studies Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Remzije Rakipi Faculty of Business and Economics South East European University in Tetovo Republic of Macedonia r.rakipi@seeu.edu.mk Shpresa Syla Faculty of Business and Economics South East European University in Tetovo Republic of Macedonia s.syla@seeu.edu.mk Abstract: The Republic of Macedonia has since its independence made great progress in terms of economic reform and social development; prompted often by the county’s aspiration to become part of the European Union. However, in spite of these advances, weak labour market indicators in particular among females remains a great concern and a persisting challenge for the country. Based on official data from the Labour Force Survey (LFS) conducted by the State Statistical Office (SSO) for the case of the Republic of Macedonia, the aim of this study is to examine the development of female unemployment in the past decade (2004-2013) in the Republic of Macedonia from a multi-dimensional perspective. This while comparing national trends with other Balkan countries already in the EU using LFS data provided by Eurostat. Findings show that the female unemployment rate in the R. Macedonia is moving in the right direction with a decreasing trend throughout the observed period with drop of 8.8 percent point from 2004 to 2013 (observed at 29% in 2013). Compared to Balkan countries in the EU, findings show that the R. Macedonia has been performing relatively better than these countries, who have all experienced negative fluctuations in female unemployment rates in the observed period with rates at higher levels compared to 2004. Furthermore, the findings show no evidence of inequality between male and female unemployment rates in the country, however notable disparities are evident when observing unemployment among various age groups and the level of education attainment.The paper concludes with clear policy recommendations for boosting female employment to include increasing female access to education and entrepreneurial programs, increased access to childcare, etc. Volume 6 | Number 2 | Fall 2016 Keywords: Labour market, female unemployment; unemployment, employment JEL Classification: J01, E24 Article History Submitted: 17 December 2015 Resubmitted: 12 August 2016 Accepted: 24 August 2016 http://dx.doi.org/10.14706/JEC OSS16619 57 �Remzije Rakipi, Shpresa Syla Introduction Issues related to the labour market are the heart of social and political debate in the Republic of Macedonia. The country has since its independence made great progress in terms of economics reforms and social development. However, in spite of these advances, weak labour market indicators in particular among females (15-64 years) remains a great concern and a persisting challenge for the country. High unemployment amongst females is however not a recent phenomenon in the country, nor is the country an exception in this regards. As argued by MojsoskaBlazevski, Najdova, Stojkov, and Asenov (2009), the labour market in the Republic of Macedonia is considered insufficiently inclusive of females similar to other Western Balkan countries, this despite legislation being in place on labour relations, gender equality, anti-discrimination and equal employment opportunities. Job creation for the most vulnerable groups in society, and especially women, is a key component in the fight against social exclusion, and the most effective way to provide vulnerable groups such as females a sense of independence, financial security and a sense of belonging. Women represent a category in society that is traditionally excluded or underrepresented in the labour market not only due to discrimination and inequality in the labour market, but significantly also due the role they play within the household which makes it often more difficult for them to enter the job market and pursue careers. In this context, it is the aim of this study to shed some light on the development and challenges of female unemployment in the past decade (2004-2013) in the Republic of Macedonia from a multi-dimensional perspective. This while comparing national trends with trends in other Balkan countries, more specifically with Balkan countries in the European Union. Literature Review Gender based unemployment in general does not present a new or an unexplored area. However not much study exists on this particular topic that is specific to the R. of Macedonia. At the least no known studies exist covering trends in female unemployment for the observed period that additionally compares female unemployment trends with Balkan countries already in the EU. Available studies on female unemployment specific to the R. of Macedonia is predominately found in non-scientific studies and reports (European Training Foundation, 2013; United Nations, 2013; World Bank, 2008 and 2013) where female unemployment is usually covered lightly as part of a more general studies of labour market indicators in the R. of Macedonia; serving primarily policy making objectives. The closest 58 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study scientific research in this field can be attributed to a few (Mojsoska-Blazevski et al., 2009; Lehmann, 2010; Mojsoska-Blazevski, 2012; Mojsoska-Blazevski and Kurtishi, 2012; Avlijaš, Ivanović, Vladisavljević and Vujić, 2013; Mickovska-Raleva and Dimitrijevska, 2013) who try at various levels to depict a picture of female unemployment in the R. of Macedonia; sharing the common understanding that women in the R. of Macedonia are traditionally underrepresented in the labour market. Mickovska-Raleva and Dimitrijevska (2013) further arguing that special attention needs to be given to policies for greater inclusion of women. This in particular women from rural areas and young women. Mojsoska-Blazevski and Kurtishi (2012) argue to greater depth in this context and state that the main reason why the female unemployment rate is not much higher is the relatively high willingness of women to take low-paid, secure public sector jobs, or jobs in newly created small private firms, since by tradition, they are second-income family earners. Methodology To properly understand female unemployment, it is essential to consider the development of the labour market from a much broader perspective and to also observe changes in the labour market in general. A close look at other labour market indicators such the rate of economically active and inactive population and employment trends is deemed warranted in this case. This in respect to both gender gaps and aggregate level (National Level) rates. A valuable source in the capturing of events in the labour market is the Labour Force Survey (LFS), which is executed annually by the State Statistical Offices of various EU countries and EU candidate countries. Hence, for the sake of harmonised labour market data, in particular for comparison purposes, data analysis of trends in female unemployment in Republic of Macedonia is based on official Labour Force Survey data published by the State Statistical Office of the Republic of Macedonia and Labour Force Survey data of selected Balkan countries published by Eurostat. Data Analysis Female Labour Market Participation and Inactivity Labour force participation rate (Economic Activity Rate - EAR) of women in the Republic of Macedonia has shown a slight increase in the last decade (2004-2013). The participation of women in the labour market has increased in the observed period by 12.8% (Figure 1) which is slightly higher than the increase experienced in Volume 6 | Number 2 | Fall 2016 59 �Remzije Rakipi, Shpresa Syla the case of male labour force participation (8.9%) in the same period. Noteworthy, is that a noticeable gap exists when comparing activity rates amongst females and males. As shown in Figure 1, female activity rates are significantly lower than male activity in each year of the observed period. According to the World Bank (2008), lower female participation rates are believed to be mainly driven by very low levels of participation of young-rural-unskilled women. Furthermore, according to the same report, most women who are not in the labour force are either in school or undertaking household activities. While, according to Mojsoska-Blazevski et al. (2009), the main factors influencing low participation of women in R. of Macedonia include the tradition and cultural habits in the country, the low level of education and skills, ethnicity in combined with the education, the availability and cost of child care services and care for older family members, labour market discrimination towards females, etc. Mojsoska-Blazevski et al. (2009) further state that young, rural and unskilled females are less likely to be active in the labour market. Another important aspect to consider in this context is women’s participation in the informal economy. As stated by Huyer (2014), the low labour force participation rate of women in the labour market may also indicate a much greater reliance by women on the informal economy. This particular in the case of rural women, and of women with Albanian and Roma origin (Lehman, 2010). Female labour force participation slightly increased during the global economic crisis opposite to what could have been expected. As stated by Avlijaš et al. (2013) this could be understood as a coping mechanism of households facing income shocks by adding a family member to the labour market or replacing a family member who lost their employment. From an educational attainment perspective, female participation in the labour market is highest among women with tertiary education which saw a slight but steady increase until 2010 (89.4%) following a slight decrease in the following years reaching 87.6% in 2013. 60 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Figure 1: Labour Force Participation in R. of Macedonia 2004-2013 by Gender and Level of Education Attained Among Females (%) Source: LFS, State Statistical Office of the R. of Macedonia Compared to Balkan countries in the European Union (Figure 2), data show that R. of Macedonia has had the lowest female labour market participation rate throughout the observed period followed by Croatia and Greece with slightly higher rates. R. of Macedonia lies significantly below the average participation rate of these countries collectively, however noted with the highest increase in rates in the study period with 12.8% followed by Bulgaria with 10.4%. Women in Slovenia are much more active compared to other Balkan countries with an activity rate of 66.6% in 2013, which is 13.9% higher than the R. of Macedonia (52.7%) in the same year. Figure 2: Female Labour Force Participation in Selected Balkan Countries 20042013 (%) Source: LFS, State Statistical Office of R. of Macedonia and Eurostat Volume 6 | Number 2 | Fall 2016 61 �Remzije Rakipi, Shpresa Syla The inactivity rate of females depicted in Figure 3 as a percentage of the total population in R. of Macedonia show that female inactivity is twice as high as male inactivity in the country. Looking at the period 2006-2013, data show that inactivity amongst both females and males is on the way down, but with a very slow and marginal downwards trend and an overall fall of app. 7% in both cases from 2006 to 2013. Figure 3: Inactive Population as a Percentage of the Total Population in R. of Macedonia by Gender (%) Source: Author’s own work based on LFS data, State Statistical Office of the R. of Macedonia According to data, female inactivity in R. of Macedonia is mostly resulting from household responsibilities and secondly as a result of undergoing education and training (Table 1). While, female inactivity in benchmark countries (Table 1) can be explained primarily due to education and training and secondly to retirement; indicating a much older female population in these countries compared to R. of Macedonia. As reported by the World Bank (2008), who has studied female inactivity at sub-group level in R. of Macedonia, the large share of females who are inactive due to household activities can mainly be attributed to a large number of full-time housewives among women who are less educated and live in rural areas. 62 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 1: Inactive Female Population - Main Reasons not Seeking Employment in Selected Balkan Countries in 2013 (%) Awaitin Own Other Looking Pursuing Retire Believes Other g recall illness family/ after education/traini d no reason to work or personal children or ng work is s (on lay- disabilit responsibiliti incapacitate availabl off) y es d adults e Bulgaria 0.9 11.9 10.2 13.3 28.4 19.4 11.6 4.2 Greece : 4.3 18.0 7.8 27.7 16.0 2.2 24.0 Croatia 0.5 6.8 17.8 7.3 31.7 26.1 7.7 2.1 Slovenia 0.3 8.9 9.1 3.4 32.6 38.4 3.7 3.5 : 3.1 38.7 11.2 26.8 11.9 5.2 3.1 Macedoni a Source: Author’s own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat Female Employment Looking at female employment in the R. of Macedonia in the study period, data show that the female employment rate is slowly but constantly on the rise with an 8.4 p.p. increase from 2004 to 2013. Positive and noteworthy in this context is that no spill-over effects seem to have been observed on both female and male employment following the global economic crisis in 2008/09. On the adverse side, noteworthy is that data show female employment rates to be significantly below male employment rates with a gap of 1.5 time higher male employment rate compared to the female employment rate in 2013. Volume 6 | Number 2 | Fall 2016 63 �Remzije Rakipi, Shpresa Syla Figure 4: Female vs. Male Employment Rates (15-64 years) in R. of Macedonia 2004-2013 (%) Source: Author’s own work based on LFS data from the State Statistical Office of the R. of Macedonia In a semi regional perspective, data show (Table 2) that the R. of Macedonia is not the only country to struggle with low female employment rates. A similar problem is observed in Greece with a slightly higher female employment rate; 39.9% compared to 37.3% in the case of R. of Macedonia in 2013. Looking at the trend over the study period, all countries included in the study have observed increases in female employment except for Greece and Slovenia who registered a decline of 5.6 p.p. and 2.1 p.p., respectively, from 2004 to 2013. The R. of Macedonia is the only country that has observed a relatively consistent increase in rates throughout the study period; reaching an 8.4 p.p. increase from 2014-2013. Table 2: Female Employment Rates (15-64 years) in Selected Balkan Countries 2004-2013 (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Macedonia 28.9 30.1 30.7 32.3 32.9 33.5 34.0 35.3 35.3 37.3 Bulgaria 51.6 51.7 54.6 57.6 59.5 58.3 56.4 55.6 56.3 56.8 Greece 45.5 46.0 47.3 47.7 48.6 48.9 48.0 45.0 41.7 39.9 Croatia 47.8 48.6 49.4 51.6 52.7 53.7 52.1 49.5 48.5 48.5 Slovenia 61.3 61.3 61.8 62.6 64.2 63.8 62.6 60.9 60.5 59.2 Source: Author’s own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat 64 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Based on available data (since 2006 only), from an educational attainment perspective (Figure 5), female employment in R. of Macedonia shows a decreasing trend for educated women with a 4.2 p.p. decrease from 2006 to 2013. An opposite trend for women with lower levels of education is however observed. Observed data show that female employment amongst women with primary and lower secondary education (levels 0-2) has increased by 18.4% in the study period and 12.8 % in the case of women with upper secondary and post-secondary non-tertiary education (levels 3 and 4). Figure 5: Female Employment Rate in R. of Macedonia by Education 2006-2013 (%) Source: LFS, State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 3), the R. of Macedonia lies significantly below each of the countries and across all educational levels. While looking specifically at female employment with tertiary education attainment a similar trend is seen with declining rates across all countries, but with Greece experiencing the most notable decline by 14.1 p.p. Opposite to other countries, R. of Macedonia is the only country that has observed an increase from 2006-2013 in female employment amongst lower education levels. Volume 6 | Number 2 | Fall 2016 65 �Remzije Rakipi, Shpresa Syla Table 3: Female Employment Rate by Education (Highest Level Attained) in Selected Balkan Countries (%) 2006 Bulgaria Greece Croatia Slovenia Macedonia Level 0-2 23.6 33.2 27.9 37.5 15.2 Level 3-4 62.6 47.9 54.4 63.5 40.6 2013 Level 5-8 79.7 76.7 79.6 86.6 68.3 Level 0-2 23.7 27.7 23.7 27.2 18.0 Level 3-4 59.2 36.4 50.9 58.8 45.8 Level 5-8 79.1 62.6 75.1 80.8 64.1 Change from 2006 in Percent Point Level Level Level 0-2 3-4 5-8 0.1 -3.4 -0.6 -5.5 -11.5 -14.1 -4.2 -3.5 -4.5 -10.3 -4.7 -5.8 2.8 5.2 -4.2 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat One of the ways to boost employment is through fostering entrepreneurship. In this context, R. of Macedonia shows progress. As can be seen from the number of selfemployed females in the country (Table 4), the number is on the rise going from app. 19.500 cases in 2008 to app. 27.900 cases in 2013. Approximately, one third of self-employed females are at the same time also employers, and although this category has increased, the highest increase in the observed study period (20082103) has been observed among self-employed females without employees (app. 6500 persons). The study period has in this case been reduced to include only observed figures from 2008-2013 due to missing data for period 2004 to 2007. Table 4: Female Self-Employment in R. of Macedonia from 2008 - 2013 (in thousands) Self-employment Type/Year 2008 2009 2010 2011 2012 2013 Self-employed Total Self-employed persons with employees (employers) Self-employed persons without employees (own-account workers) 19.5 17.8 20.2 23.9 24.0 27.9 7.1 7.3 8.5 9.1 8.2 9.0 12.4 10.5 11.7 14.8 15.8 18.9 Source: LFS, State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 5), the R. of Macedonia is the only country with increasing trends throughout the period 2008-2013, while all other countries have had an interruption in their positive trends following 2010; registering decreasing number in both 2011, 2012, and 2013. 