344 10 3494 https://omeka.ibu.edu.ba/files/original/8b96893a78e144e1ce3528ddb64cda9f.pdf 05d90d24287663f1f75d41eabd9444f3 PDF Text Text 1 Irony in William Blake’s Poetry Serap Denizer Bozkurt Kocaeli University, Turkey Abstract: Irony, stating something meaning another, turns into a philosophical method of understanding opposite concepts with Friedrich Schlegel’s Fragments published in the eighteenth century. It accords irony an ontological and epistemological function and changes its scope. William Blake, one of the prominent names of Romantic poetry, employs the binary oppositions and creates a different perspective of irony. In addition to the usage of traditional binary systems such as; good and evil, heaven and hell, he structures new binary systems. The traditional binary systems used by Blake are challenging as he redefines the opposite concepts in a holistic manner. On analyzing these three poems; “The Marriage of Heaven and Hell”, “The Tyger” and “The Lamb” it would be fair to claim that he presents a different perspective of construing the world with the employment of irony using integrative binary oppositions in the Romantic period. Keywords: romantic poetry, irony, William Blake 1. Introduction In his A Blake Dictionary, The Ideas and Symbols of William Blake. S. F. Damon (2013) states that: “Every sect is self-limited, whereas Truth is universal. Instead of any religion, Blake wanted the truth—the whole truth including all errors, life including death, the soul including the body, the world of mind including the world of matter, the profound discoveries of the mystics reconciled with the scoffings of the skeptics, heaven and hell married and working together, and in the ultimate heart, Man eternally in the arms of God”(61). 2. Analysis William Blake, one of the first and major representatives of Romanticism in England, is a challenging poet with his works full of opposites, which gives birth to the employment of irony. The changing scope of irony displays its effects on William Blake’s works. M. A. R. Habib (2011) explains the changing scope of irony as follows: By the end of the eighteenth century, irony had risen from being a mere rhetorical device to an entire way of looking at the world. Schlegel’s Fragments of 1797 accords irony an epistemological and ontological function, seeing it as a mode of confronting and transcending the contradictions of the finite world. … At the core of irony as formulated by most nineteenth-century thinkers was a romantic �2 propensity to confront, rather than overlook, the obstinate disorder, contingency, flux, and mystery of the world. In this sense, an ironic vision accepts that the world can be viewed from numerous irreconcilable perspectives, and rejects any providential, rational, or logical foreclosure of the world’s absurdity and contradictions into a spurious unity.(147) Habib, (2011) also states that William Blake, the first major figure of English Romanticism, had recourse to mysticism and a mythical vision of history, and he saw the world as inherently harboring opposites and contradictions which was the poet’s task to harmonize (153). In these lines, Habib defines Blake’s perception of the world and the function of the poet very clearly. It can be said that Blake is very good at reflecting his perception of the world by combining these contradictions. However, he does not only apply these contradictions, but he also redefines them in a holistic manner. Even the titles of his works prove it; The Marriage of Heaven and Hell, The Songs of Innocence and The Songs of Experience. He chooses to unite these concepts perceived as opposite by mankind. Reading Blake’s poems makes the reader question, criticize and revalue concepts such as; heaven, hell, angel, devil, good, and evil which are considered to be the traditional binary oppositions in western thought. ‘The Romantics’ only recourse was to an ironic vision which insisted that reality is not confined to here and now but embraces the past and is located in a Platonic ideal realm.’ (Habib,148). William Blake is also one of these poets who is endeavoring to define the reality. Damon (2013) states that Blake’s basic purpose was the discovery and recording of new truths about the human soul. He asserts that for Blake the most exciting thing possible was the discovery of these truths (55). In this paper, the poems; The Marriage of Heaven and Hell, The Tygerand The Lambwill be analyzed in terms of the employment of irony through the usage of opposites and contradictions in the light of Blake’s search of truth. The Marriage of Heaven and Hell, the title, which is to be examined first, gives the readers some clues about Blake’s usage of seemingly opposite concepts. Blake redefines and reshapes the heaven and hell in a philosophical point of view and unites them. Habib’s lines explaining the relationship between Romanticism and irony, also helps the reader understand the fundamental disposition of Blake’s poetry; The ideals of Romanticism included an intense focus on expressing human subjectivity, an exaltation of nature, of childhood and spontaneity, of primitive forms of society, of human passion and emotion, of the poet, of the sublime, and of imagination as a more comprehensive and inclusive faculty than reason. The most fundamental philosophical disposition of Romanticism has often been seen as irony, an ability to accommodate conflicting perspectives of the world. (Habib, 145) The heaven and hell are perceived as conflicting perspectives. However, it would not be right to say that Blake depicts the heaven and hell as places designed for afterlife to punish or reward the souls. John Beer (2005) claims that the heaven and hell are described as ‘the states �3 of the human soul’ by many critics (67). The title The Marriage of Heaven and Hell welcomes the reader to the world of contraries blending and forming a unity. The following lines are taken from the very first section of The Marriage of Heaven and Hell called ‘Argument’: Without contraries is no progression. Attraction and repulsion, reason and energy, love and hate, are necessary to human existence. From these contraries spring what the religious call good and evil. Good is the passive that obeys reason; evil is the active springing from energy. Good is heaven. Evil is hell(Blake, 163). Blake does not only use the contraries to strengthen his narration or strike the reader. He attributes more to the contraries seeing them as a must. Damon (2013) expresses this notion in his words; “These two worlds, Hell and Heaven, are essential to each other; they exist simultaneously in God. Thus there is the Opposition of Contraries in God himself, without which there could be no life ”(213). Beer criticizes Blake stating; “How far Blake expected his ideas to be taken completely seriously is hard to determine. Allowance must certainly be made for his sense of irony. The very fact that The Marriage of Heaven and Hell was cast in precisely those terms suggests that he was allowing for a possible equality of value between the two sides ”(Beer, 23). The readers can agree with Beer on the issue of irony, but it is hard to say that Blake was allowing for a possible equality of value between two sides. In Blake’s definition of heaven and hell, it is clear that he foregrounds the hell and the components of hell. The definition of devils and the comparison of the angels and the devils, and the flames in hell can prove it. First, Blake destroys the image of hell, which is a place for the corrupted, full of torment and cruelty. Damon’s lines also reflect it; ‘God is good; all things that proceed from him are good in essence, nor can that essence ever be corrupted. Therefore ‘Hell’ which is of God must be good; and the life force proceeding from it cannot be evil and far from being everlasting pain, is eternal delight. Everything that lives is holy (Damon, 214). To propound that hell is a formidable, scary place would be wrong in Blake’s world of perception. Damrosh’s ideas on the Blake’s perception of hell supports this idea; In celebrating what he calls Hell, Blake has in mind something very different from the usual connotations of that word. The fundamental idea in The Marriage of Heaven and Hell is that theologians and preachers have wrongly stigmatized energy as diabolical, even though it is absolutely essential to existence. They claim that “good is the passive that obeys reason; evil is the active springing from energy.” Blake’s counterclaim is that Heaven and Hell must interact as vital contraries, like partners in a marriage who are different yet joined. Both are equally important. (Damrosch, 101) We all have a concept of hell in our minds, but Damon (2013) asserts that the hell depicted by Blake in his paintings of the last judgment is the lake of fire into which errors, but not people are cast and annihilated (72). Even the fires of the hell are thought to be ‘the flames of �4 inspiration’ by Damon (Damon, 772). The comparison of the angels and the devils is also very striking: Devils for Blake are usually evil spirits, probably accuser of sin; but in The Marriage of Heaven and Hell, for once they are the original geniuses, those who are familiars in the hell of the subconscious, which is the source of all energy. They are contrasted to the Angels, the restricting spirits of conventionality. …All genius varies thus. Devils are various. Angels are all alike.(Damon, 445) Devils are not portrayed to be wicked creatures, their liability is not to make humankind commit a sin, but to remind them that they are capable of committing sins. Northrop Frye (1990) defines devils as follows; ‘If man,’ Blake asks, ‘is considered as only evil and god only good, how then is regeneration effected which turns the evil to good?... Satan in the Bible is called ‘diabolos’ or accuser because he is forever reminding man of his own insufficiency. … For Satan is not himself a sinner but a self-righteous prig’. (65) Harold Bloom (2003) interprets The Marriage of Heaven and Hell in characteristics of two kinds of people; ‘Blake now gets back to the “contraries” mentioned earlier in the work. He contends that there are only two kinds of people, the Prolific and the Devouring, and that these opposites are both inimical to each other and necessary—for ‘if they were reconciled mankind would cease to exist ’ (105). Proverbs of Hell, the second part of The Marriage of Heaven and Hell starts with a note; A Memorable Fancy – 1; As I was walking among the fires of hell, delighted with the enjoyments of genius, which to angels look like torment and insanity, I collected some of their proverbs, thinking that as the sayings used in a nation mark its character, so the proverbs of hell show the nature of infernal wisdom better than any description or buildings or garments.(Blake, 165) In this section of the poem, Blake goes on expressing the concepts using their opposites and his ironic manner can be clearly analyzed in his lines; Prisons are built with stones of law, brothels with bricks of Religion. The best wine is the oldest, the best water the newest. Prayers plough not; praises reap not; joys laugh not; sorrows weep not. The head sublime, the heart pathos, the genitals beauty, the hands and feet proportion.(Blake, 168) Leo Damrosh (2015) explains the section, Proverbs of Hell, as a dictionary of anti-proverbs; A memorable section of The Marriage of Heaven and Hell is entitled “Proverbs of Hell,” which are really anti-proverbs. Ordinary proverbs convey conventional �5 truisms, … Blake’s aphorisms are anything but conventional: “Exuberance is beauty”; “The cistern contains, the fountain overflows”; …“The road of excess leads to the palace of wisdom.” At times these anti-proverbs seem deliberately intended to shock: “Sooner murder an infant in its cradle than nurse unacted desires.” (103) The second poem which will be analyzed is ‘The Tyger’ which has been a source of speculation with its different interpretations; When the stars threw down their spears And watered heaven with their tears, Did He smile His work to see? Did He who made the Lamb make thee? Tiger, tiger, burning bright In the forests of the night, What immortal hand or eye Dare frame thy fearful symmetry? (Blake 67-74) In this poem, it is clear that Blake uses ‘the tyger’ and ‘the lamb’ as contraries. The tyger and the lamb are not clear-cut opposites like the heaven and hell, but the characteristics of the tyger and the lamb can be considered to be considerably diversified. Bloom (2003) explains the characteristics of the tyger and the lamb stating that; It would be simplistic to state that “The Lamb” is good and “The Tyger” is evil. And it is probably not what Blake intended. “The Tyger” is experience. It is bright, energetic, and vital. It is familiar with its domain and is assertive in its environment. While the Lamb merely follows the flock, the tiger has learned from experience and is autonomous. No longer following the crowd or a single shepherd, the tiger is a hunter directly in search of satisfaction. (19) Though there are different explanations of the tyger, Bloom sees it as a luminous creature roaming the forest at night. He also identifies the tyger with Lucifer and thinks that Blake is struck by the beauty, strength, and balance of the beast, and questions what inspiration is behind its creation. The powerful imagery, comparing the fire in the tiger’s eyes and the fire used to create it, suggesting that the tiger can also be a reflection of the fires of Hell (Bloom 2003, 17). Line by line, the tiger grows more powerful and frightening: a beast without boundaries. Yet, the speaker tries to reason with the mighty animal, asking about its creator and its opposite of the animal kingdom: the lamb. The work bears a similarity to Blake’s “The Lamb”, which appears, appropriately, in the “Innocence” part of the volume of poems. “The Tyger” is part of the “Experience.” Did Blake believe that transformation from the gentle lamb into the powerful tiger is an integral part of maturation?(Bloom 2003, 18) �6 These lines above bring a new perspective to the relationship of the tyger and the lamb. The question; ‘Did Blake believe that transformation from the gentle lamb into the powerful tyger is an integral part of maturation?’ also brings a new dimension to the speculation. Though lamb is seen and stated as opposite, it can be the superior version of the tyger. As William Blake sees the opposites and contraries as complementary, it can be assumed that the tyger and the lamb are also complementary elements, which are created by the same power embodying all the contraries. The third poem is The Lamb, in which Blake asks the same question, but this time it is about the creator of the Lamb. However in this poem, we have the answer, Blake states that ‘the creator’ calls himself a Lamb. Little lamb, who made thee? Dost thou know who made thee? Little lamb, I’ll tell thee; Little lamb, I’ll tell thee; He is callèd by thy name, For He calls Himself a Lamb.(Blake44-49) As it was mentioned before that William Blake sees the opposites as complementary, it can be said that the Tyger and the Lamb are also integrative elements. Damon (2013) supports this notion in his A Blake Dictionary. ‘In the song of Innocence and experience, it counterbalances ‘The Lamb.’ The Lamb symbolizes the Loving God; the Tyger, the Angry God. … The Tyger is not the contrary of the Lamb, but its negation’ (1577). The quotation below, defines the concept, the Lamb and also foregrounds the embodying feature of the creator. Blake is against the idea of interpreting God as having only good characteristics. Goodness cannot define God, as it is not enough to define the source of everything created. However, goodness can be a concept created by God, as good, evil, heaven, hell, angels, devils, the Tyger, and the Lamb were created. Everything is unified and represents God in Blake’s poetry. But that is not what Blake meant when he made the lamb the symbol of innocence. He meant that there really is behind the universe an eternal image called the lamb, of which all living lambs are merely the copies or the approximation. He held that eternal innocence to be an actual and even an awful thing. … God is not a symbol of goodness. Goodness is a symbol of God.(Bloom 2008, 96) 3. Conclusion In conclusion, in the poems The Marriage of Heaven and Hell, The Tyger, and The Lamb, Blake employs the contrary ideas, a way of irony, to criticize and portray the effects of the social transformations of his age. However, the reader needs to gain a deeper understanding of Blake’s purpose. To see the concepts as only contrary on the surface may not fulfill his �7 purpose. He tries to unite all the contraries, which are sprung from the same source. In The Tyger, Blake asks a question; ‘Did He who made the Lamb make thee?’ (Blake, 74). To categorize and label the concepts as purely ‘good’ or ‘evil’ is not a good way to follow in the journey of understanding them. Blake tries to define some of the concepts with their contraries, but in his perception, he gives a different meaning to them. Blake’s depiction of hell, for example, is completely different than the sense of hell, which was depicted by religion. It can be said that the contraries of Blake as the substance are distinct from the contraries of mankind, but the characteristics referred to them are opposites. Blake’s utilizing irony in his definitions of the concepts is a good example of the view that in a philosophical disposition of Romanticism has often been seen as irony, an ability to accommodate conflicting perspectives of the world (Habib, 145). References: Beer, John. 2005. William Blake, A Literary Life. New York: Palgrave Macmillan. Blake, William.2005.Collected Poems. Ed. W. B. Yeats. New York: Routledge Classics. Bloom, Harold Ed. 2003. Comprehensive Research and Study Guide, William Blake. New York, Infobase Publishing. Bloom, Harold Ed. 2008. Bloom’s Classic Critical Views, William Blake. USA: Infobase Publishing. Damon, S. F. 2013. A Blake Dictionary, The Ideas and Symbols of William Blake. Hanover, New Hampshire: Darthmouth College Press. Damrosch, Leo. 2015. Eternity’s Sunrise, The Imaginative World of William Blake. UK: Yale University Press. Frye, Northrop. 1990.Fearful Symmetry, A Study of William Blake. New Jersey, USA: Princeton University Press. 10th Printing. Habib, M.A.R. 2011.Literary Criticism from Plato to Present, An Introduction. UK: WileyBlackwell. � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3283 Title A name given to the resource Irony in William Blake’s Poetry Author Author Denizer Bozkurt, Serap Abstract A summary of the resource. Irony, stating something meaning another, turns into a philosophical method of understanding opposite concepts with Friedrich Schlegel’s Fragments published in the eighteenth century. It accords irony an ontological and epistemological function and changes its scope. William Blake, one of the prominent names of Romantic poetry, employs the binary oppositions and creates a different perspective of irony. In addition to the usage of traditional binary systems such as; good and evil, heaven and hell, he structures new binary systems. The traditional binary systems used by Blake are challenging as he redefines the opposite concepts in a holistic manner. On analyzing these three poems; “The Marriage of Heaven and Hell”, “The Tyger” and “The Lamb” it would be fair to claim that he presents a different perspective of construing the world with the employment of irony using integrative binary oppositions in the Romantic period. Keywords: romantic poetry, irony, William Blake Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-05-25 Keywords Keywords. Article PeerReviewed PE English https://omeka.ibu.edu.ba/files/original/b50236c3fe5545e78522b37db4175887.pdf 45276464403d6f65f1f7846e64bca567 PDF Text Text The improvement of educational-training values is of paramount importance within most institutions Utkir Tolipov & Azamat Akbarov Tashkent State Pedagogical University Named After Nizami, Uzbekistan & International Burch University, Bosnia and Herzegovina Abstract: This article examines the essence of such concepts as "educational values","national values"; "common to all mankind values"; their interrelation and harmonious parity are shown. Special attention is given to the characteristic of values "ustoz-shogird" (teacher-pupil), from the historical and cultural heritage of outstanding thinkers of the East. Keywords: spiritual heritage, national and common to all humankind values, personal and professional qualities, creative abilities, relations "ustoz-shogird"(teacher-pupil), mentor, socialization of the person. 1. Introduction With republican independence changes of national consciousness are realized at the level of government program of problem of deep studying created by our ancestors throughout centuries of an invaluable spiritual heritage, revival of the lost values, revival of national traditions and values has led to basic changes in the activity of teachers – mentors, and the training of future pedagogical staff. First of all the task in respect to providing future experts with knowledge, skills on bases of sciences with the account of their interests, abilities and propensities, along with their attraction to creative scientific research activity, formation of high spirituality, the organizations of a substantial free time of addressees of formation. National education of indissoluble is connected with the history and philosophy of people. In this aspect, an important means of educating young people is cultural-pedagogical past heritages. One of the traditions, having huge educational "value, tradition is "Ustozshogird"(the master, or mentor, teacher-pupil). One of the responsibilities delegated to educational system are those for establishing curricula at the course and degree levels and to evaluate the effectiveness of proposed curricula in achieving the aims of the students. (Berkley, 2013) The development is to be shown as an assessment matrix that deepens the pupil-teacher relationship and the overall achievement of students. Colleges and schools have to be entrepreneurial in establishing revenue, generating programs that will enhance the quality of education, as well as providing experts in their field in order to educate new generations of experts. For instance, at Berkley University, they have developed a Center for Teaching and Learning, which offers support and further education of �teaching staff, in order to enhance their effectiveness in the areas of pedagogy, curriculum, and assessment. In an era of massively delivered asynchronous learning, the residential character of the teaching system should become the core of the academic mission (Berkley, 2013), even when implementing possibilities proposed by new technologies into curricula. 