Innovative approaches in the management of ...

Innovative approaches in the management of competitiveness of businesses

Collective monograph edited by A. Berezin,

M. Bezpartochnyi

ISMA University Riga (Latvia) 2016

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Inovatīvas pieejas uzņēmumu konkurētspējas pārvaldībā

Kolektīva monogrāfija A. Berezin un M. Bezpartochnyi zinātniskajā redakcijā

Informācijas sistēmu menedţmenta augstskola Rīga (Latvija) 2016

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UDK 005.591.6:005.332.4 Innovative approaches in the management of competitiveness of businesses: collective monograph / edited by A. Berezin, M. Bezpartochnyi / ISMA University. – Riga, 2016. – 196 p. Authors of study within the monograph came to conclusion that need use of innovative approaches to business development and management of competitiveness, methodical toolkit of forecasting of business development, formation of competitive advantages, effective use of resource potential. Basic research focuses on issues of introduction of innovative approaches to information security, formation of logistics systems, legal regulation of functioning clusters, efficient use of personnel, development of export potential, ecological aspects of businesses. Research results have been implemented on various models of functioning businesses in trade, industry, agricultural sector, which have an innovative component and allows you to ensure competitiveness in the context of globalization. Results obtained during the research can be used in decision-making at level of how business, and at level of local governments on formation of competitive advantage and business development. Results can also be used by students and young scientists on modern concepts of development of enterprises in face of increasing competition and formation of competitive advantages on market of goods and services. Reviewer: Dr. Krēsliņš Kārlis – Academic Pro-rector Ventspils University College, M.Sc. in Information Studies, PhD, Researcher of the Centre for Entrepreneurship, Innovation and Regional Development (CEIRD), Latvia International scientific editoral board: Mariana Petrova – PhD, Assoc. Prof., Director of Education Technologies Center, St. Cyril and St. Methodius University of Veliko Turnovo, Bulgaria The collective monograph is approved for publication at the meeting of the Scientific Council of the Information Systems Management University, Business Institute of 23 May 2016, Minutes No. 3-16. Reproduction or citation reference is mandatory. © ISMA University, 2016 ISSN 1849-5214 (electronic)

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Innovative approaches in the management of competitiveness of businesses

Contents

Chapter 1 CONDITION AND PROSPECTS OF DEVELOPMENT ENTREPRENEURSHIP IN THE CONTEXT OF GLOBALIZATION ………………………………………………….. 8 Bezpartochnyi M., Živitere M., Riashchenko V. The modern concept of operation and development of retail …....... 8 Bibilashvili L. Investment policy in energy sector ……………………………..…14 Catalin I., Gina I. The analysis of European Union countries index of globalization from the viewpoint of clusters …………………………….……… 18 Davulis G. Theoretic analysis of global international business management models and their suitability for Lithuanian case ……………..…... 25 Vutsova A., Topleva S. Global challenges and entrepreneurial spirit development through public-private partnership ………………………………..………. 42 Chapter 2 METHODOLOGY AND FORECASTING BUSINESS DEVELOPMENT …………………………………………….…….. 51 Bezpartochnyi M., Živitere M., Riashchenko V. Use of cluster analysis to ensure the effective functioning and development of retail ……………...…...……………………...….. 51 Bebnadze K. Description of management by laws of physics ………………….. 55

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Mishchuk I. Methodological and methodical approaches to trade enterprise logistics system forming …………………………………………. 60 Chapter 3 MODERN APPROACHES AND TRENDS IN MANAGEMENT ……………………………………………………............................... 70 Butvilas T., Butvilienė J., Vasilienė-Vasiliauskienė V., Vasilis Vasiliauskas A. Project-based learning strategy implementation …………….…… 70 Rumanovská L., Lazíková J., Takáč I., Fehér A. Innovations and competitiveness in agriculture enterprises in Slovakia ………………………………………………………...… 79 Witek L., Szalonka K. Ecological attitudes and behavior among young consumers as a challenge of green marketing …………………………….………. 97 Chapter 4 FORMATION OF COMPETITIVE ADVANTAGES OF BUSINESSES .…………………………………………………..…. 107 Dimkow S. Competitive advantage achievement through collaborative innovations ………………………………………...……………. 107 Ianioglo N. The introduction of organizational innovations as a factor of increasing the competitiveness of enterprises ………………..…. 116 Litvin A., Coser C., Putuntean N. Management of sectorial competitiveness related to the environment of limiting and stimulating factors …………………………….... 127 Toma S.-G., Marinescu P., Gradinaru C. Strategy and creativity in business ………………………...……. 139

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Vasilienė-Vasiliauskienė V., Vasilis Vasiliauskas A. Lean and agile supply chain strategies for competitive e-commerce services ………………………………………………….………. 149 Chapter 5 INNOVATIVE APPROACHES TO FORMATION OF THE RESOURCE POTENTIAL .……………………………...………. 158 Dodonov О., Potoyalo Y. The meaning of innovations in the development of logistics systems ………………………………………………………………...…. 158 Miszczak K. Social innovation for communes on the example of „nemo creativity station‟ project …………………………………………………... 165 Poór J., Timea J., Madarász I., Horbulák Z., Szabó I., Antalik I., Ildikó É. Kovács, Dús M., Gábrielné G., Vinogradov S., Kollár C. Trends and tendencies of atypical employment among hungarian and slovak unemployed people in light of empirical researches ….… 174 Rinkova S., Atanasova I. The knowledge and innovative development in transforming economies ………………………………………………….……. 188

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Chapter 1 CONDITION AND PROSPECTS OF DEVELOPMENT ENTREPRENEURSHIP IN THE CONTEXT OF GLOBALIZATION

Bezpartochnyi Maksym PhD in Economics, Associate Professor, Post-Doctorate Fellow, Chair of Economics Enterprises, Poltava University of Economics and Trade Živitere Marga Academician, Professor, Dr.oec., Rector‘s Advisor, Head of the Department of Economics, ISMA University Riashchenko Viktoriia Dr. oec., Professor, Department of Management and Marketing, Director of the Entrepreneurship program, ISMA University

THE MODERN CONCEPT OF OPERATION AND DEVELOPMENT OF RETAIL

Development of retailers Ukraine is a complex and dynamic a process that takes place in conditions of transformational changes in the national economy under the influence of factors of economic, social and legal nature. The variability of these factors causes changes in the market environment, the operation of trade enterprises, requiring finding adequate approaches to management and the formation of their strategic competitive advantage. In turn, making effective management decisions on trade enterprises, as the experience requires its full and relevant information provision on the status and trends of their industry environment. In a competitive business can succeed or survive under conditions of their own development, so the consideration of its nature as an economic 8

category is relevant. To effectively manage the development of the enterprise must understand what is meant by this term. Development – is irreversible, directed, regular change of material and ideal objects; directional change system, in which deployed its internal capabilities. There are evolutionary and revolutionary forms of development. Evolutionary change caused by gradual qualitative object, and is characterized by rapid revolutionary qualitative changes in its structure. Also produce progressive direction of the characteristic of which is the transition to a more perfect and regressive, reflecting degradation, reduction of loss of ability to perform certain functions stagnation. Depending on the emphasis on quantity and attributive factors are two ways of development: with extensive way – by quantitative increase resources for constant technical and technological and organizational basis; intensive way implies active involvement qualitatively new means of production, the introduction of technological and organizational innovations, training staff. Analysis of scientific works of economists enables us to determine that arises as a result of new qualitative state of the object that acts as a change in its composition or structure. Development as an economic category has certain characteristics: - Change, movement, during which the new development provided the necessary quality, capable of independent movement and reproduction; - Reflect changes occur as a result of internal contradictions and external factors; - Carried out by purposeful transformation of the object; - Is not a one-time transformation and continuous process over time; - The movement is in a spiral. Some economists believe these concepts are synonymous. But this interpretation is not correct, since the rise – this increase in size or number, and evolves – to increase the capacity and competence. For quantitative characteristics typical growth, while development attribute. However, the development may include elements of growth. Between growth and development does not necessarily conflict exists, they can enhance the effect of each other, that between them there is synergy. Growth does not always lead to an increase in value, while its development involves. If growth is not mandatory increase the value of enterprise, without this development is not possible. So consider the concept is closely related to the effectiveness and efficiency of the 9

company. The development company is closely connected with its potential. Although the amount of available resources is important for the growth of the organization, but their presence does not stipulate development. Lack of resources can not stop him: on the contrary, the more development reaches the enterprise, the less they depend on and can better manage available resources and create their own resource potential. The genesis of theories of enterprise development begins with the following of scientific views on the nature of his "theory of directed development of enterprises", "theory of cyclic development of enterprises" and "the concept of life-cycle businesses." According to the theory of "directed development of enterprises," the development of enterprises treated as a set of transitions from one state of internal and external balance to other similar state prevailing circumstances and stream factors [1]. The basis of this theory was empirical evidence for periodic occurrence of economic crises in the development of socio-economic systems at different levels. Thus, we can conclude that companies develop cyclically from one crisis to another phase, and phase measurement criteria of economic efficiency was elected, which occasionally tends to increase and decrease under the influence of internal and external factors [3]. The concept of "life-cycle businesses," enterprise development can interpret as a life cycle that is characterized by a number of time steps and has the following stages: birth, childhood, parenthood, early maturity, flowering forces full maturity, aging, renewal. Considering the development of philosophical perspective, the authors believe that it goes through the 5 main levels: indefinite, definite, actual, real and true being, which respectively show: the formation of the new as such; new state that emerged from the transformation of old; isolated being new but based on old; its existence on its own basis, but under conditions that got the old; operation of a new self-sufficient, growing itself substance. Quite interesting and original can be considered a model of Adizes, based on the assimilation of the enterprise alive organism [4]. As the model to live far from flourishing all companies for flowering inevitably follows bureaucracy businesses and death. Adizes model defines a number of dangers that await the company on the path of development, but does not answer the question: which organizational status company 10

must strive to stay longer in a phase of flowering? Other foreign scientist L. Hreyner offers to consider development through passage now critical points. He identifies five stages of organizational development (based, respectively, on creativity, leadership, delegation, coordination and cooperation), separated from one another organizational moments of crisis. The path from one stage of development to the next company is overcoming the appropriate crisis of the transition period [7]. The disadvantages of this theory are that it essentially expresses the fact that changes in the organization are programmed. Since the 70's, when it created a theory, many companies actually have been under similar models listed in L. Hreyner. Despite this, it is incorrect to say that any modern enterprise must pass the specified path. In the table 1.1 shows systematization theories of development. Table 1.1 Characteristics of theories development of enterprises Theories Directed development Cyclic development

Life cycle

Philosophical Point of view Model development by Adizes Concept development by L. Hreyner The modern theory development

Characteristics The set of transitions from one state internal and external balance to other similar condition, prevailing circumstances and factors streaming. Companies developing cycle of one phase crisis to another, and phase measurement criteria of economic efficiency was chosen, which periodically tends to increase and decrease in the influence of internal and external factors. The development is treated as a life cycle that is characterized by a number of time stages and has the following stages of development: birth, childhood, parenthood, early maturity, flowering force full maturity, aging, renewal. The development is through the 5 main levels: indefinite, definite, actual, real and true life. Based on the assimilation of a living organism enterprise.

Consider now passing through the development of five stages of organizational development (stage development based on creativity, leadership, delegation, coordination and development stage, based on cooperation). Based on experience of project work in companies of all sizes, research conducted by internal and external conditions of organizational development, and also on an analysis of ways to overcome the crisis points.

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Internal and external factors development of trade enterprises is identified. Internal factors affecting the market opportunities for strengths of trade enterprises in a strategic perspective: 1. Evolution of retail trade objects. Today strategically important area for food retail facilities is the type of minimarkets, which are located in adjacent areas; for all products – expanding online-trading. More new retail trade objects are specialized or highly specialized type. 2. Greening trade – production and gains in organic production, the transition to an ecological packaging. 3. Management of supply chain management is changing demands of consumers. All the more important for the TA becomes focus on consumer behavior, accounting and analysis channels through which the consumer makes the purchase of goods. Consumer behaviors are keys to managing inventory control systems. 4. Adaptability. New technologies reduce costs, increase productivity, and improve customer service. Their implementation – an absolute requirement for the survival of modern control systems. 5. The price transparency. Price information is readily available to the buyer. Ability to compare it and choose the best deal. New approaches to pricing, the price of the program guarantees; the "check prices" (eng. price check) – providing information on prices at retail directly on the price tags; flexible electronic pricing oriented consumer. 6. Modification and reducing the role of pricing and increased importance of non-price competition. There is a hidden enhance price competition when the consumer is offered a new product with significantly improved consumer properties for a disproportionately small compared to the quality, price or discount under certain conditions, and so on. 7. Diversification of retail trade enterprises. In order to improve the competitiveness, effectiveness and expansion of additional services to consumers retail TP trying to diversify their activities at all levels of customer value chain, including production, distribution, marketing, after-sales service and so on. The external (market) factors and trends affecting creating strategic advantages of trading companies: 8. Increased demands of customers, the importance of demographic factors and customization (eng. customer – client, buyer) trade. Buyers have become much more attentive to their costs and product selection. Modern buyer well educated, demanding, skeptical feels a constant 12

shortage of time. Depending on the demographic situation TP builds its business, focusing on certain segments of customers. 9. Personalization shopping customer service. It is impossible to estimate the mass of buyers and depersonalized. Each buyer requires an individual approach – to know the frequency and detail of his purchases, willingness to acquire new products. At the forefront of technology, which enable to work with each customer individually. 10. Unfair competition – a feature of modern trade, sold the establishment dumping prices, discriminatory contracts with producers and others. This creates new barriers to entry, which practically very difficult to overcome. This phenomenon is called "killer market" (eng. category killers), when networks and multinationals capture the market with such a powerful purchasing and organizational capacity almost immediately destroy less powerful competitors. 11. Increased competition at the level of trade marks and brands. With the saturation of the market with quality products and rising incomes become important image characteristics value brands and brands that are the modern tools of competition. Today, retail is developing and is in a state of quantitative and qualitative changes. Despite the trend decrease in the total number of retail TP and the population real incomes and last volume of retail will rise. There is an active technological upgrade retail trade facilities and introducing new approaches to the economic activities of trade enterprises, which now can not ignore global trends in management strategies and decision making. References 1. Bojo J. (1992) Environment and development: An economic approach. – Second Revised Edition. – Boston-London: Kluwer Academic Publishers, 211 p. 2. Bezpartochnyi M. (2014) Mechanisms to ensure sustainable development of trade enterprises. Materials of IIIth International scientific and practical Internet conference "Theory and practice ensuring effective development of the market." November 28, 2014. - Poltava: PUET, pp. 88-89. 3. Hulse J.H. (2007) Sustainable Development at Risk: Ignoring the Past. – New Delhi: Cambridge University Press India Pvt. Ltd. Ottawa: International Development Research Centre, 390 p. 4. Adizes I. (1988) Corporate Lifecycles: how and why corporations grow and die and what to do about it. – New Jersey: Prentice 13

Hall, 361 р. 5. Indicators of Sustainable Development: Framework and Methodology. – N.Y.: United Nations, 1996, 428 p. 6. Koncar Jelena (2010) Private label development in Republic of Serbia. Business & Economic Horizons. Vol. 3, pp. 105-110. 7. Onno Kuik (1991) In search indicators of Sustainable Development. – Boston-London: Kluwer Academic Publishers, 140 p. 8. Rouse J.W. (1953) Estimating productivity for planned regional shopping centers, news and trends in city development. – Washington: Urban Land Institute, pp. 1-5. 9. The 2014 Global Retail Development Index [Electronic resource]. Available from: www.atkearney.com. 10. Tracey Strange (2008) Sustainable Development: Linking Economy, Society, Environment. – Paris: OECD Publishing, 142 p.

Bibilashvili Lia Doctor of Economics Academy, Associate Professor, Department of Business Administration, Gori State University, Georgia

INVESTMENT POLICY IN ENERGY SECTOR

Energy is singled out among sectors of the national economy as having the highest capital-intensity; it requires intensive and continuous financing to achieve progress according to the requirements of the macroeconomic environment. The sector has clearly suffered from the complete termination of centralized capital investments – practically the only source of financing in 1990-s. It is also obvious that the solution to the energy crisis requires the attraction of significant additional investments in current and prognostic. In the most likely scenario of economic development of Georgia for the modernization and construction of new facilities, investments of 2,9 bill US dollars (including 1,3 bill US dollars in 2001-2010) are required. The strategic purpose of state investment policy in energy sector is 14

the achievement of the required level of energy safety and energy independence of the country, creation of a strong basis for economic and social development, energy effectiveness and steady development. During the first decade the decisive importance in electric power industry is attached to rehabilitation of existing hydroelectric power stations and thermal electric power stations, rehabilitation of highvoltage transmission lines networks and distribution systems, and proper accounting systems that can be achieved at the expense of rather moderate capital costs. During the next decade attention will be paid to energy effectiveness, new capacity, increase in the level of reliability, and the development of the regional market. In the prognostic period, restoration and rehabilitation of the mains and distribution networks of natural gas will be carried out that will ensure a complete coverage of the growing needs of the population and of the economy. In the oil and gas sector, the prospecting of deposits and drilling works including previously unexploited regions using new, modern methods will be carried out. Table 1.2 Distribution of investment between energy branches in 2001-2020 Branch Electricity Natural Gas Economy (thousand tons) Oil and Gas production (thousand tons)

Increase of power Including Total 200120112010 2020 2632 884 1748

Investments, mill US $ Including Total 200120112010 2020 2267,7 1058 1209,2

2900

1110

1790

400

150

250

10645

3715

6930

250

100

150

The sharp increase in domestic energy resources together with realization of projects on energy transit corridors will ensure energy effectiveness and a high level of energy independence of the country. The required energy programs need solid capital investments and sources of financing. In the next 3-5 years opportunities of financing from internal sources (state budget, long-term credit resources, own free finances of the companies of branch) practically do not exist. At this stage, investments for the energy complex should be attracted from 15

external sources. It is necessary to note that in the near future, the policy of using the very favourable investment programs of the international financial institutions of donor countries actually will gradually be changed, and the focus of attention will be transferred to foreign commercial investments. But there is not sufficient experience in this sphere in Georgia which can cause additional difficulties. The world market of foreign investments is seller‟s market, which means that the demand for investment resources is bigger that supply, thus raising the price. Because of globalization and liberalization, the trend will continue for the next 5-7 years. This means that investments necessary to the country, can only be attracted to the country if the investment environment is competitive with the rest of the world. Factors affecting Georgia„s competitiveness include political risks and the pace of economic development. Proceeding from that, under conditions of sharp competitive environment in the investment market, lowering investment risks plays a growing part in the attraction of investment resources. Experience shows that direct foreign investments are successfully used with high efficiency for both parties – not only in developing, but also in highly-developed industrial countries. So the attraction of the investment is important for our country too. For last period serious interest is given to the energy resources of Georgia on the part of global companies, this is the first practical result. From viewpoint of internal factors for attracting investment, the most important is the legislation of the country regulating the functioning and development of the sector. From this point of view is necessary to note that the Law of Georgia “On Assistance and Guarantees of Investment Activity” is adopted; some contracts in sphere of oil and gas production are signed and ratified. Since 1996 the energy sector finally has moved from a direct management to civilized regulation regime. The legislation existing in Georgia provides foreign investors with assistance and does not impose limits above modern international norms. In Georgia all known forms of foreign capital (concessions, joint enterprises, contracts on production etc) are accepted. However for their real introduction, the appropriate legislative base and appropriate institutional structures are not yet completely developed and foreign investors in Georgia are not yet sufficiently protected from bureaucratic barriers. On the one hand this impedes the attraction of investments, and on the other hand, creates, the real opportunities for some foreign 16

investors to derive benefit from such mentioned situations. Development of legislative base in the given sphere and also formation of appropriate institutional structures, rigid differentiation of rights and duties are the very important problem whose appropriate solution will give strong stimulus to the stable progress in both energy sector, and all of the national economy. Transformation of not only foreign and local financial resources for investment is of critical importance for creation of favourable investment environment. According to existing prognostic estimations, in the next 3-5 years, free capital will be available in the energy companies which can be successfully used for investment programs. Under conditions of appropriate state support, it is possible that internal financial sources will grow in the country. In case of creation of appropriate environment (market of active securities, creation of guarantees for the stable incomes etc), the mobilization of solid resources is possible with double benefits in energy and social progress. References 1. Law of Georgia ―On Electricity and Natural Gas‖, Tbilisi, 1997, (in Georgian). 2. Indicator Plan of Social of Poverty in Georgia, Tbilisi, 2003, (in Georgian). 3. Program of Overcoming of Poverty in Georgia, Tbilisi, 2003, (in Georgian). 4. Concept of Long-term Social and Economic Development of Georgia and Prognosis of Basic Parameters for 2005, (in Georgian), Scientific and Research Institute for Social, Economic, and Regional problems. Tbilisi, 2000, (in Georgian). 5. E. Eristavi, D. Chomakhidze, P. Tsintsadze Fundamentals of Energy Complex Regulations. – Vol. II, Tbilisi, 2000-2001 (in Georgian). 6. D. Chomakidze Energy Safety of Georgia, Tbilisi, 2003, (in Georgian). 7. D. Chomakidze Economic and Ecological Problems of Utilization of Energy Potential of Georgia, Tbilisi, 2002, (in Georgian).

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Catalin Angelo Ioan PhD in Mathematics, Associate Professor, Director of Research Administration Office Danubius University Galati, Romania Gina Ioan PhD in Economics, Lecturer Danubius University Galati, Romania

THE ANALYSIS OF EUROPEAN UNION COUNTRIES INDEX OF GLOBALIZATION FROM THE VIEWPOINT OF CLUSTERS

Beyond the myriad definitions of globalization, obviously, the effects of this phenomenon are subject to a conflict, first at the ideological level. Being a complex and multidimensional phenomenon, quantification of process itself and its effects, requires thorough analysis and research. Nowadays globalization is a real-time interconnection in all aspects of social, economic, political at both international economy and individual level. As such, each segment of this phenomenon, as controversial now, should be studied, analyzed and quantified separately in order to finally go to a holistic analysis. From this “conflict of definitions” on globalization, we understand that this phenomenon is good or bad. Therefore, we believe that all efforts to measure it should materialize in capturing those links between globalization on the one hand and the poverty and economic growth on the other hand, since the economic component, not only dominant, but and strongly influences the other issues. A simplified measurement of globalization involves the calculation of the openness of an economy by reporting international trade to gross domestic product. The shortcomings of this method of calculation are understandable in the sense that it refers to the geographical distances between countries. The links between neighboring countries or regional interdependencies (which existed long before talk of globalization) can include them as part of globalization now? Creating a database and building a composite index of globalization is a very bold action. Most popular indices that measure the size, all aspects of globalization are KOF Index and Kearney Index. Although our approach we use the KOF index, we will briefly 18

present and Kearney index, as well as their advantages and disadvantages, to motivate our choice. Kearney index is calculated based on four major components [3]: 1. Economic integration a. trade b. foreign direct investment c. portfolio and capital flows d. income payments and receipts 2. Personal Contact a. Telephone b. Travel c. Remittances and personal transfers 3. Technological Connectivity a. Internet users b. Internet hosts c. Secures servers 4. Political engagement a. number of embassies in the country b. number of memberships in international organizations c. number of U.N. Security Council missions Total number of variables considered in the calculation of this index is 13 and it is based on normalization of variables. In 2002, Axel Dreher propose another globalization composite index for measurement of globalization using a number of 24 variables. On a panel of 123 countries and a statistical time series for 30 years (19702000) the author analyzes three important dimensions of globalization: economic globalization, political globalization, social globalization [2]. To measure the degree of the economic globalization, the author proposes to quantify trade, foreign direct investment and portfolio investment as a share of their GDP. Moreover, Dreher believes that major importance have restrictions on these flows: hidden import barriers, mean tariff rates, taxes on international trade (percent of current revenue), capital account restrictions. Regarding globalization social components of the index KOF considered to be important in playing the openness, they are in addition to those constituting the index Kearney, the foreign population (percentage of total population) and the number of letters of international postal sent and received per capita. Cultural globalization, the social component, refers specifically to 19

the cultural influence of the United States on other countries, measuring themselves by the number of McDonald's restaurants, and the number of broadcast American songs and movies etc. The degree of globalization policy includes quantifying number of embassies in a country, number of international inter-governmental organizations, Participation in U.N. Security Council Missions, numbers of documents signed between two or more states and ratified by the highest legislative body of each country since 1945. KOF index is available now for a much larger number of countries, allowing both analysis and country analysis between groups of countries, while the index Kearney applies to a small number of countries. Although both indices attempts to analyze how globalization is distributed spatially, KOF index, with the variables used (even if some seem irrelevant) manages better to play this. As the effects of globalization, the question remains the same, but the answers are either in favor of globalization, be its detriment. Most developed countries benefit from globalization. The question is how much of their economic performance due to this phenomenon and how much is due to macroeconomic conjunctures. But for the less developed countries costs outweigh the benefits of globalization. This time the question is what are those countries that lose from globalization. How do we identify? [4]. In what follows, we will analyze the distribution of EU countries after KOF index size in terms of grouping data clusters. Cluster theory, introduced in economic development analysis by Michael Porter in 1990 [6] has recorded, in recent years, a series of spectacular applications in various economic fields [1], [5]. Analysis of data on KOF index during 2000-2013 for all 28 EU countries [7] reveals a range: [57.22,92.63] with extremes reach by Latvia in 2000 and Belgium in 2007 respectively. In order to group the clusters of KOF index data, we considered three levels: 1 – corresponding to a high globalization 2 – corresponding to a medium globalization, 3 – corresponding to a lower globalization. Analysis of the distribution of EU countries on three categories of clusters revealed the following situation (table 1.3-1.5). From the above tables it can be seen that, for each cluster, there is a group of countries belonging to steadily over the years. Thus, between 2000-2013: Austria, Belgium, Netherlands stood constantly in cluster 1, Czech Republic, France, Greece, Luxembourg, Slovakia 20

Table 1.3 Division into clusters of EU countries Cluster 1 (high)[86.14,92.63] Year 2000-2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Country Austria, Belgium, Netherlands + Denmark, Finland, Ireland, , Spain, Sweden, United Kingdom Denmark, Finland, Ireland, Sweden, United Kingdom Denmark, Finland, Ireland, Sweden, United Kingdom Denmark, Finland, Ireland, Spain, Sweden, United Kingdom Denmark, Finland, Hungary, Ireland, Portugal, Spain, Sweden Denmark, Finland, Hungary, Ireland, Portugal, Spain, Sweden, United Kingdom Denmark, Finland, Hungary, Ireland, Portugal, Spain, Sweden Denmark, Sweden Denmark, Sweden Cyprus, Denmark, Hungary, Ireland, Portugal, Sweden Cyprus, Denmark, Hungary, Ireland, Portugal, Sweden Denmark, Finland, Hungary, Ireland, Portugal, Sweden Denmark, Finland, Hungary, Ireland, Portugal, Sweden Ireland

Table 1.4 Division into clusters of EU countries Cluster 2 (medium)[66.18,89.87] Year 2000-2013 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Country Czech Republic, France, Greece, Luxembourg, Slovakia + Estonia, Germany, Hungary, Italy, Poland, Portugal Estonia, Germany, Hungary, Italy, Portugal, Spain Estonia, Germany, Hungary, Italy, Portugal, Spain Estonia, Germany, Hungary, Italy, Poland, Portugal Cyprus, Estonia, Germany, Italy, Poland, United Kingdom Cyprus, Estonia, Germany, Italy, Poland Cyprus, Estonia, Germany, Italy, Poland, Slovenia, United Kingdom Cyprus, Finland, Germany, Hungary, Ireland, Italy, Poland, Portugal, Spain, United Kingdom Cyprus, Finland, Germany, Hungary, Ireland, Italy, Poland, Portugal, Spain, United Kingdom Croatia, Estonia, Finland, Germany, Italy, Malta, Poland, Slovenia, Spain, United Kingdom Estonia, Finland, Germany, Italy, Poland, Spain, United Kingdom Cyprus, Estonia, Germany, Italy, Poland, Spain, United Kingdom Cyprus, Estonia, Germany, Italy, Poland, Spain, United Kingdom Cyprus, Denmark, Finland, Hungary, Portugal, Spain, Sweden, United Kingdom

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Table 1.5 Division into clusters of EU countries Cluster 3 (low)[57.22,81.92] Year 2000-2013

Country Bulgaria, Latvia, Lithuania, Romania +

2000

Croatia, Cyprus, Malta, Slovenia

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Croatia, Cyprus, Malta, Poland, Slovenia Croatia, Cyprus, Malta, Poland, Slovenia Croatia, Cyprus, Malta, Slovenia Croatia, Malta, Slovenia Croatia, Malta, Slovenia Croatia, Malta Croatia, Estonia, Malta, Slovenia Croatia, Estonia, Malta, Slovenia Croatia, Malta, Slovenia Croatia, Malta, Slovenia Croatia, Malta, Slovenia Croatia, Estonia, Germany, Italy, Malta, Poland, Slovenia

belonged to cluster two, while Bulgaria, Latvia, Lithuania, Romania stood in cluster 3. Even though some countries have migrated temporarily in a cluster or another, it can be seen that Croatia (except for 2009) was in cluster 3, Denmark (except 2013) was in cluster 1, Germany (except for the year 2013) was in cluster 2, Ireland (except 2007-2008) was in cluster 1, Italy (except 2013) was in cluster 2, Malta (except for 2009) was in cluster 3, Slovenia (with the exception of 2006, 2009) was in cluster 3, and Sweden (except in 2013) was in cluster 1. One conclusion that emerges from this analysis is that the industrialized countries are at a high level of globalization (clusters 1 and 2), while countries that joined recently the European Union have the lowest level of globalization. Analyzing the ranges of KOF index for each interval in part, can be seen that the length intervals corresponding to cluster 1 evolves somewhat fluctuating, but generally been declining from 7.02 in 2000 to 1.87 in 2013. For the cluster 2, the variation from 11.2 in 2001 will be concentrate in a range with a length 5.39 in 2012. Finally, for the cluster 3 from a peak of 12.32 in 2001, it reach 5.49 in 2012.

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Table 1.6 The KOF intervals on clusters Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Cluster 1 [84.19,92.07] [84.79,91.81] [84.96,91.69] [84.76,91.8] [84.75,91.75] [84.87,91.5] [85.07,91.99] [89.49,92.63] [89.09,92.36] [86.65,92.49] [86.2,92.51] [86.07,92.27] [85.81,92.03] [89.83,91.7]

Cluster 2 [72.48,82.5] [73.23,84.43] [73.75,84.09] [74.3,82.06] [75.93,84.57] [76.02,84.07] [76.18,84.42] [81.39,87.64] [80.24,87.19] [75.88,85.24] [78.82,85.7] [79.03,85.54] [78.97,84.36] [80.4,86.44]

Cluster 3 [57.22,66.24] [59.12,71.44] [60.23,72.43] [61.3,71.63] [65.31,74.96] [67.13,75.19] [67.03,74.44] [69.92,78.46] [69.27,78.79] [66.09,74.55] [69.33,76.87] [69.97,76.67] [71,76.49] [70.97,79.9]

Figure 1.1. The evolution of length intervals corresponding to clusters On the other hand, the distances between clusters (minimum of higher cluster less the maximum of the lower) evolve relatively upward for cluster 1. Thus, if in 2000 the distance between clusters 1 and 2 record value of 1.69 and 0.36 in 2001, it reached in 2013 at 3.39. Similarly, relative to the distance between clusters 2 and 3, from 6.24 in 2000, it tends to decrease somewhere around two (2011-2.36, 20122.48, 2013-0.5). 23

Figure 1.2. The evolution of distances between clusters Length intervals decreases as the years and the difference in increasingly smaller of classes countries reveals that, within the EU, globalization tends to flatten, technology exchanges, development of communications infrastructure and not finally, population migration within the EU accelerating the process. References 1. Berezin A., (2016), Business strategy: clusters as an imperative of development, Formation strategy of economic structures: the tools and practices, ISMA University, Riga (Latvia), pp.7-24 2. Dreher A., (2006), Does Globalization Affect Growth? Empirical Evidence from a new Index, Applied Economics 38, pp.1091-1110 3. Heshmati A., (2003), Measurement of a Multidimentional Index of Globalization and its Impact on Income Inequality, WIDER 4. Martens P., Dreher A., Gaston N., (2010), Globalisation, the global village and the civil society, Elsevier, Vol.42 5. Mirkin B., (1996), Mathematical Classification and Clustering, Dordrecht: Kluwer Academic Publishers 6. Porter, M.E., (1990), The Competitive Advantage of Nations. New York: The Free Press 7. Available from: http://globalization.kof.ethz.ch/query/

24

Davulis Gediminas PhD in Economics, Professor, Department of International Business, Vilniaus kolegija/University of Applied Sciences, Lithuania