66 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 5: Female Self-Employment in Selected Balkan Countries from 2008 - 2013 (in thousands) Country/Year 2008 2009 2010 2011 2012 2013 Bulgaria 124.3 121.2 124.9 110.3 103.2 109.2 Greece 370.9 371.7 379.4 368.1 351.8 341.9 Croatia 104.0 104.4 115.6 106.4 90.5 83.4 Slovenia 24.0 24.8 32.0 31.8 30.3 28.9 Macedonia 19.5 17.8 20.2 23.9 24.0 27.9 Source: LFS, State Statistical Office of R. of Macedonia and Eurostat Female Unemployment The female unemployment in the R. of Macedonia stands at a high level, but moving in the right direction (Figure 6). According to data for the observed period, the female unemployment rate shows a decreasing trend and has dropped by 8.8 p.p. in the study period to reach 29% in 2013. This rate coincides with the level of male unemployment in the same year. The Female unemployment has been slightly higher than male unemployment rate until 2010, but on occasions also slightly lower than male unemployment as observed in 2011 and 2012. The discrepancy in gender based unemployment trends in the period 2009-2012 should be seen in light of increased employment in the public sector, and notably in education, which have been favouring women more than men (European Training Foundation, 2013). While labour force participation and employment rates of women are much lower than those of men, unemployment rates are almost equally distributed between the genders. Hence no gender gap is evident. Mojsoska-Blazevski and Kurtishi (2012) argue that this may reflect the relatively high willingness of women to take low-paid, secure public sector jobs, or jobs in newly created small private firms, since by tradition, they are second-income family earners. Volume 6 | Number 2 | Fall 2016 67 �Remzije Rakipi, Shpresa Syla Figure 6: Unemployment rate in Macedonia by gender 2004-2013 (%) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Observed data for 2013 show (Table 6) that R. of Macedonia has the second highest female unemployment rate (29%) compared to the benchmark, surpassed in this context only by Greece (31.6%) who registered a higher female unemployment rate in the same year. Slovenia (11.1%) and Bulgaria (11.9%) represent the two countries in this context with lowest female unemployment rates in 2013. The lowest female unemployment rate in the observed period has been registered in Slovenia in 2008 at the rate of 4.9% and the highest rate in the R. of Macedonia back in 2004, which registered a female unemployment rate approximate six times higher than Slovenia (lowest in 2004) and approximately twice the rate of Greece registering the second highest female unemployment rate in the same year. Looking at the trend in the observed period, all countries have experienced fluctuations in female unemployment rates, and notable fluctuations in the period 2009-2013, due to particular to the spill-over effects of the global economic crisis. The R. of Macedonia is the only country registering an uninterrupted decrease in rates throughout the period. 68 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 6: Female Unemployment Rates in Selected Balkan Countries 2004-2013 (%) Country/Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Macedonia 37.8 38.4 37.2 35.5 34.2 32.8 32.2 30.8 30.3 29.0 Bulgaria 11.7 9.9 9.3 7.3 5.8 6.7 9.5 10.1 10.9 11.9 Greece 16.1 15.6 13.9 13.0 11.6 13.4 16.5 21.7 28.4 31.6 Croatia 15.8 14.3 13.2 11.6 10.6 11.0 12.6 14.0 16.3 17.0 Slovenia 6.5 7.2 7.4 6.0 4.9 5.9 7.2 8.3 9.5 11.1 Source: Authors’ own work based on LFS data from State Statistical Office of R. of Macedonia and Eurostat Looking at female unemployment from an age perspective (Figure 7), data clearly suggests that female youth are much more vulnerable to unemployment than other age groups. Although female youth unemployment is showing a decreasing trend (dropped by 9.9 p.p. from 2006 to 2013), it is almost twice as high as females age 25-49 and more than to time higher than females in the 50-64 age group. This can partly be explained by the fact that young people are more vulnerable to economic downturns and the first to be cut from employment. Young people tend to be ‘last in’ and ‘first out’ - last to be hired, and the first to be dismissed. This, together with the challenges they face in making the transition from education and training to the labour market, makes younger generations generally subject to higher rates of unemployment than older generations (United Nations, 2013). Figure 7: Female Unemployment Rate in Macedonia by Age Group (%) Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia The vulnerability of female youth towards unemployment is according to data (Table 7) a phenomenon applicable for all benchmark countries. Due to missing Volume 6 | Number 2 | Fall 2016 69 �Remzije Rakipi, Shpresa Syla data for 2004 and 2005, the observed period has been reduced to cover only the period 2006-2013. Similar patterns to the R. of Macedonia are observed also in the case of Bulgaria, Greece, Croatia and Slovenia when observing female unemployment rates by age group. The highest female youth unemployment rate in 2006 was observed in R. of Macedonia (60.9%) followed by Greece (34.2%). Although the R. of Macedonia registered a decrease in female youth unemployment in the following years (app. 9.9 p.p.), it still remains among the countries with the highest female youth unemployment rate (51%) compared to the benchmark. Greece observed a great increase in the female youth unemployment rate (app. 30 p.p.) reaching 63.8% in 2013, surpassing thus the R. of Macedonia and registering the highest female youth unemployment among Balkan countries in the EU. Table 7: Female Unemployment Rate by Age in Selected Balkan Countries (%) 15-24 Yrs. Change from 2006 in Percent Point 2006 2013 25-49 50 - 64 15-24 Yrs. Yrs. Yrs. 25-49 50 - 64 15-24 Yrs. Yrs. Yrs. 25-49 50 - 64 Yrs. Yrs. Bulgaria 20.3 8.3 8.3 25.7 11.1 10.9 5.4 2.8 2.6 Greece 34.2 13.2 5.9 63.8 32.0 19.7 29.6 18.8 13.8 Croatia 31.1 12.0 8.6 50.2 16.2 9.6 19.1 4.2 1.0 Slovenia 16.8 6.8 4.3 23.7 10.8 8.2 6.9 4.0 3.9 Macedonia 60.9 35.9 25.1 51.0 27.9 23.1 -9.9 -8.0 -2.0 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat Female unemployment in R. of Macedonia, observed from an education attainment perspective (Figure 8), show a decreasing trend over the years for less educated women (Level 0-2), dropping altogether 27.4% from 2006 to 2013. A similar pattern was evident also for level 3-4, which dropped 24.5% in the same period; decreasing from 38.4% in 2006 to 29% in 2013. Whereas, in the case of females with tertiary education (Levels 5-8), an opposite trend is observed throughout the study period with an overall increase of 16.5% (from 23% in 2006 to 26.8% in 2013). 70 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Figure 8: Female Unemployment Rate in R. of Macedonia by Highest Level of Education Attained (%) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 8), a somewhat different pattern is observed when looking at female unemployment by educational attainment. All countries, except for R. of Macedonia have registered an increase in unemployment rates among women with lower levels of education. Greece and Slovenia have registered the highest increase in the case of education attainment level 0-2 calculated at 18 p.p. and 12.3 p.p. respectively from 2006 to 2013. Greece also stands out when observing levels 3-4 and levels 5-8, registering respectively an increase of 20.9 p.p. and 14.2 p.p. from 2006 to 2013. While, all other benchmark countries have registered more moderate increases across all levels in comparison. Table 8: Female Unemployment Rate by Education (Highest Level Attained) in Selected Balkan Countries (%) 2006 Bulgaria 2013 Level 0-2 Level 3-4 Level 5-8 Level 0-2 Level 3-4 Level 5-8 23.2 8.4 4.1 29.5 11.8 6.4 Volume 6 | Number 2 | Fall 2016 Change from 2006 in Percent Point Level Level Level 0-2 3-4 5-8 6.3 3.4 2.3 71 �Remzije Rakipi, Shpresa Syla Greece 13.8 16.3 10.3 31.8 37.2 24.5 18.0 20.9 14.2 Croatia 14.0 15.2 7.0 21.2 18.5 11.9 7.2 3.3 4.9 Slovenia 7.9 8.9 3.9 20.2 12.3 7.1 12.3 3.4 3.2 Macedonia 45.3 38.4 23.0 32.9 29.0 26.8 -12.4 -9.4 3.8 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat According to data presented in Table 9, the number of female unemployment is highest among urban women and more than two times higher than registered rural female unemployed. This is due to particular low activity rates and high inactivity rates among rural females (World Bank, 2008). However, a positive trend is observed. The number of urban female unemployment decreased by app. 9.800 persons from 2008 to 2013, roughly 12%. While, the number of unemployed females in rural areas decreased by 3.7% in the same period (app. 1400 persons). The largest decrease in registered unemployed females in urban areas is noted among females with primary and lower secondary education (in absolute terms), which dropped from 19545 to 11900 (decrease of 7645). To which extend this decrease is related to these women finding employment is subject to further research. Noteworthy in this context is however that opposite to females with lower levels of educations, females with university level education have both in the case of rural and urban women experienced an increase in numbers with registered unemployed rural women with university education going from 2743 in 2008 to 7873. This is an increase of more than 250%. Registered unemployed urban women with university education has increased likewise notably from 10599 in 2006 to 18030 in 2013. Table 9: Number of Unemployed Females in R. of Macedonia by Educational Attainment, Rural vs. Urban, 2008 & 2013 Level of Education Total 2008 2013 Rural Urban Rural Urban 38 686 83 501 37 260 73 665 287 2 300 : 1 358 Without education Incomplete primary and lower secondary education Primary and lower secondary education 2 917 3 920 963 3 063 13 221 19 545 8 849 11 900 3 years of secondary education 5 005 8 622 4 471 6 523 4 years of secondary education 14 309 35 887 14 605 31 365 72 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Higher education 205 2 628 : 1 426 1 University level education 2 743 10 599 7 873 18 030 1) University level education includes: university level education, Master's degree and Doctorate (Ph.D.) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Female unemployment is mostly long-term in nature, as is the case of men (Table 10). Hence, no gender difference is observed in this respect. Due to missing data, the observed period has been reduced to the period 2009-2013. Long-term female unemployment rates have slightly decreased from 2009-2013 by 2.7 p.p. While, the share of long-term female unemployment in total female unemployment is on the rise and increased from 80.8% in 2009 to 82.2% in 2013. Table 10: Long-Term Unemployment by Gender in R. of Macedonia1) % of long-term unemployment 2) Long-term unemployment rate3) 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Women 80.8 82.7 81.0 80.7 82.2 26.5 26.7 24.9 24.5 23.8 Men 82.5 83.7 83.6 83.0 82.7 26.2 26.7 26.6 26.1 24.0 Total 81.9 83.3 82.6 82.1 82.5 26.3 26.7 25.9 25.5 23.9 1) Long-term unemployment - unemployed persons for one year or more. % of long-term unemployment - share of unemployed persons for one year or more in the total number of unemployed persons. 3) Long-term unemployment rate - share of unemployed persons for one year or more in the total labour force. 2) Source: LFS, State Statistical Office of the R. of Macedonia Causes and Challenges of Female Unemployment in R. of Macedonia Gender based unemployment is vastly studied and discussed in literature, and does as such not present a new or unexplored area, and high unemployment levels is rarely attributed to a single factor regardless of the study perspective such as based on gender, age, and so on. Hence, the causes of unemployment are relatively known and widely accepted, and often characterised as being, frictional, structural, voluntary, etc. Having said that, and without going into much detail on this, it is from available Volume 6 | Number 2 | Fall 2016 73 �Remzije Rakipi, Shpresa Syla material clear that limited understanding and research is available to really understand the nature and causes of female unemployment in the specific context of the R. of Macedonia. This area is perceived still as unexplored to the detail that it can be addressed properly and efficiently. Much further research is needed to understand the causes and challenges of female unemployment in the R. of Macedonia, especially from a more holistic perspective including also regional and ethnic disparities given the cultural, religious, and ethnic diversity upon which the R. of Macedonia is founded. However, in general, the high of unemployment in R. of Macedonia, including that of women, can essentially be explained in the absence of significant labour supply constraints and the limited labour demand, stemming especially from the private sector (Micevska, 2008). Although the high level of unemployment among females in the R. of Macedonia can be vastly explained by the general causes of unemployment, the demanding role of women in the household and the difficulty in entering and remaining in the labour market is one aspect that is often underestimated. The World Bank (2013) reported that the opportunity cost of work for most women is higher than their potential wage in the labour market. While this does not explain the reason for the high unemployment in R. of Macedonia, it touches some key aspects hindering women to enter the labour market and actively pursue jobs such as access to child care, pay gaps, etc. Another aspect is the industries/sectors and the field of study often characterising women. Women are i.e. very much underrepresented in the construction industry and in study fields representing this industry, and female employment is vastly oriented towards manufacturing (i.e. garment and textile) and in the human health and social work sectors (World Bank, 2013). While this is a structural issue emphasising skill mismatch, the point herein lies more in the context of the lack, or the type and quality, of career support, orientation, Active Labour Market Measure, etc., rather than on the supply and demand aspects. Hence, the high female unemployment in the country can partly, but rather significantly, be explained also by the failure of the institutional framework governing the labour market to provide the necessary support to unemployed and incentives to stimulate female labour market participation and ultimately employment. While higher education institutions are quite rigid and rather slow or reluctant to adapt to changing industry needs given the high unemployment in general. From a general standpoint, it is clear that in addition to focusing on boosting the economy to create more jobs in areas where women are strong, a deeper recognition that female unemployment is 74 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study multidimensional concept with both quantitative and qualitative challenges is imperative to address this issue properly. Conclusions and Recommendations Female labour market indicators show that the Republic of Macedonia is performing poorly in most aspects in comparison to more advanced countries in the Balkan region. More and more women have entered the labour market in the past decade in the Republic