CONTENTS

IT-RELATED USAGE OF CYRILLIC SCRIPT – A STUDY CARRIED OUT

AT THE ICT COLLEGE OF APPLIED STUDIES, BELGRADE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Gordana Jelić
Danica Mamula Tartalja
Zorica Mihajlović
ECONOMIC MIGRATION AND LABOUR TRAFFICKING FROM BULGARIA . . . . . . . . . . . . . 7
Georgi Petrunov
BIODIVERSITY CONSERVATION AND AGRICULTURAL TERRACES:
A CASE STUDY ON THE ISLAND OF KYTHIRA (GREECE) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Alexandra Solomou
URBAN AND ARCHITECTURAL PERFORMANCES
IN THE FUNCTION OF DEFINING OF STRATEGY
OF SUSTAINABLE DEVELOPMENT OF TOURIST DESTINATION . . . . . . . . . . . . . . . . . . . . . . . 19
Spasoje Tuševljak
Miodrag Simović
Vladimir Simović
Ivan Tuševljak
A SYSTEMIC APPROACH TO THE MANAGEMENT OF MUSEUM HERITAGE:
THE CASE OF BASILICATA REGION MUSEUM POLE (ITALY) . . . . . . . . . . . . . . . . . . . . . . . . . 27
Sonia Ferrari
Nicolaia Iaffaldano
Vito Roberto Santamato
THE EVOLUTION OF THE ROMANIAN PASTRY.
TRADITIONS, EUROPEAN INFLUENCES, NEW TRENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Adina Săcara-Oniţa
Andra-Teodora Porumb
Ciprian Beniamin Benea
HEAVY METAL ACCUMULATION AND CHEMICAL COMPOSITION
OF ESSENTIAL OILS OF SALVIA OFFICINALIS CULTIVATED
ON HEAVY METAL CONTAMINATED SOILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Violina Angelova
SCALING BLOCKCHAIN FOR AGRICULTURAL SECTOR: THE AGRIDIGITAL CASE . . . . 55
Roberto Mavilia
Roberta Pisani
IDENTIFICATION OF THE SPORTS PREDISPOSITION
AS A SOCIAL RISK MANAGEMENT ELEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Elena Fefilova
Natalia Pazdnikova
Yuliya Karpovich
IMPLEMENTATION OF QUALITY CONTROL ON SOIL SAMPLING . . . . . . . . . . . . . . . . . . . . . 67
Zorica Sovrlić
Daniela Urošević
Ivan Svrkota
SEARCHING FOR THE MANAGERIAL IMPLICATIONS
IN ITALIAN AUTONOMOUS MUSEUM.
WHAT ARE THE PERSPECTIVES AND BARRIERS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Marianna Marzano
Monia Castellini
ADEQUACY OF THE AMOUNT OF OWN RESOURCES
OF FOOD ACCOUNTING ENTITIES IN 2018 IN SLOVAKIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Katarína Tasáryová
Renáta Pakšiová

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THE INFLUENCE OF THE GEOGRAPHICAL AREA

ON WINE PRODUCTS. A CASE STUDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Camelia Slave
NATURAL PROTECTED AREAS FROM ROMANIA.
A CASE STUDY OF DANUBE DELTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Camelia Slave
INNOVATION AND AGGREGATION:
A GOVERNANCE MODEL TO SUSTAIN COMPETITIVENESS
OF WINE COMPANY IN SOUTH ITALY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Nicolaia Iaffaldano
Andrea Sestino
THE LEADER OF THE NEW GENERATION:
HUMBLE, CONNECTOR AND CONSCIOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
Marius Calin Benea
IMPACT OF CONSOLIDATION PROCEDURES ON THE IMPLEMENTATION
OF THE INFORMATION ACCOUNTING FUNCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Artur Jastrzebowski
Zofia Wierzbinska
Marek Wierzbinski
MANAGEMENT OF INFORMATION IN ECONOMIC DIPLOMACY . . . . . . . . . . . . . . . . . . . . . 135
Marek Csabay
WORLD BANK IN THE WORLD’S ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143
Irena Andreeska
SILICON SAVANNAH – INNOVATION ECOSYSTEMS
OF AFRICA WITH A SPECIAL REGARD TO KENYA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Szabolcs Szolnoki
Árpád Papp-Váry
APPLICATION OF NEW INFORMATION
AND TELECOMMUNICATION TECHNOLOGIES
IN RUSSIAN EDUCATIONAL MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
Evgeniya Yazovskikh
Oksana Yatsenko
COMMUNICATION WITH CUSTOMERS THROUGH SOCIAL NETWORKS
– EVIDENCE FROM THE REPUBLIC OF CROATIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Višnja Bartolović
Maja Validžić
PMO APPROACH IN CHOOSING
THE OPTIMAL PROJECT GOVERNANCE FRAMEWORK
FOR CONTRACTED ENGAGEMENT MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
Srđan Atanasijević
Tatjana Atanasijević
Monika Zahar
BEST PRACTICES FOR PEOPLE WITH DISABILITIES
ADOPTED IN ITALIAN NATIONAL PARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179
Giulio Mario Cappelletti
Alfredo Ernesto Di Noia
Giuseppe Martino Nicoletti
INTERCULTURAL TRENDS IN TOURISM OF THE MONTENEGRIN COAST . . . . . . . . . . . . 187
Maria Popovic
Dijana Medenica Mitrovic
LIMITATIONS OF INTERCULTURAL MANAGEMENT IN THE DEVELOPMENT
OF TRADE RELATIONS BETWEEN COUNTRIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
Dalibor Misirača
Dragan Gnjatić

IV
 CONTENTS

BLOCKCHAIN TECHNOLOGY APPLICATION AREAS

IN THE SMART CITY INFORMATION SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
Zoran Ćirić
Otilija Sedlak
Stojan Ivanišević
ORGANIC AGRICULTURE IN THE DEVELOPMENT
OF A GREEN ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
Larisa Jovanovic
Dragan Živković
Mario Lukinovic
Milan Jankovic
THE IMPACT OF GLOBALIZATION ON THE DIGITAL ECONOMY IN BULGARIA . . . . . . 229
Maria Kicheva
Nadezhda Petkova
THE SUBURBANIZATION PROCESS AND QUALITY OF LIFE . . . . . . . . . . . . . . . . . . . . . . . . . 235
Aleksander Ostenda
Tetyana Nestorenko
Iryna Yemchenko
WHAT DRIVES THE BELIEFS IN BITCOIN? – SURVEY RESULTS . . . . . . . . . . . . . . . . . . . . . 241
Zuzana Rakovská
HEALTH MANAGEMENT IN THE 21ST CENTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
Zdravko Petković
Zdravka Petković
Tijana Milanović
THEORETICAL AND PRACTICAL CONSIDERATIONS
REGARDING THE CONTESTING PROCEDURE
IN THE FIELD OF PUBLIC PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255
Diana Gorun

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 INDEX OF AUTHORS

A I R
Adina Săcara-Oniţa, 35 Irena Andreeska, 143 Renáta Pakšiová, 85
Aleksander Ostenda, 235 Iryna Yemchenko, 235 Roberta Pisani, 55
Alexandra Solomou, 13 Ivan Svrkota, 67 Roberto Mavilia, 55
Alfredo Ernesto Di Noia, 179 Ivan Tuševljak, 19
Andra-Teodora Porumb, 35 S
Andrea Sestino, 109 K Sonia Ferrari, 27
Árpád Papp-Váry, 149 Katarína Tasáryová, 85 Spasoje Tuševljak, 19
Artur Jastrzebowski, 125 Srđan Atanasijević, 171
L Stojan Ivanišević, 209
C Larisa Jovanovic, 215 Szabolcs Szolnoki, 149
Camelia Slave, 93
Camelia Slave, 101 M T
Ciprian Beniamin Benea, 35 Maja Validžić, 159 Tatjana Atanasijević, 171
Marek Csabay, 135 Tetyana Nestorenko, 235
D Marek Wierzbinski, 125 Tijana Milanović, 249
Dalibor Misirača, 197 Maria Kicheva, 229
Danica Mamula Tartalja, 1 Marianna Marzano, 73 V
Daniela Urošević, 67 Maria Popovic, 187 Violina Angelova, 45
Diana Gorun, 255 Mario Lukinovic, 215 Višnja Bartolović, 159
Dijana Medenica Mitrovic, Marius Calin Benea, 117 Vito Roberto Santamato, 27
187 Milan Jankovic, 215 Vladimir Simović, 19
Dragan Gnjatić, 197 Miodrag Simović, 19
Dragan Živković, 215 Monia Castellini, 73 Y
Monika Zahar, 171 Yuliya Karpovich, 61
E
Elena Fefilova, 61 A Z
Evgeniya Yazovskikh, 155 Nadezhda Petkova, 229 Zdravka Petković, 249
Natalia Pazdnikova, 61 Zdravko Petković, 249
G Nicolaia Iaffaldano, 27, 109 Zofia Wierzbinska, 125
Georgi Petrunov, 7 Zoran Ćirić, 209
Giulio Mario Cappelletti, 179 O Zorica Mihajlović, 1
Giuseppe Martino Nicoletti, Oksana Yatsenko, 155 Zorica Sovrlić, 67
179 Otilija Sedlak, 209 Zuzana Rakovská, 241
Gordana Jelić, 1