THEORETIC ANALYSIS OF GLOBAL INTERNATIONAL BUSINESS MANAGEMENT MODELS AND THEIR SUITABILITY FOR LITHUANIAN CASE

The intensity of globalization and the increasing international trade foster international business expansion and its growth in most regions of the world. International business, which has been rapidly growing in recent decades, is becoming increasingly attractive not only to large corporations, but also to small enterprises, which due to the improving communication techniques, can attract more customers and, as a result, is becoming part of the global market. In the period of intensifying international business and the increasing international competition between enterprises a key success factor is becoming a properly selected international business management model that impacts the activity processes of most enterprises, which shape the final result of their activity. Therefore, it is relevant to investigate theoretical principles regarding international business management models formation and their application in enterprises when assessing their pros and cons. International business reacts sensitively to various economic, political, social, environmental, legal and other types of factors related to the markets, business support services and other processes, which are of major importance to international business and which not merely determine international business success but also provide the opportunity to carry out international commercial activities. When expanding the enterprise activity at the international level the question then arises as which business management model would best suit for different markets and different activities with regard to the enterprise experience, the philosophy of enterprise activity, its strategy and opportunities. In the current complex international environment enterprises face different value systems and beliefs of different countries; therefore the heads should be able to successfully develop inter - cultural cooperation to make international business flourish. Thus, for a successful international business development it is essential to estimate cultural environment (in a broad sense), which encompasses economic, political, 25

social, environmental, legal and other types of aspects. After estimating these aspects, business management models, which would allow to successfully develop business, can vary in different countries or regions. The issues related to international business were investigated and are being investigated by a number of authors, i.e., Bernard at all. (2007), Carbaugh (2008), Cavalcante S., at all. (2011), Harzing (2013), Hofstede (2001, 2007), Lazonick (2010), Oliver (2001), Peng (2009) and others. This article analyses theoretical aspects of three main international business management models: American, European and Japanese through describing their distinctive features and carrying out a analysis of macroeconomic environment in these countries. Recently, international business could be described as a global phenomenon , which emerged due to business expansion outside the national boundaries and the development of international exchanges. International exchange market (trade) is beneficial to all developing countries, since this is the only way to keep pace with the world's most powerful countries with regard to economic growth and technological development. The role of international trade in a global marketplace is rapidly increasing due to the intensifying international relations and the increasing movement of people. One of major conditions of international business is heterogeneity of production conditions in different regions and markets. Those conditions include: natural, climatic, resource supply, specialization, etc. Furthermore, one of key international business conditions is different labour productivity levels, which means that different countries produce what is profitable and effective in those particular counties and markets. International business might be described as business, when the product made in one country is sold to a customer or user of another country or it is consumed in another country. International business is affected by the same principles and factors existing in a national market, however, in case of international these factors have a global character. Moreover, international business, compared to the national one, has some distinctive features, the most important of which are these: commercial transactions are made in accordance with the national laws operating in those countries, payments between the contracting parties are made by one country's currency or currencies of the third parties, increasing of business risks related to the delivery of goods, payments, exchange rate changes, legislative base change concerning taxes and duties; there is an increasing demand for numerous intermediaries and 26

consultants who rise the costs of commercial operations and so forth. International business is considerably impacted by the awareness of customs of other countries, language awareness and business traditions. Currently, there are many reasons fostering international business expansion. They include: the internal market constraints or a high level of goods 'saturation', economies of scale, which reduces production costs, high and not fully loaded enterprise capacities. Foreign economic policy, which provides favourable conditions for entering into international markets, is of considerable significance. The subject of international business, the same as domestic business, is the enterprise. With regard to the enterprise goals and strategy in the international arena, different types of international business enterprises can be shaped, which determine their involvement into the global trade and the existing business management methods. It was proposed (V. Navickas, 2003) to classify international enterprises into 4 groups:  International enterprises;  Transnational enterprises;  Multinational enterprises;  Supranational enterprises or global enterprises. An international enterprise carries out its activities not only within a particular country but also outside its boundaries. It purchases raw materials or manufactured products in other countries, while part of manufactured products (not necessary net product) it exports. The financial statement of such an international enterprise reflects its export/import operations. When an international enterprise expands its activities an objective necessity emerges for establishing close relations with foreign partners, since this improves the supply of goods and facilitates and shortens its path to international markets. The controlling interest package of the transnational enterprise is given to shareholders from two or more countries. Furthermore, international activities of this enterprise include not only imports and exports. It establishes industrial and commercial branches in foreign countries. However, all management threads of these branches turn into a single parent enterprise operating in a particular country. A multinational enterprise is organizing and controlling certain economic relations at the international level. Key features of a multinational enterprise are these: it owns one or several banks aimed at providing services and monitoring financial activities of the enterprise, its turnover is more than 1 billion dollars per year, net profit - more than 50 million dollars per year, employment more than 50 thousand people. Shareholders of supranational enterprises 27

are from different countries. Practically, it is not possible to divide a supranational (global) enterprise by national features. For a long time international business was considered as a distinctive sphere of activity of large corporations. However, currently, in a rapid improvement of various communication techniques and the emergence of new markets and their niches, small - scale enterprises are becoming vital participants in international business activities. Further we will overview international business management models that are widely discussed in scientific literature and practice. The selection of an international business management model depends on specific national or regional conditions, and particularly, cultural environment. A thoughtfully selected international business management model provides an enterprise with a competitive advantage in the sphere of its activity, which allows the enterprise to get higher profits than its competitors. Cultural diversity fosters to search for versatile communication techniques for business participants. In terms of a global context, there could be distinguished three major international business management spheres that cover the same basic models regarding cooperation, concluding contracts, maintaining relations and other models for major business procedures based on mutual understanding between partners with regard to the principles of business execution. The above mentioned conditions shape three different business management schools, i.e. American, European and Japanese. The three previously mentioned management schools discerned by numerous international business researchers are usually considered as three different models regarding different understanding of business and relations between businessmen. American and Japanese business traditions are usually considered as two opposite poles with the dominance of individualism and competition in one of them (the USA) and sociality and corporation - in another (Japan). The European Business School, on the base of which management principles were shaped, was considered as an intermediate variant covering business management features existing in American and Japanese models. As noted by Richardson Global (2012), despite the fact that the American Management School, the same as the entire business culture of the region, evolved from European traditions; however, management principles emerging in a separate continent were exclusive for original interpretation of certain management processes and the attitude towards business. It was in the USA that individualism of employees oriented 28

towards a common goal of an organization emerged, which conditioned a sheer orientation of employees of all levels towards their personal results and a strict formal control. On the contrary, in Japan cultural traditions determined collective relations, non-formal relations and the emphasis on the employee age in the context of the quality of work. Europe, being a pathfinder in the development of American culture, in the course of the human society development established its own distinctive approach to management, which includes the features existing in the USA and Japan. When generalizing the American business model it is important to mention key features of this culture - the culture of this country is individualistic rather than collective, whereas the emphasis is laid on short-term rather than long-term plans and objectives; in business the priority is provided to customers and only later to the enterprise employees and benefits to society; i.e. the key aspiration in this business model is profit. The same situation exists inside the enterprise; the main aspect of employee communication - work, obligations and their implementation, whereas interpersonal relations are practically considered of no importance. Top level heads are provided with managerial freedom, however there is a strict control seeking to implement the enterprise goals. Each head is responsible for his employees and their actions, their achievements and an external image of the enterprise; however, there is a great wage gap between employees and their heads, which causes discussions on whether this model is correct. The head always represents the enterprise to the Board, is responsible for its results and creates an external image of the enterprise. The enterprise head is usually hired for six-eight years of tenure; his salary is around 109 minimum basic salaries of the country, whereas an employee gets 35 minimum basic salaries of the country per month. This wage gap causes discussions whether the policy regarding employee salaries is correct and whether the heads work more efficiently; therefore the Board has the power to vote and dismiss the employee for improper work (Oliver, 2001). The dominant feature of this culture is universality - a tendency to search for simple and understandable solutions; people do not like to think hard, therefore they search for uncomplicated solutions to problems. This feature is perceived differently by different authorsfirstly, this feature does not impede the performance of work; however, it does not provide added value to knowledge management. This is 29

revealed in the employee assessment - employees are assessed by their achieved or not achieved goals, while a salary usually depends on this result. The labour relations system is liberal in the country, which empowers employers with the freedom to hire and fire employees due to changes in the labour market. In Japan the key business form is merging of the enterprise groups, so called "keiretsu". In Japan business culture reflects historical and social values of the country, therefore in order to set up business on the basis of the Japanese business model and achieve significant results, it is essential to know the country's history. Japan is scarce of natural resources, therefore it to a great extent depends on the imported raw materials; therefore, in order to get a balanced foreign trade the country has to export a large number of products. Due to this particular reason in the 20th century the manufacturing sector expansion was its main objective. After World War II Japan began to build ships, produce machinery and electrical equipment, while later petrochemical and nuclear energy products, whereas around 1980 - computers and their parts (Graham, 2010). Since 1970 - the government supported researches, the production of robots began, the competition was encouraged in the textile, shipbuilding and chemical fertilizer industries when applying tax incentives. Despite the fact that bureaucracy in Japan was very strong, the government directly contributed to the economic development by fostering the creation of new industries, mitigated the consequences of economic downturn and created a stable and sustainable economics, however it should be noted that the government was trying to protect its citizens when continually improving their living standards. The residents of the country relied on their government; therefore entrepreneurs in Japan were considered reliable and respectful persons (Graham, 2010). The leadership style in Japanese enterprises is based not on an individualistic approach but on a collegial one. The enterprise Board is chaired by the President who is empowered with leadership freedom; he is responsible for an external image of the enterprise and its representation. In the enterprises of this style each president has fixed goals and tactics how to achieve them; he observes them in his work, except for the economic downturn periods, due to which he may change his actions at his personal discretion (Graham, 2010). The head usually gets around 16 basic minimum wages that are fixed in the country. According to Charkham (1994), work efficiency is not 30

entirely ensured, since there is no control regarding the activity of the enterprise heads. Charkham (1994) admits that key investors in "keiretsu" system are banks and other enterprises that provide access to the cheap financial capital and easier access to the markets. The provision of financial resources to large enterprise clusters provide them with the opportunities of investing and expanding business, and consequently, gaining a significant market share without focusing on short-term results. These entrepreneurial aspirations lead to the expansion of long-lasting relationships; as stated by Gerlach (1992), the sole objective of an enterprise is not to generate business profit, but to focus on its further expansion and growth. A great advantage is that when an enterprise, belonging to the network, faces significant problems or unwanted challenges, it is not alone to handle them; moreover, the enterprise network policies do not tolerate ineffective work and irrational use of resources. Japanese heed on social relations and interpersonal relationship development that are deep rooted in their culture. As stated by Giedrius Jucevičius (2008), the key features of Japanese culture impacting the country's prosperity are strong family relationships dominant in separate organizations and between the enterprise employees. An enterprise is perceived as a family; therefore it is based on the principles peculiar to the family values. Japanese strictly observe high quality requirements; the only difference is that they do not need written standards, since they have a strong commitment to "social responsibility". The Japanese holistic way of thinking acknowledges various ideas and integrates them into work processes when seeking positive impacts on the environment. For instance, Japanese do not lay emphasis on price and value, because they think that being less expensive does not necessarily mean lower quality. The same holistic approach could be applied to perceiving new technologies. In some countries the implementation of new technologies simply means replacing older ones, whereas in Japan new technologies are considered as improving and remodelling the older ones. The formation of this business model was impacted by Japanese culture - traditions, ethics, family respect and loyalty, respect for older generation, integrity, harmony seeking and attention to science and education. For Japanese the attitude that harmonious heart-to-heart relations with the environment is one of key success factors is sort of a reminder prompting that man should fulfil the obligations he is born with, while Western countries tend to emphasize human rights. 31

Currently, after the implementation of several reforms and the government change, the country's authorities control business activities, while Japanese policy is described as bureaucratic and pluralist. In publications on international entrepreneurship researches American and Japanese models are considered opposite poles, whereas the European business management model is a link incorporating the features of both models. However, it should be noted that the USA and Japan are unified geographical and socio-cultural units, where business traditions are perceived in a similar way in any geographical location of the countries (Casillas, et all, 2010). Europe differs significantly in this respect - over the centuries the countries developed as isolated units and became distinctive, which should be considered when analysing business management models of different regions. For example, business management models of the largest European countries - Great Britain, Italy, Germany and France - are links between Japanese collectivism and American individualism. When bearing in mind geopolitical context, it is evident that business management model existing in Great Britain is closer to the principles of the American Business School, whereas the models of Italy, France and Italy are closer to the Business School of Japan (Richardson Global, 2012; Cadogan, ey all, 2009). Considering the fact that a close link between business management models of Great Britain and the USA is apparent and acknowledged by numerous management theorists, while the specifics of German business model in the global context is closer to Japanese management traditions, it should be admitted that business schools in France and Italy, which significantly differ from the ones in Germany and Great Britain, can not be unambiguously linked with the same schools existing in Japan and the USA. However, according to the opinion of most authors, business management schools in France and Italy are closer to the Japanese Management School rather than the American School. Thus, The European Business Management School model is much more complex - it could be divided into separate models that have common and different features. Usually, the European Business Management School model is split into separate types, which are based on diverse philosophical orientations, i.e. pragmatism, which claims that knowledge is gained through rational thought prior to experience, which is based on deductive management models when ignoring a subjective holistic experience oriented towards intuition and based on a humanistic-systematic approach, oriented towards human relations and 32

close interpersonal relations. On the basis of these business cultures we can define European management principles existing in different countries or regions, however, it should be noted that contemporary Europe, which ensures a free movement of goods and people, becomes assimilated, therefore, the above discussed business management models are becoming similar to each other. International business researchers when investigating European business management models divide Europe into four regions, in which different business management models operate, i.e. western, eastern, southern and northern regions with their distinctive business management principles that shape international business practice of each particular region. Usually, pragmatism is linked to the culture of Western Europe, while rationalism - to northern culture, holistic approach – to eastern and humanism – to southern culture. However, this division is conditional. Humanism prevailing in the countries of Latin America reflects the culture of its inhabitants. Humanism, as a form of business management, distinguishes itself for sociability, close relations, usually based on family ties and a patriarchal business organization structure. Emphasis should be laid on the Scandinavian example - this region is abundant with different business management styles (except for humanism), the combination of which determine a distinctive attitude of Scandinavian entrepreneurs towards business and their ability to adapt to different cultures. The prevailing styles in Germany are rationalism and holistic approach. It should be noted that the authors do not investigate the region of Central and Eastern Europe, while heeding on the countries of Western Europe ; therefore the provided analysis is not exhaustive. Thus, Europe does not have one common business management model. For our further research we have chosen the Scandinavian (Sweden) business management model, which is closest to Lithuania's culture and it should be seriously considered. The Scandinavian business management model lays emphasis on the employee and his professional development. Each member of an organization has his own tasks, however, concurrently he has an opportunity to participate in decision taking, shaping the enterprise objectives and implementing them. An employee has freedom to choose how to perform his tasks, which fosters self-confidence and creativity. This is the reason why this country has an employee who provides ideas, is not afraid to risks, is self-confident and increasing profit of his enterprise. Educational system of the country is based on fostering entrepreneurship, establishing favourable conditions 33

for learning and professional development, whereas a university graduate is considered as a full-fledged market participant capable of taking proper decisions. The enterprise fosters employee sociability and sustainable relationships between them; according to Swedish researchers, this guarantees a strong inner motivation of employees. The heads as well as employees respect each other's personal life; moreover, they understand that the employee self-realization depends on his work activities. Furthermore, the representatives of this culture are not haughty for their achievements and merits and all employees feel equal. Lithuania does not have its unique business management model, which would differ from those existing in other countries; however, the majority of researchers consider the Lithuanian business management model as a European one. This model is based on planning, strong management and control that could be implemented when observing existing laws, the abundance of which results in the rise of a powerful bureaucratic apparatus. Its advantages are these: it covers a large number of laws which protect employees against negative effects - a dishonest competition, employee exploitation, etc., however, there is a great desire to circumvent the laws. When assessing an enterprise with regard to its social aspect, it should be admitted that Lithuanian enterprises only partly foster communication between their employees. Large enterprises organize festivals, trips or celebrations to bring together employees and their families; however, the enterprise aspiration is to gain profit. Now we will analyse distinctive features of business management models of different cultures and discern those aspects that could be applied in Lithuania while establishing business management model that corresponds to business conditions in Lithuania. Each culture is unique for its distinctive features that can‟t be traced in other cultures and which in time span are shaped according to the attitude, perceptiveness, values, traditions and customs of the country's residents. It is apparent that countries of the same region usually have common interests, therefore business ethics is not an exception; however, the more distant regions are located the greater cultural diversity exists between them. Such countries as Japan, the USA and Sweden are particularly different; therefore we could adapt everything that would help successfully develop our business within the country and outside its boundaries. In order to assess the efficiency of the country's business management model it would be appropriate to 34

analyse macroeconomic indicators reflecting the economic situation of the country, as well as the impact of macroeconomic environment on business effectiveness. Since this is a separate broad issue, we have limited ourselves with providing a dynamic analysis of business and customer confidence indicators when heeding on the impact of global crisis on these indicators. Business (industrial) confidence indicator reveals the level of optimism and confidence of the country's entrepreneurs towards the country's economic situation, which impacts the investments of business representatives in business. A low indicator slows down the economic growth, since entrepreneurs investments are considerably lower, which results in creating less workplaces and goods that could compete in the domestic market. This indicator is estimated when assessing the opinion of the enterprise heads about the country's economic situation and changes in demand for services and forecasts. Customer confidence indicator - the average responses of the country's residents to four questions, related to the forthcoming household financial situation, the country's economic situation, unemployment rate and the opportunity to accumulate savings. In the course of the research performance the indicator of business and customer confidence in the USA was steady and its value was around 50 (fig. 1.3).

Figure 1.3. Business and customer confidence indicators in the USA 35

It insignificantly decreased in the crisis period. However, the global crisis significantly impacted the customer confidence indicator, the value of which dropped from 112 in 2007 to 52 2008 and only since 2010 it was increasing insignificantly. The confidence indicator in Japan was changing unevenly - this was to a great extent influenced by the economic crisis (fig. 1.4). In the crisis period it dropped to negative values. In 2010 it dropped to -48 and in 2012 it remained negative. However, customer confidence indicator in the course of the research performance was positive and much more stable. However, it was also affected by crisis, though to a lesser extent.

Figure 1.4. Business and customer confidence indicators in Japan Customer and industrial confidence indicators in Sweden were changing equally, except for 2002, 2011 and 2012, when their changes varied (fig. 1.5). Indicators of both types were affected by the economic crisis; however, customer confidence indicator was almost always lower than industrial confidence indicator, except for 2002, 2003 and 2009. Business and customer confidence indicators in the period of the research performance in Lithuania were negative, except for 2004, when business confidence indicator was 2 and in 2007 when customer confidence indicator was 5 (fig 1.6). Both indicators, especially customer confidence indicator, were impacted by the economic crisis.

36

Figure 1.5. Business and customer confidence indicators in Sweden

Figure 1.6. Business and customer confidence indicators in Lithuania Thus the highest value of business and customer confidence indicators in the period of the research was in USA and lovest value of this indicators was in Lithuania. In order to create an appropriate business model of the country there 37

is no need to generate new ideas, since it is much easier and more effective to follow successful examples of other countries and adapt them to the Lithuanian environment. Some aspects contradict our culture and are against business ethics, for instance, strong social relationships prevailing in Japan would not fit to Lithuania and it would take much effort to adapt it. Thus, when creating a specific business management model, we should bear in mind personal characteristics of the country's residents, our values and traditions. The aim of the business management model creation is to help business representatives of the country to effectively manage processes, strengthen social relations within the enterprise and seek the desired economic activity results when considering social and natural environment. On the basis of the research, below are provided our proposals regarding the principles intended for the Lithuanian international business management model. Since Lithuania is a European country, it would be preferable to orientate Lithuanian business towards the European business management model, particularly to Northern Europe, i.e. the Swedish model, since with regard to geopolitical and cultural aspects Lithuania is closer to this particular European region. The Swedish example is the most suitable because this country is socially oriented, which means that well-being of all residents of the country is of major importance. One of advantages of this model is that it develops an individual who is selfconfident and trusts his government, is motivated to pursue his objectives and boldly plunges into business. The heads of Lithuanian enterprises should trust their employees and provide them with the opportunities to take initiative in task performance and take personal responsibility for results. Each enterprise should be socially responsible, the initiative should be the prerogative of employees; they should seek more than it is specified under the laws and other legal acts - prepare new projects oriented towards the environmental protection, maintaining, etc. When establishing this model in Lithuania it is necessary to improve educational system, which would foster creativity, self-expression and the desire for self-improvement regardless of risks. This business model shapes a responsible attitude of an individual towards work, values and colleagues and impacts the employee motivation and work productivity. In Lithuania model, we should try to achieve balance and equal opportunities for males and females. The model should not emphasize male or female priorities. This could help build sustainable relationships between employees and an appropriate emotional environment bearing 38

in mind that it could help develop a helpful and understanding employee. Enterprises should consider not short-term but long-term objectives when laying emphasis not on material values but on social relations, self-expression and social responsibility. The Japanese business model could be beneficial when creating a Lithuanian model. Japanese culture is distinctive, since its residents are open to innovation, they accept the experience of other countries, their traditions and culture, which they interpret in their own way and customize everything what is beneficial to them. This feature could be useful for Lithuanian entrepreneurs. It is not that easy, however Lithuanian business representatives should be able to integrate useful and unconventional experiences in their activities. When developing international business it could be beneficial and could attract new partners. One more aspect that could benefit Lithuanian business is Japanese courteousness and respect existing between employees and business partners, which is rarely observed in our culture. Lithuania, the same as Japan, should heed on researches so that to create viable future products, such as solar panels, information technologies, nanotechnology and photonics as well as carry out medical research. Lithuania is abundant in qualified workers; however, insufficient funds are allocated for the purchase of necessary equipment. It should be admitted that in Lithuania business successfully exploits its favourable geographical position and well developed infrastructure for expanding international trade with European countries and other regions of the world. However, Europe does not have a unified business management model. Each country or each European region has its own traditions and cultural values. It is necessary to evaluate these specifics in order to develop successful international business. Thus, international business management models in Lithuania might vary depending on the nature of business partners or their activities. The obtained research results lead to these conclusions. Globally, the three major international business management areas can be distinguished, which include the same basic models regarding cooperation, concluding contracts, maintaining relations and other models for key business procedures: American, European and Japanese management schools, on the basis of which international business management models are shaped. When analysing international business management models, literature sources lay emphasis on their geographical distribution, however, they stress that the European international business management model can‟t be exhaustively 39

described according to one-dimension types; special importance should be given to cultural distinctiveness of separate European regions, assessing the specifics of their economic development, political and social principles. After performing a comparative analysis of business environment in Japan, the USA and Sweden was completed, we can admit that there are three trends - American, Japanese and Swedish business models. The American business model heeds on material values and is oriented towards short-term but effective results achieved in an individualistic society. Contrary to the American model, the Japanese business model heeds on employees and their relationships. In Sweden collectivism and socially oriented market are prevailing. In order to improve the Lithuanian international business management model it is necessary to seek for the socially oriented market, where the heads trust their employees and provide them with the opportunity for self-improvement. Moreover, they should be socially responsible, preserve the environment and avoid the selection of employees by gender or age. Educational system should foster creativity and personal development. Lithuania should focus on the future products, such as solar panels, nanotechnologies, photonics and medical researches supported by the government and using its funds allocated for the research performance. References 1. Bernard, A.B., Jensen, J.B., Redding, S.J. and Schott, P.K. (2007). Firms in International Trade. The Journal of Economic Perspectives, Vol. 21, No. 3., pp. 105-130. 2. Carbaugh, Robert J. International economics. - Mason (Ohio): Thomson /South-Western, 2008. - 553 p. - ISBN 0324363427. 3. Cavalcante S., at all. (2011). Business model dynamics and innovation: (re)establishing the missing linkages. Journal of Management Decision, Vol. 49, Nr. 8, pp. 16-24. 4. Harzing A.W. Research in International and Cross-cultural Management. [Electronic resource]. Available from: http://www.harzing.com/. 5. Hofstede G. (2007). History of Japan & Understanding the Communication System. Monash University. [Electronic resource]. Available from: http://www.docstoc.com/docs/23541900/Hofstede-CulturalDimension-of-Japan. 40

6. Hofstede, Geert (2001). Culture's Consequences: comparing values, behaviors, institutions and organizations across nations (2nd ed.). Thousand Oaks, CA: SAGE Publications. ISBN 978-08039-7323-7. OCLC 45093960. 7. Japan Business Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/japan/businessconfidence. 8. Japan Consumer Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/japan/consumerconfidence. 9. Lazonick W. (2010). Innovative Business Models and Varieties of Capitalism: Financialization of the U.S. Corporation. Business History Review. – Vol. 84, Nr. 4, pp. 675 – 702. 10. Lithuania Business Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/lithuania/business-confidence. 11. Lithuania Consumer Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/lithuania/consumerconfidence. 12. Oliver J. (2001). Business Models and the Transfer of Businesslike Central Government Agencies. An International Journal of Policy and Administration, Vol. 14, Nr. 2, pp. 233 – 252. 13. Peng, M. W. Global business. Mason, (Ohio): South-Western: Cengage Learning, 2009. - 577 p. -ISBN 9780324585940. 14. Richardson Global. Cultural Assessment. [Electronic resource]. Available from: http://www.richardsonglobal.com/CSI.html. 15. Sweden Business Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/sweden/businessconfidence. 16. Sweden Consumer Confidence. [Electronic resource]. Available from: http://www.tradingeconomics.com/sweden/consumerconfidence. 17. United State Consumer Sentiment. [Electronic resource]. Available from: http://www.tradingeconomics.com/unitedstates/consumer-confidence. 18. United State Purchasing Managers Index. [Electronic resource]. Available from: http://www.tradingeconomics.com/unitedstates/business-confidence. 41

Albena Vutsova PhD in Economics, Professor Faculty of Economics and Business Administration, Sofia University ―St. Kliment Ohridski‖, Bulgaria Silviya Topleva PhD in Economics, Chief Assistant Professor, Faculty of Economics, University of Food Technologies, Plovdiv, Bulgaria

GLOBAL CHALLENGES AND ENTREPRENEURIAL SPIRIT DEVELOPMENT THROUGH PUBLICPRIVATE PARTNERSHIP

According to modern economic theory and practice entrepreneurship as an important innovative component rises a pivotal source of economic growth and development. Global transformations highlight the partnership promoting entrepreneurial initiative. Along with business cooperation, public-private partnership (PPP) has been recognized as a factor in stimulating entrepreneurship and creativity. The increasing degree of community interdependence finding out PPP as an instrument to achieve sustainable development. Institutional context of PPP stimulates entrepreneurial initiative by focusing on sustainability through contracting out, ensuring resources based on private finance initiative, concessions and privatization. The purpose of this article is to outline the role of public-private partnership in the global world promotion of entrepreneurial initiative, giving reasons and adequate practical models. 1. Entrepreneurship as a factor for economic growth At the end of the era of mercantilism, the expansion of private economic initiative marks the beginning of interpretations of entrepreneurship. R. Cantillon (1680 - 1734) analyzes the first arbitration role of entrepreneurs in the economy. They consider supply and demand as a common environment providing with a balance into economic system. Entrepreneurs take a and bear risks, which convert them into generators of society economic value [11]. J.-B. Say (1767 1832) rationalizes entrepreneurship leading functions in economy. Inspired by his theses, J. Schumpeter (1883 - 1950) treats entrepreneurs as holders of innovative ideas where they are responsible for economic development. Entrepreneurial creative destruction underlies economic progress. Entrepreneurship is seen a source of innovation development 42

and competitiveness, and a key factor for economic growth as well. (fig.1.7). Entrepreneurial activity generates profits and attracts new economic players starting to imitate the innovation. Profit Innovation

Imitation

Entrepreneurship Competitiveness

Initiative

Dispersion

Corporate and economic growth

Figure 1.7. Entrepreneurship as a source of economic growth (Interpretation on Schumpeter [15]) Until the 80-s of XX c. dominates the perception that only large companies are capable of entrepreneurial initiative in the economy [8]. In this period leading paradigm is to encourage "effective demand" as a counter-cyclical measure and source of economic growth. The saving gap is a main factor for growth. Neoclassical alternative emphasis on the role of technological transformation for the achievement of economic growth, but it is an exogenous variable. Thus, entrepreneurship remains beyond the scope of attention to rigorously mathematical economic models of perfect competition and information, general equilibrium and rational choice. They exclude innovative entrepreneurship and imbalances profits [18]. Mature imbalances generate endogenous growth theory and highlight the doctrine of "supply-side economy" and "new public management". Focus is shifting towards incentives for economic initiative and entrepreneurial property management. The entrepreneur compose a balance in the economic system through endogenous origin innovations. Entrepreneurship as a factor of economic growth, mediates and integrates micro and macro-level in economics and society [18]. The basis of endogenous growth theory is the human capital, as a carrier of an entrepreneurial spirit, creativity and 43

innovation. Kknowledged and skilled people rather to embark on business ventures. The developing of entrepreneurship as a factor for competitiveness, jobs creation, incomes, growth, wealth, welfare is very much depending on the building and accumulation of human capital and function of knowledge, skills, qualification of the workforce. However, the third wave of revolution – (information one), uncertainty, market fragmentation, demise of mass production require structural driving forces transformations of the industrial economy. Flexible and specialized small and medium enterprises become a source of entrepreneurial initiative and economic growth. They are entrepreneurship generators by the nature of property rights, the management model and simplified procedures for decision-making. Business environment dominated by small and medium enterprises is more favorable towards entrepreneurship [3]. They create an entrepreneurial culture that enhances the absorption potential for entrepreneurial initiative; growing skills and experience. However, the entrepreneurship of small and medium enterprises is hampered by fear of failure and lack of funding. The choice to start-up entrepreneurial initiative is a dilemma between income from wages and profit uncertainty [16]. Skills to discover and utilize financial resources are part of the entrepreneurial competence. Small and medium firms impose qualitative changes in capital demand, limiting the export of labor, enhancing a variety of products and services, increasing the customer added value. Authoritative worldwide measure of entrepreneurial initiative is the Global Entrepreneurship Monitor. Studding 60 economies in the world for 2015 is ascertained that 66% of adults perceive entrepreneurship as a good career choice . People between 25-35 and 35-44 years are most active in entrepreneurship. In efficiency-driven economies dominate entrepreneurs who develop commercial business wholesale and / or retail (54% and 49%); in innovation-driven group preference is given to ICT and the services sector (49%) [9]. The growth of entrepreneurial initiative induces qualitative transformation of the economy such as reducing unemployment [18]. Job creation is a part of the social component of entrepreneurial activity. Thus, the institutional fostering of entrepreneurship emerges as a major anti-crisis measure and source of economic growth and development. Entrepreneurship is also dependent on the phases of the economic cycle. It may be pro- and anti-cyclical [4]. The favorable economic situation reinforces the willingness to take and bear more risks. Stagnating 44

economic environment is not predispose to investment and initiative. Nevertheless, entrepreneurship is considered as a tool discovering the disparities in economic and social environment and transforming them into high-quality marketable products and services. For entrepreneurial spirit performance even in a situation of recession, public regulation has enormous influence. "The rules of the game" and corruption in the economic system strongly effect entrepreneurial initiative. Market failures, investment activity, efficiency and distribution of benefits generally are economy regulators . Institutional regulation of entrepreneurship should be directed to reducing the bureaucratic burden and the cost to start-up a business. Institutional regulation in favor of promoting entrepreneurship and start-up business are measured by Doing Business Index, which covers 189 economies. The Report for 2016 finds improvement in the regulatory environment of 122 economies, as documented 231 reforms especially in the field of reducing the cost of starting a business, paying taxes, getting electricity and registering property [6]. Regulations may encompass product and factor markets and affect entrance and competition. The barriers to entry market or industry slow down innovation and growth. The positive effect of education on entrepreneurship decreases significantly in high regulated economies [3]. The acquired knowledge and skills can not be fully implemented in entrepreneurial ventures. Within the EU entrepreneurship regulation is undertaken by Small Business Act (2008). Its priorities are promoting entrepreneurship through education, improving access to finance and markets, facilitating business transfer. Guidelines of EU public policy in the field of entrepreneurship is determined by the "Think Small First" principle. The target is to be evaluated appropriateness of given regulatory measure by its impact on small and medium enterprises [7]. Increased public spending, equality in income distribution, enhancing labor costs, lack of participation in higher educational degrees create a negative impact on entrepreneurship . Favorable institutional framework that encourages entrepreneurship involves deregulation, flat tax, antitrust laws, removing trade barriers, market transparency. Among regulatory measures promoting entrepreneurship are improving access to finance, facilitating the input and output, availability of government programs to stimulate entrepreneurship [2]. Measures to maximize entrepreneurial activity is based on economic liberalization, which may conflict with other objectives of state policy. 45

Public-private partnership. adequately integrates the private and social interest in the economy . In summary, entrepreneurship is an economic and social activity combining risk-bearing, innovation and utilization of profit opportunities. Innovation and job creation make entrepreneurship a source of economic growth. General trend for stimulating entrepreneurship regulations is reducing the bureaucratic burden and cost, thereby increasing initiative, especially in a globalize world. 2. Entrepreneurship in the global context Globalization as a contemporary phenomenon based on ICT, straightens government regulations and entrepreneurship in front of many challenges. Global transformations reinforce the markets liberalization and deregulation. On the one hand, free movement of capital and all kinds of resources significantly reduces the impact of policy on economic development. On the other hand, linking the world into a global manufacturing and sales network enables small and medium enterprises to enter on the international market. The global order faces entrepreneurship in front of the challenges of partnership relations. Smaller companies find successful implementation of their initiative in the global market through effective partnerships with large corporations in their supply chain. Thus, outsourcing becomes a source of entrepreneurial creativity in the global context [17]. Business partnership relations may encompass joint ventures, franchising, alliances, networks. The place of public institutions in the development of entrepreneurship on the scene of global market, can be found through public-private partnerships and fostering participation in industrial cluster unions. Institutional partnership supports businesses, mitigates risks and promotes technology transfer. Thus, globalization and partnership facilitate access to new technologies and services. In summary, globalization, outsourcing and PPP compose endogenous entrepreneurship through opportunities for technology transfer and investment in knowledge [1]. Knowledge-based business start-ups and PPP generate media of synergy and partnership in the global economy. 3. Public-private partnership - an instrument for sustainable development The pursuit of economic growth and industrialization deepens the 46

perception of inevitability of environmental destruction in the name of material prosperity. The alternative is sustainable development, that emerging as the embodiment of integration and interconnectivity of economic growth and efficiency, social welfare and the preservation and maintenance of ecological balance. The idea is to overcome poverty by providing long-term equity, eco balance, global transformation of economic growth and trade relations and stabilization of population growth in some regions [12]. In the contemporary complex and interconnected world the wellbeing of the different countries and regions in the perspective of sustainability can be achieved by synergy such as cumulative result of the efforts of business, government and non-government sector. The higher degree of community interdependence considers PPP as a main instrument for sustainable development. Aiming at global objectives in the field of sustainable development, international governmental cooperation is gradually shifting to network management of crosssectoral non-governmental agents. Concerning sustainability perspective, PPP integrates economic, social and environmental interests of stakeholders. The private partner is associated with market power, efficiency, rationality, technical knowledge, innovation and entrepreneurship, and the public one, who can embody the state or local governments associates with regulation, consideration of the common good, social responsibility, equity and public accountability. Satisfaction on both sides results from the profit for the private sector and reducing the cost of the public sector ([5], р. 6). PPP overcomes the weaknesses of public management, opposing results and customer satisfaction to administrative and political expediency. Satisfaction of public interest from the private sector, however, hides the risk of loss of confidence in government institutions. In summary, PPP based on cross-sectoral cooperation is gradually becoming a tool for effective, legitimate and democratic management of public property and services. In essence PPP complies with the principle of subsidiarity and imposes itself as an pivotal instrument for development of entrepreneurial initiative in the global world with a focus on innovation and technology transfer in the direction of sustainability. 4. Models stimulating entrepreneurship through public-private partnership PPP contract defines the distribution of risks, costs and property 47

management where he is the main source of conflicts regulation and distribution of benefits and losses of the partnership. There are institutional and contractual PPP. In institutional PPPs, private and public partners are shareholders in a specially created business entity. Responsibility is for the private sector and the distribution of shares varies. In contractual PPP relationship between the parties, the investment plan and the quality requirements are regulated in the contract ([5], р. 4). PPPs operates by three dimensions - policies, practices, results [14]. The pivotal aspects are obtaining of value for money and value at risk. The objective is a risk transferring to the private partner and reducing the costs into public debt. Co-addition and management competencies of the partners resulting in job creations, increasing the innovation potential and competitiveness of the participants and deepening and transferring knowledge and experience. Possible PPP models for entrepreneurship and sustainability development in the global world are expressed in contracting out, ensuring resources based on private finance initiative, concessions and privatization. In contracting out the main instrument is public procurement, which affecting in particular the infrastructure, urbanization and delivery of services. Payment emerges in the availability of product or service [10]. The interest of the entrepreneur is to get orientation towards strategy of reducing costs rather than increasing customer added value [14]. The private partner has no engagement to the quality of delivered service. Bringing out the resources or outsourcing emphasis on taking responsibility of the private sector for the management and delivery of public services. Stimulated by receiving user charges for the delivery of service, the entrepreneur is interested in innovate and improve quality. Private finance initiatives (PFIs) represent an investment project financing of urban infrastructure and high technological entities with different arrangements for the design, construction, financing, operation, development, transferring or acquiring property. A variety of private finance initiatives is the concession, with emphasis on the responsibility of private sector for financing, investment and provision of the service or product for a certain period of time. The model of PFI allows efficient stimulation of entrepreneurship through PPP. PPP provides a stable investment returns independent of market conditions. PFIs promote the development of innovation, technology transfer, clusters participation. In order to stimulate innovation and effective marketing strategies, the private sector can engage with more risk. The global world imposes 48

innovation activities, as a measure of the entrepreneurial efficiency. The development of entrepreneurial spirit through PFIs is affirmed a pivotal means of knowledge-based economy in global world. In traditional forms of PPP public property ownership remains and the responsibility of the private sector varies. Privatization as an option of PPP is a complete transfer of assets from public to private sector. At the transformation of property ownership, government partner retains only its regulatory functions. Risks affecting PPP concerns fears about self-interested intentions of larger and influential business entity through concession or privatization to acquire promising public sites [13]. The modern image of the PPP embodies public provision of certain services rather than privatization. Uncertainty in the global market stands out national economies against on challenges to find alternative sources of growth by promoting entrepreneurial initiative. Public support in starting-up own business and making high-technological innovation associates entrepreneurship and economic growth. Global challenges impose PPP as a key instrument for achieving sustainable development and knowledge-based economy. Promoting entrepreneurship through PFI in the context of global transformations focuses on building cluster structures, hightechnological innovation and infrastructure. The synergy of partnership relations in the global context evokes and deepens the effectiveness of entrepreneurial creativity and initiative. Business success is the result of the synergy of partnership efforts. References 1. Audretsch, D., Keilbach, M., Lehmann, E. Entrepreneurship and Economic Growth. 2006. Oxford University Press. 2006 2. Benchmarking: Fostering Firms Creation and Entrepreneurship. Paris: OECD. Directorate for Science, Technology and Indu stry. 2002 3. Braunerhjelm, P., Desai, S., Eklund, J. Regulation, firm dynamics and entrepreneurship. In: European Journal of Law and Economics. Vol. 40/ 2015, Issue 1. 2015. pp 1-11 4. Congregado, E., Golpe, A., Parker, S. The dynamics of entrepreneurship: hysteresis, business cycles and government policy. In: Empirical Economics, Vol. 43/2012, Issue 3. 2012. pp. 1239-1261 5. Cruz, C. O. and Marques, R. G. Infrastructure. Public-Private Partnership. Decision, Management and Development. 2013. 49

Springer 6. Doing Business 2016. Measuring regulatory quality and efficiency. A World bank group flagship report. 13th edition. [Electronic resource]. Available from: http://www.doingbusiness.org/ 7. European commission, [Electronic resource]. Available from: http://ec.europa.eu/growth/smes/business-friendlyenvironment/small-business-act/index_en.htm 8. Galbraith, J. K. The New Industrial State. 1967. Routledge. London 9. Global Entrepreneurship Monitor. Global Report 2015/ 16. [Electronic resource]. Available from: http://www.gemconsortium.org/ 10. Iossa, E., Martimort, D. The Simple Micro-Economics of PublicPrivate Partnerships. Economics and Finance Working Paper. 2009. [Electronic resource]. Available from: http://www.brunel.ac.uk/about/acad/sss/depts/economics 11. Mirjam van Praa, C. Some classic view on entrepreneurship. In: De Economist, Vol. 147. 1999. pp. 311-335 12. Report of the World Commission on Environment and Development. 1987. Our Common Future. United Nations 13. Pattberg, Ph., Biermann, Fr., Chan, S. & Mert, A. Public-Private Partnership for Sustainable Development. Emergence, Influence and Legitimacy.2012.Edward Elgar Publishing Limited 14. Roehrich, J. Lewis, M., George, G. Are public-private partnerships a healthy option? A systematic literature review. In: Social science and medicine 113. 2014. pp. 110 – 119 15. Schumpeter, J. Capitalism, socialism, democracy. HarperCollins Publisher. 2008 16. Stam, E., Audretsch, D., Meijaard, J. Renascent entrepreneurship. In: Journal of Evolutionary Economics. Vol. 18/ 2008. Issue 3. 2008. pp. 493 - 507 17. Thurik, R., Stam, E., Audretsch, D. The rise of the entrepreneurial economy and the future of dynamic capitalism. Technovation. Vol. 33. 2013. pp. 302 – 310 18. Wennekers, S., Thurik, R. Linking entrepreneurship and economic growth. In: Small Business Economics. Vol. 13/ 1999. Issue 1. pp. 27 - 56