of Macedonia, and especially educated women. Still, the female labour force participation is significantly below Balkan countries integrated in the European Union such as Bulgaria, Greece, Slovenia and Croatia; and the female inactivity rates are despite a slow downwards trend still twice as high than that of males in the country. Female employment rates have been on the rise in the study period, but at a much slower pace compared to male employment rated and lies still below most Balkan countries. The increase in female employment is mainly stipulated by increases in employment among lower educated women, while a downward employment trend is observed for women with tertiary education. Female self-employment is on the rise, but still at a very low level to other more developed Balkan countries. Female unemployment in the R. of Macedonia is slowly, but consistently moving in the right direction. The female unemployment rate has dropped by 8.8 p.p. from 2004 to 2013, but remains still at a very high level (at 29% in 2013). The country has the second highest rate compared to benchmark countries, surpassed only by Greece with a higher rate. However, when compared to male unemployment rates in the country, observed data show that no gender gaps seem to exist due to marginal differences in female and male unemployment rates in the study period (20042013). The decreasing trend in female unemployment is mainly witnessed among urban females. Female unemployment is long-term in nature, as observed also with the opposite gender, and a large number of women (app.50%) are unable to enter the labour market due mainly to household responsibilities. Hardest hit by unemployment are especially female youth and lower educated women. Data show a decreasing trend for both categories in the study period, but still both categories display extremely high unemployment rates, especially among female youth. Higher educated women seem to be less vulnerable to unemployment than other categories, but this category Volume 6 | Number 2 | Fall 2016 75 �Remzije Rakipi, Shpresa Syla displays an increasing trend in unemployment which is worrisome as this might be a cause to further discouragement among females to enter labour market in the future or/and pursue higher education. Similar trends are witnessed across the countries compared in the context of higher educated women with Greece and Croatia experiencing higher increases in unemployment rates than R. of Macedonia in this category. However, with opposite trends when observing at lower educated women, where the country is performing much better in the period 2006-2013 comparison to the more developed Balkan countries who have all registered growing unemployment rates in this category. In the case of the R. of Macedonia, a downwards trend is observed in the study period with a decrease of 12.4 p.p. from 2006 to 2013. A high level of complexity is involved in reducing female unemployment and it should be recognized that there is no easy or quick way to do this. Recognition that female unemployment is multidimensional concept with both quantitative and qualitative challenges is imperative to address this issue properly. Further recognition is also needed in terms of the causes and effects of female unemployment in the country. Female unemployment manifests, not only a loss to society in terms of forgone achievement, lost tax income, added expenditure and slower economic growth. Above and beyond all, it causes individual suffering, a loss of personal dignity and material hardship on the part of the jobless and their families which makes it difficult to develop into a socially cohesive society and achieve the kind of sustainability needed to ensure future European integration and general well-being. The Government of the R. of Macedonia should increase efforts to ensure that the institutional framework governing the female labour market addresses and formulates policies and measures in the future in a way that they effectively and inclusively address female employment across all regions and ethnic groups through intervention in key areas impacting female unemployment. Macroeconomic development is the key in this context to ensure job creation, but equally important are also tailored, inclusive, and reasonably funded Active Labour Market Measures (ALMM). To include also promotion and support of female entrepreneurship, reasonable access to child care facilities, improved access to high quality education and training to reduce skills mismatch and the competitiveness of women in the labour market. Key in this context is also the need for improvement of the capacities of the National Employment Agency to be able to better support unemployed females. 76 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study References Avlijaš, S., Ivanović, N., Vladisavljević, N., & Vujić, S. (2013). Gender pay gap in the Western Balkan countries: Evidence from Serbia, Montenegro and Macedonia (Research Project). Foundation for the Advancement of Economics Brunnbauer, U. (2000). From equality without democracy to democracy without equality? Women and transition in southeast Europe. South-East Europe Review, 3/2000, 151 – 168. European Training Foundation (2013). Former Yugoslav Republic of Macedonia Review of Human Resources Development. Publications Office of the European Union. EUROSTAT (2015). Labour Force Survey 2014-2013. Retrieved from: http://ec.europa.eu/eurostat/web/lfs/data/database. Huyer, S. (2014). Gender and Climate Change in Macedonia. Report. Third National Communication on Climate Change (TNC). Ministry of Environment and Physical Planning of R. of Macedonia. Kjosev, S. (2007). Unemployment in the Republic of Macedonia - Specifics and possible solutions. Economics and Organization, 4/2, 153 – 160. Lehmann, H. (2010). Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the New Member States (Policy Paper). Bonn: Forschungsinstitut zur Zukunft der Arbeit. Micevska, M (2008). The Labour Market in Macedonia: A Labour Demand Analysis. Labour, 22/2, 345–368. Mickovska-Raleva, N. & Dimitrijevska T. (2013). Gender equality in EU: How does Macedonia compare? Center for Research and Policy Making. Mojsoska-Blazevski, N., Najdova, J., Stojkov, A. & Asenov, L. (2009). Labour Market in the Former Yugoslav Republic of Macedonia. A Study for the European Commission Employment. Social Affairs and Equal Opportunities DG. Volume 6 | Number 2 | Fall 2016 77 �Remzije Rakipi, Shpresa Syla Mojsoska-Blazevski, N. (2012). Challenges to successful employment policy in the region: Towards more jobs, quality labour force and greater competitiveness. Discussion Paper for the Western Balkans Investment Framework. Mojsoska-Blazevski, N. & Kurtishi N. (2012). The Macedonian Labour Market: What makes it so different? Journal of Social Policy, 5/.9. State Statistical Office (2008). Labour Force Survey 2008. Retrieved from: http://www.stat.gov.mk/PublikaciiPoOblast_en.aspx?id=3&rbrObl=14. State Statistical Office (2013). Labour Force Survey 2013. Retrieved from: http://www.stat.gov.mk/PublikaciiPoOblast_en.aspx?id=3&rbrObl=14. United Nations (2013). Report of the World Social Situation 2013. Inequality Matters, Department of Economic and Social Affairs. Woman for Economy - Economy for Women (2013). Being a Woman in the Balkans (Project). Southeast Europe and the EU – Leadership Development Programme 2012/13. World Bank (2008). FYR Macedonia Labour Market Profile 2004-2007. Policy Note. Human Development Sector Unit, Europe and Central Asia. World Bank (2013). FYR Macedonia: Gender Diagnostic - Gaps in Endowments, Access to Economic Opportunities and Agency. Poverty Reduction and Economic Management Unit Europe and Central Asia Region. 78 Journal of Economic and Social Studies �Journal of Economic and Social Studies Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Merim Kasumovic University of Tuzla, Bosnia and Herzegovina merim78@hotmail.com Sanela Meholjic-Kalajdzic Foundation for Sustainable Development Bosnia and Herzegovina s.meholjic@hotmail.com Harun Meholjic Elektroprivreda BiH, Bosnia and Herzegovina harunmeholjic@hotmail.com Abstract: Public procurement system in Bosnia and Herzegovina Keywords: Public procurement (BH) is defined by various laws and regulations and is often identified with the legal profession. However, it is actually more significant and relevant for economists and public officials. One of the key challenges remains the application of transparency to the system of public procurement in the context of strengthening market competition in BH, as well as the market economy in general. The research methods applied reveal the market strength of the contracting authorities (buyers) and market competition among suppliers (sellers) in the public procurement market in BH, as measured by their market shares. Based on the research, the connection between the market strength of contracting authorities and the level of development of competition on the public procurement market in BH in the period from 2010 to 2012 was examined in terms of choosing more or less transparent procurement procedures. Volume 6 | Number 2 | Fall 2016 system, transparency, market competition JEL Classification: H57, H44, H41, H76 Article History Submitted: 14 July 2015 Resubmitted: 23 August 2016 Accepted: 31 August 2016 http://dx.doi.org/10.14706/JECOS S16618 79 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Introduction Public procurement market represents one of the key areas for financial interaction of public and private sector. Public procurement regulations are a novelty in domestic legislation. The public procurement system in Bosnia and Herzegovina (BH) is a new system of awarding contracts in public procurement procedures, and it is based on the Act of Public Procurement of BH i (Act), which establishes the rights and obligations of participants in the procurement process as well as the control of public procurement. According to Rička et al. (2008) the purpose of this law is to ensure: (1) the most effective way of using public funds with regard to the purpose and object of the procurement; (2) procurement execution and awarding a public procurement contract that is carried out by contracting authorities in accordance with the procedures established by this act, and (3) contracting authorities will take all necessary measures to ensure fair and active competition among the potential suppliers, by applying equality of treatment, non-discrimination and transparency. The public procurement system in BH has both its theoretical and practical dimensions. While the theoretical dimension is determined by the external environment such as legal, political and economic environment, its practical aspects lie in the accomplishment of various economic goals. – This is important to all countries, especially for countries in development and transition like BH. Just like there is no system that can accomplish all goals, there is no country that can expect that goals of its system will always remain the same. The current objectives of the single public procurement system in BH (Public Procurement Agency, 2010) are: continuous execution of procedures of public procurement and transparent public procurement contract awarding, equality treatment for all participants in procedures of public procurement, encouragement of sustainable market and economic growth and ensuring legal protection at the same time. The European Commission reported that public procurement of goods, services and works, in the European Union in 2010 was estimated at 2.406 billion euros, that is 19.7% from total GDP. The public procurement stake in developing countries was even bigger and ranged from 25% to 30% from total GDP (Knežević, 2007). Therefore, public procurement is considered to be a source of economic growth stimulation, strengthening the private sector and the market economy in general (Rička et al., 2008). Countries in transition accomplish their objectives within different political and economic environments, but their common goal is to establish 80 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina an efficient bureaucracy that will support creating politics and manage realization of public procurement in an economical manner, without abuse of power. Economic transition requires that a transparent and efficient system of public procurement has to be placed as a priority, so it can support demonopolisation and privatization (European Commission, 2007). Therefore, we can state that a public procurement system, based on transparency, can be in service of strengthening market competition and private sector development. However, in countries in transition, like Bosnia and Herzegovina, at the beginning stages of a market economy, there are great dangers. Bribes and similar tampering threaten real competition and may discourage and repel domestic and foreign investors, which results in a decrease of growth rate in such countries. Considering the importance and purpose of the public procurement system in BH, the question emerges, how the existing procurement system in BH is applied, and what are its effects in economic terms.That is, whether more transparent procedures for public procurement that strengthen fair market competition are applied, contributing thereby to the strengthening of the market economy in BH, and what are further restrictions on public procurement system which stand in the way of achieving a functioning market economy in Bosnia and Herzegovina? In an effort to find answers to these questions, the subject of research has been defined, and it is reflected in the assessment of theoretical and practical aspects of applying the transparency of public procurement in the context of strengthening the market economy in BH. The overall objective of this paper is to explain the importance of the principle of transparency in the public procurement system, in the context of the creation and growth of a functioning market economy. This is one of the main preconditions for the existence of market competition. Transparency System of Public Procurement in Bosnia and Herzegovina (BH) Public procurement is defined as purchasing goods, services and works by contracting parties in accordance with the rules and regulations of public procurement.They are administrative bodies and enterprises that are subjected to the Law and have to carry out the procedures for public procurement, prior to the conclusion of the public procurement of goods, services and works. Procedures of public procurement and conditions for its execution are also defined by the act, where final decision is made by the contracting authority, depending on the fulfillment of conditions defined by the act. Contract value is estimated by the contracting authority in the beginning of the procedure of public procurement, and Volume 6 | Number 2 | Fall 2016 81 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic that value represents the so called value class on the basis of which the types of public procurement procedure to be applied is determined. In the act, there are two categories of value classes: • • primary i.e. domestic value classes – when the contract value is equal or greater then 50.000,00 KM in case of procurement of goods or services, and equal or greater then 80.000,00 KM in case of procurement of works; and international value classes – when contract value is equal or greater then 500.000,00 KM for state authorities or 700.000,00 KM for local authorities and public entities in case of procurement of goods and services, and equal or greater than 2.000.000,00 KM in case of procurement of works. The act establishes five primary procedures for the award of contracts in public procurement, which are equal to or above the primary value class and for international competition (described in Chapter II of the act), as follows: (1) open procedure; (2) restricted procedure with prequalification; (3) negotiated procedure with publication of procurement notice; (4) negotiated procedure without publication of procurement notice; (5) a design contest project. The act provides for the application of two more procedures (as described in Chapter III of the act), as follows: (1) a direct agreement, and (2) the competitive request of quotations, which are applicable to public procurement procedures below the primary value class, or governing contracts of lesser value. The basic principles on which the Act of Public Procurement in BH (Act) is based on, and the EU Directives on public procurement, which the contracting authorities must respect throughout the procurement process are the principles: equal treatment (non-discrimination), transparency, fair and open competition, economy and legality (Rička et al., 2008). The principle of transparency in public procurement procedures demands availability of relevant information to all interested parties, consistent and in a timely manner, via accessible and prevailing medium, at no or at reasonable cost (Public Procurement Agency, 2009). Respect for the principle of transparency is guaranteed by the regulations which are presented in Table 1. 