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https://omeka.ibu.edu.ba/files/original/5110afb2a21002a198a4a6336f157e53.pdf
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Models of linking recreational tourism and agribusiness thought use of
ICT
Šemsudin Plojović
University of Novi Pazar
Serbia
Suad Bećirović
University of Novi Pazar
Serbia
Senadin Plojović
Technical faculty “Mihajlo Pupin” Zrenjanin
Serbia
Enis Ujkanovic
University of Novi Pazar
Serbia
Abstract: Paper is presenting results of project “With better cooperation towards better future” which is
supported by University of Novi Pazar and Sanjak business association with focus on segment of project
about investigating the possibility of application of information communication technologies in order to
increase the visibility of tourism resources and linking individual farmers who can make their agriculture
products, food, accommodation and other services available to tourists. This study addresses the issue of
linking the tourist offers and offers of organic food from small agriculture households. The project treats
the area of South Serbia and northern Montenegro, which is known for the beauty of mountain trails,
glacial lakes, large cave systems, fast-flowing rivers and cuisine specialties. The aim of the project is to
popularize this potential and its actualization within the tourist industry. This project involves the
registration of pedestrian trails, bicycle paths, trails of photo safaris within the google maps system as
well as within the specific mobile applications.The essence of the project is the implementation of mobile
and other applications and electronic services to improve the lives of small farm households through the
improvement of tourist offer, the development of organic production and enabling farmers to sell their
products to final customers directly.
Keywords: tourist industry, organic products, market positioning
Introduction
Paper is presenting results of project “With better cooperation towards better future” which is
supported by University of Novi Pazar and Sanjak business association.
239
�The focus of this paper is segment of the project about investigating the possibility of application
of information communication technologies in order to increase the visibility of tourism
resources and linking individual farmers and rural households who can make their agricultural
products, food, accommodation and other services available to tourists.
This study addresses the issue of linking tourist offers and offers of organic food produced by
small agricultural households.
The project treats the area of south west Serbia and northern Montenegro, which is known for the
beauty of mountain trails, glacial lakes, large cave systems, fast-flowing rivers and cuisine
specialties.
The aim of the project is to popularize this potential and its actualization within the tourist
industry.
The project also involves the registration of pedestrian trails, bicycle paths, trails of photo safaris
within the google maps system as well as within the specific mobile applications.
Scope of the research
Starting hypothesis of the research is that there is no valid possibility of linking recreational
tourism and agribusiness using ICT.
If this starting hypothesis is not confirmed that means that complementary hypothesis is valid
and that is: There is at least one possibility of linking recreational tourism and agribusiness using
ICT.
Authors have translated the idea of linking recreational tourism and agribusiness in adequate and
usable model that has been constructed based on the research done in ten municipalities in south
west Serbia and northern Montenegro. Research has been done using different research method
including observing, interviewing and analysis of the existing solutions in this area.
Objective of the work is to find applicable model of linking recreational tourism and agribusiness
that can be used as a base for developing adequate software solution.
In order to achieve this objective following research tasks had to be conducted:
- Analyse business of agricultural households in the research area, collect data on key
challenges that agricultural producers face.
- Identify potentials for development of recreational tourism, collect data on key challenges
that tourist organizations face in developing recreational tourism.
- Based on the collected data and their analysis, as well as SWOT and GAP analysis
develop model that could improve market position of small agricultural households and at
the same time improve tourist potential of the area.
In order to fulfil these research tasks authors have used data collection methods already
mentioned. In addition to this, for the analysis of the collected data, following methods have
been used: comparative method of existing solutions, SWOT analysis of agricultural producers
240
�and SWOT analysis of the tourist potentials as well as GAP analysis of the agricultural
households and tourist resources from the aspect of market potential and customer relations.
Separate chapter of this paper will cover each of the mentioned tasks.
Position of the agricultural households in the area
Authors emphasize the fact that this is not a first paper dealing with the analysis of market
position of small agricultural households in this area as well in other places around the world.
Previous research in this subject are numerus and different authors showed development of
agricultural households in the mountain areas from different aspects and tried to indicate the
solutions to development of these areas. For this purpose, we will use existing information on
position of small agricultural households in the mountain areas in official documents developed
by teams hired by European Commission, FAO as well as strategizes for rural development of
the individual municipalities. Beside these documents authors use results of the work of Nobel
Prize winner Muhamed Yunus that he presented in his book Banker of the Poor. Authors also
reference work of Swinned that dealt with the challenges of marketing of small agricultural
producers. In the part related to organization of small agricultural households authors, beside
their own research, also reference results of Ravindran S.N. as well as Toader M. and Valentina
G.R. that in separate papers covered challenges of sustainability of small rural households. In the
part related to finances authors reference work of Zender R. that researched alternative sources
of financing small agricultural households since classical sources of finance are hard to get or
expensive for them. Also, authors relay on their own earlier publications covering individual
segments of agribusiness development as well as tourism in the given area.
When development of small agricultural households is concerned following local, regional and
national stakeholders and factors are most important (Plojovic at all. 2016):
- Natural factors (land, insolation, availability of water…)
- Demografic factors (population, age, available information...)
- Infrastructure factors (road networks, communications, water supply systems, facilities
for storage and processing agricultural products...)
- Community support (financial and organizational support from the municipality, national
and international institutions, availability and willingness of support institutions...)
- Legal and economic environment (regulations regarding loans and financing,
collateral...)
On the other hand, internal most important internal factors of individual agricultural households
are (Plojovic at all. 2017.):
- Market entry
- Availability of financing sources
241
�-
Join use of land
Infrastructure conditions
Personal conditions
Position of agricultural household depends on adequate development of these factors. Task
related to this part of research is consisted of analysis which factors can be improved the most
and which of them contribute most to the market position of the agricultural household.
As far as the data on current situation of agricultural households, authors present the information
they obtained from the field research and using secondary data. Using method of generalization
in some areas, authors used the collected data on sampled households to present the current
situation agricultural households in the region.
Key challenge that individual agricultural producer face in the mountain areas of the west
Balkans is access to markets for their products. If we take export of corn for example, we can see
that it is one of the agricultural with the biggest export. However, these products are mostly not
produced by the small agricultural producers, but instead it was produced by large agricultural
corporations. One of the reasons is that large corporations, using the economy of scale, can
afford to pay larger fee to rend the government land. At the same time they also negotiate buying
the government land. Market present demands a capacity to be able to interact with the buyers
constantly and continuously and inform them on the current offers. That part small agricultural
producers can achieve best trough the joint use of resources.
Next factor is consolidating of land ownership, and that is mostly true in the mountain areas were
land owned by individual producers is very limited and physically divided in different locations
(see the attached graph).
As we can see, average size of the land owned by individual producers is very small and if we
take into account information that this land is usually divided is several locations, not linked to
each other that this situation becomes even more severe.
Data from the National Statistical Office show that available agricultural land in Serbia is 5,346,597
ha, accounting for 68.9 percent of Serbia's territory (7,759,200 ha). (Ševarlić, 2012, p. 37) The 2012
Census of Agriculture ascertained for the first time in the current public databases on land resources two
very disturbing facts:
1. Total agricultural land (3,861,477 ha) is less than half (49.8%) of the total territory of Serbia
(7,759,200 ha) and
2. even 424,054 ha or 11.0% of total agricultural land is not utilised, which makes 7.9% of the
available agricultural land. (Ševarlić, 2012, p. 248, 249).
If we add to this information that number of rural population is in constant decrease at the same
time when the land owned by individual producers is decreasing we can see a paradox caused by
242
�the fact that many people that have enharited agricultural land decided not to cultivate it. The bad
consequence of this is, as mentioned, that a large percentage of available agricultural land is not
cultivated. Aging rural population is one more indicator that shows on bad current situation in
rural areas. At an old age, rural population decrease their productivity dramatically. Also,
readiness for change and embracing new production methods also decreases with age. There is
also lack of motivation for new investment in agricultural production if there is no new
generations to continue the work. All this indicates that demographic factors have very large
influence on development of agricultural production in rural areas.
Potential for Rural Tourism
Natural factors used for tourist valorisation are consisting of following elements:
Geomorphology characteristics, climate, hydrography, plants and animal world. Initial factor for
development of tourism is geographic characteristic of the area. Complex natural tourist values
are best valorised by analysing geomorphological, climate, hydrological and biogeographical
tourist elements.
In the tourist morphological sense the researched area is consisted of following parts:
o
o
o
o
o
City valleys
Mountains
River valleys
High plains
Hilly areas.
However, in each of these parts there are many tourist potentials that are not know to a wider
audience of current and potential customers.
Pester plain and Vlahovi, as well as mountains are part of the Dinaria mountain system.
Lower areas, river valleys as well as Pobrđa also part of this system.
Geomorphology characteristics as touristic value is consisted of complex geological materials,
tectonically arranged valleys of river Lim, Uvac, Raska and Ibar as well as smaller valleys
connected to them. Geomorphologic objects have special importance for the whole touristic
valorisation.
Geomorphology of the researched area has mainly mountain characteristics were Pester high
plain is in the central part and valleys of river Ibar and Lim in the east and west borders
surrounded by mountains Haila, Prokletije, Golija, Radocela, Rogozna, Ninaja, Giljeva,
Jodovnik, Zlatar and Mojstirskodraske mountains.
243
�Although, the area is not suitable for communication infrastructure, valleys enable enough space
to build roads necessary for development of tourism in this area.
Researched area, because of its geographic position is on the transit communications between
main regional centres. Based on the number of toursits that visits and/or pass trough this area we
can conclude that the region has not used its potential as transitory position to attract more tourist
revenue.
In this cross-border region, beside City of Novi Pazar, other towns and rural settlements are not
established as tourist destinations, if we exclude several spa places and mountain Golija.
Croup of closer regions and centres cover West Serbia and Sumadija in the west with the
Pomoravlje. Bigger centres are Uzice, Cacak, Kraljevo, Kragujevac and Krusevac. Other regions
surrounding the are are Montenegro and Kosovo with centres like Kosovska Mitrovica and Pec.
In the near future, role of stronger source of tourists will have East and Central Bosnia and
Bosnian Posavina including cetres Sarajevo, Tuzla, Banja Luka, Brcko and others.
In the gorup of tourist sources centres further than 300 km are Vojvodina, East and South East
Serbia with centers including: Belgrade as the capital, Novi sad, Subotica, Zrenjanin, Pancevo,
and in the east and south Zajecar, Negotin, Bor, Nis, Leskovac and Vranje.
To all mentioned tourist sources centres more attention needs to be paid in order to promote
tourist values and potential of the researched area.
The importance of this area, when it comes to recreational tourism can be best illustrated by
project Via Dinarica (www.viadinarica.com). For the destinations that covers, the project recived
a received a “2014 Travel Awards: Best New Trail” by the Outside Online magazine
(https://www.outsideonline.com/1921701/2014-travel-awards-best-new-trail) in 2014, and “Best
of the world” destination for 2017 by the National Geographic Magazine
(https://viadinarica.com/en/blog/280-national-geographic-traveler-via-dinarica-medu-najboljimsvjetskim-destinacijama-2).
244
�Source: www.viadinarica.com , 20.04.2017.
Project Via Dinarica has an objective to map tourist potential along three routes through
mountain pass of Dinarica mountains starting from Slovenia all the way trough Albania. Three
routes are marked as green, white and blue. Green and white route pass trough area of southwest
Serbia and northern Montenegro. It is hard to list all the tourist potential in one paper, but it is
very important that they are generally recognized and to work on validating each individual
resource.
Information collected by the authors about responses from tourists that visited these places show
following:
o Road infrastructure is in very bad condition.
o Accommodation capacities are not distributed well.
o Tourist organizations are not focused on recreational tourism
o Near tourist attractions there is no safe accommodations and establishing camps.
o Mountain paths are not marked well.
o There is no adequate cooperation of tourist organizations and local communities.
o The mobile networks do not cover all the area
o Lack of cooperation between tourist organizations with an aim to create joint
tours.
These are most commong answers that authors have summarized from many answers that,
unfortunately, indicate that actualization of tourist potentials is very low as well as awareness
that these potential can be transformed in development potential of the region.
245
�Possibilities of linking recreational tourism and agribusiness
The research points to the possibility, that through the development of tourist potentials of
recreational tourism, with adequate cooperation, to improve the position of small agricultural
households.
The basic precondition for successful cooperation is a "win-win" strategy, that is to find a benefit
in the cooperation for all sides. And if there is a benefit for a wider social community then a
synergistic effect is achieved.
The current SWOT analysis of small agricultural households with focus on factors which can
influence recreational tourism is given bellow:
S
Organic production,
Natural beauties,
Clean air and water,
Special features of cuisine products
W
Poor road infrastructure,
Crushed production,
Insufficient implementation of
measures,
The problem of entering the market
O
The development of new products,
Finding market niches,
Direct contact with customers
agro-technical
T
Emigration of young people,
Dependence on the buyer,
Exclusion from strategic documents
Media neglect
In the SWOT analysis of the position of small agricultural households, many factors are noted:
Bad road infrastructure, small scale production, insufficient application of agro-technical
measures, the problem of entering the market, and so on. The essence of linking recreational
tourism with agribusiness is to minimize the impact of these shortcomings. Reducing the impact
of these shortcomings is reflected in the fact that recreational tourists do not request road
infrastructure, since the essence of recreational tourism is movement of foot, visits of natural
beauties, such customers are looking for products that are specific, special and with less use of
biochemical treatments of modern chemistry. This approach, on the other hand, enables the
leveraging of the advantages of agricultural households in the mountainous region, which are:
organic production, natural beauty, clean air and water, the specificity of food products and
many others. It also positively influences Chances, which are the development of new products,
finding of markets niche, direct contact with customers. This approach also decreases likelihood
of Threats occurring, such as emigration of youth, dependence on customers, exclusion from
strategic documents and media neglect.
The current SWOT analysis of the offer of recreational tourism with a reference to the factors
that can be influenced by linking with small agricultural households is given bellow:
246
�S
Organic production,
Natural beauties,
Clean air and water,
Special features of cuisine products
W
Accommodation capacities not well distributed.
Tourist organizations are not oriented towards
recreational tourism.
There are no safe conditions for lodging and
camping near tourist attractions.
Mountain trails are not well marked.
Adequate cooperation between the tourist
organization and the local population not establish.
O
The development of new products,
Finding market niches,
Direct contact with customers
T
Emigration of young people,
Exclusion from strategic documents,
Media neglect
If we consider the improvement of the tourist offer as an improvement in the services that the
customer buys, then the improvement of the tourist offer is also an additional benefit for the
customer.
Adequate linking with agricultural households will greatly contribute to overcoming the
shortcomings of the tourist offer. In the part of the accommodation capacities within the rural
tourism, accommodation facilities can be created at the tourist site near tourist attractions. The
goal of every agricultural household would be to get more customers and they would make an
effort to conserve nature with an adequate improvement their offer. If an agricultural household
is aiming to sell their products to tourists who are not going to use the accommodation services
but want to camp, then the agricultural household has an interest in arranging and protecting
camping sites in order to increase the sales of agricultural products. Since the rating of a tourist
destination depend on the well-marked trails, then the agricultural holding has an interest in
maintaining these markings. A software solution can facilitate exchange of information between
tourists and agricultural households. Tourist organizations can be as support to the initiative, but
with no need to be part of providing the service. As we have already talked about other factors of
SWOT analysis in this paper, it is sufficient to justify the ways of reducing the impact of the
weaknesses of the tourist offer
The proposed model of connecting recreational tourism and agribusiness
Based on the analysis of the current state of small agricultural households and the analysis of the
tourist offer, with reference to recreational tourism, the possibilities of linking have been
considered. A model of linking recreational tourism and agribusiness with the use of ICT has
been created.
To create this model following sets of activities are needed:
247
�o activities related to the information system
o activities related to tourist offer
o activities related to agricultural households
The project implies the following activities related to tourist offer:
o Work on identification of tourist resources
o Valorization of tourist resources
o Gap analysis of the current and desired state of exploitation of tourist resources
o Mapping tourist resources through integration into Google Maps or similar navigation
software
o Mapping roads to tourist attractions as well as mapping of the hiking, cycling and photo
safari trails
The model implies the following activities related to agricultural households:
o Identification of households who are ready to offer their agricultural products to tourists
o Identification of suitable places for visiting
o Mapping of touristic facilities within tourist offers
o Preparation and training of agricultural households in order to increase their capacity to
include catering services in the framework of their offer
The model implies the following activities related to the information system that would support
the linkage of tourist offer and supply of agricultural households:
o Identification and creation of tourist routes
o Presentation of agricultural households on these routes and presentation of the services
they provide
o Development of internet portal and mobile application that connects tour operators and
agricultural households, as well as individuals tourists and agricultural households
o Development of a special form of social network that would gather visitors and users of
these services
o Development of reservation, ordering and billing of products and services electronically.
The end result of these activities should be an interactive internet site that is linked to a mobile
application. Data on tourist tours, attractions and places to visit are entered by Local Tourist
Organizations. This creates awareness of the tourist offer. Using GPS values each location is
shown on Google Maps application. Also, each of the tourist routes is presented as a tracking
route on Google maps. Each route would have a full description, length, sights, hosts along the
route, time to visit and the time needed to get around.
248
�Registration of agricultural households, that is, obtaining a user account for every agricultural
household would be done in local tourist organizations. After registering and obtaining the ID
number, agricultural hosts would download a mobile app from the Google Play Store and enter
their data. Every agricultural household enter general characteristics about their offer:
o Positioning on the map
o A short film about the household
o Products that they offers
o Indicative price list
Customers - recreational tourists can use either an internet site or a mobile application for
tourists. Through the application, they can contact the tourist organization or individual
households with their requests. For each request, the household with a confirmation also sends a
pro forma invoice. After confirmation of the payment of funds to the household account the
tourist services can be provided. In order to be able to further use the site and mobile application,
both the household and the guest are obliged to evaluate each other in the system. In this way,
the status and reputation of individual households is created.
The system is to be maintained by local tourist organization, and would be funded by the fees
charged as a percentage to each financial transaction in the system. This would ensure
sustainability of the model.
The authors also recommend that the agricultural households propose camping sites and build
sanitation facilities and showers in the vicinity of those places. Some households might build
special capacities for accommodation.