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Chapter 2 METHODOLOGY AND FORECASTING BUSINESS DEVELOPMENT

Bezpartochnyi Maksym PhD in Economics, Associate Professor, Post-Doctorate Fellow, Chair of Economics Enterprises, Poltava University of Economics and Trade Živitere Marga Academician, Professor, Dr.oec., Rector‘s Advisor, Head of the Department of Economics, ISMA University Riashchenko Viktoriia Dr. oec., Professor, Department of Management and Marketing, Director of the Entrepreneurship program, ISMA University

USE OF CLUSTER ANALYSIS TO ENSURE THE EFFECTIVE FUNCTIONING AND DEVELOPMENT OF RETAIL

In today's conditions of increased competition in the consumer market actualized the problem need to improve the competitiveness of trade enterprises. Under these conditions, the key issue is the search optimization reserves the retail price, which is the economic profit. As a result, a significant number of trade enterprises held strategy of optimizing costs, focusing on Different ways of its realization: the rejection of costly imports; cost savings through the creation of private brands. One of the modern tools to ensure effective functioning and development of commercial enterprises is cluster analysis. The goal of clustering of trade enterprises is further detailed study of individual groups of economic agents and improves their operations and detects communication between the scale of operations, logistics activity and productivity of their businesses business activity. The choice of variables in cluster analysis is one of the most 51

important steps in the research process. Regarding the group of trading companies proposed to use three sets of indicators: 1) operational indicators that characterize the scale and characteristics of trade enterprises (assortment product groups, the activities of trade, retail trade volume, structure of property, the number of trade workers, etc.); 2) financial-economic indicators characterizing the financial and economic state of commercial enterprise and the effectiveness of its business (cost on 1 money proceeds from sales, profitability, staff productivity, capital productivity, flexibility of working capital, the turnover rates, liquidity, etc.); 3) logistics indicators characterizing the level of logistics activity clustering of objects (the proportion of workers performing logistics functions in the structure of personnel, the level of information security logistics management level logistization functional areas of commercial enterprise). In forming the scorecard second group should be considered an important point – the nature of these indicators. They should not be absolute values and relative. Otherwise, cluster analysis of commercial enterprises based on financial and economic indicators will take into account not only their current status and efficiency of economic activity, but its magnitude as natural that the sales revenue, profit, material costs and other absolute financial and economic indicators of trade on order higher than the mini. Index of information security logistics management information describes the availability and efficiency of its receipt, determined by the degree of use in commercial enterprise of modern information technology and the introduction of local and corporate information systems to quickly make informed logistics solutions. Under the terms of logistization functional activities of commercial enterprises refers to the degree of use of logistic approach in purchasing, sales, shipping and storage areas. An important aspect of the use of cluster analysis is a clear fixation feature space, which must be unique, so the selection area should be approached with the utmost care. If substantial reasons not followed advantage of a scale for the signs, they can be measured in different units. However, in this case requires further made the transition to the single values of the scale. This can be achieved by applying point scale (10-, 100-point, etc. depending on the purpose and nature of research indicators), ranking and standardization attributes of the 52

objects. Go to point scale requires a significant amount of additional work: the choice of the most appropriate scale for the evaluation of each selected measurement scale, which is very time-consuming procedure and requires the involvement of experts to study the industry. The method of ranking is to replace the absolute values of their ranks that objects studied initially ordered by the valuesof the best indicators of the worst, and then assign each indicator rank (place), and further studies are operated ranks. This method has a significant drawback – artificially decreasing the distance between objects. These deficiencies deprived way of standardization indicators. This should be possible to consider the specific features and quality choose the most appropriate method of valuation. That valuation is appropriate to bring the values of operational, financial and economic indicators of trade and logistics enterprises in comparable units. If possible, regulation should be based on values that are independent of the sample, is theoretical or reference. The solution to the problem of cluster analysis is a partition of objects that satisfy certain optimality criterion. This criterion can be functional, expressing the desirability level partitioning options and different groupings. Therefore, an important step cluster analysis (fig. 2.1) is to determine the criteria clustering objects. Choice optimality criterion (degree of closeness or distance of objects) is the main point in the cluster analysis, which depends crucially on the final group at a given algorithm partitioning. In each task, this choice is made differently, considering the main goal of the study, and the physical nature of the statistical information used. Results of cluster grouping trade enterprises operating and logistics parameters define the specific management of their logistics activities, which consists in taking into account technological features of the trading process (own production, packaging and packaging, transportation within the warehouse assortment structure and resources) and the assessment of the current level logistization functional activities, identifying areas not covered logistics, in order to concentrate on them major effort management personnel. Financial and economic indicators have been identified as clustering parameters for comparison with the results of multidimensional clustering trade enterprises logistics indicators generalization which made it possible to conclude that the logistic activity of commercial enterprises significantly affect their financial position and performance of business. 53

Definition of clustering purposes The sample clustering objects Definition of indicators on which will be implemented clustering 1. Operation indicators (describing the scope of trade) 2. Financial and economic indicators (describing the status and effectiveness of trade activity) 3. Logistical indicators (characterizing logistical activity)

Assessment of selected indicators for clustering Bringing the values of each subject to comparable scale 1. Go to the point scale 2. Ranking 3. Standardization (normalization)

Defining criteria clustering 1. Correlation coefficients 2. Measure the distance 3. Factors associativity 4. Probabilistic similarity coefficients

Choice the method of cluster grouping 1. Hierarchical agglomerative methods; 2. Iterative methods (k-means); 3. Factor methods; 4. Methods of graph theory. Implementation of the chosen method of cluster analysis

Figure 2.1. Algorithm group of trade enterprises based on cluster analysis Suggested author

54

This comparison allows pre-determine the causes of the poor condition of the company, unacceptable trade organization (operation of fixed assets, low level of automation of trading) or inefficient management of logistics flows (of uncoordinated movement, neglect and environmental conditions, lack of optimization calculations of parameters of traffic flow). In the case of relevance for a particular trade enterprise of the other causes of inefficient economic activity, further evaluation of integrated logistics activities by functional ingredients will reveal more detail and explore problem areas in their organization to resolve and address the identified problems. References 1. Bezpartochnyi M. (2014) Using cluster analysis when assessing the performance of trade enterprises. Trade, commerce, business, collection of scientific papers. - Lviv: Lviv Commercial Academy. - Vol. 17, pp. 24-27. 2. Aldenderfer M.S. (1984) Cluster Analysis. – London-New Delhi: Sage Publications, 88 p. 3. Brian S. (1993) Cluster Analysis. – 3-rd ed. – London-New York: Halsted Press, 170 p. 4. Romesburg Charles (2004) Cluster Analysis for Researchers. – North Carolina: Lulu Press, 334 p.

Bebnadze Khatuna Doctor of Economic Sciences, Associate Professor, Department of Business Administration, Gori State University, Georgia

DESCRIPTION OF MANAGEMENT BY LAWS OF PHYSICS

The effectiveness of a company, organization, any enterprise has to be determined by the circumstance of how it does achieve its goal that was planned earlier. The goal itself can be of any kind: financial profit, increase of market quota, recognizability, survival, development, charity program. The formulation of a correctly determined and well-thought goal is a handsel of the success for the company. It happens fairly often 55

that the notions of mission and vision result to be confused. All the more, - these two notions can be seen also mentioned as the permutable (interchangeable) ones. However, they do differ with their contents. The mission of a company is the purpose of its existence, and the vision of a company is its aspiration. Still, the practice and the experience do show us that a well-formulated mission is not sufficient for the company in order to be successful. There is a Japanese sentence that tell us: “The mission is nothing without the action, but the action without the mission is a nightmare”. If the staff of a company is really its most valuable asset, the mission of this company is namely up to them. Even in case of a hi-tech enterprise, its success depends on the employees that do work there. The forming of a mission is a reasonably complicate process as its content has to be comprehensible, perceptible and clear. But what is the most complicate, that is nevertheless the process of the bringing of this mission to the staff. Both of the processes of informing the staff and of the internalization of this mission by the staff are complicate. And exactly here one of the most important levers the manager holds does arise – that lever is “communication”. And that is by means of communication that the principal fulfils his/hers functions of managing. Without the communication cannot be accomplished also planning, organizing, motivation and control, - the functions that do represent the basis of management. The main problem is the level of understanding, such of a significance of this function as it is realized by directors. The observation conducted by us towards Georgian companies has shown that here the function of communication is totally neglected. It is not attributed any importance not only by the staff but – also by the immediate leaders; this might be conditioned because of the informational vacuum that existed in Soviet Union, and that has raised up some leaders of the present days. We are due not to forget that in a post-Soviet space, even after the Soviet Union has been destroyed, the methods characteristic for it were the ruling ones. Namely because of this many of today‟s directors do hardly perceive the importance of effective communication. One of the possibilities to represent the importance of communication in the form comprehensible for everybody, independently on their mental disposition, is its display by its expression in physics. The demonstrated laws of physics are axioms on the basis of which many new theories can be determined and demonstrated. In general, mathematics, physics and others are exact sciences. In its own turn, the science of management does concern the 56

social-economic processes, and, consequently – the human resources. As we do know, the construction of relations with human beings is a complicate process, because each of them is distinguished with his/hers mentality, character, approach to the business, skills, etc. The example of effective communication and management will be discussed by us using the model of mutual consolidation of the famous parable of Krylov and the law of physics. Everyone does know well the parable of I. Krylov about swan, pike and lobster. The plot of the parable is such that the three friends had decided to transport a cart, but, as the swan tried to fly to the sky all the time, the lobster walked backwards, and the pike was directed towards the water, they did not succeed. This parable of Krylov, essentially, was written as a kind of derision on the Emperor of Russia of those days, Alexander I (17771825), more precisely – on his political course meant to establish the order in the State. Despite of the great efforts, this goal could not be achieved, as the State was developing not in one direction. Thereafter, we have a problem of management that has also its explication from physics. Let‟s imagine that transposition of the cart is the goal of the company, organization, and the above-mentioned pike, swan and lobster – the employees and staff of this organization. In such a case, the process described by us has only three participants, but when at the organization there are much more employees, the situation becomes much more complicate. Every employee, whilst executing his/hers own job functions, facilitates to the organization the movement towards a planned goal. Within our concrete example we do show only three forces that fulfill the action upon the same point, but in case of a real company we can have 10, 100 or 1000 different forces. According to Newton‟s law, in an inertial system the impulse of velocity differential for a material point of a body is equal to the vector sum of all the forces acting upon it. If we do suppose that the forces do act in different directions, than the body can also not to move at all, - when the sum of forces acting upon it is equal to “zero”. Let‟s discuss the example of the parable where the acting forces are: lobster, swan and pike (scheme 2.1). Calculating the acceleration of a body, we do substitute all the forces acting upon it by one force that is called the resultant force. It is the geometric sum of all forces acting upon the body. In order to fulfill the addition of two vectors, we do use parallelogram law or triangle law. Thus, we can obtain one force – the sum of these two vector forces (scheme 2.2). 57

Scheme 1

Scheme 2 In case if the forces are acting in different directions and if we do suppose that these forces are equal, the sum of forces acting upon the body gives us “zero”, - that is, the body will not move: R = F1 + (F2 + F3) = 0.

(2.1)

In management the force of acting of this or that employee upon the movement of the company is indeed too hard to evaluate, but it is evident that when all the employees of some company do pursue the common goal, as a result, such company will achieve the fixed objective in a much quicker and much more effective way (scheme 2.3 and scheme 2.4). What about the consolidation around the common mission (goal), it requires namely the knowledge of aspects of communication, and the exploitation of this knowledge. In our example, Scheme 3 is the state of the staff of a company when the goal of the company in question is unknown to them; Scheme 4, on the contrary, shows us the state of the staff of a company when the goal of the company in question is known to them, and all of them do move in this direction. 58

Goal Scheme 3

Goal Scheme 4 The effective management is a precondition of the success of an organization. The realization of management functions: planning, organizing, directing/leadership, control, billing and so on, - along with the other means, goes to be accomplished with the help of communication. Management/(ruling, controlling), as it follows from its content, does provide the use of human resources and their directing, and what about the relations with human beings, the latter comes accomplished by means of communication. The “physics” model of communication based onto the laws of physics that has been introduced by us in this article is able to approve once more the role and significance of an effective communication for management process. References 1. Mission statement. Wikipedia. World electronic Encuclopedia. [Electronic resource]. Available from: http://en.wikipedia.org/wiki/Mission statement 2. Teresa Amabile and Steve Kramer, Harvard Business Review Blog Network. [Electronic resource]. Available from: 59

http://blogs.hbr.org/hbsfaoulty/2011/IO/valuing-your-mostvaluable.html 3. Материал из Википедии – свободной энциклопедии; [Electronic resource]. Available from: http://ru.wikipedia.org/ wiki/Лебедь,Щука и Рак. 4. Newton‘s Laws on mation; [Electronic resource]. Available from: http://en.wikipedia.org./wiki/Newton‘s - Laws - of - motion # cite - note -25

Mishchuk Igor PhD in Economics, Associate Professor, Lviv Trade and Economic University

METHODOLOGICAL AND METHODICAL APPROACHES TO TRADE ENTERPRISE LOGISTICS SYSTEM FORMING

The final link in the logistics chain in most cases is a retail trade enterprise that sells goods to the population through a network of retail trade points. In retail trade network objects the public recognition of the labor cost and other resources, involved in all stages of the production process and product promotion, has its place. To ensure the effective development of retail trade enterprises you should determine the essence, content, features of the theory usage and tools of logistics in the retail trade and building of logistics systems relevant to the specifics of logistical flows. The process of retail goods trade in the store as the final stage of the logistics chain includes the following elements: search for a product in commercial facilities; search for a product on the trading floor; choice of goods; registration fees and the sale of goods. During the execution of these operations, trade enterprise must provide the buyer with complete and accurate information, maintain a stable range of products and high level of service. This updates the creation of logistics retail trade system, whose aim is to ensure conditions for meeting their customers with the necessary products, and support the trading process of goods with necessary facilities, tools, system comfort. From the standpoint of the traditional interpretation of the logistics purpose, this means providing each customer needs with right quality product in a certain quantity by 60

retail trade in a specified place at a certain time at the lowest overall cost and with a certain level of service. Retail trade enterprise logistics should be seen as a separate functional area of logistics, covering the processes of planning, implementation, accounting, control and regulation of commodity and other material, information, finance, service and personnel flows to sell products to end users (who are forming streams of buyers), meeting the needs of which allows to realize the economic interests of both retail traders and all involved in the relevant logistics chain entities. Micrologistics system of retail trade enterprise can be defined as a complex, structured in a certain way organizational set of interconnected environment and logistics business processes that ensure effective management of the enterprise to achieve the overall organization based on the theory of logistics. Application of the logistics concept in enterprise activities is implemented by identifying main ideas and implementing logistics approach. Logistics approach is a way of managing resources, characterized by changing priorities of economic activity for material flows management. Logistics processes in retail trade (fig. 2.2) begins with organization of incoming flows of customers through advertising and information work (as an integral component of information flow). Merging and converting of all streams are directed to profit from trading activities and from providing trade services.

Flow of customers: visitors (potential customers) Products flow Information flow

RETAIL TRADE ENTERPRISES

Flow of customers: сustomers, who have purchased goods, received service, information

sale trade-technologic process

Other resources flow trade service providing

Revenue from sale of goods and services

Personnel

Figure 2.2. Logistic process of retail trade enterprises (schematic diagram) 61

Equally important for retail trade enterprise is to form the output stream of customers who are satisfied with goods and services, so they become loyal partners for the retail trader and thus create conditions for the formation of entity profit (and all its partners in the logistics chain) in future. As in any other economic system, the retail trade enterprise results displayed in figure 2.2 process (output) is determined primarily by the presence of accessible resources (input) for the fundamental of functional process, including the key role played by goods resources. To create a system of resource input streams retail trader should: identify procurement logistics strategy in accordance with the mission of the company; analyze the need for adequate resources and calculate differentiated in time and range between need for them; form a purchasing policy on sources of supply, procurement methods, methods of delivery; choose specific vendors and set them rational logistic connections through contracts. One of the main problems of purchase logistics is to ensure uninterrupted goods supply with minimum reserves of resources used, first of all - product. Therefore, in the trade enterprises logistics system the important role should be the logistics activities with products inventory management through the development of an adequate system of inventory management and complex logistics operations involving the movement of products flows in the inner space of the trading facility (within the operating facilities for receiving, storage, preparation for sale of goods) and trade flows traffic in time (storage products), hence the need for tool of storage logistics. One of the following tools is the application ABC-XYZ analysis, on which ranging product categories can be carried out, plan sales and insurance inventory amounts, generate orders to suppliers. Central place in the retail trade enterprise logistics system take flows of customers, the intensity of which depends on the success of the retail trader. Thus on the nature of customers flow has a decisive influence of retail trade facility location. To establish an effective system of logistics customers flows should be investigated in the aspects of their intensity, structure, length of stay and characteristics of movement on the trading floor of the store. With the customers flow the most closely related are material (product) flows that begin their movement from the receipt of goods from suppliers, through its continued execution of complex logistics operations from dumping vehicle, inner shop conveying, storage, 62

unpacking, submission to the shop floor for placing on trade and technological equipment and completed by performing operations on the selection of goods, packaging and delivery to the buyer and payment for product. In cases where unsold products returned to the supplier or returning too assigned, poor quality, previously ordered goods, there are reverse trade flows. Products flow directly affects the economic parameters of such flows as equipment and personnel flows and largely determines the subsystems work providing logistics - warehousing and transport. Information flows at each of the trading facility level are formed by rapid collection, processing, storage and conversion of traffic flows of products in the product promotion process with the participation of the retail trader in its institutional limits (or even - out of them). The movement of products flow accompanied by a corresponding movement of funds related to payment consignments, other property, services, logistics intermediaries, receiving money from customers, payment of taxes and other payments, etc., that is - the movement of financial logistics flow. Financial logistics flow services to process change of ownership and displacement in space and in time of the material resources and traffic flow movement. In the complex of retail enterprises logistics flows an important role belongs to service flow that covers a set of services that: a) are given by the retail trader to goods consumers; b) are given to the traders in the logistics chain by its other members; c) the trader provides to other members of the logistics chain; d) are given and consumed by various structural enterprise units in the form of intra-company logistics services flow. The task of logistics service in retail trade is logistics services flow management and related material, information, financial, personnel flows, to provide internal and external consumers with possibility to receive services under the concept of logistics. The existence of any of logistics flows is provided not only thanks to the existence in logistical system of a certain type of resources, but also with processing on a set of data elements of logistics operations by personnel involved in the logistics chain entities. The purpose of the personnel flow is to provide retail trader with personnel with necessary skills needed at a certain time in the required quantity at the right place with the optimal staff costs. The above given variety of economic flows, together with a set of structure units, buildings, structures and set of their available technical tools, which are providing reception, development, transformation and 63

generation of material (primarily - product) flow through the implementation of its elements relevant logistic operations form the basis of the retail enterprise logistics system as a management facility. The characteristic of the main areas of transformation of the logistics system of retail trade enterprises is presented in table 2.1. Table 2.1 Directions of modification logistics system of retail trade enterprises Direction of modification Rationalization of primary distribution Increased control over secondary distribution Restructuring of logistics systems

Application of «quick response» (QR) logistics Application of inversion logistics operations Implementation of supply chain management (SCM) and «effective response» to the customer (ECR) The use of crossdocking-technologies

Content of modification Integrating initial operations (manufacturer-warehouse) and secondary (manufacturer-distribution center-shop) distribution within a single «system of channels» Inventory management and strict coordination of products promote through distribution centers with information technology Reducing inventory and increasing economic efficiency through «mixed distribution of goods» by conveying goods that require different temperature, through one wholesale company with a single vehicle and centralization «inactive» reserves in special warehouses Reducing inventory and speeding up trade flows by increasing the frequency of deliveries of smaller parties using Electronic Data Interchange (EDI) Increased recycling of packaging materials and the use of special equipment for the manufacture of these «recycling» products Creating conditions for greater cooperation and coordination with suppliers to maximize supply chain efficiency as a single

Transhipment of goods from one vehicle to another without warehousing to reduce inventory in the logistics system and reduce logistics costs

The objective of the retail trade enterprises logistics management are achieving the results set of trading activities by ensuring optimum parameters of cash flows, generated by suppliers of goods (industrial, agricultural, wholesale trade enterprises) in providing the highest quality of customer service in shopping points. This should be ensured the basic provisions of the logistics, which are provided for trade enterprises [1]: 1. System approach - optimization of material flow within a commercial enterprise and its divisions. The maximum effect is possible only in the optimization of the total material flow from the primary 64

source of material resources to the end-user or potentially significant areas. 2. Refusal to purchase and using a universal technological process and handling equipment. This flow optimization is possible only if the mass use of wide range of different tools of production. 3. Humanization processes, ensuring modern conditions - logistics approach strengthens the social significance of the business of material flow management, creates objective conditions for engaging in trade shots with a high potential for labor. 4. Accounting of logistics costs throughout the supply chain - to achieve minimizing the cost of bringing the material flow from its original source to the final consumer may only when the system of cost accounting allows to distinguish logistics costs and appropriately consider them when making management decisions. 5. Development of services at a modern level - logistics service is a tool of improving the competitiveness of partners in the logistics chain and goods they offer. 6. The ability of trade logistics systems to adapt - in terms of appearance on the market of various goods and services, the uncertainty of demand for them, swings qualitative and quantitative characteristics of the material flow. Logistics systems ability to adapt to changes in the external environment is an important factor in sustainable position in the market. Logistics approach requires every commercial enterprise to support connections of logistics to corporate strategy; improving the movement of material flow; receipt of necessary information and modern technology of processing; effective management of human resources; adjustment of relationships with other members of the logistics chain; taking into account earnings from the logistics activities in the financial performance; determine the optimal level of logistics services; detailed design of logistics operations and processes. Taking into account the activities of the trade enterprise in meeting needs of the population and achieving the outcomes is connected with the need to bring trade flows through the implementation of complex logistics for its core operations of product promotion process, the time requirement is the creation of logistics management services in the structure of trade enterprise. Main objective of these services is researching and organizing the complex logistics enterprises in technological and managerial aspects, which are needed to carry both on the microeconomic level (creating micrologistic system store, 65

warehouse, distribution center, etc.), and at the macroeconomic level, when the trading company acts as a link in the integrated logistics system interacting with manufacturers, logistics operators and consumers in the product promotion. Operational management of trade logistics enterprise system in this case can be seen as a dynamic management of object, that describes as known (eg. [2]) dynamic model of process management, including facility managed and control system (fig. 2.3). Х1 У1 Х2

q1 ,q2, ..........qk

.. Хіn

У2 .. Уm

n - system inputs, the state of which is characterized by certain values Х1,Х2......Хn; m - outputs, which are described with values У1, У2 .....Уm; к - different internal states of the system, characterized by values q1,q2 , ..... qк.

Figure 2.3. Model of trade enterprises as a managed facility in the logistics system Logistics processes of transformation of commodity and other resource flows in a commercial enterprise logistics system can be described as a complete mathematical model in such way, that on observation time interval Т = t: t0tt1 the state system fully meets certain vector function G(t) = (q1(t), q2(t),....qk(t))T (state vector system); the set of input features form a vector Х(t) = (X1(t), X2(t),......Xn(t))T (state vector of system inputs); the set of output functions form a vector У(t) = (У1 (t), У2(t)....... Уm(t))T (state vector of system). Logistic processes in the commercial enterprise (system behavior) can be described by two equations that bind input, output and state system: G(t) = U (G(t0), X(t), t)

(2.2)

У(t) = f (G(t), X(t), t).

(2.3)

These equations, defined on the set T, make a mathematical model of the system; they allow to define under which conditions the internal 66

system G(t) and the states of the inputs Х(t) achieve the most desirable states its outputs Y(t), so implemented objective of function system is realized. Therefore, you can define acceptable impacts on the inputs Х(t) and state systems G(t) to achieve the desired result in the output Y(t). For trade enterprise as a logistics system such measures are: the flow of goods from suppliers; investment loans; workforce; flows of labor required for the commercial and technological processes. The outputs in this case are: the volume of products turnover; the volume of trade services; various payments, charges, payments to suppliers; income from trading activities. The internal state of trade enterprise as a logistics system is characterized with: the level of distribution costs; the level of productivity of staff; assets; level of profitability; quality of trade service. Operational management of trade enterprise logistics system in this case can be examined as dynamic management object, described with the dynamic model that includes managed facility and controlled system (fig. 2.4). Sale Хо

Хо – resources (primal amount)

Хі=Х+x

x

Management objective (system capacity) Н Managing system (regulator capacity) Т

Y ф

 y = Yф-Yе

Yе standart, given result

Figure 2.4. Dynamic model of trade enterprise system management Managing the logistics trade enterprises can be effective if the continuous operational control of the management object is provided, based on continuous collection, analysis and transformation of information about it. To determine the state of variables, which characterize the behavior of this model (stock levels of similar goods at different stages of their movement), the model should enter the custom external influences. Information for managing this system can be obtained as a result of the measurement (using test equipment, manual registration data), the transfer of cash terminals information, use of databases with relevant functional services and departments, and the optimal options for a decision on the parameters of trade and related streams can be obtained 67

from using modern software and computer technology. A large number of Ukrainian trade enterprises in terms of technological development (lack of computer equipment and cash terminals) and financial capacity so far unable to organize logistics management through the use of modern computer technology and software. At the same time, the demand for today is not so much optimizing traffic flows of goods within a single commercial enterprise, as the involvement of the business entity to form a single through-goods supply chain, because the integration of all participants of the logistic is units able to provide increase for their competitiveness with meeting the needs and demands of customers concerning the organization of trade services. The deepening of market transformations in Ukraine's economy is accompanied by increasing the number and species diversity of the consumer market subjects and competition between the various parties of goods movement channel. Thus one of the most effective instruments for achieving competitive advantage for individual producers and their partners is to create in effective organizational, technical, technological and economic aspects the association of trade enterprises in the form of logistics chains, which in essence is one of the most common types of logistic units - specific forms of associations of entities, involved in the process of promotion material resources, unfinished and finished products at all stages of production and commercial process, organized on the principles of integration to ensure the most appropriate trade flow options to the needs of consumers. In a professional environment there is a common view that in the current economic conditions forefronts not the competition between products or their producers, but the competition between the associations of logistics chains, so the question of establishment and effective functioning of logistic units are the subjects of constant attention of researchers and practitioners. It should be noted that the participation of individual entities in the logistics units is objectively reflected not only in the organization and efficiency of the enterprise logistics activities complex, but the results and their performance (overall and in individual departments and services) the determination of which may confirm or deny the expediency of the participation of taking part in the logistics chain in terms of achieving its economic interests. That is why the economic practice requires the development of tools to determine the economic impact of enterprise participation in this logistics formation. 68

Despite the presence of a large number of foreign and domestic publications on the organization of enterprises logistic activity or logistics units building, it is a question of methodological and methodical support for the establishment and effective functioning of logistics groups involving retail and wholesale trade in domestic science and practice isn‟t developed enough. This applies to the problems of using created formations resource potential involved in logistics processes of trade enterprises and evaluation of wholesale or retail trader logistics. Currently, evaluation of trade enterprises activity in logistics is carried out mainly on the basis of indicators of economic activity - from the standpoint of profitability optimization. However, in our view, there is a need for further improvement of existing approaches and methods of evaluation of the trade enterprise logistics activity by taking into account not only the financial indicators but also indicators, that would reflect the actual effectiveness and efficiency of logistic processes (operations related to spatial and temporal conveying flows of goods, their quantitative and qualitative transformations). References 1. Hadgynskii, A. M. (2010) Logistics. 19th ed. - Moscow: Dashkov and Co, 245 р. 2. Susidenko, V. T., Mirochnyk, G. D. (1990) The use of ASM in trade. - Kyiv: Technics, 152 р.

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Chapter 3 MODERN APPROACHES AND TRENDS IN MANAGEMENT

Butvilas Tomas PhD in Social Science, Associate Professsor Mykolas Romeris University Butvilienė Jūratė PhD in Social Science, Associate Professor Vilnius Business College Vasilienė-Vasiliauskienė Virgilija PhD in Social Science, Associate Professor Vilnius Gediminas Technical University Vasiliauskas Aidas Vasilis PhD in Technological Science, Associate Professor Vilnius Gediminas Technical University Lithuania

PROJECT-BASED LEARNING STRATEGY IMPLEMENTATION

Nowadays higher education institutions (hereinafter HEi) experience great expectations and requirements from the society as wel as from business sector. Employers would expect that young specialists are ready for different kind of projects and assignements to be completed without any additional preparation in the company. While society has an expectation that young specialists would create additional value and thus will become a meaningful part in economic and social welfare development. According to A. Daunorienė, K. Ţdanytė, A. Ţekevičienė (2007), the dynamic changes in economy, social and technology areas create greater concurency in the market. Therefore young and talented specialist most often becomes the base for company„s success. Also to prepare such a specialist requires new educational strategies and 70

teaching paradigms at HEi. As J. C. Smart (2004) would point out, along with students„ evaluation, universities/colleges should also evaluate the needs of other societal parts (e.g. business, staff, alumni, parents, State etc.). This fact would be as a challenge as it demands to balance various needs and expectations that come from different parts in the society. However, the implementation of new teaching approaches remains one of the main strategic directions for each HEi (Daunorienė, Ţdanytė, Ţekevičienė, 2007). Thus having this in mind universities/colleges would develop a long-term strategic plans, in order to meet the requirements of a constantly changing society and market. J. Gajic (2012) says that formation of HEi strategy is a process that holds not only reshaping teaching programs, but also identification of new opportunities, the analysis of new competitors, development of innovations and positioning in the market. Therefore one of the new teaching methods/methodologies – project-based learning – is implemented in many HEi teaching programs. The growing popularity of the project-based learning (hereinafter PBL) paradigm, as an active, student-centric methodology, is related to extended opportunities in terms of knowledge attainment, facilitating the acquisition of several transversal competences such as team work, search and selection of information and synthesis and analysis abilities. The project-based learning is defined as “a teaching method in which students gains knowledge and skills by working for an extended period of time to investigate and respond to a complex question, problem, or challenge” (see at Bie.org, 2014). To many scholars PBL is seen as a model, a philosophy of teaching and learning rather than as another educational strategy (Thomas, 2000; Markham, 2012; Bell, 2014; Mapes, 2009 et al.). As practice shows, the implementation of PBL should always be based on strategic decisions. Only such an activity might create a leading position for HEi in the market, especially when business sector agrees with university/college policy. Putting it in to other words, a project-based learning is the model that organizes learning around projects. According to the definitions found in PBL handbooks for teachers, projects are complex tasks, based on challenging questions or problems, that involve students in design, problem-solving, decision making, or investigative activities; give students the opportunity to work relatively autonomously over extended periods of time; and culminate in realistic products or presentations (Thomas, 2000 et al.). While other defining features found in the 71

literature include authentic content, authentic assessment, teacher facilitation but not direction, explicit educational goals, (Moursund, 1999), cooperative learning, reflection, and incorporation of adult skills (Diehl, Grobe, Lopez, & Cabral, 1999, see in Thomas, 2000). Thus, according to Thomas (2000), we may identify some of main driving factors that enable all parties of education process to be extremely engaged within explorative activities in various fields of studies: i) PBL projects are focused on questions or problems that "drive" students to encounter (and struggle with) the central concepts and principles of a discipline; ii) projects involve students in a constructive investigation; iii) projects are student-driven to some significant degree; iv) projects are realistic, not school-like. Implementation of PBL concept addresses the European Higher Education Area (EHEA) call that urges students to be engaged in more autonomous work. Self-regulated educational process is seen as an effective pathway to involve digital-age learners, engage them in realtime problem solving through creative thinking. The PBL learning is approached as a managed process through projects that comprise a set of complex tasks, based on challenging questions or problems, investigative activities, decision making resulting in creation of realistic and meaningful outputs and their presentations (Thomas, 2000; Arce et al., 2013; Mapes, 2009). Viewing learning from a holistic approach, the PBL enables creating an integrated multilayer context composed of element from pure educational content and activities, practical experience of learners, as well knowledge led cooperation arising from networking of research and educational organisations and business companies (fig. 3.1). This way the organised and managed learning-teaching continues process produces a qualitatively new learning environment, which ultimately not only enhances overall educational capacities, address the 21st century demands of business world and education but also puts in practice a culture of the learning organisation (Lidón, Rebollar & Møller, 2011). These characteristics, as Thomas (2000) would stress out, can include the topic, the tasks, the roles that students play, the context within which the work of the project is carried out, the collaborators who work with students on the project, the products that are produced, the audience for the project's products, or the criteria by which the products or performances are judged. Shortly PBL incorporates real-life challenges where the focus is on authentic (not simulated) problems or questions and where solutions have the potential to be implemented. 72

Figure 3.1. The PBL training model (Lidón, Rebollar & Møller, 2011) Putting in addition to the figure, shown above, along with Thomas (2000) we may state that PBL incorporates three possible paradigms based on the following aspects, such as: i) outward bound wilderness expeditions; ii) postsecondary models of "problem-based" learning, and finally iii) university-based research in cognition and cognitive science applications. Therefore figure 1 takes in it education, practice, and knowledge; all these components are mainly achieved and assessed by participating in real-life settings and in some cases – in simulative contexts. Through this model PBL incorporates and bridges up educational institutions with business corporations, and integrates students into the paradigm that goes from “theory-to-practice” and the way around. Briefly two models of PBL implementation and related strategic decisions could be described as follows: 1. Study process is fully based on PBL. There should be a specialized centre that will coordinate PBL implementation and deal with new project ideas from business sector. 2. Study process is partly based on PBL. Such strategic decision allows integrating PBL into study process consistently. For the implementation of such activity only teacher and his/her team are sufficient. While realizing both PBL models, mentioned above, the main objectives include increased student‟s motivation; training of valuable 73

skills as planning and organization of the research-based learning process that will build a strong foundation for their future in a global economy; encouraging creative thinking and social skill. Projects as enablers to combine all mentioned aspects are seen as the curriculum. Learners through projects encounter and get familiar with central concepts of the discipline. Students are encouraged to think out of the box investigating problem related environment through openended questions. They must craft diverse activities in teams and individually. Projects support inter-disciplinary approach. They allow building connections between various themes and topics embracing two or more disciplines. Also, projects enable Millennial to exercise extensively their technological skills. The uniqueness of the project based learning offers not only a greater flexibility to students, but also transforms teachers‟ role. In case of PBL, teachers undertake a role of facilitators, who can overcome the boundaries and limitations of the traditional classes. The method empowers academicians apply various tools combining them in a way to boost an interest and motivation of students. On the other hand, it fosters collaborative culture between teachers calling them to share knowledge and pool recourses overcoming professional “silos”, but also geographical boundaries and time zones. Admittedly that teachers, who are less familiar with technology-rich environment, 21st century project based teaching can be a challenge. As Boss and Krauss (2007) admit, implementation of PBL turns teachers in lifelong learners. They are forced to conduct more research or seek out advice from business representatives. Designing projects requires long hours of planning. Also, PBL asks teachers to rethink and redesign students‟ assessment methods in order to reflect multiply grades and achievements doing projects. Benefits arising from the PBL were acknowledged long before the 21st century. For instance, Dewey has already emphasized that “learning by doing has great benefit in shaping students‟ learning. High-quality experiences, as well as continuity of experiences, are paramount” (Dewey, 1938). Therefore for many years the PBL methodology has been exercised in fields of technical and engineering education. Nowadays it is becoming a preferred method worldwide across diverse discipline fields. Also various research studies indicate that implementation of PBL bring tangible changes in learning-teaching experiences and learning environment. To Thomas (2000), project based learning transforms 74

students work habits and effectiveness. As Boss and Krauss point out students acquire “new patterns of thinking, they learn how to capitalize on the wisdom of the group, and, most importantly, they continually learn how to learn together” (Boss and Krauss, 2007, p. 30). As a rule, students demonstrate a greater interest, engagement and mastery approaching various disciplines. Thus the project based learning contributes in growth of community of practice. Professional learning of teachers differs from a peer-to-peer collaboration of students. The PBL brings together like-minded people forming teachers‟ learning communities. It enables increase of a critical mass of educators who share the same goal. Innovative thinking teachers together can lobby seeking to decrease teachers‟ isolation through more extensive networking in- and out the educational sector; increase shared responsibility, improve time and recourse management, better cope with technological challenges, gain more power promoting time needed changes in a systematic way. From the perspective of business, PBL method is also a source of a set of benefits. Projects require real-life problems, and thus open door for business organisations to better articulate and share business needs, test new business ideas just at a symbolic cost. Being participants of learning environment, companies can shape teaching-learning process specifying existing gaps in education field, share special training modules, launch internships in order to grow talents for their own needs. The PBL enables business organisations to avoid additional investment and risks that are related with retraining of post- graduates and prevent misuse of managers‟ time involved in the development of specialists. As Thomas (2000) and other scientists (e.g. Edelson et al., 1999; Lidón, Rebollar & Møller, 2011; Bell, 2014; Mapes, 2009) would point out about the existing problems/difficulties while implementing PBL method with students, there could be such aspects of challenges indicated: i) research on PBL implementation is largely limited to research on project-based science administered by teachers with limited prior experience with PBL. From this research, there is evidence that PBL is relatively challenging to plan and enact. Keeping the limitations of this research in mind, it is probably fair to say that most teachers will find aspects of PBL planning, management, or assessment fairly challenging and will benefit from a supportive context for PBL administration; ii) there is some evidence that students have difficulties benefiting from self-directed situations, especially in complex projects. Chief among these difficulties are those associated with initiating 75

inquiry, directing investigations, managing time, and using technology productively. The effectiveness of PBL as an instructional method may depend, to a greater extent than we recognize, on the incorporation of a range of supports to help students learn how to learn (see in Thomas, 2000). For instance, Edelson et al. (1999) in their researches would mainly focus on inquiry-based learning approach, however, this is tightly linked to what we have just described as project-based learning and some of the issues arising within inquiry-based learning might appear almost the same in using PBL method as well. These major issues, as authors would identify, are as follows:  Students‟ motivation, their willingness: for students to engage in a way that can contribute to meaningful learning they must be sufficiently motivated. PBL as well as the inquiry-based learning require a higher level of motivation on the part of learners than is demanded by most traditional educational activities. To foster learning, that motivation must be the result of interest in the investigation, its results, and their implications. When students are not sufficiently motivated, they simply either fail to participate or they participate in a disengaged manner that does not support learning.  Knowing the ways of how to explore and investigate the cases. For students to engage in both PBL and in inquiry, they must know how to perform the tasks that their investigation requires, they must understand the goals of these practices, and they must be able to interpret their results. Scientific investigation techniques such as data collection and analysis can be complicated and typically require a level of precision and care that are not required of students in their everyday experiences. If students are not able to master these techniques, then they cannot conduct investigations that yield meaningful results.  Knowledge that students have from previous experience. The formulation of research questions, the development of a plan, and the data collection, analysis, and interpretation of that data – all require both scientific and practical experience/knowledge. In designing an appropriate PBL process, the challenge might appear in providing opportunities for learners to both develop and apply that scientific understanding. If students lack this knowledge and the opportunity to develop it, then they will be unable to complete meaningful explorations.  Managerial skills. To achieve the ultimate goal, students must be able to organize and manage complex, extended activities. An 76

investigation requires planning and coordination of activity and the management of resources and work products. Students are not typically asked to manage extended complex processes as part of traditional educational activities. If they are unable to organize their work and manage an extended process, students cannot engage in PBL.  Limits of the learning contexts. The technologies and activities of PBL must fit within the practical constraints of the learning environment. Meeting the constraints of the environment is a critical consideration in design that must be considered alongside learning needs in the design of curriculum and technology (see in Edelson et al., 1999). On the other hand Mapes (2009) would talk about many similar issues that occur while implementing PBL method in educational practice, i.e. both students and teachers face a much more complex set of challenges in PBL experiences not associated with the application of more prescriptive lessons. Particularly students mainly face with: i) generation of meaningful questions; ii) management of complexity and time; iii) transformation of data, and iv) development of logical rational to support decisions. While teachers would encounter the following difficulties: i) time: PBL investigative projects as such require more planning time and classroom time than typical lessons on both long term and daily bases; ii) classroom management as teachers must balance student autonomy with order; iii) subject depth: teachers need to focus on a driving question and link concepts and diverse activities, helping the students to construct their own knowledge rather than didactically teach single subjects; iv) assessment: PBL requires alternative forms of evaluating the student‟s knowledge. In order to effectively overcome these complexities, teachers must make profound changes in the way they teach. Therefore, as Mapes (2009) states, that a primary criticism of project work is that it often leads to doing for the sake of doing. Project work is popular with both students and teachers and given that typical classroom initiatives are grass roots efforts unguided by research or theory this is a likely result. Unless challenged to do so by the conditions of the project it is unlikely that students will learn new skills or processes (Mapes, 2009; Bell, 2014 et al.). Through PBL students, teachers and business companies can gain different benefits, which all together create favourable conditions to address the challenges of a changing society in the 21st century.