82 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Table 1: Legal regulations that implement transparency requirements LEGAL REGULATIONS Article 11. Article 13. Article 18. Article 19.-20. Article 38. Article 40. Article 41. Article 42. TRANSPARENCY REQUESTS Rules of selection of the public procurement procedures, and in accordance with them, basic and preferential procurement procedure is an open procedure. Contracting authority has the obligation to prepare tender documentation which contains a collection of information on the procurement. Give the tender documentation to interested suppliers. Publication of public procurement notices. Requesting for informing the candidates and tenderers of the decisions made during the procurement procedure. Requesting for the publication of contract award notices. Report about procurement procedure. Archiving documents of the given procurement procedure by the contracting authority. Source: adapted in accordance to EUPPP Manual (European Commission, 2007) However, depending on whether the act established the obligation to perform certain operations or left it as a choice to the contracting authority, public procurement procedures prescribed by the act can be viewed as more or less transparent compared with each other. Pursuant to the provisions of the Act, authors themselves carry out a qualitative analysis of the transparency assessment of public procurement procedures, according to following criteria: whether it is obligatory or not to publish procurement notice and tender documentation, whether it is obligatory or not to publicly display the offers, whether it is obligatory or not, to have a minimum deadline for offer acceptance and minimum number of offers and bidders, and whether the tender documentation is free or not. Authors classified all procedures in three groups: most transparent procedures, less transparent procedures, and least transparent procedures, as it is show on the Figure 1. ii Volume 6 | Number 2 | Fall 2016 83 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Figure 1: Public procurement procedure in BH - transparency assessment MOST TRANSPARENT PROCEDURES LESS TRANSPARENT PROCEDURES LEAST TRANSPARENT PROCEDURES • Open • Limited with prequalification • Negotiated with publication of notices • Negotiated without publication of notices • Competitor request • Direct agreement The transparency of the public procurement system is not an end in itself; it is a mechanism that is used to accomplish a certain goal. Trepte (2006) states that the transparency of the public procurement system is primarily used as a mean to protect economic efficiency, and ensure control by regulator (national or international), of the whole procurement system. Economic efficiency, as a natural result of free market, is based on establishing perfect competition. Therefore, imposition of transparent procedures, defining conditions and specifications in advance and publishing the criteria for selection and awarding the contract, are mechanisms that are used to avoid direct discriminations that could endanger desired competition. Methodological Framework of the Research The empirical part of the research covered dynamic analysis of two research areas: (1) the existing public procurement system in BH, its framework and limitations considering transparency principle; (2) the public procurement market in BH in determining market power of contracting authorities and suppliers by measuring their individual and collective market shares in period from year 2010. to 2012. Theoretical Concept of Empirical Research The research was conducted using secondary research and available statistical data. According to authors' adaptations, the theoretical concept of empirical research is shown in Figure 2, and it states that the most significant factors for competition development in the public procurement market in BH are: scale and structure of 84 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina market demand, eventual barriers for entering the market, purchasing power of buyers (contracting authorities), whether or not procedures are transparent and open, and market power of the suppliers. Figure 2. Most significant factors for competition development in public procurement market in BH BEHAVIOR OF CONTRACTING AUTHORITIES IN TERMS OF PRESENCE OF OPEN PROCEDURE market power of seller MARKET COMPETITION DEVELOPMENT ON THE PUBLIC POROCUREMENT MARKET size and structure of demand market power of buyer barriers in attempt to enter the market Authors are considering the correlation between the most significant factors for competition development in the public procurement market in BH (Figure 3), in the way that scale and structure of demand, eventual barriers for entering the market and individual shares of contracting authorities in the public procurement market determine their market power. Market power of buyers determines their behavior in regards to selection of certain public procurement. Their choice of more or less transparent procedures contributes to the decrease or increase of competition in the public procurement market in Bosnia and Herzegovina. In this context, besides the central research hypothesis: increase in transparency of public procurement contributes to the strengthening of market competition in Bosnia and Herzegovina, two backup hypotheses have been established: Volume 6 | Number 2 | Fall 2016 85 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic H1: In the case that contracting authorities have more market power, they will utilize less transparent procedures. H2: In the case that contracting authorities have less market power, they will utilize more transparent procedures – open procedures. Figure 3: Correlation between the factors of market competition in the public procurement market in BH Market power of buyers (contracting authorities) Measured by market concentration of five leading buyers (cr5) Behavior of contracting authorities regarding transparency principle ensurance Selection of less transparent procedures Selection of more transparent procedures Market power of suppliers (sellers) Measured by market concentration of five leading suppliers (sellers)(cr5) Market competition For the assessment of contracting authorities regarding their selection of procedures, authors used the data published by the Public Procurement Agency of BH (Agency). Two hundred of the largest contracts, completed in years 2010, 2011 and 2012, and which refer to: the procurement subject description (goods/services/works), the name of the contracting authority and its supplier for each contract, the type of executed procedure and the contract value. The Agency could not deliver the data for the years 2008 and 2009 because data from those years were not representative. Two hundred of the largest contracts that were completed in 2010 and in 2012 represent more than 50% of the total public procurement market in Bosnia and Herzegovina, and in year 2011, 200 of the largest contracts represented just 34.60% of the total market. In other words, 200 of the largest contracts in the year 2010 constituted 51.57% of the total demand, in the year 2011, 34.60%, and in the year 2012 86 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina 58.61% of the total demand for goods, works and services in the public procurement market (Table 2). Table 2: Representativeness of samples for examining the market power of participants in the public procurement market TOTAL VALUE OF COMPLETED CONTRACTS 2010 3.469.981.667,61 TOTAL VALUE OF COMPLETED CONTRACTS IN A SAMPLE 1.789.620.514,48 REPRESENTATIVENESS OF THE SAMPLE 2011 3.128.833.371,96 1.082.513.780,32 34,60 % 2012 3.560.468.418,94 2.086.767.392,45 58,61 % 51,57 % Source: adapted from the Public Procurement Agency of BH data Size and Structure of the Public Procurement Market Considering that there are more than 2000 contracting authorities that are subjected to the act of public procurement of BH, and that annual value of public procurement is getting close to 4 billion KM (Public Procurement Agency, 2013),we can state that it is large and important market. Based on data published by the Directorate of Economic Planning of BH(2013), the public procurement share in GDP of BH in the year 2012 was 12.95%. Structure of the public procurement market can be analyzed by the subject of procurement: goods, services and works. During all observed years, in total value of completed contracts of public procurement, the market of the public procurement of goods was the largest. In other words, demand for goods was the largest, while the lesser demand was for works and the least for services. In the European Union as opposed to BH, services were the predominating demand, and in the year 2010 it constituted 42% of all public procurement. While 36% was the demand for work, and goods were in last place, constituting only 22% (European Commission, 2012). Analyzing the sample of 200 of the largest completed procurement of public procurement in BH (Table 3), the major procurement in years 2010 and 2011 was procurement of goods that consisted 54.4% and 74.16% of total public procurements, respectively. In the year 2012, a slightly larger procurement of works was recorded (48.21%) in regard to procurement of goods (40.70%). Volume 6 | Number 2 | Fall 2016 87 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Table 3: Structure of demand with regard to the subject of the procurement in observed sample YEA R GOODS 2010 2011 2012 SERVICES WORKS TOTAL KM % KM % KM % KM % 973.545.490, 04 802.753.121, 10 849.231.383, 10 54,4 0 74,1 6 40,7 0 213.286.929, 33 158.607.096, 00 231.599.765, 66 11,9 2 14,6 5 11,1 0 602.788.095,1 1 121.153.563,2 2 1.005.936.243, 69 33,6 8 11,1 9 48,2 1 1.789.620.514, 48 1.082.513.780, 32 2.086.767.392, 45 100,0 0 100,0 0 100,0 0 Source: adapted from Public Procurement Agency of B&H data Behavior of contracting authorities in BH – public procurement procedure selection All responsibility for adequate implementation of the public procurement system in BH lies with contracting authorities that make the final decision about utilization of a certain procedure (that can be more or less transparent), depending on the fulfillment of the conditions prescribed by law. Therefore, it was necessary to analyze their behavior in the context of ensuring the transparency principle during the selection of the procedures of public procurement. Transparency of public procurement is identified as an independent variable in the central research hypothesis. The following indicators for transparency of public procurement in BH are used: • • Presence of certain procedures in total public procurement; Variations of open negotiation procedures without notice shares in total public procurement. While in the EU transparency in public procurement procedures is rising year in and year out according to data reported by European Commission (2012), in BH transparency is dropping gradually. Data analysis of applied procedures in public procurement, represented in Table 4, has shown an apparent decline of transparency in conduction of public procurement in observed period of time. Open (most transparent) procedure in year 2012 had only 37.13% of the share in total public procurement, while in the year 2008 it had even 91.89% of the share in total public procurement. A procedure opposed to negotiation without publication of notification that is, the least transparent procedure in group of procedures from 88 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Chapter II of the Act, in the year 2008 had the share of 3.99% of total public procurement. Until the year 2012 its share increased to 49% of total public procurement. Variation of open and negotiation procedure without notice shares are presented in Figure 4. Table 4: Public procurement procedures applied in period between 2008. and 2012. Procedures from the Chapter II of the Act YE AR NEGOTIATION PROCEDURE iii Procedures from the Chapter III of the Act COMPETITIVE DIRECT REQUEST AGREEMENT OPEN PROCEDURE LIMITED PROCEDURE 20 08 KM 1.598.03 7.250,83 % 91, 89 KM 62.150.50 0,68 % 3, 15 78.788.985,5 7 3,9 9 KM 191.465.3 28,57 % 9,7 1 KM 41.829.98 1,63 20 09 1.507.30 6.001,68 82, 95 34.806.81 3,94 1, 91 275.141.970, 96 12,9 5 240.465.4 98,04 11, 32 67.093.63 2,79 20 10 1.343.82 1.679,59 38, 73 47.762.31 2,35 1, 38 1.510.857.88 6,84 43,5 4 423.359.6 03,82 12, 2 144.180.1 85,00 20 11 20 12 1.169.51 5.441,01 1.321.88 2.884,64 37, 38 37, 13 18.256.71 0,88 60.962.41 3,53 0, 58 1, 71 1.549.709.73 3,15 1.744.479.03 7,03 49,5 3 49, 00 * * * 355.389.8 73,35 9,9 8 77.754.21 0,10 % 2, 1 2 3, 1 6 4, 1 6 * 2, 1 8 TOTAL PUBLIC PROCUR EMENT KM 1.972.330. 047,28 2.124.813. 917,41 3.469.981. 667,60 3.128.833. 371,96 3.560.468. 418,65 *data not available because the Agency did not publish the report for year 2011. Source: adapted from Public Procurement Agency annual reports (2008, 2009, 2010 & 2012) and Transparency international BH for year 2011 Figure 4: Open and negotiation procedure -variations of shares 100 91,89 82,95 80 60 40 43,54 38,73 37,38 37,13 20 3,99 49,53 49,00 12,95 0 % OPEN PROCEDURE 2008 2009 Volume 6 | Number 2 | Fall 2016 % 2010 NEGOTIATION PROCEDURE 2011 2012 89 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Source: adapted from Public Procurement Agency annual reports (2008, 2009, 2010 & 2012) and Transparency International BH for the year 2011 With the fact that the least transparent procedures (competition request, direct agreement, negotiation procedure without notice) reached almost a 70% share of the total contracts signed, we can say that the behavior of contracting authorities in the context of ensuring transparency principle has failed and that it violates fair market competition. Competition on Public Procurement Market in BH Business strategies of firms affect the structure and organization of the market as well as their own functioning (Sharma and Tomić, 2011). There are many factors that affect shaping of competitive relations between participants on the market: number and size of individual participants on offering and/or demanding side, limitations and possibility of new competitors emergence, spatial distribution of customers and suppliers, greater or lesser homogeneity or differentiation of products, elasticity degree of demand for certain products, etc. (Jurin and Šohinger, 1990). Useful basic indicators of participants’ market power and the market power of their competitors are determining the market shares and level of market concentration of the observed market (Croatian Competition Agency, 2005). The greater the market share of a concentration participant, the greater the probability that such an entrepreneur has market power as well. Term – market power of an entrepreneur can be defined as a long-term ability to sell its products at a higher price than the market price.On the basis of said we can conclude that entrepreneur has significant market power if he is characterized by a large market share and high financial power that enables him to dictate purchase (market) conditions, and to exclude competitors from the market. His market power is greater if he operates on closed market. The entrepreneur with high market power has the ability to act independent of potential and real competitors, customers’ interest, suppliers, and society on the whole. Market competition is identified as an independent variable. It is also a precondition for strengthening market economy in general. For measurement of market competition on the public procurement market in B&H, based on the observed sample, the following indicators were used: • 90 The market shares of customers and sellers Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina • The market concentration ratio of the five largest buyers/sellers on submarkets of goods, services and works procurement. • The (Non)Existence of buyers/sellers domination on the public procurement market The Market Concentration ratio (CR) is one of the usual measures of market concentration. It shows the total (joint) market share of a relatively small number of the largest entrepreneurs that operate on the same market. The higher the CR is, the market is more concentrated. Considering a number of entrepreneurs whose market share is observed, the market concentration ratio is denoted with CR2, CR3, CR4, etc. A higher ratio of market concentration indicates that market competition has decreased, and vice versa. To measure (non)existence of