VII
 INDEX

A Economic Growth, 143 International Monetary Fund,

Accessibility, 179 Educational Management, 155 143
Accounting, 73 Environment, 13 Italian Museums, 73
Advertising Strategy, 35 Equity, 85
African Startups, 149 Essential Oil Composition, 45 K
Aggregation and Innovation, Ethics, 249 Kenya, 149
109 European Union, 215
Agricultural Sector, 55 Exploitation, 7 L
Agroecology, 215 Leadership, 117
Agrotourism, 13 F Learning, 117
Architecture, 19 Fauna, 13 Legitimate Interest, 255
Award Procedure, 255 Feasibility Study, 209 Longitudinal Survey, 241
Field of IT, 1
B Financial Statement, 125 M
Bakery Field, 35 Financial Transactions, 143 Management in Health, 249
Blank Samples, 67 Flora, 13 Management, 73, 135, 197,
Blockchain, 209 Food Safety, 35 249
Blockchain, 55 Maps, 93, 101
Brand, 35 G Mediterranean, 13
Bulgaria, 229 Geographical Information Museum Network, 27
Systems (GIS), 93 Museum System, 27
C Globalization, 197, 229
Capital, 85 Golden Rule of Financing, 85 N
Competitiveness, 109 Green Economy, 215 National Council for Solving
Consolidation, 125 Complaints, 255
Contaminated Soils, 45 H Natural Parks, 179
Contestation, 255 Habitat, 101 Non-Current Assets Long-
Convention, 101 Health Organization, 249 Term Liabilities, 85
Crime, 7 Health Risks, 61
Cryptocurrencies, 241 Health, 249 O
Culture, 187 Heavy Metals, 45 Offer, 255
Customer Relationships, 109 Humility, 117 Organic Agriculture, 215
Customers, 159 Organic Farming, 215
Cyrillic Script, 1 I Organizational Identity, 35
ICT College, 1 Ownership, 19
D Information Accounting
Danube Delta, 101 Function, 125 P
Developed Countries, 143 Information Processes, 135 Performance Management
Development, 19 Information Systems, 209 Framework, 171
Digital Economy, 229 Information Technologies, Performance, 73
Disabilities, 179 155 Production, 93
Innovation Management, 55 Project Governance, 171
E Innovation, 149, 229 Project Management Office,
Economic Diplomacy, 135 Institutions, 19 171
Economic disparities, 7 Intercultural, 197 Project Management, 171
Economic Expectations, 241 Interculturalism, 187 Project Related KPI, 171

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Protected Area, 101 Soil Sampling, 67 W

Protected Natural Area, 179 Spatial Planning, 19 Web Site, 35
Protection, 13 Sports Orientation, 61 Web-Quest, 155
Sports Selection, 61 World Bank, 143
Q Startup Savannah, 149
Quality Control, 67 Suburbanization, 235
Quality of Life, 235 Sustainable Rural
Development, 215
R Systematic Approach, 27
Republic of Serbia, 215
Retail Chains, 159 T
Right, 255 Telecommunication
Risk Management, 61 Technologies, 155
Tourism, 187
S Trade, 197
Salvia Officinalis, 45
Sentiment, 241 U
Smart City, 209 Urban Sprawl, 235
Social Networks, 159
Software Engineering V
Engagement Models, 171 Viticulture, 93

X
 IT-RELATED USAGE OF CYRILLIC SCRIPT
– A STUDY CARRIED OUT AT THE ICT COLLEGE
OF APPLIED STUDIES, BELGRADE
Gordana Jelić1
Danica Mamula Tartalja2
Zorica Mihajlović3

DOI:

Abstract: Given that the English language and Latin script are a ’mother tongue’ in the field of In-
ternet technologies, there is an issue in Serbia concerning the use of Cyrillic script when it comes to
teaching and learning processes in this professional community. This paper presents the results of a
study carried out at the ICT College of Applied Studies in Belgrade on the usage of Cyrillic script by
students majoring in Internet technologies study program. The research sample comprised students’
examination papers selected from courses taught by professors who use Cyrillic script in all segments
of teaching. Out of 652 students’ papers, the usage of Cyrillic script accounted for 59%. This could be
regarded as a remarkable outcome having in mind the predominance of English Latin script in the IT
sector. To achieve even better results, the teachers at all levels of education should use Cyrillic script.

Keywords: Field of IT, ICT College, Cyrillic Script

1. INTRODUCTION

T he issue of the usage of Cyrillic script is a topic constantly open for discussion in our so-
ciety. Pursuant to the Constitution of the Republic of Serbia, which was proclaimed on
November 8th 2006, “the Republic of Serbia is a state of the Serbian people and all its citizens
...” (Article 1 of the Constitution). Additionally, “the Serbian language and Cyrillic script shall
be in official use in the Republic of Serbia...” (Article 10 of the Constitution). Despite these defi-
nitions of Cyrillic script and the Serbian language included in the Constitution, we have been
witnessing that Latin script has been predominant in Serbian daily life.

Bearing in mind the prevalence of Latin script, we may notice that there are some initiatives by
individuals and organizations aimed at changing the current situation in order to return to our
original, i.e. Serbian Cyrillic script. We should mention the Association for defending the Cyrillic
alphabet “Dobrica Erić”, whose Statute was adopted on January 18th 2011, as well as the “Cherish
the Serbian Language” campaign, which has a broader context than the Cyrillic alphabet itself,
but at the same time, it also propagates Cyrillic script. This campaign, launched on April 8th 2015,
was organized by the Secretariat for Culture of the City of Belgrade, the Faculty of Philology in
Belgrade and Belgrade City Library. Many celebrities from the world of sport and culture have
been engaged in this campaign to highlight various messages written in Cyrillic on the posters. We
also need to underline the Draft of the Cultural Development Strategy, presented by the Minister of
Culture and Information, Vladan Vukosavljević, on RTS (Radio Television of Serbia), on June 10th
2017. The Strategy should provide various incentives for the usage of Cyrillic script.
1
ICT College of Applied Studies, Zdravka Čelara 16, 11000 Belgrade, Serbia
2
ICT College of Applied Studies, Zdravka Čelara 16, 11000 Belgrade, Serbia
3
ICT College of Applied Studies, Zdravka Čelara 16, 11000 Belgrade, Serbia
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In this paper, we addressed the issue of the Cyrillic script usage in a special community of indi-
viduals, which has been extremely under the pressure of using Latin script, that is in the context
of education at the level of colleges of applied studies in the field of information technologies
(IT). More specifically, we examined the students of the state ICT College of Applied Studies
(ICT College).

The Serbian language, with its corresponding Cyrillic script, is a mother tongue of most stu-
dents of the ICT College. On the other hand, the path of education that these students acquire
at this college is focused distinctively otherwise. In the field of IT, the “mother tongue” of the
profession is English (i.e. U.S. English version), with its corresponding Latin script.

Having regard to all of the foregoing, the aim of this study was to determine, by applying quan-
titative and objective methods, how many of our students examined in the selected sample use
Cyrillic script in the educational process at the College, in spite of all their professional orienta-
tions. A limited survey was conducted and the first results have been presented herein. This re-
search was inspired, inter alia, by the recently published “Survey on the usage of Cyrillic script
on the Internet” by Nikola Marković and Dragana Bečejski Vujaklija, PhD, which was carried
out within the activity of the Informatics Association of Serbia, in February 2018.

2. RESEARCH METHODOLOGY

The study on the usage of Cyrillic script by a selected group of students of the ICT College
relates the 2017/2018 academic year. The six subjects taught by three professors were observed.
The professional courses, such as Basics of Programming 1 and Databases, as well as the ac-
ademic courses, such as Business Communications, were included in the study. The courses
were selected from all three years of the study programme. The students’ papers written as a
part of their mid-term examinations and final exams were reviewed.