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References 1. Arce, M., Míguez-Tabarés, J., Granada, E., Míguez, C. and Cacabelos, A. (2013). Project-based learning: application to a research master subject of thermal engineering. Journal of Technology and Science Education, 3(3). 2. Bell, S. (2014). Project-Based Learning for the 21st Century: Skills for the Future. The Clearing House: A Journal of Educational Strategies, Issues and Ideas, 83(2), pp. 39-43. 3. Bie.org, (2014). What is PBL? [Electronic resource]. Available from: http://bie.org/about/what_pbl [accessed 2014-10-12]. 4. Boss, S. and Krauss, J. (2007). Reinventing project-based learning: your field guide to real-world projects in the digital age. 1st ed. Washington: International Society for technology and education (ISTE). 5. Daunorienė, A., Ņdanytė, K., Ņekevičienė, A. (2007). Subalansuotų veiklos įvertinimo rodiklių panaudojimas aukńtojo mokslo institucijos strategijos valdymui. Ekonomika ir vadyba: (1). 6. Edelson, D. C. et al. (1999). Addressing the Challenges of Inquiry-Based Learning through Technology and Curriculum Design. The Journal of the Learning Sciences. No. 8(3-4), pp. 391-450. 7. Gajic, J. (2012). Importance of marketing mix in higher education institutions. Singidunum Journal: 9 (1). 8. Lidón, L., Rebollar, R. and Møller, C. (2011). A collaborative learning environment. Innovations in Education and Teaching. No. 48(3). 9. Mapes, M. R. (2009). Effects and Challenges of Project-Based Learning: A Review. [Electronic resource]. Available from: https://www.nmu.edu/sites/DrupalEducation/files/UserFiles/Files/ Pre-Drupal/SiteSections/Students/GradPapers/Projects/JunakMapes_Michele_MP.pdf [accessed 2014-10-28]. 10. Smart, J.C. (2004). Higher Education: Handbook of Theory and Research, Dordrecht: Kluwer Academic Publishers. 11. Thomas, J. (2000). A review of research on project-based learning.

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Ing. Rumanovská Ľubica PhD., Head of Department of European Policies, Faculty of European Studies and Regional Development Doc. JUDr. Lazíková Jarmila PhD., Associated Professor, Department of Law, Faculty of European Studies and Regional Development Doc. Ing. Fehér Alexander PhD., Professor, Vice-head of Department of Sustainable Development, Faculty of European Studies and Regional Development Ing. Takáč Ivan PhD., Lecturer, Department of European Policies, Faculty of European Studies and Regional Development Ing. Benda Renáta PhD., Lecturer, Department of Statistics and Operations Research, Faculty of Economics and Management Slovak University of Agriculture in Nitra, Slovak Republic

INNOVATIONS AND COMPETITIVENESS IN AGRICULTURE ENTREPRISSES IN SLOVAKIA

Innovations constitute a motive force of business and economic development in all advanced market – oriented countries. Moreover, they are important essential assumptions for grow of competitiveness in private and public sector and basis for sustainable society. Level of innovative efficiency of enterprises and individual regions or countries is widely different. These differences are also main reason of existence and constant persistence of regional disparities in the European Union. An enterprise that wants to keep the interest of their customers as well as to keep up with the competition, requires innovations that are part of any functioning and profitable company. The fact remains that 79

every business should constantly look for new procedures, products and opportunities - should therefore practically implement appropriate innovation policy. In current practice it is not always linked to significant innovation investments. Very often, small innovation enterprises can bring considerable cost savings. One way to achieve competitiveness and succeed in the market and to position itself in the current circumstances, is to the search and consequently gain a competitive advantage in terms of competition in the industry. Innovation is an important factor for the competitiveness of Slovak agriculture. There is a need to pursue innovation, research and development of agricultural production, notably to enhance its energy efficiency, productivity growth and ability to adapt to climate change. The optimal use of natural resources is the need for a strong interaction between agriculture bio-economy and disciplines in order to create sustainable and efficient agriculture. EU Member States in view of the urgency of addressing the issue of productivity, resource efficiency and sustainability investing at least 10% of the total contribution from the EAFRD invested in supporting knowledge transfer and innovation in agriculture, forestry and rural areas [9]. According European Commission [5] Slovakia is a moderate innovator. Innovation performance has increased between 2007 and 2014, but declined in 2010 and in 2013.The performance relative to the EU has had more fluctuations but overtime has increased significantly. Performance relative to the EU reached a peak in 2012 at 69% of the EU average, but fell to 64% in 2014.Slovakia performs below the EU average for all dimensions, except human resources, and also for most indicators. Large relative strengths in terms of indicators are in Sales share of new innovations. Modernization and implementation of new technological innovations is to be understood as very important component of support of dynamic development of agriculture in Slovak republic, which will be competitive on domestic as well as on European Union market [8]. In the frame of regional integration is competitiveness of agriculture influenced by factors connected with innovations, financial sources, productivity, vertical coordination and other support and market regulations. They can be supplemented by marketing, informational and integral techniques [4]. The competitiveness in sectors is reached, if individual enterprises are able to sell products and services for the price and in quality which is 80

at least on the same level as their competitors. Therefore - basically – the competitiveness should be seen as economic efficiency or productivity [3]. By the ambition to define the competitiveness we can see, that there is no common definition. It is necessary to realize, that the competitiveness is not only in comparative advantage, but also has to include the condition of sustainable development and rural development and throughout also the condition concerning the quality of life. Several points of view for this parameter do exist, which allow focusing on the competitiveness in agriculture in various dimensions [1], [11]. Besides the tasks of choosing the level of competitiveness there comes out the question, what is the main indicator. If it is reaching profit, high salability of enterprises products or reaching good economic results in other economic indicators. It is clear that the complexity in evaluation of competitiveness is necessary. We will try to fulfill this condition by evaluating the competitiveness by using the complex competitiveness indicator (RCR). Also the issue of financial support in agriculture is very specific. It is necessary to note, that by solving the financial support stimulus we are facing with the wide range of opinions. The support policy and supported programs do significantly contribute to the economic growth in enterprising in agriculture and it is important to mention also their influence on quality, production as well as on rural development. Methodology In the article were used the results of research realized under the project VEGA č. 1/0775/10 – The impact of innovative projects financed through EAFDR on the competitiveness of selected agricultural subjects in region Trnava and Nitra, VEGA project n. 1/1213/12 Variant approaches of measuring competitiveness of regions. Data for the period of 2007 – 2013 based on research realized by Department of European policies, secondary data sources, journals, informational data from Ministry of economy of SR. Data‟s for processing of given problematic were used from Paying Agency of SR, statistical sources from Eurostat for the period 2007-2013. Methods used in article were mathematical and statistical data analyses, comparism analysis and scientific abstraction. The evaluation of the impact of innovative projects was realized by using the statistical method: RCR coefficient („Resource Cost Ratio“) for determination of the competitiveness level of agricultural enterprises 81

RCR competitive enterprise RCR > 1,0 the enterprise is not competitive The RCR coefficient is calculated as ratio of costs and revenues. Costs included material costs, production costs, depreciation of fixed assets, taxes and charges. Renevues included profit from goods sales, production profit and financial support realized via PRD SR 2007-2013.

Evaluation of main economic indicators in agricultural sector in Slovakia Importance of innovation in agriculture has also been confirmed at the EU level by establishing the concept of the European Innovation Partnership, introduced in EU flagship initiative 'Innovation Union' in the Europe 2020 strategy in order to accelerate the research, development and innovation in the EU through public and private stakeholders across borders and sectors. The need for innovation in agriculture is to be seen by global growth in demand for food (70% in 2050) feed, biomass also by slowing growth in agricultural productivity due to reductions in investment in agricultural research and development and increasing pressure on natural resources (water, soil ), the environment, the impact of climate change [2]. Integration of Slovakia on European markets brought for Slovak enterprises many benefits and opportunities, but also increased competition. Given the current situation in the dairy, meat and poultry industry it is possible to state that a major determinant of the competitiveness of these sectors are to be seen in innovation. innovation is mainly on product innovation (in the form of so-called. modern food) and innovation production base (in the form of concentration and specialization). European Union puts accent on increasing the competitiveness of agriculture. Therefore also Slovak republic involves this goal in its plans. Rural development Programme for SR 2007 – 2013 [7] is based on measures which are oriented on increasing the competitiveness in agriculture and forest sectors also through innovations. Based on given facts was the research oriented on appraisal of the impact of innovative projects on competitiveness of agricultural holdings in region Nitra and Trnava. If we are facing the tasks of evaluation of competitiveness in sector of national economy, it is important to consistently consider all possibilities of research. Through mentioned importance of innovation, we suppose that 82

innovative possibilities for Slovak farmers are limited. The situation in Slovak agriculture was complicated by surpluses in the dairy sector pigmeat, the Russian embargo on food and lower than expected demand in China. Slovakia furthermore decided that the flexibility of the new EU agricultural policy is to be used to enhance direct payments at the expense of the rural development program. It is for this program while facing funding to support innovation, young farmers and green practices. Rural Development Programme nonetheless supports 1,250 farms 600 young farmers family farms 400 companies and food businesses. Farmers in Slovakia have also other problems that complicate the situation in the agricultural sector. Mainly investing in innovation depends on the condition of farms that are capital underpowered. In comparison with the slovak farmers have the farmers in original member states of the EU-15 for modernization of agriculture much more resources. We can not say that companies do not want to invest but companies have a problem with the existence and there is still dissatisfaction of agricultural subjects with setting direct payments system. According the evaluation of main economic indicators of Slovak agricultural farms (table 2.2) we can state still unbalance economic development, although implementation of CAP and realization of EU financial support for agriculture in Slovakia represents main financial support, we recommend that Slovak government should put more emphasis on national funding for farmers in the frame of CAP. Table 2.2 Main economic indicators in agriculture in SR (in EUR, 2015) Indicator /year 2012 2013 GDP (at constat prices in bilions EUR) 71,5 65,0 GDP growth rate (%) 1,2 1,8 Inflation rate (%) 3,6 1,4 Foreign trade balance (billions EUR) -0,4 -0,6 Number of workers in agriculture 2 219 2 329 (thousands person) Average nominal monthly wage (EUR) 805 823 Source: Processed by authors, based on data NPPC VUEPP, 2015

2014 75,2 2,2 -0,1 -1,0 2 363 858

Based on the main economic indicators in agriculture in Slovakia it can be stated that because of the decline in the economic performance of Slovakia from year 2011, which was affected by a decline in agricultural 83

output in value terms (6%), with a significant decline in livestock production (12%) and a slight decline of plant production (1.2%) and the predominant crop structure (51.8%) and livestock (41.6%) production is in Slovakia's interest to support the growth of competitiveness of Slovak agriculture especially pig, poultry and cattle and Vegetable and fruit growing through European and national aid. The foreign trade in agricultural products achieved deficit (-1038mil.EUR) which increased year by year. Ratio of foreign trade of SR agri-food sector dropped in total exports (0,77p.p.) and total imports (0.20 p.p.) on SR foreign trade. Agriculture, according to preliminary data of the SR Statistical Office, reached the 2014 negative economic results, loss of -4.7 mil. Euros. Compared to 2013, the economic result decreased (increased loss) of 2,2 million. Euros. The economic performance of agriculture was comparable to the previous year, which resulted in reduced yields year on year (2.7%), which was slightly higher than the cost reduction (2.6%). The added value dropped of 32.6 million. EUR (7.8%). Slovak agriculture was significantly influenced by mainly price developments on the European and world market with agricultural commodities. Prices of agricultural commodities were affected by short-term and long-term factors which are reflected in the products of the economy and consequently the economy of farms. The share of aid for yield reached 30.9% year on year and increased slightly (0.5 p.p.), due to a faster decline in revenues (2.7%) as subsidies (1.1%). Differences still persist between the levels of support of Slovak agriculture and the EU-15 countries. As shown in figure 3.2 we can positively evaluate slight increase in amount of gross agricultural production, what was supposed to have positive effect on farm efficiency, but still the farm efficiency measured thus profit or loss is still in loss. This situation is mainly caused by high credit indebtedness of farm and high level of rented land on total utilized land, which except the rent also does not to use the land as guarantee for loan, so the farmers need to use other loan forms, which are usually more expensive. The farm efficiency was also influenced by several factors, mainly by faster decline in revenues (2.7%) than costs (2.6%), increase in revenues from sales of own products (2.0%) under the influence of an increase in sales of plant products (5.6%) and a decline in sales of animal products (2.2%). As well as significant regressive price developments of agricultural products (7.8%) and plant products (15.0%), mainly cereals (18.1%) and oilseeds (11.1%) and animal products prices (0.7%). The negative impact on farm efficiency had the 84

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-500 Gross agricultural production

Added value

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Figure 3.2. Development of main agricultural indicators in SR 20072014 Source: Authors calculations, NPPC – VUEPP, 2015

decrease in support policy, especially direct payments as an important part of revenue and provision of loans, because the support to agriculture in the total volume decreased by 7.9 million EUR. The decrease was caused due to the depletion of funds from the Rural Development Programme 2007 - 2013 and slower payments from the initial use of the new Rural Development Programme 2014 - 2020 as well as a drop in support from the national budget of the Slovak Republic. We suppose that the assistance of the Rural Development Programme will continue to support innovative projects that will bring new products, technologies, techniques or ways of working, creating opportunities for high-quality food production and provision of rural tourism activities and diversification of products and services not covered by the agricultural sector. Evaluation of innovative projects in Slovakia The scientific paper focuses on the identification of innovation factors and the evaluation of the impact of innovation projects supported 85

by EU Funds (European Agricultural Fund for Rural Development – EAFRD) oriented on agriculture and rural development for improving the competitiveness of agricultural enterprises. Innovations can be understood in wide range complex. They can be understood through introduction of new product, new technological process, new organization or new markets. This definition can be applied in rural areas as well as in urban areas. Based on the low population density and relatively insufficient level of human and physical sources have the rural areas arranged connection to the research centres, therefore they are limited by production of innovations. Innovations in rural areas can include adaptation of wide range applicable innovations, modernization of traditional know-how, or search for new solutions in connection to rural problems, which can not be solved by intervention of other policies in sustainable way. By Evaluation of the use of EU financial sources it is necessary to take in account the still existing differences in agricultural sector between EU-12 and EU-15 countries, mainly in area of structure and dynamic of agricultural sector. To secure the sustainable growth in future, the growth should be based on innovations and technological changes. In the competitive environment of EU, mainly in agricultural sector is necessary, that the agricultural subjects will innovate, not only to create the flow of new products and ideas, but also to increase their value on interval market. EU focuses on multifunctional agriculture and rural development by implementation of measures included in EU Common agricultural policy. Therefore EU supports sustainable agriculture, which focuses on the use of land, which plays the key role in the competitiveness of rural economy and rural landscape. As a very important factor which does influence the competitiveness is the influence of innovative projects on the competitiveness of agricultural subjects. The increase of agricultural competitiveness is for the EU important and this goal is also included in the plans of Slovak republic. Namely in the Programme for rural development for the years 2007 – 2013, which is the main document to realize this plans. Programming period 2007-2013 continues on focusing on main priority - rural development which can be reached by modernization of primary sector. Agricultural subjects in Slovak republic can acquire the financial support for innovative projects through the Programme for rural development in SR for the years 20072013 (PRD SR). This document involves the priorities of National strategic program of SR. Main proportion of agricultural subjects in 86

Slovakia is actively using the possibility to gain the EU financial sources from the EAFRD Fund on innovative projects inside the priority 1 – Support of modernization, innovations and efficiency of agro food and forest sector. Therefore is for Slovak enterprises important to focus on modernization of machinery and buildings, the use of natural sources for energy production, but also to increase the education and the flow of information between rural inhabitants, mainly farmers. Num be r of the EAFRD s upporte d proje cts in the s e le cte d re gion of SR

350 300 250 200 150 100 50 0 1.1 Farm modernization

Nit ra region

1.2 Adding the value to agricultural enterprises and products f or f orestry

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Figure 3.3. Number of EAFRD supported projects in the selected SR region Nitra and Trnava during the period 2007-2013, based on PPA data, 2015 Figure 3.3 evaluates the distribution and the intensity of financial support for selected regions of SR, namely Nitra and Trnava region, expended from the Fund EAFRD for the innovation support view during the years 2007 – 2013 realized in the frame of Rural development Programme for SR 2007 - 2013, axis 1 improvement of competitiveness of agricultural and forestry sector, measure 1 - modernization of agricultural holdings and measure 2 - adding value to agricultural and forestry products. As can be seen in Fig. 2 that in convergence regions of Slovakia (whole area of Slovakia except Bratislava region) and other regions in the frame of measure 1.1 farm modernization was contracted 1 843 farms, in total amount of 439,47 mil. EUR it was 61,5% from planed number of supported farms for the years 2007-2013. The highest amount of support was approved for Nitra region (83,8 mil. EUR, which represents 19,1% of total amount for SR), by supporting 320 agricultural 87

subjects, which was above the SK average. Lower number of projects was supported in Trnava region (233 subjects) with the amount of 57,814 mil. EUR, which represents 13,2% of total amount for SR. The average support for one projects in Nitra region and Trnava region was above the average of SR, in Nitra region represented by 0,261 mil. EUR and in Trnava region by 0,248 mil. EUR. We can state that the highest amounts of financial support were located in productive southwest and southern regions of SR, where farming of the agricultural subjects was evaluated as competitive. So there is an assumption that the subjects are using such a support to introduce innovative measures. Under the measure 1.2 Adding the value to agricultural enterprises and products for forestry were contracted 396 agricultural subjects in total amount of 199,23 mil. EUR., representing 51,5% of from planed number of supported subjects for the years 2007-2013. The highest amount of support was approved for Trnava region (50,7 mil. EUR, which represents 25,5% of total amount for SR), by supporting 71 projects. In Nitra region was the support lower, by 32,3 mil. EUR, which represents 16,2% of total amount for SR, by supporting 73 projects. The number of supported projects in Nitra and Trnava region was above the SR average, in Trnava region was the average support for one project 0,715 mil. EUR and in Nitra region was the average support 0,441 mil. EUR. According the evaluation of monitored subjects in Nitra and Trnava region were could monitor an increase in added value in the enterprises of the agricultural and forestry sector regarding the implementation of financial support under Measure 1.1 farm modernization in the 20072013 period, by 1 million. EUR, while in enterprises of forestry sector the increase was slight, 0.1 million. Euros. The aim of the measure 1.1 was the introduction of new products and processes leading to primarily an increase in the profitability of the business, thus increasing revenue or reducing costs. Approved projects included these innovative effects especially innovative features such as new methods of production and products. Within the measure 1.2 were approved mainly projects in food processing industry (85% of all projects) and low amount of projects for forestry (15%). We found such a low support for forestry not suitable for Slovakia, where forests cover 42% of area of SR. Within the measure 1.2 it was assumed that every other company would introduce new production processes or new products. This measure should bring better results in respect to innovative practices such as farm modernization measure, where it was assumed that 4 out of 10 firms introduced innovations in its production. Based on our research we can 88

state that the introduction of innovations influenced by investments into the final production value is implementing faster compering to measure farm modernization. The impact of innovative projects based on improvement of market access and on increase of the market share of agricultural subjects was evaluated through following criteria – introduction of new products or technological processes. Based on the innovation definition was analyzed the number of projects introducing new techniques, technologies or products, which are to be understood as innovative projects in Nitra and Trnava region, as shown in table 2.3. The share of mentioned agricultural subjects on total number of observed subjects was low, mostly the holdings tend to introduce new products. Table 2.3 Number of projects introducing new technologies or products (Region Nitra and Trnava) in the period 2007-2013 1.1 measure 1.2 measure NR TT NR TT new products 19 12 8 9 new technologies 112 80 29 31 no innovations 189 141 36 31 Source: Authors calculation based on information from observed agricultural holdings in Nitra (NR) and Trnava (TT) region, 2016

As shown in table 2.3 within the measure 1.1 farm modernization introduced in Nitra region 6% of agricultural holdings new products and 35% new technologies, in Trnava region was introduced lower level of innovation, only 5% of holding introduced new products and 34% new technologies. The agricultural holding used mainly the financial support for farm mechanization and reconstruction of building and in lower amount for innovations. As more innovation support measure can be evaluated the measure 1.2 adding the value to agricultural entreprises and products for forestry, within these measure introduced in Nitra region 10% of agricultural holding new products and 39% new technologies. In Trnava region the agricultural subjects introduced higher number of innovation, 12% introduced new products and 43% introduced new technologies. The EU possibilities of financial support for innovative projects does represent very important source of introduction of new innovative technologies to production process in Slovak republic and in the future they can contribute to the increase of competitiveness in the examined agricultural subject, as well as in other 89

agricultural subject in Slovakia. During the monitored period 2007-2013 the evaluated agricultural subjects stabilized their incomes and despite of overall unfavorable economic developments the agricultural subjects did not notice notable decrease of profit only slight increase of costs. Based on listed above it is possible to state, that used financial sources from the EAFRD Fund approved for the realization of innovative projects via introduction of innovative technologies and technological process by examined agricultural subjects and they had positive impact on sustainment and stabilization of incomes in these subjects. The main innovations were introduced in agri-food sector, mainly in sectors of meat and meat products, cereals, legume, oilseeds, grape and wine, fruit and vegetable. Evaluation of competitiveness of agricultural enterprises in Slovakia The aim of the research was also to evaluate how the effective change of production or use of productive factors caused the change in basic structure of agricultural products. For the evaluation were compared selected economic indicators by observed agricultural holdings in Nitra and Trnava region (fig 3.4).

Figure 3.4. Comparism of selected economic indicators evaluated by observed agricultural holdings in Nitra a Trnava region, years 2007 and 2013 (EUR.ha-1) Source: Authors calculations, data from observed agricultural holdings, 2015

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Based on the comparism shown in figure 3.4 we can state that the debt share pro 1 ha u.a.a. increased in agricultural holdings in Nitra and Trnava region. Increase was also observed by indicator – production pro 1 ha u.a.a. in Nitra as well as in Trnava region. Indicator added value showed plus value in year 2007, but due to the economic stagnation in years 2009 and 2013 was the added value lower. The same results were calculated also by the indicator profit. Based on the employment evaluation it is possible to determine evident decrease of employees. In evaluated agricultural holdings of Nitra and Trnava region were observed changes in profit as a contributor of added value. We can state, that in certain evaluated agricultural holdings based on specific conditions in agriculture a significant change in structure of basic products was observed. This change was caused by introduction of alternative products, or by the use of other technique based on the realization of projects. In these holdings was also the increase of added value observed. Based on the evaluation the innovative projects contributed to the creation of profit. The main contribution was evaluated in the decrease of labor production intensity. Also was observed the stabilization and moderate increase of utilized agricultural area (u.a.a.) and increase of shareholding assets pro 1 ha u.a.a. in Nitra region holdings and moderate decrease of shareholding assets pro 1 ha u.a.a. in Trnava region holdings. Based on the research were following factors influencing the realization of innovative projects determined:  Professional management of projects – significant influence on the positive project implementation  Production extensity  Regional support  cooperation (mainly with research centers)  suitable enterprise plan (from the long term view)  agricultural holdings assets (financial position)  farm size – the results showed dominant interest for innovative projects by agricultural holdings with u.a.a. over 1000 ha, number of employees more than 25, legal entity – Ltd.. Agricultural holdings – entitled to receive project support stated, that financial support realized through PRD SR 2007-2013 allowed them to introduce new techniques and products. Based on this statement, we can evaluate the positive impact of financial support realized via PRD SR on enterprising of agricultural holdings. 91

Evaluation of the impact of innovative projects on competitiveness of agricultural holdings was realized on the selected holdings in Nitra and Trnava region. For the evaluation was used RCR coefficient. In the research we compared programming period of SR 2007-2013 for Rural Development in the frame of axis 1 in terms to evaluate competitiveness of agricultural holdings.

Figure 3.5. Competitiveness evaluation calculations based on RCR coefficient Source: Authors calculations based on data from observed agricultural holdings, 2016

Based on shown figure 3.5 agricultural holdings are competitive if the RCR index is between the range . Based on the calculations we can state that during the years 2007– 2013 compared agricultural holdings were competitive. By the comparism of economic data with included financial support based on projects and without included financial support was the evaluated level of competitiveness lower compared to financial support realized via projects. During the programming period 2007-2013 was observed slightly lower level of competitiveness. One of the main reasons is relatively higher financial expense level of projects in programming period 2007-2013 connected by modernization, mainly to introduction of new techniques and technological processes. The competitiveness level of holdings in year 2010 was lower due to the higher credit carrying-capacity and due to the overall loss in observed agricultural holdings. 92

Main agricultural holdings are located in rural areas which do have special structural features, e.g. relatively low economic basis, limited business opportunities, low interface between sectors, relatively low level of knowledge transfer and lower competitiveness. Because of listed features, these rural areas belong to less favorite areas to implement innovations. Therefore, support of implementation of innovation on agricultural level will be the main task of government support also in Programme for rural development in Slovak republic for the years 2014-2020. The priorities of rural development in the Slovak Republic 20142020 include: P 1: Knowledge transfer and innovation in agriculture, forestry and rural areas P 2: Strengthening the viability of farms and the competitiveness of all types of agriculture and promote innovative types of technologies and sustainable forest management P 3: Promoting food chain organization, including the processing of agricultural products and their marketing, animal welfare and risk management in agriculture Support goes to production facilities (agricultural buildings, storage capacities, machinery, technologies with the emphasis on innovative approach) and support on projects oriented on effective use of renewable sources should secure creation of strong and viable agricultural sector, which will fulfil the requirements of consumers by wide range high quality food supply fulfilling all requisite health and sanitary standards. It is requisite that agricultural subjects will realize technological innovations to reach the competitiveness not only on regional, but also on European level. CONCLUSIONS Innovations are currently one of the key tools for increasing the added value of outputs generated by each sector of the national economy. Therefore to maintain the competitiveness of each economic sector in any sector of the economy should maintain a high level of innovation through the valorisation of the implementation of expenditure on research and development and dissemination of scientific capacities. New technologies extend to all areas of the economy. Agriculture, especially crop production differs from other industries in that its 93

productivity depends mainly on soil and climatic conditions. Currently, however, it influenced by many factors such as the pace of life people's needs loss of agricultural land etc. The growing societal demands for the creation of sustainable multifunctional and environmentally oriented agriculture based on the exhaustion of non-renewable inputs increasing the burden on the natural environment and waste and contaminants the allocation of production processes sector in open country and its significant influence quality of life. The competitiveness of Slovak agriculture in the common market of the European Union is strongly influenced by economic production parameters. It is important for farmers to be able to most effectively use its natural conditions and adequate production structure. Effectiveness of the use of the factors of production and consumption is a key competitive parameter that allows to assess the ability of the agricultural sector use their terms of choice and to evaluate the effectiveness of the productive structure. The scientific paper based on the research evaluates the impact of innovative projects realized via PRD SR 2007-2013 on competitiveness of agricultural subjects in Slovakia. We can state following:  Based on evaluation of EU financial support, the observed holdings introduced innovations through new products and technologies as well as new economic activities (not connected to the main production  Innovative projects in agriculture do have positive impact on competitiveness of agricultural subjects (researched in region Nitra and Trnava)  Holdings consider financial support (via projects) as an important support in connection to the competitiveness level  EU financial support realized through European Agricultural Found for Rural development had positive impact on competitiveness of agricultural holdings and increase of labor productivity (significant positive impact – evaluated in economically strong holdings)  As one of the main determinant also influencing the competitiveness were identified the costs of the project and approach to external financial sources (loans) – impact on differences in competitiveness level  Innovative projects allowed holdings multifuncionality through diversification Based on realized research, we consider that the main goal of SR in the frame of agriculture to increase the labor productivity in agriculture 94

to a level of 70% of the EU average will not be fulfilled, because labor productivity in the Slovak Republic in 2014 reached 46% in agriculture and in food industry 39% of the EU average and the evaluation of main economic agricultural indicators does not positive development trend.. Similarly, we believe that the objective of increasing the level of diversification of agricultural production and non-agricultural activities of farmers will not be fulfilled due to the significant decline in the financial allocation for the programming period 2014-2020 for that measure. The Slovak Republic has earmarked 5,35 billion EUR, equivalent to 1.3% of the total EU budget for the CAP. Based on the evaluation of RDP 2007-2013 was the programme for agricultural holdings in Slovakia main financial source to modernize agricultural holdings, adding value to agricultural and forestry products, education and diversification into non-agricultural activities during the period 2007-2013. Financial support allowed receivers of support to strengthen the production capacity, improve the use of factors of production and introduction of new techniques and products in short time period, which caused the maintaining and moderate increase of the competitiveness level (holdings in Nitra and Trnava region)in connection to their future activity, increase of the market share and more stable production and development in future. It is necessary to state, that not only the innovations and their introduction into production process, but also rational allocation of productive structures into the most favorable natural and production conditions and optimal combination and cohesion of main production factors use are contributing to strengthen the competitiveness of agricultural subject. Main agricultural subject are located in rural areas, which do have special structural features, as relatively low economic basis, limited business opportunities, low interface between sectors, relatively low level of knowledge transfer, because of listed features do such rural areas belong to less favorite areas to implement innovations. Therefore the support of implementation of innovation on agricultural level is the main task of government support via Programme for rural development in Slovak republic for the years 2014-2020. Such a support should lead to the creation of strong and viable agricultural sector, which will fulfill the requirements of consumers. It is requisite, that agricultural subjects will realize technological innovations to reach the competitiveness not only on regional but also on European level. 95

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Available from: https://webapi.cor.europa.eu/.../CDR11122012_00_00_TRA_AC_SK.d... 10. Study on Employment, Growth and Innovations in rural areas.(2010) Cit [18-12-2010] [Electronic resource]. Available from: http://ec.europa.eu/agriculture/analysis/external/employment/fulltext_en.pdf 11. Zawalinska, K. (2005), Changes in Competitiveness of Farm Sector in Candidate Countries Prior to the EU Accesion: The Case of Poland. 16 p. [cit. 2015-06- 15]. [Electronic resource]. Available from: http://ageconsearch.umn.edu/bitstream/24520/1/cp05za01.pdf

Witek Lucyna PhD, Assistant Professor in the Department of Marketing, Faculty of Management, Rzeszow University of Technology Szalonka Katarzyna DSc, Assistant Professor in Institute of Economic Sciences Faculty of Law, Administration and Economics, University of Wroclaw Poland