dominant buyer/seller on the public procurement market in B&H, the following criteria, established by provisions of the competition Act, ivwere used in this paper: • • • A buyer/seller is dominant on the market if it has more than 40% of market shares. Two or three buyers/sellers are dominant on the market if they, together, have more that 60% of the market shares. Four or five buyers/sellers are dominant on the market if they, together, have more than 80% of the market shares. Market Power of Buyers (contracting authorities) On the procurement of goods, the market concentration ratio of five leading suppliers indicates that they have high market power because their total shares (CR5) ranged from 43.58% in the year 2010, 38.9% in the year 2011 and to 40.53% in the year 2012. They do not have a dominant position but they do have significant power on this market. Three enterprises that emerge in five leading suppliers are: coal mines Kreka Tuzla, brown coal mines Kakanj and brown coal mine Banovići. Their cumulative shares are increasing each year, and in year 2012 they were 32.73%. On the procurement of works market, it has been recorded that the market concentration of the five leading suppliers was the highest in regards to market of goods and services. CR5 was 80.03% in year 2010, 37.31 in year 2011, and finally it Volume 6 | Number 2 | Fall 2016 91 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic rose to 82.0% in year 2012. In accordance with set criteria, five leading suppliers are dominant in this market. On the market of services procurement, CR5 indicates that market concentration of the five leading suppliers is rising with each year, ranging from 37.58%, over 47.59% to 48.93% in the year 2012. There are no enterprises or group of enterprises that are dominant on this market. Figure 5: Concentration of public procurement of goods, works and services markets in terms of suppliers (CR5 in period from 2010-2012) 2010 2011 82,00 80,03 43,58 38,90 40,53 GOODS 2012 47,59 48,93 37,58 37,31 WORKS SERVICES Source: adapted from Public Procurement Agency data On the overall public procurement market in terms of suppliers, high market concentration has been recorded for the five leading suppliers in year 2012 (CR was 48.12%), which indicates that these five leading buyers have relatively high market power, but not a dominant position. In regards to the market power of the five leading buyers, their market power is significantly lower. Different companies have had the position of the largest supplier in the years 2010, 2011 and 2012: NISKOGRADNJA with a share of 24.27%, Kreka coal mines with a share of 10.36%, and CHV Czech Republic with 33.63% of the share, respectively. Their individual shares are big but these suppliers were not dominant in the overall market. 92 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Results of Empirical Research of the Public Procurement Transparency Impact on Streightening Market Competition in BH Starting from the theoretical concept of empirical research and the relationship between the most significant factors of market competition development, based on the results obtained, it is possible to test the proposed research hypothesis and examine the impact of increasing the transparency of public procurement to strengthen the market competition in BH. Results of the study based on a sample of the 200 largest, completed public procurement contracts in BH in the period from 2010 to 2012 are presented in Table 5, and refer to the information on:  size and structure of demands for goods, works and services,  market concentration of the five leading buyers on the market of goods, works and services,  market concentration of the five leading suppliers on the market of goods, works and services,  the amount of open procedures in the total procurement of goods, works and services. Table 5: Research results INDICATO RS SIZE AND STRUCTU RE OF THE DEMAND IN % MARKET CONCENT RATION OF BUYERS CR5 AMOUNT OF OPEN PROCEDU RES IN % MARKET CONCENT RATION OF SUPPLIERS GOODS PROCUREMENT MARKET WORKS PROCUREMENT MARKET SERVICES PROCUREMENT MARKET 2010 2011 2012 2010 2011 2012 2010 2011 2012 54,40 74,16 40,70 33,68 11,19 48,21 11,92 14,65 11,10 75,83 64,91 75,16 84,32 42,39 95,66 59,28 62,92 64,56 18,45 29,02 18,85 7,98 8,47 14,32 3,57 10,21 2,91 43,58 38,90 40,53 80,03 37,31 82,00 37,58 47,59 48,93 Volume 6 | Number 2 | Fall 2016 93 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic CR5 Testing auxiliary hypotheses will be conducted by re-examining the relationship between market power of the largest buyer in the whole public procurement market in BH (Elektroprivreda BiH) and the amount of the open procedures in its procurement, because research shows that the public enterprise "Elektroprivreda BiH" achieved the highest individual share of 26.55%, 38.34% and 55.44% in the period from 2010th to 2012th year Research Results on the Market of Procurement of Goods In the reporting period, a higher demand for goods than for works and services has been recorded. Considering that a high demand for goods offers possibility to make a profit, many suppliers are present on this market, and therefore larger competition is expected. In the reporting period, the highest reported demand for goods was reported in year 2011 and it amounted to 74.16% from total public procurement in BH. High demand resulted in the decreasing of market concentration of the five leading buyers (CR5 was 64.91%). As a result of the decreased market power of buyers in year 2011, the amount of open procedures was highest (29.02%). This contributed to the increase in competition and in final, decreasing of the market concentration of the five leading suppliers to the smallest level in the reporting period (CR5 was 38.90%). This relationship can be seen in Figure 6. Observing this market in the year 2012, when lower demand was recorded than in the year 2011, the market power of buyers increased again, as they used their higher market power to conclude smaller value contracts with open procedure than in the year 2011. That was the reason why the market concentration of five leading buyers increased, i.e. competition on this market was lower. Figure 6: Relationship between market concentration of suppliers, amount of open procedures of total public procurement procedures and market concentration of buyers (period from 2010 to 2012) in % MARKET CONCENTRATION OF BUYERS CR5 AMOUNT OF OPEN PROCEDURES IN % MARKET POWER OF BUYERS CR5 75,83 43,58 72 38,9 18,45 2010 75,16 64,91 29,02 2011 40,53 18,85 Journal of Economic and Social Studies 2012 �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Source: data from Table 5 The largest buyer, JP Elektroprivreda BiH, acted in accordance with its market power. This buyer had a dominant position in all observed years on the market of goods with shares over 40%. As its market power as a buyer increased, the amount of open procedures in the market decreased, which can be seen in Figure 7. Figure 7: Relationship between the market share of public enterprise “Elektroprivreda BiH” and open procedure on the market 50 45 40 35 30 25 20 15 10 5 0 47,28 45,41 47,37 OPEN PROCEDURE MARKET SHARES 12,4 7,26 2010 2011 7,82 2012 Researching the impact of increasing the transparency of public procurement on strengthening market competition on the commodities market we came to the following conclusions: • With increase in the market power of buyers, the amount of most transparent procedures decreases i.e. transparency of public procurement decreases. Volume 6 | Number 2 | Fall 2016 95 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic • With the decrease of public procurement transparency, market concentration of the five leading suppliers increases i.e. market competition decreases. Research Results on the Procurement of Works Market The highest demand for works was reported in year 2012, when it amounted to 48.21% of the total public procurement in BH. As opposed to the commodities marketwhere very high demand for works did not result in an increase of competition between suppliers; on the contrary, the largest market concentration of five leading suppliers has been reported. That year, they had very high market power and dominant position (CR5 was 82%), in accordance to research criteria (Figure 8). Causes of such phenomenon can be found in the undeveloped market of works in which operates a small number of construction companies that have had difficulties surviving in periods of economic crisis. If we add to it barriers that occur with entering the market (licenses, the necessary references, business expenses etc.), high market (negotiation) power of the five leading buyers that have dominant positions on this market (CR5 95.66%), then it is not surprising that the level of market competition is at such a low level. The market power of buyers and suppliers has contributed that amount of open procedures from the total public procurement procedures was merely 14.3% in the year 2012, although values of signed contracts were high. Considering indicators recorded in the year 2011, when the lowest demand for works was recorded (11.19%), it is clear that the market power of buyers (CR5 42.39%) and sellers (CR5 37.31%) was at the lowest level in the observed period. Due to the low presence of open procedure in all the years, especially in 2010 and 2011 when it was about 8%, contracting authorities, applying the least transparent procedures for the award of public works discouraged the entry of new companies into the market and thereby jeopardizing the development of competition and the market economy in general. 96 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Figure 8: Ratio of market concentration of suppliers, representation of the open procedure and market concentration of buyers (period from 2010 to 2012) Source: data from Table 5 Public Enterprise “Elektroprivreda BiH”, which has almost achieved monopoly in the works market in year 2012, with shares of 71.57% in this market acted in accordance with its market power. The lowest level of amount of open procedure (2.54%) in total procurement of this buyer was in year 2012, when their market power was highest (Figure 9). Figure 9: Market share of public enterprise “Elektroprivreda BiH” and open procedure on the works market ratio 80 71,57 70 60 50 MARKET SHARES 40 30 10 0 OPEN PROCEDURE 19,64 20 0,46 1,1 2010 5,13 2011 2,54 2012 Source: Author’s interpretation according to data from Public Procurement Agency of BH Examining the impact of the increase in public procurement transparency on the strengthening of market competition in works market, the following conclusions were made: • Market power of buyers and suppliers is very high – the five leading buyers and suppliers have a dominating position on the market. • Undeveloped market and the existence of real barriers for new companies to enter the market makes the market power of buyers and suppliers even stronger • The very low level of public procurement transparency on this market is a consequence of very a high market power of buyers i.e. their dominant position. Volume 6 | Number 2 | Fall 2016 97 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic • The lower the level of public procurement transparency is, the greater is the market concentration of suppliers i.e. lower is the market competition. Results of the Research on Services Procurement Market On the services market, continual growth of the market power of buyers and sellers has been recorded, as well as the percentage of open procedures on observed submarkets (3% - 10%). The market power of the five leading buyers is growing each year because of low demand for services, specific procurement cases and real barriers for new companies to enter this market. The very small percentage of open procedure on this market contributes to the ever growing concentration of the five leading suppliers i.e. weakening market competition. Figure 10: Market concentration of suppliers, percentage of open procedure and market concentration of buyers ratio (period 2010 to 2012) MARKET CONCENTRATION OF SUPPLIERS CR5 AMOUNT OF OPEN PROCEDURES IN % MARKET CONCENTRATION OF BUYERS CR5 59,28 37,58 3,57 2010 62,92 47,59 10,21 2011 64,56 48,93 2,91 2012 Source: Data from Table 5 The classic example of the market power of buyers and the amount of open procedures ratio is the case of largest buyer on the services market, Public Enterprise “Elektroprivreda BiH”. The higher the market share of the buyer was, the smaller the amount of open procedures and vice versa. When the market share of this buyer was at its lowest level (7.34%) the highest percentage of open procedure was recorded (1.87%), which can be seen in Figure 11. 98 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Figure 11: Market share of “Elektroprivreda BiH” and open procedure percentage ratio on services market 16 14,9 14 12 11,65 10 8 OPEN PROCEDURE 7,34 6 MARKET SHARES 4 2 1,87 0,59 0 2010 2011 0,85 2012 Source: Authors' interpretation according to data received from public procurement agency of BH In examining the impact of increased public procurement transparency on strengthening market competition on the services market, following the conclusions can be stated: • • • • Higher market power of buyers and suppliers is continually increasing each year. Undeveloped market and the existence of real barriers for new companies to enter the market additionally strengthens the market power of buyers and sellers. Very low level of public procurement transparency on this market is a consequence for the high market power of buyers. The lower the level of public procurement transparency, the higher the market concentration of suppliers i.e. market competition is weaker. Conclusion Insights into the public procurement system, the market power of contracting authorities and suppliers, measured by their individual and cumulative market shares, as well as insights into their behavior in the context of ensuring transparency principles in public procurement have contributed in drawing one general Volume 6 | Number 2 | Fall 2016 99 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic conclusion: the public procurement system in BH can be used as an instrument for strengthening the market economy altogether with the transparency mechanism by contributing to strengthening (free) market competition, because market competition represents foundation of functional market economy. By the scientific research method, it has been determined that there is a high market concentration of five leading buyers and five leading suppliers on the market. That means a lower level of market competition. It has also been determined that public procurement transparency is decreasing. Based on quantitative evidence about the size of market competition on the public procurement market, and quantitative analysis of the transparency system impact on market competition, we can conclude that the research hypothesis has been confirmed and that: increase of public procurement transparency contributes strengthening market competition in Bosnia and Herzegovina. The results of the research give us one more insight: behavior of contracting authorities in terms of ensuring the transparency principle is determined by their market power i.e. higher their market power, measured in market shares the lower the percentage of open procedures in public procurement.