2. "Ustoz-shogird" Tradition Tradition "Ustoz-shogird" makes huge impact on the transfer of professional skills to young people, an increase of their spiritual-educational potential, development of creative abilities, in a word – the formation of a comprehensively developed person. Features of this tradition consist of, that under supervision of the teacher of the trained gets confidence of the possibilities, to estimate situations strong-willed qualities, abilities are correctly formed, and social activity is shown. To prepare good pupils, the teacher first should take care of the development of a global outlook and healthy thinking and certain professional qualities. Relations "Ustozshogird" are expedient for installing based on the concrete program of the plan. From these positions, the teacher should organize the activity in the following directions: positive impact on the student (trained) by providing knowledge according to requirements of time and laws of society; to influence spirituality, mentality of the pupil and at the same time to be exacting to oneself; to develop a habit of respect to oneself and others; to use in the course of education various advanced methods and innovative technologies; teachers should be examples from the point of view of spirituality, morals, professionalism; to form at trainees of call of duty, responsibility, compulsion of performance of the task and others; Use of tradition "Ustoz-shogird" leans against the following pedagogical principles; consciousness and activity, that is full comprehension of the essence of activity within the limits of relations "ustoz-shogird", their development and prospect; mastering by "secrets" of scientific knowledge. indissoluble communication of training and education with a life; orientation on independence and creative searches with the account of interrelation of theoretical knowledge and practice; account age and specific features trained. The using of tradition "Ustoz-shogird" will give positive results in a system of continuous education, as pupils form practical skills based on the pedagogical theory. Pupils, students, young teachers, direct tradition „Ustoz-shogird“to the display of creative possibilities. Special value thus gets acceptance in attention to specific features in training, development of their talents and hobbies, the creation, necessary conditions for this purpose. �Intensive development of the Republic of Uzbekistan in the time of independence has caused the necessary formation of various personal qualities of future citizens of the country, including the professional qualities corresponding to conditions of market economy, subject to constant changes. In the course of fast adaptation to market conditions especially increases the role of teacher, mentor, and the master. Not without thought, the society pays much attention to "Устоз"(teacher), as education of perfect person as the main motive power of the progress of society, directly depends on educational values, authority of the mentor, relations between teacher and pupil. The concept of "value" is treated as a complex of subjects and the phenomena representing an understanding of the concept, especially essential meaning. (6.618р) The concept of "value" is treated differently at household level and in scientific literature, accordingly and is used differently. Since ancient times it was widely applied in scientific and vital terminology and was grounded based on scientific thinking. In each society, the values were established. Therefore, the basic value is national mentality. Values had great value during not only the past, but also today and in the future they will make a positive impact and influence on the development of society, raising the consciousness of people, they get social value. The modern concept of values includes a complex of material, spiritual, natural, religious, moral, philosophical and other wealth (4,285р). During different epochs, the concept of value has influenced society, the ideals, hopes of society; it means that, values were perceived as a special problem and the purposes, which the society puts before them. According to their content, values are divided into national, universal, scientific, spiritual and material. Every nation seeks to achieve harmonization of national spiritual values and universal values. The spiritual heritage of the past is of high importance and the task of modern generations is to fully master and develop them. Not knowing the cultural heritage of his people, or ignoring them, means being a cultureless person. Not enriching the value and not raising them to a high level, means harming people and its prospects. In some nations and nationalities, national values represent the aggregate of all material and spiritual wealth. Universal human values inherently have a wide range, as they absorbed the values of many civilizations, ethnicities both of the past and the present. At the same time, there are certain differences in values and each of the world's civilizations. Scientific values should be used for the development of science and education, improving their live conditions, achieving harmony in the family, the enrichment of the public good, improving the socio-economic development, strengthening the spiritual and educational potential. Knowledge and science are recognized to be the highest values. The hadiths state that a person needs knowledge, shrewdness, and power of observation and memory to master the skills in any craft. Hadiths recommend ‘Be a scientist, study skills, or be a listener, and if you do not know, then try reaching the educated people. If you just do not do it, then you die’. There is a saying: ‘Do not climb onto the roof of the house, where your father sits’. This aphorism has a deep meaning: the father is the creator and teacher. He always thinks about the peace and the happiness of his children, working tirelessly for their benefit. Sometimes there are no words to express opinions about a father. The teacher (ustoz) is not �equated to the father by a chance. Father works for his child, not knowing fatigue, as well as every teacher gets satisfaction from the results of his work in teaching students. The education of fully developed, harmonious generations was considered one of the major tasks of society at all times, as far as the younger generation provides the future of the country. In its dreams and hopes, society wants to see its children physically and mentally healthy, successfully building their own future, not conceding in anything to other people and countries, to see them as people with a strong will and high spirituality. That is why so much attention is given to secondary school, which is tasked with identifying and global supporting of talented, creative, enthusiastic students who are the future leading scientists, worthy purveyors of the great heritage of our ancestors. ‘Everyone knows that the way to a man's heart lies primarily through education’. Therefore, along with the worship of the priceless heritage of our ancestors, we give due respect to the noble work of teachers and mentors that are on a par with parents educate our children’, - stressed the head of our state in his book ‘High spirituality - an invincible power’. Actually, today the role of teachers and trainers are invaluable in the upbringing of an intellectual and comprehensively developed generation. It does not matter, what kind of success would be achieved in human’s life. First, he should be grateful to his teacher, whose lessons would be remembered for a long time longtime.The tradition of "teacher-pupil" – is one common to all humankind’s values. The content of human values isdeep and full, that is why they acquire global importance. Human values correspond to the goals and aspirations of all the peoples, nations and ethnic groups. National and universal values are closely related, as historically they were formed based on the principles of life. The development of values opens up wide possibilities for common progress and moral improvement."Our ancestors created a set of requirements for a relatively perfect man, speaking in modern language, developed the eastern version of the moral code. Every person must ruthlessly suppress the unfairness and injustice, to prevent unlawful acts", - emphasized by our President [1; 53 p.] The Uzbek people can be proud of their past. He made an enormous contribution to the worlds of science and culture. The great thinkers of our people Imam Bukhari, Imam Tirmidhi, Bahauddin Naqshband, Khoja Ahmed Yasawi, Al-Khorazmiy, Beruniy, Ibn Sina, Amir Temur (Tamerlane), Mirzo Ulugbek (Ulugh Beg), Alisher Navoi, Zahiriddin Muhammad Bobur (Babur), and many others who contributed to the development of national culture, is the pride of the people. "Plutarch claimed, there are two main advantages in human nature – the mind and the thinking" [3; 144p.] It means, that the main measure of human essence is his mind, consciousness and thinking, which make up the value of the individual, on which is also based on personal qualities such as honesty, conscientiousness, respect to others, which are particularly highly prized among the Eastern nations. Objects and phenomenon, which serve the formation and development of the inner world of people mastering their spiritual riches, are called spiritual values. They are the product of human activity, his labor and creativity. Every nation has the spiritual riches that are particularly revered. These values are passed from generation to generation, and today they have not lost their value. They are a source of pride and inspiration of people. For values, we can include proverbs, teachings, and the edification of the Uzbek people. In each of them signed the spiritual wealth.In the educational process, which is aimed at the study of �values, there is an interconnection between the value of the object and the value of the subject, because the subject holds a peculiar path to its perfection. For example, the pupil or the student's place, where they receive education, can be in a classroom, gym, study of spirituality and education, information and resource center. In turn, these objects are being served as a means of training and education. The same can be said about the students, the educational equipment. Teacher and student are being involved in the educational process, are also the values of the transmission and acquisition of knowledge. While teaching about the values, the teacher uses a variety of means - texts, handouts, slides, based on national traditions, festivals, historical heritage. A visit to the holy places of our compatriots, house-museums, history museums, art and culture are greatly enrich the national consciousness of students, forms of their spiritual world.In the process of the assimilation of values,students master the abilities and skills of analysis, synthesis, separation of the main meaning, independent thinking, perception, formulate and express their opinion and assessment. Students are able to reconsider their views based on acquired values. 3. Conclusion As a result of the implementation of previously shown program, the teachers will be able to achieve a more holistic and integrated approach that benefits the common good, and develop a much better understanding of the overall teaching position. Through implementing these views and values, the quality of administrative operations will also reach its peak. Based on the foregoing, we consider that it is necessary to pay special attention to certain aspects of improving efficiency in the establishment of relations "Ustoz-shogird." (Teacher-pupil).  Stirring up the internal creative communication in a relationship "Ustoz-shogird";  Disposition of logical sequence of the content and stages of training of students on the basis of the principle of continuity;  Formation of students' skills of self-control of their behavior and actions, spiritual aspect, abilities continuous self and self;  Implementation in the minds of young people of a complete philosophy of life, aimed to achieve the status of a decent citizen of his country;  Development of pupils and students of high personal qualities, the desire to promote the prosperity of the motherland and serve for the good of the people;  Development of youth national identity and national pride in the basis of harmonization of national and universal values;  The people, the homeland for the performance of their duties and obligations;  Introduction into the educational improvements and additions basing on the standards of fairness, honesty and openness. The effective use of restored values in continuing education, of course, will give a positive result. �References: 1. Hawkins, D. 1990. “Ways of Knowing.” In M. A. Shea ed., On Teaching Vol. II: 3542. Boulder, CO: University of Colorado at Boulder. 2. Weimer, M. 2002. Learner-Centered Teaching: Five Key Changes to Practice. San Francisco, CA: Jossey-Bass. 3. Karimov I.A. “Basic tendencies of political-social and economic future of Uzbekistan”.-T.: Uzbekistan, 1995-74p. 4. UC Berkley Institutional Self- Study for Accreditation, August 2013. 5. Karimov I.A. “High spirituality – is undefeated power” –1.–Т.:“Manaviyt”, 2008. – 130 p. 6. Thought – blooming. Composition of V.Vorontsov-T.: Publishing house of literature and art named after G.Gulom, 1989-484p. 7. Tulenov J., Gofurov Z. Philosophy. Textbook for students of higher education. – T.:”O’qituvchi”, 1997.-384p. 8. MusurmonovaO.Spiritual traditions and upbringing of youths.-T.: ”O’qituvchi”,1996192p. 9. Khasanbayev Y., Turaqulov H., Khaydarov M., Khasanbayeva O., Usmonov N. Dictionary for pedagogy. – T: Subject and technology (Fanvatexnologiya), 2009.672p. 10. Inoyatova M. Determination of educational values and using them in pedagogic practice.-T.:”Sharq” (East),2010.-180p. 11. U.Q.Tolipov. Basic ways and means of using educational values.-T.: ”Continual education” journal.-2014.-№1 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3284 Title A name given to the resource The improvement of educational-training values is of paramount importance within most institutions Author Author Tolipov, Utkir Akbarov, Azamat Abstract A summary of the resource. This article examines the essence of such concepts as "educational values","national values"; "common to all mankind values"; their interrelation and harmonious parity are shown. Special attention is given to the characteristic of values "ustoz-shogird" (teacher-pupil), from the historical and cultural heritage of outstanding thinkers of the East. Keywords: spiritual heritage, national and common to all humankind values, personal and professional qualities, creative abilities, relations "ustoz-shogird"(teacher-pupil), mentor, socialization of the person. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-05-30 Keywords Keywords. Article PeerReviewed PE English https://omeka.ibu.edu.ba/files/original/f221edcc49bff50d3ec6a898bd985147.pdf c2dcf0e220515a14038cf3d180d4bf36 PDF Text Text Journal of Economic and Social Studies Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Zana Pekmez University of Sarajevo, Faculty of Economics Bosnia & Herzegovina zana_pekmez@hotmail.com Abstract: Paper intends to provide an expert view on the approach to transformation of business processes toward business sustainability, or sustainable business processes, with a focus on ecological thinking. Furthermore, it highlights the argument that approach to corporate sustainability is interdisciplinary process spanning from the fields of sociology to applied technological innovation and advances in the IT/IS sphere of influence. Through a review of an amalgam of very recent literature, a versatile business model is recommended bridging together most effective strategic information system planning (SISP) tools for building a sustainable business processes to be deployed in practice. This article intends to help high and middle management extend the notion of sustainable development to their every-day managerial activities while protecting the organization well-accepted business principles. Keywords: Corporate sustainability; Business process management (BPM); Information Systems (IS); Information Technology (IT) infrastructure, Green IT and IS JEL Classification: M15 – IT Management Article History Submitted: 21 March 2016 Resubmitted: 13 July 2016 Accepted: 5 September 2016 http://dx.doi.org/10.14706/JECO SS166110 Volume 6 | Number 2 | Fall 2016 43 �Zana Pekmez Introduction Information systems (IS) and Information Technology (IT) have in many significant ways contributed to the sustainability cause in the past decades as an instrument to raise awareness about ecological thinking, communicate and distribute information, increase productivity and optimize the use of natural resources, as well as reduce travel and transportation (Huang, 2009). However, all these deeds do not excuse these technological systems and constructs from continuing to stand up for the environment advocating and supporting sustainable business practices and systems. Powerful and wide-spread technology and significant role of information systems in our everyday lives are all reasons why IT and IS should be at the forefront of the battle for sustainability. For almost four decades it has been a greatest challenge for IT&IS professionals and business executives to align the overall business strategy with IS&IT development planning and investments. This goal became even more ambitious when executives faced the need to reconcile the corporate IS&IT planning with green strategies and sustainable and ecological thinking. The reality is that the use of IT and IS systems significantly impact the environment at every stage of its life and use cycle: consumption of raw materials, energy and water in the production phase and furthermore the consumption of electricity by use of computer, servers, displays and other hardware. Furthermore, waste of computer components has becoming a tremendous problem due to its toxic content (Murugesan, 2008). Green IS&IT strategy should encompass all the above mentioned stages of IT&IS system life, and at the same time be aligned with corporate business strategy. To achieve this goal companies, need a holistic, systematic and well-planned strategy, deep-seated in the principles of sustainable and ecological thinking toward addressing comprehensive set of environmental concerns. Reconciling the traditional companies’ objectives, such as profits, costs and competitive advantage with environmental and sustainability targets is by far greatest challenge of all, however the following text will demonstrate that there are common factors which inevitably lead in the same direction. Corporate Sustainability and IT&IS Infrastructure In the past two decades the fight for sustainability has expanded from regulators and government agencies to corporate world. Following the ecological thinking 44 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure principles, aware business executives have formed an organization – World Business Council for Sustainable Development which has grown in 2000 to count 150 international companies (Dyllick and Hockerts, 2002). However, the locus of their fight for sustainability has been mainly dominated by „eco-efficiency“, e.g. energy saving strategies, recycling, utilization of sustainable products, which have for sure colored most of the companies’ green (Dyllick and Hockerts, 2002, 131). Furthermore, companies have mostly focused on consumption of energy by the datacenters and extensive physical hardware machines and servers. According to the analyst from Gartner Research, IT departments of fairly large companies spend about 5% of their total budget on energy costs, however the IT's „dirty secret “is that more energy is consumed during the production and shipping process of hardware (PCs, servers etc.) than during its actual usage (cited in Saran, 2007). Progressively standards for achieving sustainable business practices are becoming more demanding. Besides the efficient use of resources and energy, companies should take into consideration the entire life-cycle of products and therefore reconsider many aspects of doing business to maintain the recognition of being compliant to sustainability standards. The decision to incorporate practices such as, life cycle analysis, environmental auditing and reporting, outsourcing decisions and choice of suppliers depending on their commitment to environment, are becoming a crucial element of companies’ strategy and competitiveness (Elkington, 1994, pp. 91). Environmental policies and guidelines have been primarily the task of government agencies and regulatory to be imposed on the corporates. In this arrangement, the corporate world has adopted by inertia a very reactive role, in addition to the obligation of compliance. However, due to a very dynamic and changing market conditions, companies require an innovative and unique business practices which will add value to the entire business model and products and thus grant these companies a competitive advantage in its respective industry (El- Gayar and Fritz, 2006). A competitive advantage could be measured by an additional value added to products, better cost-management practices, a robust and efficient information system and IT infrastructure. During last decade, many companies have discovered that incorporating sustainability into its overall long-term business strategy would possible grant them all the above, namely: additional value to products, better cost management and efficiency of IS&IT infrastructure. Achievement or retention of competitive Volume 6 | Number 2 | Fall 2016 45 �Zana Pekmez advantage in its respective industry and stable stream of income are much valued end-results of incorporating sustainability issues as important features of business processes and overall business goals. The following table summarizes some of the key success factors critical to achieve sustainable and versatile operating model. All these factors summarized below stem from various disciplines. Table 1: Summary of Key Factors IT INFRASTRUCTURE STRATEGIC IS PLANNING Virtualization and cloud computing – consumes less energy; prevents the need for a data centers and prevents the need for extensive cooling systems. CIO&COO awareness – Nexus between Operations and IT toward sustainable business practices Using virtualization software to divide servers into multiple machines BPM – a holistic management practices of measuring and re-designing the processes –transformation. Replacing the old equipment with new energy efficient one – EPEAT and ENERGY STAR certified systems (LCD monitors instead of CRT technology) LEAN methodology – elimination of all kinds of waste. Deployment of optimization systems Remote workers – less office space, less heat, less power, less commuting. Power management – activate the power management features on servers and devices; system settings to hibernate and shut down. Video-conferencing – with employees, customers and suppliers. Using thin-client computers Eco –metrics –measuring the use of energy & the levels of emission. Recycle IT equipment properly: not carefully recycling practices are for companies’ serious financial and information security liability. Corporate environmental 46 reporting Shared service centers Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Use of renewable energy Selecting a supplier according to their commitment to the environment (IS Value Chain) Use Green IT Standards – Epeat (www.epeat.net), the Energy Star 4.0 standard and the RoHS Directive (www.rhos.gov.uk) Eliminate printing and use of paper. Source: Table is compiled by the author from various sources listed at the reference list. Building the Theory of Corporate Sustainability Business Process Management (BPM) approach An approach to transformation and innovation in business practices is an interdisciplinary process with business-related and people-related content and issues concerning design and architecture. To measure the efficiency and effectiveness of processes in terms of the general behavior and practices, a maturity models have been introduced to the fields of Business Process Management (BPM) and Software engineering. These models guide organizations toward prioritizing activities and designing the roadmaps. De Bruin and Rosemann (2007) and Rosemann and vom Brocke (2010) developed a concept of BPM maturity model which contains six crucial components for successful and effective business management namely: strategic alignment of corporate goals, corporate governance, overall methods, information technology, people and culture (cited in Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis, 2012, 284). Thus, in order to get the most accurate diagnosis of companies processes to fix them and achieve better and more efficient business practices interdisciplinary approach as an amalgam of different fields of studies and perspectives are most needed. Since corporate sustainability is entire company's target/goal affecting all of the business practices and departments – from hygiene maintenance, operation processing and high level executive decision making – the most encompassing way to address this issue is through the Business Process Management (BPM). This phenomenon has been revolving throughout the decades and is very flexible to changes and innovation thus manager should use it as a tool to diagnose inefficiency and tailor the processes that will be highly efficient (supporting the main business Volume 6 | Number 2 | Fall 2016 47 �Zana Pekmez goals) and highly sustainable (supporting the environment)- all at the same time. Seidel, vom Brocke and Recker (2011) emphasize that only through the employment of business process change and BPM methodology (process analysis, process performance measurement and process improvement) the altering capability and function of IS and the subsequently the role of IT, will be fully effective in transforming the business toward sustainable practices. Coinciding roles of IS and IT in making of sustainable business It is important at the very beginning to make a distinction between IS and IT systems as both are integral tools to sustainable business, however they differ in terms of ways of contribution to the cause, for example: IT is a set of products, mostly hardware, that processes, transmits and stores the data and promotes sustainability with a focus on energy saving, reducing the equipment waste and optimizing utilization. On the other hand, IS (information systems) is an amalgam of organizational goals and strategies brought to life through information system and software to achieve sustainable business practices (Boudreau, Chen & Huber, 2008). For example, Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis (2012) discussed the process of IS engineering with the focus on energy efficiency pointing out that application could be more or less efficient depending in the infrastructure in which it is running (different platform would require different levels of energy). Therefore, it is crucial to discuss the existing theories on the role of the hardware components (IT) in the building process of sustainable business model. On the role of Information technology In IT processes consumption of power by data centers and hardware have been popular topics; however, the power usage by networks has not been mentioned that often in the context of sustainable IT infrastructure. The fact is that networks consume more energy than data centers and this trend will be constantly increasing. Thus it is of