ECOLOGICAL ATTITUDES AND BEHAVIOR AMONG YOUNG CONSUMERS AS A CHALLENGE OF GREEN MARKETING

The processes of globalization, the growth of social inequality, industrialization of economies have caused the realization of the negative impact of socio-economic development on the environment. The consequence was the existence of the concept of sustainable development whose roots date back to the seventies. The main objectives of this concept is to achieve economic growth, to improve the quality of human life, social justice and environmental protection. The fundamental idea is to achieve the progress while maintaining environmental protection requirements, which can be achieved by creating a new system of values which define the goals of socio97

economic development, focus on providing the highest quality of life assessed, among others, by environmental quality and the extension of the management time horizon and to implement of economic instruments to stimulate environmental activities [14]. The aim of this article is to identify the factors that influence on the behavior and ecological attitudes of young consumers, which are the prerequisite for the implementation of green. The study is of exploratory nature. The study points to the need for research at this age group because as the studies carried out so far provide inconsistent picture of the attitudes and behavior of young people who are knowledgeable about the environment and its protection, but the activities are at a low level. Numerous scientific publications indicate a growing interest in socially responsible consumption [21, 38]. Moral beliefs and values influence on decisions on purchasing of brands [10]. Green behavior and purchasing organic products are one of the elements of a balanced lifestyle [35]. Green consumerism is defined as the consumption of products that meet the basic needs of the people and improve their quality of life, while minimizing the consumption of natural resources, toxic materials and the amount of waste and pollution throughout the life cycle, without the possibility of depriving the needs of future generations [28]. Green consumption behaviors are associated with avoiding products that burden health and environment through a disproportionate amount of resources, highly sophisticated packaging, excess features or short shelf life, both in the process of production, consumption and during the post-consumption phase [24]. Ecological consumers due to anxiety feel responsible for the environment to preserve it for future generations, and translate environmental issues on the market [25]. They recognize the principles of environmental marketing and support lifestyle friendly environment [39]. They are motivated to buy an organic product, even if it has lower quality and higher price compared to conventional products [11]. Some studies use the concept of a new consumer which is wider in scope. The green behavior of consumers is affected by socio-demographic factors such as age, gender and level of education [34]. The studies [41] show that age and level of education do not play a big role in purchasing organic goods. Individual lifestyle has a greater impact on purchasing organic products than socio-demographic characteristics of the consumer [9]. The studies also show that organic food buyers have a higher income than those who do not buy such products [27]. The place of living may 98

determine the choice of organic food. In industrialized cities one can notice a significant increase in the market share of certified organic food products [4]. Children are also a factor in stimulating purchasing of organic products [13]. Green behavior in the market determines the state of environmental awareness. It is connected with several factors: environmental knowledge, environmental values, environmental attitudes, willingness to act and actual action [22]. Knowledge of consumers on organic products has an impact on trust in them, and that in turn distinguishes them from conventional products. It allows to build positive attitudes towards organic products. The low level of knowledge slows down the growth of this market. A higher level of knowledge and bigger experience is positively correlated with the attitude to this category of products [2]. Consumers who buy organic food showed more positive attitudes towards organic purchases than those who have no experience [29]. Many studies show that consumers purchase organic products because of health [8, 26]. The decisions regarding purchases of organic products have been explained on the basis of values such as security, hedonism, universalism, benevolence, stimulation and conformity [3]. Transcendental values such as universalism and kindness are more important for consumers of organic products than for other groups [16]. Although an interest in organic products is high, the research in developed countries have shown a small group of consumers buying organic food regularly. The results of the Norwegian survey indicate that 13% of the consumer group often buy organic food [37]. The buyers spend on average less than half of their budget to purchase organic products. The most important factors why consumers do not buy organic products are high prices, inadequate availability and quality of the product [5]. The studies show that supporters of environmental protection have a lower age than other groups [20, 30]. Young people are a social group distinguished by a high sensitivity to environmental problems [21, 11]. Young people appreciate more aesthetic values of environment than its health aspects and they perceive nature to a greater extent as a autotelic than instrumental [33]. This group draws attention to the ecological aspect when making consumer decisions [40]. Young people are more critical in assessing the environmental risks than older people [6]. However, the research [12] suggests different conclusions. This age group is under a great influence of peers and self-image in environmental protection [19]. Research [7] has shown that children are more knowledgeable about the environment than their parents. It has 99

been agreed that the perception of environmental responsibility by young consumers also influences their buying decisions [17]. In the Polish market the environmental criteria when buying foods are usually considered by the youngest group of respondents [31]. Research indicates that younger consumers have a more positive attitude towards the purchase of organic food and are willing to pay a higher price, but their purchase frequency is low [18]. Younger women find organic food as an important and incorporate it into their shopping [36]. Research [12] have distinguished three groups of consumers: The uncommitted "(36 percent), The green activists '(35 percent), The undefined' (29 percent). Young people aged 18 to 34 belong to "The undefined". This segment includes younger people with high levels of education, students and administrative staff and workers in the trade, living in an urban environment. People in this segment have a very negative position with respect to certain environmental aspects, i.e. activism, environmentally friendly purchasing behavior, recycling, saving resources, willingness to pay a higher price to protect the environment, but at the same time they claim to have knowledge of the subject. Polish studies give similar conclusions [31] show that the youngest people (18-24 years) together with their oldest (over 65 years), do not care of the environmental protection issues as much as the other age groups. The older and better educated respondents, the more they avoid to purchase products that are harmful to the environment. Consumers do not take environmental activities, because they are not interested in the problem (48 percent), do not believe in the effectiveness of individual actions (36 percent) and have a reluctance to change their habits (30 percent). Young people constitute a large social group with enormous potential to build behavior to protect the environment from the perspective of the early development of ecological habits and the spread of ecological knowledge. Young people are more likely than older generations to accept the new and innovative ideas [23]. A healthy lifestyle and environmental knowledge affect the ecological behavior of the young [32]. Young people in the age of globalization are subjected to the influence of many different factors. Young consumers, although declare caution and criticism in relation to the world around them, relatively often indulge in consumption, drawing joy, satisfaction, pleasure from it and treating it as a distraction [1]. At the same time the studies [1] show that the majority of young people in relation to the phenomena which are the "product" of modern times have defined their attitude as positive. This primarily concerned: ecology, computerization, development of 100

new technologies, innovation, ethnocentrism, which testifies to promote trends and processes, on the one hand to facilitate various activities, on the other hand shaping the wider quality of life. Strongly negative attitudes have been declared in relation to, among others, globalization, mass culture, materialism, consumerism and the fast pace of life. Green marketing plays a large role in shaping the ecological attitudes and behaviors. The concept of marketing strategy, which takes into account the ecological requirements, is based on the integration of economic and ecological goals. The essence of environmental marketing is contained primarily in the system approach and the change of its consciousness and obsolete paradigms [15]. In the ecological marketing the care of the natural environment is an important goal, forcing a broader perspective and look at the production and consumption. Reliable information on the products sold by the company becomes more and more desirable in the market. A prerequisite is the credibility and transparency, which can be guaranteed, among others, by ecollabeling and reliable information about their characteristics, properties and benefits. This is a major challenge for companies in the marketing communication whose aim should be to create sensitivity and awareness of consumers, rather than advertising. Promotion performs an educational function. It should be noted that the behavior of Polish consumers are influenced not only by economic, political, and social conditions, but also by cultural factors that cause another way of shaping green consumerism in Poland than in Western Europe. The demand for Polish market for organic products is growing, but it is not a pace as fast as in other EU countries. This becomes a challenge for marketing managers, whose job is to convince consumers that it is worth paying a higher price for the healthy and environmentally friendly product. Green marketing is an effective tool of influence on buying behavior of young consumers. This indicates the importance of buzz marketing in encouraging people to recommend organic products to their peers [17]. Polish consumers derive information about the environment to the greatest extent from the media, and consider themselves as wellinformed about environmental problems. This is due to the fact that they do not feel a strong need to explore knowledge about the environment and the information they already have is sufficient for them. For young people an important source of information is the Internet and social media. An important issue is the confidence in the activities of various institutions for the protection of environment, confidence in organic 101

products and their marking, which in turn affects the assessment of the consumer's own contribution to the environment. Consumers expect direct benefits for themselves while minimizing costs. Our study gives a broader view of the results obtained thanks to the numerous scientific research. It points to the need of not only on quantitative but also of qualitative research which examines the nature of the relationship between the element of cognitive, affective and behavioral attitudes. These issues will be examined by the authors in the future. Research on green consumerism is an important aid in the segmentation of the market, as it provided a wealth of information and creates the basis for decision-making by managers on groups of needs and products. Effective solutions to environmental marketing must be based on knowledge of the behavior and characteristics of the consumer. Young people in spite of a positive attitude to ecology, are not particularly concerned about the environment. Taking into consideration the fact that the school is the main source of knowledge about ecological problems, the system of environmental education in Polish schools is questionable. In the Polish market the educational system provides extensive knowledge about the environment, but does not teach the practical skills. Knowledge is necessary but not sufficient for an ecological behavior. Changing the situation requires not only adequate communication of young consumers, but on the other hand, through a system of universal, lifelong learning, gives the environment a high rank in training programs and in mass communication and the creation of environmentally friendly behaviors. It seems important to make consumers aware of the environmental risks arising from abnormal behavior as well as the creation of a system of motivation and economic incentives, e.g. the possibility of paid return packaging and a reduction in waste disposal costs that will encourage ecological behavior both in the purchasing process and in the post-consumer stage. The introduction of a symbolic price for the disposable plastic bag caused a rapid change in behavior. The group which has declared packaging shopping to reusable bags increased from 48% in 2008 to 83% in 2011 [31]. However, one should remember that a high level of ecological knowledge is not able to induce changes in the emotional attitude to environmental problems. There is also no guarantee that an increase in environmental awareness will in the long term, and in a direct and determined way change the model of needs and consumption patterns. The state intervention in the form of legal regulations is necessary. It is more easily accepted, the higher the environmental awareness and the 102

higher economic status of society. Shaping behavior of consumers is a long-term process that requires the involvement of many actors and agents, but that will benefit the whole society.

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Chapter 4 FORMATION OF COMPETITIVE ADVANTAGES OF BUSINESSES

Dimkow Svetoslav PhD in Management, Professor, Chair ―Industrial Engineering and Management‖, Faculty of Management, Technical university, Sofia, Bulgaria

COMPETITIVE ADVANTAGE ACHIEVEMENT THROUGH COLLABORATIVE INNOVATIONS

1. Introduction Recently, three drastic changes (technological, informational, institutional) revolutionize the business environment in which arises business strategies. The result of this sharp transition is the emergence of so-called "New Economy". Taken together, these changes result in the escalation of competition, imposing strict imperatives of customeroriented strategies from pull-type in order to achieve quick response to changing customer demand and expanded product differentiation by which to meet customer requirements. All these factors give rise to new imperatives that can be formulated generally as "Collaborative Innovations". A key feature of these innovations is the collaboration between business organizations. The author express the opinion that there is a need for a new form of business innovation because traditional (closed) ways for innovation does not contribute in quantitative and qualitative terms for business development and problem solving emerging in today's business environment. The paper provides an analysis of collaborative innovations with suppliers and individual and business customers. Under collaborative innovations the author understands the process of engaging in creating new products and services. Collaborative innovations are a form of socalled. "Open Innovation" (Gianiodis et al. 2010), which can be defined as a systematic search, storage and use of knowledge within and outside the businesses to the flow of the innovation process (Lichtenthaler 107

2011). The concept generally involves the combined processes and knowledge flows inside and outside the businesses organizations (Gianiodis et al. 2010; Lichtenthaler 2011). Open innovation gives an idea of how the boundaries of organizations are permeable to knowledge flows (Chesbrough and Crowther 2006). Collaborative innovations are more inclusive than open innovation because they cover processes in which businesses and customers engage in creating a common innovation. 2. Collaboration in the implementation of pull-type innovations The emergence of pull orientation process has a catalytic effect on business organizations to expand their concept of pull-type processes and increase the potential of their innovation processes. Pull innovations broaden innovation focus on internal organizational vertical processes to build systems for creating value (value networks), which extend vertically and horizontally inside organizations and partly to external business organizations involved in delivery of products to customers. Major organizational change relating to pull innovation is collaboration between business organizations. Collaboration has long been considered a valuable tool for enhancing innovation. The benefit stems from the sharing of knowledge and its consequences for innovation. In a so-called 'New economy' demand for collaboration and exchange of knowledge is a natural result of specialization and deserves special attention. But there is a second motivational factor for collaboration. Collaboration is vital for realizing the design process of products that extends beyond organizational boundaries and reaches customers. Implementation of collaborative innovations for pull business systems in the new economy is growing as organizations become more independent and specialized. Treating knowledge as organizational asset and clear separation of explicit from implicit knowledge implies the understanding of knowledge as limited resource. From this perspective, today‟s businesses are forced to seek access to external sources of knowledge, rather than creating internal organizational knowledge. Thus, knowledge is becoming the most exchanged resource, which is the catalyst for collaboration. While significant part of explicit knowledge can be found in finished products, the implicit knowledge which is crucial to understanding the processes, must be acquired. The need for acquisition of such knowledge to expand the cognitive areas of the 108

organizations brings about efforts for the creation of collaborative innovations. Nambisan (Nambisan, 2008) defines collaborative innovations as a collective approach to creating innovation and problem solving, which is based on harnessing resources and creativity of external networks and communities to strengthen and improve the innovation process and expand the scale and quality of innovative results. From this point of view can be determined the main feature of collaborative innovations innovation is an open-ended process, in which at an early stage actors of an organization, other organizations and firms are integrated in the innovation cycle (generating ideas, choice; implementation; distribution). Therefore, the trajectory of the innovation should be determined by the availability of innovative assets and not by the formal boundaries of an organization. Moreover, the role of actors is not determined by formal rules, but rather by the degree of correspondence between the problems and the available innovative assets. Accordingly, the availability of innovative asset innovation cycle can be shared between players or can be carried out by an organization. In this respect, significant is the role of information technology. They are the main means of building business networks and ensure a continuous flow of ideas and information. 3. Evaluation of collaborative innovations One of the main evaluation criteria is whether collaborative innovations help to overcome the restrictive aspects of the business environment. Collaborative innovations must be able to influence the socio-technical environment of an organization. As a reaction to restrictions on a business organization, collaborative innovations must contribute to: opening the innovation cycle to internal and external organizational innovation assets; facilitate risk-taking; promote positive attitudes towards the performance of innovation and risk-taking in the contemporary business environment. Collaborative innovations open innovation cycle for a diverse group of actors within the organizational hierarchy and outside an organization (Nambisan, 2008). By opening up the innovation cycle allows the flow of innovative assets within business organizations and beyond. Therefore, the innovation process has the potential to improve elements of the innovation cycle alternative. Generating ideas is simplified because organizations use a wide 109

range of knowledge and expertise within and outside their borders. Implementation and dissemination of ideas is facilitated by their support actors involved in the generation and selection of ideas. They are more willing to accept innovation and take on responsibilities. Collaborative innovations provide organizations with opportunities to focus on the implementation and dissemination ideas to actors possessing the most important capabilities. In this manner they strengthen the implementation of elements and spreading of the innovation cycle. Collaborative innovations performance is characterized by five indicators: - The number of new technologies generated through collaboration; - Documented intellectual property; - Immediate effect on product ranges (changes to existing product platforms or new products for sale); - Market acceptance of new technologies, including quantitative estimates of analysts immediate financial performance of products; - Perception of the participants for the overall performance of innovation. 4. Leadership and management of collaborative innovations Barriers to collaborative innovations can be eliminated or minimized by exercising appropriate leadership and management (Ansell and Gash, 2012; Sorensen and Torfing, 2012). In very complex processes of collaborative innovations lot of things can go wrong between intentions and implementation. First collection of relevant and committed actors in sustainable interactions can fail due to: lack of past experience and traditions in interaction; negative perceptions of past interactions; difficulties in motivating relevant actors to take the time and effort to interactive participation (Ansell and Gash, 2008). Secondly when the actors agree to interact, often it is because they recognize the need to share and combine ideas and resources to solve urgent or important issues. But interaction does not always stimulate collaboration overriding conflict of interest. Moreover, collaboration may fail overriding distrust and opportunistic behavior, availability of procedural uncertainty and the existence of incompatible and destructive cognitive models (Straus, 2002; Koppenjan and Klijn, 2004; Ansell and Gash, 2008). Thirdly, when the actors engage in the process of collaboration they 110

may not contribute to innovation. Recurring events of collaboration in enclosed and sustainable business networks with the same actors who over time have developed similar views of the world will stifle creativity, will discourage the creation, prototyping and implementing new and bold ideas and will decrease the spread of innovation (Skilton and Dooley, 2010). In summary, there is a risk that different obstacles disrupt the relationship between interaction, collaboration and innovation. Good intentions for communication and collaboration in order to study and exploit new ideas are not enough for the realization of collaborative innovations. In order to achieve sustainability of the process of collaborative innovations must implement appropriate methods of leadership and management. Firstly, to create a well-functioning interactive environment by active and committed actors leaders and managers must operate as organizers (Newman, 2011). The organizers aim to motivate, empower and unite actors to create and form interactive environment to determine the agenda of interactions to clarify the interactive processes and foster mutual adjustment of expectations (Ansell and Gash, 2008). Secondly, leaders and managers need to promote and facilitate collaboration between stakeholders operating as intermediaries. The mediators aim to form or clarify mutual commitments to manage the process of collaboration through decomposition into different stages to form a trust and resolve disputes through coordination of interests based on common models and to remove obstacles to collaboration (Straus, 2002; Crosby and Bryson, 2010). Finally, the progress of collaborative innovations can help if leaders and managers act as catalysts that apply entrepreneurial approaches to leadership and management. Catalysts help to reformat the problems giving new knowledge and new roles for actors benefit from existing and emerging constraints and opportunities, manage risk and promote transformative accumulation of knowledge and traditional thinking (Crosby and Bryson, 2010). 5. Co-creation products with customers The management of uncertainty is one of the main practices of innovation management. Business organizations are faced with different sources of uncertainty stemming from their technical and managerial capabilities and target markets. Thomke (Thomke, 2003) classifies 111

uncertainties associated with innovation projects: technical, manufacturing, and marketing. To minimize these uncertainties business organizations should transfer and have access to different types of information (Cassiman and Veugelers 2006). Generally, this information can be classified into two main groups (von Hippel 1998): - Information concerning the possibilities of technological solutions. This is information on how to best apply technology to transform customer needs into new products and services. Access to technological information is related to the effectiveness of the innovation process. Better information technology helps product developers to engage in activities in the innovation process which are more directly related to problem solving. The more complex and radical innovations are, the greater the need for technological information from various problem areas. All innovations are characterized by two types of information, although in different cases, their ratio is different (Nambisan, Agarwal and Tanniru 1999). Today, common understanding of the innovation process is based on the premise that business organizations rarely innovate alone, while the innovation process is based on interactive relationships between creators of products, customers and various other institutions (Laursen and Salter 2006). The goal is to get access to external information, thus minimizing uncertainties in innovative designs. Informal relations define the innovativeness of open innovation. Open innovation extends beyond the usual contractual relationship to achieve joint value. These include new forms of value creation, based on informal, non-contractual, flexible and short-term relationships. Access to customer information is a fundamental requirement for any innovation. There are two traditional approaches to acquire such information. Data input from customers can be acquired either clearly through consultation with customers about the needs and preferences through market research and interviews with focus groups, or by research in the customers sphere (analyzing sales data, Internet content, interviews with collaborators sales ). Customers can have different roles in the innovation process. Some customers may provide key information on future trends and possible technological solutions, while others are more suitable for the evaluation of innovative concepts or to participate in refining the prototypes. All these roles revolve around three ways to use the information generated 112

by customers when developing new products: - Research in the sphere of customers; - Consultation with customers; - Innovate with customers. Research in customers sphere - In this approach, the products are designed on behalf of customers. This is the typical notion of so-called. "Market orientation". Business organizations use the existing customer information from various sources such as feedback from associates in sales; analyzing sales data from previous periods; analyzing Internet content; Reports of studies of third parties and others to determine customer needs (Dalian and Hauser 2002). Another significant source of this approach are analyzes of the performance of existing products (of the organization itself and its competitors). Consultation with customers - In this approach, besides studying data on customer preferences, what is performed is direct consultation with them in order to obtain input for the innovation process. In the early stages of innovation projects customer preferences or unmet needs are identified through surveys, interviews with quantitative indicators or focus groups. Innovate with customers. In the previous two approaches customers remain isolated from business organizations. In this third alternative method customers are actively involved in the design and development of future products using funds provided by organizations that create products. This is about actively integrate customers in the innovation process (von Hippel 2005), building conception of the so-called "customer centric organization". The creators of products empower customers to design their own decisions and apply methodologies for efficient transfer of innovative solutions from customers to businesses. These are forms of open innovation with customers (customer cocreation). The term " customer co-creation " indicates the approach to create products where customers are actively engaged and involved in the design of new proposals. Co-creation with customers is defined as active, creative and social process based on collaboration between producers and customers (Piller and Ihl 2009). Business organizations organized process of innovation by customers as forming capabilities and infrastructure that allow customers to perform activities in the innovation process. This is a new concept of open innovation with customers (Reichwald and Piller 2009; Tapscott and Williams 2006; Seybold 2006). There are three characteristics that affect the dimensions of the 113

conceptual methods of co-production with customers (Diener and Piller 2010): - Stage of the innovation process. Stage of the innovation process which characterizes moment when the input from activities of common creation enters the process of developing new products i.e., whether the data of customers falls in the earliest stages of the process (generating ideas and developing concepts) or enters the end of the process (design and testing of products); - Degree of collaboration. The degree of collaboration characterizes the structure of the underlying open innovation relationship i.e., whether it is bilateral collaboration between a business organization and one customer at a particular time or there is a network of customers who collaborate with each other regardless of the business organization; - Degree of freedom. The degree of freedom characterizes the nature of the tasks that are assigned to customers i.e., whether assigned specific, predefined tasks with minimal freedom or open creative tasks on which decisions are difficult to predict because of the many degrees of freedom.

References 1. Ansell, C. , Gash A. (2008). Collaborative Governance in Theory and Practice'. Journal of Public Administration Research and Theory, 18(4), pp. 543-571. 2. Cassiman, B., Veugelers, R. (2006). "In search of complementarity in innovation strategy: internal r&d and external knowledge acquisition." In: Management Science, 52(1 , pp. 68-82. 3. Chesbrough, H., Crowther, A.K. (2006). Beyond high tech: early adopters of open innovation in other industries. R&D Management, 36, pp. 229-236. 4. Crosby, B., Bryson J. (2010). Integrative Leadership and the Creation and Maintenance of Cross-sector Collaboration. Leadership Quarterly. 21(2) , pp. 211-230. 5. Dalian, E., Hauser, J. R. (2002). "The virtual customer." In: Journal of Product Innovation Management, 19(5), pp. 332-353. 6. Gianiodis, P.T., Ellis, S.C, Secchi, E. (2010). Advancing a typology of open innovation. International Journal of Innovation Management, 14, pp. 1-42. 7. Koppenjan, J., Klijn E.. (2004). Managing Uncertainties in Networks: Public Private Controversies. London: Routledge. 114

8. Laursen, K., Salter, A. (2006). "Open for innovation: The role of openness in explaining innovation performance among UK manufacturing firms." In: Strategic Management Journal, 2 7(2), pp. 131-150. 9. Lichtenthaler, U. (2011). Open innovation: past research, current debates, and future directions. Academy of Management Perspectives, 25, pp. 75-93. 10. Nambisan, S., Agarwal, R., Tanniru, M. (1999). "Organizational mechanisms for enhancing user innovation in information technology." In: MIS Quarterly, 23(3), pp. 365-395. 11. Nambisan, S. (2008). Transforming Government Through Collaborative Innovation. IBM Center for the Business of Government. 12. Newman, J. (2011). Public Leadership as Public-making. Public Money and Management. 31(5), pp. 315-321. 13. Piller, F.T., Ihl, C. (2009). "Open Innovation with Customers — Foundations, Competences and International Trends." In: Expert Study commissioned by the European Union, The German Federal Ministry of Research, and Europaischer Sozialfond ESF. Published as part of the project "International Monitoring". Aachen: RWTH ZLW-IMA 2009. 14. Reichwald, R., Piller, F.T. (2009). Interaktive Wertschbpfung: Open Innovation, Individualisierung und neue Formen der Arbeitsteilung. 2nd. Edition, Wiesbaden: Gabler. 15. Seybold, P. (2006). Outside Innovation. Crown Business: New York. 16. Skilton, P. F., and Dooley, K. J. (2010). The effects of repeat collaboration on creative abrasion. Academy of Management Review. 35(1), pp. 118-134. 17. Sorensen, E. (2012). Governance and Innovation in the Public Sector. In David Levi-Faur (ed.) Oxford Handbook of Governance. Oxford: Oxford University Press. 18. Straus, D. (2002). How to Make Collaboration Work. San Francisco, CA: Berrett Koehler. 19. Tapscott, D., Williams, A. D. (2006). Wikinomics: How Mass Collaboration Changes Everything. New York, NY: Portfolio. 20. Thomke, S. (2003). Experimentation matters: Unlocking the potential of new technologies for innovation. Boston, MA: Harvard Business School Press. 21. von Hippel, E. (1998). "Economics of product development by 115

users: The impact of "sticky' local information." In: Management Science, 44(5), pp. 629-644. 22. von Hippel, E. (2005). Democratizing Innovation. Cambridge, MA: MIT Press.

Ianioglo Nadejda Master of Economics, PhD Student, Lecturer, Department of Economics Comrat State University, Moldova

THE INTRODUCTION OF ORGANISATIONAL INNOVATIONS AS A FACTOR OF INCREASING THE COMPETITIVENESS OF ENTERPRISES

Currently, businesses everywhere are faced with the "taunt" the modern competition, and above all the difficulties to adapt to the constant changes in market conditions. Changes become constant and pervasive, and is the normal state of modern business. Moreover, the increased pace of change, helped primarily by rapid technological progress and competition. The life cycles of products are now measured not in years and months. Socrates and the life cycle of services and time, available for the development of new products and will release them on the market. Under these conditions, it is critical to implement and continuously work with enterprises to manage new methods and structures, ie, continuously introduce organizational innovations. In recent years, world leaders moved the company, implementing an effective corporate governance system, based on innovations in improving various aspects of the companies' activities. According to statistics, the majority of American companies carry out some organizational changes at least once a year, and the major reorganization carried out every 4-5 years [9]. During organizational change, management structure become flexible; there is a possibility of multiple use of production facilities; It raises the level of quality of the products; improved working conditions; and begin to operate the new employee incentive systems that provide a high degree of innovation. The role of organizational innovation is emphasized in the work of A. Lam: "Economists assume that organizational changes are a response to technical change, when in fact organizational innovation is a 116

prerequisite for introduced technical innovation" [4] Organizational innovations are not the only factor supporting product and process innovation; they themselves can have a significant impact on the results of an active enterprise. Organizational innovations can improve the quality and efficiency of work, encourage the exchange of information and the ability to increase the enterprise to learn and use new knowledge and technologies. In addition to organizational innovations, there are more frequent synergy and opportunity in different ways to combine and create new competitive advantages. Organizational innovations are able to produce a "useful effect ", by increasing the competitiveness of business organizations in the following areas:  Reducing the cost of resources (financial, human, and time) for the development and solution of organizational and administrative problems;  Improving the efficiency of decisions for business development;  The creation of competitive advantages for business development. In addition, the introduction of new methods in organizational business practices of the enterprise, organizational jobs, skills, and development, have a more efficient use of material and moral incentives, etc. The company is much cheaper in the long run, and more effective. In general there are three broad approaches to organizational innovation. Firstly, innovation is considered as a determining factor of organizational growth and superior business performances [6]. This approach emphasizes on innovation oriented business strategy and grants bigger investment in the growth of organizational capability to innovate new products. The second approach regards innovation as rather a byproduct of dynamic organizational development and prescribe prioritization of company‟s atmosphere and working condition over just exclusively focusing on innovation management. The third approach credits innovation as a contributing factor but underlines a careful balance between innovation and other contributing factors for an efficient business performance [6]. These different levels of apportioning importance on innovation delineate, in the advance management literature, the thought and strategies of leading and managing innovation by the managers [6]. The Oslo Manual is the foremost international source of guidelines 117

for the collection and use of data on innovation activities in industry. According to the Oslo Manual organizational innovation is the implementation of a new organizational method in the firm's business practices, workplace organization or external relations [5] Organizational innovation in the firm includes:  the introduction of significantly changed organizational structures;  the implementation of advanced management techniques;  the implementation of new or substantially changed corporate strategic orientations. The specifics of organizational innovation, as compared to other kinds of innovations are as follows:  First, organizational innovations - changes that the organization made that did not exist before.  Second, it is a significant change affecting important aspects of the organization.  Third, the implementation of organizational innovation requires preparatory work and proper training of personnel .  Fourth, the implementation of organizational innovations associated with the emergence and resolution of problematic situations. The problem, as opposed to the problem involves the development and use of unconventional and creative approaches to its resolution.  Fifth, organizational innovations has a significant social and economic consequence.  Sixth, the implementation of the majority of organizational innovations may take several years, and it is sometimes impossible to determine exactly at what point there was innovation.  Seventh, this kind of innovation is more difficult in comparison with the technology, amenable to substantiation of its implementation and the evaluation afterwards. The implementation of the enterprise organizational innovation does not require manufacturers significant material, financial and human investments , but they give a long-term economic benefits by: 1. The use of new techniques in the management of: communications, means of fixation, transmission, processing, storage media, etc. 2. Introduction of new computer programs and systems support management decisions; 3. Changes in the structure and content of the information flows, the introduction of planning and reporting forms and indicators, changes in 118

the structure and content of the database, changing regulations on document management, etc.; 4. Changes in the organizational structure of management; 5. Changes in the structure of the staff and the procedure for its work; 6. The introduction of new methods of motivation and incentives for staff; 7. Education and training of personnel; 8. Changes in management practices; 9. Changes in the goal-setting system (including the revision of the mission, policies, strategies and other strategic documents.); 10. Changes in technology and methods of decision-making; 11. Changes in the organizational structure of management; 12. The introduction of new regulations of functioning of structural units, new or modified regulations and corporate standards; 13. Re-branding, conducting PR-actions, and improving relations with shareholders. The introduction of organizational innovations in enterprises increase their competitiveness and enables companies to gain a competitive advantage with the use of the intellectual resources of the organization, which is not a required significant upfront investment and time to implement them. That sequential development and implementation of such innovation will affect the transfer of the interests of the organization from the present into the future in a sustainable revolving basis to stimulate the growth of efficiency of activity, rationally manage time as a resource. The implementation of organizational innovation it is an important part of the innovation policy of enterprise. The process of implementing any innovation is divided into certain stages, each of which is accompanied by certain activities as well as competent management, which is essential. Analysis of the literature related to the implementation of organizational innovation, leads to the conclusion that most of the authors are the adaptation of organizational innovation in the enterprise as a sequential process consisting of steps similar to the process of technological innovation. Table 1 presents models of the implementation of organizational and technological innovations such authors as: F. Auerswald, R. A. Wolfe, F. Damanpour and M. Schneider. In the presented models, the implementation of organizational and technological innovation is almost identical. 119

Table 4.1 Comparison of an algorithm for implementing technological and organizational innovations phase 1

2

3

4

Auerswald F. (technologica l innovation)

Basic research

Wolfe R. A. (organization al innovation)

Idea developm ent (concept)

5

6

Proof of concept

-

Taking decision

Testing

Informi ng personn el

Approval Assessme nt

Taking decision

Implemen tation (testing)

The emergence of the idea and its approval

Taking decision

Implemen tation (testing)

-

Phase 1 The emergence and selection of idea

Phase 2 Taking decision

Phase 3 Testing

Phase 4 Implemen tation

author

Damanpour F. & Schneider M. (organization al innovation) Generalizatio n of key phases

Productio n and promotio n of Assessme nt Documen tation Use

Source: compiled by the author based on 1; 2; 7

In the presented model, the process of implementing organizational innovation consists of successive stages. All stages can be grouped into four general phases graphically presented in figure 4.1.

Figure 4.1. Stages of implementation of organizational innovations Source: developed by the author

120

Phase 1. «The emergence of the idea and its approval» At this stage, the assessment of the problems of organization, the emergence of the idea of the introduction of organizational innovation, the analysis of different kinds of organizational innovations and choose the best option. Phase 2. «Taking decision» Evaluation of financial, human and technical capacity of the enterprise. The allocation of resources. Phase 3. «Testing» The third phase involves the introduction of (fully or partially) the organizational innovation: the selection and appointment of qualified persons responsible, testing innovation, evaluation and final decision. Phase 4. «Implementation» Document and full implementation of innovations in the company's activity. However, as practice shows, the process of implementing organizational innovation is not always possible to clearly regulate and present as stages and in addition, they have a number of distinctive features, making it impossible to compare the process of introducing organizational innovations to the process of technological innovation. For example, R.Daft, asserts that the process of technological innovation carried out "bottom up", ie initiated by employees of the company, whereas the process of introducing organizational innovations implemented "top-down" ie, initiated by management [3]. The author of this article proposes its own algorithm on implementation of this kind of innovation that can be adapted to the activity of the enterprises .Visually the process of implementing organizational innovation is shown in figure 4.2: Let us consider each proposed implementation phase of organizational innovation in more detail. 1. Determination of the need for and effectiveness of organizational innovations. For deciding on the introduction of organizational innovations in the activities of the company, should first determine how these innovations are needed in the enterprise. On the need for institutional innovation in the enterprise indicates dysfunctional business processes. Dysfunctional business processes include: no established process for the exchange of information across the enterprise, the lack of (weak) feedback, excessive bureaucratization process that leads to unnecessary complexity, high level of commoditymaterial buffer stocks, which means that the system unable to cope with uncertainty, and so on. etc. In addition, the answer to the question of the impact of organizational innovation to customers, the final profit of the company, as well as an assessment of potential risks. 121

DETERMINATION OF THE NEED FOR AND EFFECTIVENESS OF ORGANIZATIONAL INNOVATIONS

STAFF TRAINING TO ORGANIZATIONAL CHANGES

DEVELOPMENT OF THE SCHEDULE OF IMPLEMENTATION OF ORGANIZATIONAL INNOVATIONS AND THE FORMATION OF INNOVATIVE GROUP

AN EXPERIMENTAL IMPLEMENTATION OF INNOVATIONS (TESTING)

FULL IMPLEMENTATION OF ORGANIZATIONAL INNOVATION IN THE ENTERPRISE

EVALUATION OF THE RESULTS

Figure 4.2. The algorithm implementation of organizational innovations Source: developed by the author

2. Staff training to organizational change. In the process of implementation of organizational innovation, it is the most important role played by the staff of the enterprise. In this regard, of particular importance is the task of increasing the willingness and ability of innovative personnel in the organization, ie willingness and ability to carry out the first time or play (take) the actual idea or innovation in order to obtain social effect. As practice shows, conflict-free 122

implementation of innovative changes in the organization is the exception rather than the rule. Too different innovative changes are estimated by management companies (for it is a new chance) and by its employees (to change them often fraught with danger) Resistance innovative changes - is any actions of employees, to discredit, delay or impede the innovation in an organization. Levels and forms of resistance to innovation in companies due to social psychological factors and are closely linked to the innovation process, which is essentially the interaction of people with different , often quite opposite types of receptivity and willingness to innovate [8]. Resistance staff organizational innovations, according to research for the following reasons [10]:  The low level of corporate culture;  Lack of staff at the information on the ongoing reforms;  Lack of motivation to participate in personnel changes;  Lack of coordination management;  Use an authoritarian approach to implementing changes;  Distrust of employees to the initiators of change. Researchers identify a group of the most promising directions for overcoming resistance to the personnel of the innovative changes: 1. Resource area, which includes the allocation of additional resources for the design and implementation of innovative changes, financial assistance to innovative risk, staff; 2. Information direction involves ensuring personnel information about the substance of innovative problems and solutions, preliminary information about possible difficulties and problems of innovative changes; 3. Motivational direction includes providing material and moral incentives of participants of innovative changes, promoting professional advancement innovators, improving their professional work and personal status; 4. Technology areas requires the development of innovative projects on a competitive and integrated manner, ensuring the correct formulation of the problem of innovation, the optimal allocation of resources and adequate assessment of the innovative changes of innovative games, group training, innovative experiments; 5. Ethical direction orienting at improving the organizational culture of the participants and the conventional changes, the use of a variety of sanctions against violators of organizational norms and traditions. 3. Development of the schedule of implementation of 123

organizational innovations and the formation of innovative group. Schedule of innovation is needed in order that management can keep track of the process of implementation and time to carry out corrective measures. Formation of the working group can be divided into several stages. The first stage - the selection of the most active part of the workforce. The criteria for such a selection can be defined: education, work experience in enterprise, the ability to work with documents. Personal qualities: communication skills, tact and loyalty; objectivity and realism, the ability to separate the essential from the inessential; ability to think analytically and flexibility to structure the information gathered, articulate, enthusiastic. In addition, it is important to take into account the possibility of selected staff to influence people and promote change. The second stage of the formation of a working group - is interviewing candidates for the working groups in order to obtain their consent to participate in the implementation of organizational innovation as a team member. The third step - training the members of the working groups (teams): conducting training either through in-house training courses and training programs conducted by outside organizations that specialize in this innovation in management (consulting firms) or by creating inhouse system of exchange of best management practices, dissemination of practical skills in new ways and using them. The fourth stage - the certification of the working group, on the basis of which the final formation of the team. 4. An experimental implementation of innovations (testing) This step not only provides the opportunity to test the innovation in a particular company, but also allows you to set the exact sequence of organizational changes to adjust the schedule of implementation of innovations. For the experiment can be selected one or more structural units. Under the experiment, we mean the following activities [11]: 1. Testing the major organizational changes that reflect management innovation and then to the full implementation of the framework will be extended to all the activities of the enterprise. 2. Testing of a feedback mechanism on the interim results of the implementation of organizational innovation. As such a mechanism could serve as internal audits (audit, assessment, inspection, testing) , which form a feedback control system. 3. Analysis of the functioning of the units in the new environment (based on reports from the audit reports and is responsible for the 124

implementation of organizational innovation). For these purposes, you must use the performance indicators of organizational innovation. 4. Reduced feelings of uncertainty among staff by demonstrating the advantages of the innovations on the example of the unit where the experiment took place. 5. Full implementation of organizational innovation in the enterprise. After the pilot implementation of organizational innovation, achieved positive results, it is possible to start full implementation. 5.1 It is necessary to extend the training program introduced at the third stage, and train staff in the divisions. 5.2. In the absence of professionals with the right skills and the inability to provide them as a result of training within the company should conduct the hiring of new staff. 5.3. Conducting job displacement in accordance with the terms of the functioning of innovation. 6. Evaluation of the results. At this stage management of enterprise: 6.1. Evaluates the results. 6.2. The results are compared with pre- calculated performance at the first stage. If necessary, the adjustment of all phases of algorithm innovation. 6.3. Preparations for the diffusion of organizational innovations their spread in other divisions and subsidiaries of the company, as well as in other companies through patenting. In addition to the above-described steps for successful implementation and long-term use of administrative innovations that require a feedback mechanism on the basis of which will be carried out by coordination and control of organizational change. Therefore, a great importance to the proposed scheme, the introduction of organizational innovations should be given to procedures and monitoring techniques, resulting in getting information about the degree of achievement of objectives and compliance with the schedule of implementation, on the amount of resources expended on the implementation of the work requirements of staff to the new, they need to modify the implementation of new forms of management practices. The feedback mechanism will provide more reliable information, which, in turn, will assess and monitor the quality of the implementation process, by adapting it to the requirements and capabilities of the users. Because only in this case, the implemented organizational innovation will meet the established norms of behavior in the organization, and will be of 125

great value for the majority of the members of the organization. The advantage of the proposed methods of implementation of organizational innovation, is that it takes into account the reaction and prevents the resistance of the personnel to organizational changes. Also, this method of implementation allows monitoring of changes at each stage and to assess the resulting effect. Conclusion. The introduction of organizational innovations in the economic and innovative activity of industrial enterprises determines, on the one hand, increasing the effectiveness of innovation, and on the other - to improve the functioning of the results of enterprises, which testifies to the special role of innovation to improve the competitiveness of industrial enterprises. Innovations of this type can be defined as a decisive rejection of traditional principles, procedures and methods of management and established organizational forms, with the result that changes the whole company management system. References 1. Auerswald, F. (2002) Between Invention and Innovation An Analysis of Funding for Early-Stage Technology Development. National Institute of Standards and Technology Report NIST GCR 02–841 2. Damanpour, F., & Schneider, M. (2006) Phases of the Adoption of Innovation in Organizations: Effects of Environment, Organization and Top Managers. British Journal of Management, 17(3): 215-236 3. Daft, R.,A Dual-Core (1978) Model of Organizational Innovation. The Academy of Management Journal, 21(2): 193-210 4. Lam, A. (2005) "Organizational Innovation", Chapter 5 in J. Fagerberg, D. Mowery and RR Nelson (eds.), The Oxford Handbook of Innovation, Oxford University Press, Oxford 5. Oslo Manual (2005): Guidelines for Collecting and Interpreting Innovation Data, 3rd Edition 3rd edition Pages: 163 ISBN 97892-64-01308-3 6. Seyed H.R., Omid A.(2013) Management of Organizational Innovation//International Journal of Business and Social Science Vol. 4 No. 1. – р. 226-232 7. Wolfe, R. A. (1994).Organizational innovation: review, critique and suggested research directions. Journal of Management Studies, 31(3): 405-431. 8. Голева Т.В. Преодоление сопротивления персонала 126

организации инновационным изменениям - Белгород, 2006. 199 с. 9. Кузнецов Ю.В. Теория современного менеджмента и организационные инновации в управлении фирмой: автореф. дисс. д-ра экон. наук: защищена 11.04.95 / Ю.В. Кузнецов. СПб., 1995.-41 с. 10. Мильнер Б.З. Концепция организационных изменений в современных компаниях // Проблемы теории и практики управления. – 2006. №1. 11. Мыслякова Ю. Г. Организация внедрения управленческих инноваций на промышленном предприятии: диссертация кандидата экономических наук: 08.00.05.- Екатеринбург, 2007. - 195 с.