Conclusion
The research carried out by the authors and the data they collected indicate that linking
recreational tourism and agribusiness can contribute to following:
- Improving market position of agricultural households
- Improving local tourist offer
- Impact on local, regional and national factors to devote special attention to small rural
households in the mountain areas.
This disproves the initial work hypothesis that there is no possibility of linking recreational
tourism and agribusiness using ICT.
It also confirms complementary hypothesis which is: There is at least one possibility of linking
recreational tourism and agribusiness using ICT.
249
�This paper presents an overview of the research conducted by the authors with the aim to point
out the unused potentials that can be used to improve the lives of small agricultural producers as
well as recreational tourists. In order for this research to achieve its goal, it is necessary to
disseminate the results of this research and take appropriate actions based on specific knowledge
acquired through the research. This can contribute to improvement of the position of agricultural
households, as well as the improvement of the tourist offer and thus contribute to better life of
the local population.
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�
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Title
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Models of linking recreational tourism and agribusiness thought use of ICT (doi: 10.14706/icesos1723)
Author
Author
PLOJOVIĆ, Šemsudin
Becirovic, Suad
Plojovic, Senadin
Ujkanovic, Enes
Abstract
A summary of the resource.
Abstract: Paper is presenting results of project “With better cooperation towards better future” which is supported by University of Novi Pazar and Sanjak business association with focus on segment of project about investigating the possibility of application of information communication technologies in order to increase the visibility of tourism resources and linking individual farmers who can make their agriculture products, food, accommodation and other services available to tourists. This study addresses the issue of linking the tourist offers and offers of organic food from small agriculture households. The project treats the area of South Serbia and northern Montenegro, which is known for the beauty of mountain trails, glacial lakes, large cave systems, fast-flowing rivers and cuisine specialties. The aim of the project is to popularize this potential and its actualization within the tourist industry. This project involves the registration of pedestrian trails, bicycle paths, trails of photo safaris within the google maps system as well as within the specific mobile applications.The essence of the project is the implementation of mobile and other applications and electronic services to improve the lives of small farm households through the improvement of tourist offer, the development of organic production and enabling farmers to sell their products to final customers directly. Keywords: tourist industry, organic products, market positioning
Date
A point or period of time associated with an event in the lifecycle of the resource
2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
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https://omeka.ibu.edu.ba/files/original/e1b0d2bfdb419dc5e3b295045c486146.pdf
308f716f64e424cec85d217c8f120ad2
PDF Text
Text
Analysis using brands in the small and medium entreprises in Romania
Carme Adina Pastiu
“1 Decembrie 1918 “University of Alba Iulia
Romania
carmenpastiu@yahoo.com
Silvia Stefania Maican
“1 Decembrie 1918 “University of Alba Iulia
Romania
sylvia_mihalache@yahoo.com
Abstract: Creating a brand is very important for a company, the more that should be considered
strategic dimensions. It involves a huge investment and long term, given the efforts that must be made in
advertising and promotion.In a global market increasingly competitive, branding is a strategic
advantage. In a young economy, the free market is emerging just 25 years ago an analysis of the use of
own brands can open up new avenues of research and strategic development.
The main objective of the paper was to the research on existing brand in Romanian ( SIBIU, ALBA,
CLUJ county) small and medium enterprises and Identifying existing policies in small and medium
enterprises in connection with own brand. A quantitative research method was used to achieve the
defined objectives. This selective survey offers the opportunity to study and identify solutions for
development of small and medium companies in the Alba, Sibiu and Cluj County and the opportunities
available.
Key wards: brand, small and medium entreprises
Introduction
Developing or creating a brand is of particular importance to an enterprise. Regardless of the
form of ownership, size, or activity of the enterprise, brand investment has proven to be an
important strategic option. It involves a very large and long-term investment, considering the
steps to be taken in advertising, promoting and making a special package.
In an increasingly competitive global market, branding is a strategic asset. That explains, at the
moment, the financial efforts made by Japanese or American firms to create and consolidate
product brands.
A corporate brand is a brand that represents a corporation - organization - and reflects its
patrimony, values, people, strategy (Aaker A David, 2006).
95
�However, portfolio brands also include non-company brands whose link to domestic brands is
actively managed; A good example is sponsorships, symbols, celebrities promoting brands, but
also countries or regions. (Brexendorf T. O., Barry Bayus, Kevin Lane Keller 2015) Brand and
innovation management need and benefit from each other, suggesting a need for a deeper
integration between the two.
A main brand is the central indicator of the offer, the point of reference. It obviously occupies
the main place (Aaker A David, 2006).
A supportive brand serves to provide the credibility and consistency of an offer, its role being to
represent an organization (Aaker A David, 2006).
Brand and innovation management have become increasingly important priorities for firms over
the last few decades. Firms rely on strong brands and product innovations to gain competitive
advantage and fuel growth (Berthon, P., Ewing, M. T. and Napoli, J. 2008).
In a market approach, the considerable difference between sellable products and services and the
rest of the objects is related to the company's conscious decision to change and / or improve the
image of their products through symbols, logos and communication strategies.
Changing the image of the product in the mind of the consumer is achieved through visible
forms of communication: trademark and registered name (symbol) and logo (visual-auditory
message). Wally Olins wondered why brands are a clear and unique manifestation of our times?
Because, he says, "brands mean clarity, safety, consistency, and status, that is, everything that
human beings need to define themselves. Brands mean identity.
Branding in the Romanian small and medium companies
Creating a brand is very important for a company, the more that should be considered strategic
dimensions. It involves a huge investment and long term, given the efforts that must be made in
advertising and promotion. In a global market increasingly competitive, branding is a strategic
advantage. In a young economy, the free market is emerging just 25 years ago an analysis of the
use of own brands can open up new avenues of research and strategic development.
Example for Romanian market:
In light industry manufacturing activity is lohn. Products are sold under famous brands from
other countries. The IT industry is very developed in Cluj County but produce for companies
around the world.
Research methodology
A quantitative research method was used to achieve the defined objectives.
96
�This selective survey offers the opportunity to study and identify solutions for development of
small and medium companies in the Alba, Sibiu and Cluj County and the opportunities
available.
The aims:
Research on existing brand in Romanian (SIBIU, ALBA, CLUJ County) small and
medium enterprises.
Identifying existing policies in small and medium enterprises in connection with own
brand
General objective of the research was established as follows
O1. Analysis of brand in small and medium enterprises
The defined specific objectives of the research are:
S1. Identifying the brand managers' attitude
S2. Measuring branding activities
The research was conducted based on a questionnaire administered with Google Docs.
The observation unit was represented by the entreprises from Transilvania included in
the survey sample.
Unit survey was represented by those who answered the questionnaire administered :
Persons who manage the companies
Owners
The survey type used is probabilistic. It was used a random sampling method, unrestricted.
Sample is formed by 175 units. 94% probability. Error +/- 6% (this is a limit to the study).
This research was conducted on the following types of companies: services, manufacture, and
trade.
O1. Analysis of brand in small and medium enterprises
Of the total surveyed enterprises, only 42% have their own brand and from these 73% they are in
the services field. In the counties analyzed, the service area is characterized by the higher
97
�adoption of one's own brand. IT companies (Cluj), light industry Alba or automotive industrial
production (Sibiu) work for EU firms under their own brand.
S1. Identifying the brand managers' attitude
The result is related to the type of business. Managers understand the importance of using their
own brand, but they are not widely used. In the service sector, management involvement is much
bigger.
S2 Measuring branding activities. Visual identity manual
Even though they have visual identity elements in small and medium businesses, there is no
branding manual developed by professionals.
98
�Many businesses have brand, logo elements, slogans, but do not have a unitary concept. Just
35% have invested in a branding campaign.
99
�Conclusions
Brands are a reflection of the corporate goal, they become important not only for customers but
also for people who work from the inside or outside as partners, employees or financiers. In a
constantly changing world where all the other things are troubled, the status of the brand as a
symbol of the company and what it does becomes the central pillar.Globalization and
outsourcing of companies, alliance formation and co-operation, flattening management
structures, limited employment, why should people, wherever they come from, and whatever
their relationship with the company?
Only reputation, only reliable because there is nothing else. And how can you represent and
design confidence more and more a spiritual and cultural binder, a binder representing their
reputation in the surrounding world. Brands are probably more important than ever for
companies in their own domestic and day-to-day business.
The role of brands in society will be the one people will give, and the importance and sphere of
influence is increasing from one year to the next.
By brand, any business can find a way out of the market and the chaos of the market and reach
the target audience. The modern consumer's perception of products and services is at the center
of the buying decision, and brands can direct this perception%.
If branding has given the trade a tremendous power and influence, it can do so in other fields
such as arts, sports, health, education and other social areas.
By analyzing the relationship between variables is seen as:
companies that have developed branding campaigns have over 15 employees
companies that have developed branding campaigns over a turnover of over 10,000EUR
brand managers believe that contribute to increased sales and higher turnover
companies where managers believe that the brand is not necessary have less than 10
employees companies in the services organized several branding campaigns
Analyzing the data from the study it can be concluded that managers know their competition but
fail to differentiate its offer towards them.
Analyzing data, we can say that managers of small and medium companies analyzed did not
give due importance the brand.
Firms in the services given more importance to the brand.
The managers identify the benefits of brand but do not develop our own brand
100
�References
Aaker, David A.Robert Jacobson (2001) The Value Relevance of Brand Attitude in HighTechnology Markets. Journal of Marketing Research: November 2001, Vol. 38, No. 4, pp.
485-493.
Aaker, D. A. (1996). Measuring brand equity across products and markets. California
Management Review, 38(3), 102–120.
Aaker, D. A. (1997). Innovation: brand it or lose it. California Management Review, 50(1),
Aaker David A. ( 2006) Strategia portofoliului de brand, Bucureşti, Ed. Brandbuilders
Berthon, P., Ewing, M. T. and Napoli, J. (2008), Brand Management in Small to Medium-Sized
Enterprises, Journal of Small Business Management, 46: 27–45. doi:10.1111/j.1540627X.2007.00229.x
Brexendorf Tim Oliver, Barry Bayus, Kevin Lane Keller(2015) Understanding the interplay
between brand and innovation management: findings and future research directions ,
Journal of the Academy of Marketing Science, 2015, Volume 43, Number 5, Page 548
Datar, S., Jordan, C. C., Kekre, S., Rajiv, S., & Srinivasan, K. (1997). Advantages of time-based
new product development in a fast-cycle industry. Journal of Marketing Research, 34(1),
36–49.
Gatignon, H., & Xuereb, J.-M. (1997). Strategic orientation of the firm and new product
performance. Journal of Marketing Research, 34(1), 77–90.
Gielens, K., & Steenkamp, J.-B. E. M. (2007). Drivers of consumer acceptance of new packaged
goods: an investigation across products and countries. International Journal of Research in
Marketing, 24(2), 97–111.
101
�
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3643
Title
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Analysis using brands in the small and medium entreprises in Romania (doi: 10.14706/icesos176)
Author
Author
Pastiu, Carmen Adina
Maican, Silvia Stefania
Abstract
A summary of the resource.
Abstract: Creating a brand is very important for a company, the more that should be considered strategic dimensions. It involves a huge investment and long term, given the efforts that must be made in advertising and promotion.In a global market increasingly competitive, branding is a strategic advantage. In a young economy, the free market is emerging just 25 years ago an analysis of the use of own brands can open up new avenues of research and strategic development. The main objective of the paper was to the research on existing brand in Romanian ( SIBIU, ALBA, CLUJ county) small and medium enterprises and Identifying existing policies in small and medium enterprises in connection with own brand. A quantitative research method was used to achieve the defined objectives. This selective survey offers the opportunity to study and identify solutions for development of small and medium companies in the Alba, Sibiu and Cluj County and the opportunities available. Key wards: brand, small and medium entreprises
Date
A point or period of time associated with an event in the lifecycle of the resource
2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
-
https://omeka.ibu.edu.ba/files/original/812c6f80d2b24fc773e36277d8966f77.pdf
cf964f20f767af436f8fcf078c350359
PDF Text
Text
Attitudes and Behaviors of Young Adults toward Music in Retail
Environments in Bosnia and Herzegovina
Azra Pohara
Faculty of Economics and Social Sciences
International Burch University
Bosna and Herzegovina
azra.pohara@gmail.com
Teoman Duman
Faculty of Economics and Social Sciences
International Burch University
Abstract: Attitudes and behaviours of young adults toward music in retail environments in Bosnia and
Herzegovina are in focus of retailers. The retailers want to attract more customers by creating an
atmosphere for a particular type of people, class, age, with desired products. Influence of music can be
seen all around the globe. Industry professionals make millions of dollars by producing and creating new
songs and rhythms in special events (Example: Shakira; World Cup 2010). Music in Bosnia and
Herzegovina is well spread, and it can be one of the best places to see how music influences human lives
and their habits. It is well-known fact that Bosnian’s devote most of the time by listening to music and use
it as a motivation or charm of happiness to forget everyday problems. For Bosnians, music is like a sweet
drink, escapade from problems and life motivation. Music is their inborn gift, and for this study, Bosnia
and Herzegovina is the right place to see how much music impacts young adults, and how retails stores
can benefit from it.
This study used previous research as a guideline to show the impact of certain music genre on
consumer’s behavior and attitude in Bosnia and Herzegovina. The focus of research was to test the
impact of music on young adult’s cognitive, emotional, and behavioral level, particularly with regard to
attitudes and perceptions, and moods and feelings in the retail environment. Research data were
collected from young adults in Sarajevo during the winter months of 2016. In total, 125 questionnaires
were collected and used in data analysis. Research results showed that music is very important in making
retail choices for young adults in Sarajevo. Also, the pace and type of music were found to be influential
on retail choices of young adults who participated in the research study.
Keywords: Music, retail choices, young adults, Sarajevo.
Introduction
The term music is considered to be derived from the word “mousa” which means angel in Old
Greek. Music has always played a vital role in people's lives. From early ages, people are trying
to express themselves using music and its influence on people to send specific messages.
148
�National anthems are often connected with the music, which sends the message and boosts
morality to the people of that nation. Music in some cases presents a cure for some psychological
diseases (depression, drug addiction or suicide thoughts). In many ways, music helps people to
express their emotions, thoughts, and ideas. Music is a lucky charm that follow humankind
through centuries.
In some cases music helps as a thought motivator or a way where people can remind themselves
about previous thoughts, actions or some previous times that are gone, missing in distant past
(Alpert and Alpert, 1990). Music is people’s way of expressing themselves, giving others and
themselves relief and letting go their suppressed feelings (Dillman-Carpentier and Potter, 2007).
Since birth mother sings her child different songs using different rhymes to make the child
comfortable and prepare him for sleep. Music in mother voice and words that are spoken bring
peace in child’s soul and sense of security. Music is one of the essential parts in people’s lives.
Even when a person is alone, he/she sings different songs as an answer to put loneliness and
nostalgia beside. Using music in retail business is a custom among entrepreneurs. Music helps
people to make easier choices and boost their moral and motivation.
Music in Bosnia and Herzegovina is well spread, and it can be one of the best places to see how
music influences human lives and their habits. It is well known fact that Bosnian’s devote most
of time by listening to music, and use it as a motivation or charm of happiness to forget every
days’ problems. For Bosnians, music is like a sweet drink, escapade from problems and life
motivation. Music is their inborn gift, and for this study, Bosnia and Herzegovina is the right
place to see how much music impacts Bosnia and Herzegovina society, and how retails stores
can benefit from it.
Research questions are:
1.
2.
3.
4.
5.
6.
Which type of music is most popular among young adults?
Can music help retail stores to hold customers longer than usual?
Does specific genre of music or music itself is connected to certain product?
Does music loudness affect retail stores income?
Does music have psychological impact on customers/young adults?
Will music change certain behavior among young adults or it just helps retail stores with
attitude?
Research methodology
In this chapter we will present the method we used to develop the survey and questions to
establish the sample size for delivering results. Also, in the chapter, we will talk about the
hypotheses: “Music has an influence on young adults’ behaviours and attitudes while shopping,
149
�Slow music relaxes young adults while purchasing some products or service, Fast music makes
young adults aggressive while purchasing some products or service” that represent the goal to be
achieved in this project. There are many goals, but mainly would be effect of music on human
behaviour, external and internal influence, arousal and valance influence and can music create a
habit in human behaviour while doing shopping, drinking coffee in coffee shop, or eating ćevapi
at some restaurant.
Sampling is a process used in statistical analysis in which a predetermined number of
observations are taken from a larger population. The sampling methodology used in this research
is judgmental sampling. Judgmental sampling “is a form of convenience sampling in which the
population elements are selected based on the researcher’s judgment” (Malhotra, 2009, p. 377).
This type of sampling methodology is a form of convenience sampling in which the population
elements are selected based on the researcher’s judgment (Malhotra, 2009, p. 377).
This sampling is used because of previous observed behaviour and attitude seen at young adults
in Bosnia and Herzegovina. The primary data of this study was collected through a survey which
was conducted among young adults in Bosnia and Herzegovina. The respondents were people of
target ages and genders in Bosnia and Herzegovina society. The third part of a survey was about
general impact of music on their likeness or unlikeness of loud-fast/slow-soft music on their
desire to purchase particular product. Also, in some of these questions, it is asked about
connection music has with some product or some Brand making, or they just love listen to music.
In this study, both three point and four point category scale were used to diagnose influence of
music on young adult’s behavior while shopping. Respondents could respond with “Yes”, “No”
and “Maybe” in three point category scale while in four point category scale “Sometimes” and
“Maybe” were added. All responses were scaled so that a higher score on a specific subject so
that is indicates a stronger agreement with the attitude/behavior whereas a lower score indicated
a weaker agreement, or disagreement with that specific thesis.
Descriptive statistics, correlation and regression are used to analyse the data. The surveys were
distributed by mail and social networks (Facebook, Viber, Skype, Pikii, Instagram etc.). The
sample size was the 125 responses. The results were analysed through SPSS software, 18th
version.
The secondary data was collected through research on the internet in order to attain the relevant
articles about influence of music on customer’s attitude and behavior. Also, we should mention
that there is no relevant data in Balkan areas regarding this issue. So, this study can be a
significant step towards new research in these parts of the world. Especially, because people
from Balkan areas are specific, and they do not share similar interest as it is in Western countries.