crucial importance to consider the organization of business practices and systematization of human resources in regard to information processing and information sharing (Pernici, Aiello, vom Brocke, Donnellan, Gelenbe and Kretsis, 2012). Huang (2009) defined the sustainable IT development as a set of principles that takes into account at the same time and with equal importance the business goals and the environment. He proposes a new theoretical approach for the lifecycle 48 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure analysis of IT equipment with an explicit focus on the sustainability and he calls it „sustainable system development lifecycle “(SSDLC). SSDLC includes six stages: sustainable planning, sustainable analysis, sustainable design, sustainable implementation, sustainable maintenance and sustainable disposal (Huang, 2009). At each of these stages environmental requirements should be in focus: energyefficient equipment and power-management software should be used in the planning and design stages; system testing for energy consumption, proper installation, proper system migration during testing and implementation and proper maintenance to ensure that system if working in the most efficient state to extend its endurance and detect any inefficiencies in time. In addition, effective and sustainable disposal of the equipment is a final, however, most important stage that has been in most cases neglected. (Huang, 2009). This theory of SSDLC should be guiding principles for all IS&IT and business executives in the process of transformation and changeover to sustainable business practices. A more dynamic theory approach through the classification of degrees of effects of IT infrastructure on the environment has been developed by Hilty at al. (2006) and Kohler and Erdmann (2004) isolating three types of effects: first-order, second-order and third-order. (Cited in Dedrick, 2010, pp. 175). First-order effect is direct impact on the environment from IT hardware and equipment through the entire product lifecycle - from production to disposal. Second-order effects are impacts on the subsidiary processes such as transportation and industry and third- order effects are more complicated constructs whose effects have a power to change people's lifestyle and the economy, such as an example of home-business built on ecommerce platform (Dedrick, 2010). Information systems Even though their means of contribution to the sustainable corporate practices differ, a well-designed IS shall not be successful without efficient hardware components and in the long run such business model will not be sustainable in every aspect of its functional performance and end-result. The overview of the following theories will demonstrate the operational interdependence of IS and IT in the process of reaching long-term sustainable business-model. Besides the Real Theory of Management, that represents the gold-standard guidelines for competitive and successful business practices, new theories have been emerging with a focus on ecological thinking and sustainability that besides the Volume 6 | Number 2 | Fall 2016 49 �Zana Pekmez obvious fight for the environment, still guards the traditional profit-making and competitiveness mantra: such theories revolve mainly around the ideas of ecoefficiency, eco-effectiveness, life-cycle analysis, Lean & Green methodologies etc. (ElGayar and Fritz, 2006). Hart (cited in Boudreau, Chen & Huber, 2008, pp. 7) identifies three major sustainability goals, namely: pollution prevention, sustainable product utilization and clean technologies. On the level of firm or organization there are many means by which IS and IT could effectively contribute to all three mentioned goals, such as; using virtualization instead of physical servers (to prevent pollution), recycling computer (sustainable product utilization) and video conferencing or SharePoint for clean technology (Boudreau, Chen & Huber, 2008). Among these three frameworks of integrating sustainability into SISP, Boudreau, Chen & Huber (2008) also mention the key concepts of strategic alignment of business processes by using IS to achieve „aggregation, adaptation and arbitrage “, as well as the principles of ecological thinking („eco-efficiency, eco-equity and eco-effectiveness “) as drives toward sustainability of business practices trough the IS/IT deployment (Boudreau, Chen & Huber, 2008, pp.16). Furthermore, Dyllick and Hockerts (2002) recognized the need to contribute to building a systematic theory of corporate sustainability and they introduced the model approach of six criteria defining three cases for sustainability, namely the business case, the natural case and the societal case. In most firms’ executives follow solely the principles of eco-efficiency in order to achieve positive net value (economic value) in contributing to environment. Dyllick and Hockerts (2002) add to this business case yet another important criterion, namely the socio-efficiency as a new concept that correlates the firm's value to social impact suggesting that when designing a business case besides the eco-efficiency, socio-efficiency should also be used as a guiding principle. In addition to business case, two authors presented the natural case for corporate sustainability driven by the concept of eco-effectiveness and the societal case defined by socio-effectiveness and ecological equity. (Dyllick and Hockerts, 2002). Belief-action-outcome (BAO) & Energy Informatics Nigel P. Melville (2010) adds to the theory of corporate sustainability by analyzing the role of IS and innovation through the prism of two new disciplines, namely behavioral science and design science. A micro-macro model, called belief-action50 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure outcome (BAO), has been developed with an intention to research sustainability issues on diverse levels of granularity and through the different theories and constructs since the field of IS applies many theories among which are some from its own field and many are from different disciplines such as behavioral studies, psychology, sociology, economics etc. (Melville, 2010). Watson, Boudreau and Chen (2010) contributed to theoretical background by demonstrating a new conceptual framework – Energy Informatics. It is a solutionoriented interdisciplinary idea on how IS should contribute to sustainability with a focus on reducing energy consumption. In other words, energy informatics is a concept that models the relationship between energy and information using the tools from management science, design science and policy formation. It also important to mention that their interpretation and understanding of ecological goals is driven by above mentioned Dyllicks and Hockerts (2002) theories of eco-efficiency, eco-equity and eco-effectiveness. (Watson, Boudreau and Chen, 2010). Besides developing groundwork for a new theory, Watson, Boudreau and Chen (2010) underlined a several fronts where IS scholars and business executives should practice energy informatics, namely: research (9 core research questions have been proposed), teaching, Journals (by migration to electronic format and by actively publishing issues in sustainable IS) and through IS Association (Watson, Boudreau and Chen, 2010). Competitive advantage: “undeniable” fallout of sustainable business practices Translating its business practices and infrastructure to ecological and sustainable processes most practitioners and executives identify with high costs and low returns, however sustainability has become a global goal and most of organizational and firms had recognized sustainability issues as critical by incorporating it in its overall longterm business strategy. Those companies that have not done this yet are exposed to high risk of competitive disadvantage for many reasons: costumers worldwide are more environmental consciousness and prefer to buy products with green labels. Furthermore, elimination of many forms of waste (waste of resources, time, and energy) will ultimately lead to lower costs, higher profitability and returns (Boudreau, Chen & Huber, 2008). Practitioners warn that also the outsourcing decision should include, as a grading criterion, vendor’s commitment to sustainable business practice. Companies will be ultimately more. Volume 6 | Number 2 | Fall 2016 51 �Zana Pekmez motivated to comply with the sustainable standards due to the increased disclosure from companies in relation to their ecological profiles which will directly impact label, image and ratings in their respective industries. Commoditization leading to sustainability Making economic value of goods and services eventually will lead to reducing overheads and transactions costs, however according to Editor in Chief of Computer Weekly Bryan Glick, such commoditization could be a fertile ground for innovation. Consequently, innovation boosts competitive advantage and cost advantage if it channeled in the right direction toward sustainable development. As an example of services being commoditized for greater good, Glick mentions “cloud services” – large and expensive to maintain IT infrastructure (storage, processors and physical servers) is now replaced by 1GB archive disk space for a one US cent on monthly basis. Thus, cloud computing directly eliminates investing heavily in expensive IT infrastructure which enables firms from very beginning to save on large capital costs which further reduces the barriers for market entry for many firms. (Sako, 2012). Conclusion There are many approaches to corporate sustainability and environmentally sound business practices, but the question remains how are we to select the business model that will be committed to the environment, profitable and affordable at the same time. The most recent literature on SISP declares this to be a scientific question suggesting that academic research will eventually reveal a manual for the practitioners on how to bring together the costs and benefits of corporate environmental initiatives and transformations (Dedrick, 2010). Current literature mostly agrees that the competitive advantage from new IT technologies and IS innovations will be assured once these are accompanied with other factors such as corporate governance focused on creativity and exploiting new opportunities introduced by competitive top and middle management. (Del Giudice and Straub, 2011) In the meantime, practitioners should keep in mind some of the key approaches to corporate sustainability highlighted in this paper. Most importantly, in designing a sustainable business model one should focus on interdisciplinary approach bringing 52 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure together sociological, psychological, economical, technological and financial components to construct efficient and lean processes with minimal waste. References Anandarajan M., & Lippert K.S. (2006). Competing Mistresses? Academic vs. Practitioners Perceptions of Systems Analysis. Journal of Computer Information Systems, Special Issue 2006, 114-126. Bansal, P., & Roth, K. (2000). Why Companies go Green: A Model of Ecological Responsiveness. Academy of Management Journal, 43 (4), 717-736. Boudreau, M.-C., Chen, A.J. & Huber, M. (2008). Green IS: Building Sustainable Business Practices in Watson R.T. (Ed.), Global Text Projects, Athens, GA, 247-261. Byrd, A.T, Lewis, R.B., & Bradley, V.R. (2006). IS Infrastructure: The Influence of the senior IT leadership and Strategic Information Systems Planning. Journal of Computer Information Systems, Fall 2006, 101-113. Cone, E. (2006). The Greening of the CIO, CIO Insight, 31-38. de Bruin, T., and M. Rosemann (2007). Using the Delphi Technique to Identify BPM Capability Areas. Paper presented at the Proceedings of the 18th Australasian Conference on Information Systems (ACIS 2007), Toowoomba, Australia. Del Giudice, M., & Straub, D. (2011). IT and Entrepreneurism: An On-Again, Off-Again Love Affair or a Marriage? MIS Quarterly, 35 (4), 5. DiRamio, D. (2009, January). 10 Tips to Green IT. Communications News, 32. Drucker, F.P. (2006, February). What Executives Should Remember? Harvard Business Review, 144-152. Dyllick, T., & Hockerts, K. (2002). Beyond the business case for corporate sustainability. Business Strategy and the Environment, 11, 130-141. Volume 6 | Number 2 | Fall 2016 53 �Zana Pekmez El-Gayar, F.O., & Fritz, D.B. (2006). Environmental management information systems (EMIS) for sustainable development: A Conceptual Overview. Communications of AIS, 17 (34), 2-49. Elkington, J. (1994). Towards the Sustainable Corporation: Win-Win-Win Business Strategies for Sustainable Development. California Management Review, Winter 1994, 90-100. Forester Research (2008). The Down of Green IT services. Gladwin, N.T., Kennelly J.J., & Krause T.-S. (1995). Sifting Paradigms for Sustainable Development: Implications for Management Theory and Research. Academy of Management Review, 20 (4), 874-907. Glick, B. (2012, September/October). Among the uncertainty of the cloud sits a platform for innovation. Computer Weekly, 14. Hart, S.L. (1997). Beyond greening: Strategies for sustainable world. Harvard Business Review, 75 (1), 66-76. Hasan, H. M., Ghose, A. K., & Spedding, T. A. (2009). IS solution for the global environmental challenge: An Australian initiative. Paper presented at the Proceedings of the Fifteenth Americas Conference on Information Systems: AMCIS2009, San Francisco, California, 1-7. Hilty, L.M., et al. (2006). The Relevance of Information and Communication Technologies for Environmental Sustainability—A Prospective Simulation Study. Environmental Modelling& Software, 21 (11), 1618–1629. Kohler, A., & Erdmann, L. (2004). Expected Environmental Impacts of Pervasive Computing. Human and Ecological Risk Assessment, 10 (5), 831–852. Huang, H.A. (2009, Summer). A Model for Environmentally Sustainable Information Systems Development. Journal of Computer Information Systems, 114121. Melville, P.N. (2010). Information systems innovation for Environmental Sustainability. MIS Quarterly, 34 (1), 1-21. 54 Journal of Economic and Social Studies �Key Success Factors for Sustainable Strategic Information Systems Planning and Information Technology Infrastructure Murugesan, S. (2008, January/February). Harnessing Green IT: Principles and Practices. IT Professionals, 24-33. Newkirk, E.H., & Lederer, L.A. (2007, spring). The Effectiveness of Strategic Information Systems Planning for Technical Resources, Personnel Resources, and Data Security in Environments of Heterogeneity and Hostility. Journal of Computer Information Systems, 34-44. Pernici, B., Aiello, M., vom Brocke, J., Donnellan, B., Gelenbe, E., & Kretsis, M. (2012). What IS Can do for Environmental Sustainability: A Report form CAiSE’11 Panel on Green and Sustainable IS. Communications of the AIS, 30 (18), 275-292. Piccoli, G., & Ives, B. (2005). Review: IT-Dependent Strategies Initiatives and Sustained Competitive Advantage: A Review and Synthesis of the Literature. MIS Quarterly, 29 (4), 747-776. Rosemann, M., & vom Brocke, J. (2011). The Six Core Elements of BPM in vom Brocke, J., and M. Rosemann (Eds.). Handbook on Business Process Management, vol. 1, New York, NY: Springer. Sage, P.A. (1999). Sustainable Development: Issues in Information, Knowledge, and Systems Management. Information, Knowledge and Systems Management, 1, 185-223. Sako, M. (2012, July). Technology Strategy and Management Business Models for Strategy and Innovation. Communications of the ACM, 55 (7), 23. Saran, C. (2007). Green IT goes beyond the datacenter. Computer Weekly, 10. Seidel, S., vom Brocke, J., & Recker, J. (2011). Call for Action: Investigating the Role of Business Process Management in Green IS. Paper presented at the Proceedings of SIG Green Workshop. Sprouts: Working Papers on Information Systems, 11(4). Retrieved from: http://sprouts.aisnet.org/11-4 Watson, T.R., Boudreau, M., & Chen J.A. (2010). Information Systems and Environmentally Sustainable Development: Energy Informatics and New Directions for the IS Community. MIS Quarterly, 34 (1), 23-38. Volume 6 | Number 2 | Fall 2016 55 �� Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3318 Title A name given to the resource Key Success Factors for Sustainable Strategic IS Planning and IT Infrastructure Author Author Zana, PEKMEZ Abstract A summary of the resource. Abstract: Paper is intended to provide an expert view on the approach to transformation of business processes toward business sustainability, or sustainable business processes, with a focus on ecological thinking. Furthermore, it highlights the argument that approach to corporate sustainability is interdisciplinary process spanning from the fields of sociology to applied technological innovation and advances in the IT/IS sphere of influence. Through a review of an amalgam of very recent literature a versatile business model is recommended bridging together most effective strategic information system planning (SISP) tools for building a sustainable business processes to be deployed in practice. An article is intended to help high and middle management extend the notion of sustainable development to their every-day managerial activities while protecting the organization well-accepted business principles. Keywords: Corporate sustainability, BPM, IS, IT infrastructure, Green IT and IS Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-11 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/7f8e7aa1a07c609ce7450dd9f5425031.pdf 3484db3db523d1b130ec1a30c09e93bb PDF Text Text Journal of Economic and Social Studies Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Remzije Rakipi Faculty of Business and Economics South East European University in Tetovo Republic of Macedonia r.rakipi@seeu.edu.mk Shpresa Syla Faculty of Business and Economics South East European University in Tetovo Republic of Macedonia s.syla@seeu.edu.mk Abstract: The Republic of Macedonia has since its independence made great progress in terms of economic reform and social development; prompted often by the county’s aspiration to become part of the European Union. However, in spite of these advances, weak labour market indicators in particular among females remains a great concern and a persisting challenge for the country. Based on official data from the Labour Force Survey (LFS) conducted by the State Statistical Office (SSO) for the case of the Republic of Macedonia, the aim of this study is to examine the development of female unemployment in the past decade (2004-2013) in the Republic of Macedonia from a multi-dimensional perspective. This while comparing national trends with other Balkan countries already in the EU using LFS data provided by Eurostat. Findings show that the female unemployment rate in the R. Macedonia is moving in the right direction with a decreasing trend throughout the observed period with drop of 8.8 percent point from 2004 to 2013 (observed at 29% in 2013). Compared to Balkan countries in the EU, findings show that the R. Macedonia has been performing relatively better than these countries, who have all experienced negative fluctuations in female unemployment rates in the observed period with rates at higher levels compared to 2004. Furthermore, the findings show no evidence of inequality between male and female unemployment rates in the country, however notable disparities are evident when observing unemployment among various age groups and the level of education attainment.The paper concludes with clear policy recommendations for boosting female employment to include increasing female access to education and entrepreneurial programs, increased access to childcare, etc. Volume 6 | Number 2 | Fall 2016 Keywords: Labour market, female unemployment; unemployment, employment JEL Classification: J01, E24 Article History Submitted: 17 December 2015 Resubmitted: 12 August 2016 Accepted: 24 August 2016 http://dx.doi.org/10.14706/JEC OSS16619 57 �Remzije Rakipi, Shpresa Syla Introduction Issues related to the labour market are the heart of social and political debate in the Republic of Macedonia. The country has since its independence made great progress in terms of economics reforms and social development. However, in spite of these advances, weak labour market indicators in particular among females (15-64 years) remains a great concern and a persisting challenge for the country. High unemployment amongst females is however not a recent phenomenon in the country, nor is the country an exception in this regards. As argued by MojsoskaBlazevski, Najdova, Stojkov, and Asenov (2009), the labour market in the Republic of Macedonia is considered insufficiently inclusive of females similar to other Western Balkan countries, this despite legislation being in place on labour relations, gender equality, anti-discrimination and equal employment opportunities. Job creation for the most vulnerable groups in society, and especially women, is a key component in the fight against social exclusion, and the most effective way to provide vulnerable groups such as females a sense of independence, financial security and a sense of belonging. Women represent a category in society that is traditionally excluded or underrepresented in the labour market not only due to discrimination and inequality in the labour market, but significantly also due the role they play within the household which makes it often more difficult for them to enter the job market and pursue careers. In this context, it is the aim of this study to shed some light on the development and challenges of female unemployment in the past decade (2004-2013) in the Republic of Macedonia from a multi-dimensional perspective. This while comparing national trends with trends in other Balkan countries, more specifically with Balkan countries in the European Union. Literature Review Gender based unemployment in general does not present a new or an unexplored area. However not much study exists on this particular topic that is specific to the R. of Macedonia. At the least no known studies exist covering trends in female unemployment for the observed period that additionally compares female unemployment trends with Balkan countries already in the EU. Available studies on female unemployment specific to the R. of Macedonia is predominately found in non-scientific studies and reports (European Training Foundation, 2013; United Nations, 2013; World Bank, 2008 and 2013) where female unemployment is usually covered lightly as part of a more general studies of labour market indicators in the R. of Macedonia; serving primarily policy making objectives. The closest 58 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study scientific research in this field can be attributed to a few (Mojsoska-Blazevski et al., 2009; Lehmann, 2010; Mojsoska-Blazevski, 2012; Mojsoska-Blazevski and Kurtishi, 2012; Avlijaš, Ivanović, Vladisavljević and Vujić, 2013; Mickovska-Raleva and Dimitrijevska, 2013) who try at various levels to depict a picture of female unemployment in the R. of Macedonia; sharing the common understanding that women in the R. of Macedonia are traditionally underrepresented in the labour market. Mickovska-Raleva and Dimitrijevska (2013) further arguing that special attention needs to be given to policies for greater inclusion of women. This in particular women from rural areas and young women. Mojsoska-Blazevski and Kurtishi (2012) argue to greater depth in this context and state that the main reason why the female unemployment rate is not much higher is the relatively high willingness of women to take low-paid, secure public sector jobs, or jobs in newly created small private firms, since by tradition, they are second-income family earners. Methodology To properly understand female unemployment, it is essential to consider the development of the labour market from a much broader perspective and to also observe changes in the labour market in general. A close look at other labour market indicators such the rate of economically active and inactive population and employment trends is deemed warranted in this case. This in respect to both gender gaps and aggregate level (National Level) rates. A valuable source in the capturing of events in the labour market is the Labour Force Survey (LFS), which is executed annually by the State Statistical Offices of various EU countries and EU candidate countries. Hence, for the sake of harmonised labour market data, in particular for comparison purposes, data analysis of trends in female unemployment in Republic of Macedonia is based on official Labour Force Survey data published by the State Statistical Office of the Republic of Macedonia and Labour Force Survey data of selected Balkan countries published by Eurostat. Data Analysis Female Labour Market Participation and Inactivity Labour force participation rate (Economic Activity Rate - EAR) of women in the Republic of Macedonia has shown a slight increase in the last decade (2004-2013). The participation of women in the labour market has increased in the observed period by 12.8% (Figure 1) which is slightly higher than the increase experienced in Volume 6 | Number 2 | Fall 2016 59 �Remzije Rakipi, Shpresa Syla the case of male labour force participation (8.9%) in the same period. Noteworthy, is that a noticeable gap exists when comparing activity rates amongst females and males. As shown in Figure 1, female activity rates are significantly lower than male activity in each year of the observed period. According to the World Bank (2008), lower female participation rates are believed to be mainly driven by very low levels of participation of young-rural-unskilled women. Furthermore, according to the same report, most women who are not in the labour force are either in school or undertaking household activities. While, according to Mojsoska-Blazevski et al. (2009), the main factors influencing low participation of women in R. of Macedonia include the tradition and cultural habits in the country, the low level of education and skills, ethnicity in combined with the education, the availability and cost of child care services and care for older family members, labour market discrimination towards females, etc. Mojsoska-Blazevski et al. (2009) further state that young, rural and unskilled females are less likely to be active in the labour market. Another important aspect to consider in this context is women’s participation in the informal economy. As stated by Huyer (2014), the low labour force participation rate of women in the labour market may also indicate a much greater reliance by women on the informal economy. This particular in the case of rural women, and of women with Albanian and Roma origin (Lehman, 2010). Female labour force participation slightly increased during the global economic crisis opposite to what could have been expected. As stated by Avlijaš et al. (2013) this could be understood as a coping mechanism of households facing income shocks by adding a family member to the labour market or replacing a family member who lost their employment. From an educational attainment perspective, female participation in the labour market is highest among women with tertiary education which saw a slight but steady increase until 2010 (89.4%) following a slight decrease in the following years reaching 87.6% in 2013. 