“, Intentionally or not, contracting authorities negatively affect the development of market competition and therefore functional economy in BH, by not preferring most transparent procedure - open procedure. Theoretical, methodical and empirical insights on the impact of the public procurement system’s transparency on market competition and the market economy in general, represent an argument for urgent reform of the existing public procurement system that enables contracting authorities to weaken the development of market competition and the market economy in Bosnia and Herzegovina. References Council of Ministers of Bosnia and Herzegovina (2012). Chapter 5: Public procurement. Retrieved from: http://www.dei.gov.ba/dei/dokumenti/uskladjivanje/default.aspx?id=10896&langTa g=bs-BA 100 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Croatian Competition Agency (2005). Instruction on the procedure for the assessment of horizontal enterpreneurs' concentration. Retrieved from: http://www.aztn.hr/uploads/documents/tn/zakonodavni_okvir/Naputak_3.pdf Directorate for Economic Planning of Bosnia and Herzegovina (2013). Economic trends: Annual report for 2012. Retrieved from: http://www.dep.gov.ba/dep_publikacije/ekonomski_trendovi/Archive.aspx?langTag= bs-BA&template_id=140&pageIndex=1 European Commission (2007). EUPPP Manual: Public procurement lecturers training in B&H – part 1. Retrieved from: http://www.javnenabavke.ba/publikacije/EUPPPI.pdf European Commission (2007). EUPPP Manual: Public procurement lecturers training in B&H – part2. Retrived from: http://www.javnenabavke.ba/publikacije/EUPPPII.pdf European Commission (2012). Commission staff working document –Annual Public Procurement Implementatation Review. Retrieved from: http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/2012 1011-staff-working-document_en.pdf Jurin, S., & Šohinger, J. (1990). Teorija tržišta i cijena. Zagreb: Globus Knežević, B. (2007). Elektronske javne nabavke na Zapadnom Balkanu, Evropsko zakonodavstvo, VI (19-22), 37-41. Madžar, L. European Union Competition Policy. Retrieved from: http://www.vps.ns.ac.rs/Materijal/mat12420.pdf Public Procurement Agency of Bosnia and Herzegovina (2009). How to apply the principles of the Article 1 of the Act of the Public Procurement of Bosnia and Herzegovina? Retrieved from: http://www.javnenabavke.ba/index.php?id=16odg&odg=1&jezik=bs Public Procurement Agency of Bosnia and Herzegovina (2010). Development strategy of public procurement system in Bosnia and Herzegovina for the period 2010-2015. Retrieved from: http://www.javnenabavke.ba/index.php?id=03vij&vij=25&jezik=bs Volume 6 | Number 2 | Fall 2016 101 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Public Procurement Agency of Bosnia and Herzegovina (2013). Annual report on contracts concluded in public procurement procedures. Retrieved from http://www.javnenabavke.ba/index.php?id=11izv&izv=21&jezik=bs Rička, Ž., Buza, H., Petričević, S., & Stanarević, M. (2008). Zakon o javnim nabavkama –komentar i primjena. Sarajevo: Revikon. Sharma, S., & Tomić, D. (2011). Mikroekonomska analiza tržišne moći i strateškog ponašanja preduzeća. Zagreb: Mikrorad. Transparency international BH (2012). Public Procurement Act of BH: Monitoring of implementation. Retrieved from: http://ti-bih.org/wp-content/uploads/2012/12/Monitoring-javnih-nabavki-2012.pdf Trepte, P. (2006). EUPPP Manual: Right and EU public procurement policy: Transparency requests. Retrieved from: http://www.javnenabavke.ba/publikacije/pravo_i_politika_javnih_nabavki_eu_bs_hr _sr.pdf i “Official Journal B&H”, number 49/04, 19/05, 52/05, 94/05, 8/06, 24/06, 70/06, 12/09, 60/10 & 87/13. ii Design contest project as one of the possible procedures was excluded from the analysis due to his specific application. iii The Public Procurement Agency in the Annual reports does not publish data of the value of concluded contracts by negotiated procedure with publication of procurement notice and negotiated procedure without publication of procurement notice separately. iv Criteria have been established based on the provisions of Act of Public Procurement of Bosnia and Herzegovina 102 Journal of Economic and Social Studies �Journal of Economic and Social Studies Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Mesut Bozkurt Çanakkale Onsekiz Mart University Turkey mesutbozkurt59@hotmail.com Emrah Özkul Kocaeli University Turkey emrahozkul@hotmail.com Abstract: This study examines how reputation management (RM) Keywords: Tourism, reputation activities influence consumers’ choice behaviors. In order to understand the relationship between them the possible consequences of RM activities such as corporate image, consumer trust, and perceived risk were analyzed as the antecedents of consumers’ choice behavior. Specifically, a structural equation model was developed for hypothesized relations between the constructs of the study. Empirical research was conducted using data from 232 individual consumers in Albania (n=109) and Turkey (n=123) to test our conceptual model. The data were analyzed through t-test and structural equation modelling (SEM). The study shows that RM activities obviously determine the constructs of corporate image and consumer trust positively, whereas they affect perceived risk by consumers negatively. The lower level of perceived risk through RM activities was found as a significant determinant of consumers’ choice behavior. Volume 6 | Number 2 | Fall 2016 management, choice behavior, consumer trust, image JEL Classification: M1, M3 Article History Submitted: 13 April 2016 Resubmitted: 5 August 2016 Accepted: 15 September 2016 http://dx.doi.org/10.14706/JECOS S16617 103 �Mesut Bozkurt Çanakkale, Emrah Özkul Introduction In marketing science, psychological processes behind consumer behaviors and preferences are accepted as key determinants based on a vast body of research on their reactions to products, brands and the names of firms. This understanding prescribes that general beliefs about a firm can determine the way in which consumers make their decisions toward the given firm. Also, marketing research mentions that the factor of consumer trust is another important key determinant in the decision making process (Moorman et al., 1992; Chen and Tan, 2004). Both factors are leading parts of the psychological process although objective evaluations such as firm performance and quality of offerings are significant in addition to these two factors. If market players can manage the psychological processes of consumers successfully, then they are able to increase the possibility of being chosen by consumers among many other competitors. This viewpoint builds a practical question for firms: what strategies and activities positively increase consumers’ beliefs and trust toward the firm? This study examines reputation management activities from the perspective of increasing the positive image of any firm and consumer trust to create choice behavior in favor of the firm. Reputation has been defined as the intangible asset expressing the evaluation of a target market on whether the firm is substantially ‘good’ or ‘bad’ (Weiss et al. 1999), and reflects the cumulative knowledge about the past and present acts of the organization (Suh and Amine, 2007). In today’s highly competitive markets, reputation is not a result that appears by itself, and that can be gained by chance. However, it is an organizational value that could be improved by management perspective with long term strategies. In short, creating a good reputation for a firm requires the understanding of strategic marketing management to transform these activities into reputation management. Reputation gained by successful strategic marketing management can be demolished in very short order if the attention is not sustained. Although reputation is an abstract concept, it has a potential to generate concrete values if it is created successfully by any firm. Fombrun (1996) states the meaning of positive reputation perceived by consumers for an organization in terms of competitive advantages as follows: (1) delaying rival mobility in the industry, (2) charging price premium to customers, at least in highly uncertain markets, (3) attracting higher-quality and larger amounts of investments from the stock market, (4) maintaining a high spirit among employees, (5) supporting and enhancing new product introduction and 104 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management recovery strategies in the event of a crisis (Fombrun & Shanley, 1990; Fombrun, 1996). However, although there is extensive research on reputation management (Weigelt and Camerer, 1988; Fombrun, 1996; Roberts and Dowling, 2002; Cretu and Brodie, 2007), the literature still suffers from a lack of empirical studies that examine whether reputation management activities shift perceived risk by consumers through creating a positive corporate image in the minds of consumers and establishing consumer trust. Therefore, the aim of this study is to explore the relationship between reputation management activities and consumers’ choice behaviors through perceived corporate image, consumer trust, and perceived risk by consumers exposed to the reputation management activities of firms. The knowledge this study generates is expected to contribute to the competitiveness topic of marketing literature by its research model considering the consequences of reputation management activities as the antecedents of choice behavior. The rest of the paper is organized as follows: First, a literature review is presented to recognize the main variables of the study. Second, we present a research model indicating the hypothesized relationships between constructs. Finally, methodology of the research, data analysis and findings will be presented, followed by a conclusion with the limitations of this research study. Literature Review and Development of Hypotheses Reputation Management Intensive competition, the leading feature of today’s markets, forces market players to find various strategic advantages. A widely accepted theory of the resource-based view of the firm (Barney, 1991) points out that valuable, rare, inimitable, and nonsubstitutable resources of firms are essential for stronger and long-term competitiveness. It should be noted that the resources building competitiveness are not related only to production and technical processes such as R&D, efficiency, and cost, but also to managing the general psychology in the marketplace towards the firm. When consumers have negative associations for a firm then market performance of the firm will probably not be independent of them. In other words, what consumers, competitors, and related institutions in the market are saying about the firm is a direct part of market performance since the words have an obvious power to attract and discourage individuals into a given market player. Thus, the Volume 6 | Number 2 | Fall 2016 105 �Mesut Bozkurt Çanakkale, Emrah Özkul reputation of any firm can play as a rare, inimitable, and nonsubstitutable resource in a highly competitive market environment to encourage consumers toward the firm if it can be built successfully. Reputation of a firm, therefore, can be considered to be a psychological antecedent in the consumer decision-making process. It is possible to consider this dimension as a leading strategic resource for the competitive advantage of any firm (Fombrun, 1996; Capozzi, 2005). In this context, the concepts of reputation, reputation management (RM), and reputation management activities attract attention particularly from the management and marketing areas examining the question of how to be competitive (i.e., Roberts and Dowling, 1997; Hutton et al., 2001; Capozzi, 2005; Cretu and Brodie, 2007). Reputation occurs around individuality, or what a person or an organization is known for. In business literature, it is therefore defined as an overall evaluation of the extent to which a firm is substantially “good or bad”, or “positive or negative” (Deephouse, 2000; Roberts & Dowling, 2002). The reputation created for a firm in the marketplace can include real, perceived and incorrect dimensions. Even if it is sometimes incorrect or unreal, the reputation of a firm has the power to influence consumers’ reactions. There is a consensus among academicians that corporate reputation must be purposefully managed rather than driven by chance so that it can contribute to the competitiveness of the firm (Fombrun, 1996; Formbrun and van Riel, 2004; Simoes et al., 2005). Thus, designing specific activities to manage the process of building reputation comes into prominence in strategic behavior. Corporate Image Corporate image is described as the overall impression made on the minds of individuals about an organization (Finn, 1961; Kotler, 1982; Dichter, 1985; Barich and Kotler, 1991). In marketing literature, image is defined as a mental construct processed internally (Crompton, 1979), or as a mental picture of consumers (Dobni and Zinkhan, 1990) for any given offering such as business name, variety of products, package design and quality, and appearance of store. Some empirical evidence in the marketing field clearly shows that the long-term reputation of the seller has been found to be more important than short-term product quality movements (Landon & Smith, 1997). McKnight et al., (1998) report, based on empirical research, that corporate reputation provides the assurance of consumers’ integrity and goodwill. Assurance also helps to increase trust, particularly when the consumers have not had experience before and hence do not 106 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management have firsthand knowledge of the firm. A typical example provides a valuable insight into this relationship: there is a perceived notion around the world that products processed in China will not have long-life due to not meeting quality standards. Products from China may really be low-quality and it is normally expected that consumers who have experienced these products before will avoid new transactions, but it is not uncommon to observe consumers avoiding Made-in-China products who have not had experience with them before. It is possible to explain this type of consumer behavior with the poor reputation of China in the marketplace. Poor reputation results in poor image in the minds of consumers. It is expected, therefore, that the more positively consumers think about a firm, the more positive their perceptions towards the corporate image. In line with the foundation built above, the following hypothesis is proposed: H1: There is a positive relationship between RM activities and corporate image. Trust From the view of social exchange theory (Blau, 1964; Cook and Emerson, 1978) trust is a leading factor in a relationship between consumers and the firm. The theory emphasizes the importance of human psychology in forming social exchanges. Research proves that lack of trust can directly disrupt the formation of a relationship from the consumer side. Thus, trust can be described as a psychological antecedent for consumer behavior (Garbarino and Johnson, 1999; Ba and Pavlou, 2002; Pavlou and Gefen, 2004). The creation of a positive reputation for the firm through specific and pre-planned activities, and managing the corporate image, can increase the value of intangible assets such as trust (Calantone, Cavusgil & Zhao, 2002). Positive reputation of the firm and brilliant corporate image are expected to function as preceding states for trust in consumer psychology, based on the social exchange theory. Several researchers (Weigelt & Camerer, 1988; Garbarino & Johnson, 1999; Plank, Reid, & Pullins, 1999) report that corporate reputation has a vital role in reducing the uncertainty consumers encounter when they evaluate firms. Positive corporate reputation is based on superior performance over a certain period of time. In other words, positive corporate reputation can lead to creating confidence, and thus Volume 6 | Number 2 | Fall 2016 107 �Mesut Bozkurt Çanakkale, Emrah Özkul increasing the trust (Morgan & Hunt, 1994). Based on the above reasoning we propose that: H2: There is a positive relationship between RM activities and consumer trust. H3: There is a positive relationship between corporate image and consumer trust. Perceived Risk The factor of risk perceived by consumers has been a major question in the marketing discipline since it is considered to be a leading part of human psychology in the decision-making process. Risk is defined as an individual’s or a group’s perceptions of the uncertainty associated with engaging in an activity (Dowling and Staelin, 1994). Bauer (1960) stated this as “the uncertain consequences resulting from purchase”. From this perspective, risk perceptions of consumers arise from potentially negative results of any engagement. Some academicians (Engel, Blackwell, and Miniard, 1986, p. 109) consider perceived risk as “beliefs about the risks associated with product (service) purchase’’. In marketing literature there is a widely accepted classification based on the study of Jacoby and Kaplan (1972) and Kaplan et al.