It shall be clearly shown during study observation and results. Zotero Standalone was used
150
�during process of articles collection.
Data Analysis:
Table 1: Survey Demographic Questions (N: 125) and findings
Frequency
15-24
80
25-35
34
Ages
36-45
10
46 plus
1
Total
125
Bosniak
113
Serb
4
Ethnicity
Croat
4
Other
4
Total
125
Male
86
Gender
Female
39
Total
125
Source: Author’s own research
Valid
percent
64,0
27,2
8,0
.8
100,0
90,4
3,2
3,2
3,2
100,0
68,6
31,2
100,0
Percent
64,0
27,2
8,0
.8
100,0
90,4
3,2
3,2
3,2
100,0
68,6
31,2
100,0
Cumulative
percent
64,0
91,2
99,2
100,0
90,4
93,6
96,8
100,0
Demographic
68,8
100,0
The first section of the questionnaire consisted of demographics.
As we can see in this table majority of participants are ages from 15-24 (64). Next are from 25 to
35 (27.2%), then 36-45 (8%) and only one candidate that is 46 or older (0.8%). In a further study,
we shall eliminate two categories 36-45 and 46 or older, because of our thesis.
As we can see, major participation in this figure were people of age 15 to 24 with 64.9%, from
age 25 to 35 was 27.2%, from 36 to 45 was 8%, and 46 and more only one participant, or 0,8%
It is shown that Bosniaks have taken a lot more participation in this survey (around 90.4%),
rather than other two ethnicities and others (3.2% each)
As we can see from this chart and figure, male’s response to the survey was higher (68.8%) than
female ones. (31.2%)
Table 2: Survey Questions (N: 125) and findings
Type of music
Pop
Folk
Classic
Country
Rock
Other
Total
Male
22
23
8
1
16
16
86
Female
19
8
1
1
3
7
39
Source: Author’s own research
151
Total
41
31
9
2
19
23
125
Behavioural
�The second section was about general questions about music, their habits, will and customers
purchasing in Bosnia and Herzegovina. In this part, five choices of the genre are given to the
participants, and they are: pop, folk, classic, country (Bosnian country music) and Rock music,
while other is put for those who cannot decide.
Results are that Pop music is slightly more popular than Folk music with 41 participants for the
Pop genre (22 males and 19 females), and 31 for Folk music genre (23males and 8 females).
Next to them is Rock music with 19 supporters (16 males and 3 females), Classical music genre
with 8 males and 1 female supporter, Country music with 1 male supporter and 23 participants
who put other genres (16 males and 7 females). As a result in this section, we can see that type
of genre does not differentiate between genders and if retailers want to improve business with
music, Pop and Folk music are genres which people are listening to a lot.
Table 3: Q9
Music motivate me
in shopping
Yes
No
Sometimes
Frequency
74
12
39
Percent
59,2
9,6
31,2
Attitude
Source: Survey
In this question, music as a motivator, 125 participants gave these results: 59.2% said that music
motivated them, 9.6% said that music didn't motivate them, while 31.2% were neutral. Young
adults and young people were ones who mostly said yes to this question.
Table 4: Q10
I feel
comfortable
when I visit a
shop that plays
music
0
Yes
No
Total
Frequency
Percent
3
110
12
125
2,4
88,0
9,6
100,0
Valid
percent
2,4
88,0
9,6
100,0
Cumulative
Percent
2,4
90,4
100,0
Attitude
Source: Survey
There were 125 participants, where 110 said yes for feeling comfortable when music was being
played in the shop, only 12 said no. Three of them were neutral. They haven’t given the answer
to this question. The majority of young adults answered yes regarding arousal feeling, or
comfortable/positive feeling while visiting a shop that plays music. Music creates a good
atmosphere, attracts them and brings enjoyment in a retail store.
152
�Table 5: Q11
Frequency
2
14
77
32
125
Fast music
makes me
aggressive
while
shopping?
0
Yes
No
Sometime
Total
Source: Survey
Percent
1,6
11,2
11,2
25,6
100,0
Valid percent
1,6
11,2
11,2
25,6
100,0
Attitude
According to the survey results majority of young adult and young people consider fast music
does not make them aggressive (not comfortable, annoying) while shopping. So if retailers want
to attract new customers, especially younger population, fast music is the ideal solution.
Table 6: Q12
Slow music makes
me relaxed while
shopping?
Yes
No
Sometimes
Total
Frequency
41
41
43
125
Percent
32,8
32,8
34,4
100,0
Attitude
Source: Survey
In this part, participants have shown that slow/soft music is not the thing that mostly relaxes
them. Participants with the answer no are 41 or 32.8%. as it is the case with participants who said
yes 41 or 32.8%. The answer “sometimes”, it gives neutral ground where people are sometimes
satisfied with slow, soft music in the back. Again, we should mention age variation of the
participants. The majority of them are young people, from the age 15 to 35. These respondents
are likely to be potential customers to coffee shops, restaurants, discos and etc., where loud
music is played and where music impacts “their minds”
Table 7: Q14
Specific genre of
music associates
me with some
product I want to
buy/purchase?
Frequency
Percent
Yes
14
11,2
No
93
74,4
Sometimes
18
14,4
Total
125
100,0
Source: Survey
153
Attitude
�According to the survey mentioned above, young adults and young people cannot, or are not able
to connect some music with a genre. Around 74.4% said “No”, 14.4% said “Sometimes”, while
11.2% said “Yes”. On the other hand, those who said yes gave several examples like: Coca Cola,
Pepsi, Ornel, Violeta etc., where music in their commercials are used, and in some areas, phrases
they are using in ads are recognisable, especially Coca Cola’s Christmas commercial, or Pepsi’s
commercials related to soccer etc.
Table 8: Q15
Frequency
Music helps
me to decide
which
product
I
will
purchase.
Percent
Valid percent
Cumulative
percent
2,4
0
3
2,4
2,4
Yes
16
12,8
12,8
15,2
No
37
29,6
29,6
44,8
Sometimes
69
55,2
55,2
100,0
Total
125
100,0
100,0
Attitude
In this survey question, young adults and young people answered negative (55.2%) regarding
music help in purchasing some particular product, “sometimes” is answered 29.6%, “yes” is
answered 12.8% and three participants were without answers. Over 57, 6% (answers NO and no
answer) music doesn’t help for deciding which product will purchase.
Hypothesis Testing
In this hypothesis testing, we are examining two opposing hypotheses: the null hypothesis and
the alternative hypothesis. The null hypothesis is the statement being tested. Usually, the null
hypothesis is a statement of "no effect" or "no difference". The alternative hypothesis is the
statement you want to be able to conclude is true.
Based on this sample data, the test determines whether to reject the null hypothesis. We will use
a p-value, to make the determination. If the p-value is less than or equal to the level of
significance, which is our cut-off point, then we are rejecting the null hypothesis and accepting
the one we have investigated.
154
�Table 1: H1: Music has an influence on customer’s behaviours and attitudes while shopping
Descriptive Statistics
N
Q9
1
Minimum
Maximum
Mean
Std. Deviation
125
0.00
2.00
1.07
0.340
Q181
125
1.00
3.00
1.74
0,720
Q211
125
1.00
4.00
2.32
1.126
Valid N (listwise)
125
Table 1 shows that the general average is 1.71. According to results of descriptive statistics we
can confirm that H1 is true which means that music has an influence on customer’s behaviours
and attitudes while shopping.
Also, the majority of participants feel comfortable when they enter a shop where music is played,
and also music loudness and choice of music has an effect on their staying in that store.
Table 2: H2: Slow music relaxes customers while purchasing some products or service.
Descriptive Statistics
N
Minimum
Maximum
Mean
Std. Deviation
Q111
125
1.00
3.00
2.02
,823
Q151
125
1.00
3.00
1.76
,807
Valid N (listwise)
125
Table 2 shows that slow music doesn’t relax customers while purchasing some products with
average mean of 1.89
Also, it shows that people generally does not like slow music in Bosnia and Herzegovina. Also it
shows that music must be there to entertain and attract customers. Also, we should age, which
was mentioned earlier, where majority of participants are from age 15 to 25.
155
�Table 3: H3: Fast music makes customers aggressive while purchasing some products or service.
Table 3 shows with mean of 2,105 that fast music does not make customers aggressive while
purchasing some products or service. So this hypothesis is not true.
Also, we should mention that fast music is not an obstacle for some retailers to try to attract
customers of the younger population with loud and fast music in Bosnia and Herzegovina.
Atmosphere of the store depends only if it is for younger or older people, rich or middle class.
Target audience is the most important thing.
Findings
Results in this study show that in Bosnia and Herzegovina young adults and young people
mostly have low awareness of music influence on their lives, and their daily routines. Especially
while shopping. Music is all around, no matter loud or slow. That significant level influences
their choices while purchasing products. Fast music on the other hand, as results show is not big
bug and undesirable for retailers, because younger population like such music, and they want to
be in that store, coffee shop or a market where music is played loud and clear. In other words,
retailers should choose carefully their target customers, and choose music accordingly to their
age, status, and product they want to sell.
This study can contribute to the following studies in the same or similar fields, being a base to
build larger and detailed research in this particular field in Bosnia and Herzegovina. Retailers
while reading this text can make steps for creating adequate, suitable and comfortable
atmosphere for target audience. Music has an impact on customer behaviour, still retailers need
to make orders first and target their class. In West, classical music is for rich stature; here it is not
the case. You can play it, but hardly anyone will come, if you have not developed your brand and
name on the market.
At the end, this research confirms previous research regarding influence of music on human
behaviour, especially arousal dimension (feelings, emotions), where music is mover and creator
of good, healthy atmosphere, where retailers and customers can profit from each other.
Money is time, and time is money but the music is everywhere around us
156
�Conclusion
This research is the master theases that was conducted among people of younger age, and older
with not so qualified knowledge of English, was asked questions about music’s influence on
consumer’s behavior. It is well known that music is all around, and its power of persuasion can
be used in retail stores.
This study represents young people - high school students (125 respondents) are showing music
influence on their daily life, their behavior and which type of music they prefer. They are also
showing difference that loud and slow music is played, and that positive atmosphere, or music of
their choice will make them comfortable and they will stay longer in the shop and according with
that, they would spend more. However, music taste is not guarantee for success. Every retail
owner must decide his target audience, class of people and then decide which type, what kind of
music will be played, and which customers will they attract.
Some previous results done have shown that for retailers it is important to consider building
adequate and proper atmospherics and music environment, especially because young adult’s
perception can be altered, and similarity between music and the brand/retail product can have a
reflect on consumers’ in-store reaction, staying time and brand perception.
References
Alpert, J. I., & Alpert, M. I. (1990). Music Influences on Mood and Purchase Intentions.
Psychology and Marketing, 7(2), 109-33.
Malhotra, N. K. (2009). Marketing Research: An Applied Orientation. Prentice Hall.
Dillman-Carpentier, F., & Potter, R. F. (2007). Effects of Music on Physiological Arousal:
Explorations into Tempo and Genre. Media Psychology, 10(3), 339-363.
157
�
Dublin Core
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Extent
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3642
Title
A name given to the resource
Attitudes and Behaviors of Young Adults toward Music in Retail Environments in Bosnia and Herzegovina (doi: 10.14706/icesos175)
Author
Author
Pohara, Azra
DUMAN, Teoman
Abstract
A summary of the resource.
Abstract: Attitudes and behaviours of young adults toward music in retail environments in Bosnia and Herzegovina are in focus of retailers. The retailers want to attract more customers by creating an atmosphere for a particular type of people, class, age, with desired products. Influence of music can be seen all around the globe. Industry professionals make millions of dollars by producing and creating new songs and rhythms in special events (Example: Shakira; World Cup 2010). Music in Bosnia and Herzegovina is well spread, and it can be one of the best places to see how music influences human lives and their habits. It is well-known fact that Bosnian’s devote most of the time by listening to music and use it as a motivation or charm of happiness to forget everyday problems. For Bosnians, music is like a sweet drink, escapade from problems and life motivation. Music is their inborn gift, and for this study, Bosnia and Herzegovina is the right place to see how much music impacts young adults, and how retails stores can benefit from it. This study used previous research as a guideline to show the impact of certain music genre on consumer’s behavior and attitude in Bosnia and Herzegovina. The focus of research was to test the impact of music on young adult’s cognitive, emotional, and behavioral level, particularly with regard to attitudes and perceptions, and moods and feelings in the retail environment. Research data were collected from young adults in Sarajevo during the winter months of 2016. In total, 125 questionnaires were collected and used in data analysis. Research results showed that music is very important in making retail choices for young adults in Sarajevo. Also, the pace and type of music were found to be influential on retail choices of young adults who participated in the research study. Keywords: Music, retail choices, young adults, Sarajevo.
Date
A point or period of time associated with an event in the lifecycle of the resource
2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
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The significance of non-monetary incentives and its relationship with
employee motivation: A case of civil service employees in Bosnia and
Herzegovina
Emir Srna
International Burch University
Bosnia and Herzegovina
emirsrna@yahoo.com
M. Sait Dinc
International Burch University
Bosnia and Herzegovina
m.sait.dinc@ibu.edu.ba
Abstract: The purpose of this paper is to examine the perceived importance of non-monetary
incentives as well as the degree of their current utilization within the civil service sector in
Bosnia and Herzegovina. One of the aims of the study is to explore if non-monetary incentives
have prospective to increase employee’s motivation in comparison to monetary rewards. Such
finding could play a beneficial role in understanding the fact that an individual’s behaviour and
motivation can be greatly influenced by alternative and cost-friendly non-financial motivating
factors. The study is conducted on a sample of 129 civil servants of all categories at the state
level. The relationships between the variables were evaluated by descriptive statistics,
correlations and non-parametric independent samples test. The study findings demonstrate that
the non-monetary incentives are not sufficiently utilized in the civil service sector. Furthermore,
according to the findings, non-monetary incentives represent a very strong motivating factor and
could be widely and actively used in order to secure increased motivation of the civil servants in
Bosnia and Herzegovina.
Keywords: Non-monetary incentives, Motivation, Civil service, monetary incentives.
1 Introduction
The human capital is the brain of any process organized in the form of an institution, corporation
or organization, private or public one. In this regard, the organization success depends on its
workforce. Unfolding this process to the level of employees, it can be said that one of the
greatest factors for the employee success is motivation. Therefore, due attention must be given to
this factor. Organizations, in order to achieve success and reach their strategic goals, must have
motivated employees, the ones who work with enthusiasm, energy and dedication. On the other
158
�hand, the organizational management must do everything in order to establish and bring into
force healthy and motivated employees.
The first assumption that comes to mind when word “incentive“ is mentioned is usually some
form of monetary reward for employees. However, it can be noted that incentive in fact is the
thing that encourages or motivates someone to perform a certain action. Besides well-known
monetary incentives, there are other stimuli that boost our performance and in the end, support
the accomplishments of the goals. Therefore, the importance of such stimuli or incentives should
not be neglected or undermined by company managers or employees who should take proactive
role in seeking the establishment of the incentive system. The reason behind the introduction and
use of such incentives can be manifold: commitment enhancement, productivity increase,
psychological satisfaction of employees leading to job satisfaction, higher work enthusiasm and
many others.
Although companies in developed countries have been aware of the benefits of use of nonmonetary incentives, it can be easily said that the culture of use of non-monetary incentives in
developing countries is at a low level. Bosnia and Herzegovina (BiH) is one of those developing
countries. After brutal war, BiH started recovering its economy and is now working to join the
European Union. But managers in this country are still not fully aware of the potential that such
incentives may have on employee’s job satisfaction and motivation to drive them to better
performance. Since there is a very scarce literature as well as research conducted on this issue in
Bosnia and Herzegovina (Dinc & Plakalovic, 2016), it is deemed appropriate to instigate a study
in this regard and further research the current use as well as possible effects of the increased use
of non-monetary incentives. It is also well known in our society that the possibility of use of
monetary rewards in public institutions is stipulated by different laws in Bosnia and Herzegovina
and the fact is that these rules and regulations greatly limit the use of monetary rewards,
especially having in mind the financial crisis in the last decade.
This fact multiplies the importance of other, alternative means of employee motivation and that
is actually why this study focuses primarily on the non-monetary incentives. In the wake of
limitations on the use of monetary incentives in public service in Bosnia and Herzegovina, this
study tries to identify the value of non-monetary incentives and their link with the motivation
and performance of employees (See Figure 1). This is especially important having in mind that
little or no evidence exists regarding the effects of non-monetary incentives on motivation in
Bosnia and Herzegovina and its civil service.
159
�Figure 1 Proposed Research model
Job-related
NMI
Tangible
NMI
Social NMI
Employee
motivation
2 Literature review
Motivation represents anything that ignites our physical and mental capacities to move towards a
certain accomplishments or objectives. Max A. Eggert (1999), who has worked on the complex
subject of motivation, stated “Motivation is like a jellyfish. Everyone knows what it is but it is
difficult to describe or define”. In essence, various authors have different views on the concept of
motivation. However, all these offered definitions share few common points: all are tackling the
“factors or events that energize, channel, and sustain human behaviour over time “(Steers,
Mowday, & Shapiro, 2004).
The starting point in the motivational process are the needs, followed by the process of sending
signals, thus triggering our behaviour in the direction of reaching and meeting the objectives that
we believe will satisfy our needs.
If motivation is induced internally, originated from an individual, such type of motivation is
called intrinsic motivation. Many of the authors consider this type of motivation to be the most
important. According to Deci and Ryan (2000), the intrinsic motivation develops out of the
psychological needs, such as a need for competency, autonomy and self-determination.
On the opposite, the extrinsic motivation is when employees perform the activities to realize a
certain outcome with showing no personal interest in the specified activity. The only interest of
the employee in this context is related to tangible incentives he may earn by repeating some
specific action or process. For example, the only motivation for employee to stay another three
hours overtime is to get a full day off, or to receive some other kind of monetary or other reward.
Job satisfaction is not equal to motivation but it is rather linked to it. One of the most commonly
used definition of job satisfaction is given by Locke (1976) who defines it as “a pleasurable or
positive emotional state resulting from the appraisal of one's job or job experiences “. Employee
160
�satisfaction is very important in order for employees to remain happy and to perform to the
maximum of their capabilities. There are several important factors that may impact satisfaction:
work itself, benefits, promotions, peers and colleagues (Locke, 1976). According to Lut (2012),
both motivation and satisfaction relate to job performance and they can influence it either
positively or negatively.