The information on the script used by the students in the educational process was obtained
by inspecting the students’ papers. Such an inspection of students’ papers provided direct and
objective data. A similar method was applied by Mihajlović and Ognjanović (2006) in their
research, whereby the ability of a selected group of researchers at the Vinča Institute to use da-
tabases was monitored directly. By the application of such a direct method, the questionnaires
filled in by a selected group of respondents were avoided. Surveys are methods frequently used
in studies and analyses of the use of computers and the Internet both worldwide and in the coun-
try (Informatics Association of Serbia, 2018; Josanov & Djurić-Kuzmanović, 2004; Statistical
Office of the Republic of Serbia 2017a, 2017b). The problem with surveys is that information is
obtained indirectly.

In this study, it is necessary to point out the attitude that three professors have towards Cyrillic
script. All three professors have a positive attitude towards Cyrillic script and they have been
using it in teaching. In this regard, there are two professors who can be especially distinguished.
These professors have forced the usage of Cyrillic script wherever and whenever possible. All
the course materials prepared for students have been written in Cyrillic, all the materials pre-
pared for mid-term examinations and final exams have been also written in Cyrillic and the
exam results have been published using Cyrillic script as well. Finally, the exam marks in the
students’ files have been also written in Cyrillic.

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 IT-RELATED USAGE OF CYRILLIC SCRIPT
– A STUDY CARRIED OUT AT THE ICT COLLEGE OF APPLIED STUDIES, BELGRADE

In addition to the professors’ positive attitude towards Cyrillic script, it is necessary to empha-
size that the ICT College has been impelling the usage of Cyrillic, as it is a state college that acts
in accordance with the Constitution and the laws of the Republic of Serbia. The College’s web-
site has been made in Cyrillic. Of course, the College also has a website available in English.

3. RESULTS AND DISCUSSION

The study comprised 652 students’ papers. Out of the total number of the students’ papers
reviewed, Cyrillic was used in 385 students’ papers (59%) and Latin script was used in 267
students’ papers (41%). The rankings per professors are different, as expected. The majority of
students who write in Cyrillic attended the courses held by the professors who consistently use
Cyrillic script themselves. The numbers and percentages of the students per professors have
been given in Table 1. In our opinion, the percentage of the students who use Cyrillic is rather
high, especially considering the field of work of the ICT College, i.e. the field of IT which is
dominated by the English language and Latin script. Also, given the general impression that
Latin script is predominant in all segments of our society and rather aggressively imposed, the
obtained findings may be considered somewhat surprising, in a positive sense.

Table 1. Numbers and percentages per professors

Number of students, Percentage of students,
Number of students
Cyrillic Cyrillic
Professor no. 1 279 203 73
Professor no. 2 213 111 52
Professor no. 3 160 71 44
Total number of students 652 385 59

Herein we will also provide more detailed information about the courses of Basics of Programming
1, Business Communications and Databases. Regarding the course Basics of Programming 1, the
number of students who participated in this study was 101. Cyrillic script was used by 79 students
(78%) and Latin script was used by 22 students (22%). As for the Business Communications course,
the number of students participating in the study was 78. Cyrillic script was used by 66 students
(85%) and Latin script was used by 12 students (15%). This is the best result obtained in favour of
Cyrillic script. The least favourable result, in regard to the usage of Cyrillic script, was obtained
in the Databases course. The number of students participating in this study was 160. There were
71 (44%) students who used Cyrillic script and 89 students (56%) who used Latin script in their
papers. In regard to this course, it should be noted that the professor uses both Latin and Cyrillic.

In the survey organized and analysed by Marković and Bečejski Vujaklija (2018), carried out
within the activity of the Informatics Association of Serbia, which inspired us to examine the
usage of Cyrillic script among the students of the ICT College, the organizations engaged in
different fields were asked two questions as follows:
• whether they have a website in Cyrillic, and
• whether they have a national, СРБ domain registered.

The survey included 143 organizations in the field of education and science, 60 organizations in
the field of information technology industry and 54 organizations engaged in the field of pub-
lic administration. The organizations engaged in other fields were less represented in number,
therefore, it would be unreasonable to consider them herein. The field of culture and media
could serve as an example, since only 10 such organizations took part in the survey and the

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results indicated that 7 of them have their websites in Cyrillic. The highest percentage, i.e. 80%,
of available Cyrillic websites, was found in the public administration organizations, followed by
the organizations in the field of education and science, i.e. 57%.

This is quite foreseeable as the public administration must be the first one to comply with the
laws of the Republic of Serbia and the percentage should have been 100%. This also applies
to the field of education and science. The identity of a nation should be nurtured by education
through its language and script. In our opinion, the percentage of the organizations in this area
of 57% is alarmingly low. In this respect, different levels of education should be distinguished
and education should be separated from science as well. As for the IT organizations, out of
which only 12% have their websites available in Cyrillic, which may be considered an expected
outcome since, as previously stated, English and Latin script represent the norms and stand-
ards applicable to such organizations. Consequently, Latin script has been naturally and unduly
transferred into the Serbian language. Hence, the organizations should be more influenced to
use Cyrillic script as all the technical requirements have been provided.

In this study, we focused on the first question. If the results given in this paper are compared
with those obtained by the Informatics Association of Serbia, it may be stated that the findings
provided by our study on the attitude towards Cyrillic script at the ICT College are quite good.
As a reminder, 59% of the students who participated in the study used Cyrillic script in the ed-
ucational process, although the predominant field of education is that of IT. The problem with
this profession can be found in the rapid development of new information technologies. In such
a race against time, it is much easier for teachers to introduce English terms and use Latin script
directly than to attempt to incorporate the Serbian language and Cyrillic script. However, we
believe that a high level of IT expertise should not be a barrier to nurturing native Serbian and
Cyrillic. In order to preserve Cyrillic script, the teachers of the College, and beyond, need to
cherish it more. This can also have a positive impact on students as shown in our case.

CONCLUSION

In our study on the usage of Cyrillic script in the educational process by the students at the ICT
College, conducted on a selected group of students and their papers, the obtained results have
indicated that 59% of the students used Cyrillic. This percentage is rather high given that the
predominant field of education at the College is that of IT. In the field of IT, English is the native
language of the profession, which entails the intensive use of Latin script.

The results were provided by a direct inspection of the students’ papers. This approach is direct
and objective because the students were able to opt for the script quite spontaneously, without
any special emphasis on the script concerned. In contrast, the common studies on the use of
information technologies in our country and worldwide, including the usage of Cyrillic script,
apply surveys whereby sampled respondents provide answers to the questions asked (Informat-
ics Association of Serbia, 2018; Josanov & Djurić-Kuzmanović, 2004; Statistical Office of the
Republic of Serbia 2017a, 2017b). However, it should be especially emphasized that the profes-
sors whose courses were herein analysed use Cyrillic script intensively in teaching and thus,
probably indirectly, influence their students.

According to the results of the survey on the use of Cyrillic websites by the selected organiza-
tions from our country, predominantly from the field of science and education, which was con-

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 IT-RELATED USAGE OF CYRILLIC SCRIPT
– A STUDY CARRIED OUT AT THE ICT COLLEGE OF APPLIED STUDIES, BELGRADE

ducted by the Informatics Association of Serbia, 57% of them have their websites available in
Cyrillic. The above findings are not quite good since they show that those who should take care
of the people’s identity, their knowledge and literacy, thus cherishing the Serbian language and
its original, i.e. traditional Serbian Cyrillic script, do not put enough efforts into it.

The knowledge of new information technologies is an indisputable task of education; howev-

er, it should not undermine the basic knowledge of the native Serbian language and Cyrillic
script. These two are not contradictory and they should not clash with each other. An increased
percentage of the usage of Cyrillic script in IT teaching can be achieved through a greater in-
volvement of teachers at all levels of the education system and in all courses, including the pro-
fessional ones, in respect to the Serbian language and Cyrillic script. This is not easy because
the profession does its part. It is much easier for teachers to directly introduce and use English
terms and Latin script in the field of emerging technologies. Nevertheless, they should make an
extra effort on this issue as their mission is to expand their students’ knowledge in any field. The
best method to direct students toward the Serbian language and Cyrillic script is to act as a role
model without major proclamations, as shown in our research.