(1974) that includes financial, physical, psychological, performance, and social risk. Greatoresk and Mitchell (1994) identified social risk as “social loss”, and added the sixth category as time risk. Trust and perceived risk are closely interrelated (Mayer et al., 1995). In terms of managerial perspective, consumer trust and positive corporate image lead to more positive perceptions towards the quality of the products, and the firm as a whole. Marketing literature, based on a vast body of empirical evidence, suggests that the mentioned constructs encourage consumers by cutting negative associations about the firm (McKnight et al., 1998; Garbarino and Johnson, 1999; Pavlou and Gefen, 2004; Cretu & Brodie, 2007). In other words, the level of perceived risk can be decreased by increasing the positive clues. The higher the perceptions of risk, the higher the trust needed to facilitate a transaction. When risk is present, a higher level of trust is needed to make transactions possible. That is, consumer trust towards a product or an organization reduces the perceived risk for a specific offering. As a result, the firms attached to positive associations are expected to behave well and avoid negative behaviors, which 108 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management strengthen customers' perceptions towards lower level perceived risk. Based on this view we hypothesize that: H4: There is a negative relationship between corporate image and perceived risk by consumers. H5: There is a negative relationship between consumer trust and perceived risk by consumers. Choice Behavior Understanding the essential determinants in the process of the evaluation of consumer behavior has been a supreme aim in the field of marketing. It is possible to state that customers’ evaluations towards a product, a brand or the name of the organization are signals of actual choice behavior (Zeithaml, Berry and Parasuraman,1996), based on structural psychology (George and Jones, 1999, p.532) in which human behaviors are described as the activity done consciously. This description also emphasizes the important difference between “behavior” and “motion”. The underlying indication from the discipline of psychology emphasizing the connection between behavior and its antecedents explains specifically that most human behavior is under volitional control (Ryan, 1970). There are different ways of examining choice behavior of consumers in marketing literature. For example, Bloemer and Odekerken-Schröder (2007) examined price insensitivity in the context of choice behavior. Bansal, Irving, and Taylor (2004) investigated consumers’ choice behaviors in the context of switching intentions. On the other hand, Mittal, Kumar, and Tsiros (1999) measured customers' intention to recommend to other people, which can be considered to be an indicator of choice behavior if it is positive. Consumers’ choice behaviors among competing offerings emerge based on maximizing their benefits as it is implied in the explanations from psychology area (Becker, 1990; Tversky and Kahneman, 1981). Lower level of risk perceived by consumers is a direct part of higher benefits. In other words, reducing risk ensures consumers reach more satisfactory results. A rational theory of consumer behavior (Tversky and Kahneman, 1986, 1991) implies that consumers will employ the level of risk they perceive as a cue for their possible satisfaction. From this perspective, perceived risk by consumers is a main indicator in terms of whether they engage with a brand or a firm. In short, the more risk consumers perceive the less choice behavior they exhibit. More specifically, if they perceive relatively higher levels of risk towards Volume 6 | Number 2 | Fall 2016 109 �Mesut Bozkurt Çanakkale, Emrah Özkul a firm, then they are more likely to have the intention not to prefer, switching intentions, negative word-of-mouth and price sensitivity. Based on this view we hypothesize that: H6: There is a negative relationship between perceived risk and choice behavior of consumers. Building on the literature review and the hypotheses developed, the following model emerged as the research model of this study (figure 1). In the research model, five main constructs and the relations between them are examined through hypothesized paths. Figure 1. Conceptual model and hypothesized relations Corporat e – + RM + + Trust Perceive Choice Behavior – – Research Design The research in this study was conducted by employing a quantitative methodology. In this context, a structured questionnaire was developed as the data collection instrument based on a literature review and previous research (e.g., Sirdeshmukh et al., 2002; Selnes and Sallis, 2003; Dowling, 2006). The sample for this survey consisted of customers who were staying at Sheraton Hotels in Tirana, Albania and Istanbul, Turkey, in the period February – April 2009. The survey was limited only to the businessmen segment due to their constant demand for hotel services, and thus their enhanced familiarity. The design of the questionnaire was based on five different constructs examined in this research. As presented in tables 1, 2, 3, 4 and 5, 110 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management reputation management (RM) activities were measured using the scale adopted from Fombrun (1998) and Fombrun, Gardberg, and Sever (2000). Items for measuring consumer trust were adopted from Selnes and Sallis (2003). The construct of corporate image was adopted from the study of Wu and Petroshius (1987). For the variable of perceived risk, we employed the well-known definition of Engel, Blackwell, and Miniard (1986, p. 109) and the well-established classification of Jacoby and Kaplan (1972) for perceived risk by consumers. And finally, choice behavior was measured using items from Bansal et al., 2004; Mittal et al., 1999; and Zeithaml et al., 1996). All constructs were measured on five-point Likert scales ranging from Definitely agree to Definitely disagree. The overall value of the Cronbach alpha to assess the reliability of the variables was 0.83, indicating a satisfactory level. Methodology The study was conducted between April - July 2015. Albania and Turkey were selected for the realization if the study and research was made in 2 five star hotels in these countries. Albania and Turkey was selected so as to reach data easier and to compare two facilities belonging to same chain in two different countries. Moreover, the reputation of the aforementioned hotel chain is high. Based on these information, country and facility selection was made by intentional sampling among nonstochastic selection methods. However the selection of customers within these facilities was performed by simple sampling method among the probabilistic sampling methods. Data was obtained by the evaluations of 109 participants from the hotel facility in Albania and 123 participants from the hotel facility in Turkey. During the study, certain number of surveys were conducted each month so as to prevent formation of duplicate results. In the data collection stage of the study, as the universe and sample could not be determined clearly and as the obtained data was insufficient, the frame could not be determined clearly. After this study which can be assumed to be pilot, other comparisons may be supported by other studies in which the number of facilities and participants will be higher. Descriptive Statistics In total, 268 usable questionnaires were collected from participants over the course of three months (February – April 2009) in Albania and Turkey simultaneously. Of those gathered thirty-six forms were eliminated (13.4 %) due to excessive amounts of Volume 6 | Number 2 | Fall 2016 111 �Mesut Bozkurt Çanakkale, Emrah Özkul missing data. Thus, 232 forms were coded for data analysis. The distribution of questionnaires analyzed by country is as follows: Respondents from Albania were 109 (47 %) and from Turkey 123 (53 %) of the overall sample. The analysis of demographic characteristics of the sample revealed that most of them were male (169 respondents; 73 %) and in the 45 – 60 age category (171 respondents; 73.7 %). Just over half had a university degree (131 respondents; 56.4 %). Data Analysis and Results Analysis of Differences between Albanian and Turkish Consumers In the first step of the analysis, the collected data were analyzed by employing the SPSS program. A series of independent t-tests were used to determine if differences existed between Albanian and Turkish consumers across the constructs of the research model. Table 1 indicates the differences between the subgroups of the sample in the evaluation of RM activities. Table 1. Mean Differences between Albanian and Turkish Consumers for RM Activities AL TR 4.80 4.61 4.55 t– value -1.83 -1.81 -1.36 4.46 4.22 4.32 0.068 0.071 0.173 3.96 4.67 -2.61 0.015 4.43 4.38 1.81 0.071 4.51 4.77 -1.62 0.103 4.46 4.49 4.71 4.40 -2.47 0.56 0.022 0.510 4.24 4.65 -2.59 0.011 4.79 4.88 4.63 4.70 4.83 4.61 4.29 4.51 4.27 4.52 0.810 3.26 1.87 2.27 1.75 0.412 0.003 0.062 0.025 0.078 Statement’s Average Declaring to provide high quality offerings every time Declaring to provide value-for-money offerings every time Declaring to provide new and innovative offerings every time Declaring that the philosophy shared by all staff is high customer satisfaction Showing its upper-class level through comments in the media Announcing the names of famous guests staying at Sheraton Employing upper-class marketing channels Creating a feeling of a first-class company through specific advertisements Designing an extraordinary building externally Designing an exclusive atmosphere inside the hotel Providing excellent working environment to its staff Equipping its staff with superior qualifications Building high standards in human relations 112 Sig. Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Hosting and sponsoring eminent art events Hosting many popular meetings (official meetings, society weddings, cocktail parties) Supporting and announcing many societal projects Declaring its environmental responsibility and sensitivity 4.80 4.66 1.82 0.070 4.21 4.79 -2.51 0.014 3.91 4.27 4.48 4.49 -2.38 -1.77 0.017 0.075 Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a fivepoint scale, ranging from “1= Definitely agree” to “5= definitely disagree”. The findings of the comparison between Albanian and Turkish groups showed that Turkish consumers had a slightly higherscore but this finding cannot be confirmed by statistical results (p>0.05). Based on the results in table A, no significant difference was found for the evaluation of RM activities. Although Turkish consumers have higher scores, Albanian consumers also have very positive overall evaluations towards the firm’s RM activities. It should be noted that the largest difference was found in the “designing exclusive atmosphere inside the hotel” (p< 0.01), indicating one of the lowest scores from the Turkish group at 4.29 that means very positive. This means that both groups in different countries have similarly positive perceptions for RM activities of the firm. While analyzing the relationships among the constructs across the research model, the second construct is determined as corporate image. Table 2 reports the view of the corporate image from the respondents’ evaluations. Table 2. Mean Differences Between Albanian and Turkish Consumers for Corporate Image AL TR 4.41 4.48 4.77 4.33 4.44 t– value 1.74 1.80 1.66 2.21 -0.67 Average Has a pleasant atmosphere A well-known brand Has high quality goods and services Well-managed firm 4.61 4.62 4.90 4.82 4.41 0.078 0.073 0.104 0.028 0.498 Has polite staff Has consumer-oriented staff Attracts upper-class customers Means prestigious Exclusive firm 4.33 4.22 4.76 4.60 4.88 4.68 4.31 4.28 4.12 4.36 -1.72 -0.86 2.10 1.99 2.14 0.081 0.397 0.036 0.039 0.033 Statement’s Volume 6 | Number 2 | Fall 2016 Sig. 113 �Mesut Bozkurt Çanakkale, Emrah Özkul Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a fivepoint scale, ranging from “1= Definitely agree” to “5= definitely disagree”. Table 2 shows that there is no significant difference between Albanian and Turkish consumers for the evaluations towards CI of the firm. Both groups are seen to have very positive assessments. In comparison with those of Albanian consumers, Turkish consumers had slightly lower scores but this was not confirmed statistically (p > 0.05). Similarly, in both groups the most positive evaluation was reported on the item the firm is a well-known brand (mean scores: 4.90 and 4.77, respectively). For the Albanian group, clearly it is possible to see the reflections of CI since they ranked the item it is an exclusive firm as second highest (4.88). Also, in the Turkish group, it should be noted that overall scores for CI items are above 4.00. The largest difference existed between the groups on the firm has high quality goods and services, which means that the former had much more positive views than the latter (p < 0.05). However, the mean value of the Turkish group for this item can also be considered rather positive (4.33). The data obtained from the sample of this study in two different countries clearly prove a brilliant CI for the firm in the minds of respondents. Table 3. Mean Differences between Albanian and Turkish Consumers for Trust* Statement’s AL TR Average I trust that S is competent at what it is doing I feel that S is trustworthy. I feel that S is honest in fulfilling its promises I think that S is very responsive to customers. I believe that S will respond with understanding in the event of problems 4.59 4.89 4.81 4.70 4.33 4.22 4.42 4.41 4.13 4.19 4.68 4.72 tvalue 1.73 1.81 3.31 2.12 -1.77 -1.87 Sig. 0.081 0.070 0.001 0.034 0.076 0.064 Table 4: Mean Differences between Albanian and Turkish Consumers for Perceived Risk* Statement’s AL TR Average 4.40 4.65 In S, facing offerings that are not value-for-money is a serious risk. (R) 4.32 4.60 114 tvalue 1.82 1.91 Sig. 0.068 0.063 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Satisfactoriness of physical environment in S is a serious risk. (R) It is a serious risk that the goods and services offered by S can be inadequate in order to meet my needs (R) 4.45 4.62 4.12 4.71 Staying at S can create unhappiness in my inner world (R) 4.76 4.81 If I say to friends that I prefer S, they may condemn me (R) 4.38 4.53 1.94 2.31 1.35 1.79 0.062 0.024 0.177 0.071 Table 5: Mean Differences Between Albanian and Turkish Consumers for Choice Behavior * Statement’s AL TR Sig. 4.12 4.05 4.37 tvalue 1.57 1.80 1.93 Average I will prefer S in the future. I will consider S the first choice at which to stay. I don’t think that the other brands will provide clearly better offerings. It is a low possibility that I will replace S with a competitor. 4.25 4.13 4.58 4.11 4.07 1.86 0.062 4.18 3.99 1.74 0.081 0.074 0.073 0.058 * Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a five-point scale, ranging from “1= Definitely agree” to “5= definitely disagree”. R: Reverse coded. The findings of the comparison between Albanian and Turkish consumers for the dimension of trust are presented in Table 3. Based on average scores from the subgroups of the sample, a statistically significant difference was not reported by significance level (p > 0.05) for t-values computed (1.73). Respondents both in Albania and Turkey seem similar to each other in terms of trust towards Sheraton (grand mean values: 4.59 and 4.42, respectively). The largest difference between the groups was observed for the item I feel that Sheraton is trustworthy, which means Albanian respondents clearly had much more positive attitudes in favor of Sheraton than the respondents in Turkey (mean values: 4.81 and 4.13, respectively). Based on the grand mean values, it is possible to state that the sample as a whole clearly has the feeling of trust towards the firm. Table 4 provides the results of perceived risk by respondents towards the firm, Sheraton. The results reveal that there were no significant differences between the Volume 6 | Number 2 | Fall 2016 115 �Mesut Bozkurt Çanakkale, Emrah Özkul mean scores except one item on risk for inadequacy of offerings to meet individual needs (p < 0.05). It is important to note that this part of the scale measuring perceived risk towards the firm was established with five reverse coded items. The negative signs of the t-values indicate less perceived risk by Turkish respondents than Albanians. However, the mean scores of Albanians can be considered as a strong indicator that they perceive risk at minimum levels towards the firm. Likewise the grand mean scores for both groups report the similarity statistically (t-value: - 1.82 and p > 0.05). This result shows that the respondents both in Albania and Turkey are sure about the standards of the firm, and thus they do not worry about the firm and its offerings. Table 5 summarizes the data obtained from the sample on their choice behavior. According to the results shown in table 5, overall the items were assessed similarly by Albanian and Turkish respondents. These four items all have a probability value that is more than .05. Grand mean scores for both groups (4.25 and 4.12, respectively) did not produce statistically significant differences (t-value: 1.57 and p > 0.05). The mean scores ranged from 4.11 to 4.58 in the group of Albanians, and from 3.99 to 4.37 in the Turkish group, indicating a strong loyalty or very positive choice intention in the future. These findings indicate that respondents preferred the firm, Sheraton, consciously at present and clearly they have a tendency to maintain this behavior. The overall analyses of responses through five t-test operations point out the obvious resemblance between Albanian and Turkish respondents towards the given stimuli. It should be noted that those stimuli are the main