The companies should approach each individual employee in order to establish the type of their
dominant needs and act accordingly – giving the proper value to non-monetary incentives
(Alderfer, 1972).
In support to non-monetary incentives importance and value, McClelland (1975) differentiated
three types of needs in the organizations: need for power, need for affiliation and need for
achievement.
2.1 Non-monetary incentives versus monetary incentives
While monetary incentive is a money based reward, non-monetary, as its name implies, is a
reward that is not directly associated with the financial means. It is not to say that non-monetary
incentives have no monetary value, on the contrary.
Many researches argue that the use of non-monetary incentives, especially in jobs with cognitive
requirements, have a longer lasting effect on employee motivation. McKinsey global survey of
1047 executives, managers and employees from different sectors established that three nonfinancial incentives are even more effective motivators than the three top-rated monetary
incentives (Dewhurst, Guthridge and Mohr, 2009). The top three non-monetary incentives
identified by the report were: praise and commendation, attention by managers and new tasks
opportunity.
A performance study found that even a task requiring very limited cognitive efforts, a larger
monetary reward led to a poorer performance (Ariely, 2008). This study was replicated several
times and the results were consistent throughout. The people offered medium monetary bonuses
performed equal to those offered low bonuses and interestingly enough, the people offered the
highest bonuses performed worse than other two groups.
In conclusion, it seems that the high monetary rewards may cause additional costs for institutions
but may also have a demotivating or discouraging effect on employees.
161
�2.1.1 Social non-monetary incentives
Social non-monetary incentives are related to relationship between the superior and the employee
in the work environment. These incentives are important since they have crucial impact on
satisfying the needs such as relatedness and growth which represents the top two types of needs
(Alderfer, 1972). One of the most powerful incentives within this category is recognition or
praise. Providing recognition to the employees for certain performance has very strong
motivational effect. In addition to that, it results in no additional cost to the managers of the
institution.
2.1.2 Job-related non-monetary incentives
Job-related NMI are closely connected, stem from the job itself and these intrinsically motivate
employees. The employees exercise more effort in order to perform at their job because the
achievement itself provides them with pleasure and motivates them further.
McClelland (1975) in his achievement and acquired need theory argues that the need for
achievement represents the need for reaching challenging goals. The best rewards for such
employees certainly are not connected with any kind of monetary rewards, since such employees
are exclusively driven by the sense of pleasure after accomplishments. Some of the most
important job-related non-monetary incentives are: promotion, goal setting, job empowerment,
job enrichment, job enlargement, job rotation, participation in decision-making processes and
opportunities for further growth.
2.1.3 Tangible non-monetary incentives
Tangible non-monetary incentives are goods and services given by managers in order to reward
and motivate employees. These incentives are considered non-cash in nature, but should be
regarded as extrinsic motivators since they are provided by a source other than individual in
question (Jeffrey & Shaffer, 2007). Furthermore, there are four psychological phenomena
associated with these type of incentives: justifiability, social reinforcement, separability and
evaluability. The value of the incentive is directly proportionate to the difficulty the employee
would face to justify the purchase of the specific goods with his own money. Social
reinforcement is directly related to the visibility – the effects of such incentive do not come from
the incentive itself but rather from other people’s respect and their knowledge of employee’s
good performance. Evaluability is referred to the fact that employee who received the reward
evaluates the award differently. The employees tend to value positive aspects of rewards rather
than negative ones that are associated with any specific reward.
Meacham and Wiesen (1969) have offered classification on non-monetary incentives in two
categories, social and pre mack. The first category included informal recognition, formal
162
�acknowledgement and friendly greetings, while the other category included job rotation,
extended breaks and job with more responsibility.
These categories were redesigned in order to establish final three categories of non-monetary
incentives: social, tangible non-monetary incentives and job related non-monetary incentives
(Yavuz, 2004).
3
Hypotheses
Recent studies have demonstrated that the non-financial recognition is the most effective of
rewards (Silverman, 2004). The latest research and empirical evidence indicate that intrinsic
motivation decreases while extrinsic work motivation seems to decrease with age (de Lange, Bal,
Van der Heijden, de Jong, & Schaufeli, 2011). Several other researches confirmed these findings,
including Jurkiewicz and Brown (1998) who conducted a study amongst public service
employees in the U.S. According to the Warr proposal (1997) the older employees have reduced
need for high job demands, job variety and feedback. Finally, it is argued that there is significant
difference between the superiors and subordinates average ranking of incentives contributing to
their willingness to produce more effort in their jobs (Yavuz, 2004).
The following hypotheses are posited in this study:
Hypothesis 1: Monetary and non-monetary incentives are equally important motivating factor
both for senior civil servants and for civil servants.
Hypothesis 2: The effect of job-related, social and tangible incentives on motivation decreases
with the years of age.
Hypothesis 3: There is no statistically significant difference in the effect of job factors on
motivation based on gender.
Hypothesis 4: There is no statistically significant difference in the effect of job-related, social
and tangible incentives on motivation based on position or rank.
4 Research method
4.1 Sample and data collection
In accordance with the information provided by the Civil Service Agency of Bosnia and
Herzegovina, the total number of state institutions employing civil servants amounts to 69. A
total of 3700 civil servants are employed in these institutions. The following tables offer further
disaggregation of the employed civil servants by gender and their rank:
163
�Figure 2. Actual ratio of civil servants by gender and rank
Gender
Position
7%
Civil
servant
Female
47%
53%
Male
Senior
civil
servant
93%
A questionnaire using the web tool was distributed to civil service institutions while certain
number of questionnaires were given in a hard copy. A total of 129 employees reverted with the
fully completed questionnaire. A summary of sample characteristics is presented in Table 1. The
majority of the respondents were female (57.4%) while 62.8% of the respondents were between
31 and 40 years old. The majority of respondents (87.6 %) were Civil servants while the rest
belong to senior civil servant category.
Table 1. Sample Characteristics
Variable
Demographics
Gender
Female
74
57.4
Male
55
42.6
21-30 years
3
2.3
31-40 years
81
62.8
41-50 years
31
24
51-60 years
14
10.9
under 12 months
2
1.6
1-5 years
14
10.9
6-10 years
70
54.3
11-15 years
43
33.3
under 5 years
6
4.7
5-10 years
29
22.5
11-15 years
43
33.3
over 16 years
51
39.5
Senior civil servant
16
12.4
Civil servant
113
87.6
Age
Tenure in the institution
Total job tenure
Rank
Number
164
Valid Percent (%)
�4.2 Instruments and measures
A three-page questionnaire was used to collect the data. The first set of items is designed to
assess the current level of utilization of non-monetary incentives within the respondent’s
institutions. The following set of items is related to the most important job factors that contribute
to the motivation from the perspective of the respondents. Another set of items the employees
were asked to indicate the degree of importance of specific incentives belonging to one of the
three non-monetary incentive categories. Finally, the last part included demographic questions
such as age, gender, rank, job tenure with the current institution and the total job tenure.
The survey was initially prepared in the English language, but before forwarding it to the study
population, it was translated into Bosnian language. In order to assess the validity of the study,
the pilot study of the survey was performed on 25 civil service employees at the High Judicial
and Prosecutorial Council of BiH.
In order to measure the job-related, social and tangible incentives, the scale developed by
Morgeson & Humphrey (2006) and Yavuz (2004) was used which was additionally modified.
The questionnaire consisted of 39 items. Current utilization of the non-monetary incentives is
evaluated using 20 items. The respondents were asked to rate the current status of utilization of
job-related, social and tangible incentives, broken down into twenty specific incentives
belonging to one of these three categories. These items were measured using a 5-point Likert
scale (5=strongly agree; 1= strongly disagree).
Most important factors affecting motivation are measured using 13 items. These items were
measured also using 5- point Likert scale.
In order to evaluate employee incentive preference, 1 item with 14 incentives was listed and
evaluated using 5- point Likert scale (5=very important; 1=not important).
4.3 Data analysis
The data was analysed using the SPSS (version 23) software as well as STATA (release 14).
Reliability of the scales was assessed by Cronbach’s alpha. Sample characteristics of respondents
were summed up running a descriptive statistic. Independent sample t-test was used to
understand whether there is difference in motivation by monetary and non-monetary incentives
between two groups of rank: senior civil servants and civil servants. Polychoric correlations were
used to show the correlation between three non-monetary incentives and age. In order to
determine difference in distribution/effect of job factors across two gender categories,
nonparametric independent samples Mann-Whitney U test was used. Finally, nonparametric
independent samples Mann-Whitney U test was used to show the difference in the effect of each
165
�of the non-monetary incentive category - job-related, social and tangible on motivation based on
position or rank of the civil servants.
5. Results
5.1 Initial results
As it was demonstrated in Table 2, the Cronbach’s Alpha for the first part of questionnaire
targeting the current overall use of non-monetary incentives was 0.895 while the Cronbach’s
Alpha for non-monetary incentives was 0.880.
Table 2. Reliability Coefficients
Cronbach’s Alpha
Current incentive utilization (20 items)
Non-monetary incentives (14 items)
0.895
0.880
5.2 The results of the employees’ perception of the current use of non-monetary incentives in
institutions
Descriptive statistics – frequencies were used to summarize and present the level of satisfaction
of employees with the usage of non-monetary incentives in their respective institutions. The
participant employees consider that the current use of these incentives is at unsatisfactory level.
47.3% employees strongly or moderately disagree with the statement that the use of nonmonetary incentives is at satisfactory level. 36.4% of employees have a neutral opinion while
only 16.3% are satisfied with the level of utilization of non-monetary incentives currently.
5.3. Hypotheses testing
In the testing of the first hypothesis, in line with the mean results, both groups, senior civil
servants and civil servants ranked non-monetary incentives as the most important motivating
factor. Independent samples t-test was used for each of the incentive and for grouping variable senior civil servants and civil servants in order to test if there is statistically significant difference
between mean scores between these two categories of staff. For the non-monetary incentives, the
t-test had a p-value of 0.175 (equal variances assumed). For the monetary incentives, the t-test
had a p-value of 0.242 (equal variance assumed). As a result, the hypotheses 1 is supported with
the conclusion that there is no difference in the importance of monetary and non-monetary
incentives based on rank of civil servants.
166
�Table 3. Mean scores of the two incentives based on rank
Monetary incentives
Mean
Non-monetary incentives
Mean
Senior civil
servants
Civil
servants
2.93
3.28
3.87
3.48
p value
0.242
0.175
The second hypothesis stated that the effect of job-related, social and tangible incentives on
motivation decreases with the years of age. For this purpose, the polychoric correlation tests in
STATA package were carried out with the aim to estimate the degree of correlation between
categorical ordinal variables. They have been used in line with the justified assumption that in
fact the ordinal variables are basically truncated versions of their underlying continuous
variables. Table 5 shows that polychoric correlation between the tangible incentives and age is
negative, and as indicated by goodness of fit tests statistically significant, which means that with
the age progression the effects of tangible incentives on motivation decreases. Furthermore,
polychoric correlation between social incentives and age is positive, and statistically significant
as indicated by goodness of fit tests, which means that with the age increase, the effects of social
incentives on motivation increase accordingly. Polychoric correlation between job-related
incentives and age is not statistically significant.
Table 4. Correlation between incentives and age
Rho.
Tangible incentives
Social incentives
Job-related incentives
Goodness of fits test
Pearson G2
Likelihood ratio X2
23.430325
16.76458
44.361491
32.26361
10.821232
7.8695617
-.04558337
.2409996
.09423693
The third hypothesis indicated that there is no significant difference in distribution/effect of job
factors across two gender categories. Nonparametric Independent samples Mann-Whitney U test
was carried out since this test analyses the equality of the distribution in both of subsamples. The
results are listed in the Table 6. According to the results, there is no statistically significant
difference in the ability of tangible, social, monetary factors and good interpersonal relationships
to increase motivation across male and female employees. Furthermore, the results indicated
there is significant difference in the influence of wage on motivation (Mann-Whitney U=1401;
p<0.05) between male and female employees. The effect of wages on motivation is higher with
female population (mean rank=73.57) when compared to male population (mean rank=53.473).
There is also a significant difference in the influence of job-related factor on motivation between
male and female employees (Man-Whitney U=1798; p <0.05). Likewise, the influence of this
factor on motivation is higher with female population (mean rank=70.43) compared to male
167
�population (mean rank=57.69). Finally, the results indicated that there is also significant
difference in the influence of job security on motivation based on gender (Man-Whitney=1091.5;
p<0.05). The effect is higher with female population (mean rank=77.75) when compared to male
population (mean rank=47.85).
Table 5. Difference in the effect of job factors on motivation across gender
Mean rank
N
Tangible incentives
Female
74
61.63
Male
55
69.54
Satisfactory wage
Female
74
73.57
Male
55
53.47
p value
0,219
0.001
0,441
Social incentives
Female
74
67.09
Male
55
62.19
Job-related incentives
Female
74
70.43
Male
55
57.69
0,040
0,509
Monetary incentives
Female
74
63.27
Male
55
67.33
0.000
Job security
Female
74
77.75
Male
55
47.85
0,196
Good interpersonal relationship
Female
74
68.20
Male
55
60.69
The Hypothesis 4, stated that there is no statistically significant difference in the effects of each
of the non-monetary incentive categories - job-related, social and tangible on motivation based
on position or rank of the civil servants. Nonparametric Independent samples Mann-Whitney U
test was carried out and the results are listed in the Table 7. According to the results, there is no
statistically significant difference in the effect of social, tangible and job-related incentives on
motivation between senior civil servants and civil servants. This finding supports the Hypothesis
4. The mean rank from the table below indicates which group of employees is more motivated by
each of these three categories of non-monetary incentives.
168
�Table 6. Impact of job-related, social and tangible incentives on motivation based on rank of the civil servants
Mean rank
N
Job-related incentives
Senior civil servant
16
58.88
Civil servant
113
65.87
Social incentives
Senior civil servant
16
58.63
Civil servant
113
65.90
p value
0.453
0.445
0.799
Tangible incentives
Senior civil servant
16
67.16
Civil servant
113
64.69
6. Conclusions and Limitations
As mentioned earlier in the text, the human capital is the most important value of any institution
or company. All institutions need motivated employees in order to successfully operate and
perform their activities. In our case of civil service employees, it is evident that civil servants
have fixed salaries and monetary compensations, with little or no room for any sort of monetary
incentives to be granted to employees.
It transpires from the research and its results, that the respondents’ first and primary focus is to
satisfy their physiological requirements. Hence the satisfactory wage was rated as the most
important of seven factors motivating good performance. The next most crucial factor is job
security followed by the good interpersonal relationships with colleagues. Job-related aspects of
work that are closely connected to and stem from the job itself and intrinsically motivate
employees are also very important. In this case, the least important incentives that motivate the
employees are tangible – materialistic incentives and monetary incentives.
After conducting extensive employee survey in Czech Republic, Vaskova (2006) concluded that
financial compensation in the form of basic-pay is the most important factor, followed by
positive relations and social incentives.
It is meaningful to conclude that civil servants in Bosnia and Herzegovina, almost completely
adhere to the Maslow hierarchy of needs, ranking and giving priority to the most basic needs and
then moving up the pyramid with other above identified needs consequently. This finding is
completely in line with the Pink (2009) theory of what motivates employees. The theory states
that in cognitive professions, upon receiving proper and satisfactory wages, employees are no
longer motivated by money and monetary incentives.
169
�Another set of questions in the questionnaire showed the wage as the factor of importance with
the aim to show and present the distribution of the perceived importance only between the
monetary and non-monetary incentives as well as to show whether these two categories are
equally important when compared to each other. The majority of employees (72.1%) stated that
non-monetary incentives can elevate the interest of employee in the job even in cases when
monetary incentives cannot be utilized. Moreover, when compared separately with monetary
incentives, non-monetary incentives are valued slightly more than monetary incentives which
indeed confirms they represent a significant motivating factor, allowing for an argument that
civil service employees are not completely satisfied with the wage levels, therefore the issue of
money is still important for them.
Still, job security, good relationships and job recognition and appreciation continue to be the
most important motivating factors. Furthermore, approximately half of the respondents are not
satisfied with the current utilization of the non-monetary incentives in their institutions with only
16% of employees who are in fact satisfied with its use.
The results of the research imply that there is a strong and unequivocal relationship between nonmonetary incentives and motivation and civil service sector management should work
relentlessly in order to increase the use of non-monetary incentives especially having in mind the
ease and economy of their use.
The research also found that the ability of tangible incentives to motivate us to perform better
decreases with the age while the ability of social incentives to motivate increases with the age.
According to the results, the following factors equally motivate male and female employees:
tangible, social, monetary factors and good interpersonal relationships. The results furthermore
show that female employees are more motivated by wages when compared to their male
counterparts. Moreover, job-related sources of satisfaction represent a more important motivating
factor for female employees. Finally, the results indicated that female employees value more jobsecurity aspects when compared to their male colleagues. Therefore, it can be concluded that
distribution of all kind of incentives should be tailored to match the needs or choices of different
gender categories.
Finally, even though this research has helped us better understand motivating factors of specific
group of employees, it has few limitations. The results were obtained from a limited number of
employees and a survey of a larger sample size could possibly give different findings. Another
limitation could perhaps be the scarcity of literature. Additional research should aim to review
the actual legal aspects and possibilities of use of monetary and non-monetary incentives in the
civil service in BiH. Additionally, the future research should examine the direct relationship
between the performance and extrinsic and intrinsic motivating factors and therefore give a
proper tool to managers to use and apply different types of incentives.
170
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Vaskova, R. (2006). Gender differences in performance motivation. Prague: Research Institute of Labour
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�
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The significance of non-monetary incentives and its relationship with employee motivation: A case of civil service employees in Bosnia and Herzegovina (doi: 10.14706/icesos179)
Author
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Srna, Emir
DINÇ, Muhammet Sait
Abstract
A summary of the resource.