REFERENCES

Association for defending the Cyrillic alphabet “Dobrica Erić”. (2011). Retrieved from www.
cirilica-beograd.rs
“Cherish the Serbian Language” campaign. (2015). Retrieved from www.bgb.rs/index.php/com-
ponent/content/article/2.-uncategorized/695-n-gu-sprs-i-zi
Constitution of the Republic of Serbia. (2006). Retrieved from www.srbija.gov.rs/cinjenice-o-sr-
biji/ustav-php
Constitutional Court of the Republic of Serbia. (1963). Retrieved from www.ustavni.sud.rs/
page/view/139-100028/ustav-republike-srbije
“Draft of the Cultural Development Strategy”. (2017). RTS (Radio Television of Serbia). Re-
trieved from www.rts.rs/page/stories/ci/story/124/drustvo/ 2764362/zastita-cirilice-i-jezi-
ka-vazni-za-kulturoloski-opstanak-drustva.html
ICT College of Applied Studies, Belgrade. (2007). Retrieved from https://www.ict.edu.rs
Jošanov, B. i Đurić-Kuzmanović, T. (2004). Rodne razlike u upotrebi računara, uspehu na ispit-
ima i istraživačkom radu u ICT i E-biznisu. CDROM Zbornik radova, YU iNFO, E-Soci-
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Marković N. i Bečejski Vujaklija D. (2018). Anketa o korišćenju ćirilice na Internetu. Informat-
ics Association of Serbia. Društvo za informatiku Srbije. Retrieved from http://dis.org.rs/
sr/?s=anketacir
Mihajlović, Z. & Ognjanović, J. (2006). Jedna analiza o tome da li znamo da koristimo baze po-
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March, 2006, 133 (1-4). ISBN 86-85525-01.
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(2017b). Upotreba informaciono-komunikacionih tehnologija u Republici Srbiji. Beograd.

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 ECONOMIC MIGRATION AND LABOUR TRAFFICKING
FROM BULGARIA
Georgi Petrunov1

DOI:

Abstract: Economic migration from the post-socialist countries to the countries of Western Europe
continues to be a highly dynamic process, with large migration flows marking the second decade of the
21st century. Bulgaria is no exception to this trend: thousands of Bulgarians each year migrate to West-
ern European countries. In search of well-paying jobs and a better life, some of them find themselves
trapped in trafficking schemes and fall victim to the modern form of slavery. This report explores traf-
ficking in human beings from Bulgaria to Western Europe, and in particular trafficking for the purpose
of labor exploitation. The research methods used include court case analysis and in-depth interviews
with prosecutors, investigators, police officers, NGO representatives and victims of trafficking. The
report examines the main reasons for involvement in labor trafficking, typical trafficking practices,
recruitment methods, and the various forms and economic sectors in which the victims are exploited.
Among the key factors for migration and labor trafficking the research highlights weak and slow eco-
nomic development, high levels of poverty and social exclusion coupled with the marginalization of
social groups, lack of adequate work and job insecurity, and high levels of crime.

Keywords: Economic disparities, Crime, Exploitation

1. INTRODUCTION

T he twenty-first century, as Anna Krasteva (Krasteva, 2014) points out, has been metaphor-
ically described by researchers as the „age of peoples on the move”, the „era of migration”,
and the „migration planet”. Although migration is not a new phenomenon, one can argue that
it has become one of the main features of the modern world and the trend is a steady increase
of the international migrant stock. The United Nations (UN, 2019) estimate that in 2019, there
are 271,642,105 migrants in the world, which is almost 120 million more than in 1990, when the
number of migrants was153,011,473. This means that in 2019, 3.5% of the world’s population are
migrants.

The multiple complex motivations and migration trajectories often combine economic, social
and political factors (Manning, 2013). Nevertheless, with the exception of periods of war, ethnic
or religious conflict, international movement is mostly economically motivated (Moch, 2013).
People from less developed countries are seeking opportunities for a better life for themselves
and their families in economically advanced countries, where they can find more jobs and
higher incomes than in their home country. Economic globalization and modern technologies
make the economic and social disparities between nations even more visible (Barner, Okech, &
Camp, 2014). According to some authors, the access to information about the conditions of life
in rich countries, as well as the easier contact with friends who have already gone abroad deep-
ens the perception of inequality and lack of prospects at home, motivating people from poorer
countries to migrate to richer countries (Jac-Kucharski, 2012; Cho, 2015; Mo, 2018).

1
University of National and World Economy, boul. 8th December, Sofia, Bulgaria
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As elaborated by Saskia Sassen (Sassen, 2002), with economic globalization various cross-border
circuits emerge, that have become a source for livelihood, accumulation of profits and foreign
currency in many countries around the world. These chains are specifically developed to generate
big profits, but at the expense of disadvantaged people. They include cross-border migration and
trafficking in human beings, and the exploitation of workers in formal and informal labor markets.

This report deals specifically with trafficking in human beings for the purpose of labor exploita-
tion. In particular, the paper analyzes the main aspects of this type of trafficking of Bulgarians
in Western European countries. The report draws upon sources and data collected through a
project funded by the University of National and World Economy, and includes desk research
of court cases and in-depth interviews with prosecutors, investigators, police officers, NGO
representatives and victims of trafficking.

2. CONDITIONS FOR THE DEVELOPMENT OF LABOUR TRAFFICKING

FROM BULGARIA

Scholars (Barner, Okech, & Camp, 2014) draw attention to the development of criminal mar-
kets, both between “developed” and “peripheral” countries, and in “peripheral”/developing na-
tions themselves – such as trafficking in humans. Bulgaria belongs to the so-called developing
countries, which after the fall of the communist regime in 1989 underwent radical changes in
the political, economic and social spheres. The country’s post-communist period is marked by
multiple economic and political crises. Furthermore, the enforcement of public policies of de-in-
dustrialization, deregulation, privatization, decentralization, and liberalization simultaneously
in key spheres - the social security system, health care and education, local government and
transport, in infrastructure and public services (electricity, water, etc.), in the labor market, etc.,
lead to the impoverishment and marginalization of large groups of people (Jeliazkova, 2011).

During the last ten years, the economic indicators in Bulgaria have improved. The GDP has
increased, unemployment levels have dropped, and the average monthly salary has risen. Nev-
ertheless, Bulgaria remains the country with the lowest per capita GDP in the European Union
(6,550 euro in 2018 compared with an EU 28 average of 28,270 euro)2, and with the highest per-
centages of people at risk of poverty or social exclusion (32,8 %3 in 2018). Although the average
salary has increased, almost 80% of the workers in 2017 are paid below that and more than half
of the workers have official incomes below the minimum wage (Ministry of Finance, 2017).
There are great wage differences between regions: according to data of the National Statistical
Institute4 while in southwestern Bulgaria (which includes the capital Sofia), the average gross
monthly salary reaches 700 euros, in the cities of the Northwestern Region (ranked second in
the EU for low purchasing power of the population) the average gross salary is around 400 euro.
Disparities like this are a strong push factor for migration – both internal and external.

Bulgaria is a source country of migration. Official statistics5 show that in 2018 only, 33,225
people emigrated from Bulgaria. This is the official number of people who have declared their
change of residence; the figure does not take into account seasonal migrants and those who have
2
Eurostat, Real GDP per capita, code [SDG_08_10].
3
Eurostat, People at risk of poverty or social exclusion, code [T2020_50].
4
National Statistical Institute, Average Gross Monthly Salary in 2019, available at: https://www.nsi.bg/bg/
content/, accessed on 28.10.2019
5
National Statistical Institute, External migration by age and gender, available at: http://www.nsi.bg/bg/
content/3072/, accessed on 28.10.2019
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 ECONOMIC MIGRATION AND LABOUR TRAFFICKING FROM BULGARIA

not declared they were living abroad. According to experts, the number of Bulgarians who have
emigrated since the 1990s is nearly 2 million (Jeliazkova et al, 2018). Other scholars point out
that for 90-95% of the Bulgarian emigrants who left the country in large numbers between 2000
and 2003, the main incentive was the opportunity to earn €15-20,000 per year, compared with
a typical annual salary of €1,000-2,000 for unskilled labor in Bulgaria; many of the emigrants
work in the lowest segment of the West European labor market (Bezlov et al., 2007, р. 128). A
recent study shows that among low-qualified Bulgarians, the wage levels for the same work are
much higher in Western Europe than in Bulgaria, which motivates people to look for employ-
ment abroad (Stoilova & Dimitrova, 2017).

The circumstances of large groups of people in poor socio-economic conditions who are looking
for a better life offer criminals a new niche, especially after the bans for free movement within
the EU were lifted. People living in poverty are more likely to accept risky job offers abroad or
to fall victims of exploitation by traffickers without being able to seek help. The Eastern Euro-
pean countries, including Bulgaria, are among the most affected by human trafficking and the
main countries of origin of victims of trafficking to richer countries, mainly in Western Europe
(Mattar, 2009; Shelley, 2014; UNODC, 2018). According to Europol (2016), most of the reported
victims are Bulgarians, along with citizens of the Czech Republic, Estonia, Poland, Romania,
and Slovakia. According to the UNODC (2018) report, 33% of the identified victims of traffick-
ing in the countries of Western and Southern Europe come from Southeast European countries.