constructs within the research model of this study. It is possible, therefore, to put together the subgroups of the sample while analyzing the research model rather than conducting separate analyses. Analysis of the Research Model This study was designed to understand the effects of the factor of reputation management that target markets consider when they prefer a brand or a firm rather than its competitors. In this study, a structured model related to the variables assumed to be influential on choice behavior of consumers was tested by employing Structural Equation Modeling (SEM). The structure, composed of the relationship of four assumed constructs to one main dependent variable (choice behavior) constitutes the model of the study to be tested. As mentioned before, the reliability 116 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management coefficient of the overall scale was computed as Cronbach alpha ; 0.83. Data analysis involves evaluation of the measurement model and the structural model. The Evaluation of the Overall Model For the overall model, the Chi-square value was found significant as 514.93 with 233 degrees of freedom. This value is not unusual for larger sizes of sample (Doney and Cannon, 1997). The ratio of Chi-square to degree of freedom is 2.21, which is adequate statistically for the fit of the model. Although the values of GFI (0.93) and AGFI (0.92) are lower than those of CFI (0.97), NFI (0.93) and NNFI (0.94), it is accepted that CFI values above 0.95 are suggestive of a meaningful model (Hu and Bentler, 1999). The fit indices calculated here with RMSEA (0.058) and SRMSR (0.073) can be considered as adequate. All related indices are summarized in Table 6. Table 6: Goodness-of-fit summary Fit indices Values Χ2 Ratio ( Χ2/ df ) GFI AGFI NFI NNFI CFI Standardized RMSR RMSEA 514.93 2.21 .93 .92 .93 .94 .97 .07 .06 GFI, Goodness of fit index; AGFI, Adjusted Goodness of fit index; NFI, BentlerBonett normed fit index; NNFI, Bentler-Bonett non-normed fit index; CFI, comparative fit index; RMSR, root mean squared residual, RMSEA, root mean squared error of approximation. Measurement Model The quality of the model was assessed on unidimensionality, convergent validity, reliability and discriminant validity (see Table 7). The unidimensionalityof each construct in the model was analyzed with principal component analysis that reveals the appropriate items loaded at least 0.60 on the hypothesized components. A good overall model fit has provided support for convergent validity of the scale through all Volume 6 | Number 2 | Fall 2016 117 �Mesut Bozkurt Çanakkale, Emrah Özkul loadings that were significant (p < 0.05). Many of the R2 values have exceeded 0.50 proposed by Fornell and Larcker (1981). On the other hand, reliabilityof the measurement model was analyzed based on the values of composite reliability that should be greater than the benchmark of 0.70 to be considered adequate (Fornell and Larcker, 1981). As indicated in table 7, all the reliability values are above 0.70, revealing adequate reliability. Discriminant validity was tested by confirmatory factor model in which correlations between constructs were constrained to one. Chi-square differences were significant throughout the model (p < 0.01). The model of the study, therefore, is proper to be applied for understanding the relationships between the constructs given with the support of reliability, convergent validity, discriminant validity and unidimensionality. Table 7. Measurement Model Reputation Management Activities (Fombrun, 1998; Fombrun, Gardberg, and Sever , 2000 ) 118 1. Declaring to provide high quality offerings every time 2. Declaring to provide value-for-money offerings every time 3. Declaring to provide new and innovative offerings every time 4. Declaring that the philosophy shared by all staff is high customer satisfaction 5. Showing its upper-class level through comments in the media 6. Announcing the names of famous guests staying at S 7. Employing upper-class marketing channels 8. Creating a feeling of first-class company through Composite reliability Variance Explained Loading R2 0.77 0.72 0.88 0.74 0.81 0.63 0.76 0.55 0.89 0.74 0.72 0.52 0.67 0.63 0.92 0.48 0.42 0.79 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Corporate Image (Wu and Petroshius 1987) specific advertisements 9. Designing an extraordinary building externally 10. Designing exclusive atmosphere inside the hotel 11. Providing excellent working environment to its staff 12. Equipping its staff with superior qualifications 13. Building high standards in human relations 14. Hosting and sponsoring eminent art events 15. Hosting many popular meetings (official meetings, society weddings, cocktail parties) 16. Supporting and announcing many societal projects 17. Declaring its environmental responsibility and sensitivity 1. Has a pleasant atmosphere 2. Well-known brand 3. Has high quality goods and services 4. Well-managed firm 5. Has polite staff 6. Has consumer-oriented staff 7. Attracts upper-class customers 8. Means prestigious 9. Exclusive firm 1. I trust that S is competent at what it is Volume 6 | Number 2 | Fall 2016 0.76 0.91 0.83 0.78 0.62 0.66 0.55 0.79 0.81 0.63 0.78 0.58 0.66 0.46 0.62 0.42 0.72 0.52 0.63 0.42 0.72 0.52 0.81 0.63 0.70 0.51 0.84 0.68 0.73 0.93 0.52 0.83 0.89 0.74 0.82 0.63 0.90 0.77 0.79 0.56 0.73 0.52 119 �Mesut Bozkurt Çanakkale, Emrah Özkul Trust (Selnes and Sallis, 2003) Perceived Risk (Engel, Blackwell, and Miniard,1986; Jacoby and Kaplan,1972) Choice Behavior (Bansal et al., 2004; Mittal et al., 1999; Zeithaml et al., 1996) 120 doing 2. I feel that S is trustworthy 3. I feel that S is honest in fulfilling its promises 4. I think that S is very responsive to customers 5. I believe that S will respond with understanding in the event of problems 1. In S, facing offerings that are not value-for-money is a serious risk (R) 2. Satisfactoriness of physical environment in S is a serious risk (R) 3. It is a serious risk that the goods and services offered by S can be inadequate in order to meet my needs. (R) 4. Staying at S can create unhappiness in my inner world. (R) 5. If I say to friends that I prefer S, they may condemn me (R) 1. I will prefer S in the future 2. I will consider S the first choice at which to stay 3. I don’t think that the other brands will provide clearly better offerings 4. It is a low possibility that I will replace S with a competitor 0.85 0.72 0.91 0.79 0.82 0.63 0.71 0.52 0.75 0.55 0.70 0.51 0.89 0.83 0.69 0.88 0.74 0.74 0.64 0.51 0.92 0.79 0.83 0.64 0.84 0.66 0.94 0.83 0.88 0.74 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Structural Model The estimates and hypothesis results are summarized in Table 8. Furthermore, figure 2 also provides the complete model with the path estimates. The model explained 62 – 74 % of the variance (R2 scores). Overall, the research model accounted for 74 % of the variance of choice behavior. Table 8: Structural Model of RM Activities on CI, CT, PR and CB Parameter (Paths) RM Activities Corporate Image H1 (+) RM Activities Consumer Trust H2 (+) Corporate Image Consumer Trust H3 (+) Corporate Image Perceived Risk H4 (–) Consumer Trust Perceived Risk H5 (–) Choice Behavior H6 (–) Perceived Risk Estimates Hypothesis Squared Multiple Correlations for Structural Equations Corporate Image Consumer Trust Perceived Risk Choice Behavior 0.793* 0.678* 0.423** - 0.447** - 0.763* - 0.872* Estimates 0.71 0.62 0.66 0.74 * p < 0.001 ** p < 0.01 Volume 6 | Number 2 | Fall 2016 121 �Mesut Bozkurt Çanakkale, Emrah Özkul Figure 2. SEM Analysis of the Research Model Corporate 0.79* Image - 0.44** 0.42** RM 0.68* Consumer Trust Perceived - 0.76* Choice Behavior - 0.87* R2 0 74 * p < 0.001 , ** p < 0.01 As seen in table 8, all proposed relationships between the constructs of the model were supported by the statistical results. The standardized estimates of the structural parameters (i.e., RM activities corporate image and consumer trust, and corporate image consumer trust) prove that consumers’ evaluations toward RM activities positively influence the view of corporate image in their minds (see table 8, r: .79 and p < 0.001). Similarly, RM activities to be exposed clearly determine consumer trust positively towards the firm that organized RM activities (r: .68 and p < 0.001). These outcomes confirm H1, in that positive evaluations of consumers towards RM activities of the firm lead to positive corporate image in their minds. Also, the hypothesis H2 was confirmed by the results, in that positive evaluations of consumers towards RM activities lead to higher levels of trust towards the firm in consumer psychology. It is possible, therefore, to state that RM activities organized by firms have a direct influence on both the appearance of the firm in the marketplace, and inner evaluation processes consumers activate. Thus, RM activities of firms have a power to create doubled effect on consumers’ decision making process as external and internal stimuli. Consumer trust is also positively influenced by corporate image, as hypothesized in H3 (r: .42 and p < 0.01). This confirmation for H3 shows that positive corporate image in the minds of consumers plays a supportive role to enhance the feeling of 122 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management trust in consumer psychology. Therefore, RM activities have both direct influences on consumer trust, and indirect influences on it through corporate image. H4 and H5 investigate the impact of corporate image and consumer trust on the factor of perceived risk. The standardized estimates of the structural parameters reveal that corporate image has a significant effect on perceived risk, but in a negative direction (r: - .44 and p < 0.01). In other words, perceived risk by consumers for a given firm is negatively influenced by corporate image in the mind of consumers. That is, the more positive corporate image consumers assume the less perceived risk they have. Also, the results confirm H5, in that a higher consumer trust toward a firm leads to a lower perceived risk by consumers (r: - .76 and p < 0.001). Thus, perceived risk by consumers is influenced significantly by the two variables in a negative direction, as hypothesized in the research model. Comparing the values of the two coefficients, it appears that consumer trust has greater influence on perceived risk by consumers than corporate image. The analyses of the hypotheses obviously point out that perceived risk by consumers is a significant determinant on their choice behavior (r: - .87, p < 0.001), in support of H6. Perceived risk seems to have a negative impact on choice behavior of consumers, just as hypothesized at the beginning of the research. Based on this test result, one can infer that higher perceived risk will result in lower choice behavior. Thus, it is possible to say that in order to increase the positive attitude toward choice of a firm’s offerings, perceived risk should be cut off through enhancing consumer trust based on RM activities. Overall, all the parameters are significant in the research model. According to Chin (1998), in order for coefficients to be considered meaningful they should be above the value 0.2. In our research model all parameters were computed between 0.42 – 0.87, indicating considerable impact. Moreover, all the structural relationships are in the hypothesized direction (table 8). These findings strongly support the positive relationships between RM activities and corporate image created in the minds of consumers and consumer trust in the psychological structure (figure 2), negative relationships between corporate image - consumer trust and perceived risk, and then a negative relationship between perceived risk and choice behavior. These results are not only consistent with the findings of previous studies (e.g. Benjamin and Podolny, 1999; Keh and Xie, 2008) but also with our expectations of associated relationships among the constructs. Volume 6 | Number 2 | Fall 2016 123 �Mesut Bozkurt Çanakkale, Emrah Özkul Conclusion This paper aims to understand the role of RM activities on consumers’ choice behaviors. Drawing on the literature for reputation management and behavioral intentions of consumers, this research study theoretically develops and empirically measures a model analyzing the effects of RM activities toward the evaluations of consumers and then choice behavior. In conclusion, choice behavior of consumers can be predicated as a dependent variable with a rate of 74 % through antecedent constructs triggered by RM activities. Empirical results clearly reveal that perceived risk by consumers plays a determinative role in the process. Therefore, we should especially focus on how to minimize perceived risk through RM activities. It is possible to say that RM activities influence consumers’ decision making processes with indirect effects by enhancing corporate image and creating trust. The empirical results of this study show that perceived risk can be decreased by increasing consumer trust and positive corporate image based on RM activities of firms. Thus, if firms organize specific RM activities (i.e. making high-volume and continuous commitments to the market for superior customer satisfaction, announcing the famous people preferring the offerings of the firm, sponsoring important events in social life) strategically and systematically, this will function in building positive judgments resulting in lesser perceived risk and finally in more positive tendencies to prefer any given firm’s offerings. We note that the findings of this study should be assessed together with some specific limitations. First, the data required were collected from actual customers of a firm within its business atmosphere rather than in an unrelated place. However, designing a research activity in Sheraton was a result of the difficulties of reaching consumers for examining the reflections of RM activities of any firm. Second, although all hypotheses are supported, the findings of this study were generated from the customers of only one firm. 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(1996), The behavioral consequences of service quality, Journal of Marketing, 60 (2), 31−46. 130 Journal of Economic and Social Studies �Romina ALKIER, University of Rijeka, CROATIA Fatih DEMIROZ, Florida International University, USA Teoman DUMAN, International Burch University, BOSNIA AND HERZEGOVINA Ugur ERGUN, Epoka University, ALBANIA Sanel HALILBEGOVIC, International Burch University, BOSNIA AND HERZEGOVINA Veli KRECI, South East European University, REPUBLIC OF MACEDONIA Muharem KARAMUJIC, University of Sarajevo, BOSNIA AND HERZEGOVINA Mehmet ORHAN, International Burch University, BOSNIA AND HERZEGOVINA Esref RASIDAGIC, International Burch University, BOSNIA AND HERZEGOVINA Iqtidar Ali SHAH, College of Applied Sciences, OMAN Dževada ŠUŠKO, University of Zenica, BOSNIA AND HERZEGOVINA Volkan ULKE, Suleyman Sah University, TURKEY � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3630 Title A name given to the resource FULL BOOK of 6.2. issue Author Author Journal of Economic and Social Studies, Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Book PeerReviewed H Social Sciences (General) Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3609 Title A name given to the resource APPLICATION OF FRACTAL GEOMETRY PRINCIPLES IN TRADITIONAL PERSIAN, OTTOMAN AND BOSNIAN SACRAL ARCHITECTURE ORNAMENTS Author Author KARGIC, Lejla Abstract A summary of the resource. The fractal geometry is a relatively new research subject in theory of architecture, but its principles are in use for centuries. Among the witness are numerous architectural masterpieces around the world and various ornaments found in different cultures. This master thesis investigates the presence of fractal geometry principles in traditional sacral architecture ornaments of Persian, Ottoman and Bosnian architecture. Methodology used in the analysis of specific ornaments plates was the box counting technique via ImageJ fractal analysis software and FracLac plugin. Collected data was then analyzed comparatively and the results discussed in terms of existence of fractal geometry principles in the analyzed ornaments and similarity and relation between the ornaments from the above mentioned three cultures. The purpose of this study is to examine the presence and level of similarity between fractal dimensions of analyzed ornaments, which represent a consequence of cultural and civilizational connections. Keywords: ornaments, fractal geometry, Persian ornaments, Ottoman ornaments, Bosnian ornaments, sacral architecture, box counting Date A point or period of time associated with an event in the lifecycle of the resource 2016 Keywords Keywords. Thesis NonPeerReviewed NA Architecture