Abstract: The purpose of this paper is to examine the perceived importance of non-monetary incentives as well as the degree of their current utilization within the civil service sector in Bosnia and Herzegovina. One of the aims of the study is to explore if non-monetary incentives have prospective to increase employee’s motivation in comparison to monetary rewards. Such finding could play a beneficial role in understanding the fact that an individual’s behaviour and motivation can be greatly influenced by alternative and cost-friendly non-financial motivating factors. The study is conducted on a sample of 129 civil servants of all categories at the state level. The relationships between the variables were evaluated by descriptive statistics, correlations and non-parametric independent samples test. The study findings demonstrate that the non-monetary incentives are not sufficiently utilized in the civil service sector. Furthermore, according to the findings, non-monetary incentives represent a very strong motivating factor and could be widely and actively used in order to secure increased motivation of the civil servants in Bosnia and Herzegovina. Keywords: Non-monetary incentives, Motivation, Civil service, monetary incentives.
Date
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2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
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https://omeka.ibu.edu.ba/files/original/8cf5d80135245bc1609e69a9ebc321be.pdf
a45cf823c918e60adacc309a2c49b4f8
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Text
International Relations and Policy Development of the Republic of Macedonia
Aneta Stojanovska-Stefanova
University Goce Delcev-Stip, Republic of Macedonia
aneta.stojanovska@ugd.edu.mk
Abstract: In order to recapture the essence and justification of this paper, the source of this theoretical
review we found it in the definition of statehood. After the end of the thirty years of civil war in Europe and
the signing of the peace treaty of Westphalia in 1648, the creation and development of the country began to
the form that we know today.
In terms of increasing interdependence between the countries, the question of their mutual cooperation is
essential. For the states equally important segment with internally arranged relations is the manner on
which they concern and regulate the international relations.
State boundaries are endpoints to where sovereignty lies within a country. The authorities within it regulate
the relations inside and the nature of its international positions. The highest authority, which does not
recognize any other form of higher power, is sovereignty. Considering that the law, especially the
international, is an active matter open to interpretation, although the basic features of a country are clear,
yet there are two types of states divided to a de jure- existing under law and de facto-existing in reality,
based on the matter whether and which of the characteristics of statehood they own.
Republic of Macedonia, has raised the issue of the international relations high. Confirmation of the said is
the chapter VI of the Constitution, which is dedicated to this issue. Except the Constitution, the area of the
international relations is stipulated by the Law on Foreign Affairs and the Law of signing, ratification and
execution of the international contracts. The Law on Foreign Affairs of the Republic of Macedonia, precisely
defines the concepts of "foreign affairs" and "foreign policy".
Keywords: state, recognition, politics, government, rule, sovereignty, international relations, international
development
Introduction
In any democratic country it is equally important to regulate and develop the internal and
international relations. Macedonia is a parliamentary democracy which has a clear model of the
triple division of power. The Foreign policy is a domain, constitutionally reserved for the head of
the state, the Assembly and the Government. In practice, Mirchev D. (2006) stated that the head of
the state performs a little more powers than it is usual in the parliamentary systems, while the
government performs the essential functions in the foreign policy, while the Government performs
the basic functions of the foreign policy, leaving the Assembly in a rather weaker position.
It is suggested that the political, legal, economic and cultural traffic between the subjects of the
international law is going through their authorized representatives and through their bodies
(Frchkoski Lj. et al., (1995).
7
�The Republic of Macedonia has dedicated the Chapter VI of the Constitution to the regulation of
this matter. The international relations are subject to the regulation of the constitutional regulation
because the internal law depends on the international law.
The best proof of this are those constitutes that contain provisions for the transfer of part of the
national sovereignty over the international institutions or stipulating consent for accordance of the
internal legal order with the generally accepted rules of the international law. The dependence of the
internal law of the international law is in function of the actions of the independent states in the
field of protection and promotion of the world peace (Shkarikj S., Siljanovska-Davkova G., (2007).
The main sources of the international relations are the mandatory norms of the international law (ius
cogens) and the legal principles recognized by civilized nations.
With the mandatory norms of the international public law and legal principles recognized by the
civilized nations, the international relations of the states become legal relations or values that are
developed with the help of the law. In such a context, (Shkarikj S., Siljanovska-Davkova G., (2007)
the right appears as a factor of civilized development of the international relations.
Tukidit, (1981), stated that the rules of the international public law are often violated, especially this
phenomenon is noticeable in time of war when "the strong do what they have power to do, and the
weak do what they must accept.
The constitution of the Republic of Macedonia from 1991 regulates the international relations with
the two types of provisions. First, the international relations are evaluated from the perspective of
the generally accepted norms of the international law as a fundamental value of the constitutional
order of the Republic of Macedonia and second, with several provisions, contained in a separate
section of the normative text of the Constitution.
By accepting the generally accepted norms of the international law as a fundamental value, the
Republic of Macedonia is committed to respect the sources of the international law: the
international customary law; practice of international courts; doctrine or opinion of respectable
experts in the field of the international law and ratified international agreements. In the section
dedicated to the international relations are regulated several groups of issues: the relation of the
ratified agreements against the internal legal order of the Republic of Macedonia; entities
responsible for the concluding of the international agreements; association and dissociation of the
Republic of Macedonia from alliances or communities with other countries and deciding on
association and dissociation of the Republic of Macedonia from membership in international
organizations.
The international agreements ratified in accordance with the Constitution are part of the internal
legal order in the Republic of Macedonia and they cannot be changed by law. With this solution,
Shkarikj S., Siljanovska-Davkova G., (2007), argued that the ratified international agreements;
association and dissociation of the Republic of Macedonia from alliances or communities with other
states and decides on association and dissociation of the Republic of Macedonia from membership
in the international organizations.
8
�About the terms “policy” and “foreign policy”
In the political theory, there is no unanimity about the definition of the term policy.
The policy can be generally defined as achievement of certain ideas essential to a community.
Above all they are ideas essential to a community. Above all they are the ideas essential for the
common good, justice and the general usefulness. As on an individual plan the man tends to
improve more its moral qualities, in that way on the plan of the life in a community, it tends to
justice and the common good, i.e. to improvement of its community, argued in Encyclopedia of the
political culture (1993).
By definition, the foreign policy should be part of a significant portion of the policies that any
country or sovereign political entity implements. We name that policy as a foreign policy, but other
people call it - international politics, world politics, global politics, international relations, and
comparative politics, argued Mirchev (2006). Among several approaches, even more-concepts in
the study of the foreign policy, the geopolitics as already mentioned is certainly one of those
inevitable. It has a long history and has produced a wealth of academic resources and conceptual
criticism. Some authors associate the origin with the analysis of Aristotle for spatial factors that
affect the political forms of the ancient Greek cities. Indeed, numerous social thinkers since ancient
times until today, which think about politics, had and still have on their tables geographical maps
despite their notebooks and pencils.
Berridge Geoff R., (2004), stated that until the 17th century the responsibility of the diplomacy in
the European countries routinely had been granted on various bureaucracies ("on state authorities")
on a geographical basis. Some of those functions have been responsible for some homework
(Hamilton and Langhorne, 1995: 72-73). Machiavelli writes almost exclusively about the
mechanics of the government, for funds to help of some countries that can become strong, for
policies with which countries can become strong, for policies with which they can expand their
power, and for mistakes that lead to their rotten and coup. The political and military measures are
practically the only object of his interest, and almost completely separate them from religious,
moral or social considerations, except as means to achieve political goals. Maleski D., (2000),
stated that the aim of politics is to preserve and increase the political power, and the measure with
which it appreciates it is the success in achieving this goal.
I have already said that any governor should have a good foundation, because if not, he will
certainly fail, argued Machiavelli Niccolo, (2009). The international relations are organized around
the legal fiction that the states have exclusive jurisdiction over its territory, its people and resources
and events that occur on it. The practice, as might be expected, is well behind the idea, as is usually
the case with the political principles. However, the basic norms, rules and practices of the
contemporary international relations are based on the sovereignty of the state and the formal
equality of (sovereign) states. It is suggested that he non-intervention is a duty that correlates with
the right of sovereignty. Other states are obliged not to interfere in the international actions of a
sovereign state Donnelly J., (2004).
9
�Hans Morgenthau a representative of the Rationalists in the international policy writes that the
international policy and politics in general is a power struggle. Of course if you start from the idea
that physical survival is of primary importance for every individual, you will come to the
conclusion that the power is of primary importance for the states as subjects of the international
law, because the national security is of primary importance. Through the prism of the power of the
state to promote its national interest which latter it trays to accomplish within the world politics.
In the book "God's country", St. Augustin asserts that "the human history is a sinusoidal wave of
good and bad events, i.e. from devastating wars, trying to provide a short-term peace, whose utterly
meaning is not understandable to the humans, but it is certain by God, (Miler D. 2002).
On the other hand, the representatives of the internationalist theory in the international policy
advocate for relations between states governed by the norms and behaviours with which had
previously willingly agreed, and which would be applicable in war and in peace.
The message of Emmanuel Kant that" the state of peace must be established", and that it can be
realized through a "free federation" of states is close to the idea of collective security and
international organization, characteristic for the institutionalists of our time, Maleski D., (2000).
The principle of settlement of the international disputes by peaceful means obliges the states and
those who are members of the United Nations and those who are not, all international disputes to be
resolved through peaceful means and thus not to be jeopardize the international peace and security
Simikj M. (1988).
During the debate on the Declaration of non-use of force in 1987, only the United States of America
and Australia explicitly intercede for anticipating self-defence; the other countries were in position
to keep their positions by simply omitting any provision for self-defence, except the general
formula that "The States have the natural right of individual or collective self-defence in case of an
armed attack, as it is provided in the UN Charter”, argued Grej 2009.
The Swiss lawyer Emmerich de Vatel one of the first intellectual forerunners of the modern
internationalism in the book "The Law of the Nations" says "justice is the foundation of every
society and it is very important to find a suitable application in the relations between the nations
than in the relations between individuals, showed by Williams, Goldstein and Schfritz, (1994).
According to the theoretician Schmit Carl, (1979), the essence of the political action is in the
distinguishing of friend-enemy. That kind of differentiation according to Schmidt gives political
sense of the human activities and motives. The totality of the policy contained in that each area of
the human activities (religion, economy, moral, etc.) is subject to such a distinction, i.e. the
separation of friends and enemies. Each religious, moral, economic, ethnic or some other
contradiction turns into political opposite, when it becomes strong enough to group people of
friends and enemies.
Mircev (2006) stated that the world politics as a starting point to has the reality of the international
community with the established relationships, institutions and the active role of many partners in
the determination of the guidelines of this policy, through the instruments of the foreign policy,
negotiations, joint ventures and influence.
10
�The analysis of the activities of the holders of the foreign policy of the Republic of Macedonia
suggests to the conclusion that in the process of the realization of its own foreign political priorities,
our country in the past years from acquiring independence until today is governed by the
fundamental tenets of the constitution and the laws and principles of the action of the states in the
United Nations.
The objectives of the foreign policy of the Republic of Macedonia in recent years have been carried
out by the holders of the functions that were elected in free, fair and democratic elections, but they
have in a significant extant remained unchanged. However, regarding the characteristics of
individuals who perform these functions through the years, the differences are perceptible.
This certainly is affected by the development of the parliamentary democracy in the independent
states that had been created after the fall of communism in the Eastern Europe, the approach to the
execution of the function from the stand of ideological and political profile and of course, the global
changes that take place in the international community.
The Republic of Macedonia in the implementation of foreign policy is guided by the respect of the
Charter of the United Nations, resolving of the conflicts, disputes and outstanding issues between
the countries peacefully, adherence to the international and legal principle for permanence of the
borders, respect of the policy for improvement of the corpus of Human rights and freedoms, support
of the disarmament efforts and ban for all weapons for mass destruction, support to the promotion
of the international economic relations in terms of economic globalization.
The institute of the international recognition is one of the instruments to develop cooperation with
other countries on the basis of common interests. This institute "Recognition of States" is known in
the League of Nations and the United Nations. The legal effects of the recognition of the states is
limited if they are only reduced to declaratory act, but they can be both constitutive and more
serious, if followed by the establishment of other legal and economic pressures, such as insulation
or boycott.
It is important to emphasize that the recognition of the states has no direct connection with the
establishment of the diplomatic relations, namely it can happen a state to be recognized, but with it
cannot be established diplomatic relations, while the reverse is not possible, because the
establishment of the diplomatic relations implies recognition of that state.
Frchkoski et all., (1995) showed that legally seen the act of "recognition" of the state is legal and
formal act and has no direct impact on the essential independence and the existence of the state,
namely, on the effectiveness of its existence, but often the omission of the recognition of one or
more countries could create serious difficulties for the new state and its normal involvement in the
international relations.
11
�Competences in the field of the foreign policy in accordance with the Constitution of the
Republic of Macedonia from 1991
According to the Constitution of the Republic of Macedonia and according to the character whether
the conduct of the foreign policy is one of the major responsibilities, authorities for performing
foreign affairs can be divided into two groups: primary and secondary.
Primary are those authorities that are focused on the major responsibilities in the execution of the
foreign policy.
Figure 1: Primary Authorities for performing foreign affairs
The President of the
Republic of
Macedonia
The Government of
the Republic of
Macedonia
The Assembly of the
Republic of Macedonia
The Ministry of
Foreign Affairs
The Minister for
Foreign Affairs
Source: Authors’ own work
Secondary however are, those authorities and institutions which in certain cases and circumstances
may participate in the conduct of the foreign policy.
Figure 2: Secondary authorities for performing foreign affairs
The units of the
local selfgovernment
Authorities of the
state government
Source: Authors’ own work
12
�Stojanovska A. (2013) stated that in the area of the foreign policy, the President of the Republic of
Macedonia has the following responsibilities:
- Appoints and dismisses by decree the ambassadors and MP’s of the Republic of Macedonia
abroad
- Accepts the credentials and revocable letters of the foreign diplomatic representatives.
The Assembly of the Republic of Macedonia has the following responsibilities:
- Ratifies international agreements
- Makes decisions on association and dissociation from a union or community with other states.
While the Government of the Republic of Macedonia has the following responsibilities:
- Decides on recognition of states and governments
- Establishes diplomatic and consular relations with other countries
- Adopts decisions on opening of diplomatic and consular offices abroad
- Proposes appointment of ambassadors and MP’s of the Republic of Macedonia abroad and
appoints heads of consular offices.
Conventionally, the authorities responsible for foreign affairs can be divided into two groups:
1) State authorities whose headquarters is in the state (or internal authorities), and
2) Authorities whose headquarters is in the territory of other countries (foreign authorities).
The first group includes the: Head of State (monarch or president of Republic), the President of the
Government (Prime Minister), and the Minister for Foreign Affairs.
The second group includes the diplomatic and consular representatives and the permanent
representatives of the countries in the international organizations.
Figure 3: Authorities responsible for foreign affairs
Authorities for
Foreign Affairs
STATE
AUTHORITIES
FOREIGN
AUTHORITIES
President of the
Republic
Diplomatic
Authorities
Prime Minister
Consular
Representatives
Minister of Foreign
Affairs
Permanent
Representatives of the
counties
Source: Authors’ own work
13
�Law on Foreign Affairs from 2006
The Official Gazette of the Republic of Macedonia (2006), in the Law on Foreign Affairs reported
precisely and defined the responsibilities of authorities for performing of the foreign work. With the
same prescriptive in details normatively is determined the whole process of creation, establishment
and implementation of the foreign policy, as well as the relations between the authorities
conducting foreign affairs and the state government authorities, in the exercising of the foreign
affairs, which reduces the possibility of overlapping or dysfunction. Characteristic of the Law on
Foreign Affairs of the Republic of Macedonia is that besides the traditional approach towards
creating such a norm, it emphasizes the role of the Assembly of the Republic of Macedonia.
Also, by the law it is determined the jurisdiction, structure and operation of the Ministry of Foreign
Affairs, which before the adoption of the law was governed by one member of its competence and
the Law on the organization and operation of the state administration authorities, i.e. some members
in the same law for competences of the management authorities. The great part of the matter for the
essential elements of the organization and work of the Ministry before the adoption of the law were
moved by-laws.
Furthermore, the law defines the diplomatic and consular representations that Republic of
Macedonia can open abroad, and the procedure and conditions of appointment of the head of the
diplomatic - consular office. More precisely is determined the procedure for revocation of the heads
of the missions, and their duties, responsibilities and relations with the authorities for performing of
the foreign works. Determined are specific duties and diplomatic - consular officers working in
diplomatic - consular offices.
The Law on Foreign Affairs in Article 2, precisely determines and delimits the terms foreign affairs
and foreign policy.
The term "foreign affairs" refers to actions performed by the competent authorities of the state
government and the state government management in the exercise and protection of the rights and
interests of the Republic of Macedonia in the international relations with the countries, international
authorities, organizations and communities.
While the term "foreign policy" refers to political objectives and activities of the Republic of
Macedonian relations with countries and with international authorities, organizations and
communities that protects the interests of the Republic of Macedonia in the international relations
and protect the interests of its citizens and the legal entities registered in it.
The President of the Republic of Macedonia and foreign policy
In determining the term head of state or President meet in more terms.
Frchkovski et all. (1995), stated that the head of the state is the authority that represents the state in
the country and abroad, namely, it represents the state unity and independence, whereupon it is not
14
�important whether it is a monarch or head of state in the country in the republican establishment, as
regardless of whether it is for independent or collective body.
It is suggested the term head of state means the authority that has significant powers, but is not a
holder of the supreme, legally unlimited power, which belongs to the principle of the Constituent
and/or legislative body (Bajaldziev 1999).
Another group of theorists define the head of state, as an individual or corporate body who
embodies the political community and the long duration of the state and performs ceremonial
functions related with the representing of the country at home and abroad, argued Maklin (2002).
Gligorov K. (2001), stated that procedure for the election of the President of the Republic of
Macedonia is regulated in the Article 80 and 81 of the Constitution of the Republic of Macedonia,
and the Electoral Code.
The President of the Republic of Macedonia is elected by direct and immediate elections, by secret
ballot, for a period of five years. For President of the Republic a same person can be elected mostly
twice. The secondary election is not necessarily to proceed to the previous term, as is the case (e.g.,
NB) with the Constitution of Slovenia from 1991, argued Shkaric (2004).