Litvin Aurelia PhD in Economics, Associate Professor Coser Cornel Lecturer Putuntean Nina Lecturer State Agrarian University of Moldova

MANAGEMENT OF SECTORIAL COMPETITIVENESS RELATED TO THE ENVIRONMENT OF LIMITING AND STIMULATING FACTORS

Starting from the definition of competitiveness as an index of state or sector performance, Beitone A. argue that from temporal perspective, the competitiveness of a sector can be divided into short and long-term. Short-term competitiveness takes into consideration, first of all, the market share in foreign economic activity; it is determined, in our opinion, by the performance of product importers, but also by the competitiveness of competitors in those markets. Long-term competitiveness highlights sectorial specialization and ability to adapt to the requirements of global trends. In our opinion, sectorial competitiveness requires two essential approaches: internal approach and external approach. The first deals with the ability of a sector to be efficient, given that productivity, and respectively, agricultural production are reduced in Moldova; here we 127

can add the deficient infrastructure of rural areas and poor development of entrepreneurship. The second approach (external) could be considered in relation to high costs of local products and relatively low quality of food products compared to our competitors in the retail markets. In this regard, the achievement of comparative advantage in the agri-food sector could be done in two ways [188]: 1. Lower costs of production, which would allow an advantageous price positioning relative to competitors in the international market; 2. Product differentiation, which guarantees high quality, high prices and positioning in certain market niches. We understand that both options would be feasible for the Republic of Moldova in the long term, but product differentiation is the way that involves minimized risks, especially to external shocks and losses of certain markets; therefore, we consider it as a sustainable option. Our opinion regarding the environment of agri-food sector competitiveness includes 5 elements: volume capacity, quality performance, price positioning, the possibility of ensuring qualitative uniformity and consistency of production volume and logistical capacity. In a disaggregated manned, we propose our own model of including these factors in analyzing the environment forming the agrifood sector competitiveness of the Republic of Moldova. We substantiate this model on 3 parts: 1. Factorial (internal) conditions, characterized by: productivity and performance of the sector, cost of resources, access to finance, export facilitation and logistics. 2. The measures to stimulate agri-food exports: business environment and the environment of related institutions. 3. The measures to promote agri-food exports, referring to: certification, standardization and innovation infrastructure. The availability of data at regional and international levels, according to some specialized indicators (internationally recognized), will allow us to make a comparison. In this regard, we planned to develop and implement an indicator: the Index of International Comparison of Competitiveness Factors (IICCF). Methodologically, it compares the value of national results by certain categories with the results of the same categories of Moldova‟s competitors on the EU and CIS agri-food market. The obtained percentage will indicate the share of national results in the performance of export competitors (as a percentage), and depending on this indicator, 128

it will be obtained sectorial performance or under-performance compared to competitors. Productivity and hence performance of the agricultural sector of the Republic of Moldova should be a reference element in substantiating sectorial policies. The latest data indicate that, compared to our competitors in key retail markets, the shares of our sector are poor (table 4.2). Our studies show that Moldova records performance in the category of labour productivity in the sector, crops and animal products below the level of all its direct competitors. The most significant discrepancy (i.e. a small IICCF index) Moldova records in the category of gross value added per employee, and namely compared to France and Netherlands; as for the productivity of crops, our country is positioned with a loss of competitiveness compared to all states, with few exceptions, when it recorded a higher IICCF index than its competitors: for cereals compared to Russia and Kazakhstan and for fruits, compared to Estonia and Kazakhstan. As for livestock production, it recorded a positive index (greater than 100%) compared to more competitors. Pig breeding could serve as example compared to Russia, Turkey, and Kazakhstan, cattle breeding to Kazakhstan and poultry breeding compared to all states presented in the study, except the Netherlands. Table 4.2 Efficiency of the agricultural sector of the Republic of Moldova compared to its competitors in the main markets, 2013 Country

Moldova Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan

Gross value added per employe, USD 2325 12438 40127 74307 35219 66238 3320 12530 6898 5973 5154 9046 3973

Average production per ha, kg/ha

Animal heads per 1000 ha of agricultural land

Cereals

Fruits

Vegetables

Pigs

Cattle

Poultry

2852 3864 4081 7074 7318 8653 3803 3123 3249 2240 4064 3009 1164

4817 6953 11285 9337 12899 33726 9785 1139 13337 7590 10036 5059 4108

8340 15077 37756 22258 31403 57149 35095 25872 25304 19564 17142 25379 22898

166 376 946 468 1658 6609 774 371 0,07 86 183 486 4

77 144 211 663 753 2165 406 270 362 92 112 500 27

10625 6473 5154 7510 10620 53800 9739 2214 6701 2283 5165 4813 154

Source: elaborated by the authors based on the data of the World Bank, FAO and national accounts

129

At the level of processing industry (table 4.3), we see that the discrepancies are kept especially for sugar and milk, while for other products, IICCF index is higher (Annex 92). The most significant convergence per product is registered for sunflower oil, butter and cheese. Table 4.3 Productivity of the agri-food industry of the Republic of Moldova compared to its competitors in the main markets, 2013 Country

Moldova Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan

Processed plant products, per 1000 ha of agricultural land, tonnes Sunflower Wine Sugar oil 13,4 48,8 57,0 23,5 7,62 12,6 15,9 118,7 19,9 20,11 149,2 150,7 8,25 50,3 213,1 124,2 557,6 1,04 134,1 22,7 0,7 60,1 15,1 2,6 22 55,7 4,07 33,2 0,09 3,2 76,2 0,94 0,09 0,02

Primary and processed animal products, per 1000 ha of pastures and hayfields, tonnes Milk

Butter

Cheese

1505,4 1063,6 811,6 2592,5 6739,4 16076,7 3972,3 2353,8 1246,7 328,2 1462,3 2189,9 26,2

11,8 1,7 3,7 41,9 95,1 172,6 53,2 9,4 13,7 2,3 12 32,6 0,07

19,8 18,4 23,9 200,7 480,4 1025,9 232 130,7 13,1 7,07 21,1 48,1 0,12

Source: elaborated by the authors based on data of FAO and national accounts

The performance of processing industry explains the migration of resources to the most efficient activities. Although agriculture, generally as a sector, employs a greater number of people, the food industry involves a smaller number of entities but generates higher sales revenues by 4.2 billion MDL more than agriculture. More than 33% of the workforce employed in the food industry is concentrated in the manufacture of bakery products, which generates sales revenues of 1.92 billion MDL, being surpassed by the dairy industry (2.34 billion) and meat industry (2.30 billion). The dairy industry proved to be a sector with concentrated capacities, where a total number of only 30 entities generates the highest revenue from sales in the food industry. The cost (purchase price) of the resources involved in the agri-food sector (inputs) can play a crucial role in determining the price policy of economic entities and thus determining the competitiveness of the whole agri-food sector. In the specialized field, Apergis and Rezitis argue that the price of production factors represents, firstly, an indicator for 130

developing programs aiming at promoting efficiency and growth in the agri-food sector. Based on the national and international practices, it is known that a limit of 40-70% of agricultural production costs is related to workforce costs. This applies to such crops as: vineyards, orchards, vegetables and animal breeding; however, it does not refer to maize and other cereals. We intended to develop a comparative analysis by cost items, which will reflect the constraints for inputs supply and Moldova‟s situation in this category of competitiveness. The study was initiated by approaching the most significant inputs: workforce and energy. In this context, it was noted that, considering human resource costs, Moldova registers a lower IICCF index than its competitors (Annex 94), fact which induces a positive effect on the sector. As for energy costs, the country is clearly in a disadvantageous situation, especially for the item „electricity” (table 4.4). Table 4.4 The cost of human and energy resources of the Republic of Moldova compared to its competitors in the main markets, 2013-2014 Country

Moldova Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan

Average nominal monthly salary, USD, 2013

Energy costs, 2014 Electricity, price for non-household consumers, USD kilowatt-hour 0,10 0,10 0,14 0,12 0,17 0,11 0,09 0,11 0,15 0,05 0,07 0,10 0,05

Diesel, price at the service station, USD per liter

192,3 471,2 959 1812,7 1189,1 2023,2 604,2 348,5 479,6 491,5 248 394 356,6

1,16 1,71 1,55 1,63 1,58 1,80 1,39 1,51 1,90 0,75 1,16 1,06 0,64

Source: elaborated by the authors based on data of the World Bank

With an increasing trend of use, fertilizers continue to play an important role in ensuring high yields of some crops. According to our calculations, analyzing the data of the US Department of Agriculture [190], fertilizers have an important share (between 18-40%) in the structure of farms‟ operating cost. Since Moldova is an importer of fertilizers, in order to offer the same basis for comparison, we studied 131

the import prices of fertilizers for Moldova and its competitors. An important constraint in the evaluation of agricultural land price is the lack of some sets of officially updated data. Based on this assumption, we considered appropriate to study the results of international consulting companies (e.g. Knight Frank), as well as various analytical reports in this field. The compiled results, regarding the cost of these inputs, are reflected in table 4.5. Obviously, the greatest pressure on Moldova comes from extremely high import prices for fertilizers, where the country loses absolutely its competitive advantage. This situation is most likely determined by the lack of a diversified offer, but also by the flawed policies that do not emphasize the support for these inputs. A more advantageous position is recorded compared to Russia (nitrogen fertilizers), Belarus, Kazakhstan and Romania (potassic fertilizers). As for the price of agricultural land, Moldova is surpassed only by Kazakhstan, where the lowest price was registered. In this case, this indicator already generates added competitiveness. Table 4.5 The cost of imported fertilizers and the price of agricultural land in the Republic of Moldova and compared to its competitors in the main markets, 2011-2014 Country Moldova Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan

Fertilizers, import prices, USD/tonnes, 2014 Nitrogen Phosphorous Potassic 338 330 334 299 297 242 302 323 280 440 240 309 300

1557 238 221 284 405 369 493 394 384 131 105 427 307

446 475 394 359 346 281 339 437 368 320 293 827 535

Average price of agricultural land, USD/ha, 2011-2013 739 2128 15174 7438 12918 63674 6700 4090-5800 18196 1759 300-1000 3600 367

Source: elaborated by the authors based on data of Intracen and national accounts

The costs of agricultural machinery are also associated with the general costs, as they are involved in the agro-technical activities, maintenance activities etc. As we understand that the analysis of their comparability is not a feasible one and it would not necessarily meet the 132

requirement of objectivity, we chose to associate this factor of competitiveness with the cost of energy resources, especially with the cost of diesel (Table 3). Certainly, the price of energy resources makes up no less than 44% of the cost of agricultural machinery and equipment use. Moreover, considering the exceeded life cycle of the trucks and tractors unit, we confirm the lack of competitive advantage in the technical branch. Finally, water resources have their contribution, as a competitive factor, through a series of indicators (table 4.6), of which we have examined the following: average price, irrigation equipment, mean annual rainfall. Among these indices, the mean annual rainfall and the area equipped for irrigation positively correlate with sectorial competitiveness, while the mean price correlates negatively. Annex 96 presents the Index of International Comparison of Competitiveness Factors for water. The studies have shown that we are not competitive for the category of water price and mean rainfall, fact implying restrictions on water resources. A relatively good positioning was conditioned by the area under irrigation systems, which indicates the irrigation potential. CIS countries are competitive as for the ratio of price while European states - for the ratio of mean rainfall. Table 4.6 Characteristic of water resources in the Republic of Moldova and compared to its competitors in the main markets, 2006-2014 Country

Moldova Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan

Mean price, USD/1000 m3, 2013-2014 1,49 1,51 2,62 4,48 1,93 2,05 2,05 1,82 1,93 0,58 0,31 0,13 0,13

Water Cultivated area, area equipped for irrigation, %, 2006-2012 10,83 6,73 20,46 13,65 4,27 41,79 0,89 0,07 22,45 1,92 6,51 2,02 8,92

Mean long-term rainfall, in depth (mm/year), 2014 450 637 636 867 700 778 600 626 593 460 565 618 250

Source: elaborated by the authors based on data of Aquastat and national accounts

An interesting observation consists in the fact that, although they 133

have obvious competitive advantages in the price of resources, CIS states are not positioning themselves in the international market with high value units for export. Thus, these countries (including the Republic of Moldova) are not efficiently using their advanced resources - technology, infrastructure, etc., - while this is valid for the western states; the latter export a superior added value having efficient systems of logistics, promotion, production equipment, etc. A synthesis concerning the valorization of factors determining the competitiveness of Moldova‟s agri-food sector, elaborated based on the above presented tables highlights the following facts:  Out of the studied 20 indices, 9 have a negative effect on the sectorial competitiveness, which involves major disadvantages for our country, related to Moldova‟s relationship with its competitors in the EU and CIS markets.  Among these factors with negative effect, we could mention: the productivity of crops (it is smaller than the one of competitors), the price of fertilizers (higher), price of water (higher), energy costs (higher), the volume of mean rainfall (smaller). Finally, the profile of Moldova‟s competitors on the regional agri-food market depends largely on the approach of government policies related to the importance of agriculture in the respective economy. FAO proposes a relevant indicator in this field „agricultural orientation index” (AOI), which sets out the extent to which government expenses for agriculture reflect the importance of this sector in country‟s economy. Mean=1,4

Figure 4.3. Agricultural Orientation Index for different states, mean value 2001-2013 Source: elaborated by the authors based on data of FAO and national accounts

134

We noticed that the AOI value for the Republic of Moldova is 1.34 points, which is an index below the mean of compared states (since the contribution of agriculture to GDP is quite high and its funding by the government is modest). Among the regional countries, only Belarus offers to agriculture the funding that is correlated with its share in GDP (AOI = 2.38). The states with the closest convergence to Moldova are Estonia, Hungary, Argentina, and Brazil. The highest Agricultural Orientation Index is recorded in Germany (3.6) and France (3.29), countries which actually have the most advanced agricultural systems in Europe and are among the best world countries. In an increasingly interconnected global system, not only the internal resources and their cost determine sectorial competitiveness of the sector, especially when we speak about the agri-food sector. We noticed that the best countries in terms of trade start to emphasize more strongly on top resources - infrastructure, logistics, delivery speed and cost. This allows them to gain competitive advantage compared to other states, through greater market penetration, product expansion and lower costs. In our opinion, here we should make reference to the following quantification tools:  The 1st group of indicators – infrastructure and efficiency of customs procedures;  The 2nd group of indicators – cost and time of export, indicators of transportation efficiency (logistics). Referring to the first group of indicators, we can mention that according to the World Bank methodology, the indicator „infrastructure” reveals the quality of infrastructure related to trade and transport (ports, roads, railways, information technology etc.); it can take values from 1 (low level) to 5 (high level). The latest available data (2014) allows the compilation of this indicator for the Republic of Moldova and its competitors, as well as for the regional countries. In the reference period, Moldova‟s infrastructure performance is well below that of regional countries and especially that of competitor states. In 2014, Moldova cumulated 78% of the competitors‟ values, indicating deficiencies, especially compared to Germany, France, Netherlands, Spain and, in the region, to Slovakia and Hungary. Although the infrastructure index has been steadily growing in Moldova, only Kazakhstan and Georgia had lower values than our country, and the countries recording the closest index to ours were Russia, Belarus, Ukraine and Serbia.

135

Table 4.7 The quality of infrastructure in the Republic of Moldova, countries competing in the agri-food export and regional countries, 2010-2014 Country Republic of Moldova Moldova‟s competitors: Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan Mean of competitors Regional countries: Bulgaria Hungary Serbia Slovakia Georgia Mean of the regional countries

2010 2,05

Indicator ”infrastructure”, points 2012 2014 2,44 2,55

2,25 3,58 4,00 4,34 (leader) 4,25 2,98 2,75 3,08 2,38 2,44 2,66 3,15

2,51 3,74 3,96 4,26 (leader) 4,15 3,10 2,79 3,62 2,45 2,69 2,78 2,60 3,22

2,77 3,77 3,98 4,32 (leader) 4,23 3,08 3,34 3,53 2,59 2,65 2,55 2,38 3,26

2,30 3,08 2,30 3,00 2,17 2,57

3,20 3,14 2,62 2,99 2,85 2,96

2,94 3,18 2,73 3,22 2,42 2,89

Source: elaborated by the authors based on data of the World Bank

The efficiency of customs procedures involves such measurable tools as: the simplicity of procedures, their predictability, the speed of procedures. Furthermore, the analysis of internal indices regarding customs procedures highlighted the situation of customs formalities, which hinder export procedures. We chose to identify and analyze all these indices compared to country‟s competitors (table 4.8). We found that processing time and particularly physical inspection represented the most significant constraints. These primary indicators determine the efficiency of customs procedures, as derivative index. Here, our country is positioned below the mean value of its competitors, recording 2.45 points thus overpassing such countries as Russia (2.20) and Kazakhstan (2.33). It is important to mention that within export procedures, the cumulative effect is represented by the cost and time of export. According to international methodology, export cost expresses the cost associated with all export procedures, including the cost for documents, 136

Table 4.8 Performance of customs procedures in the Republic of Moldova and in the countries competing in the agri-food export, 2012-2014

Country

Republic of Moldova Moldova‟s competitors: Romania Spain France Germany Netherlands Poland Estonia Turkey Russia Ukraine Belarus Kazakhstan Mean of competitors

Efficiency of customs procedures

Time of processing without physical inspection (days)

2014 2,46

2

2,83 3,63 3,65 4,10 3,96 3,26 3,40 3,23 2,20 2,69 2,50 2,33 3,14

1 1 3 0 0 1 0 1 1 1 1 1 0,91

Time of processing with physical inspection (days) 2012 7

1 1 2 1 1 2 1 2 2 2 1 1 1,41

Physical inspection (%)

35,0

10,54 5,15 1 3,42 2,50 75 1 7,86 61,24 21,09 6,55 6,25 16,8

Source: elaborated by the authors based on data of the World Bank

administrative fees, brokerage, and inland transportation; similarly, export time refers to the time required for all export procedures. Moldova has practically one of the highest costs for export procedures, over 3000 USD per container, being overpassed only by CIS countries. This is explained by internal costs and by the fact that it is a landlocked country; generally, in 2014 export costs increased very much, because shipping is under the pressure of higher costs and geographical tensions caused by the conflicts in the Middle East. Furthermore, procedurally, an exporter from Moldova will need several days to complete an export transaction – and namely 46, compared to 12 in Estonia, for example. In conclusion we can mention the following: 1) In recent decades, international trade structure has undergone significant changes: competition was intensified, the role of emerging economies increased, regional economic integration was catalyzed and retail networks acquired a major share in the sale of agri-food products. 137

2) Although it is compelled, because of its situation and characteristics, to get integrated as deeply as possible in the international trade flows, the agri-food sector of the Republic of Moldova continues to demonstrate under-performance compared to regional states, both as value added per employee and involved resources. 3) With practically liberalized regimes in exports to EU and CIS countries, the Republic of Moldova has an excessive concentration of markets and products of the agri-food sector. The instability of exports, along with poor performance, affects a lot the economic activity and reconfirms the systemic problems. 4) The indices of Moldova‟s commercial performance indicate lower values than those of regional or competitor countries in the agrifood markets and the high concentration of exports, combined with low unit value of exported products (i.e. we have failed to diversify markets and in addition we sell cheap) present a high risk and low competitiveness of the sector. 5) The analysis of exporters of agri-food products from Moldova revealed an incipient form of their development, with delayed reactions to market dynamics, inappropriate structure of their organization, poor capacity to create partnerships and major constraints in attracting funds and implementing some sustainable management practices. References 1. Porter M.E. (1998) Competitive Strategy: techniques for analyzing industries and competitors. New York: The Free Press, 422 p. 2. Holleran E., Bredahl M.E., Zeibat L. (1999) Private incentives for adopting food safety and quality assurance. In: Food Policy, vol. 24, nr 6, p. 669-683. 3. Ketels Ch. (2010) Export Competitiveness: Reversing the Logic. Boston: Institute For Strategy and Competitiveness. 4. Competitiveness and the export performance of the euro area. Nr 30, 2005. Frankfurt am Main: European Central Bank. 100 p. 5. Hakobyan S. (2011) Export Competitiveness of Developing Countries and U.S. Trade Policy. Middlebury. 6. World Bank. (2005) Agricultural growth for the poor: An agenda for development. Washington: The International Bank for Reconstruction and Development, 228 p. [Electronic resource]. Available from: http://wwwwds.worldbank.org/external/default/WDSContentServer/IW3P/IB/ 138

2005/08/30/000012009_20050830123312/Rendered/PDF/334250 rev0pub.pdf 7. Euromonitor International. Passport Industrial market Reports, 2015. [Electronic resource]. Available from: http://www.euromonitor.com/food-beverages-and-tobacco

Toma Sorin-George PhD in Economics and Sociology, Professor, Faculty of Administration and Business, University of Bucharest Marinescu Paul PhD in Economics, Professor, Faculty of Administration and Business, University of Bucharest Gradinaru Catalin PhD in Economics, Assistant Professor, Faculty of Administration and Business, University of Bucharest, Romania

STRATEGY AND CREATIVITY IN BUSINESS

Introduction The current global highly competitive landscape is characterized by turbulence, risk and uncertainty. In the last decade “the most recent financial crisis has touched every aspect of our society and called into question many of the basic assumptions by which we have lived” (Rosenfeld, Lorsch and Khurana, 2011, p. 1). In order to successfully face various challenges (e.g., economic, technological, social, cultural, demographic) companies are increasingly paying attention to the need for creativity and innovation. Creativity represents “the most serious shortcoming identified by executives in new and potential hires – most keenly felt in Asia and Latin America – and is something that may be particularly difficult to rectify” (EIU, 2015, p. 3). 139

Since creativity has been perceived as generator of innovation (Nelson and Winter, 1985) fostering creativity has become an imperative for all companies. This is why it requires “the stimulus of imaginatively presented information so that new thoughts can be generated, new perspectives listened to, new patterns considered and new angles discussed” (Kind, 1994, p. 10). The beginning of this new millennium has witnessed a fundamental shift in the way people conceive of strategy. Starting from the fact that for a long period of time strategy “has been driven by academics and consultants looking from the „outside-in‟ and offering generic bestpractice prescriptions” some authors have concluded that “it is time for the strategic identity of corporations to come from the „inside-out‟” (Cummings and Wilson, 2003, p. 37). Therefore, leading-edge business organizations around the world have designed, implemented and developed several methods and techniques (e.g., creative thinking) for the pursuit of linking strategy and creativity. Thriving strategies require more than ever creativity and innovation in these rapidly changing times. The migration of creativity to strategy in companies expressed the fact that these two concepts are no longer optional in today‟s unstable business environment. Explaining creativity Numerous writers, researchers and practitioners have recognized the value of creativity not only in the business world, but also in our daily lives. A great deal of effort has been spent to understand creativity especially in the last decades. Modern creativity researches began after the Second World War. In spite of the fact that “creativity has sometimes seemed irresoluble” (Sternberg, 1988, p. vii), during the time various approaches have emerged about this concept (table 4.9). Table 4.9 Approaches on creativity No. Type 1. Personality approach 2. Cognitive approach 3. Socio-cultural approach 4. Interdisciplinary approach Source: Sawyer, 2012.

Period 1950s and 1960s 1970s and 1980s 1980s and 1990s After 2000

In the beginning of the 1950s, A. F. Osborn aimed to present the 140

principles and procedures of creative thinking. He also challenged the traditional views that assumed that creativity was a gift and could not be nurtured. In his opinion, people could improve their creative potential through practice. He and S. Parnes designed and implemented one of the best methods for improving creativity: the Creative Problem Solving (CPS). On his turn, J. P. Guilford stated that creativity is a continuous trait in all people (Guilford, 1950) and by solving their problems they are growing creatively (Guilford, 1967). Some beliefs considered that creativity springs from unconscious processes, being associated with inspiration or genius (Ghiselin, 1985), but others saw creativity as a phenomenon constructed through an interaction between producers and audience, and provided a system approach to this concept (Csikszentmihalyi, 1997). At the end of the last century, H. Eysenck suggested that a set of three types of variables are likely to interact in order to contribute to creativity in terms of achievement (fig. 4.4). Cognitive variables - Intelligence - Knowledge - Technical skills - Special talents

Environmental variables - Politico-religious factors - Cultural factors - Socio-economic factors - Educational factors

Personality variables - Internal motivation - Confidence - Non-conformity - Creativity (trait)

Creativity as achievement

Figure 4.4. The main variables influencing creativity Source: Eysenck, 1996.

At the beginning of this century, researchers argued that human creativity is the most critical resource in the knowledge-based economy (Florida, 2002). By focusing on the growing role of creativity in the American economy, Florida asserted that a new class, the creative class, 141

appeared and expressed the values of those which are engaged creatively at their workplaces and represent purveyors of creativity (e.g., scientists, professors, actors, designers, researchers, programmers). The creative ethos of this new social class constitutes a fundamental driving force for economic development. Within the Martin Prosperity Institute, Florida and his colleagues have released each year the Global Creativity Index (GCI) that ranks countries worldwide based on the 3Ts of economic development- talent, technology, and tolerance (Florida, Mellander and King, 2015). Last year, Australia held the first position (table 4.10). Table 4.10 The Global Creativity Index 2015 Rank 1 2

Country Technology Talent Australia 7 1 United States of 4 3 America 3 New Zealand 7 8 4 Canada 13 14 5 Denmark 10 6 5 Finland 5 3 7 Sweden 11 8 8 Iceland 26 2 9 Singapore 7 5 10 Netherlands 20 11 Source: Florida, Mellander and King, 2015.

Tolerance 4 11

GCI 0.970 0.950

3 1 13 20 10 2 23 6

0.949 0,920 0.917 0.917 0.915 0.913 0.896 0.889

As the concept of creativity is both paradoxical and complex its definitions seem to differ greatly. However, it can be defined as:  “a new mental combination that is expressed in the world” (individualist definition- Sawyer, 2012, p. 7).  “the process through which new ideas that make innovation possible are developed” (Parjanen, 2012, p. 111).  “the generation of a product that is judged to be novel and also to be appropriate, useful, or valuable by a suitably knowledgeable social group” (socio-cultural definition- Sawyer, 2012, p. 8).  “the process of generating ideas” (Gurteen, 1998, p. 6).  “an emergence in action of a novel relational product, growing out of the uniqueness of the individual on the one hand, and the materials, events, people, or circumstances of his life on the other” (Rogers, 1959, p. 71).  “that process which results in a novel work that is accepted as 142

tenable or useful or satisfying by a group at some point in time” (Stein, 1956, p. 172). The above mentioned definitions allow us to better understand the notion of creativity. Firstly, creativity constitutes a multidimensional concept which is difficult to define from a single perspective (e.g., in terms of “product” or “process”). Secondly, it is often associated with other concepts such as imagination, novelty, value, intelligence, knowledge or curiosity (Arasteh and Arasteh, 1968; Pope, 2005). Thirdly, creativity requires originality and effectiveness (Runco and Jaeger, 2012). Fourthly, creativity provides people and/or organizations solutions to their problems. Linking strategy and creativity in business Effective organizational management in a very dynamic and complex business environment imposes the implementation of strategies based on creativity. The realities of a knowledge-based economy require companies to nurture and leverage their creativity in order to guide their strategic moves. In spite of the fact that “the relationship between strategy and creativity in the business literature is still somewhat remote” (Johnston and Bate, 2013, p. xviii), many companies consider creativity as a key to business success due to the fact that “knowledge and ideas are infinite economic goods that can generate increasing returns through their systematic use” (Kim and Mauborgne, 1999, p. 44). Since the mid 1980s creativity has grown in prominence and has started to become an engine for providing new value and growth in business organizations. Since then more and more companies (box 1) have recognized “the importance of infusing creativity into their development of new strategic opportunities” (Johnston and Bate, 2013, p. xxi). This is why the traditional foundation of strategy has been significantly challenged by the creativity imperative. Creativity is seen in successful companies as the input that leads to innovation, competitiveness and growth. For this reason creativity should be stimulated at the following interrelated levels:  individual- encouraging the continuous development of personal creativity.  group- helping the generation of ideas within a team.  organizational- arranging a proper internal environment that spurs the sharing of ideas. 143

Box 1. Creativity at Eli Lilly and Company Eli Lilly and Company has been in the pharmaceutical industry for 140 years. The American company is one of the largest drug manufacturers in the world. In the mid 1980s, the top management of the company decided to establish half-dozen cross-functional teams in order to identify and develop new strategic options in infectious disease. By using creative techniques, they generated hundreds of strategic options. As a result, the company was restructured around these options and succeeded in launching several innovative products (e.g., Zyprexa and Humalog) in the beginning of the 1990s that allowed it to remain a key player in the pharmaceutical industry. Creativity became therefore a central element of its corporate strategy. Sources: Johnston and Bate, 2013; Blake, 2013.

There are three stages which differentiate business organizations from a creativity point of view. In the first stage, companies recognize the role played by creativity in the business world. In the second stage, they offer the proper conditions for creativity to flourish. In the third stage, companies make efforts to train their staff to become more creative. By linking strategy and creativity, business organizations are building creative strategies. Most of these strategies include some or all of the following components (Cook, 1998):  culture, leadership style and values;  structure and systems;  skills and resources (fig. 4.5). There have been identified four generic elements of a creative strategy: innovation, entrepreneurship, leadership and organization. A creative strategy requires the full integration of all of them as: • “Creative Strategy incorporates an approach to Innovation that harnesses both creation and discovery. • Creative Strategy utilizes an approach to Entrepreneurship that promotes both diligence and dilettantism. • Creative Strategy draws upon an approach to Leadership based upon being able to envision the big picture for the future and interact in the present. • Creative Strategy involves an approach to organization that focuses the activities of others and encourages them to roam into pastures new.” (Bilton and Cummings, 2010, p. 9) 144

Creative strategy

Culture, leadership style and values - “The way we do things here” - Leadership role and style - Core values

Structure and systems - Formal organizational structures - Informal structures - Rewards, recognition and career systems

Skills and resources - Attraction, development and retention of creative talent - Information - Finance - Organizational climate

Figure 4.5. The components of a creative strategy Source: Cook, 1998.

As any strategy, creative strategy involves both logical thinking and creative thinking. Logical thinking is a rigorous way of thinking whereas “creative thinking takes liberty in following thinking rules” (De Wit and Meyer, 2010, p. 35). Creative thinking drives companies to seek other ways of conducting their business and makes possible the continuous adaptation of strategy to changing environment. Conclusions Creativity represents a fruitful concept that enriches our lives. As a fundamental intangible asset, creativity holds a central place in the current human society. Creativity is also important in the business world. It is fundamental to the survival and prosperity of any company in a highly competitive environment. On the one hand, creativity leads to extraordinary results and proves to be central to business success. On the other hand, creativity is a core capability and a source of sustainable competitive advantage. This is why companies have to think of creativity as a key business asset that should be further nurtured and stimulated. In the past, creativity was thought to be marginal to strategy in business organizations. The two concepts were treated as peripheral to each other. Our paper has shown that creativity should be at the heart of strategy in today‟s companies that face a chaotic business environment. 145

References 1. Arasteh, A. R., Arasteh, J. D. (1968). Creativity in the Life Cycle- Volume II. Leiden: E. J. Brill- 180 p. 2. Bilton, C., Cummings, S. (2010). Creative Strategy: Reconnecting Business and Innovation. Chichester: Wiley- 275 p. 3. Blake, H. (2013). A history of…Eli Lilly & Co. [Electronic resource]. Available from: http://www.pharmaphorum.com/articles/a-history-of-eli-lillyco 4. Cook, P. (1998). The creativity advantage- is your organization the leader of the pack? Industrial and Commercial Training, Vol. 30, No. 5, pp. 179-184. 5. Csikszentmihalyi, M. (1997). Creativity: Flow and the Psychology of Discovery and Invention. New York: Harper Perennial- 372 p. 6. Cummings, S., Wilson, D. C. (2003). Images of Strategy. In Cummings, S., Wilson, D. C. (eds.) (2003). Images of Strategy. Oxford: Wiley-Blackwell Publishing- 464 p. 7. De Wit, R., Meyer, R. (2010). Strategy Synthesis: Resolving Strategy Paradoxes to Create Competitive Advantage. Third edition. Zrinski: South-Western Cengage Learning- 490 p. 8. Economist Intelligence Unit (EIU) (2015). The Global Talent Index Report: the Outlook to 2015. Chicago: Heidrick & Struggles- 26 p. [Electronic resource]. Available from: http://www.economistinsights.com/sites/default/files/download s/GTI%20FINAL%20REPORT%205.4.11.pdf. 9. Eysenck, H. J. (1996). The Measurement of Creativity. In Boden, M. A. (ed.) (1996). Dimensions of Creativity. Chapter 8. Cambridge and London: The MIT Press- 256 p. 10. Florida, R. (2002). The Rise of the Creative Class: And How It‘s Transforming Work, Leisure, Community and Everyday Life. New York: Basic Books- 416 p. 11. Florida, R., Mellander, C., King, K. M. (2015). The Global Creativity Index 2015. July, 8. [Electronic resource]. Available from: http://martinprosperity.org/content/the-globalcreativity-index-2015/. 12. Ghiselin, B. (ed.) (1985). The Creative Process: Reflections 146

on Invention in the Arts and Sciences. Berkeley: University of California Press- 259 p. 13. Gurteen, D. (1998). Knowledge, Creativity and Innovation. Journal of Knowledge Management, Volume 2, No. 1, pp. 513. 14. Johnston, R. E. Jr., Bate, J. D. (2013). The Power of Strategy Innovation: A New Way of Linking Creativity and Strategic Planning to Discover Great Business Opportunities. New York: AMACOM- 332 p. 15. Kim, W. C., Mauborgne, R. (1999). Strategy, Value Innovation, and the Knowledge Economy. Sloan Management Review, Spring, Vol. 40, No. 3, pp. 41-54. 16. Kind, J. (1994). Fostering Creativity. The TQM Magazine, Vol. 6, No. 5, pp. 9-10. 17. Osborn, A. F. (1953). Applied Imagination: Principles and Procedures of Creative Problem Solving. New York: Scribner‘s Sons- 317 p. 18. Guilford, J. P. (1950). Creativity. American Psychologist, Vol. 5, Issue 9, pp. 444–454. 19. Guilford, J. P. (1967). Creativity: Yesterday, Today and Tomorrow. The Journal of Creative Behavior, Vol. 1, Issue 1, pp. 3–14. 20. Nelson, R. R., Winter, S. G. (1985). An Evolutionary Theory of Economic Change. Cambridge: Belknap Press of Harvard University Press- 454 p. 21. Oppenheimer A. (2016). What‘s behind innovation? It‘s people. February 5, Miami Herald. [Electronic resource]. Available from: http://www.miamiherald.com/entertainment/books/article5870 3678.html. 22. Parjanen, S. (2012). Experiencing Creativity in the Organization: From Individual Creativity to Collective Creativity. Interdisciplinary Journal of Information, Knowledge, and Management, Vol. 7, pp. 109-128. 23. Pope, R. (2005). Creativity: Theory, History, Practice. London and New York: Routledge- 302 p. 24. Rogers, C. R. (1959). Toward a theory of creativity. In Anderson, H. H. (ed.) (1959) Creativity and Its Cultivation. New York: Harper & Brothers- 293 p. 147

25. Rosenfeld, G., Lorsch, J. W., Khurana, R. (eds.) (2011). Challenges to Business in the Twenty-First Century. Cambridge: American Academy of Arts & Sciences. [Electronic resource]. Available from: https://www.amacad.org/pdfs/challenges.pdf. 26. Runco, M. A., Jaeger, G. J. (2012). The Standard Definition of Creativity. Creativity Research Journal, Vol. 24, Issue 1, pp. 92-96. 27. Sawyer, R. K. (2012). Explaining Creativity: The Science of Human Innovation. Second edition. New York: Oxford University Press- 568 p. 28. Stein, M. I. (1956). A transactional approach to creativity. In Taylor, C. W. (ed.) (1956). The 1955 University of Utah Research Conference on the Identification of Creative Scientific Talent. Salt Lake City: University of Utah Press. 29. Sternberg, R. J. (1988). The Nature of Creativity: Contemporary Psychological Perspectives. Cambridge: Cambridge University Press- 466 p. 30. Taylor, A. I., Getzels, J. W. (eds.) (2009). Perspectives in Creativity. Third edition. New Brunswick and London: AldineTransaction- 353 p.