60 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Figure 1: Labour Force Participation in R. of Macedonia 2004-2013 by Gender and Level of Education Attained Among Females (%) Source: LFS, State Statistical Office of the R. of Macedonia Compared to Balkan countries in the European Union (Figure 2), data show that R. of Macedonia has had the lowest female labour market participation rate throughout the observed period followed by Croatia and Greece with slightly higher rates. R. of Macedonia lies significantly below the average participation rate of these countries collectively, however noted with the highest increase in rates in the study period with 12.8% followed by Bulgaria with 10.4%. Women in Slovenia are much more active compared to other Balkan countries with an activity rate of 66.6% in 2013, which is 13.9% higher than the R. of Macedonia (52.7%) in the same year. Figure 2: Female Labour Force Participation in Selected Balkan Countries 20042013 (%) Source: LFS, State Statistical Office of R. of Macedonia and Eurostat Volume 6 | Number 2 | Fall 2016 61 �Remzije Rakipi, Shpresa Syla The inactivity rate of females depicted in Figure 3 as a percentage of the total population in R. of Macedonia show that female inactivity is twice as high as male inactivity in the country. Looking at the period 2006-2013, data show that inactivity amongst both females and males is on the way down, but with a very slow and marginal downwards trend and an overall fall of app. 7% in both cases from 2006 to 2013. Figure 3: Inactive Population as a Percentage of the Total Population in R. of Macedonia by Gender (%) Source: Author’s own work based on LFS data, State Statistical Office of the R. of Macedonia According to data, female inactivity in R. of Macedonia is mostly resulting from household responsibilities and secondly as a result of undergoing education and training (Table 1). While, female inactivity in benchmark countries (Table 1) can be explained primarily due to education and training and secondly to retirement; indicating a much older female population in these countries compared to R. of Macedonia. As reported by the World Bank (2008), who has studied female inactivity at sub-group level in R. of Macedonia, the large share of females who are inactive due to household activities can mainly be attributed to a large number of full-time housewives among women who are less educated and live in rural areas. 62 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 1: Inactive Female Population - Main Reasons not Seeking Employment in Selected Balkan Countries in 2013 (%) Awaitin Own Other Looking Pursuing Retire Believes Other g recall illness family/ after education/traini d no reason to work or personal children or ng work is s (on lay- disabilit responsibiliti incapacitate availabl off) y es d adults e Bulgaria 0.9 11.9 10.2 13.3 28.4 19.4 11.6 4.2 Greece : 4.3 18.0 7.8 27.7 16.0 2.2 24.0 Croatia 0.5 6.8 17.8 7.3 31.7 26.1 7.7 2.1 Slovenia 0.3 8.9 9.1 3.4 32.6 38.4 3.7 3.5 : 3.1 38.7 11.2 26.8 11.9 5.2 3.1 Macedoni a Source: Author’s own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat Female Employment Looking at female employment in the R. of Macedonia in the study period, data show that the female employment rate is slowly but constantly on the rise with an 8.4 p.p. increase from 2004 to 2013. Positive and noteworthy in this context is that no spill-over effects seem to have been observed on both female and male employment following the global economic crisis in 2008/09. On the adverse side, noteworthy is that data show female employment rates to be significantly below male employment rates with a gap of 1.5 time higher male employment rate compared to the female employment rate in 2013. Volume 6 | Number 2 | Fall 2016 63 �Remzije Rakipi, Shpresa Syla Figure 4: Female vs. Male Employment Rates (15-64 years) in R. of Macedonia 2004-2013 (%) Source: Author’s own work based on LFS data from the State Statistical Office of the R. of Macedonia In a semi regional perspective, data show (Table 2) that the R. of Macedonia is not the only country to struggle with low female employment rates. A similar problem is observed in Greece with a slightly higher female employment rate; 39.9% compared to 37.3% in the case of R. of Macedonia in 2013. Looking at the trend over the study period, all countries included in the study have observed increases in female employment except for Greece and Slovenia who registered a decline of 5.6 p.p. and 2.1 p.p., respectively, from 2004 to 2013. The R. of Macedonia is the only country that has observed a relatively consistent increase in rates throughout the study period; reaching an 8.4 p.p. increase from 2014-2013. Table 2: Female Employment Rates (15-64 years) in Selected Balkan Countries 2004-2013 (%) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Macedonia 28.9 30.1 30.7 32.3 32.9 33.5 34.0 35.3 35.3 37.3 Bulgaria 51.6 51.7 54.6 57.6 59.5 58.3 56.4 55.6 56.3 56.8 Greece 45.5 46.0 47.3 47.7 48.6 48.9 48.0 45.0 41.7 39.9 Croatia 47.8 48.6 49.4 51.6 52.7 53.7 52.1 49.5 48.5 48.5 Slovenia 61.3 61.3 61.8 62.6 64.2 63.8 62.6 60.9 60.5 59.2 Source: Author’s own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat 64 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Based on available data (since 2006 only), from an educational attainment perspective (Figure 5), female employment in R. of Macedonia shows a decreasing trend for educated women with a 4.2 p.p. decrease from 2006 to 2013. An opposite trend for women with lower levels of education is however observed. Observed data show that female employment amongst women with primary and lower secondary education (levels 0-2) has increased by 18.4% in the study period and 12.8 % in the case of women with upper secondary and post-secondary non-tertiary education (levels 3 and 4). Figure 5: Female Employment Rate in R. of Macedonia by Education 2006-2013 (%) Source: LFS, State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 3), the R. of Macedonia lies significantly below each of the countries and across all educational levels. While looking specifically at female employment with tertiary education attainment a similar trend is seen with declining rates across all countries, but with Greece experiencing the most notable decline by 14.1 p.p. Opposite to other countries, R. of Macedonia is the only country that has observed an increase from 2006-2013 in female employment amongst lower education levels. Volume 6 | Number 2 | Fall 2016 65 �Remzije Rakipi, Shpresa Syla Table 3: Female Employment Rate by Education (Highest Level Attained) in Selected Balkan Countries (%) 2006 Bulgaria Greece Croatia Slovenia Macedonia Level 0-2 23.6 33.2 27.9 37.5 15.2 Level 3-4 62.6 47.9 54.4 63.5 40.6 2013 Level 5-8 79.7 76.7 79.6 86.6 68.3 Level 0-2 23.7 27.7 23.7 27.2 18.0 Level 3-4 59.2 36.4 50.9 58.8 45.8 Level 5-8 79.1 62.6 75.1 80.8 64.1 Change from 2006 in Percent Point Level Level Level 0-2 3-4 5-8 0.1 -3.4 -0.6 -5.5 -11.5 -14.1 -4.2 -3.5 -4.5 -10.3 -4.7 -5.8 2.8 5.2 -4.2 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat One of the ways to boost employment is through fostering entrepreneurship. In this context, R. of Macedonia shows progress. As can be seen from the number of selfemployed females in the country (Table 4), the number is on the rise going from app. 19.500 cases in 2008 to app. 27.900 cases in 2013. Approximately, one third of self-employed females are at the same time also employers, and although this category has increased, the highest increase in the observed study period (20082103) has been observed among self-employed females without employees (app. 6500 persons). The study period has in this case been reduced to include only observed figures from 2008-2013 due to missing data for period 2004 to 2007. Table 4: Female Self-Employment in R. of Macedonia from 2008 - 2013 (in thousands) Self-employment Type/Year 2008 2009 2010 2011 2012 2013 Self-employed Total Self-employed persons with employees (employers) Self-employed persons without employees (own-account workers) 19.5 17.8 20.2 23.9 24.0 27.9 7.1 7.3 8.5 9.1 8.2 9.0 12.4 10.5 11.7 14.8 15.8 18.9 Source: LFS, State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 5), the R. of Macedonia is the only country with increasing trends throughout the period 2008-2013, while all other countries have had an interruption in their positive trends following 2010; registering decreasing number in both 2011, 2012, and 2013. 66 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 5: Female Self-Employment in Selected Balkan Countries from 2008 - 2013 (in thousands) Country/Year 2008 2009 2010 2011 2012 2013 Bulgaria 124.3 121.2 124.9 110.3 103.2 109.2 Greece 370.9 371.7 379.4 368.1 351.8 341.9 Croatia 104.0 104.4 115.6 106.4 90.5 83.4 Slovenia 24.0 24.8 32.0 31.8 30.3 28.9 Macedonia 19.5 17.8 20.2 23.9 24.0 27.9 Source: LFS, State Statistical Office of R. of Macedonia and Eurostat Female Unemployment The female unemployment in the R. of Macedonia stands at a high level, but moving in the right direction (Figure 6). According to data for the observed period, the female unemployment rate shows a decreasing trend and has dropped by 8.8 p.p. in the study period to reach 29% in 2013. This rate coincides with the level of male unemployment in the same year. The Female unemployment has been slightly higher than male unemployment rate until 2010, but on occasions also slightly lower than male unemployment as observed in 2011 and 2012. The discrepancy in gender based unemployment trends in the period 2009-2012 should be seen in light of increased employment in the public sector, and notably in education, which have been favouring women more than men (European Training Foundation, 2013). While labour force participation and employment rates of women are much lower than those of men, unemployment rates are almost equally distributed between the genders. Hence no gender gap is evident. Mojsoska-Blazevski and Kurtishi (2012) argue that this may reflect the relatively high willingness of women to take low-paid, secure public sector jobs, or jobs in newly created small private firms, since by tradition, they are second-income family earners. Volume 6 | Number 2 | Fall 2016 67 �Remzije Rakipi, Shpresa Syla Figure 6: Unemployment rate in Macedonia by gender 2004-2013 (%) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Observed data for 2013 show (Table 6) that R. of Macedonia has the second highest female unemployment rate (29%) compared to the benchmark, surpassed in this context only by Greece (31.6%) who registered a higher female unemployment rate in the same year. Slovenia (11.1%) and Bulgaria (11.9%) represent the two countries in this context with lowest female unemployment rates in 2013. The lowest female unemployment rate in the observed period has been registered in Slovenia in 2008 at the rate of 4.9% and the highest rate in the R. of Macedonia back in 2004, which registered a female unemployment rate approximate six times higher than Slovenia (lowest in 2004) and approximately twice the rate of Greece registering the second highest female unemployment rate in the same year. Looking at the trend in the observed period, all countries have experienced fluctuations in female unemployment rates, and notable fluctuations in the period 2009-2013, due to particular to the spill-over effects of the global economic crisis. The R. of Macedonia is the only country registering an uninterrupted decrease in rates throughout the period. 68 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Table 6: Female Unemployment Rates in Selected Balkan Countries 2004-2013 (%) Country/Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Macedonia 37.8 38.4 37.2 35.5 34.2 32.8 32.2 30.8 30.3 29.0 Bulgaria 11.7 9.9 9.3 7.3 5.8 6.7 9.5 10.1 10.9 11.9 Greece 16.1 15.6 13.9 13.0 11.6 13.4 16.5 21.7 28.4 31.6 Croatia 15.8 14.3 13.2 11.6 10.6 11.0 12.6 14.0 16.3 17.0 Slovenia 6.5 7.2 7.4 6.0 4.9 5.9 7.2 8.3 9.5 11.1 Source: Authors’ own work based on LFS data from State Statistical Office of R. of Macedonia and Eurostat Looking at female unemployment from an age perspective (Figure 7), data clearly suggests that female youth are much more vulnerable to unemployment than other age groups. Although female youth unemployment is showing a decreasing trend (dropped by 9.9 p.p. from 2006 to 2013), it is almost twice as high as females age 25-49 and more than to time higher than females in the 50-64 age group. This can partly be explained by the fact that young people are more vulnerable to economic downturns and the first to be cut from employment. Young people tend to be ‘last in’ and ‘first out’ - last to be hired, and the first to be dismissed. This, together with the challenges they face in making the transition from education and training to the labour market, makes younger generations generally subject to higher rates of unemployment than older generations (United Nations, 2013). Figure 7: Female Unemployment Rate in Macedonia by Age Group (%) Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia The vulnerability of female youth towards unemployment is according to data (Table 7) a phenomenon applicable for all benchmark countries. Due to missing Volume 6 | Number 2 | Fall 2016 69 �Remzije Rakipi, Shpresa Syla data for 2004 and 2005, the observed period has been reduced to cover only the period 2006-2013. Similar patterns to the R. of Macedonia are observed also in the case of Bulgaria, Greece, Croatia and Slovenia when observing female unemployment rates by age group. The highest female youth unemployment rate in 2006 was observed in R. of Macedonia (60.9%) followed by Greece (34.2%). Although the R. of Macedonia registered a decrease in female youth unemployment in the following years (app. 9.9 p.p.), it still remains among the countries with the highest female youth unemployment rate (51%) compared to the benchmark. Greece observed a great increase in the female youth unemployment rate (app. 30 p.p.) reaching 63.8% in 2013, surpassing thus the R. of Macedonia and registering the highest female youth unemployment among Balkan countries in the EU. Table 7: Female Unemployment Rate by Age in Selected Balkan Countries (%) 15-24 Yrs. Change from 2006 in Percent Point 2006 2013 25-49 50 - 64 15-24 Yrs. Yrs. Yrs. 25-49 50 - 64 15-24 Yrs. Yrs. Yrs. 25-49 50 - 64 Yrs. Yrs. Bulgaria 20.3 8.3 8.3 25.7 11.1 10.9 5.4 2.8 2.6 Greece 34.2 13.2 5.9 63.8 32.0 19.7 29.6 18.8 13.8 Croatia 31.1 12.0 8.6 50.2 16.2 9.6 19.1 4.2 1.0 Slovenia 16.8 6.8 4.3 23.7 10.8 8.2 6.9 4.0 3.9 Macedonia 60.9 35.9 25.1 51.0 27.9 23.1 -9.9 -8.0 -2.0 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat Female unemployment in R. of Macedonia, observed from an education attainment perspective (Figure 8), show a decreasing trend over the years for less educated women (Level 0-2), dropping altogether 27.4% from 2006 to 2013. A similar pattern was evident also for level 3-4, which dropped 24.5% in the same period; decreasing from 38.4% in 2006 to 29% in 2013. Whereas, in the case of females with tertiary education (Levels 5-8), an opposite trend is observed throughout the study period with an overall increase of 16.5% (from 23% in 2006 to 26.8% in 2013). 70 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Figure 8: Female Unemployment Rate in R. of Macedonia by Highest Level of Education Attained (%) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Compared to benchmark countries (Table 8), a somewhat different pattern is observed when looking at female unemployment by educational attainment. All countries, except for R. of Macedonia have registered an increase in unemployment rates among women with lower levels of education. Greece and Slovenia have registered the highest increase in the case of education attainment level 0-2 calculated at 18 p.p. and 12.3 p.p. respectively from 2006 to 2013. Greece also stands out when observing levels 3-4 and levels 5-8, registering respectively an increase of 20.9 p.p. and 14.2 p.p. from 2006 to 2013. While, all other benchmark countries have registered more moderate increases across all levels in comparison. Table 8: Female Unemployment Rate by Education (Highest Level Attained) in Selected Balkan Countries (%) 2006 Bulgaria 2013 Level 0-2 Level 3-4 Level 5-8 Level 0-2 Level 3-4 Level 5-8 23.2 8.4 4.1 29.5 11.8 6.4 Volume 6 | Number 2 | Fall 2016 Change from 2006 in Percent Point Level Level Level 0-2 3-4 5-8 6.3 3.4 2.3 71 �Remzije Rakipi, Shpresa Syla Greece 13.8 16.3 10.3 31.8 37.2 24.5 18.0 20.9 14.2 Croatia 14.0 15.2 7.0 21.2 18.5 11.9 7.2 3.3 4.9 Slovenia 7.9 8.9 3.9 20.2 12.3 7.1 12.3 3.4 3.2 Macedonia 45.3 38.4 23.0 32.9 29.0 26.8 -12.4 -9.4 3.8 Source: Authors’ own work based on LFS data from the State Statistical Office of R. of Macedonia and Eurostat According to data presented in Table 9, the number of female unemployment is highest among urban women and more than two times higher than registered rural female unemployed. This is due to particular low activity rates and high inactivity rates among rural females (World Bank, 2008). However, a positive trend is observed. The number of urban female unemployment decreased by app. 9.800 persons from 2008 to 2013, roughly 12%. While, the number of unemployed females in rural areas decreased by 3.7% in the same period (app. 1400 persons). The largest decrease in registered unemployed females in urban areas is noted among females with primary and lower secondary education (in absolute terms), which dropped from 19545 to 11900 (decrease of 7645). To which extend this decrease is related to these women finding employment is subject to further research. Noteworthy in this context is however that opposite to females with lower levels of educations, females with university level education have both in the case of rural and urban women experienced an increase in numbers with registered unemployed rural women with university education going from 2743 in 2008 to 7873. This is an increase of more than 250%. Registered unemployed urban women with university education has increased likewise notably from 10599 in 2006 to 18030 in 2013. Table 9: Number of Unemployed Females in R. of Macedonia by Educational Attainment, Rural vs. Urban, 2008 & 2013 Level of Education Total 2008 2013 Rural Urban Rural Urban 38 686 83 501 37 260 73 665 287 2 300 : 1 358 Without education Incomplete primary and lower secondary education Primary and lower secondary education 2 917 3 920 963 3 063 13 221 19 545 8 849 11 900 3 years of secondary education 5 005 8 622 4 471 6 523 4 years of secondary education 14 309 35 887 14 605 31 365 72 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Higher education 205 2 628 : 1 426 1 University level education 2 743 10 599 7 873 18 030 1) University level education includes: university level education, Master's degree and Doctorate (Ph.D.) Source: Authors’ own work based on LFS data from State Statistical Office of the R. of Macedonia Female unemployment is mostly long-term in nature, as is the case of men (Table 10). Hence, no gender difference is observed in this respect. Due to missing data, the observed period has been reduced to the period 2009-2013. Long-term female unemployment rates have slightly decreased from 2009-2013 by 2.7 p.p. While, the share of long-term female unemployment in total female unemployment is on the rise and increased from 80.8% in 2009 to 82.2% in 2013. Table 10: Long-Term Unemployment by Gender in R. of Macedonia1) % of long-term unemployment 2) Long-term unemployment rate3) 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 Women 80.8 82.7 81.0 80.7 82.2 26.5 26.7 24.9 24.5 23.8 Men 82.5 83.7 83.6 83.0 82.7 26.2 26.7 26.6 26.1 24.0 Total 81.9 83.3 82.6 82.1 82.5 26.3 26.7 25.9 25.5 23.9 1) Long-term unemployment - unemployed persons for one year or more. % of long-term unemployment - share of unemployed persons for one year or more in the total number of unemployed persons. 3) Long-term unemployment rate - share of unemployed persons for one year or more in the total labour force. 