The powers of the President of the Republic of Macedonia in the execution of the foreign affairs are
defined in Article 5 of the Law on Foreign Affairs, according to which the President of the Republic
of Macedonia: represents the country in the international relations, in accordance with the
international law and its responsibilities; participates in the creation of the foreign policy in
cooperation with the Government, through the establishment of general guidelines on the foreign
policy, including issues of the international relations with implications on security and defence of
the country; monitors the implementation of the foreign policy and the results and any
disagreements with other bodies for foreign affairs performing, can inform the Assembly; gives
suggestions and participates in the pose of views on some foreign-policy matters within its
competence, including the security and defence aspects arising from the international relations;
appoints and dismisses by decree ambassadors and representatives of the Republic of Macedonia
abroad, in procedure determined by this Law; gives consent to the issuance of agreement of the
head of foreign diplomatic office and accepts the credentials and revoked letters of the foreign
diplomatic representatives, in the procedure established by this law.
International Recognition of States
The Institute “recognizing the states” is common and very important legal institution within the
International Law initially because of the political circumstances which are determining it. Thomas
D. Grant (1999) stated that up until now there is not precise rule according to which one state
becomes internationally recognized and has the right of statehood and right to participate as single
with the other states from different international organizations. There are some attempts made in
order to establish certain universal criteria for acquiring the aforementioned statuses and
possibilities but none of them has succeeded to be affirmed as a relevant and respected by all the
15
�states in the world. There are two theories that study this matter. The first one is the Declarative
Theory of statehood, originating from the conference held in Montevideo, which is best put in the
sentence “the political existence in one state is independent from its recognition by other states”.
According to this theory for acquiring statehood, and thus the involvement of the state in
international law as its subject, the following four element must be included: territory, population,
sovereign power and ability to manage the previous three. Going back to the beginning of this text it
can be seen that the largest part of the definition is taken from the Treaty of Westphalia, which
means that it is not a novelty in international law, but an existing criteria which although recognized
it is not fully accepted and implemented free from discrimination.
International law includes Constitutive Theory of statehood. It examines the state recognition by
other states as instrumental in acquiring statehood and status of a subject of international law to a
new country. The aspects that are covering this theory, which although not formally accepted
worldwide but can be considered as realistic are beautifully depicted in the thought of Openheim
(L.Oppenheim) that says "International law says that a state does not exist until it is recognized by
other, but at the same time it does not exist until it acquires recognition."
It can be concluded that the acquisition of independence and international legal subjectivity of a
state is formally dependent on its international recognition, which is based on the will of other
countries.
Sublimating the declarative positions of states as for this subject and reality of the foregoing, it can
be concluded that the recognition of a state as a sovereign entity and relevant international law is
open to interpretation, there are no rules in this field and any existing state recognized a new state
on its own discretion and in accordance with its national interests, while not obligatory adhering to
certain customary norms in international behavior.
The precedent during the international recognition of states: The Case of Republic of Macedonia
The case of the procedure for admission of the Republic of Macedonia in the United Nations is a
unique precedent in the history of that organization. This precedent is important not only because of
the particular circumstances associated with the Republic of Macedonia, but also as a possible
negative example in the procedure, namely depending on the legal assessments of political cobodies and organs of the United Nations. The legal and political arguments did not dominate during
the procedure for admission through the bodies of the UN Security Council, UN General Assembly,
in the case of Macedonia, but emerged as a theme and an obstacle to the political contestation of
one Member State (Greece), which is calling upon the provisions of the Charter for maintaining
peace and avoid creating crisis zones around the world. Greece has represented its political attitudes
towards Macedonia as a potential threat to peace (the very existence of Macedonia on its northern
borders) which actually represented the elevation of a bilateral dispute level "procedural obstacle"
to the United Nations.
Returning the problem of recognition of Republic of Macedonia in collective manner with
admission and with the membership in the United Nations, it was supplemented by another
16
�precedent, namely with a solution that Macedonia is admitted for membership in the United Nations
under temporary "label" as "ex Yugoslav Republic of Macedonia ", and temporarily not
demonstrating its official flag in front of the building and in the bodies of the United Nations. This
decision should be in force until a final solution to the "dispute" through the procedure for its
solution set by the Secretary General of the United Nations.
Stojanovska A. (2013) stated that the precedent is certainly unpleasant for the organization of the
United Nations as it refers to the inadmissible and unfounded raise of a bilateral problem to legal
and procedural circumstance – that is an obstacle to the realization of fundamental rights of a
country to become an international entity with full capacity.
The case of Republic of Macedonia for the acceptance in UN there were two additional terms out of
the legal sphere and referring to the direct violation of the Charter such as: to accept a descriptive
name FYROM and to negotiate with Greece for its constitutional name.
The International Court of Justice as one of the principal organs of the United Nations in its history
of existence has once discussed the issue of setting additional conditions for membership in the
United Nations. In its advisory opinion of 28th May 1948 on the conditions for admission of a State
in the membership of the United Nations, the court has taken a legal standpoint (contained in the
ICJ Reports, 1948) that the requirements specified in Article 4, paragraph 1 of the Charter for
membership " represent an exhausting enumeration , and are not given as simply management
principles as an or example. " This refers to the fact that if an applicant fulfils four conditions of
article 4, paragraph 1 of the Charter, such State should be admitted to membership in the United
Nations. According to the aforementioned judicial opinion from 1948 one state cannot be
conditioned prior to admission with previous recognition of legal elements, which is that such
conditionality is setting additional conditions which are contrary to Article 4 paragraph 1 of the UN
Charter and the setting up of such conditions the court explicitly declares that the UN Charter is
violated.
Conclusions
The characteristics of a modern state, the way it is recognized nowadays are shaped by Peace Treaty
of Westphalia, according to which the state is constituted by three main features, territory,
population and sovereignty, i.e. absolute power for governing over them. In order to have a better
understanding of the process of recognition and various specifics that have occurred throughout
history the attention must be paid to the terms sovereignty and statehood first, and thereto
sovereignty refers to how a state acquires it as well, and later on the manners through which
countries recognize the existence of another state.
There are two types of states divided into: de jure- existing according the law and de facto- existing
in reality, based on the fact which of the statehood features they own1.
1
Ibid,page.268.
17
�De jure states are those that are fulfilling some of the conditions of statehood but not all three. As
an example can be considered a country that has a territory and a population but not full sovereignty
over them. Also a good example could be a government in exile as well, or government under
which the international community has the right to exercise sovereignty over a territory and a
population but because of the occupation can not exercise that right, as is the case with the
governments of the Baltic states in the period during World War II while their territories were under
Nazi occupation, they are recognized by the countries of the alliance as their legitimate rulers, role
which de facto was taken over after the release. Another specific example of recognized sovereignty
in the absence of territory in some way but not completely de jure state but rather as de jure
government is the sovereignty dealing with "the organization" known as the Sovereign Military
Order of Malta.
This "organization" had an authority in Malta in the past, but after the expulsion of its members
from the island they continue to exist in Rome. Interestingly, the Order is recognized as sovereign
by many countries, a situation that reflects the fact that it has established diplomatic relations with
103 states and 6 entities that are subject to international law, including the European Union whereby
they have responded with reciprocity that have established diplomatic relations with the Order.
Apart from diplomatic relations the Sovereign Military Order of Malta has few buildings in the city
of Rome that the Italian Government has granted their extraterritorial status which means that
within the territory / facilities the law is implemented by the Order, and not by Italy, and this is a
status reserved exclusively for the embassies of countries. In addition the United Nations does not
register the Order of Malta as "a non-member" but as an entity that has received a valid invitation to
participate as an observer in the organization. Apart from these typical state features "the
organization" has its own army, which is part of the Italian Army, however flying the flag and
under the command of the Order; it also has coins that have rather collectors than a symbolic role
and uses postal stamps, although not everywhere yet accepted by a number of European and world
countries.
De facto state is considered the one that is an entity owning a territory and a population and
sovereignty, but which lacks a legitimate recognition by a number of other states. This usually
happens if a de facto state has been part of another country previously that opposes and denies its
sovereignty. Here lies the tangent point between the characteristics of statehood and the need for
their recognition as legitimate by other, already existing countries. There are many examples of de
facto countries in the world including Taiwan, which the People's Republic of China considers it as
part of its territory even though there is no real sovereignty over it, as is the case of Somaliland and
Somalia, to some extent Kosovo and Serbia etc.
The case of the procedure for admission of the Republic of Macedonia in the United Nations is a
unique precedent in the history of that organization. This precedent is important not only because of
the particular circumstances associated with the Republic of Macedonia, but also as a possible
negative example in the procedure, namely depending on the legal assessments of political cobodies and organs of the United Nations. The legal and political arguments did not dominate during
the procedure for admission through the bodies of the UN Security Council, UN General Assembly,
in the case of Macedonia, but emerged as a theme and an obstacle to the political contestation of
18
�one Member State (Greece), which is calling upon the provisions of the Charter for maintaining
peace and avoid creating crisis zones around the world. Greece has represented its political attitudes
towards Macedonia as a potential threat to peace (the very existence of Macedonia on its northern
borders) which actually represented the elevation of a bilateral dispute level "procedural obstacle"
to the United Nations.
Returning the problem of recognition of Republic of Macedonia in collective manner with
admission and with the membership in the United Nations, it was supplemented by another
precedent, namely with a solution that Macedonia is admitted for membership in the United Nations
under temporary "label" as "ex Yugoslav Republic of Macedonia ", and temporarily not
demonstrating its official flag in front of the building and in the bodies of the United Nations. This
decision should be in force until a final solution to the "dispute" through the procedure for its
solution set by the Secretary General of the United Nations.
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p.385
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http://www.icj-cij.org/docket/files/3/1821.pdf, accessed October 2015.
Schmit Carl, (1979), Der Begriff des Politischen, Duncker und Humbolt, Berlin, p.37
19
�Shkarikj S., Siljanovska-Davkova G., (2007), Constitutional law, Faculty of Law “Iustinianus
Primus”-Skopje, p.601-602, 607, 609
Shkarikj Svetomir, (2004), Comparative and Macedonian constitutional law, Matica Makedonska
Skopje, p.619
Simikj Miroslav, (1988), Modern International relations and war, Vojnoizdavachki i novinski
centar, p.80
Stojanovska A., Master Thesis, “Constitutional-legal and Political Aspects of the Foreign Policy,
with Special Retrospection to Republic of Macedonia”, pg. 58.
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The Crisis of the Sovereign State and the "Privatization" of Defense and Foreign Affairs, Heritage
Foundation, (www.heritage.org), accessed April 2012.
The Government of the Republic of Macedonia, (www.vlada.mk), accessed May 2017
The Ministy of Foreign Affairs of The Republic of Macedonia, (www.mfa.gov.mk), accessed May
2017
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The United Nations, (www.un.org), accessed February 2017
Tukidit, (1981), History, Adomir, Moscow, p.344-350
Williams, Goldstein and Schfritz, (1994), Classic Readings of International Relations, Wadsworth
Publishing Company, Belmond California, p.7
20
�
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3635
Title
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International Relations and Policy Development of the Republic of Macedonia (doi: 10.14706/ICESOS174)
Author
Author
Stojanovska-Stefanova, Aneta
Abstract
A summary of the resource.
Abstract: In order to recapture the essence and justification of this paper, the source of this theoretical review we found it in the definition of statehood. After the end of the thirty years of civil war in Europe and the signing of the peace treaty of Westphalia in 1648, the creation and development of the country began to the form that we know today. In terms of increasing interdependence between the countries, the question of their mutual cooperation is essential. For the states equally important segment with internally arranged relations is the manner on which they concern and regulate the international relations. State boundaries are endpoints to where sovereignty lies within a country. The authorities within it regulate the relations inside and the nature of its international positions. The highest authority, which does not recognize any other form of higher power, is sovereignty. Considering that the law, especially the international, is an active matter open to interpretation, although the basic features of a country are clear, yet there are two types of states divided to a de jure- existing under law and de facto-existing in reality, based on the matter whether and which of the characteristics of statehood they own. Republic of Macedonia, has raised the issue of the international relations high. Confirmation of the said is the chapter VI of the Constitution, which is dedicated to this issue. Except the Constitution, the area of the international relations is stipulated by the Law on Foreign Affairs and the Law of signing, ratification and execution of the international contracts. The Law on Foreign Affairs of the Republic of Macedonia, precisely defines the concepts of "foreign affairs" and "foreign policy". Keywords: state, recognition, politics, government, rule, sovereignty, international relations, international development
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2017
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PeerReviewed
H Social Sciences (General)
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https://omeka.ibu.edu.ba/files/original/5076eba6f2ac37796b64aea063d9bc03.pdf
b7edad928309cec7e2dbd9911c0ed4b4
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ERP SYSTEM IN DIGITAL ENVIRONMENT: A COMPREHENSIVE BIBLIOGRAPHY REVIEW OF THE LITERATURE IN PERIOD 2010-2015
Author
Author
Suljic, Mirza
Osmanbegovic, Edin
Abstract
A summary of the resource.
Abstract: ERP (Enterprise Resource Planning) system represents the largest, most complex and most demanding business information system that organizations implement, which is a big step ahead of individual (i.e. department) applications and information systems that have prevailed in the past. Today, when the world is dramatically dependent on the data, the need and use of the ERP systems are steadily increasing. In the last ten years, the most important technology associated with the redesign and standardization of the business processes in terms of best practices were ERP systems. In this paper, a comprehensive review of published articles in various journals on the topic of ERP systems in the period 2010-2015 has been elaborated. All processed papers have been indexed in Web of Science (WoS) database. Since the academic knowledge about ERP systems reached a certain level of maturity, this paper presents the bibliographic review of works in the ERP systems field and other related areas. Analysis of the literature indicates that more and more various research disciplines contribute to the development of the field of ERP systems. Therefore, it is expected that the future area of research related to the ERP system depends on technical and technological progress, and sophisticated business ideas that include functionality that are currently outside the ERP system. Keywords: Enterprise Resource Planning; ERP systems; ERP trends; ERP reviews; ERP research productivity; ERP keyword; ERP co-citation analysis
Date
A point or period of time associated with an event in the lifecycle of the resource
2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
-
https://omeka.ibu.edu.ba/files/original/8ddb070b3d0d854f537b88ab69e5c7c8.pdf
5d030dbff548df87b04ef04a46d9e16c
PDF Text
Text
The Impact of Ewom in Social Media on Consumer Purchase Decisions
Merve Turkyilmaz
International Burch University
Bosnia and Herzegovina
turkylmz@outlook.com
Mersid Poturak
International Burch University
Bosnia and Herzegovina
mersid.poturak@ibu.edu.ba
Abstract: Marketers define their social media platform as an essential piece to reach their consumers. The
flock of web users turning to social media to receive and convey their thoughts, opinions, and suggestions
has made social media an integral part of digital marketing. Using traditional media to advertise had
restrictions in placement and outcome while, nowadays, social media has liberated this obstacle. It has
created a platform which allows information to spread freely and at a fast pace. Using electronic word-ofmouth in social media permits a constant connection to a vast audience. The purpose of this study is to
explore the effect of electronic word-of-mouth within the context of social media on consumer purchase
decisions. More precisely, how the familiarity of the eWOM source, the way of communication, writer’s
expertise and the popularity of a product affects the consumer's purchase decision. The data has been
gathered using quantitative research method. The sample consists of students studying in Timisoara,
Romania. The surveys were e-mailed to students’ e-mail addresses. Due to the lack of response from e-mails,
the responses were gathered using a mixture of door-to-door and online surveys methods. The questions
were answered by 200 students within a month. The results will provide the extent of impact eWOM in social
media has on the purchase decisions.
Key Words: Electronic word-of-mouth, Social media, Digital marketing, Purchase decision
Introduction
The constant escalation of the internet usage drove companies to mend their marketing strategies to
include the digital interactivity of their customer base. Digital marketing is defined as; “a
subcategory of marketing which uses digital technology to place and sell products.” It is the
marketers’ use of technologies such as; emails, social media, and word-of-mouth to engage with
their target group and generate sales. What sets digital marketing apart from traditional marketing is
the ability to comprehend the efficiency of the marketing campaigns while they are still being
served to the online viewers.
The choice procedure and psychosocial movement are involved in the phases of assessing, buying,
devouring or requesting any good or service. As the Internet advanced, along with globalization, the
buyers started to confront the issue of "perplexity by over-decision". The various brands accessible
for a similar item perplexes the customer to make up his/her mind on which brand to choose. Thus,
21
�there is a solid requirement for a medium to slice through the advertising "mess" and help shoppers
pick an item that will fit their needs. Electronic word-of-mouth plays the role of this medium.
Customers that decide to utilize this method for correspondence may have their buy goal adjusted,
particularly by individuals who has had a shopping background with that good or service (Nawaz et
al., 2014).
The way individuals see data sources influence their process of acknowledging the information
being provided (Hu, 2015). By the enhancements in web based shopping the significance of
electronic word-of-mouth has extremely increased. When shoppers get recommendations from their
closest or colleagues on social media they are able to instantly go to the websites which provide the
product or service. If the person thinks about the suggestions given by someone he or she knows,
the visit to the website can finish with purchase. This is one of the crucial elements which make
eWOM better than traditional WOM (Evans & Erkan, 2014). In other words, ads posted by firms on
social network sites is probable to be overlooked by the individuals because these advertisements
are created by the firm, and in this way seen as deceitful (Diffley et al., 2011).
Consumers are now in the position where they can immediately express their thoughts, give input,
acknowledge or question the activity of a brand (Chiosa, 2014). These actions are possible because
of the digital world we live in. By participating in web-based social networking, brands can create
showcasing techniques that improve customer dedication and carry on the positive picture of the
brand.
Literature Review
Numerous definitions of electronic word-of-mouth (eWOM) have been made throughout literature.
Hennig-Thurau et al. (2004) have defined this marketing strategy as “Any positive or negative
statement made by potential, actual, or former customers about a product or company which is
made available to a multitude of people and institutions via the Internet”. The sole difference
between Electronic word-of-mouth (eWOM) and traditional word-of-mouth (WOM) is identified as
the platform of communication being the Internet (Sørensen, 2010).
It is vital to comprehend the thought processes directing the online influencers to use electronic
word-of-mouth. Understanding the motives is fundamental for those seeking to urge the influential
individuals to spread messages. Knowing the thought processes in conveying online word-of-mouth
can help organizations to create messages that will improve the viral movement and focus on the
targeted customers.