The living conditions in Bulgaria and the strong desire of people to migrate, motivated by the
search for a better standard of living abroad, create a fertile ground for the operations of traf-
fickers who thus respond to the demands of exploitative employers for cheap labor (Mansoor &
Quillin, 2006; Mahmoud & Trebesch, 2010). The exploitation of victims of trafficking ranges
from sexual exploitation, forced labor, to begging and organ harvesting (Petrunov, 2014). The
next section of the report focuses on trafficking for labor exploitation.

3. ASPECTS OF LABOR TRAFFICKING FROM BULGARIA

In Bulgarian law,6 trafficking in human beings is defined as: “the recruitment, transportation,
transfer, harbouring or admission of persons, regardless of their will, through the use of coer-
cion, abduction, unlawful imprisonment, deception, abuse of power, abuse of vulnerability, or
by giving, receiving or promising benefits, to obtain the consent of a person having control over
another person when exercised for the purpose of exploitation.” According to the ILO Forced
Labour Convention from 1930, labor exploitation constitutes “all work or service which is ex-
acted from any person under the menace of any penalty and for which the said person has not
offered himself voluntarily.” The prohibition of forced labor relates to all types of work, services
and employment, regardless of industry or profession, whether the practice is legal and formal,
or illegal and informal in nature. The crime of labor exploitation involves practices such as slav-
ery or those similar to slavery, debt bondage and servitude (Europol, 2016).

The main destination countries of trafficking in human beings from Bulgaria are the Czech
Republic, Greece, Italy, Spain, Cyprus, but cases of forced labor involving Bulgarians are found
in Sweden, Norway, Germany, the United Kingdom, the Netherlands, Portugal and other West-
ern European countries. The analysis of the identified cases indicates that the most vulnerable
group for this type of trafficking are young to middle-aged men and women with low education
6
Cf. The Law on Trafficking in Human Beings in Bulgaria.
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and qualifications, who do not have a well-paid job in Bulgaria or work in seasonal employ-
ment. Most often, the recruiter is not the same as the exploiter himself; to recruit victims, the
recruiter publishes advertisements in media or relies on personal contacts in certain commu-
nities. Similar conclusions are found in the Europol report (2016): victims are lured through
word of mouth and online advertisements, posted on social media and on specific websites (e.g.,
online recruitment agencies). In one of the court cases investigated, traffickers recruited victims
directly in the Employment Office in one city in northwestern Bulgaria, promising the unem-
ployed lucrative jobs in Western Europe; however, on arrival at the final destination they were
exploited. A man who worked in Greece shares: “I found out from acquaintances that they may
introduce me to a person who arranges fruit-picking work in Greece… [He] offered me a good
salary, promised to take care of the paper work, even to drive me [there]. I agreed… we went
with his van and picked up other people along the way… When we arrived, we found ourselves
in hell.” Upon arrival in Greece, he finds himself a victim of labor trafficking; his documents
were taken by the traffickers, he was not free to travel, and had to work at different places each
day, but never received the agreed payment for the harvested produce.

Transportation in many of these cases is legal, with no resistance from victims, as they are
convinced that they will work abroad under pre-arranged conditions. After arriving in the coun-
try of final destination, the victims realize that the conditions are completely different from what
they have been promised in advance – both in terms of living and working conditions. One of
the respondents traveled to Sweden after an acquaintance offered him a job as an elderly car-
egiver. Upon arrival, he was taken to the outskirts of the city and accommodated with another
Bulgarian in a tent, located in a wooded area – without sewage, without electricity, with food
brought by the trafficker from time to time: “I didn’t know where I was or how to get to the
city ... It was scary, you don’t know what might happen, a dungeon everywhere.” Regarding the
work, the respondent realizes he has been deceived: “I did not become a caregiver. They lied to
me. [The trafficker] made us carry the beams and metal for a cottage in the forest. They were
building it; we were just laborers. [He] said, let’s get the job done here first, then he’d arrange
for us work as caregivers. And that was a lie, it was clear.”

The sectors in which Bulgarian men and women are exploited are most often agriculture, har-
vesting of fruits/vegetables and the food industry; women are exploited as seamstresses or do-
mestic helpers, and men in construction and logging. Usually the victims work from morning
till night, with little or no breaks. The victims who were interviewed stated that they were forced
to work between 10 to 14 hours a day, six to seven days a week. A young woman who worked
in Germany says: “It was hard [picking strawberries] work, you squatted most of the time, but
that wasn’t the problem. The bad thing is that they made us work 10-11 hours with two breaks
of 20 minutes each. We rarely drank water and there was almost no time to eat. Considering that
we worked without a day off sometimes, after a week you felt like dying. You can’t get a good
night’s sleep, [it was] very bad.” The pay is well below what was agreed. The interviews show
that almost all of the employees got money withheld from the workers’ wages for shelter, food
(though only once a day), for arranging the paperwork and transportation. After covering these
and other daily expenses, there is hardly any money left for the workers – in some cases they do
not have enough to buy a ticket to return home. In many cases, the exploiters tell victims that
they’ll be paid at the end of the season, forcing them to stay if they want to get anything at all.

Information gathered from court documents shows that this type of trafficking is most often
organized by small groups, often with family ties between the members who have established

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 ECONOMIC MIGRATION AND LABOUR TRAFFICKING FROM BULGARIA

networks of contacts in the countries of destination. Group leaders and their confidants usually
reside in the destination country and control the victims. The main means of control in traffick-
ing for forced labor include threats that if the victim leaves, they will not receive any money; con-
stant surveillance during work; taking the victims’ personal documents; threats to inform local
authorities that the victim is residing and working illegally. In many cases, victims are also con-
trolled by the debt they have accumulated (typically, the money borrowed to travel to the country
of destination and the cost of staying). In some cases, traffickers also use physical violence.

4. CONCLUSION

The study shows that among the key factors for migration and labor trafficking are weak and
slow economic development, associated with huge economic inequalities between regions and
countries; high levels of poverty and social exclusion coupled with the marginalization of social
groups; lack of adequate work and job insecurity; high levels of crime. Notwithstanding the fact
that there will always be poorer and richer countries, that the free movement of people cannot
and should not be restricted, that the pursuit of wellbeing should not be denied anyone, one
question remains open: How to make this movement safer? In this respect further analysis and
identification of the most vulnerable groups is needed, along with identification of the measures
to improve their situation first in their home country. We also need to examine more rigorously
the factors behind the increase in the number of people being trafficked and how these factors
can be eliminated or at least mitigated.

These issues relate to the so-called supply side of trafficking; on the other side is the demand
for the services offered by traffickers through the exploitation of their victims. Therefore, the
demand side must necessarily be included in the formula to mitigate the severity of the problem
and to reduce its scale. As long as in destination countries employers go unpunished for using
cheap labor by violating not only labor but also human rights, no adequate response to the is-
sues can be expected. Only the close collaboration of all stakeholders, including researchers,
experts from civil society organizations, social workers, law enforcement officials and govern-
ment agencies, can ensure that the problems are properly addressed and the policies for preven-
tion and combating trafficking in human beings and the measures implemented are based on
knowledge and best practices.

ACKNOWLEDGMENT

This paper is result of the author`s work in frame of research project № NID NI-10/2018: “Mon-
ey Laundering from Human trafficking” financed by University of National and World Econo-
my, Sofia.

REFERENCES

Barner, J., Okech, D., & Camp, M. (2014). Socio-economic inequality, human trafficking, and
the global slave trade. Societies, 4, 148–160; https://doi:10.3390/soc4020148.
Bezlov, T., Gounev, P., Petrunov, G., Tzenkov, E., & Tzvetkova, M. (2007). Organized crime in
Bulgaria: Markets and trends. Sofia: Center for the Study of Democracy.
Cho, S.Y. (2015). Modeling for Determinants of Human Trafficking: An Empirical Analysis.
Social Inclusion, 3, 2-21 (Special Issue „Perspectives on Human Trafficking and Modern
Forms of Slavery”). http://dx.doi.org/10.2139/ssrn.2117838.