2) Source: LFS, State Statistical Office of the R. of Macedonia Causes and Challenges of Female Unemployment in R. of Macedonia Gender based unemployment is vastly studied and discussed in literature, and does as such not present a new or unexplored area, and high unemployment levels is rarely attributed to a single factor regardless of the study perspective such as based on gender, age, and so on. Hence, the causes of unemployment are relatively known and widely accepted, and often characterised as being, frictional, structural, voluntary, etc. Having said that, and without going into much detail on this, it is from available Volume 6 | Number 2 | Fall 2016 73 �Remzije Rakipi, Shpresa Syla material clear that limited understanding and research is available to really understand the nature and causes of female unemployment in the specific context of the R. of Macedonia. This area is perceived still as unexplored to the detail that it can be addressed properly and efficiently. Much further research is needed to understand the causes and challenges of female unemployment in the R. of Macedonia, especially from a more holistic perspective including also regional and ethnic disparities given the cultural, religious, and ethnic diversity upon which the R. of Macedonia is founded. However, in general, the high of unemployment in R. of Macedonia, including that of women, can essentially be explained in the absence of significant labour supply constraints and the limited labour demand, stemming especially from the private sector (Micevska, 2008). Although the high level of unemployment among females in the R. of Macedonia can be vastly explained by the general causes of unemployment, the demanding role of women in the household and the difficulty in entering and remaining in the labour market is one aspect that is often underestimated. The World Bank (2013) reported that the opportunity cost of work for most women is higher than their potential wage in the labour market. While this does not explain the reason for the high unemployment in R. of Macedonia, it touches some key aspects hindering women to enter the labour market and actively pursue jobs such as access to child care, pay gaps, etc. Another aspect is the industries/sectors and the field of study often characterising women. Women are i.e. very much underrepresented in the construction industry and in study fields representing this industry, and female employment is vastly oriented towards manufacturing (i.e. garment and textile) and in the human health and social work sectors (World Bank, 2013). While this is a structural issue emphasising skill mismatch, the point herein lies more in the context of the lack, or the type and quality, of career support, orientation, Active Labour Market Measure, etc., rather than on the supply and demand aspects. Hence, the high female unemployment in the country can partly, but rather significantly, be explained also by the failure of the institutional framework governing the labour market to provide the necessary support to unemployed and incentives to stimulate female labour market participation and ultimately employment. While higher education institutions are quite rigid and rather slow or reluctant to adapt to changing industry needs given the high unemployment in general. From a general standpoint, it is clear that in addition to focusing on boosting the economy to create more jobs in areas where women are strong, a deeper recognition that female unemployment is 74 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study multidimensional concept with both quantitative and qualitative challenges is imperative to address this issue properly. Conclusions and Recommendations Female labour market indicators show that the Republic of Macedonia is performing poorly in most aspects in comparison to more advanced countries in the Balkan region. More and more women have entered the labour market in the past decade in the Republic of Macedonia, and especially educated women. Still, the female labour force participation is significantly below Balkan countries integrated in the European Union such as Bulgaria, Greece, Slovenia and Croatia; and the female inactivity rates are despite a slow downwards trend still twice as high than that of males in the country. Female employment rates have been on the rise in the study period, but at a much slower pace compared to male employment rated and lies still below most Balkan countries. The increase in female employment is mainly stipulated by increases in employment among lower educated women, while a downward employment trend is observed for women with tertiary education. Female self-employment is on the rise, but still at a very low level to other more developed Balkan countries. Female unemployment in the R. of Macedonia is slowly, but consistently moving in the right direction. The female unemployment rate has dropped by 8.8 p.p. from 2004 to 2013, but remains still at a very high level (at 29% in 2013). The country has the second highest rate compared to benchmark countries, surpassed only by Greece with a higher rate. However, when compared to male unemployment rates in the country, observed data show that no gender gaps seem to exist due to marginal differences in female and male unemployment rates in the study period (20042013). The decreasing trend in female unemployment is mainly witnessed among urban females. Female unemployment is long-term in nature, as observed also with the opposite gender, and a large number of women (app.50%) are unable to enter the labour market due mainly to household responsibilities. Hardest hit by unemployment are especially female youth and lower educated women. Data show a decreasing trend for both categories in the study period, but still both categories display extremely high unemployment rates, especially among female youth. Higher educated women seem to be less vulnerable to unemployment than other categories, but this category Volume 6 | Number 2 | Fall 2016 75 �Remzije Rakipi, Shpresa Syla displays an increasing trend in unemployment which is worrisome as this might be a cause to further discouragement among females to enter labour market in the future or/and pursue higher education. Similar trends are witnessed across the countries compared in the context of higher educated women with Greece and Croatia experiencing higher increases in unemployment rates than R. of Macedonia in this category. However, with opposite trends when observing at lower educated women, where the country is performing much better in the period 2006-2013 comparison to the more developed Balkan countries who have all registered growing unemployment rates in this category. In the case of the R. of Macedonia, a downwards trend is observed in the study period with a decrease of 12.4 p.p. from 2006 to 2013. A high level of complexity is involved in reducing female unemployment and it should be recognized that there is no easy or quick way to do this. Recognition that female unemployment is multidimensional concept with both quantitative and qualitative challenges is imperative to address this issue properly. Further recognition is also needed in terms of the causes and effects of female unemployment in the country. Female unemployment manifests, not only a loss to society in terms of forgone achievement, lost tax income, added expenditure and slower economic growth. Above and beyond all, it causes individual suffering, a loss of personal dignity and material hardship on the part of the jobless and their families which makes it difficult to develop into a socially cohesive society and achieve the kind of sustainability needed to ensure future European integration and general well-being. The Government of the R. of Macedonia should increase efforts to ensure that the institutional framework governing the female labour market addresses and formulates policies and measures in the future in a way that they effectively and inclusively address female employment across all regions and ethnic groups through intervention in key areas impacting female unemployment. Macroeconomic development is the key in this context to ensure job creation, but equally important are also tailored, inclusive, and reasonably funded Active Labour Market Measures (ALMM). To include also promotion and support of female entrepreneurship, reasonable access to child care facilities, improved access to high quality education and training to reduce skills mismatch and the competitiveness of women in the labour market. Key in this context is also the need for improvement of the capacities of the National Employment Agency to be able to better support unemployed females. 76 Journal of Economic and Social Studies �Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study References Avlijaš, S., Ivanović, N., Vladisavljević, N., & Vujić, S. (2013). Gender pay gap in the Western Balkan countries: Evidence from Serbia, Montenegro and Macedonia (Research Project). Foundation for the Advancement of Economics Brunnbauer, U. (2000). From equality without democracy to democracy without equality? Women and transition in southeast Europe. South-East Europe Review, 3/2000, 151 – 168. European Training Foundation (2013). Former Yugoslav Republic of Macedonia Review of Human Resources Development. Publications Office of the European Union. EUROSTAT (2015). Labour Force Survey 2014-2013. Retrieved from: http://ec.europa.eu/eurostat/web/lfs/data/database. Huyer, S. (2014). Gender and Climate Change in Macedonia. Report. Third National Communication on Climate Change (TNC). Ministry of Environment and Physical Planning of R. of Macedonia. Kjosev, S. (2007). Unemployment in the Republic of Macedonia - Specifics and possible solutions. Economics and Organization, 4/2, 153 – 160. Lehmann, H. (2010). Macedonia’s Accession to the EU and the Labor Market: What Can Be Learned from the New Member States (Policy Paper). Bonn: Forschungsinstitut zur Zukunft der Arbeit. Micevska, M (2008). The Labour Market in Macedonia: A Labour Demand Analysis. Labour, 22/2, 345–368. Mickovska-Raleva, N. & Dimitrijevska T. (2013). Gender equality in EU: How does Macedonia compare? Center for Research and Policy Making. Mojsoska-Blazevski, N., Najdova, J., Stojkov, A. & Asenov, L. (2009). Labour Market in the Former Yugoslav Republic of Macedonia. A Study for the European Commission Employment. Social Affairs and Equal Opportunities DG. Volume 6 | Number 2 | Fall 2016 77 �Remzije Rakipi, Shpresa Syla Mojsoska-Blazevski, N. (2012). Challenges to successful employment policy in the region: Towards more jobs, quality labour force and greater competitiveness. Discussion Paper for the Western Balkans Investment Framework. Mojsoska-Blazevski, N. & Kurtishi N. (2012). The Macedonian Labour Market: What makes it so different? Journal of Social Policy, 5/.9. State Statistical Office (2008). Labour Force Survey 2008. Retrieved from: http://www.stat.gov.mk/PublikaciiPoOblast_en.aspx?id=3&rbrObl=14. State Statistical Office (2013). Labour Force Survey 2013. Retrieved from: http://www.stat.gov.mk/PublikaciiPoOblast_en.aspx?id=3&rbrObl=14. United Nations (2013). Report of the World Social Situation 2013. Inequality Matters, Department of Economic and Social Affairs. Woman for Economy - Economy for Women (2013). Being a Woman in the Balkans (Project). Southeast Europe and the EU – Leadership Development Programme 2012/13. World Bank (2008). FYR Macedonia Labour Market Profile 2004-2007. Policy Note. Human Development Sector Unit, Europe and Central Asia. World Bank (2013). FYR Macedonia: Gender Diagnostic - Gaps in Endowments, Access to Economic Opportunities and Agency. Poverty Reduction and Economic Management Unit Europe and Central Asia Region. 78 Journal of Economic and Social Studies � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3325 Title A name given to the resource Trends and Challenges of Female Unemployment in the Republic of Macedonia: A Regional Comparative Study Author Author RAKIPI, Remzije SYLA, Shpresa Abstract A summary of the resource. The Republic of Macedonia has since its independence made great progress in terms of economic reform and social development; prompted often by the county’s aspiration to become part of the European Union. However, in spite of these advances, weak labour market indicators in particular among females remains a great concern and a persisting challenge for the country. Based on official data from the Labour Force Survey (LFS) conducted by the State Statistical Office (SSO) for the case of the Republic of Macedonia, the aim of this study is to examine the development of female unemployment in the past decade (2004-2013) in the Republic of Macedonia from a multi-dimensional perspective. This while comparing national trends with other Balkan countries already in the EU using LFS data provided by Eurostat. Findings show that the female unemployment rate in the R. Macedonia is moving in the right direction with a decreasing trend throughout the observed period with drop of 8.8 percent point from 2004 to 2013 (observed at 29% in 2013). Compared to Balkan countries in the EU, findings show that the R. Macedonia has been performing relatively better than these countries, who have all experienced negative fluctuations in female unemployment rates in the observed period with rates at higher levels compared to 2004. Furthermore, the findings show no evidence of inequality between male and female unemployment rates in the country, however notable disparities are evident when observing unemployment among various age groups and the level of education attainment. The paper concludes with clear policy recommendations for boosting female employment to include increasing female access to education and entrepreneurial programs, increased access to childcare, etc. Keywords: Labour market, female unemployment; unemployment, employment. Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-11 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance https://omeka.ibu.edu.ba/files/original/b6af977adf3771558e0b879b23a7facb.pdf a15d3b13e611bad510f75284ce841a95 PDF Text 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 79 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Introduction Public procurement market represents one of the key areas for financial interaction of public and private sector. Public procurement regulations are a novelty in domestic legislation. The public procurement system in Bosnia and Herzegovina (BH) is a new system of awarding contracts in public procurement procedures, and it is based on the Act of Public Procurement of BH i (Act), which establishes the rights and obligations of participants in the procurement process as well as the control of public procurement. According to Rička et al. (2008) the purpose of this law is to ensure: (1) the most effective way of using public funds with regard to the purpose and object of the procurement; (2) procurement execution and awarding a public procurement contract that is carried out by contracting authorities in accordance with the procedures established by this act, and (3) contracting authorities will take all necessary measures to ensure fair and active competition among the potential suppliers, by applying equality of treatment, non-discrimination and transparency. The public procurement system in BH has both its theoretical and practical dimensions. While the theoretical dimension is determined by the external environment such as legal, political and economic environment, its practical aspects lie in the accomplishment of various economic goals. – This is important to all countries, especially for countries in development and transition like BH. Just like there is no system that can accomplish all goals, there is no country that can expect that goals of its system will always remain the same. The current objectives of the single public procurement system in BH (Public Procurement Agency, 2010) are: continuous execution of procedures of public procurement and transparent public procurement contract awarding, equality treatment for all participants in procedures of public procurement, encouragement of sustainable market and economic growth and ensuring legal protection at the same time. The European Commission reported that public procurement of goods, services and works, in the European Union in 2010 was estimated at 2.406 billion euros, that is 19.7% from total GDP. The public procurement stake in developing countries was even bigger and ranged from 25% to 30% from total GDP (Knežević, 2007). Therefore, public procurement is considered to be a source of economic growth stimulation, strengthening the private sector and the market economy in general (Rička et al., 2008). Countries in transition accomplish their objectives within different political and economic environments, but their common goal is to establish 80 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina an efficient bureaucracy that will support creating politics and manage realization of public procurement in an economical manner, without abuse of power. Economic transition requires that a transparent and efficient system of public procurement has to be placed as a priority, so it can support demonopolisation and privatization (European Commission, 2007). Therefore, we can state that a public procurement system, based on transparency, can be in service of strengthening market competition and private sector development. However, in countries in transition, like Bosnia and Herzegovina, at the beginning stages of a market economy, there are great dangers. Bribes and similar tampering threaten real competition and may discourage and repel domestic and foreign investors, which results in a decrease of growth rate in such countries. Considering the importance and purpose of the public procurement system in BH, the question emerges, how the existing procurement system in BH is applied, and what are its effects in economic terms.That is, whether more transparent procedures for public procurement that strengthen fair market competition are applied, contributing thereby to the strengthening of the market economy in BH, and what are further restrictions on public procurement system which stand in the way of achieving a functioning market economy in Bosnia and Herzegovina? In an effort to find answers to these questions, the subject of research has been defined, and it is reflected in the assessment of theoretical and practical aspects of applying the transparency of public procurement in the context of strengthening the market economy in BH. The overall objective of this paper is to explain the importance of the principle of transparency in the public procurement system, in the context of the creation and growth of a functioning market economy. This is one of the main preconditions for the existence of market competition. Transparency System of Public Procurement in Bosnia and Herzegovina (BH) Public procurement is defined as purchasing goods, services and works by contracting parties in accordance with the rules and regulations of public procurement.They are administrative bodies and enterprises that are subjected to the Law and have to carry out the procedures for public procurement, prior to the conclusion of the public procurement of goods, services and works. Procedures of public procurement and conditions for its execution are also defined by the act, where final decision is made by the contracting authority, depending on the fulfillment of conditions defined by the act. Contract value is estimated by the contracting authority in the beginning of the procedure of public procurement, and Volume 6 | Number 2 | Fall 2016 81 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic that value represents the so called value class on the basis of which the types of public procurement procedure to be applied is determined. In the act, there are two categories of value classes: • • primary i.e. domestic value classes – when the contract value is equal or greater then 50.000,00 KM in case of procurement of goods or services, and equal or greater then 80.000,00 KM in case of procurement of works; and international value classes – when contract value is equal or greater then 500.000,00 KM for state authorities or 700.000,00 KM for local authorities and public entities in case of procurement of goods and services, and equal or greater than 2.000.000,00 KM in case of procurement of works. The act establishes five primary procedures for the award of contracts in public procurement, which are equal to or above the primary value class and for international competition (described in Chapter II of the act), as follows: (1) open procedure; (2) restricted procedure with prequalification; (3) negotiated procedure with publication of procurement notice; (4) negotiated procedure without publication of procurement notice; (5) a design contest project. The act provides for the application of two more procedures (as described in Chapter III of the act), as follows: (1) a direct agreement, and (2) the competitive request of quotations, which are applicable to public procurement procedures below the primary value class, or governing contracts of lesser value. The basic principles on which the Act of Public Procurement in BH (Act) is based on, and the EU Directives on public procurement, which the contracting authorities must respect throughout the procurement process are the principles: equal treatment (non-discrimination), transparency, fair and open competition, economy and legality (Rička et al., 2008). The principle of transparency in public procurement procedures demands availability of relevant information to all interested parties, consistent and in a timely manner, via accessible and prevailing medium, at no or at reasonable cost (Public Procurement Agency, 2009). Respect for the principle of transparency is guaranteed by the regulations which are presented in Table 1. 82 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Table 1: Legal regulations that implement transparency requirements LEGAL REGULATIONS Article 11. Article 13. Article 18. Article 19.-20. Article 38. Article 40. Article 41. Article 42. TRANSPARENCY REQUESTS Rules of selection of the public procurement procedures, and in accordance with them, basic and preferential procurement procedure is an open procedure. Contracting authority has the obligation to prepare tender documentation which contains a collection of information on the procurement. Give the tender documentation to interested suppliers. Publication of public procurement notices. Requesting for informing the candidates and tenderers of the decisions made during the procurement procedure. Requesting for the publication of contract award notices. Report about procurement procedure. Archiving documents of the given procurement procedure by the contracting authority. Source: adapted in accordance to EUPPP Manual (European Commission, 2007) However, depending on whether the act established the obligation to perform certain operations or left it as a choice to the contracting authority, public procurement procedures prescribed by the act can be viewed as more or less transparent compared with each other. Pursuant to the provisions of the Act, authors themselves carry out a qualitative analysis of the transparency assessment of public procurement procedures, according to following criteria: whether it is obligatory or not to publish procurement notice and tender documentation, whether it is obligatory or not to publicly display the offers, whether it is obligatory or not, to have a minimum deadline for offer acceptance and minimum number of offers and bidders, and whether the tender documentation is free or not. Authors classified all procedures in three groups: most transparent procedures, less transparent procedures, and least transparent procedures, as it is show on the Figure 1. ii Volume 6 | Number 2 | Fall 2016 83 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Figure 1: Public procurement procedure in BH - transparency assessment MOST TRANSPARENT PROCEDURES LESS TRANSPARENT PROCEDURES LEAST TRANSPARENT PROCEDURES • Open • Limited with prequalification • Negotiated with publication of notices • Negotiated without publication of notices • Competitor request • Direct agreement The transparency of the public procurement system is not an end in itself; it is a mechanism that is used to accomplish a certain goal. Trepte (2006) states that the transparency of the public procurement system is primarily used as a mean to protect economic efficiency, and ensure control by regulator (national or international), of the whole procurement system. Economic efficiency, as a natural result of free market, is based on establishing perfect competition. Therefore, imposition of transparent procedures, defining conditions and specifications in advance and publishing the criteria for selection and awarding the contract, are mechanisms that are used to avoid direct discriminations that could endanger desired competition. Methodological Framework of the Research The empirical part of the research covered dynamic analysis of two research areas: (1) the existing public procurement system in BH, its framework and limitations considering transparency principle; (2) the public procurement market in BH in determining market power of contracting authorities and suppliers by measuring their individual and collective market shares in period from year 2010. to 2012. Theoretical Concept of Empirical Research The research was conducted using secondary research and available statistical data. According to authors' adaptations, the theoretical concept of empirical research is shown in Figure 2, and it states that the most significant factors for competition development in the public procurement market in BH are: scale and structure of 84 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina market demand, eventual barriers for entering the market, purchasing power of buyers (contracting authorities), whether or not procedures are transparent and open, and market power of the suppliers. Figure 2. Most significant factors for competition development in public procurement market in BH BEHAVIOR OF CONTRACTING AUTHORITIES IN TERMS OF PRESENCE OF OPEN PROCEDURE market power of seller MARKET COMPETITION DEVELOPMENT ON THE PUBLIC POROCUREMENT MARKET size and structure of demand market power of buyer barriers in attempt to enter the market Authors are considering the correlation between the most significant factors for competition development in the public procurement market in BH (Figure 3), in the way that scale and structure of demand, eventual barriers for entering the market and individual shares of contracting authorities in the public procurement market determine their market power. Market power of buyers determines their behavior in regards to selection of certain public procurement. Their choice of more or less transparent procedures contributes to the decrease or increase of competition in the public procurement market in Bosnia and Herzegovina. In this context, besides the central research hypothesis: increase in transparency of public procurement contributes to the strengthening of market competition in Bosnia and Herzegovina, two backup hypotheses have been established: Volume 6 | Number 2 | Fall 2016 85 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic H1: In the case that contracting authorities have more market power, they will utilize less transparent procedures. H2: In the case that contracting authorities have less market power, they will utilize more transparent procedures – open procedures. Figure 3: Correlation between the factors of market competition in the public procurement market in BH Market power of buyers (contracting authorities) Measured by market concentration of five leading buyers (cr5) Behavior of contracting authorities regarding transparency principle ensurance Selection of less transparent procedures Selection of more transparent procedures Market power of suppliers (sellers) Measured by market concentration of five leading suppliers (sellers)(cr5) Market competition For the assessment of contracting authorities regarding their selection of procedures, authors used the data published by the Public Procurement Agency of BH (Agency). Two