The work of Hennig-Thurau et al. (2004) demonstrates the factors affecting the number of visits
and the frequency of these visits on online platforms. Their findings indicate that the dominant
reason for site visits is the social benefit. Furthermore, the number of comments is positively
correlated with the social benefit motive. The probability to advise a product based on an online
review depends on where the reader has found the comment (Lee & Youn, 2009). Readers are more
inclined to suggest the product when they have read it on and independent review website or the
brand’s own website. From another perspective, a negative correlation exists between the consumer
22
�expertise and consumer involvement. The consumer expertise has a negative impact, while the
consumer involvement has a positive impact on the potential buyers of the product in question
(Cheung et al., 2012). Figure 2 shows the motives of word-of-mouth communication identified in
the literature.
Figure 1Motives of word-of-mouth communication identified in literature
Source: Dellarocas, C., & Narayan, R. (2006, December). What motivates consumers to review a product
online? A study of the product-specific antecedents of online movie reviews. In WISE.
Park et al. (2007) emphasizes how electronic word-of-mouth has two different roles of either
becoming the channel for obtaining information or a sign of product popularity. However, the
extent to which the consumer is affected by one of these roles is based on the consumer’s intention.
Consumers tend to care more about reading the comments which give more clues about the product
when their intentions to buy are high. On the other hand, when their buying intentions are low, the
quality of the comments is not a priority. In this case, consumers are merely interest in the
popularity of the product in question. The confidence of the consumer increases depending on the
expertise of the writer and the purpose of the research (Chang et al., 2010).
Based on the findings of Hoffman & Daugherty (2013), the communication ties between firm and
consumers are not merely up to the content, the delivery effectiveness is just as important.
Apparently, customers give their time into creating eWOM via social media since they wish to have
any kind of effect by impacting product awareness and choices made by different purchasers. The
recommendations among female consumers are more effective when compared to male consumers
(Nadeem, Andreini, Salo, & Laukkanen, 2015). Even though users of a certain product or service
are unwilling to post their experience, they are likely to be affected by the comments they read on
social media sites because these sites are seen as platforms which are effective and valid (Yogesh &
Yesha, 2014).
23
�Research Methodology
According to the study of Perrin (2015), 90% of the teenagers from the ages 18 to 29 have a social
media presence. In this manner, the utilization of university students was considered suitable as the
sample group for the study. The aim of this research was to use descriptive statistics and gain an
insight on the importance of certain eWOM variables in social media on purchase decision.
Sampling Procedure
The research was conducted in Timisoara, Romania. At total of 200 students filled out the
questionnaire. While 172 of the replies came from Romanian students, 28 of them were attained
from international students studying in Timisoara. Female students comprised more than half of the
total responses.
Questionnaire Design and Data Collection
The questionnaire was formed using Google forms. It began with an introductory paragraph
explaining the reason for conducting the research and what their contributions meant for the data
gathering. Twenty straight forward questions were design and all besides the demographic
questions were 5-point Likert scale based. Each question was mandatory to reply while
confidentiality was promised. The survey had 6 short sections. The first three questions were asked
to understand the demographic background of the respondents; such as their age. The second
section was used to measure the impact of commenter familiarity and whether readers see known
source as more valuable. The third section focused on comprehending the importance on
bidirectional communication. The fourth section comprised of the expertise factor. Knowing that
only some of the comments are written by experts this section aimed to analyze the significance of
the writer’s background. The fifth section asked the frequency to purchase a product because of its
popularity. The final section consisted of questions directed to understand your purchase behavior
based on the comments on social media. A title and description for each section were added in order
to ease the understanding of the sections. This also helped the respondent clear any questions
regarding the aim of the research.
The students were reached by using their student email addresses and Facebook groups created by
different departments. Additionally, door-to-door survey approach was in order to reach the planned
number of responses. The survey was conducted from February 10, 2017 till April 13, 2017.
Results
Even though a total of 200 responses were achieved in this research, 172 of them were considered
to be the targeted sample. The 28 responses obtained from international students were excluded.
The three demographic questions asked to gain an understanding about the respondent’s
background profile were gender, age and their completed education level. The data was analyzed
using SPSS 18.0. The four variables analyzed were the importance of commenter familiarity, bi24
�directional communication, expertise and popularity of the product/service. Since descriptive
statistics was the only method for analyzes, the questions related to each variable were compounded
in SPSS. This enabled us to present a single descriptive table for each of the four sections.
The majority of the survey has been filled out by females with a 60.0% of response rate, leaving the
males 40.0% out of the total. 4 respondents are below the age of 18, 161 of them are between the
ages of 18-24 and 7 of them are 25 or above. These results lead to the conclusion that most of the
respondents were between the ages 18-24, making up 94% of the surveyors. Out of the total 172
respondents, more than half of them have finished high school and are studying undergraduate. 46
respondents have finished undergraduate, 22 of them have finished their master’s degree and only 1
has finished their PhD. The percentages based on the education levels of the respondents are 60, 27,
13 and 0.5, respectively.
Descriptive Statistics on the importance of the Familiarity of the Commenter on Social Media
The following questions were compounded in SPSS to obtain table 1.
•
•
•
•
How likely are you to be affected by product recommendations posted on social media?
Do you think that you are more likely to purchase a product because it was recommended
by someone you personally know? Such as a friend or family member.
Do you consider the frequency of the communication between you and the recommender of
the product as important?
Are you more likely to remember a product recommendation from someone you know?
As stated before, the total numbers of surveyors were 172. The mean is found to be 3.747 and the
median is 3.75. Out of a 5 point range these results show that the respondents are likely to be
affected the familiarity of the commenter on social media. The std. deviation and variance are .5779
and .334, respectively.
Table 1 Descriptive results on the familiarity variable
Familiarity
N
Mean
Median
Mode
Std. Deviation
Variance
172
3.747
3.750
3.75
.5779
.334
Range
2.50
Descriptive Statistics on the importance of the Bi-directional on Social Media
The questions compounded in order to analyze the second variable were as follows:
•
•
Does the online communication with the recommender motivate you to make the purchase?
Do you feel the need to contact the person who posted a comment about the product you
were planning on buying?
25
�•
Do you find all the answers to your questions about a product when going through the
comments?
Table 2 shows that the mean for the questions related to bi-directional communication is 3.093 and
the median is 3.00. Out of a 5 point range these results show that the respondents are quite neutral
when it comes to the importance of communication on social media. Meaning that, having the
opportunity to communicate with the commenter does now fall under any of the two extremes. The
std. deviation and variance are .7319 and .536, respectively.
Table 2 Descriptive results on the bi-directional communication variable
Bi-directional
Communication
N
Mean
Median
Mode
172
3.093
3.000
3.00
Std. Deviation
Variance
.7319
.536
Range
3.67
Descriptive Statistics on the importance of the Commenter Expertise on Social Media
The following three questions were used to have a single descriptive table for the expertise variable.
•
•
•
Does the level of knowledge the commenter has on a product affect your purchase
decision?
Do you feel the need to search if the commenter is an expert?
Does the level of recognition that the commenter has affect your purchase decision?
The mean for the expertise factor (shown in table 3) is seen to be 3.455 and the median is 3.33. Out
of a 5 point range these results show that the respondents are more likely to be affected the
commenter’s expertise when compared to the communication opportunity. The std. deviation and
variance are .6479 and .420, respectively.
Table 3 Descriptive results on the expertise variable
Expertise
N
Mean
Median
Mode
172
3.455
3.333
3.33
Std. Deviation
Variance
.6479
.420
Range
3.67
Descriptive Statistics on the importance of the Product/Service Popularity on Social Media
The questions listed below were used for the last variable which was the importance of
product/service popularity.
•
•
How often do you purchase a product because of its popularity among social media
users? The popularity could be the number of likes, comments, shares or retweets.
How often do you prefer the popular product because of its social media presence?
26
�•
Do you find the popularity of a product to ease your decision making progress?
The mean of the popularity variable is found as 3.484 and the median is 3.66. Out of a 5 point range
these results show that the respondents are likely to be affected the popularity of the product/service
on social media. The std. deviation and variance are .7734 and .598, respectively.
Table 4 Descriptive results on the popularity variable
Popularity
N
Mean
Median
Mode
172
3.484
3.666
3.67
Std. Deviation
Variance
.7734
.598
Range
3.67
Conclusion
The descriptive analysis made in the previous section shows that the four variables do not possess
the same level of importance. The results indicate that the familiarity variable plays the most
important role out of the four. Social media users are prone to rely on comments they read from
friends and other acquaintances. Becoming informed by someone who you know by first hand
eliminates the doubt of reliability. On the hand, the opportunity to communicate with the writer of
the comment is found to be the least important variable. This provides an understanding that
Romanian students are rarely the initiatives of communication to gain more information on a certain
product/service on social media. When compared with the familiarity variable we understand that
our sample takes cognizance of immediately concluding whether or not the comment is reliable and
provides most of the information needed without the extra effort of contacting. The other two
variables analyzed were expertise and the popularity of a product/service on social media. The
results of both variables have shown that even though they are not considered to be as important as
the familiarity variable their roles aren’t as small as being able to communicate with the commenter.
That is to say, they fall in between the two.
The limitation of the study is that it was conducted in a single city and could be broadened to gain a
better understanding of the topic. A comparative analysis will be possible when more than one
country is involved. This will allow the researcher to comprehend the differences and similarities of
variables found to crucial in social media. The sample size can be bigger and number of variables
can be extent. Furthermore, certain SPSS analysis can be used to find if there is a statistically
significant value for each variable.
Companies need to focus on their own needs in order to use their social media platforms to the
fullest. The sample of this paper was found to be more concerned about the familiarity of the writer
on social media. However, a broader research with an expansion in sample size, variable and
geographic location will certainly provide a clearer answer for any future researcher. Conducting an
analysis by adding various countries will allow us to see this topic from a wider perspective.
27
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28
�
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Extent
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3653
Title
A name given to the resource
The Impact of Ewom in Social Media on Consumer Purchase Decisions (doi: 10.14706/icesos1716)
Author
Author
Turkyilmaz, Merve
POTURAK, Mersid
Abstract
A summary of the resource.
Abstract: Marketers define their social media platform as an essential piece to reach their consumers. The flock of web users turning to social media to receive and convey their thoughts, opinions, and suggestions has made social media an integral part of digital marketing. Using traditional media to advertise had restrictions in placement and outcome while, nowadays, social media has liberated this obstacle. It has created a platform which allows information to spread freely and at a fast pace. Using electronic word-ofmouth in social media permits a constant connection to a vast audience. The purpose of this study is to explore the effect of electronic word-of-mouth within the context of social media on consumer purchase decisions. More precisely, how the familiarity of the eWOM source, the way of communication, writer’s expertise and the popularity of a product affects the consumer's purchase decision. The data has been gathered using quantitative research method. The sample consists of students studying in Timisoara, Romania. The surveys were e-mailed to students’ e-mail addresses. Due to the lack of response from e-mails, the responses were gathered using a mixture of door-to-door and online surveys methods. The questions were answered by 200 students within a month. The results will provide the extent of impact eWOM in social media has on the purchase decisions. Key Words: Electronic word-of-mouth, Social media, Digital marketing, Purchase decision
Date
A point or period of time associated with an event in the lifecycle of the resource
2017
Keywords
Keywords.
Conference or Workshop Item
PeerReviewed
H Social Sciences (General)
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https://omeka.ibu.edu.ba/files/original/afc06c5d1994753dee14e79fa00735be.pdf
719e2a8c1fce7108c10eccf928fc91ab
PDF Text
Text
Sharing Economy in Western Balkans: Potential for Rural Development
Admir Čavalić
Faculty of Economics, University of Tuzla
Bosnia and Herzegovina
admir.cavalic@yahoo.com
Abstract: With the development of technology, especially information and communication systems, new
ways of providing services emerged, based on the model of "collective consumption" or "sharing
economy". This represents a trending economic phenomenon when it comes to consumption. Within
sharing economy, consumers are organized by using specific technological platforms that enable them to
innovatively consume or produce a particular product/service. These models provide maximum use of
scarce resources on the basis of technological support and social capital of the community.
Consequently, efficiency and confidence are essential for the functioning of sharing economy, whose size
is estimated at 225 billion dollars by 2025. However, these trends are not evenly distributed and the
development of the sharing economy depends on a series of conditions, which will be discussed in the
paper. Thus, sharing economy makes tremendous challenges for all relevant stakeholders, especially the
governments, in the context of adjusting the regulatory framework to meet its demands. Compared to
developed countries, Western Balkan countries are significantly lagging when it comes to sharing
economy. This is reflected in the lack of foreign and domestic investment in this area. The aim of this
paper is to present the conceptual framework for this new economic trend, with the emphasis on the
current state of sharing economy in Western Balkans. Paper will focus on the discussion of development
potentials of sharing economy in the function of rural business development. Based on this, a set of
recommendations will be made for improving the state of sharing economy in the Western Balkans.
Keywords: sharing economy, Internet, rural development, Western Balkans
JEL Classification: O18, O33, M13
Introduction
The sharing economy has become a new economic paradigm of modern business, especially in
Western countries. Although unevenly distributed, these trends are further spreading to other
countries of the world. Across the world, domestic sharing companies are being established, but
more often global sharing apps are spreading their influence. Unfortunately, these trends have
not yet fully gained momentum in the countries of the Western Balkans. There are some sharing
initiatives in certain cities in this region, but this is still inadequate for taking advantage of all the
potential of sharing economy. In order to understand these new trends, the first part of the paper
will present the concept of sharing economy, with its definitions and models. The second part of
the paper presents the state of the sharing economy in the Western Balkan, and in the third part
of the paper, we discuss the potential of sharing economy in function of improving rural
development in this region
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�Theoretical framework of sharing economy
Sharing is a phenomenon as old as humankind, while the sharing economy is phenomena born of the
Internet age (Belk, 2014). The term collaborative consumption first time occurred in 1978. in paper by
Felson and Spaeth (1978), where they defined it as those events in which one or more persons consume
economic goods or services in the process of engaging in joint activities with one or more others. This
was later popularized by Algar (2007), who argued that technology is democratizing the purchasing
process and that gives consumers control when it comes to price optimisation. Sharing economy is part of
a global trend characterized by the democratization of technology (home computers for all), the
democratization of finance (credit cards for all) and the democratization of information (the Internet for
all) (Friedman, 2000). Buczynski (2013) states that this model is making the step forward from consumer
based society to economic democracy. This in fact, strongly supports the old thesis that capitalism is an
economic democracy in the strictest sense of the word (Mises, 2006). According to the theory of Thomas
Kuhn, it is clear that the research area of sharing economy is still in “before paradigm” stage,
characterized by a series of incomplete, competing theories in the scientific community, that compete for
primacy to be a new paradigm (Letica, 2010). Therefore, there are many definitions of sharing economy,
which will be presented in the following lines.
Juho et. al. (2016) define the sharing economy as an umbrella concept that includes several ICT
developments and technologies, among others collaborative consumption, which endorses sharing the
consumption of goods and services through online platforms. Defined as an “umbrella concept”, sharing
economy may relate to the fulfillment of number of consumer needs: from cooking over transportation up
to alternative currencies. Previously, these products/services were provided by major companies, not
individual entrepreneurs (Zervas et. al., 2016). Sharing economy can be defined as a form of
consumption in which the social aspects become more relevant and important (De la Calle Vaquero, De
La Calle Calle, 2013). This new business model interferes with the older ways of doing business and
changes not only what is consumed, but also how it is consumed (Stanić, 2015). In order to sum up these
definition, some mayor principles of sharing economy business model can be introduced (Umihanić,
Omerović, 2016): relying on the Internet technologies, especially smartphone apps; maximizing the
utilization of existing resources; trusting to strangers and creating impersonal relationships, and designing
the win-win-win deal for all parties included. Sharing economy only works via Internet technologies, and
the main goal is to maximize resources using trust (social capital) as a basis of economic relations. When
it comes to the causes that lead to rise of sharing economy, Sundararajan (2013) writes that
“reengineering” of consumption is a natural consequence of the ongoing consumerization of digital
technologies. Because of fast development of sharing economy and the fact that Internet is a media of
unprecedented opportunities (Husejnefendić, 2011), that leads to the compression of space and time
(Harvey, 2012), there are many extraordinary challenges for regulators when it comes to this area. That is
why some individual regulators who failed to reach concrete solutions, decide to completely ban certain
sharing models in their countries.
Sharing economy covers a variety of sectors (Frodesiak et al., 2011): transportation (cars, bikes), apparel
(clothing, accessories), food, living spaces, household appliances, money (social lending, virtual
currencies, time banks) workspaces, travel, accommodation, space (storage, parking, spare rooms).
Intensity of sharing in each sector is determined by nature and attractiveness of the sector, but also the
influence and organization of consumers. The consumer is indeed the one who determines what company
127
�is (Drucker, 2008). Thus, sharing companies are mainly in the sectors of transport, accommodation,
money and the like. Within the sharing economy there are different business models that enable the
realization of transactions and profit earning (Zott et al., 2011). Rachel Botsman (2013), coauthor of a
book "What's Mine Is Yours: The Rise of Collaborative Consumption", identified seven basic sharing
models: service fee, white label, freemium, on sale, flat membership, tiered subscription plans,
membership plus usage. Each of these models is based on a different financial scheme, depending on the
area in which it operates.
Sharing economy in Western Balkans
Taking into account the current situation on the labor market, respectively the level of youth
unemployment in the Western Balkans, and bearing in mind that the most frequent participants
in the sharing economy are young people (Kumar, 2015), it could be expected that sharing
economy would have an exceptionally fertile ground in this region. One of the main conditions
for the development of sharing economy is, as noted earlier, Internet technology and the ability
to access and share information. Goudin (2016) states that it is necessary to look at the Internet
penetration statistics and number of social networks and mobile phone users in order to have a
complete picture of the countries' predispositions for the development of a sharing economy.