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Vasilienė-Vasiliauskienė Virgilija PhD in Social Sciences, Associate Professor, Vilnius Gediminas technical university Vasiliauskas Aidas Vasilis PhD in Technological Sciences, Associate Professor, Vilnius Gediminas technical university Lithuania

LEAN AND AGILE SUPPLY CHAIN STRATEGIES FOR COMPETITIVE ECOMMERCE SERVICES

Companies aiming at competitive advantage must overcome serious challenges posed by customers – quality and low price. A competitive advantage is to be gained whilst implementing new activity strategies, improving the structure and management of the Supply Chain. Agile and Responsive Supply Chain strategy is relevant in today‟s business, as well as in production and provision of the products desired by the consumers. This makes it possible to shorten the time required to adapt the currently ongoing operations in the Supply Chain to new market needs. The sales of electronic services have increased significantly over the past years. The popularity of e-commerce conditions the consumers to require their orders to be delivered fast. Thus, the duration of the “last mile” process must be shortened. The question arises, how do the electronic service providers adapt to rapidly changing market conditions; are they able to apply the response-ensuring strategies of the Supply Chain. Strategic management of the Supply Chain and ensuring of the responsiveness become a key management concept. (A. Harsono2014). Supply Chain management and integration of business operations is the main source to obtain responsiveness and agility, as well as competitive advantage. In order to achieve this, the collaborative partnerships must be included in the supply network. (Y. Tsen̕ o (2011). According to S. Coy (2011), a key characteristic of many successful organisations is a supply chain that is connected to customers, thus, it is necessary to understand their requirements and respond rapidly to demand signals. The challenge is to successfully put in place the organisation structure, systems and processes that determine the agility 149

of the Supply Chain. In today„s market, a responsive and agile Supply Chain is more required than efficient one. An efficient Supply Chain is acceptable to its suppliers, manufacturers and retailers, as orders and process management at a predictable and constant demand leads to lower costs. Meanwhile, responsive and customer driven Supply Chain operates under cooperation between interested parties by exchanging information and ordering of the production. In this way, operational costs and risks are minimized, a greater customer satisfaction level is achieved. (Benavides et al 2012, Qrunfleh S., Tarafdar M. 2013). Supply Chain agility possesses five dimensions (The Global Supply Chain Institute, 2013): 1. Alertness – ability to quickly detect changes, opportunities and threats. This dimension suggests that companies must recognize changes and respond to them. 2. Accessibility – ability to access relevant data. These Supply Chains must be information-based rather than inventory-based. This is linked to the levels of competencies of responsible members and experience to make informed decisions. 3. Decisiveness – usage of the available information to make decisions resolutely. 4. Swiftness – ability to implement decisions quickly. 5. Flexibility – ability to modify the range of tactics and operations to the extent needed. Benefits of a Customer driven Supply Chain (Coy 2011): • Higher customer-service levels. • Leaner responsiveness. • Reduced supply chain costs and complexity. • Reduced lead times. • Increased market velocity. • Organisational transparency. Possibilities of implementation of E-business in the Supply Chain of e-service providers intertwines with business organisation models, i.e. business-to-consumer and business-to-business. From the perspective of business-to-consumer, the tendencies of service quality and delivery conditions are analysed. From the perspective of business-to-business, the possibilities of supply chain management in order to meet the requirements set by the consumer are analyzed. The popularity of e-services impels the retailers to deliver goods 150

quickly and inexpensively. It is a serious challenge for traditional logistics models. The growth in electronic services caused the demand for free transportation and quick delivery. (Baud-Lavigne et al 2014).This demand has initiated the following changes in the consumer behaviour: • Deviation from the consent for a long wait to expectations that delivery will be implemented the very same day without additional costs. • Deviation from inflexible delivery points and uncertain delivery time to a situation, where consumer determines the time and place of delivery. • Deviation from unfavourable product return policy to reduction of the repayment amounts; and from the perspective of logistics – returns must be free of charge both in shops and collection points of the returned products. The growth of online retailers conditions the fast lead time to become a competitive advantage. This encourages retailers to have their own local storage network or production units to be carried from the larger centres to warehouses, where products are not stored, but loaded from an incoming to an outbound transport. This frequent model is linked to city logistics. Consumer values are rapidly changing throughout the Globe, thus, it is necessary to find logistics measures that would enable to be closer to consumers and satisfy their need to receive goods faster. E-commerce models have led to a wave of the following types of logistics services: 1. Mega e-fulfilment centres where the merchandise is stocked and picked at item level. This infrastructure unit can be either operated by the retailer or logistics service provider. 2. Parcel hubs/sortation centres which sort orders by zip or post code, so that they can be delivered to the relevant parcel delivery centre for final delivery to the customer‟s home or designated collection point. 3. Parcel delivery centres which handle the „last mile‟ delivery to the customer. Growing consumer demands have led both the e-commerce and logistic service providers to take up initiatives for faster product delivery. This resulted in appearance of same-day delivery service. Analysis of the current state of same-day delivery service was carried out during the investigation of world class and Lithuanian eshops listed in the table below (table 4.11). 151

Table 4.11 Comparative analysis of the status of same-day delivery service E-shop Asos.com Amazon.com Ebay.com Aliexpres.com Pigu.lt Membershop.lt

Delivery time frame Same day Next day Only in the UK + (limited geographical network) + + (limited geographical network) + + (product is ordered in the commodity withdrawal center, it has to be in the warehouse and it is awaited until it is prepared) -

Conclusion can be made that world class e-shops provide same-day delivery service; however geographical scope of such service is quite limited. In case of Lithuania, provision of same-day delivery service is conditional and dependant on the fact, whether the product at the moment of order placement is already in the warehouse. The provision of the same-day delivery service may be implemented by the following solutions: 1. Charging a fee from the consumer. This delivery model is expensive. A person who physically performs delivery service to the consumer must collect parcelsfrom the warehouses or distribution centres, drive to the specified address and return to the warehouse. Considering that transportation costs are equal to zero, the delivery service with approx. one-hour fulfilment process can be measured in monetary terms. Therefore, the possible solution – to simply evaluate this service. 2. Determination of the same-day delivery service within specified zones. This means, that one must consider the location of the concentrated potential consumers and demand for this service. There is a small chance, that this service will be required by consumers located within a far distance from the cities. 3. Usingof the Courier Services. In order for small e-businesses to provide the same-day delivery service, it is a must to hireproviders of these services. It is possible for the parcel to reach the consumer even in few hours if the traders own the warehouse. 4. Using the warehouses and order fulfilment services.By hiring warehouse process management service providers, onlinevendorsmay distribute their inventory in a more efficient manner.If the products are 152

stored in several warehouses where orders are processed and fulfilled, the transportation time allocated for standard orders is reduced as one warehouse may be located closer to the consumer than the other one. 5. Working with other retailers and distributors. Retailers can work with other vendors incorporating the competitive retailers and distributors in order to supplement one another. Major retail segments have large production supply groups which enables the retailers to obtain products at the lower costs. Having an interest to collaborate, these groups may help one another and compete even with the major eservice providers. It is the solution that requires relevant changes in business relations. Considering the aforementioned challenges, possibilities and solutions of the same-day delivery service, it is thus possible to establish a supply chain that would satisfy the demands of an end-user – receive the ordered goods as soon as possible, in the most convenient and accessible manner. However, if the e-service provider supplies goods online and inventory is stored in the warehouse distant from the consumers, thus, establishing a new distribution network with its own structural elements and connections located in the close proximity to the consumer market, might be expensive and economically disadvantageous if the serviced share of market is small. In this case, an alternative can be a close cooperation with a thirdparty logistics providers and thus benefits provided from the established distribution and management possibilities. The same-day delivery service model is viable only in those geographical zones where online stores have warehousesclose to consumer market. The main condition to fulfil this method of delivery is inventory management at the particular distance from the consumer in order to deliver products on the very same day if desired. Critical conditions for the provision of this service: 1. Inventory to be delivered on the same day has to be as close as to reach the consumer who is in the geographical zone in which this service is provided. 2. Consumer has to be in the geographical zone, in which this service is provided. To design the same-day delivery model, it is important to distinguish the processes of the Supply Chain in which certain decisions have to be made enabling to implement this model for the consumers (fig. 4.6).

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Figure 4.6. Decisions making stages in the process of the same-day delivery service design The launch of the new delivery service, where goods are delivered to the consumer right after an order is placed, starts from the e-service providers„decisionto have this type of supply and distribution network. In the first stage of the launch, managers must decide upon the required elements of the Supply Chain, i.e.: • selection of the warehouse; • selection of the supplier; Warehouse assessment criteria are associated with: 1. Geographic location. 2. Flexibility of operational processes: • order picking at the item level; • time taken to collect and pack the product; • order consolidation operations, i.e. the time and volume of orders that warehouse may service; • sortation possibilities of orders in accordance with recipients and zip codes; • flexibility and adaption possibilities of the warehouse designed for consumer„s order picking; items requiring the same day delivery are to be packed and prepared for shipping in the priority order. 154

• Levels of the warehouse automation depending on the the speed of the above mentioned characteristics. 3. Flexibility of the maintenance processes: • product marking and data-entry on the product location in order to ensure the smooth collection process; • storage capacity as it greatly impacts the level of assortment that e-service providers can maintain and offer to the consumer; • operation management, that ensures correspondent levels of products in the warehouse and provides real-time information. Supplier assessment criteria are linked to inventory and its diversity support processes to ensure product accessibility: • geographic location of the inventory managed by the supplier as it depends on time taken to provide products to consumers; • possibility to combine order quantities depending on inventory levels in the warehouse; • time taken for the supplier to process an order on behalf of eservice providers; • collaboration to select assortment diversity that would be marketable to the end-user. The second stage of the launch of the same-day delivery service is related to connecting of network elements by employing transportation services to cover geographic distances. The following two transportation stages are distinguished: 1. From the supplier to the fulfilment centre. This transportation stage is directly linked to the process of inventory maintenance. The required transportation services must provide the following flexible solutions: • carriage of full or partial loads depending on geographic location of the suppliers„ inventory; • product consolidation possibilities in carrying different loads from different suppliers; • time taken to carry full or partial loads depending on geographic location of the suppliers„ inventory; • time taken to respond to transportation service requests and how quick the pick-up of the cargo from the supplier is arranged; • time taken to respond to changing quantities of the cargo; • safe cargo transportation; • costs for different quantities of cargo transportation; 2. Transportation from the warehouse to the consumer. This stage of transportation is directly linked to operational processes designed for 155

delivery of orders to the consumer. The required transportation services from the “last mile” to the end-user must provide the following flexible solutions: • adjustment to collecting diverse amounts of cargo; • geographic possibilities, i.e. how long one vehicle designed to implement „last mile“ to the end-user may cover certain distances to deliver cargo on the same day. • time taken to respond to the orders of transportation services designed for cargo delivery on the same day. The third stage of the launch of the same-day delivery service is related totransportation process: supplier – warehouse. The most important decisions in this stage are associated with questions on who is to execute the supply process to the warehouse. 1. This is implemented by e-service providers. It is necessary to assess whether a vehicle fleet complies with aforementioned assessment criteria and may adapt to diverse amounts and volumes of cargo and distances.If product demands and transportation volumes are uneven and suppliers„inventory is located in different geographic locations, thus, to own a vehicle fleet might be economically disadvantageous. 2. This is implemented by 3PL service provider. Online store may search for partners that possess necessary resources to implement transportation process by selecting the most beneficial variant. Solutions related to transportation process: warehouse – end user. The most important decisions in this stage are associated with questions on who is to execute the supply process to the user. 1. Transportation process „last mile“ to the end-user is implemented by e-service provider. Online store owns vehicle fleet that is suitable for transportation of small items. To own a vehicle fleet might be economically disadvantageous due to the prevalence of the consumers in geographic zone, small value and uneven quantities of orders. 2. „Last mile“ process is carried out by a courier service engaged in delivery of the small parcels. It is beneficial, as this service already have a developed and suitable system in distribution network. The application of established model in case of Lithuania e-shop located in Vilnius (company prefers to remain anonymous) has indicated that development of this service has boundary conditions, i.e. inventory is stored and order fulfilment process must be carried-out in the very same geographic zone in which the consumers are located. E-service providers must make decisions related to selecting managers of the supply chain and its networks in order for distribution network to be 156

suitable for the same-day delivery service. Model Approbation in Vilnius city have shown, that the same-day delivery in distribution network should alter the order fulfilment process as the separate lines of orders are to be created of which one is allocated for standard delivery and the other one – for the same-day delivery in Vilnius city. The time for order delivery is shortened, however, should the number of orders is low, the delivery costs increase approximately 3 times. References 1. Baud-Lavigne, B., Bassetto, S., Agard, B. (2014). A method for a robust optimization of joint product and supply chain design. Journal of Intelligent Manufacturing. pp 1-9 2. Benavides, L., Eskinazis, V. Swan, D. (2012). Six steps to successful supply chain collaboration. Supply Chain Quarterly, Issue 2. 3. Coy, S. (2011). Creating and Embedding a Customer Driven Supply Chain. BearingPoint. 8 p. 4. Goldsby, T. J., Griffis, S. E. Roath, A. S. (2006).Modelling lean, agile, and leagile supply chain strategies. Journal of Business Logistics, Vol. 27, pp. 57–80. 5. Graves, B. J. (2014). Maximizing Productivity in E-commerce Warehousing and Distribution Operations. Via internet: http://www.inboundlogistics.com/cms/article/max 6. Harsono, A. (2014). The impact of e-commerce in supply chain management at Dell inc. Journal of Multidisciplinary Engineering Science and Technology. Vol. 1, Issue 3, pp. 11-18. 7. Qrunfleh, S., Tarafdar, M. (2013). Lean and agile supply chain strategies and supply chain responsiveness: the role of strategic supplier partnership and postponement. Supply Chain Management: an International Journal. Vol. 18, Issue 6, pp. 571 – 582. 8. The Global Supply Chain Institute. (2013). Game-changing trends in supply chain. First Annual Report by the Supply Chain Management Faculty at the University of Tennessee. 54 p.

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Chapter 5 INNOVATIVE APPROACHES TO FORMATION OF THE RESOURCE POTENTIAL

Dodonov Оleg PhD in Economic Sciences, Senior Researcher Potoyalo Yana Polotsk State University Republic Belarus

THE MEANING OF INNOVATIONS IN THE DEVELOPMENT OF LOGISTICS SYSTEMS

The current stage of the development of the Republic of Belarus (then - RB) is characterized by the strategic reference point for the innovative development of all areas of national economy, which requires rethinking of logistics role and meaning. At the same time in the basic regulatory documents of the economic development of the Republic of Belarus (Law of 10.07.2012, № 425-L «About state innovation policy and innovation activities in the Republic of Belarus» and Law of the Republic of Belarus of 19.01. 1993 № 2105XII «About the foundations of the state scientific policy»; the state program of innovative development of the Republic of Belarus for 20112015, and the technological development Strategy of the Republic of Belarus up to 2015 period) the role of the logistics system is not fully realized as subsystems of the national economy in which the processes of exchange of goods and trade flows are intensified. The practical problem is also connected with a realization of the meaning of innovations for the development of logistics systems which is not recognizable in full during the description of their essence by scientists. For the development of the logistics system (then – LS) the implementation of innovations that are aimed at the effective product distribution management in each section of the logistical chain is needed. It will provide improving of streaming processes for effectiveness and competitiveness of enterprises achieving. The implementation of innovations as a means of achieving this aim 158

is complicated because logistics is a relatively young science, in comparison, for example, with marketing. Many questions relating to its conceptual apparatus and terminology are very changeable and constantly supplemented with new content. For solving particular scientific problems it is necessary: first – to examine the essence of LS and its subsystem elements; second – to systemize the existing approaches to the classification of the key concepts which are used in logistics for substantiation and formation of LS at various levels of the national economy and, most of all, at the level of enterprises that is very relevant; third – to determine the place and role of innovations according to their type in LS, in general, and in each of its subsystems. According to its essence, LS is one of the most complicated social and economic systems made by man. The complexity is connected with the fact that the LS has both economic and social essences as it consists of social and economic units (subsystem elements), which are interconnected in a common management process of material and attendant streams, operating logistic functions, and are connected with external environment. Summarizing the material which is presented in logistics sources, it is possible to distinguish main subsystems of LS: - purchase, production facilities; - resources; - transport; - production; - distribution; - marketing; - information; - personnel staff; - service; - finance. At the same time, such an approach to the emphasizing of major subsystems LS collides with the understanding of the conceptual foundations of its management. According to such a classification, the structural elements, which influence the logistics processes, are not distinguished. The realization of this methodological problem leads to the necessity of LS subsystems improvement with structural elements and processes distinguishing in it which the influence of those elements is aimed at. Thus, LS subsystems are divided into structural elements and processes. It is presented in table 5.1. Obviously, the most important subsystems-processes are aimed at the LS formation, functioning and development. At the same time, it is not possible to organize even one of those processes without the formation of subsystem-structural elements. However, the given characteristic of subsystems makes it possible to assert that there are presuppositions in each of them which form and develop the system, as a whole. These preconditions are formed 159

Table 5.1 The classification of LS subsystems with structural elements and processes distinguishing Subsystem Personnel staff

Finance

Information Transport

Production facilities

Resources

Purchase Production

Distribution

Marketing

Service

The brief description of LS subsystem Subsystems are structural elements The most important subsystem, which influences the functioning of all logistics operations and provides with purposeful activity of the logistics system, in general, because it has a very valuable resource – personnel staff, that is capable of productive work. It is a management and plan system of financial flows based on the information and data about the organization of material flows; it performs the number of important functions aimed at the ensuring, accounting and coordination movement of resources in logistics processes. It supports the information link between all LS subsystems simultaneously carrying out control and management function. It connects particular elements of the logistics system (purchasing, storage facilities, resources, production, marketing) using transport process, ensuring both the regularity and timeliness of its functioning. It is represented by storage areas in the form of buildings, constructers, areas and also necessary technical means for transition of material flow "storage area"; the main purpose is connected with placement and storage of the material flow, converted into reserves, its processing in the storage and organization of required "format" for more convenient transportation. "Circulatory" subsystem is an indicator of LS vitality, which guarantees its high adaptability to the changing market environment and is characterized by high costs. In general, it influences LS effectiveness, depending on the relevant value of resources. Subsystems are processes It provides the logistics system with a material flow in the form of raw materials and other resources directly from the original source. It provides the transformation (processing) of the incoming material flow into output, which is relevant in the market, with minimum cost and required quality. It provides an outflow of material flow from the subsystem of production and its delivery through logistic channels and also chains with minimum cost. It provides timely sales of finished products for customers with the accompanying logistics services in the right place at the appointed time; the subsystem, integrated with marketing. It provides a range of services which are carried out in the process of ordering, production, purchase, delivery and further product servicing.

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according to the aims of separate system functioning, which can be achieved during the solution of the system tasks. In general, the goal achievement of the separate subsystem functioning due to the solution of particular objectives create economic and social conditions for LS formation and development. To determine the meaning of innovation in LS, in general, it is necessary to find in its definition those processes which allow to develop the system due to implementation of innovations in each subsystem. In the Programme of logistics system development of the Republic of Belarus up to 2015 (confirmed by the Soviet of Ministers of the Republic of Belarus of 29.08.2008 N 1249) LS is regarded as a complicated completed (structured) economic system which consists of the elements-links (transport-, wholesale and logistic centers), interconnected and interacting through the information exchange of information in order to achieve the effective chain management of goods and cargo delivery with the participation of Republic and local authorities, interested organizations which have transport, storage, forwarding, information, financial, certified, insurance and production structures [1]. In the project of the Concept of the State LS Development Programme of the Republic of Belarus for 2016-2020 the logistics system is regarded as a complex completed, structured economic system, which consists of transport (transport-, wholesale and logistic centers), interconnected objects on the territory of the Republic of Belarus and organizations which transport, storage, forwarding, information, financial, certified, insurance and production structures, interacting through the information exchange for the effective management of goods movement in the Republic of Belarus [3]. In the project of the Law of the Republic of Belarus «About the logistic activities» of 2012 LS is represented as a complex, dynamic control system, which is aimed at the carrying out of good circulation for timely provision of the economy and the population's needs with goods and products of industrial purpose at the least cost [4] . If there is no unified understanding of LS, it is possible to distinguish structural elements and processes in each definition. In such processes the innovations of a specific type, which have a priority meaning for a separate subsystem, must be applied. According to LS subsystem division into structural elements and processes the equation of this approach is logical with such a classified 161

feature of the division into kinds as an innovation type which is connected with an innovative enterprise: the innovation division into food, resource and process [5]. In that case, it is possible to say that four of five subsystems-processes of LS the process innovations on the stage of purchase, distribution, marketing and service have a priority meaning. At the same time the «production» subsystems have production innovations. The resource innovations are priority for «building blocks» LS subsystems. Their implementation will allow to increase the rationality of resource using and to achieve the aim of each LS subsystem development which are concluded in: innovations in staffing strategy of the enterprise (subsystem "personnel"); innovations in the rationalization of financial resources using (subsystem "finance"); innovations in LS information support (subsystem "information"); innovations in increasing of the capacity of LS transport support (subsystem "transport"); innovations in goods and resources storage (subsystem "storage facilities"); innovations in resource optimization (subsystem "resources"). Schematically, the dependence can be represented in the form of the innovation classification system for LS subsystems in the following way (fig. 5.1). The developed classification allows to distinguish the fifteenth classification feature of innovative enterprises (organizations) coding for the automation of their information search, accounting and analysis of innovative activity at the level of the national economy fields and on a global scale. The difference, in that case, is connected with the fact that the coding subject is directly related to LS. On the basis of the developed classification through the implementation of certain types of innovations it is possible to ensure the innovative LS development at any level. This approach represents a practical significance of the proposed classification. Starting from the definition of innovation interpreted by the Law of the Republic of Belarus of 10.07.2012, № 425-Z «About state innovation policy and innovation activities in the Republic of Belarus» as «a new or improved product, technology or new service, technical decision of production, administrative, commercial type which is introduced into civil circulation or used for own needs [6]. 162

Food

INNOVATIONS

Process

Resource

«Purchase»

«Production»

«Personnel staff» «Finance» «Information»

«Distribution» «Marketing» «Service»

«Storage»

industrial

«Resources»

purchasing distributive

LS SUBSYSTEMS

sale service

personnel

financial

information

storage

NEW TYPE OF LS INNOVATION DEVELOPMENT

Figure 5.1. Classification of innovation logistics system (LS) According to the characteristics of LS subsystems (table 5.1), the following description of new innovation types which ensure innovative development of each LS subsystem (table 5.2) is given. The developed classification and offered characterization of new types of LS innovation directly provides innovative system development through its subsystem elements. At the same time, the innovations create economic conditions coming out of the tasks that must be solved in each of LS subsystems. This approach allows to solve the problems in each of LS subsystems through the implementation of innovations. Thus, the potential possibilities which LS has for its development, are increasing. The tasks are also being solved in each subsystem for removal of «narrow spaces» in LS. It allows to create the real assumptions for its innovation development. 163

Table 5.2 Characteristics of the new types of LS innovations A new type of innovation Staffing

Financial

Information Transport Storage

Purchasing Production

Distributive Marketing Service

Brief description of innovation type in LS subsystem Innovations in personnel work (labor force) aimed at the development of motivation of productive work for LS development. Innovations aimed at financial flows rationalization in LS, accounting and coordination of financial resources movement in logistics processes. Innovations for optimization of information connection between all LS subsystem. Innovations aimed at reduce of purchasing time, production and distribution including the transport support of LS processes. Innovations for rational storage of goods in storage areas, their movement and processing, optimization of storage facilities and resources. Innovations during the process of purchasing of raw staff, materials and other resources directly from the source. Innovations in the process of production, transformation of entering material flow of LS into products, which are relevant in the market, with minimum costs and required quality. Innovations in the process of the material flow coming out from LS and its distribution with minimum costs to consumers. Innovations in the process of realization of finished products to consumers. Innovations during the process of package of services providing after the realization of finished products to consumer.

References 1. Программа развития логистической системы Республики Беларусь на период до 2015 года / утверждена Постановлением Совета Министров Республики Беларусь от 29 августа 2008 г. N 1249. 2. Государственный Стандарт Республики Беларусь СТБ 23062013 «Услуги логистические: общие требования и процедура сертификации» от 29.01.2013 № 7, введенного в действие с 01.11.2013 г. – Минск: Изд-во «Госстандарт», 2013. – 10 с. 3. Проект Концепции Государственной программы развития логистической системы Республики Беларусь на 2016 – 2020 годы. – Мн.: БелНИИТ «Трнастехника» Министерства транспорта и коммуникаций Республики Беларусь, 2015. – 20 с. 164

4. Проект Закона Республики Беларусь «О логистической деятельности» от 2012 г. – Мн.: Министерство транспорта и коммуникаций Республики Беларусь, 2012. – 41 с. 5. Гершман М.А. Инновационный менеджмент. — М.: Маркет ДС, 2008. — 200 с. 6. Закон Республики Беларусь от 10.07.2012 г. № 425-З «О государственной инновационной политике и инновационной деятельности в Республике Беларусь».

Dr. Miszczak Katarzyna Assist. Prof., Department of Spatial Economy and Local Government Administration, Faculty of Economic Sciences, Wroclaw University of Economics Poland

SOCIAL INNOVATION FOR COMMUNES ON THE EXAMPLE OF „NEMO CREATIVITY STATION‟ PROJECT1

1. Introduction Social innovations due to their interdisciplinary character become part of a new paradigm, which are open ones [Wyrwa 2015]. It is mainly a bottom-up process, largely spontaneous, without imposing how it should look for „top-down factors‟ (government, politicians, central institutions, etc.). More effective way to support the development of social innovations seem to be indirect actions, involving the creation of a good climate for innovativeness, entrepreneurship and creativity. The example of such activities dedicated to the networking of cooperation between science and business and consequently to improving the quality 1

Project titled „NEMO Creativity Station – Social Innovation for Communes‟ was realized by the Author in partnership with the Nexus New Technologies SA company, financed by Urban Program of Support for Cooperation of Higher Education and Science with Economic Activity Sector „Mozart‟ – partnership of science and business (2014/15 edition) on the basis of the regulation issued by the President of Wroclaw and the Act no. XXIX/652/12 of Wroclaw City Council of 5 th July 2012. In the article there were used internal source materials of Nexus New Technologies SA company.

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of local space is the Municipal Cooperation Programme Support Higher Education and Science and the Sector of Economic Activity „Mozart buisiness-science partnerships‟ [Wrocław Academic Hub 2015]. „Mozart‟ is a city programme (approved by the Wrocław City Council) which aims to activate the local labour market and support job creation by connecting business and science and strengthen transfer of knowledge between these sectors. Established within Programme partnerships bring tangible, mutual benefits. Scientist gets a unique opportunity to deepen his previously acquired knowledge on practical experience, and then to adapt the results of cooperation in his research, teaching and organizational activities carried out at the university. In return, the scientist offers a transfer of economic knowledge to company in order to improve the functioning business model by increasing the effectiveness of company‟s communication and development actions and simultaneously sales. All the operations undertaken in partnership project, except for the effects described above are intended to support Wrocław labour market by enabling companies to access the intellectual potential of scientists. 2. Social innovations and creativity in local societies In the twenty-first century the most will succeed the economies and societies that will be creative. Therefore, in areas where dynamic and mobile operators organize themselves into networks, so as to with the support of high-tech solutions produce/promote innovative products, while respecting the principles of sustainable development, should be taken up as soon as possible measures to identify potential and ways to support the creative sector, social innovations and clusters. All these three determinants are seen as a precursor to new economic forms and catalyst (driver) of development of socio-economic space of city/municipality in which these entities operate. The activities should be supported by using modern tools of Strategic Policy Intelligence [Miszczak 2010], which will facilitate the implementation of an aggressive strategy supply. Spatial units, where favorable conditions for the development of creative industries, network organizations and mature innovation systems will be created are likely to change (increase) their positions in an inclusive milieu. However for this purpose, it is necessary the actual involvement of all stakeholders of the business, as well as knowledge of the latest trends. Hence the need to prepare a comprehensive and innovative service offerings that will ensure success 166

in overcoming potential problems and in achieving the objectives set out in the development strategies of Polish communes. These activities, supported by the work of entrepreneurs, scientists, architects and local authorities, should clearly contribute to the liberation of a greater potential for innovations and creativity among local societies, and consequently improve the quality of their labour markets and promote the principle of social inclusion. Compass of changes in the economy and society, aiming to maintain the quality of the environment and provide opportunities for future generations, through the efficient use of resources and responsible consumption is the concept of sustainable development [http://www.eko-gminy.pl]. The concept should be implemented both at the global, European, national and, perhaps first of all, local level and related to all entities affecting the milieu - both businesses, public administration, local governments, local communities and individual consumers. As an example would be gradually introduced within the framework of EU directives 3x20%, requirement of clean energy houses/facilities will result in better living conditions (less pollution, lower costs) in the future. Additional satisfaction for the potential user of or eco- or smart- object is the ability to produce its own energy within such a facility or even the production for others. The significance of innovations for economic and social development is indisputable, however this progress should concern increase of effectiveness both economic and social or ecological achievable through eco-innovations. These technical, planning, organizational or social solutions can be implemented in all types of territorial units, organizations and activities. However, especially the areas, which by their nature, scope or scale have a significant impact on the environment, should be of interest to social, eco-innovation thinking. This applies to such areas as education, public utilities, local government policy, public management and the entire sphere of public services. Hence the proposition of „NEMO Creativity Station‟ project filling the needs of local community and allows for increasing the effectiveness of local governmental management. Moreover educational actions and network cooperation within the project are factors in the dissemination of knowledge about social innovations. It is not enough for the contemporary human to have once gained skills and competences to maintain the attractiveness on the labour market and be able to adapt to the changing economic conditions. Every one of us has to be ready to attend next lessons which requires elastic, open mind. This openness 167

shall be shaped starting from the very first years of life and the lowest education levels. Benchmark in this regard could be Singapore, which is not having rich natural resources, steadily expanding its global competitive advantage and occupies high positions in prestigious rankings for innovativeness thanks to modern, integrated and highly effective education system. Science and education are priorities in economic policy of Singapore, which are dedicating more and more resources (e.g. free internet for each inhabitant tax-financed) and continuously improving teaching methods based on effective meritocracy and competition. It is also worth noticing that the current processes of learning take place in various places – at home, during practicing sports, entertainment and having fun – the school has lost the monopolistic position in this regard. That means it is necessary to create new mechanisms and forms of education that better correspond to the needs, as well as the possibilities of modern children and youth. The perfect place to equip students not only with knowledge, but rather skills of self-improvement (physically and mentally), skills of finding the information and interpreting it, cooperation in team and critical thinking – would be the „NEMO Station‟, providing that the forge of welleducated young generation and the incubator of creative workers for whom searching for innovations will be a natural need, not a transcending beyond the common (imposed) standards. 3. „NEMO Creativity Station‟ – idea, object, aims, results, strategy management and financing model of the project The project called „NEMO Creativity Station – Social Innovation for Communes‟ is a proposition filling the needs of local society and allowing for raising the effectiveness of self-governmental management. Educational activities and network cooperation planned within the project realization are factors of spreading knowledge about social innovations. The idea of the project „NEMO Creativity Station‟ is taking the young generation from hands of hopelessness, filling their time with safe, pleasant and useful activities during the time when the parents are at work. So it is worth to change the dull bus stop for an innovative „NEMO Station‟, where they will be able to safely play, learn and be raised. Their leisure time shall be filled with sport activities to develop the curiousness for the world and give them a chance to realize their passions [Nexus 2015]. 168

Moreover, „NEMO Creativity Station‟ is an innovative program on the scale of Poland, with its idea allowing to utilize talent and energy of children and teenagers in the fields of sport, culture, recreation and their hobbies. In addition, the object which is one of the project‟s products has a chance to be used for many other purposes and by a wide spectrum of users, thanks to which representatives of various social groups can benefit of it, too. For those who are unemployed, „NEMO Station‟ is a chance to find new job. It is also a place for: appropriate development of children and youth (by providing them with modern sport infrastructure, especially swimming section); fight with diseases of affluence; build relations in young society in the spirit of sport and culture; integration of youth with disabled peers; be raised according to the sport culture; shape and strengthen creative and entrepreneurship attitudes (thanks to multimedia common-rooms, interesting educational workshops and lectures). Determinants associated with the development of the creative sector, new technologies and spatial economic networks also fall within the definition of the concept of „NEMO Creativity Station‟, which would be built in Polish communes and would offer services defined by the European Commission [European Commission, 2011] as particular components of creative sector whether within creative industries (e.g. artistic activity, music and entertainment, film, photography, artistic crafts, fashion design) or within knowledge intensive industries (e.g. information and communication technologies - ICT). Locations of NEMO stations should include problematic areas of big cities (including suburban districts) and territories with harder access to such kind of objects. Within the project there is an idea to create modular, architecturally simple sport-recreational-cultural object without any design whims that could consist of: swimming pool of different sizes, gymnastic halls (optionally with audience), multimedia common-room, small centre of SPA and rehabilitation, the back office and microincubator of entrepreneurship. By definition, this building is to be energy saving or having passive way of utilizing recycled sources of energy. It is designed in the extent of low-budget and low-cost object. The modularity of the building enables each commune to choose elements that suit it by size, price, functions etc., adjusting it to its needs. Object has one verified, simple project that can be applied on the commune territories, simultaneously limiting the costs of each acceptation and verification [Nexus 2015]. Strategic aim of the project is the improvement of the children and 169

teenagers‟ life standard (as well as other social groups) in communes by the activity of „NEMO Creativity Station‟ and the promotion of physically and mentally healthy lifestyle. Detailed objectives are: extending the educational and sport offer of the commune, promotion of tourism attractiveness of the commune, creating positive image of the commune by elaborating and developing innovative system of culturalrecreational service system, support for local small and medium enterprises and creating new work places [Empirium 2015]. The results of the project for each of the target groups were identified in six spheres: social, economic, technological, educational, ecologic, health. To the social benefits coming from the implementation of the service we can include: prevention of addictions, change of attitudes and beliefs, elimination of the phenomenon of being socially excluded, promotion of the role of the family, support in creating innovative solutions, development of skills and talents. To the economic benefits without a doubt we can include: improvement of competences, education of inhabitants and their adaptation skills to market changes, development of innovativeness and competitiveness of the economy, improvement of the space attractiveness, modernization of local labour market and increase of resource utilization effectiveness. On the other hand, to results in the area of technology it is worth to mention the advanced systems of: vertical and horizontal termoisolation, spray applied hydroisolation and acquisition of renewable energy sources using steered photovoltaic cells, thermal collectors and wind turbines. The aforementioned results determine other ones, referring to the ecological education, i.e.: enriching the knowledge in terms of designing and the landscape architecture, improving the quality of conditions of natural environment. Educational benefits for potential „NEMO Station‟ users are most of all the realization of integrated programs (knowledge, skills and attitudes) and the rich offer of developmental trainings. Further, the health benefits connected with efficient implementation of the „NEMO Station‟ are very diversified, with exemplary ones: rehabilitation of sick and disabled, prevention of diseases or preventive programs „Work-Life Balance‟ [Empirium 2015]. It is worth to underline that the management strategy of the „NEMO Creativity Station‟ project including the international criteria of effectiveness of managing projects uses the method of collaborative planning. In relation to the aforementioned, in the project actions many actors are involved: (Capital group in which the Nexus New Technologies SA is operating; Innovation Plus Centre European 170

Association; architectural office; marketing, training and PR workshops; green infrastructure management workshops; Wroclaw University of Economics) having rich experience and qualified knowledge necessary for optimal preparation, realization and implementation of the integrated social innovation. The offer of „NEMO Station‟ is complex and provides the potential recipients with solutions in terms of possibility of financing the investment. Design-Build-Finance model (fig. 5.2) is suggested here, in terms of which the financing of the own input takes places in a form of liability buyout with the prolonged deadline of payment [Nexus 2015]. The project group, having qualified HR resources, moreover offers its help for the commune in applying for financial sources, both national and foreign. 4. Conclusion In the dynamically changing reality, the societies and the organizations face new problems, the resolution of which requires acquiring new competences. Moving to creative, learning economy makes various entities (including communes) face hard challenges. As an answer for them in the transforming environment, new organizational forms ought to be created, with more effective structures of flat organizations based on decentralization, multidirectional communication, networking and innovations, in particular the social ones [Miszczak 2012]. That kind of innovation (milieux of social innovation) plays a crucial role in the modern development, including the changes that are taking place in the functional structure of intelligent units. Using social innovations that on the one hand are absorbed by a specific spatial-economic setting, and on the other are diffused, altogether allows to make the economic activity more modern, reduce the costs of production and increase the effectiveness, as well as introduce new products create earlier inexistent demand to the market. An appropriate relation in these processes supports the intensification of benchlearning process, which in turn strengthens the potential of a given subject and its position on international arena [Nicholls, Murdock 2012]. The „NEMO Creativity Station‟ project allows efficiently to manage the social change by: attractive educational offer (multimedia commonrooms, interesting educational workshops and lectures), innovative technological solutions, complex health care, conscious use of public space, evolutionary ecologic attitude, strengthening the local 171

172

Source: Own elaboration

Figure 5.2. Design-Build-Finance model

entrepreneurship (microincubator for small and medium enterprises), shaping and strengthening the creative attitudes (forge of creative talents) as well as social and business integration. Moreover, functioning of „NEMO Creativity Station‟ is adjusted to the European Union directive 3x20% and enables the realization of at least one of the five headline targets set out in the strategic document „Europe 2020 - A strategy for smart, sustainable and inclusive growth' and defined as 'promoting social inclusion, especially by reducing poverty, with the aim of rising out of poverty or social exclusion 20 million citizens' [Europa 2020]. References 1. Empirium-Group Sp. Z O.O., (2015), Internal source materials of the company, Wrocław. 2. ‗Europa 2020 – Strategia na rzecz inteligentnego i zrównoważonego rozwoju sprzyjającego włączeniu społecznemu‘, [Electronic resource]. Available from: http://www.mg.gov.pl/files/upload/8418/Strategia%20Europa%20 2020.pdf 3. European Commission, (2011), Creative Europe - A new framework programme for the cultural and creative sectors (2014-2020), European Commission, Brussels. 4. http://www.eko-gminy.pl 5. Miszczak K., (2010), Strategic Policy Intelligence tools in management of European regions, The Journal of Regional Development and Planning, Miloslav Ńańek (Ed.), The Faculty of Social and Economic Studies, University of J.E. Purkyně in Ústí nad Labem, Czech Republic, vol. 2, no. 2, pp. 199-204. 6. Miszczak K., (2012), Dylematy rozwoju regionu ekonomicznego w świetle wyzwań XXI wieku, University of Economics, Wrocław. 7. Nexus Nowe Technologie SA, 2015, Internal source materials of the company, Wrocław. 8. Nicholls A., Murdock A., (2012), Social Innovation: Blurring Boundaries to Reconfigure Markets, Palgrave Macmillan, London. 9. Wrocław Academic Hub, (2015), [Electronic resource]. Available from: http://www.wca.wroc.pl/ 10. Wyrwa J., (2015), Innowacje społeczne w teorii i praktyce, Polskie Wydawnictwo Ekonomiczne, Warszawa.