hundred of the largest contracts, completed in years 2010, 2011 and 2012, and which refer to: the procurement subject description (goods/services/works), the name of the contracting authority and its supplier for each contract, the type of executed procedure and the contract value. The Agency could not deliver the data for the years 2008 and 2009 because data from those years were not representative. Two hundred of the largest contracts that were completed in 2010 and in 2012 represent more than 50% of the total public procurement market in Bosnia and Herzegovina, and in year 2011, 200 of the largest contracts represented just 34.60% of the total market. In other words, 200 of the largest contracts in the year 2010 constituted 51.57% of the total demand, in the year 2011, 34.60%, and in the year 2012 86 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina 58.61% of the total demand for goods, works and services in the public procurement market (Table 2). Table 2: Representativeness of samples for examining the market power of participants in the public procurement market TOTAL VALUE OF COMPLETED CONTRACTS 2010 3.469.981.667,61 TOTAL VALUE OF COMPLETED CONTRACTS IN A SAMPLE 1.789.620.514,48 REPRESENTATIVENESS OF THE SAMPLE 2011 3.128.833.371,96 1.082.513.780,32 34,60 % 2012 3.560.468.418,94 2.086.767.392,45 58,61 % 51,57 % Source: adapted from the Public Procurement Agency of BH data Size and Structure of the Public Procurement Market Considering that there are more than 2000 contracting authorities that are subjected to the act of public procurement of BH, and that annual value of public procurement is getting close to 4 billion KM (Public Procurement Agency, 2013),we can state that it is large and important market. Based on data published by the Directorate of Economic Planning of BH(2013), the public procurement share in GDP of BH in the year 2012 was 12.95%. Structure of the public procurement market can be analyzed by the subject of procurement: goods, services and works. During all observed years, in total value of completed contracts of public procurement, the market of the public procurement of goods was the largest. In other words, demand for goods was the largest, while the lesser demand was for works and the least for services. In the European Union as opposed to BH, services were the predominating demand, and in the year 2010 it constituted 42% of all public procurement. While 36% was the demand for work, and goods were in last place, constituting only 22% (European Commission, 2012). Analyzing the sample of 200 of the largest completed procurement of public procurement in BH (Table 3), the major procurement in years 2010 and 2011 was procurement of goods that consisted 54.4% and 74.16% of total public procurements, respectively. In the year 2012, a slightly larger procurement of works was recorded (48.21%) in regard to procurement of goods (40.70%). Volume 6 | Number 2 | Fall 2016 87 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Table 3: Structure of demand with regard to the subject of the procurement in observed sample YEA R GOODS 2010 2011 2012 SERVICES WORKS TOTAL KM % KM % KM % KM % 973.545.490, 04 802.753.121, 10 849.231.383, 10 54,4 0 74,1 6 40,7 0 213.286.929, 33 158.607.096, 00 231.599.765, 66 11,9 2 14,6 5 11,1 0 602.788.095,1 1 121.153.563,2 2 1.005.936.243, 69 33,6 8 11,1 9 48,2 1 1.789.620.514, 48 1.082.513.780, 32 2.086.767.392, 45 100,0 0 100,0 0 100,0 0 Source: adapted from Public Procurement Agency of B&H data Behavior of contracting authorities in BH – public procurement procedure selection All responsibility for adequate implementation of the public procurement system in BH lies with contracting authorities that make the final decision about utilization of a certain procedure (that can be more or less transparent), depending on the fulfillment of the conditions prescribed by law. Therefore, it was necessary to analyze their behavior in the context of ensuring the transparency principle during the selection of the procedures of public procurement. Transparency of public procurement is identified as an independent variable in the central research hypothesis. The following indicators for transparency of public procurement in BH are used: • • Presence of certain procedures in total public procurement; Variations of open negotiation procedures without notice shares in total public procurement. While in the EU transparency in public procurement procedures is rising year in and year out according to data reported by European Commission (2012), in BH transparency is dropping gradually. Data analysis of applied procedures in public procurement, represented in Table 4, has shown an apparent decline of transparency in conduction of public procurement in observed period of time. Open (most transparent) procedure in year 2012 had only 37.13% of the share in total public procurement, while in the year 2008 it had even 91.89% of the share in total public procurement. A procedure opposed to negotiation without publication of notification that is, the least transparent procedure in group of procedures from 88 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Chapter II of the Act, in the year 2008 had the share of 3.99% of total public procurement. Until the year 2012 its share increased to 49% of total public procurement. Variation of open and negotiation procedure without notice shares are presented in Figure 4. Table 4: Public procurement procedures applied in period between 2008. and 2012. Procedures from the Chapter II of the Act YE AR NEGOTIATION PROCEDURE iii Procedures from the Chapter III of the Act COMPETITIVE DIRECT REQUEST AGREEMENT OPEN PROCEDURE LIMITED PROCEDURE 20 08 KM 1.598.03 7.250,83 % 91, 89 KM 62.150.50 0,68 % 3, 15 78.788.985,5 7 3,9 9 KM 191.465.3 28,57 % 9,7 1 KM 41.829.98 1,63 20 09 1.507.30 6.001,68 82, 95 34.806.81 3,94 1, 91 275.141.970, 96 12,9 5 240.465.4 98,04 11, 32 67.093.63 2,79 20 10 1.343.82 1.679,59 38, 73 47.762.31 2,35 1, 38 1.510.857.88 6,84 43,5 4 423.359.6 03,82 12, 2 144.180.1 85,00 20 11 20 12 1.169.51 5.441,01 1.321.88 2.884,64 37, 38 37, 13 18.256.71 0,88 60.962.41 3,53 0, 58 1, 71 1.549.709.73 3,15 1.744.479.03 7,03 49,5 3 49, 00 * * * 355.389.8 73,35 9,9 8 77.754.21 0,10 % 2, 1 2 3, 1 6 4, 1 6 * 2, 1 8 TOTAL PUBLIC PROCUR EMENT KM 1.972.330. 047,28 2.124.813. 917,41 3.469.981. 667,60 3.128.833. 371,96 3.560.468. 418,65 *data not available because the Agency did not publish the report for year 2011. Source: adapted from Public Procurement Agency annual reports (2008, 2009, 2010 & 2012) and Transparency international BH for year 2011 Figure 4: Open and negotiation procedure -variations of shares 100 91,89 82,95 80 60 40 43,54 38,73 37,38 37,13 20 3,99 49,53 49,00 12,95 0 % OPEN PROCEDURE 2008 2009 Volume 6 | Number 2 | Fall 2016 % 2010 NEGOTIATION PROCEDURE 2011 2012 89 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Source: adapted from Public Procurement Agency annual reports (2008, 2009, 2010 & 2012) and Transparency International BH for the year 2011 With the fact that the least transparent procedures (competition request, direct agreement, negotiation procedure without notice) reached almost a 70% share of the total contracts signed, we can say that the behavior of contracting authorities in the context of ensuring transparency principle has failed and that it violates fair market competition. Competition on Public Procurement Market in BH Business strategies of firms affect the structure and organization of the market as well as their own functioning (Sharma and Tomić, 2011). There are many factors that affect shaping of competitive relations between participants on the market: number and size of individual participants on offering and/or demanding side, limitations and possibility of new competitors emergence, spatial distribution of customers and suppliers, greater or lesser homogeneity or differentiation of products, elasticity degree of demand for certain products, etc. (Jurin and Šohinger, 1990). Useful basic indicators of participants’ market power and the market power of their competitors are determining the market shares and level of market concentration of the observed market (Croatian Competition Agency, 2005). The greater the market share of a concentration participant, the greater the probability that such an entrepreneur has market power as well. Term – market power of an entrepreneur can be defined as a long-term ability to sell its products at a higher price than the market price.On the basis of said we can conclude that entrepreneur has significant market power if he is characterized by a large market share and high financial power that enables him to dictate purchase (market) conditions, and to exclude competitors from the market. His market power is greater if he operates on closed market. The entrepreneur with high market power has the ability to act independent of potential and real competitors, customers’ interest, suppliers, and society on the whole. Market competition is identified as an independent variable. It is also a precondition for strengthening market economy in general. For measurement of market competition on the public procurement market in B&H, based on the observed sample, the following indicators were used: • 90 The market shares of customers and sellers Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina • The market concentration ratio of the five largest buyers/sellers on submarkets of goods, services and works procurement. • The (Non)Existence of buyers/sellers domination on the public procurement market The Market Concentration ratio (CR) is one of the usual measures of market concentration. It shows the total (joint) market share of a relatively small number of the largest entrepreneurs that operate on the same market. The higher the CR is, the market is more concentrated. Considering a number of entrepreneurs whose market share is observed, the market concentration ratio is denoted with CR2, CR3, CR4, etc. A higher ratio of market concentration indicates that market competition has decreased, and vice versa. To measure (non)existence of dominant buyer/seller on the public procurement market in B&H, the following criteria, established by provisions of the competition Act, ivwere used in this paper: • • • A buyer/seller is dominant on the market if it has more than 40% of market shares. Two or three buyers/sellers are dominant on the market if they, together, have more that 60% of the market shares. Four or five buyers/sellers are dominant on the market if they, together, have more than 80% of the market shares. Market Power of Buyers (contracting authorities) On the procurement of goods, the market concentration ratio of five leading suppliers indicates that they have high market power because their total shares (CR5) ranged from 43.58% in the year 2010, 38.9% in the year 2011 and to 40.53% in the year 2012. They do not have a dominant position but they do have significant power on this market. Three enterprises that emerge in five leading suppliers are: coal mines Kreka Tuzla, brown coal mines Kakanj and brown coal mine Banovići. Their cumulative shares are increasing each year, and in year 2012 they were 32.73%. On the procurement of works market, it has been recorded that the market concentration of the five leading suppliers was the highest in regards to market of goods and services. CR5 was 80.03% in year 2010, 37.31 in year 2011, and finally it Volume 6 | Number 2 | Fall 2016 91 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic rose to 82.0% in year 2012. In accordance with set criteria, five leading suppliers are dominant in this market. On the market of services procurement, CR5 indicates that market concentration of the five leading suppliers is rising with each year, ranging from 37.58%, over 47.59% to 48.93% in the year 2012. There are no enterprises or group of enterprises that are dominant on this market. Figure 5: Concentration of public procurement of goods, works and services markets in terms of suppliers (CR5 in period from 2010-2012) 2010 2011 82,00 80,03 43,58 38,90 40,53 GOODS 2012 47,59 48,93 37,58 37,31 WORKS SERVICES Source: adapted from Public Procurement Agency data On the overall public procurement market in terms of suppliers, high market concentration has been recorded for the five leading suppliers in year 2012 (CR was 48.12%), which indicates that these five leading buyers have relatively high market power, but not a dominant position. In regards to the market power of the five leading buyers, their market power is significantly lower. Different companies have had the position of the largest supplier in the years 2010, 2011 and 2012: NISKOGRADNJA with a share of 24.27%, Kreka coal mines with a share of 10.36%, and CHV Czech Republic with 33.63% of the share, respectively. Their individual shares are big but these suppliers were not dominant in the overall market. 92 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Results of Empirical Research of the Public Procurement Transparency Impact on Streightening Market Competition in BH Starting from the theoretical concept of empirical research and the relationship between the most significant factors of market competition development, based on the results obtained, it is possible to test the proposed research hypothesis and examine the impact of increasing the transparency of public procurement to strengthen the market competition in BH. Results of the study based on a sample of the 200 largest, completed public procurement contracts in BH in the period from 2010 to 2012 are presented in Table 5, and refer to the information on:  size and structure of demands for goods, works and services,  market concentration of the five leading buyers on the market of goods, works and services,  market concentration of the five leading suppliers on the market of goods, works and services,  the amount of open procedures in the total procurement of goods, works and services. Table 5: Research results INDICATO RS SIZE AND STRUCTU RE OF THE DEMAND IN % MARKET CONCENT RATION OF BUYERS CR5 AMOUNT OF OPEN PROCEDU RES IN % MARKET CONCENT RATION OF SUPPLIERS GOODS PROCUREMENT MARKET WORKS PROCUREMENT MARKET SERVICES PROCUREMENT MARKET 2010 2011 2012 2010 2011 2012 2010 2011 2012 54,40 74,16 40,70 33,68 11,19 48,21 11,92 14,65 11,10 75,83 64,91 75,16 84,32 42,39 95,66 59,28 62,92 64,56 18,45 29,02 18,85 7,98 8,47 14,32 3,57 10,21 2,91 43,58 38,90 40,53 80,03 37,31 82,00 37,58 47,59 48,93 Volume 6 | Number 2 | Fall 2016 93 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic CR5 Testing auxiliary hypotheses will be conducted by re-examining the relationship between market power of the largest buyer in the whole public procurement market in BH (Elektroprivreda BiH) and the amount of the open procedures in its procurement, because research shows that the public enterprise "Elektroprivreda BiH" achieved the highest individual share of 26.55%, 38.34% and 55.44% in the period from 2010th to 2012th year Research Results on the Market of Procurement of Goods In the reporting period, a higher demand for goods than for works and services has been recorded. Considering that a high demand for goods offers possibility to make a profit, many suppliers are present on this market, and therefore larger competition is expected. In the reporting period, the highest reported demand for goods was reported in year 2011 and it amounted to 74.16% from total public procurement in BH. High demand resulted in the decreasing of market concentration of the five leading buyers (CR5 was 64.91%). As a result of the decreased market power of buyers in year 2011, the amount of open procedures was highest (29.02%). This contributed to the increase in competition and in final, decreasing of the market concentration of the five leading suppliers to the smallest level in the reporting period (CR5 was 38.90%). This relationship can be seen in Figure 6. Observing this market in the year 2012, when lower demand was recorded than in the year 2011, the market power of buyers increased again, as they used their higher market power to conclude smaller value contracts with open procedure than in the year 2011. That was the reason why the market concentration of five leading buyers increased, i.e. competition on this market was lower. Figure 6: Relationship between market concentration of suppliers, amount of open procedures of total public procurement procedures and market concentration of buyers (period from 2010 to 2012) in % MARKET CONCENTRATION OF BUYERS CR5 AMOUNT OF OPEN PROCEDURES IN % MARKET POWER OF BUYERS CR5 75,83 43,58 72 38,9 18,45 2010 75,16 64,91 29,02 2011 40,53 18,85 Journal of Economic and Social Studies 2012 �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Source: data from Table 5 The largest buyer, JP Elektroprivreda BiH, acted in accordance with its market power. This buyer had a dominant position in all observed years on the market of goods with shares over 40%. As its market power as a buyer increased, the amount of open procedures in the market decreased, which can be seen in Figure 7. Figure 7: Relationship between the market share of public enterprise “Elektroprivreda BiH” and open procedure on the market 50 45 40 35 30 25 20 15 10 5 0 47,28 45,41 47,37 OPEN PROCEDURE MARKET SHARES 12,4 7,26 2010 2011 7,82 2012 Researching the impact of increasing the transparency of public procurement on strengthening market competition on the commodities market we came to the following conclusions: • With increase in the market power of buyers, the amount of most transparent procedures decreases i.e. transparency of public procurement decreases. Volume 6 | Number 2 | Fall 2016 95 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic • With the decrease of public procurement transparency, market concentration of the five leading suppliers increases i.e. market competition decreases. Research Results on the Procurement of Works Market The highest demand for works was reported in year 2012, when it amounted to 48.21% of the total public procurement in BH. As opposed to the commodities marketwhere very high demand for works did not result in an increase of competition between suppliers; on the contrary, the largest market concentration of five leading suppliers has been reported. That year, they had very high market power and dominant position (CR5 was 82%), in accordance to research criteria (Figure 8). Causes of such phenomenon can be found in the undeveloped market of works in which operates a small number of construction companies that have had difficulties surviving in periods of economic crisis. If we add to it barriers that occur with entering the market (licenses, the necessary references, business expenses etc.), high market (negotiation) power of the five leading buyers that have dominant positions on this market (CR5 95.66%), then it is not surprising that the level of market competition is at such a low level. The market power of buyers and suppliers has contributed that amount of open procedures from the total public procurement procedures was merely 14.3% in the year 2012, although values of signed contracts were high. Considering indicators recorded in the year 2011, when the lowest demand for works was recorded (11.19%), it is clear that the market power of buyers (CR5 42.39%) and sellers (CR5 37.31%) was at the lowest level in the observed period. Due to the low presence of open procedure in all the years, especially in 2010 and 2011 when it was about 8%, contracting authorities, applying the least transparent procedures for the award of public works discouraged the entry of new companies into the market and thereby jeopardizing the development of competition and the market economy in general. 96 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Figure 8: Ratio of market concentration of suppliers, representation of the open procedure and market concentration of buyers (period from 2010 to 2012) Source: data from Table 5 Public Enterprise “Elektroprivreda BiH”, which has almost achieved monopoly in the works market in year 2012, with shares of 71.57% in this market acted in accordance with its market power. The lowest level of amount of open procedure (2.54%) in total procurement of this buyer was in year 2012, when their market power was highest (Figure 9). Figure 9: Market share of public enterprise “Elektroprivreda BiH” and open procedure on the works market ratio 80 71,57 70 60 50 MARKET SHARES 40 30 10 0 OPEN PROCEDURE 19,64 20 0,46 1,1 2010 5,13 2011 2,54 2012 Source: Author’s interpretation according to data from Public Procurement Agency of BH Examining the impact of the increase in public procurement transparency on the strengthening of market competition in works market, the following conclusions were made: • Market power of buyers and suppliers is very high – the five leading buyers and suppliers have a dominating position on the market. • Undeveloped market and the existence of real barriers for new companies to enter the market makes the market power of buyers and suppliers even stronger • The very low level of public procurement transparency on this market is a consequence of very a high market power of buyers i.e. their dominant position. Volume 6 | Number 2 | Fall 2016 97 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic • The lower the level of public procurement transparency is, the greater is the market concentration of suppliers i.e. lower is the market competition. Results of the Research on Services Procurement Market On the services market, continual growth of the market power of buyers and sellers has been recorded, as well as the percentage of open procedures on observed submarkets (3% - 10%). The market power of the five leading buyers is growing each year because of low demand for services, specific procurement cases and real barriers for new companies to enter this market. The very small percentage of open procedure on this market contributes to the ever growing concentration of the five leading suppliers i.e. weakening market competition. Figure 10: Market concentration of suppliers, percentage of open procedure and market concentration of buyers ratio (period 2010 to 2012) MARKET CONCENTRATION OF SUPPLIERS CR5 AMOUNT OF OPEN PROCEDURES IN % MARKET CONCENTRATION OF BUYERS CR5 59,28 37,58 3,57 2010 62,92 47,59 10,21 2011 64,56 48,93 2,91 2012 Source: Data from Table 5 The classic example of the market power of buyers and the amount of open procedures ratio is the case of largest buyer on the services market, Public Enterprise “Elektroprivreda BiH”. The higher the market share of the buyer was, the smaller the amount of open procedures and vice versa. When the market share of this buyer was at its lowest level (7.34%) the highest percentage of open procedure was recorded (1.87%), which can be seen in Figure 11. 98 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Figure 11: Market share of “Elektroprivreda BiH” and open procedure percentage ratio on services market 16 14,9 14 12 11,65 10 8 OPEN PROCEDURE 7,34 6 MARKET SHARES 4 2 1,87 0,59 0 2010 2011 0,85 2012 Source: Authors' interpretation according to data received from public procurement agency of BH In examining the impact of increased public procurement transparency on strengthening market competition on the services market, following the conclusions can be stated: • • • • Higher market power of buyers and suppliers is continually increasing each year. Undeveloped market and the existence of real barriers for new companies to enter the market additionally strengthens the market power of buyers and sellers. Very low level of public procurement transparency on this market is a consequence for the high market power of buyers. The lower the level of public procurement transparency, the higher the market concentration of suppliers i.e. market competition is weaker. Conclusion Insights into the public procurement system, the market power of contracting authorities and suppliers, measured by their individual and cumulative market shares, as well as insights into their behavior in the context of ensuring transparency principles in public procurement have contributed in drawing one general Volume 6 | Number 2 | Fall 2016 99 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic conclusion: the public procurement system in BH can be used as an instrument for strengthening the market economy altogether with the transparency mechanism by contributing to strengthening (free) market competition, because market competition represents foundation of functional market economy. By the scientific research method, it has been determined that there is a high market concentration of five leading buyers and five leading suppliers on the market. That means a lower level of market competition. It has also been determined that public procurement transparency is decreasing. Based on quantitative evidence about the size of market competition on the public procurement market, and quantitative analysis of the transparency system impact on market competition, we can conclude that the research hypothesis has been confirmed and that: increase of public procurement transparency contributes strengthening market competition in Bosnia and Herzegovina. The results of the research give us one more insight: behavior of contracting authorities in terms of ensuring the transparency principle is determined by their market power i.e. higher their market power, measured in market shares the lower the percentage of open procedures in public procurement.