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Europol. (2016). Trafficking in human beings in the EU. Hague: Europol Public Information.
Jac-Kucharski, A. (2012). The Determinants of Human Trafficking: A US Case Study. Interna-
tional migration, 50(6), 150-165. https://doi.org/10.1111/j.1468-2435.2012.00777.
Jeliazkova, М. (2011). Inequality and policies. Trojan: Alja (in Bulgarian).
Jeliazkova, M., Minev, D., Draganov, Dr., Krasteva, V. & Stoilov, A. (2018). Youth employment
policies in Bulgaria. Tallinn: Tallinn University. Retrieved from: http://www.except-pro-
ject.eu/working-papers/.
Krasteva, А. (2014). From migration to mobility: Policies and routes. Sofia: New Bulgarian
University Publishing House (in Bulgarian).
Mahmoud, T.O., & Trebesch, C. (2010). The economics of human trafficking and labour mi-
gration: Micro-evidence from Eastern Europe. Journal of Comparative Economics, 38(2),
173–88. https://doi:10.1016/j.jce.2010.02.001.
Manning, P. (2013). Migration in world history. Abingdon: Routledge.
Mansoor, A., & Quillin, B. (2006). Migration and Remittances: Eastern Europe and the Former
Soviet Union. Washington, DC: World Bank.
Mattar, M. (2009). Trafficking in persons: Global overview, current trends, and pathways for-
ward. Washington, DC: John Hopkins University.
Ministry of finance. (2018). Data provided by Ministry of finance in response to a question from
the Member of Parliament Jelio Boichev. Retrieved from: https://www.parliament.bg/pub/
PK/318729854-06-1098.pdf.
Mo, C.H. (2018). Perceived relative deprivation and risk: An aspiration-based model of human
trafficking vulnerability. Political behavior, 40(1), 247-277. https://doi:10.1007/s11109-017-
9401-0.
Moch, L. P. (2013). Lessons and cautionary tales from the past: Building bridges from migration
history to Europeanness. National Identities, 15(1), 9-19. https://doi:10.1080/14608944.201
2.733151.
Petrunov, G. (2014). Human trafficking in Eastern Europe: The case of Bulgaria. The An-
nals of the American Academy of Political and Social Science, 653(1), 162-182. https://
doi:10.1177/0002716214521556.
Sassen, S. (2002). Women`s burden: Counter-geographies of globalization and the fem-
inization of survival. Nordic Journal of International Law, 71(2):255-274. https://
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Shelley, L. (2010). Human trafficking: A global perspective. New York: Cambridge University
Press;
Stoilova, R. & Dimitrova, E. (2017). Emigration from the Perspective of School to Work Tran-
sition in Bulgaria. Czech Sociological Review, 53(6), 903-933. https://doi:10.13060/00380
288.2017.53.6.380
United Nations. (2019). Workbook: UN Migrant stock total 2019. United Nations, Department
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UNODC. (2018). Global report on trafficking in persons 2018. New York: United Nations.

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BIODIVERSITY CONSERVATION AND AGRICULTURAL TERRACES:
A CASE STUDY ON THE ISLAND OF KYTHIRA (GREECE)
Alexandra Solomou1

DOI:

Abstract: Agricultural terraces and terrace walls are a conspicuous feature of the Mediterranean
landscapes. The aim of the study is the contribution of agricultural terraces and terrace walls in the
biodiversity conservation of the Kythira island. Analysis of the literature from the main academic re-
sources databases and personal interview surveys indicate that agricultural terraces and terrace walls
provide various goods and services, which are vital, and they are potential and interesting resources
for the development of this area. It is noteworthy that agricultural terraces and terrace walls are an
important habitat for biodiversity. Consequently, these landscape elements should be preserved and ex-
ploited as favor the components of biodiversity which are the source of our food and medicines, fibers,
fuels and industrial products. The direct uses of the components of biodiversity contribute substantially
to the economy and tourism development.

Keywords: Flora, Fauna, Environment, Protection, Agrotourism, Mediterranean.

1. INTRODUCTION

1.1. The Natural Environment of Kythira

T he island of Kythira, also known as Cerigo, is located south of the southeastern tip of the
Peloponnese. The area of ​​Kythira is 277.28 km2 and the length of the coastline is 114.24
km, while taking into account the 22 islands around it, the total area is 278.65 km2. Its general
geomorphologic picture is semi-mountainous, dominated by a low plateau of 200-300 meters,
which is often interrupted by gorges and some valley-like configurations. This plateau leads to
steep cliffs to the west and south, and to the east and north, to smoother and lower formations,
with many beaches. There are several islands and islets around, with the most important being
Dragonares in the east and Avgo or Hitra in the south (Aggelidis et al., 2016). Most of the Kyth-
ira area belongs to the category „forests and semi-natural areas” (63.35%), 36.38% of the total
area belongs to the category „agricultural areas” and 0.27% to artificial areas (Figure 1).

The climate of Kythira is temperate Mediterranean. According to Hellenic National Meteor-

ological Service (HNMS) statistics (1955-1997), the region is characterized by a dry, warm
season during the summer months, with relatively high temperatures and moderately low tem-
peratures during the winter months. It is noteworthy that Kythira possesses significant natural
wealth (flora and fauna), composing a highly versatile mosaic that can offer multiple emotions
to the visitor.

Specifically, the EZD area GR3000010 - NISIDES KYTHIRON: PRASONISI, DRAGON-

ERA, ANTIDRAGONERA (total area: 989.13 ha) is important for flora [e.g. Allium gomph-
renoides Boiss. & Heldr., Anthemis scopulorum Rech. f., Centaurea raphanina subsp. mixta
1
Institute of Mediterranean and Forest Ecosystems, Hellenic Agricultural Organization “Demeter”, N.
Chlorou 1, 11528, Ilisia, Athens, Greece
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(DC.) Runemark etc.], the bird (eg Anthus campestris, Falco eleonorae, Lanius senator etc.) and
its mammals (eg Monachus monachus, etc.). Also, SPA GR3000013 - KYTHIRA KAI GYRO
NISIDES: PRASONISI, DRAGONERA, ANTIDRAGONERA, AVGO, KAPELLO, KOUFO
KA FIDONISI (total area: 5392.46 ha) (Map 1) are important for breeding species and marine
species. It has been designated as SPA for the following birds: Calonectris diomedea, Puffinus
yelkouan, Phalacrocorax aristotelis, Falco eleonorae, Falco peregrinus, Larus audouinii and
Emberiza caesia (FILOTIS, 2018).

Figure 1. The Natural Environment of Kythira (Photo: Dr Alexandra Solomou).

2. MATERIALS AND METHODS

Data for the current study were taken from previously published work and to ensure the credi-
bility only indexed research and review articles were used. The databases were included: Scop-
us, Google Scholar, PubMed, Science Direct, and MEDLINE. Also, we carried out personal
interview surveys (Fowler, 2002) with the residents of Kythira island (Map 1) in 2017 and 2018.

Map 1. Greek island Kythira.

14
 BIODIVERSITY CONSERVATION AND AGRICULTURAL TERRACES:
A CASE STUDY ON THE ISLAND OF KYTHIRA (GREECE)

3. RESULTS AND DISCUSSION

3.1. Dynamics of stone terraces and walls in the natural environment

The island of Kythira is the crossroad of Mediterranean cultures. The fire caused in 2017 ex-
posed the stone terraces and walls (Figure 2), works that span hundreds of years, whose main-
tenance and extension continued until the 1960s, as they are elements of the Greek landscape
and its features. Greek countryside. According to Koulouri (2004) terraces are, historically, one
of the most important and characteristic human interventions in shaping the Mediterranean
landscape. They are a very important element of the historical and cultural heritage of the Med-
iterranean peoples and at the same time of great aesthetic and environmental value.

The stone terraces and stone walls (Figure 2) are very likely to have been conceived by the island’s
inhabitants in ancient times so that they can cultivate the land, mainly due to the steep the slope of
the soil and to some extent secure their survival. Traditionally, the art of tiering has been passed
down from generation to generation, among members of each artisan family. Terrestrial farming
has largely been abandoned by the mechanization of agriculture, extensive farming and the reduc-
tion in the share of human labor in agricultural production (Crhysanthaki, 2005).

Figure 2. Stone terraces and walls in the Kythira landscape (Photo: Dr Alexandra Solomou).

It is noteworthy that the systems of stone terraces and walls (Figure 2) provide a multitude of
benefits for both the environment and human societies. They provide Ecosystem Services that
are vital, especially in island regions. More specifically, the most important benefits of main-
taining stone terraces and walls are:
• Prevention of soil erosion, both by the action of water and by air,
• Protection during extreme weather, preventing floods and contributing to the creation
of a local microclimate,
• Production, under conditions, of high-quality products,
• The creation of suitable micro-habitats for the conservation, protection and enhance-
ment of biodiversity,
• Maintaining the high aesthetic and cultural value of the Mediterranean landscape [1,5].