When it comes to Western Balkans, these, predispositions are there. Thus, in Albania there is an
Internet penetration of 63%, while 52% are users of social networks and up to 165% are mobile
users. Internet penetration in Bosnia and Herzegovina is 69%, and is Serbia 65% with a growth
of over 22% in the period from January 2016 to January 2017. Croatia has Internet penetration
of 75%, Macedonia 70% and Montenegro 65%. When it comes to the number of active users on
social networks, in Bosnia and Herzegovina there are 45% of them, in Croatia 47%, Macedonia
53%, Serbia 39% and Montenegro 56% users. In Bosnia and Herzegovina, 90% of the
population has a mobile subscription, 113% in Croatia, 113% in Macedonia, 108% in Serbia and
161% in Montenegro (WeAreSocial, 2017). This data shows that there is a huge technological
potential for sharing economy development. Another important factor is opportunity to start new
business. Regarding this, the region moves in a positive direction, and on Doing Business World
Bank index (2017), when it comes to starting a new business, Albania is currently at 46th place,
Macedonia at 4th place, Croatia 43rd, Serbia 47th, Bosnia and Herzegovina on 79th, and
Montenegro on 51th place. In addition to the regulator's actions, one factor negatively effects the
development of the sharing economy in the Western Balkans. It relates to social capital. Namely,
war events and national conflicts caused the loss of trust and community feeling, which
permanently damaged the social capital of the region. The benefits of the sharing economy can
only be realized if marketplaces are safe and stable (Saidi, 2013). Still, it can be concluded that
there are basic assumptions for the development of a sharing economy in Western Balkans.
These are related to the developed technology, the ability to open new businesses, and a large
number of young unemployed people who can work within the sharing economy. But still,
factors like the lack of social capital and rule of law, as well as positive action by the regulator,
determine that sharing economy is still in a poor condition.
128
�When it comes to examples of sharing economies in the Western Balkans countries, primarily in
the field of transport services, the biggest interest is taken by Uber. This company attempted to
start working in Serbia where company's regional leadership met with representatives of the
Ministry of Civil Engineering, Transport and Infrastructure of the Republic of Serbia. Later the
same Ministry (2015) issued a statement stating that there are no legal requirements for Uber's
operation on the territory of the Republic of Serbia "due to the disagreement with the legal
regulations". Although Uber representative for the Balkan region, Alexandra Corolea confirmed
Uber's interest in entering the market of Bosnia and Herzegovina, Minister of Transport of
Canton Sarajevo said that something like this is not possible because it is not in accordance with
the legislation (SarajevoTimes, 2016). Unlike Serbia and Bosnia and Herzegovina, Croatia has
decided to allow Uber to operate on the territory of the City of Zagreb. But still despite a large
number of interested users and more than 50,000 downloads of applications in the first six
months of operation (Telegram.Hr, 2016), there was a significant resistance of existing taxi
service who couple of time organized violent protests (Milekić, 2015; Pavlić, 2016). It is
interesting that in Belgrade there is a domestic CarGo sharing application that operates on a
model similar to that used by Uber. This app adapted to the regulatory legislation on the territory
of Belgrade. When it comes to other countries of the region, there were no indications of Uber's
interest to enter their market. Experiences in which sharing platforms such as Uber and AirBnB
faced both protests and violence, similar to those in Zagreb, as well as regulatory responses that
sought to reduce the share of market sharing economy (Gata, 2015) were present both in the
metropolises of the United States, and in the countries of Western Europe. But unlike Western
Balkans, these problems were solved and now sharing economy flourishes in Western countries.
The most striking successes in the region have sharing application that relate to accommodation,
above all AirBnB. This application exists in every country in the Western Balkans. The reason
for this is that there are still unresolved private property issues so the government does not
control this market too much. This was capitalized by AirBnB. This sharing application has
actively involved thousands of people across these countries, who can now easily lease their
own (unused) space. What is important to note is that the system protection is extremely
rigorous, so when registering, besides their financial information, users also need to show the
proof of identity such as a valid passport. AirBnB success is quite interesting, because some
authors argue that for a accommodation sharing, there needs to be fulfillment of three factors:
trust, efficiency, and economic benefits (Tussyadiah, 2015). Another successful sharing
application developed in all countries of the region is Couchsurfing. Similar to AirBnB, this
application capitalizes on the lack of order when it comes to renting market.
Analyzed by individual countries, apart from AirBnB and Couchsurfing, there are a number of
transport sharing companies in Serbia, such as CarGo, Car4Use and BlaBlaCar (Blic92, 2015).
In Montenegro, there are so-called condo hotels (Radio Televizija Crne Gore, 2015), which also
belong to the sharing movement. Also, in 2015, an academic panel discussion on the potential of
the sharing economy for Montenegro was organized. Croatia has the biggest number of sharing
applications, such as BlaBlaCar, which allows transport sharing, Porthop, which solves the
problem of reserving boats, Click & Boat for chartering, Appetite, a mobile application that
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�allows finding local meals made by professional and amateur chefs, “Milo za drago” direct
exchange system and Home Exchange that allows users to exchange their houses (Laslavić,
2015; Kolić, 2016; Poslovni.hr, 2017). There is also domestic time sharing bank called “Ura po
Ura”, as well as the BitCoin ATM. As far as Albania is concerned, it is interesting that this
country hosted the global HitchGathering event, which also promotes the concept of sharing
(Dodig, 2014). Looking at the cases of sharing economy in the Western Balkans, it is noticeable
that Croatia has made the most progress.
Sharing potential for rural development
Agriculture has been a backbone of the Western Balkans for centuries and has always played an
important role in these societies (Znaor, 2013). However, compared to EU, there are many
problems in the context of rural development. First of all, there is no proper statistical record of
land used in relation to total agricultural land. This is primarily due to the lack of well-defined
property rights, as well as other post-conflict problems, such as the usurpation of refugee land.
Agriculture in most Western Balkan countries primarily meets the social, and then economic,
function. The small-scale and fragmented nature of private farming remains a general
characteristic of agriculture in all Western Balkans, representing a long-term structural handicap
(Volk, 2010). One important trend is the migration from rural areas to large cities, but also
general emigration of the population to the EU. Further problems concern the lack of proper
infrastructure, capital, as well as major networking (such as agricultural unions, consortium,
etc.). What is also problematic for domestic rural development is the lack of domestic and
foreign investment due to long-term uncertainty (Hall, 1996). Namely, the political, economic
and legal instability of the Western Balkans often affects the potential of any major investment
in the rural development of these countries. In addition, a significant part of the Western Balkans
is mountainous and hilly, or has a karst feature and is thus less favorable for agriculture. Regions
with such features are subject to substantial aging and depopulation processes, which can hold
back the development of agriculture in these areas (Volk, 2010). A large part of the agricultural
area is not used for production or is extensively used. All of this, it carries a number of negative
consequences. First, it creates many reasons for leaving rural settlements. In addition to the great
poverty, there are serious problems in terms of infrastructure, public institutions (health and
education), as well as inability to recruit. Migration, especially when it comes to young people,
can lead to irreversible decline and depopulation not only in rural and peripheral zones, but also
in small towns that often play an important role in providing basic services (Vittuari, 2011).
Although sharing economy primarily develops in cities (Helms, Palacios, 2017), yet there is
evidence that this trend is also taking momentum in rural areas (Philips, 2013). If rural
development is defined as process of improving the quality of life in rural communities (UNDP,
2013), then we can trace the potential for rural development in key features of sharing economy.
The main benefit of sharing economy is that is uses unused resources. As Lombardo notes, it is a
form of recycle, reuse and repurpose (Lombardo, 2015). Sharing economy is maximizing the use
of resources like empty apartments, unused cars, unemployed workers and the like. Sharing
130
�services allow for items to be used productively that would otherwise be gathering dust (Baker,
2014). This is the effect of product service systems, which allow members to share multiple
products that are owned by companies or by private persons (Matzler et al., 2015). For rural
development, this feature is particularly important and that is because of the seasonal utilization
of rural resources. In particular, this could create opportunity for Western Balkans farmers to
share their resources which would otherwise be unused (for certain times of the year, according
to the nature of agricultural crops). By maximizing the use of resources, sharing economy affects
the price reduction of goods and services, which is important in the context of price
competitiveness of Western Balkan agricultural products. Agricultural producer prices are rather
high, mostly above the EU average, indicating weak price competitiveness for most Western
Balkans products compared to EU countries (Volk et al., 2012). Market price pressure is
particularly intensified in recent years, with the opening of local markets for EU products. This
forces domestic farmers to use low-cost strategies in order to achieve their own competitive
advantage.
Sharing economy also lowers the operating costs for small businesses, which helps new
entrepreneurs to have significant savings in the first years of operation. Small agricultural
businesses usually have insufficient cash flow that can not cover higher capital expenditure and
costs, which means that they can rely on a cheaper sharing alternatives. Sharing rather than
purchasing can help small businesses survive (Hakobyan, 2017). For rural development, small
businesses are important because they can lead to creation of family enterprises, that on the
long-run reduce unemployment and help keep rural population stable. Sharing models are also
developing new services. For certain services, traditional industries simply did not have the
capital or market initiatives. Innovative sharing models enable cheap sets of new services for
consumers. Thus, tourists using sharing apps like AirBnB can visit the outermost regions of a
particular Western Balkan country. These places would otherwise be bypassed by tourists
because of the lack of large-scale capital investment for the development of tourist
infrastructure, but also because local communities do not have needed resources for marketing
promotion. One of most important features of sharing economy is that creates new jobs and thus
directly affects the employees. Unemployment is reduced as new employees join the labor
market and circle of those who participate in the process of sharing, expands. In addition,
sharing economy increases the productivity of individuals involved in these activities, while
allowing greater flexibility of the workplace. Workers in these new industries tend to avoid
traditional business hours. This keeps up with current labor trend of increasing the number of
freelancers. In U.S. alone in 2014. there was about 54 million workers (34% of the population)
that considered themselves freelancers (Horowitz, 2014). It is also true for work in rural areas,
where entrepreneurs themselves determine how much and when to work. What is most
interesting is the social impact of the sharing economy. Many authors write about the developing
of new sense of community and strengthening of local communities. For instance, according to
TechRepublic, Airbnb has coordinated free accommodations for people affected by natural
disasters, and TaskRabbit has experimented with organizing volunteers and crisis situations.
These and other trust-building efforts help sharing economy participants see one another as
131
�equals, building constructive relationships where none existed previously (Martucci, 2015). This
is especially important for local rural communities, which already own social capital for the
development of commonality and trust needed for sharing economy. In addition to the abovementioned features of sharing economy, we can outline four basic ways to capitalise these new
trends in function of Western Balkans rural development:
Sharing infrastructure and land.
Creating and funding agricultural innovations (crowdfunding).
Barter and swap economy, alternative currencies.
Improving rural tourism by using sharing economy models.
By sharing infrastructure and land, farmers can use their own, expensive, infrastructure
throughout the year. For instance, FarmBackup and MachineryLink allow farmers to share their
assets – machines and manpower, with similar companies at greater distances. This makes
machinery exchange a flexible solution that won’t affect the regular production (Grigoras,
2016). This answers the problems that farmers have because different agricultural products use
different resources throughout the year. Sharing economy enables farmers to share their
equipment with others and thus increase the level of its utilization. Another important way to use
the sharing economy for rural development is to use sharing systems that finance agricultural
innovations. Agriculture is precisely one of the most innovating industries today, mostly for the
purpose of reducing the share of human labor in this area, and consequently increase of
productivity and ultimately profitability. By using platforms such as crowdfunding, local
farmers can get the necessary capital for their innovations. Sharing economy can be used for
creation of a parallel monetary system within the country's legal economic flows. Lack of
financial resources is one of the main problems of rural areas (Berjan et al., 2015). Barter or
swap arrangement can be created to increase domestic liquidity, which is a usual problem of
Western Balkans rural stakeholders. As an example, across Brazil's farm belt, barter trade is
making a comeback as tightening credit, falling crop prices and a volatile currency open a multibillion dollar business to merchants and tractor makers (Ewing, 2015). Also, it is possible to use
alternative currencies like Bitcoin, to allow easier value preservation. Finally, perhaps the most
important way of using sharing economy is to improve rural tourism. This happen in Ireland
with AirBnBThe (AirBnBCitizen, 2016). Sharing economy opens up opportunities for bringing
more tourists to distance, rural areas. Sharing applications attract tourists and do a free
promotion of rural tourism, which in the long run creates the potential for rural development.
Sharing economy can also develop creative tourism. This can be done by so called rural hubs,
that offer space for creative work (Paoletti, 2014). These hubs attract urban people that work in
areas of creative industries. Finally, it should be added that the sharing economy has a positive
impact on ecology that represents the basis of rural development. Increased resource utilization
contributes positively to the reduction of pollution and the general ecology (Gururaj, 2015).
132
�Sharing economy also reduces waste. Thus, for example, UberPool lets people share their Uber
ride, which results in a lower fare for everyone and reduced pollution / traffic (Minton, 2015).
Conclusion
Within the paper, the sharing economy is presented as a new economic trend that determines
current standards of consumption. Unlike the traditional economy, sharing economy integrates
unused resources, which, in turn, increases productivity, but also employment, especially of the
marginalized labor market groups. The sharing economy creates a number of challenges for
regulators, which unfortunately has prevented its development in the Western Balkan countries.
Thus, the paper showed that UBER is only partially active in this region and that apart from the
success of AirBnB, there are only a few good examples of foreign and domestic sharing
applications. According to that, there are very limited sharing resources that can support the
rural development in these countries. However, this does not harm the long-term sharing
potential that can be utilized in the future. Specifically, the sharing economy can support the
maximization of resources in agriculture, lead to greater innovation, develop alternative
monetary models, and significantly influence the development of rural tourism. For the purpose
of using these new technologies, in function of regional rural development, we can set out
following recommendations:
Regulators in the countries of the Western Balkans must provide legal frameworks in
order to support the development of the sharing economy. This means greater openness
of the legal system for new business models that are based on new technologies and
sharing. By developing a sharing economy, the possibility of opening up new jobs
increases, but also there is an increase in competitiveness of the entire economy.
Rural development of the Western Balkans should be based on new technologies and
increased competitiveness and innovation of the rural sector. Sharing economy models
should become an integral part of rural development strategies in a way that they support
the existing, traditional ways of doing business.
In order to develop the sharing economy in the Western Balkans, it is necessary to work
on the long-term improvement of all of the assumptions for its development. These
assumptions relate to the development of technology, but also to the advancement of
social capital, which represents main problem in this region.
In the end, it can be concluded that the sharing economy represents an exceptional chance for
rural development of Western Balkan region. This paper offers only a basic insight into the
given area, and its weakness is that it lack empirical research of this area. Because of that, future
research should focus on empirical exploring of the state, characteristics and needs of sharing
economy in the Western Balkans.
133
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Sharing Economy in Western Balkans: Potential for Rural Development (doi: 10.14706/icesos171)
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Čavalić, Admir
Abstract
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Abstract: With the development of technology, especially information and communication systems, new ways of providing services emerged, based on the model of "collective consumption" or "sharing economy". This represents a trending economic phenomenon when it comes to consumption. Within sharing economy, consumers are organized by using specific technological platforms that enable them to innovatively consume or produce a particular product/service. These models provide maximum use of scarce resources on the basis of technological support and social capital of the community. Consequently, efficiency and confidence are essential for the functioning of sharing economy, whose size is estimated at 225 billion dollars by 2025. However, these trends are not evenly distributed and the development of the sharing economy depends on a series of conditions, which will be discussed in the paper. Thus, sharing economy makes tremendous challenges for all relevant stakeholders, especially the governments, in the context of adjusting the regulatory framework to meet its demands. Compared to developed countries, Western Balkan countries are significantly lagging when it comes to sharing economy. This is reflected in the lack of foreign and domestic investment in this area. The aim of this paper is to present the conceptual framework for this new economic trend, with the emphasis on the current state of sharing economy in Western Balkans. Paper will focus on the discussion of development potentials of sharing economy in the function of rural business development. Based on this, a set of recommendations will be made for improving the state of sharing economy in the Western Balkans. Keywords: sharing economy, Internet, rural development, Western Balkans JEL Classification: O18, O33, M13
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2017
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H Social Sciences (General)
-
https://omeka.ibu.edu.ba/files/original/b13e9639794ab71f1dbc18792f3bf279.pdf
5b74966d8af855e97c6c73d32512a769
PDF Text
Text
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
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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
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�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
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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
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�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
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�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
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�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,
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�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
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�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.
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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
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�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:
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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
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�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
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�Investigating the Drivers of Choice Behavior in Tourism:
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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
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�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
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�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
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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
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�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
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�Investigating the Drivers of Choice Behavior in Tourism:
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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
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�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
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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.
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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. This type of research should be
reinforced by a variety of research outputs examining the other firms’ cases.
Finally, the research model developed in this study can be expanded by other
possible antecedents and consequences of reputation management (i.e., corporate
identity, consumer sensitivity) to be able to produce more sophisticated
understanding.
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Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management
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OZKUL, Emrah
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TThis study examines how reputation management (RM) 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. Keywords: Tourism, reputation management, choice behavior, consumer trust, image
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Text
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
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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
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�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
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�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.
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�Public Procurement System in Service for Strengthening the Market
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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
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�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
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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
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�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
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�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
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�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
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�Public Procurement System in Service for Strengthening the Market
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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
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�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.
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�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.
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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
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�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
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�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
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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
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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:
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_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
�
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Title
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Public Procurement System in Service of Strengthening the Market Economy in Bosnia and Herzegovina
Author
Author
KASUMOVIC, Merim
MEHOLJIC-KALAJDZIC, Sanela
MEHOLJIC, Harun
Abstract
A summary of the resource.
Abstract: Although the public procurement system in Bosnia and Herzegovina is represented the area of the legal profession because it is defined by laws and regulations, it is actually more important for economists and all public officials in the country. The subject of this work is theoretical. and practical aspects of applying the transparency to the system of public procurement in the context of strengthening market competition in Bosnia and Herzegovina, and the market economy in general. The special significance of this work lies in the fact that for the first time, research methods were applied to reveal the market strength of the contracting authorities (buyers) and market competition among suppliers (sellers) in the public procurement market in Bosnia and Herzegovina, as measured by their market shares. Based on such findings, the relations of market strength of contracting authorities and the level of development of competition on the public procurement market in Bosnia and Herzegovina in the period from 2010 to 2012 was examined in terms of choosing more or less transparent procurement procedures. Keywords:public procurement system, transparency, market competition.
Publisher
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International Burch University
Date
A point or period of time associated with an event in the lifecycle of the resource
2016-11
Keywords
Keywords.
Article
PeerReviewed
H Social Sciences (General),HB Economic Theory,HG Finance