“, Intentionally or not, contracting authorities negatively affect the development of market competition and therefore functional economy in BH, by not preferring most transparent procedure - open procedure. Theoretical, methodical and empirical insights on the impact of the public procurement system’s transparency on market competition and the market economy in general, represent an argument for urgent reform of the existing public procurement system that enables contracting authorities to weaken the development of market competition and the market economy in Bosnia and Herzegovina. References Council of Ministers of Bosnia and Herzegovina (2012). Chapter 5: Public procurement. Retrieved from: http://www.dei.gov.ba/dei/dokumenti/uskladjivanje/default.aspx?id=10896&langTa g=bs-BA 100 Journal of Economic and Social Studies �Public Procurement System in Service for Strengthening the Market Economy in Bosnia and Herzegovina Croatian Competition Agency (2005). Instruction on the procedure for the assessment of horizontal enterpreneurs' concentration. Retrieved from: http://www.aztn.hr/uploads/documents/tn/zakonodavni_okvir/Naputak_3.pdf Directorate for Economic Planning of Bosnia and Herzegovina (2013). Economic trends: Annual report for 2012. Retrieved from: http://www.dep.gov.ba/dep_publikacije/ekonomski_trendovi/Archive.aspx?langTag= bs-BA&template_id=140&pageIndex=1 European Commission (2007). EUPPP Manual: Public procurement lecturers training in B&H – part 1. Retrieved from: http://www.javnenabavke.ba/publikacije/EUPPPI.pdf European Commission (2007). EUPPP Manual: Public procurement lecturers training in B&H – part2. Retrived from: http://www.javnenabavke.ba/publikacije/EUPPPII.pdf European Commission (2012). Commission staff working document –Annual Public Procurement Implementatation Review. Retrieved from: http://ec.europa.eu/internal_market/publicprocurement/docs/implementation/2012 1011-staff-working-document_en.pdf Jurin, S., & Šohinger, J. (1990). Teorija tržišta i cijena. Zagreb: Globus Knežević, B. (2007). Elektronske javne nabavke na Zapadnom Balkanu, Evropsko zakonodavstvo, VI (19-22), 37-41. Madžar, L. European Union Competition Policy. Retrieved from: http://www.vps.ns.ac.rs/Materijal/mat12420.pdf Public Procurement Agency of Bosnia and Herzegovina (2009). How to apply the principles of the Article 1 of the Act of the Public Procurement of Bosnia and Herzegovina? Retrieved from: http://www.javnenabavke.ba/index.php?id=16odg&odg=1&jezik=bs Public Procurement Agency of Bosnia and Herzegovina (2010). Development strategy of public procurement system in Bosnia and Herzegovina for the period 2010-2015. Retrieved from: http://www.javnenabavke.ba/index.php?id=03vij&vij=25&jezik=bs Volume 6 | Number 2 | Fall 2016 101 �Merim Kasumovic, Sanela Meholjic-Kalajdzic, Harun Meholjic Public Procurement Agency of Bosnia and Herzegovina (2013). Annual report on contracts concluded in public procurement procedures. Retrieved from http://www.javnenabavke.ba/index.php?id=11izv&izv=21&jezik=bs Rička, Ž., Buza, H., Petričević, S., & Stanarević, M. (2008). Zakon o javnim nabavkama –komentar i primjena. Sarajevo: Revikon. Sharma, S., & Tomić, D. (2011). Mikroekonomska analiza tržišne moći i strateškog ponašanja preduzeća. Zagreb: Mikrorad. Transparency international BH (2012). Public Procurement Act of BH: Monitoring of implementation. Retrieved from: http://ti-bih.org/wp-content/uploads/2012/12/Monitoring-javnih-nabavki-2012.pdf Trepte, P. (2006). EUPPP Manual: Right and EU public procurement policy: Transparency requests. Retrieved from: http://www.javnenabavke.ba/publikacije/pravo_i_politika_javnih_nabavki_eu_bs_hr _sr.pdf i “Official Journal B&H”, number 49/04, 19/05, 52/05, 94/05, 8/06, 24/06, 70/06, 12/09, 60/10 & 87/13. ii Design contest project as one of the possible procedures was excluded from the analysis due to his specific application. iii The Public Procurement Agency in the Annual reports does not publish data of the value of concluded contracts by negotiated procedure with publication of procurement notice and negotiated procedure without publication of procurement notice separately. iv Criteria have been established based on the provisions of Act of Public Procurement of Bosnia and Herzegovina 102 Journal of Economic and Social Studies � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3321 Title A name given to the resource 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 An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-11 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance 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 104 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management recovery strategies in the event of a crisis (Fombrun & Shanley, 1990; Fombrun, 1996). However, although there is extensive research on reputation management (Weigelt and Camerer, 1988; Fombrun, 1996; Roberts and Dowling, 2002; Cretu and Brodie, 2007), the literature still suffers from a lack of empirical studies that examine whether reputation management activities shift perceived risk by consumers through creating a positive corporate image in the minds of consumers and establishing consumer trust. Therefore, the aim of this study is to explore the relationship between reputation management activities and consumers’ choice behaviors through perceived corporate image, consumer trust, and perceived risk by consumers exposed to the reputation management activities of firms. The knowledge this study generates is expected to contribute to the competitiveness topic of marketing literature by its research model considering the consequences of reputation management activities as the antecedents of choice behavior. The rest of the paper is organized as follows: First, a literature review is presented to recognize the main variables of the study. Second, we present a research model indicating the hypothesized relationships between constructs. Finally, methodology of the research, data analysis and findings will be presented, followed by a conclusion with the limitations of this research study. Literature Review and Development of Hypotheses Reputation Management Intensive competition, the leading feature of today’s markets, forces market players to find various strategic advantages. A widely accepted theory of the resource-based view of the firm (Barney, 1991) points out that valuable, rare, inimitable, and nonsubstitutable resources of firms are essential for stronger and long-term competitiveness. It should be noted that the resources building competitiveness are not related only to production and technical processes such as R&D, efficiency, and cost, but also to managing the general psychology in the marketplace towards the firm. When consumers have negative associations for a firm then market performance of the firm will probably not be independent of them. In other words, what consumers, competitors, and related institutions in the market are saying about the firm is a direct part of market performance since the words have an obvious power to attract and discourage individuals into a given market player. Thus, the Volume 6 | Number 2 | Fall 2016 105 �Mesut Bozkurt Çanakkale, Emrah Özkul reputation of any firm can play as a rare, inimitable, and nonsubstitutable resource in a highly competitive market environment to encourage consumers toward the firm if it can be built successfully. Reputation of a firm, therefore, can be considered to be a psychological antecedent in the consumer decision-making process. It is possible to consider this dimension as a leading strategic resource for the competitive advantage of any firm (Fombrun, 1996; Capozzi, 2005). In this context, the concepts of reputation, reputation management (RM), and reputation management activities attract attention particularly from the management and marketing areas examining the question of how to be competitive (i.e., Roberts and Dowling, 1997; Hutton et al., 2001; Capozzi, 2005; Cretu and Brodie, 2007). Reputation occurs around individuality, or what a person or an organization is known for. In business literature, it is therefore defined as an overall evaluation of the extent to which a firm is substantially “good or bad”, or “positive or negative” (Deephouse, 2000; Roberts & Dowling, 2002). The reputation created for a firm in the marketplace can include real, perceived and incorrect dimensions. Even if it is sometimes incorrect or unreal, the reputation of a firm has the power to influence consumers’ reactions. There is a consensus among academicians that corporate reputation must be purposefully managed rather than driven by chance so that it can contribute to the competitiveness of the firm (Fombrun, 1996; Formbrun and van Riel, 2004; Simoes et al., 2005). Thus, designing specific activities to manage the process of building reputation comes into prominence in strategic behavior. Corporate Image Corporate image is described as the overall impression made on the minds of individuals about an organization (Finn, 1961; Kotler, 1982; Dichter, 1985; Barich and Kotler, 1991). In marketing literature, image is defined as a mental construct processed internally (Crompton, 1979), or as a mental picture of consumers (Dobni and Zinkhan, 1990) for any given offering such as business name, variety of products, package design and quality, and appearance of store. Some empirical evidence in the marketing field clearly shows that the long-term reputation of the seller has been found to be more important than short-term product quality movements (Landon & Smith, 1997). McKnight et al., (1998) report, based on empirical research, that corporate reputation provides the assurance of consumers’ integrity and goodwill. Assurance also helps to increase trust, particularly when the consumers have not had experience before and hence do not 106 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management have firsthand knowledge of the firm. A typical example provides a valuable insight into this relationship: there is a perceived notion around the world that products processed in China will not have long-life due to not meeting quality standards. Products from China may really be low-quality and it is normally expected that consumers who have experienced these products before will avoid new transactions, but it is not uncommon to observe consumers avoiding Made-in-China products who have not had experience with them before. It is possible to explain this type of consumer behavior with the poor reputation of China in the marketplace. Poor reputation results in poor image in the minds of consumers. It is expected, therefore, that the more positively consumers think about a firm, the more positive their perceptions towards the corporate image. In line with the foundation built above, the following hypothesis is proposed: H1: There is a positive relationship between RM activities and corporate image. Trust From the view of social exchange theory (Blau, 1964; Cook and Emerson, 1978) trust is a leading factor in a relationship between consumers and the firm. The theory emphasizes the importance of human psychology in forming social exchanges. Research proves that lack of trust can directly disrupt the formation of a relationship from the consumer side. Thus, trust can be described as a psychological antecedent for consumer behavior (Garbarino and Johnson, 1999; Ba and Pavlou, 2002; Pavlou and Gefen, 2004). The creation of a positive reputation for the firm through specific and pre-planned activities, and managing the corporate image, can increase the value of intangible assets such as trust (Calantone, Cavusgil & Zhao, 2002). Positive reputation of the firm and brilliant corporate image are expected to function as preceding states for trust in consumer psychology, based on the social exchange theory. Several researchers (Weigelt & Camerer, 1988; Garbarino & Johnson, 1999; Plank, Reid, & Pullins, 1999) report that corporate reputation has a vital role in reducing the uncertainty consumers encounter when they evaluate firms. Positive corporate reputation is based on superior performance over a certain period of time. In other words, positive corporate reputation can lead to creating confidence, and thus Volume 6 | Number 2 | Fall 2016 107 �Mesut Bozkurt Çanakkale, Emrah Özkul increasing the trust (Morgan & Hunt, 1994). Based on the above reasoning we propose that: H2: There is a positive relationship between RM activities and consumer trust. H3: There is a positive relationship between corporate image and consumer trust. Perceived Risk The factor of risk perceived by consumers has been a major question in the marketing discipline since it is considered to be a leading part of human psychology in the decision-making process. Risk is defined as an individual’s or a group’s perceptions of the uncertainty associated with engaging in an activity (Dowling and Staelin, 1994). Bauer (1960) stated this as “the uncertain consequences resulting from purchase”. From this perspective, risk perceptions of consumers arise from potentially negative results of any engagement. Some academicians (Engel, Blackwell, and Miniard, 1986, p. 109) consider perceived risk as “beliefs about the risks associated with product (service) purchase’’. In marketing literature there is a widely accepted classification based on the study of Jacoby and Kaplan (1972) and Kaplan et al.(1974) that includes financial, physical, psychological, performance, and social risk. Greatoresk and Mitchell (1994) identified social risk as “social loss”, and added the sixth category as time risk. Trust and perceived risk are closely interrelated (Mayer et al., 1995). In terms of managerial perspective, consumer trust and positive corporate image lead to more positive perceptions towards the quality of the products, and the firm as a whole. Marketing literature, based on a vast body of empirical evidence, suggests that the mentioned constructs encourage consumers by cutting negative associations about the firm (McKnight et al., 1998; Garbarino and Johnson, 1999; Pavlou and Gefen, 2004; Cretu & Brodie, 2007). In other words, the level of perceived risk can be decreased by increasing the positive clues. The higher the perceptions of risk, the higher the trust needed to facilitate a transaction. When risk is present, a higher level of trust is needed to make transactions possible. That is, consumer trust towards a product or an organization reduces the perceived risk for a specific offering. As a result, the firms attached to positive associations are expected to behave well and avoid negative behaviors, which 108 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management strengthen customers' perceptions towards lower level perceived risk. Based on this view we hypothesize that: H4: There is a negative relationship between corporate image and perceived risk by consumers. H5: There is a negative relationship between consumer trust and perceived risk by consumers. Choice Behavior Understanding the essential determinants in the process of the evaluation of consumer behavior has been a supreme aim in the field of marketing. It is possible to state that customers’ evaluations towards a product, a brand or the name of the organization are signals of actual choice behavior (Zeithaml, Berry and Parasuraman,1996), based on structural psychology (George and Jones, 1999, p.532) in which human behaviors are described as the activity done consciously. This description also emphasizes the important difference between “behavior” and “motion”. The underlying indication from the discipline of psychology emphasizing the connection between behavior and its antecedents explains specifically that most human behavior is under volitional control (Ryan, 1970). There are different ways of examining choice behavior of consumers in marketing literature. For example, Bloemer and Odekerken-Schröder (2007) examined price insensitivity in the context of choice behavior. Bansal, Irving, and Taylor (2004) investigated consumers’ choice behaviors in the context of switching intentions. On the other hand, Mittal, Kumar, and Tsiros (1999) measured customers' intention to recommend to other people, which can be considered to be an indicator of choice behavior if it is positive. Consumers’ choice behaviors among competing offerings emerge based on maximizing their benefits as it is implied in the explanations from psychology area (Becker, 1990; Tversky and Kahneman, 1981). Lower level of risk perceived by consumers is a direct part of higher benefits. In other words, reducing risk ensures consumers reach more satisfactory results. A rational theory of consumer behavior (Tversky and Kahneman, 1986, 1991) implies that consumers will employ the level of risk they perceive as a cue for their possible satisfaction. From this perspective, perceived risk by consumers is a main indicator in terms of whether they engage with a brand or a firm. In short, the more risk consumers perceive the less choice behavior they exhibit. More specifically, if they perceive relatively higher levels of risk towards Volume 6 | Number 2 | Fall 2016 109 �Mesut Bozkurt Çanakkale, Emrah Özkul a firm, then they are more likely to have the intention not to prefer, switching intentions, negative word-of-mouth and price sensitivity. Based on this view we hypothesize that: H6: There is a negative relationship between perceived risk and choice behavior of consumers. Building on the literature review and the hypotheses developed, the following model emerged as the research model of this study (figure 1). In the research model, five main constructs and the relations between them are examined through hypothesized paths. Figure 1. Conceptual model and hypothesized relations Corporat e – + RM + + Trust Perceive Choice Behavior – – Research Design The research in this study was conducted by employing a quantitative methodology. In this context, a structured questionnaire was developed as the data collection instrument based on a literature review and previous research (e.g., Sirdeshmukh et al., 2002; Selnes and Sallis, 2003; Dowling, 2006). The sample for this survey consisted of customers who were staying at Sheraton Hotels in Tirana, Albania and Istanbul, Turkey, in the period February – April 2009. The survey was limited only to the businessmen segment due to their constant demand for hotel services, and thus their enhanced familiarity. The design of the questionnaire was based on five different constructs examined in this research. As presented in tables 1, 2, 3, 4 and 5, 110 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management reputation management (RM) activities were measured using the scale adopted from Fombrun (1998) and Fombrun, Gardberg, and Sever (2000). Items for measuring consumer trust were adopted from Selnes and Sallis (2003). The construct of corporate image was adopted from the study of Wu and Petroshius (1987). For the variable of perceived risk, we employed the well-known definition of Engel, Blackwell, and Miniard (1986, p. 109) and the well-established classification of Jacoby and Kaplan (1972) for perceived risk by consumers. And finally, choice behavior was measured using items from Bansal et al., 2004; Mittal et al., 1999; and Zeithaml et al., 1996). All constructs were measured on five-point Likert scales ranging from Definitely agree to Definitely disagree. The overall value of the Cronbach alpha to assess the reliability of the variables was 0.83, indicating a satisfactory level. Methodology The study was conducted between April - July 2015. Albania and Turkey were selected for the realization if the study and research was made in 2 five star hotels in these countries. Albania and Turkey was selected so as to reach data easier and to compare two facilities belonging to same chain in two different countries. Moreover, the reputation of the aforementioned hotel chain is high. Based on these information, country and facility selection was made by intentional sampling among nonstochastic selection methods. However the selection of customers within these facilities was performed by simple sampling method among the probabilistic sampling methods. Data was obtained by the evaluations of 109 participants from the hotel facility in Albania and 123 participants from the hotel facility in Turkey. During the study, certain number of surveys were conducted each month so as to prevent formation of duplicate results. In the data collection stage of the study, as the universe and sample could not be determined clearly and as the obtained data was insufficient, the frame could not be determined clearly. After this study which can be assumed to be pilot, other comparisons may be supported by other studies in which the number of facilities and participants will be higher. Descriptive Statistics In total, 268 usable questionnaires were collected from participants over the course of three months (February – April 2009) in Albania and Turkey simultaneously. Of those gathered thirty-six forms were eliminated (13.4 %) due to excessive amounts of Volume 6 | Number 2 | Fall 2016 111 �Mesut Bozkurt Çanakkale, Emrah Özkul missing data. Thus, 232 forms were coded for data analysis. The distribution of questionnaires analyzed by country is as follows: Respondents from Albania were 109 (47 %) and from Turkey 123 (53 %) of the overall sample. The analysis of demographic characteristics of the sample revealed that most of them were male (169 respondents; 73 %) and in the 45 – 60 age category (171 respondents; 73.7 %). Just over half had a university degree (131 respondents; 56.4 %). Data Analysis and Results Analysis of Differences between Albanian and Turkish Consumers In the first step of the analysis, the collected data were analyzed by employing the SPSS program. A series of independent t-tests were used to determine if differences existed between Albanian and Turkish consumers across the constructs of the research model. Table 1 indicates the differences between the subgroups of the sample in the evaluation of RM activities. Table 1. Mean Differences between Albanian and Turkish Consumers for RM Activities AL TR 4.80 4.61 4.55 t– value -1.83 -1.81 -1.36 4.46 4.22 4.32 0.068 0.071 0.173 3.96 4.67 -2.61 0.015 4.43 4.38 1.81 0.071 4.51 4.77 -1.62 0.103 4.46 4.49 4.71 4.40 -2.47 0.56 0.022 0.510 4.24 4.65 -2.59 0.011 4.79 4.88 4.63 4.70 4.83 4.61 4.29 4.51 4.27 4.52 0.810 3.26 1.87 2.27 1.75 0.412 0.003 0.062 0.025 0.078 Statement’s Average Declaring to provide high quality offerings every time Declaring to provide value-for-money offerings every time Declaring to provide new and innovative offerings every time Declaring that the philosophy shared by all staff is high customer satisfaction Showing its upper-class level through comments in the media Announcing the names of famous guests staying at Sheraton Employing upper-class marketing channels Creating a feeling of a first-class company through specific advertisements Designing an extraordinary building externally Designing an exclusive atmosphere inside the hotel Providing excellent working environment to its staff Equipping its staff with superior qualifications Building high standards in human relations 112 Sig. Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Hosting and sponsoring eminent art events Hosting many popular meetings (official meetings, society weddings, cocktail parties) Supporting and announcing many societal projects Declaring its environmental responsibility and sensitivity 4.80 4.66 1.82 0.070 4.21 4.79 -2.51 0.014 3.91 4.27 4.48 4.49 -2.38 -1.77 0.017 0.075 Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a fivepoint scale, ranging from “1= Definitely agree” to “5= definitely disagree”. The findings of the comparison between Albanian and Turkish groups showed that Turkish consumers had a slightly higherscore but this finding cannot be confirmed by statistical results (p>0.05). Based on the results in table A, no significant difference was found for the evaluation of RM activities. Although Turkish consumers have higher scores, Albanian consumers also have very positive overall evaluations towards the firm’s RM activities. It should be noted that the largest difference was found in the “designing exclusive atmosphere inside the hotel” (p< 0.01), indicating one of the lowest scores from the Turkish group at 4.29 that means very positive. This means that both groups in different countries have similarly positive perceptions for RM activities of the firm. While analyzing the relationships among the constructs across the research model, the second construct is determined as corporate image. Table 2 reports the view of the corporate image from the respondents’ evaluations. Table 2. Mean Differences Between Albanian and Turkish Consumers for Corporate Image AL TR 4.41 4.48 4.77 4.33 4.44 t– value 1.74 1.80 1.66 2.21 -0.67 Average Has a pleasant atmosphere A well-known brand Has high quality goods and services Well-managed firm 4.61 4.62 4.90 4.82 4.41 0.078 0.073 0.104 0.028 0.498 Has polite staff Has consumer-oriented staff Attracts upper-class customers Means prestigious Exclusive firm 4.33 4.22 4.76 4.60 4.88 4.68 4.31 4.28 4.12 4.36 -1.72 -0.86 2.10 1.99 2.14 0.081 0.397 0.036 0.039 0.033 Statement’s Volume 6 | Number 2 | Fall 2016 Sig. 113 �Mesut Bozkurt Çanakkale, Emrah Özkul Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a fivepoint scale, ranging from “1= Definitely agree” to “5= definitely disagree”. Table 2 shows that there is no significant difference between Albanian and Turkish consumers for the evaluations towards CI of the firm. Both groups are seen to have very positive assessments. In comparison with those of Albanian consumers, Turkish consumers had slightly lower scores but this was not confirmed statistically (p > 0.05). Similarly, in both groups the most positive evaluation was reported on the item the firm is a well-known brand (mean scores: 4.90 and 4.77, respectively). For the Albanian group, clearly it is possible to see the reflections of CI since they ranked the item it is an exclusive firm as second highest (4.88). Also, in the Turkish group, it should be noted that overall scores for CI items are above 4.00. The largest difference existed between the groups on the firm has high quality goods and services, which means that the former had much more positive views than the latter (p < 0.05). However, the mean value of the Turkish group for this item can also be considered rather positive (4.33). The data obtained from the sample of this study in two different countries clearly prove a brilliant CI for the firm in the minds of respondents. Table 3. Mean Differences between Albanian and Turkish Consumers for Trust* Statement’s AL TR Average I trust that S is competent at what it is doing I feel that S is trustworthy. I feel that S is honest in fulfilling its promises I think that S is very responsive to customers. I believe that S will respond with understanding in the event of problems 4.59 4.89 4.81 4.70 4.33 4.22 4.42 4.41 4.13 4.19 4.68 4.72 tvalue 1.73 1.81 3.31 2.12 -1.77 -1.87 Sig. 0.081 0.070 0.001 0.034 0.076 0.064 Table 4: Mean Differences between Albanian and Turkish Consumers for Perceived Risk* Statement’s AL TR Average 4.40 4.65 In S, facing offerings that are not value-for-money is a serious risk. (R) 4.32 4.60 114 tvalue 1.82 1.91 Sig. 0.068 0.063 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Satisfactoriness of physical environment in S is a serious risk. (R) It is a serious risk that the goods and services offered by S can be inadequate in order to meet my needs (R) 4.45 4.62 4.12 4.71 Staying at S can create unhappiness in my inner world (R) 4.76 4.81 If I say to friends that I prefer S, they may condemn me (R) 4.38 4.53 1.94 2.31 1.35 1.79 0.062 0.024 0.177 0.071 Table 5: Mean Differences Between Albanian and Turkish Consumers for Choice Behavior * Statement’s AL TR Sig. 4.12 4.05 4.37 tvalue 1.57 1.80 1.93 Average I will prefer S in the future. I will consider S the first choice at which to stay. I don’t think that the other brands will provide clearly better offerings. It is a low possibility that I will replace S with a competitor. 4.25 4.13 4.58 4.11 4.07 1.86 0.062 4.18 3.99 1.74 0.081 0.074 0.073 0.058 * Note: The negative t-values mean that Turkish respondents have higher mean scores than Albanian respondents for the related items. The criteria were based on a five-point scale, ranging from “1= Definitely agree” to “5= definitely disagree”. R: Reverse coded. The findings of the comparison between Albanian and Turkish consumers for the dimension of trust are presented in Table 3. Based on average scores from the subgroups of the sample, a statistically significant difference was not reported by significance level (p > 0.05) for t-values computed (1.73). Respondents both in Albania and Turkey seem similar to each other in terms of trust towards Sheraton (grand mean values: 4.59 and 4.42, respectively). The largest difference between the groups was observed for the item I feel that Sheraton is trustworthy, which means Albanian respondents clearly had much more positive attitudes in favor of Sheraton than the respondents in Turkey (mean values: 4.81 and 4.13, respectively). Based on the grand mean values, it is possible to state that the sample as a whole clearly has the feeling of trust towards the firm. Table 4 provides the results of perceived risk by respondents towards the firm, Sheraton. The results reveal that there were no significant differences between the Volume 6 | Number 2 | Fall 2016 115 �Mesut Bozkurt Çanakkale, Emrah Özkul mean scores except one item on risk for inadequacy of offerings to meet individual needs (p < 0.05). It is important to note that this part of the scale measuring perceived risk towards the firm was established with five reverse coded items. The negative signs of the t-values indicate less perceived risk by Turkish respondents than Albanians. However, the mean scores of Albanians can be considered as a strong indicator that they perceive risk at minimum levels towards the firm. Likewise the grand mean scores for both groups report the similarity statistically (t-value: - 1.82 and p > 0.05). This result shows that the respondents both in Albania and Turkey are sure about the standards of the firm, and thus they do not worry about the firm and its offerings. Table 5 summarizes the data obtained from the sample on their choice behavior. According to the results shown in table 5, overall the items were assessed similarly by Albanian and Turkish respondents. These four items all have a probability value that is more than .05. Grand mean scores for both groups (4.25 and 4.12, respectively) did not produce statistically significant differences (t-value: 1.57 and p > 0.05). The mean scores ranged from 4.11 to 4.58 in the group of Albanians, and from 3.99 to 4.37 in the Turkish group, indicating a strong loyalty or very positive choice intention in the future. These findings indicate that respondents preferred the firm, Sheraton, consciously at present and clearly they have a tendency to maintain this behavior. The overall analyses of responses through five t-test operations point out the obvious resemblance between Albanian and Turkish respondents towards the given stimuli. It should be noted that those stimuli are the main constructs within the research model of this study. It is possible, therefore, to put together the subgroups of the sample while analyzing the research model rather than conducting separate analyses. Analysis of the Research Model This study was designed to understand the effects of the factor of reputation management that target markets consider when they prefer a brand or a firm rather than its competitors. In this study, a structured model related to the variables assumed to be influential on choice behavior of consumers was tested by employing Structural Equation Modeling (SEM). The structure, composed of the relationship of four assumed constructs to one main dependent variable (choice behavior) constitutes the model of the study to be tested. As mentioned before, the reliability 116 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management coefficient of the overall scale was computed as Cronbach alpha ; 0.83. Data analysis involves evaluation of the measurement model and the structural model. The Evaluation of the Overall Model For the overall model, the Chi-square value was found significant as 514.93 with 233 degrees of freedom. This value is not unusual for larger sizes of sample (Doney and Cannon, 1997). The ratio of Chi-square to degree of freedom is 2.21, which is adequate statistically for the fit of the model. Although the values of GFI (0.93) and AGFI (0.92) are lower than those of CFI (0.97), NFI (0.93) and NNFI (0.94), it is accepted that CFI values above 0.95 are suggestive of a meaningful model (Hu and Bentler, 1999). The fit indices calculated here with RMSEA (0.058) and SRMSR (0.073) can be considered as adequate. All related indices are summarized in Table 6. Table 6: Goodness-of-fit summary Fit indices Values Χ2 Ratio ( Χ2/ df ) GFI AGFI NFI NNFI CFI Standardized RMSR RMSEA 514.93 2.21 .93 .92 .93 .94 .97 .07 .06 GFI, Goodness of fit index; AGFI, Adjusted Goodness of fit index; NFI, BentlerBonett normed fit index; NNFI, Bentler-Bonett non-normed fit index; CFI, comparative fit index; RMSR, root mean squared residual, RMSEA, root mean squared error of approximation. Measurement Model The quality of the model was assessed on unidimensionality, convergent validity, reliability and discriminant validity (see Table 7). The unidimensionalityof each construct in the model was analyzed with principal component analysis that reveals the appropriate items loaded at least 0.60 on the hypothesized components. A good overall model fit has provided support for convergent validity of the scale through all Volume 6 | Number 2 | Fall 2016 117 �Mesut Bozkurt Çanakkale, Emrah Özkul loadings that were significant (p < 0.05). Many of the R2 values have exceeded 0.50 proposed by Fornell and Larcker (1981). On the other hand, reliabilityof the measurement model was analyzed based on the values of composite reliability that should be greater than the benchmark of 0.70 to be considered adequate (Fornell and Larcker, 1981). As indicated in table 7, all the reliability values are above 0.70, revealing adequate reliability. Discriminant validity was tested by confirmatory factor model in which correlations between constructs were constrained to one. Chi-square differences were significant throughout the model (p < 0.01). The model of the study, therefore, is proper to be applied for understanding the relationships between the constructs given with the support of reliability, convergent validity, discriminant validity and unidimensionality. Table 7. Measurement Model Reputation Management Activities (Fombrun, 1998; Fombrun, Gardberg, and Sever , 2000 ) 118 1. Declaring to provide high quality offerings every time 2. Declaring to provide value-for-money offerings every time 3. Declaring to provide new and innovative offerings every time 4. Declaring that the philosophy shared by all staff is high customer satisfaction 5. Showing its upper-class level through comments in the media 6. Announcing the names of famous guests staying at S 7. Employing upper-class marketing channels 8. Creating a feeling of first-class company through Composite reliability Variance Explained Loading R2 0.77 0.72 0.88 0.74 0.81 0.63 0.76 0.55 0.89 0.74 0.72 0.52 0.67 0.63 0.92 0.48 0.42 0.79 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Corporate Image (Wu and Petroshius 1987) specific advertisements 9. Designing an extraordinary building externally 10. Designing exclusive atmosphere inside the hotel 11. Providing excellent working environment to its staff 12. Equipping its staff with superior qualifications 13. Building high standards in human relations 14. Hosting and sponsoring eminent art events 15. Hosting many popular meetings (official meetings, society weddings, cocktail parties) 16. Supporting and announcing many societal projects 17. Declaring its environmental responsibility and sensitivity 1. Has a pleasant atmosphere 2. Well-known brand 3. Has high quality goods and services 4. Well-managed firm 5. Has polite staff 6. Has consumer-oriented staff 7. Attracts upper-class customers 8. Means prestigious 9. Exclusive firm 1. I trust that S is competent at what it is Volume 6 | Number 2 | Fall 2016 0.76 0.91 0.83 0.78 0.62 0.66 0.55 0.79 0.81 0.63 0.78 0.58 0.66 0.46 0.62 0.42 0.72 0.52 0.63 0.42 0.72 0.52 0.81 0.63 0.70 0.51 0.84 0.68 0.73 0.93 0.52 0.83 0.89 0.74 0.82 0.63 0.90 0.77 0.79 0.56 0.73 0.52 119 �Mesut Bozkurt Çanakkale, Emrah Özkul Trust (Selnes and Sallis, 2003) Perceived Risk (Engel, Blackwell, and Miniard,1986; Jacoby and Kaplan,1972) Choice Behavior (Bansal et al., 2004; Mittal et al., 1999; Zeithaml et al., 1996) 120 doing 2. I feel that S is trustworthy 3. I feel that S is honest in fulfilling its promises 4. I think that S is very responsive to customers 5. I believe that S will respond with understanding in the event of problems 1. In S, facing offerings that are not value-for-money is a serious risk (R) 2. Satisfactoriness of physical environment in S is a serious risk (R) 3. It is a serious risk that the goods and services offered by S can be inadequate in order to meet my needs. (R) 4. Staying at S can create unhappiness in my inner world. (R) 5. If I say to friends that I prefer S, they may condemn me (R) 1. I will prefer S in the future 2. I will consider S the first choice at which to stay 3. I don’t think that the other brands will provide clearly better offerings 4. It is a low possibility that I will replace S with a competitor 0.85 0.72 0.91 0.79 0.82 0.63 0.71 0.52 0.75 0.55 0.70 0.51 0.89 0.83 0.69 0.88 0.74 0.74 0.64 0.51 0.92 0.79 0.83 0.64 0.84 0.66 0.94 0.83 0.88 0.74 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Structural Model The estimates and hypothesis results are summarized in Table 8. Furthermore, figure 2 also provides the complete model with the path estimates. The model explained 62 – 74 % of the variance (R2 scores). Overall, the research model accounted for 74 % of the variance of choice behavior. Table 8: Structural Model of RM Activities on CI, CT, PR and CB Parameter (Paths) RM Activities Corporate Image H1 (+) RM Activities Consumer Trust H2 (+) Corporate Image Consumer Trust H3 (+) Corporate Image Perceived Risk H4 (–) Consumer Trust Perceived Risk H5 (–) Choice Behavior H6 (–) Perceived Risk Estimates Hypothesis Squared Multiple Correlations for Structural Equations Corporate Image Consumer Trust Perceived Risk Choice Behavior 0.793* 0.678* 0.423** - 0.447** - 0.763* - 0.872* Estimates 0.71 0.62 0.66 0.74 * p < 0.001 ** p < 0.01 Volume 6 | Number 2 | Fall 2016 121 �Mesut Bozkurt Çanakkale, Emrah Özkul Figure 2. SEM Analysis of the Research Model Corporate 0.79* Image - 0.44** 0.42** RM 0.68* Consumer Trust Perceived - 0.76* Choice Behavior - 0.87* R2 0 74 * p < 0.001 , ** p < 0.01 As seen in table 8, all proposed relationships between the constructs of the model were supported by the statistical results. The standardized estimates of the structural parameters (i.e., RM activities corporate image and consumer trust, and corporate image consumer trust) prove that consumers’ evaluations toward RM activities positively influence the view of corporate image in their minds (see table 8, r: .79 and p < 0.001). Similarly, RM activities to be exposed clearly determine consumer trust positively towards the firm that organized RM activities (r: .68 and p < 0.001). These outcomes confirm H1, in that positive evaluations of consumers towards RM activities of the firm lead to positive corporate image in their minds. Also, the hypothesis H2 was confirmed by the results, in that positive evaluations of consumers towards RM activities lead to higher levels of trust towards the firm in consumer psychology. It is possible, therefore, to state that RM activities organized by firms have a direct influence on both the appearance of the firm in the marketplace, and inner evaluation processes consumers activate. Thus, RM activities of firms have a power to create doubled effect on consumers’ decision making process as external and internal stimuli. Consumer trust is also positively influenced by corporate image, as hypothesized in H3 (r: .42 and p < 0.01). This confirmation for H3 shows that positive corporate image in the minds of consumers plays a supportive role to enhance the feeling of 122 Journal of Economic and Social Studies �Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management trust in consumer psychology. Therefore, RM activities have both direct influences on consumer trust, and indirect influences on it through corporate image. H4 and H5 investigate the impact of corporate image and consumer trust on the factor of perceived risk. The standardized estimates of the structural parameters reveal that corporate image has a significant effect on perceived risk, but in a negative direction (r: - .44 and p < 0.01). In other words, perceived risk by consumers for a given firm is negatively influenced by corporate image in the mind of consumers. That is, the more positive corporate image consumers assume the less perceived risk they have. Also, the results confirm H5, in that a higher consumer trust toward a firm leads to a lower perceived risk by consumers (r: - .76 and p < 0.001). Thus, perceived risk by consumers is influenced significantly by the two variables in a negative direction, as hypothesized in the research model. Comparing the values of the two coefficients, it appears that consumer trust has greater influence on perceived risk by consumers than corporate image. The analyses of the hypotheses obviously point out that perceived risk by consumers is a significant determinant on their choice behavior (r: - .87, p < 0.001), in support of H6. Perceived risk seems to have a negative impact on choice behavior of consumers, just as hypothesized at the beginning of the research. Based on this test result, one can infer that higher perceived risk will result in lower choice behavior. Thus, it is possible to say that in order to increase the positive attitude toward choice of a firm’s offerings, perceived risk should be cut off through enhancing consumer trust based on RM activities. Overall, all the parameters are significant in the research model. According to Chin (1998), in order for coefficients to be considered meaningful they should be above the value 0.2. In our research model all parameters were computed between 0.42 – 0.87, indicating considerable impact. Moreover, all the structural relationships are in the hypothesized direction (table 8). These findings strongly support the positive relationships between RM activities and corporate image created in the minds of consumers and consumer trust in the psychological structure (figure 2), negative relationships between corporate image - consumer trust and perceived risk, and then a negative relationship between perceived risk and choice behavior. These results are not only consistent with the findings of previous studies (e.g. Benjamin and Podolny, 1999; Keh and Xie, 2008) but also with our expectations of associated relationships among the constructs. Volume 6 | Number 2 | Fall 2016 123 �Mesut Bozkurt Çanakkale, Emrah Özkul Conclusion This paper aims to understand the role of RM activities on consumers’ choice behaviors. Drawing on the literature for reputation management and behavioral intentions of consumers, this research study theoretically develops and empirically measures a model analyzing the effects of RM activities toward the evaluations of consumers and then choice behavior. In conclusion, choice behavior of consumers can be predicated as a dependent variable with a rate of 74 % through antecedent constructs triggered by RM activities. Empirical results clearly reveal that perceived risk by consumers plays a determinative role in the process. Therefore, we should especially focus on how to minimize perceived risk through RM activities. It is possible to say that RM activities influence consumers’ decision making processes with indirect effects by enhancing corporate image and creating trust. The empirical results of this study show that perceived risk can be decreased by increasing consumer trust and positive corporate image based on RM activities of firms. Thus, if firms organize specific RM activities (i.e. making high-volume and continuous commitments to the market for superior customer satisfaction, announcing the famous people preferring the offerings of the firm, sponsoring important events in social life) strategically and systematically, this will function in building positive judgments resulting in lesser perceived risk and finally in more positive tendencies to prefer any given firm’s offerings. We note that the findings of this study should be assessed together with some specific limitations. First, the data required were collected from actual customers of a firm within its business atmosphere rather than in an unrelated place. However, designing a research activity in Sheraton was a result of the difficulties of reaching consumers for examining the reflections of RM activities of any firm. Second, although all hypotheses are supported, the findings of this study were generated from the customers of only one firm. 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Extent The size or duration of the resource. 3329 Title A name given to the resource Investigating the Drivers of Choice Behavior in Tourism: Corporate Image, Perceived Risk and Trust Interactions through Reputation Management Author Author BOZKURT, Mesut OZKUL, Emrah Abstract A summary of the resource. 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 Publisher An entity responsible for making the resource available International Burch University Date A point or period of time associated with an event in the lifecycle of the resource 2016-11 Keywords Keywords. Article PeerReviewed H Social Sciences (General),HB Economic Theory,HG Finance 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 126 �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 129 �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 �References AirBnBCitizens. (2016, November 04). 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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 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 �References Chang, L., Lee, Y., & Huang, C. L. (2010). The influence of E-Word-Of-Mouth on the Consumer’s Purchase Decision: a Case of Body Care Products. Journal of Global Business Management, 6(2), 1-7. Cheung, C. M., & Lee, M. K. (2012). What drives consumers to spread electronic word of mouth in online consumer-opinion platforms. Decision support systems, 53(1), 218-225. Chiosa, A. R. (2014). WORD OF MOUTH ON SOCIAL MEDIA. SEA: Practical Application of Science, 2(4). Diffley, S., Kearns, J., Bennett, W., & Kawalek, P. (2011). Consumer behaviour in social networking sites: Implications for marketers. Irish Journal of Management, 30(2), 47. Digital Marketing Definition | Investopedia. (2015, April 6). Retrieved December 18, 2016, from http://www.investopedia.com/terms/d/digital-marketing.asp Evans, C., & Erkan, I. (2014). The impacts of electronic word of mouth in social media on consumerspurchase intentions. Hennig-Thurau, T., Gwinner, K. P., Walsh, G., & Gremler, D. D. (2004). Electronic word-of-mouth via consumer-opinion platforms: What motivates consumers to articulate themselves on the Internet?. Journal of interactive marketing, 18(1), 38-52. Hu, X. (2015). Assessing Source Credibility On Social Media–––An Electronic Word-Of-Mouth Communication Perspective (Doctoral dissertation, Bowling Green State University). Lee, M., & Youn, S. (2009). Electronic word of mouth (eWOM) How eWOM platforms influence consumer product judgement. International Journal of Advertising, 28(3), 473-499. Nadeem, W., Andreini, D., Salo, J., & Laukkanen, T. (2015). Engaging consumers online through websites and social media: A gender study of Italian Generation Y clothing consumers. International Journal of Information Management, 35(4), 432-442. Nawaz, A., Vveinhardt, J., & Ahmed, R. R. (2014). Impact of Word of Mouth on Consumer Buying Decision. European Journal of Business and Management, 6(31). Park, D. H., Lee, J., & Han, I. (2007). The effect of on-line consumer reviews on consumer purchasing intention: The moderating role of involvement. International Journal of Electronic Commerce, 11(4), 125-148. Perrin, A. (2015). Social media usage. Pew Research Center.(n.d.). Retrieved January 21, 2017, from http://www.tezu.ernet.in/~utpal/course_mat/research_design.pdf Sørensen, A. C. (2010). A Process Model of Online Word of Mouth (Unpublished master’s thesis). Copenhagen Business School. Retrieved from Yogesh, F., & Yesha, M. (2014). Effect of Social Media on Purchase Decision. Pacific Business Review International, 45-50. 28 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 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) https://omeka.ibu.edu.ba/files/original/5076eba6f2ac37796b64aea063d9bc03.pdf b7edad928309cec7e2dbd9911c0ed4b4 Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3713 Title A name given to the resource 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/8cf5d80135245bc1609e69a9ebc321be.pdf a45cf823c918e60adacc309a2c49b4f8 PDF Text 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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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 The President of the Republic of Macedonia, (www.pretsedatel.mk), accessed January 2017 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 � Dublin Core The Dublin Core metadata element set is common to all Omeka records, including items, files, and collections. For more information see, http://dublincore.org/documents/dces/. Extent The size or duration of the resource. 3635 Title A name given to the resource 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 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)