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3.2. Contribution of stone terraces and walls to biodiversity conservation

Stone terraces and walls are an integral part of the Mediterranean landscape (Figure 3). In many
cases, they create ecological seals/habitats/nests offering a permanent or temporary refuge to vari-
ous biodiversity components, e.g. invertebrates, reptiles, birds, etc. One of the reasons that terraces
create fires is that they are normally oriented so that „retaining walls during the day store solar en-
ergy, which is released at night, thereby creating local microclimate” suitable for supporting many
organisms, leading thus increasing biodiversity (Vernikos et al., 2001). In essence, they create an
artificial habitat and organism shelter that is enhanced by the increase in landscape mosaics.

The micro-environment at the base of stone terraces and walls is a refuge of high humidity and
increased primary productivity (dense vegetation), factors which are important for invertebrate
populations (e.g. spiders, phalanx, Carabidae, Staphylinida, etc.) (Arnett et al., 2002, Dajoz
2002). During the summer months the slits and openings of the stone terraces and walls ac-
commodate large numbers of other invertebrates (e.g. snails) that pass the grouping period in a
protected microclimate. This is probably due both to the high humidity of the stone terraces and
walls, and to the increased calcium requirements for the construction of snail shells, factors that
make them ideal environments for organisms.

Figure 3. Stone terraces and walls as an important source of biodiversity

(Photo: Dr Alexandra Solomou).

As regards the reptiles, their exothermic role plays a decisive role in the selection of „good” cal-
orie sites where there are rich food and predator protection (Adolph, 1990). Stone terraces and
walls are places for this activity and they are selected by reptiles. In addition, these areas of the
island’s rural landscape are very important for wildlife, because they are an important refuge
for a large number of species (e.g. reptiles, smallpox and insects) that constitute important food
for many bird species.

Stone terraces and walls are also an important habitat for flora diversity and habitat for dry or
shady plants as they find a safe retreat site, a haven of life. The flora that grows in these areas
hosts species that are scattered by the natural flora of neighboring areas. Plant species vary
greatly from place to place depending on geographical location (climate, altitude, etc.) (Peta-

16
 BIODIVERSITY CONSERVATION AND AGRICULTURAL TERRACES:
A CASE STUDY ON THE ISLAND OF KYTHIRA (GREECE)

nidou, 2001). Also, the age of the building, the conservation of moisture at least once a year,
and the north orientation or shading (which indirectly regulate the amount and / or moisture
duration) favor the growth of herbaceous plants (Pafilis, 2014).

4. FUTURE RESEARCH DIRECTIONS

Future research should continue for biodiversity monitoring and management actions which will
allow this wealth to maintain and to be inherited undisturbed in future generations. Also, it will
be studied the promotion of agrotourism in Kythira island. It is important to be referred that
agrotourism is a mild alternative form of sustainable tourism development and multiactivity in a
rural area, which aims to: a) help the visitor get acquainted with the rural area, the cultural and
authentic features of the area, the farming activities, the local products, the traditional cuisine
and the daily life of the residents, b) bring the visitor in touch with nature as well as the activities
in the countryside, in which he can participate, entertain and feel his joy navigation, knowledge,
information and discovery, c) mobilize the productive, cultural and developmental forces of the
place, thus contributing to the sustainable economic and social development of Kythira rural area.

In addition to the proposed framework, some additional proposals to support Kythira’s develop-
ment include: a) Protecting the local product and developing an integrated marketing strategy to
achieve benefits at the individual and collective level and b) Strengthening the sustainable char-
acter of tourism development on the Kythira island and turning to alternative forms of tourism,
in the context of exploiting the local product. This strategy would have as a result the extension
of the tourist season, with even more positive consequences for Kythira island.

5. CONCLUSION

In conclusion, stone terraces and walls are part of the island’s cultural tradition and heritage,
which should be preserved and exploited with a view to an environmentally sustainable spatial
development with effective and coherent protection of the environment and its cultural heritage,
of biodiversity and adaptation to climate change. Finally, Greece offered to develop agrotourism
because of its natural beauty and its history and tradition. The research on biodiversity, sus-
tainability and agrotourism may provide guidance for researchers, policymakers and funding
agencies to prioritize research questions and frame their activities.

ACKNOWLEDGMENT

We thank the Institute of Mediterranean and Forest Ecosystems, Hellenic Agricultural Organi-
zation “Demeter” for their bibliographic database and assistance.

REFERENCES

Adolph, S.C. (1990). Influence of behavioral thermoregulation on microhabitat use by two Scele-
porus lizards. Ecology, 71(1):315-327.
Aggelidis, Ch., Georgiadis, N., Kordopatis, P., Portolou, D. and Tsiopelas, N. (2016). Recording
and Evaluation of the Kythira and Antikythera Natural Environment. Mediterranean Insti-
tute for Nature and Man - Hellenic Ornithological Society, Athens (in Greek).
Arnett, R.Jr, Thomas M.C., Skelley, P.E., Frank, J.H. (2002). American Beetles, Volume II: Pol-
yphaga: Scarabaeoidea through Curculionoidea. CRC Press LLC, Boca Raton, FL.

17
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Chrysanthaki, Ch. (2005). Aesthetic Value of the Upgraded Landscape and its Development in
the Sustainable Development Education. Bachelor’s thesis. School of Humanities. Depart-
ment of Preschool Education and Educational Design Sciences. University of the Aegean.
Mytilene.
Dajoz, R. (2002). Les coléoptères carabidés et ténébrionidésmTec & Doc Lavoisier.
FILOTIS. (2018). Available at: https://filotis.itia.ntua.gr/biotopes/c/GR3000010/ (Accessed
10.10.2018).
Fowler, F.J. (2002). Survey Research Methods, 3rd ed. Thousand Oaks, CA: Sage.
Hellenic National Meteorological Service (HNMS) (1955-1997). Available at: http://www.hnms.
gr/emy/el/ (Accessed 19.10.2018).
https://esajournals.onlinelibrary.wiley.com/doi/pdf/10.2307/1940271#accessDenialLayout
Kiráľová, A., & Hamarneh, I. (2018). Urban tourism competitiveness of selected European cities.
In V. Bevanda (Ed.), Recent Advances in Information Technology, Tourism, Economics,
Management and Agriculture. Paper presented at 2nd International Scientific Conference
ITEMA 2018, Graz University of Technology, Graz, November 8, 2018 (pp. 125-133). Bel-
grade: Association of Economists and Managers of the Balkans. https://doi.org/10.31410/
itema.2018.125
Koulouri, M. (2004). Soil water erosion and land use change in the Mediterranean: abandoning
traditional extensive cultivation. Doctoral thesis. Environment Department. University of
the Aegean. Mytilene.
Pafilis, P. (2014) Dry stone, biodiversity supports. Scientific Research Program 2013. Ioannis S.
Latsis Public Benefit Foundation. National and Kapodistrian University of Athens, Greece.
Petanidou, Th. (2001). The role of terraces in the past and their importance for the future of the
islands in terms of economy, ecology and culture. Final Technical Report to the Ministry
of the Aegean. Mytilene, Greece.
Vernikos, N., Daskalopoulou, S., Paylogeorgatos, G. (2001). Proposal for Classification of Stone
Structures. In M. Varte-Matarangas, Katselis Y. (Ed.), The Building Stone in Monuments.
Paper presented at the International InterdisciplinaryWorkshop Scientific Conference
ICOMOS – IGME 2001 (pp. 170-270) Mytilene, Greece.

18
 URBAN AND ARCHITECTURAL PERFORMANCES
IN THE FUNCTION OF DEFINING OF STRATEGY
OF SUSTAINABLE DEVELOPMENT OF TOURIST DESTINATION
Spasoje Tuševljak1
Miodrag Simović2
Vladimir Simović3
Ivan Tuševljak4

DOI:

Abstract: Development of science and positive practice are increasingly emphasizing the importance
of multidisciplinary approach in resolving problems in the domain of nature, society and economy,
and in particular problems generated by interaction of various factors of influence of apostrophized
strategic areas. As diverse the factors of action are, diversity of character of action by areas and syn-
ergy is manifested even more, which emphasizes the need for planning and monitoring of effects. In
this context, observed relationships between natural, social and economic structures indicate the lack
of indigenous self-regulation by fields and the complexity of synergy and interactions. As the whole
paradigm is situated in a given milieu, from micro location to universe, the role of space becomes im-
portant, placing spatial planning, urbanism and architecture as scientific disciplines dealing with the
phenomenology of space, its significance and effect on the phenomena of nature, society and economy,
sequentially and as a whole.