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Poór József Professor, DSc., Szent István University, Gödöllő, Hungary Juhász Timea Freelancer, Budapest, Hungary Madarász Imre Assoc. Professor, PhD., Szent István University, Gödöllő, Hungary Horbulák Zsolt Assis. Professor, PhD, Alexander Dubček University of Trenčín, Trenčín, Slovakia Szabó Ingrid Regional Development Agency, Komárno, Slovakia Antalik Imrich Assis. Professor, PhD, J. Selye University, Komárno, Slovakia Ildikó Éva Kovács Engeneer, Szent István University, Gödöllő, Hungary Dús Miklós Assis. Professor, PhD, Szent István University, Gödöllő, Hungary Tőzsér Györgyi Gábrielné Szent István University, Gödöllő, Hungary Vinogradov Szergej Assoc. Professor, PhD, Szent István University, Gödöllő, Hungary Kollár Csaba Assoc. Professor, PhD, Szent István University, Gödöllő, Hungary

TRENDS AND TENDENCIES OF ATYPICAL EMPLOYMENT AMONG HUNGARIAN AND SLOVAK UNEMPLOYED PEOPLE IN LIGHT OF EMPIRICAL RESEARCHES

Summary: Employment is today one of the crucial questions, since the crisis started in 2008, its impulses expressed their impacts among others in the 174

labour market. A series of job losses and cost reductions induced greater rationalization and flexibility of employment. One of the features of that is the fact that the perception of atypical employment has recently undergone a transformation. The figures of the Hungarian Central Statistical Office show, inter alia, that these forms of employment are increasingly in the focus of interest of employers and areas of application are broadened, furthermore their frequency increases. Similarly to the employer, the workers will see new perspectives in atypical solutions, but of course the question is how the employees' attitudes are formed and how these opportunities determine expansion. This study summarizes the partial results of a research carried out in the past few years. The study, based on a survey conducted among the unemployed basically examined attitudes of this social group towards atypical forms. The research was conducted in two countries simultaneously, namely in Slovakia and Hungary, and provided the opportunity to discuss the issue from different angles. The current specification is for examining whether there is a difference between the opinions of the Slovak and Hungarian unemployed in regard to atypical work. 1. Summary of the literature The Hungarian literature of atypical – non-traditional forms of employment can be regarded as relatively rich. Already in the nineties appeared some studies on the concept clarification and interpretation – including Laky (1998) and Frey (2000), and in the next few years, economists analysed the possibilities and limits of the spread of atypical forms. Publications of the last decade examined the opportunities of atypical work from the perspective of employment policies. Laky (2002), Frey (2000) and Seres (2010) presented the international experience and benefits of atypical employment and stressed the need for its spread. Looking at the labour market effects of atypical work Köllõ – Vince (1999) and Scharle (2000) found that in addition to the increase in unemployment in the new forms did not appear to be an alternative to jobs, and the dissemination of atypical forms of employment was a relatively slow process. Structure and spread of atypical employment are excellently presented by Hárs in his study which covers two decades (2012) and presents besides the summary of the international and national literature as well as a concept description the results of research on the impacts of participation in atypical work 175

on households and regional characteristics. Teréz Laky (2000), provides a brief economic-historical overview of the continuous change of employment, defines the various forms of atypical employment, points out the international differences, describes the conditions of the dissemination of each single form in Hungary. In recent years, several studies have examined the spread and role of non-standard forms of employment in the labour market. The Research of the Department of Sociology and Social Policy of the University of Debrecen, (Rév, 2010) was carried out in the service sector. Ékes (2009), analysed part-time, fixed-term contracts, as well as the incidence of self-employment forms in Hungary and the European Union and attempted to outline the future of atypical employment. Atypical work, but more flexible forms of employment have attracted the interest of Slovak economists as well. Not just theoretical writings, but research results have also been published on the issue. This topic appeared in literature for the first time in 1992, when the attention was called to the psychological context of atypical employment (Zelmanov 1992a), respectively, this time it was done in social context (Zelmanov 1992b). Then, for a long time the problem occurred rarely. A paper mentioned the specifics of agricultural employment (Buchta, 1994) another one dealt with atypical employment contracts (Barancová 1998). In 2005 a study was born on trends in Slovakia. (Hanzelová, E. – Kostolná, Z. – Reichová, D) The real breakthrough, however, comes from the 2010‟s. Scientific papers appear on the legal background of the shared workplace (Mičudová 2011), and on the shared workplace itself (Mičudová, 2013), on working conditions of the typical and atypical jobs and on the significance of flexible work (Grenčíková – Španková, 2014). Conferences are also devoted to the problem (Factors of making the workplace more flexible in Slovakia from the perspective of the family and integration into the social system, Banska Bystrica 2014). Relevant presentations are also given on other conferences, which examined the atypical employment relationships (Bačišín, 2013) or atypical forms of employment and social security relations among others. (Macková 2014) There are instances for the analysis of the theme in terms of the regional employment. (Pšenková 2014) 1. Presentation of the research 1.1. Sample

176

As already mentioned, the research was carried out last year. The interviews took place in Hungary in the Offices of the Central Transdanubian Regional Employment Service in Komárom and Esztergom, while in Slovakia in the offices of the Labour- and Social Affairs and Family Centre in Komarno and Sturovo. The reasons for the choice of the place were that people in the study (the unemployed) are concentrated in large numbers in these areas. Another reason for the choice of the place of the examination was that the questionnaires were to fill out by individuals living certainly in the area whereas the local Labour Centres register the unemployed according to their residence. On the structure of the questionnaire can be said that it basically consisted of closed questions based on nominal and metric scales. The questionnaires were filled out on paper, and the data were subsequently processed by using SPSS and Excel format. The evaluation methods were typically univariate and multivariate tests, including frequency, average, standard deviation, and cross-table analysis, independent sample T-test, factor -and cluster investigations. The current study focused on proving the following hypothesis: Presumably, Slovak and Hungarian unemployed in the sample, typically representing different attitudes of atypical forms of perception and this influences their decisions regarding the acceptance of atypical employment opportunities. The research involved 689 people attended, but actually those who declared themselves unemployed (i.e. those who were at the moment of the research not working), were only 279 people, so this sample number was used in the evaluation. The current sample cannot be regarded to be representative because of its numerousness, either. 1.2. Research results From the 279 respondents there were 133 Slovak, while 146 people Hungarians, so the proportion of participants of two countries were relatively close to each other (47.7 and 52.3). In terms of gender, 38.7% of men and 61.3% of women participated in the study that means the proportion of women was more than one and a half times more compared to men. According to the age of 30 years of age to 35.4% in the 30's age group, 27.8%, and then 40 years of age, 36.8% were in the research. On the basis of marital status the highest proportion of single people and married people were represented, the former rate of 38.2%, while 177

33.1% of the latter, however, had the lowest proportion of widows at 1.5%. Based on the educational attainment in the sample 25.2% is the proportion of basic qualification holders, 28.1% of those with secondary education without maturity diploma, 32.5% of maturity diploma holders, while 14.2% of university graduates. Regarding the previous jobs the respondents had to provide where they previously worked. The table below shows the previous employments: Table 5.3 Previous employments Previous employment Day labourer Top manager Lower-level leadership Mid-level manager Casual worker Individual contractor Public employment Unskilled worker Skilled worker Subordinate staff Altogether Missing Total Source: Authors‘ own research

Number/Head 3 4 7 9 14 16 16 40 40 108 257 22 279

% 1.2 1.6 2.7 3.5 5.4 6.2 6.2 15.6 15.6 42.0 100.0

The above figures show well that a very small % of the respondents were employed in top manager positions and the same refers to day labourers as well, while the respondents worked in largest proportion as employees before losing their jobs. 60.3% of the respondents had heard of atypical employment opportunities. The investigation revealed that in this aspect there was a significant difference between the Slovak and Hungarian respondents, i.e. according to Pearson's Chi-Square: 11.352 df :1: sign: , 001, p 0.05) between the respondents however it does in the case of the other atypical variables. Finally, the research asked the opinion of the respondents why they thought people tended to opt for non-standard solutions. There were three possible answers to be chosen: "no other choice", "it has some advantages," and because "I do not think they accept." The distribution of answers given by the respondents is shown in table 5.8: 182

Country

Table 5.8 Distribution of answers on the reasons of acceptance of the different atypical forms of employment by country

H SK H Part time work (less than 8 hours per a day) SK H One-season commitment SK H Telework commitment; telecommuting SK H Contract with labour hire firms; agency work SK H Sales agent with independent contractor‟s certificate SK H Participation in public work SK Source: Authors‘ own research Casual work; day work

%

There are certain advantages %

I think it will not be accepted %

85.4 37.8 57.8 18.4 61.2 18.5 42.4 12.7 59.7 18.7 52.0 15.4 60.9 35.5

13.1 61.4 40.6 81.6 34.9 78.2 51.2 84.9 37.2 80.5 39.4 79.7 35.2 55.6

1.5 .8 1.6 .0 3.9 3.2 6.4 2.4 3.1 .8 8.7 4.9 3.9 8.9

No other choice

In the case of each variable there was a significant disagreement between the countries. The majority of Hungarian respondents thought that was no other choice for a worker, which means they were forced to choose these employment solutions - except telecommuting. However, the majority of Slovak respondents were much more open towards atypical forms of work, in the case of all types the majority claimed that the choice was largely determined by the advantages of these forms of employment. The proportion of this perspective was particularly high in the case of agency work, part-time employment and telework. However in a lower proportion, but the Hungarian respondents assumed that the reason for choosing the two latter forms of employment might be in their inherent advantages. The Hungarian respondents mostly assumed that people would not take on sales work; while the Slovak respondents felt the same regarding public work. If the answers are generally taken into account, which means not separately for each atypical form, and we arrange the common judgements of all forms in a table, very strong differences can be observed between responses from the northern and southern sides of the border. The question in this case, would be the following: “What do you 183

think the attitude of people is in general towards atypical jobs?” 4.1% of the Hungarian respondents and 3.0% of the Slovak ones would not accept them. The perception of the two groups is very similar: both believe that only a few people would refuse the offer. 95.9% of the Hungarian respondents and 97% of the Slovak ones assumed that "people in general" would accept such a work. Table 5.9 People‟s judgement whether “people in general” would accept atypical job offers (%) Hungarian respondents 4.1 59.9 35.9 ≈100.0

Would not accept Because of pressure „no other choice‟ There are certain advantages Total Source: Authors‘ own research

Slovak respondents 3.0 22.4 74.5 ≈100.0

Why would people accept them? According to the Hungarian majority (60%), people are forced to assume atypical employment; Slovakia is less than a quarter of respondents (22.4%) thought the same thing. Two thirds of those who live on the north side of the border (75%), however, assume that "people in general" see explicit benefits in atypical forms; while only 35.9% of the Hungarian respondents thought so. The huge difference between the responses from the Hungarian and Slovak sides of the border immediately disappears when the issue is not that "Do you think that people in general,"… but that "personally, you would accept an" atypical job. According to the data in table 5.10 in total, we can find that both a quarter of the Hungarian and Slovakian respondents would reject such an offer. Table 5.10 Respondents themselves would accept an atypical job? (%) Hungarian respondents 26.2 60.4 13.4 ≈100.0

Would not accept Would accept temporarily Would accept on long term Total Source: Authors‘ own research

Slovak respondents 24.9 55.3 19.7 ≈100.0

The result is particularly interesting because there is a sharp division between the assumed responses of the respondents “of the people in 184

general” and their self-perception. On the other hand, judging by the opinions of others answers do not match, however Hungarian and Slovakian values are very similar on both sides of the border if it is about their own decisions. Table 5.11 Presumed answers of the others versus the respondents‟ own possible reactions to atypical work offers (%) Respondents themselves Hungarian side 26.2

Slovak side

Would not accept Because of pressure, 60.4 temporarily Even on long term 13.4 (possible advantages) Total ≈100.0 Source: Authors‘ own research

24.9

Others according to the respondents Hungarian Slovak side side 4.1 3.0

55.3

59.9

22.4

19.7

35.9

74.5

≈100.0

≈100.0

≈100.0

The judgement behind the data of table 5.11 can be formulated as if both the Slovak and the Hungarian respondents uttered on the acceptance of atypical work: “I myself would not”, “just under pressure”, “only on short term”, the majority of other people, however, would accept atypical work because it is thought to be even advantageous. The other striking phenomenon is the strong opposition against atypical employment; a quarter of respondents would not accept if any of atypical jobs was offered them in the job market. We should not forget that the respondents are unemployed. 2. Conclusion The study presented some results of a research taking place in the past year. The hypothesis formulated during the surveys can be regarded as accepted. The research could highlight the typically different views of Slovak and Hungarian respondents on "non-standard" forms of employment. It is a fact that the majority regards these atypical forms of employment as temporary solution. Considering the chances of acquisition of a normal work the majority assumed a neutral impact. The largest proportion of Hungarian respondents were those who basically 185

evaluate these forms as necessity solutions (except for teleworking), while the majority of the Slovak respondents had seen even the beneficial side of them as a motivational factor in terms of the adoption of these options. It is an important message from the research that generally the respondents would have adopted these solutions in higher proportion either temporarily or on long-term, than those who would have refused which also indicates that regardless whether due to necessity or even to the benefits the penetration of these forms even from the side of the employees is gradually opening. A contradictory attitude towards atypical jobs is shown by the fact that the respondents found "people in general" would accept such opportunities, but personally they would decline them.

References 1. Baboń, P. (2013). Pracovné podmienky v typických, netypických a veľmi netypických zamestnaniach na Slovensku: mapovacia ńtúdia. Prognostické práce. Vol 5, Issue 3, pp. 175-197. 2. Bačińín, V. (2013). Atypické pracovné vťahy na trhu práce. Vybudovanie laboratória makroekonomických analýz a prognóz. Vytvorenie excelentného pracoviska ekonomického výskumu pre rieńenie civilizačných výziev v 21. storočí. February 14. 2013. CD-ROM – Bratislava: Ekonóm pp. 1-6. 3. Barancová, H. (1998). Atypické zmluvy v pracovnom práve. Práca a mzda. Vol. 46, Issue 7-8, pp. 21-24. 4. Buchta, L. (1994). Agrárna nezamestnanosť – bezvýchodisková stratégia alebo prechod k stabilizačným trendom? Hospodárske noviny. Vol. 2, Issue 137, p. 5. 5. Determinanty vyuņívania flexibilizácie práce v SR z pohľadu rodiny a ich implementácia do sociálneho system. Conference of Univerzita Mateja Bela Banska Bystrica, March 25, 2014 6. Ékes, I. (2009). Az atipikus munka és jövője. Munkaügyi Szemle. Vol 53, Issue 1, pp. 66-71. 7. Frey, M. (2000). A munkaidőrendszerek rugalmassá válása. Közgazdasági Szemle. Vol. 47, Issue 12, pp. 1008-1026. 8. Grenčíková, A., Ńpanková, J. (2014). Význam flexibilných pracovných vzťahov. Sociálno-ekonomická revue. Vol. 12, Issue 1, pp. 15-24. 9. Hanzelová, E., Kostolná, Z., Reichová, D. (2005). Atypické formy zamestnanosti na Slovensku: minulosť a súčasnosť. Rodina a práca, Stredisko pre ńtúdium práce a rodiny, Apríl. Bratislava 186

10. Hárs, Á. (2012). Atipikus foglalkoztatási formák Magyarországon a kilencvenes és a kétezres években. Budapesti Munkagazdaságtani Füzetek. Budapest, Magyar Tudományos Akadémia Közgazdaság- és Regionális Tudományi Kutatóközpont Közgazdaságtudományi Intézet, Budapesti Corvinus Egyetem Emberi Erőforrások Tanszéke. 11. Köllő, J., Vincze, M. (1999). Self-employment, Unemployment and Wages: Regional Evidence from Hungary and Romania, BWP. Vol 7. 12. Laky, T. (1998). Változó fogalmak a munka változó világában. Közgazdasági Szemle. Vol. 45, Issue 2, pp. 123-136. 13. Laky, T. (2000). Az atipikus foglalkozásokról. [Electronic resource]. Available from: http://people.mokk.bme.hu/~kornai/laky/Cikk/atipikus.pdf 14. Laky, T. (2002). Munkaerőpiac Magyarországon 2002-ben. [Electronic resource]. Available from: http://econ.core.hu/doc/mt/2003/hun/laky.pdf 15. Macková, Z. (2014). Atypické formy zamestnania versus sociálne zabezpečenie. Zamestnanosť a jej sociálno-ekonomické súvislosti v európskom priestore. Conference Proceeding , Veľký Meder, May 15-16, 2014, CD-ROM – Bratislava: Ekonóm. pp. 249-263 16. Mičudová , T. (2011). Delené pracovné miesto v novelizovanom Zákonníku práce. Dane a účtovníctvo v praxi. Vol. 16, Issue 11, pp. 23-26. 17. Mičudová, T. (2013). Delené pracovné miesto (job sharing). Daňový a účtovný poradca podnikateľa. Vol. 18, Issue 10, pp. 147-154. 18. Pńenková, J. (2014). Sociodemografická a pracovnoprávna analýza potenciálu tvorby pracovných miest v regióne Horná Nitra. Sociálno-ekonomická revue. Vol. 12, Issue 1, pp. 70-78. 19. Rév, A. (2000). Atipikus foglalkoztatás a szolgáltató szektorban. Muszájságok. Munkavállalási és munkakeresési hajlandóság az alacsony foglalkoztatási szegmensekben. Tanulmánykötet. Debreceni Egyetem Szociológiai és Szociálpolitikai Tanszéke [Electronic resource]. Available from: http://szoctanszek.unideb.hu/tart/palyazat/Innotars/Dokumentum ok_files/Zarokotet.pdf 20. Scharle, Á. (2000). Önfoglalkoztatás, munkanélküliség és családi kisvállalkozások Magyarországon. Közgazdasági Szemle. Vol. 47, Issue 3, pp. 250–274. 187

21. Seres, A. (2010) A részmunkaidős foglalkoztatás tendenciái és terjedésének tényezői az Európai Unióban és Magyarországon, MTA KTI Műhelytanulmányok, 10. 22. Zelmanová, L. (1992a). Atypické zamestnania a ich psychologické účinky. Otázky práce. Vol. 3, Issue 4, pp. 4-5. 23. Zelmanová, L. (1992b): Niektoré druhy atypických zamestnaní a ich sociálne súvislosti. Otázky práce. Vol. 3, Issue 6, pp.19-21.

Rinkova Stanka PhD in Economics, Associate Professor, SWU West University in Blagoevgrad, Bulgaria Atanasova Irina PhD in lawyer, Associate Professor SWU West University in Blagoevgrad, Bulgaria

THE KNOWLEDGE AND INNOVATIVE DEVELOPMENT IN TRANSFORMING ECONOMIES

Nowadays, the main problem of the development of any economy is the creation, acquisition and use of knowledge. It is a crucial factor and an economic resource for the competitiveness of the national economies in a globalizing world. This paper is based on theoretical understanding and characteristics of knowledge and it argues that it is a factor of production and its products, it is also an economic resource of growing importance. Knowledge is also favorable public and private, which multiplies the externalities and promote competitive advantages for operators and the country's information society. Some data of the aggregate innovative products in Bulgaria is provided. Adopted in 2010 Europe 2020 strategy, the EU Commission proposes new economic strategy to exit the crisis and identifies three key drivers for growth: smart growth / fostering knowledge, innovation, education and digital society / sustainable growth / more efficient use of resources in production in order to increase the competitiveness / and inclusive growth / increased participation in the labor market, skills and combating poverty.[9] The importance of the knowledge for economic development is becoming more urgent problem. This is associated with accelerating changes in technology and 188

their impact on the global socio-economic processes, and on the other to the internal logic of the development of economic science. Solving this problem has its practical dimensions defined by the European and national policy goals to build a society and knowledge economy. Knowledge has always been important to solve the main contradiction in every economic system-how with limited resources to meet the growing needs. In this sense, the progress of society is determined by the knowledge, which is mobilized to solve the main socio-economic problems of society. It could be assumed that the first thorough economic study of knowledge is the theory of economic development of Joseph Schumpeter. [8,66]. It introduces innovation as an economic concept and determines its contents change as related to: new product introduction, new method of production introduction, utilization of new market, obtaining new sources of raw materials, construction of a new industrial organization. Y. Shumpeter sees the main reason for innovation the motives of the firms to obtain economic rents. In the production process, the productivity is increased and the company receives competitive advantages. When updating the product, the company gets a monopoly position and monopoly price. The Knowledge, as an object of economic study is found in the work of Daniel Bell. He formulated the idea in 1973 for "society of knowledge" as a postindustrial society. According to him, this society is a transition from production society to information society or knowledge society, which has the following characteristics: [1.16]: making theoretical knowledge in the basic principle of development; restructuring of the economy to "divert" from manufacturing goods to services; converting universities and research organizations into major institutions and leading role of human capital; enforcement of intellectual technologies in decision making. For the socio-economic progress of the society becomes crucial the information availability and more economic activities are directed to the field of services. Those ideas D. Bel are confirmed by the developments in the last third of the twentieth century. The problem of the theoretical understanding of the role of knowledge for economic development is seen by Peter Drucker and he introduced the concept of "knowledge economy." He believes "that neither labor nor natural resources, nor the capital will be a major source," a means of production "... This is the knowledge ... and .. its practical application of knowledge in the work. [2, 49]. According to Drucker "the value is created by the of productivity and the innovation, 189

which is the practical application of knowledge‟‟ Jerome Rifkin explores the role of knowledge as intellectual capital. The theory of human capital also examines the role and importance of knowledge for economic prosperity of the countries. Jacques Boriyar considers that wealth today is not embodied in a heap of material products but in a system of signs / data, information, skills, etc. In his theory of competitive advantage M. Portar justifies the need to "identify improvements and innovation in production methods, the importance of national economic structures, values, institutions, culture and history of competitive success of industries and companies [5 35]. According to Al. Toffler "substantial part of the work carried out in the company aims to constantly wear outfit of knowledge to create new knowledge and to convert simple data into information and knowledge. .. knowledge itself becomes the supreme economic source in central input in the economy of future... a central resource of the Third Wave" [6 43] However, the development of the economy through the creation and use of new knowledge is analyzed by a number of Bulgarian authors as Iv .Angelov Ivan Iliev R.Chobanova, St.Savov A.Leonidov, L.Kirev, A.Kazakov and others. For example At. Leonidov in "New Economy wrote that "in the advanced countries there is a new type of economic growth due to the impact of the new key factors: human capital, high technologies and novices to create new products and processes, profound changes in the organization of production, changes in entrepreneurship, etc ". [4, 20] The knowledge is a verified by the public practice, historical result of the process of learning the material and spiritual processes and phenomena. The knowledge is a process of subjective reflection of objective reality and this determines its personification and access to personal information. The types of knowledge that are important for the economic development are: pre-scientific / life / scientific, empirical and theoretical, explicit / codified / and implicit, science and technological. The World knowledge exists in objects, processes and phenomena. The scientific knowledge is looking for an explanation of these phenomena and processes through system released by understanding of concepts and categories of the science. It addresses the questions-how to carry out a process, why it runs a certain way and looks for patterns in the development to make assumptions about the evolution of various phenomena, objects and events. The progress of scientific knowledge is associated with an increase in the power and scope of scientific 190

prediction and as such there is a great means to achieve pre-set goals. Crucial to economic prosperity are scientific and technological knowledge, although other species also have their "participation". After a brief overview of the different positions, a reasonable inference that knowledge becomes a major resource factor of production and its main product can be made. It is good that it satisfies the needs of people with familiarity with the material and spiritual phenomena and processes. A factor of production, it becomes through the embodiment of knowledge in engineering, technology, organization and management of production in the host material form elements of physical capital. The knowledge performs intermediary role, servicing the real sector of acceptances of independent economic existence-form of patents, knowhow licenses. In the formation of human capital, these are have skills, experience and competencies. Knowledge as a resource and a factor of production has a value form, which during the production is increased significantly. It is therefore appropriate that Bulgaria instead of exporting raw timber and other raw materials to produce them with material goods that saturated with value and then export. The knowledge as product of research is alienated. In the codified knowledge it accepts individual form of economic realization -by sale of know-how, licenses, patents. The owner of this knowledge gets Intellectual rent. The basis of this income is increasing the productivity of labor in the so called science-absorbing industries like- computer and office equipment, electronics, robotics, instrumentation, pharmaceutical, medium and low-tech sector. The conclusion is that there are no economic and human activities which would develop outside the "rails" of knowledge in one or another degree. This explains the motives of the business sector in developed countries, where the cost of research and development are billions of dollars, and the rate of return to private companies is between 30 and 43%. Lester Turow puts an important and topical issue- what are the mechanisms to attract private companies so they invest in research and development. It offers the following solutions: (7,134) manufacturing knowledge in government research organizations and resolve it to be used by all; stimulating private initiative through subsidies; creating a "knowledge market" by legal guarantees for the protection of intellectual property. In developed countries and in Bulgaria these three schemes are applied On the basis of the adopted in 2011 National Strategy for Development Research 2020 in Bulgaria are set following 191

priority research areas: biotechnology, energy, transport, information technology, cultural heritage. This national strategy envisages increasing investment in science and technology to 1.5% of GDP by 2020. Common to all kinds of knowledge is that the quality and quantity depends on the access of individuals to information. That is why today the most important are the distribution and use of information and communication technologies. The information must become a knowledge which is mainly done through interactive teaching. This effect has the use of e-mail, internet, Twitter, Facebook and other social networks. General properties of information and knowledge are the following. They share common characteristics such as public goods. This is the noncompetitive access to them. If someone has an idea, it is not an obstacle and for another man to have it. For their reproduction, the marginal costs decline and for that "production" of knowledge and information, the law of diminishing marginal utility does not work. It is necessary to distinguish between scientific and technological knowledge and information. Technological knowledge is realized in a specific company, where more technical activities are performed. The scientific and the technological knowledge differ mainly by source of funding, in the way of production management and beneficiaries of economic values. The creation of new scientific and technological knowledge is interrelated. The scientific knowledge leads to technological innovation and generate a demand for the development of the first. Knowledge as a public good is twofold. From the standpoint of the theory of property rights, knowledge is a private good. The products of fundamental exploration and discoveries of fundamental importance and those who enjoy freedom have the character of public goods. They are uncompetitive, indivisible and not exclude in consumption. In the field where knowledge takes the form of patents, selling licenses, know-how, it is already uncompetitive, but divisible good and brings its discoverer rent income. Thus knowledge has its price, which is the economic form of realization of ownership it. / discovery, invention, copyright textbook, lecture, painting, etc. / knowledge can be transformed from a private to public good. It has the property of "overflow seepage" that is accomplished by patenting intellectual product publication of research results, crossing the researchers to work in another organization, etc. Knowledge as a product of research and resource exists independently of space constraints and it is weightless and ethereal as the light. Unlike traditional goods and factors of production, knowledge is 192

characterized by a number of features, and they are as follows: 1. Knowledge is alienated in specific way. The ordinary commodity selling is performed by transferring the ownership from the seller to the buyer. Knowledge though sold remains in its original proprietor. Here is alienated the right to use it. 2. Keeping the usefulness of knowledge in the process of using. It lacks physical wear and it ages morally. Its reproduction means reproduction, duplicating. 3 Self increasing of knowledge in the process of consumption- the usefulness of knowledge in the process of consumption is not absorbed, but rather in the process of consumption it increases. That is why rarity and scarcity of resources in the era of knowledge economy is replaced by extension, with the abundance of knowledge growth The Information flow was increased more than 30 times during the twentieth century. 4. The character and the mechanisms of accumulation of knowledge are specific. In the information society the rate of accumulation of human capital, education, health, culture goes ahead of those in physical capital accumulation. Knowledge-based economy is based on human capital development. 5. In the knowledge society a new structure of property relations is formed. In the industrial society the company is the main micromodel and in the information society-it is business network, which is understood as a place of intellectual product creation. According to M. Kastels "the basic form of the new economy's is the enterprise network and the networks are the basic material from which are made all new organizations. Enterprise network materializes the culture information / global / economy: it converts the signals into consumer products through processing knowledge. "[3,178] Business networks are not separate production units, but are digital infrastructure for collaboration and systems of suppliers, distributors, customers realize business connections for economic interests Business networks have a multiplicity of entities to varying degrees and forms, which derive economic benefits from the movement of objects. There is also a multiplicity of objects- knowledge and information, which are a source of income for the same subject. For the pragmatic part of the study are pointed out some specific indicators and problems in the development of the Bulgarian economy to knowledge economy by gross innovation product in the country and its European dimensions. The gross product innovation or innovativeness of the economy is demonstrated by the new products and 193

services, developing new technologies and achieving new scientific results. It is a summary measure of the functioning of the national innovation system. It reflects the innovation activities of the business sector and the general public. In early 2013 the European Commission published the Outcome of the Innovation Union and Bulgaria is among the moderate innovators, but there is a decline in comparison with 2006 by 18.6% in value of the index measuring the state of research and development. [9] One of the main reasons is to reduction of government funding for R & D and economic crisis since 2009. Bulgaria still has a comparative advantage in terms of quality of human resources, intellectual property, and economic impact of the development and implementation of innovations. Bulgaria is making progress in terms of the Index of the World Bank to build a knowledge economy. [11] Indices of Economy of knowledge are -ICT, Education, Innovation, Institutions and business climate. In 2012 the country ranks 45th out of 145 countries and moves 6 positions compared to 2000.According to the Global Innovation Index 2014 Bulgaria occupies 44th plase, But within the EU it is the last position. For the period 1995-2012 the country is making progress in the legislative framework, institutional and business environment. There is a decline in innovation -from 7.12 to 6.94 ICT-from 7-04 to 6.66, and education– from 7.3 to 6.25. [10, 11] According to the Global Competitiveness Index 2014-2015g Bulgaria occupies 54th place out of 144 countries.[13] The stable macroeconomic environment combined with low levels of innovation potential indicators / quality of scientific developments, costs of R & D /. Bulgaria and Romania are EU members that are on their second stage of development based on increasing the efficiency of economy. Most of the member states rely on the new knowledge and technologies as a source of economic growth and quality of life. The study of innovation activity in the EU Member States for the period 2008 to 2014 found that one third of the companies in the EU are defined as innovative. In Bulgaria they are only 13% of them only 3.5% rely on external organizations –business partners, universities and organizations as a source of ideas, information and resources for the development of new processes and products. The national innovation system is characterized by weak demand and supply innovation. From both these basic characteristics of the knowledge and the scientific arguments that it is increasingly becoming a key resource and product of economic development the following conclusions can be 194

made. It is necessary a new economic theory to put the knowledge in the center of goods production For Bulgaria as an EU member, this issue has an important practical significance, as according to the objectives of the Strategy Europe -2020 to turn knowledge and innovation as drivers for smart, sustainable and inclusive growth. This implies a more competitive, greener and higher level of employment and reducing poverty knowledge-based economy. References 1. Bel, D.,(1999) Gryadushtee postindustrialynoe society. Sotsialynogo prognozirovaniya.per experience. Sang, pp.16,288 et seq. Drakar, P.,(2000). Post-capitalist society, with. Izd.LIK,p.49 2. Kastels, M .(2004). Informatsionnata age, economics, society, culture, p.1 rise of the network society, S.Lik, p.178 3. Leonidov, At.(2003). "New economy" - Model and government policy sJournal .Ikonomicheska thought, p.20, 4. Portar, M.,(2004), Competitive Advantage of Nations, S.Klasika and style ,35 5. Toflar, A.(2000),Novata civilization Politics of the Third Wave, S..Voenno Publishing, p.43 6. Tarou, L.(20000 Building blagosastoyanie S.Lik, p.134 7. Schumpeter, J.,(1934) The theory of economic development Cambridge, Mass., Harvard University Press, p.66 8. European Commision EUROPE 2020, March, 2014 9. Innovation Union Scoreboard, 2013 10. Inovation Scoreboard 2014 11. http: go.worldbank.org 12. www.weforum.org/en/ initiativis /gcp

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Innovative approaches in the management of competitiveness of businesses Collective monograph edited by A. Berezin, M. Bezpartochnyi

Inovatīvas pieejas uzņēmumu konkurētspējas pārvaldībā A. Berezin

Kolektīva monogrāfija un M. Bezpartochnyi zinātniskajā redakcijā

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