Keywords: Spatial Planning, Architecture, Development, Ownership, Institutions.

1. INTRODUCTION

S patial planning includes a wide range or relevant natural, technological, economic and social
factors, having the intention to formulate principles and aims of sustainable development
by optimizing available factors within given spatial framework. As it is natural that potentials
and resources are situated in the space, so is natural interdependence of economic activities and
space, as well as pluralism and rivalry of ownership portfolio and interests, which emphasize
the significance of legal regulation and functionality and stability of institutional settings.

Tourism has become an economic branch on the rise thanks to numerous circumstances, be-
fore all globalization of world economy, growth of mobility of production factors, but also au-
tochthonous specificities of business itself that opens optimistic perspectives to everyone; for
development, growth of employment and compensation of losses caused by globalization and
liberalization of market with negative implications in many sectors and branches. Comparative
advantages as those exotic natural circumstances, attributes and characteristics undeveloped
countries have – are not sufficient for use for tourism development dynamization. A sophisti-
cated view of all circumstances is needed to effectively valorize human and material resources

1
University of Economy of East Sarajevo, Alekse Šantića 3, 71240 Pale, Bosnia and Herzegovina
2
Constitutional Court of Bosnia and Herzegovina, R.Dž.Čauševića 6/III, 71000 Sarajevo, Bosnia and Her-
zegovina
3
Prosecutor’s Office of Bosnia and Herzegovina, Kraljice Jelene 88, 71000 Sarajevo, Bosnia and Herzegovina
4
Preduzetnik.IT, Stari Grad, Belgrade, Serbia
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the country has, which implies the creation of development strategies, economic and current
policies with a sophisticated and forward-looking approach to achievement of future goals.

Spatial planning encompasses a wide range of relevant natural, technological, economic and
social factors in order to formulate the principles and goals of sustainable development by op-
timization of available factors within given spatial framework, so as to distinguish between
local, regional, national and transnational spatial planning documents and concepts. Urbanism,
on the other hand, defines the conditions and mechanisms of operational purpose with the aim
of harmonization and optimization of natural, social and economic performances for generating
of sustainable development, while architecture creates functional and aesthetic dimensions of
use and visual recognition. As it is natural that potentials and resources are located in space, so
is natural and necessary appropriate legislation that regulates all the aspects in a creative and
effective manner, connections and interactions of economic activities and spaces.

2. URBANISM AND ARCHITECTURE AS FRAMEWORK FOR FORMULATING

THE TOURIST DESTINATION DEVELOPMENT STRATEGY

The urban framework and architectural solutions primarily determine the attractiveness of
tourist destination, but also business opportunities and effects of functional and aesthetic per-
formances, in general and in details, which is certainly the most important. Unfortunately, the
circumstances of poor and underdeveloped countries are such that the lack of money, knowl-
edge, vision and functional institutions is most often compensated by ad hoc improvisation,
which generates errors that are difficult to eliminate and expensive.

Of course, not even the richest people are immune to mistakes, but they are less frequently made
and easier to repair. However, the impression is that the area of spatial planning and architecture
is important only insofar as it allows political and investment elites to provide “soft” mobility
and low costs at a certain moment, which in the long term limits the possibilities of valorization,
but also multiplies social expenditures on various basis, now and in future.

In order to come up with solutions that optimize the valorization of potentials, a sophisticated
research approach is needed when formulating strategies and operational mechanisms for im-
plementation. This approach is sui generis challenging in the context of Jahorina tourist des-
tination, due to growing disparity between fascinating natural performances and huge social
and private investments, on the one hand, and realized exploitation effects, on the other, that
worryingly stagnate and threaten the survival. It must be noted that the existing situation was
significantly negatively influenced by urban-architectural solutions.

It is extremely important for a tourist destination that it is urbanistically functional and archi-
tecturally recognizable, which is not only a picture of the landscape and visual identity that
visitors will take with them, but also the basis on which commercial and business strategies are
built. In order to create conditions for formulating commercial and business strategies and their
functional harmonization, it is necessary to first build mechanisms for defining spatial planning
strategies and architectural solutions frameworks.

Infrastructure potential and concept of visual recognizability is formatted by the strategy of

spatial planning and framework of architectural solutions, which is at the same time basis
for formulating competitive business strategies and their operationalization. Spatial planning

20
 URBAN AND ARCHITECTURAL PERFORMANCES IN THE FUNCTION
OF DEFINING OF STRATEGY OF SUSTAINABLE DEVELOPMENT OF TOURIST DESTINATION

should look at the totality of natural, economic and demographic potentials in the context of
goals that are to be achieved, now and in the long term. It is an unquestionably complex mission
that entails a multidisciplinary approach, which generates complications in coordination and
harmonization of diverse doctrinal and methodological approaches and propositions.

It is a long and complex journey from vision, concept and instruments, to planning documents
and institutional operationalization, that, perhaps most expressive, describes a well-known Lat-
in proverb “per astera ad astra”. The paradigm of the phenomenon is compounded by the fact
that spatial planning formulates vision, performance strategies and instruments that effectively
affect economic, legal, social, demographic and employment status and perspectives, which
certainly implies branch, regional, local, but also political controversies and rivalries.

The study of the impact of urbanism and architecture on the position and perspectives of sus-
tainable development of Jahorina tourist complex is indisputably intriguing and significant not
only in the context of apostrophized aspects, but also in the context of assessment of the possi-
bilities for overcoming of generated constraints in order to create better conditions for business-
es to grow their competitiveness and profitability. .

3. CULTURAL HERITAGE, SOCIAL AND ECONOMIC CIRCUMSTANCES

AND THEIR IMPACT ON THE PROCESS OF FORMULATING
AND PROJECTING OF URBAN AND ARCHITECTURAL PERFORMANCES

Urban and architectural vision is primarily determined by heritage, level of technocratic devel-
opment of the profession and talent and gift of architect. In doing so, vision is always situated in
given socio-economic context, which defines the goals to be achieved, as well as the means and
instruments for the realization of set goals.

An analysis of the current state of urban functionality and architectural recognizability indi-
cates that the existing configuration is the result of ideological heritage and preferences of social
and political factors whose primary goal was to meet the needs of social groups, so that market
valorization was at the second place. According to such preferences, established goals were not
primarily economic but social and propaganda in a way that rest and recreation could be used
by workers and their families, unions, youth and ferrymen under privileged conditions, with a
wide range of socialization and loss recovery mechanisms.

In such conditions, many companies and institutions have built capacities “by directive” without
necessary complete urban and architectural projects, but also without professional elaborations
and economic feasibility projects. This has resulted in activation of numerous construction and
infrastructure facilities without institutionally authorized building and use permits and resolved
ownership status.

The mortgage of (ir)reparable failures from the past complicates resolution of cumulated prob-
lems, as in sphere of value system so as in profiling of vision for the market environment and
inexorably harsh economic conditions, which economic theory classifies as a model of complete
competition. In this context, a new strategic role and generated reach of urbanism and architec-
ture in development of economy and society as a whole should be formulated, which in modern
conditions implies a multidisciplinary approach and sophisticated future forecasting mecha-
nisms in order to create solutions of a higher degree of reliability in assessment of changes.

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At the present moment, the circumstances are further complicated by the persistent crisis, which
discourages investors and limits investment opportunities, and without additional investments for
optimization of urban performances, it is not possible to revitalize the yield potential of existing
capacities or to build new ones. The problem is all the greater because significant investments are
also needed to improve financial position and for financial consolidation, which in given circum-
stances is impossible without adequate support and interventions from social funds.

What to choose as a priority for investment in case of limited resources - optimization of urban
performances or consolidation of financial position, is a question for economic policy mak-
ers, which the fate of Jahorina tourist complex depends on, in many respects. The problem is
additionally complicated by both the ideological confusion caused by transition and lack of
answers for overcoming of economic crisis, as well as political conflicts, improvisation and lay
arbitration when selecting economic policy priorities that, instead of growth, produce regional
rivalries and animosities, as well as branch and structural mismatches. Such circumstances
clearly affect the neglect of the potential of touristic economy as a whole, and consequently the
potential of the Jahorina tourist destination, although this economic branch has a pronounced
multiplier effect on the growth of the conjuncture, employment and GDP.

Optimization of urban performances is extremely important for the market valorization of tour-
ist complex potential, as it creates the conditions for the revitalization of the yield position
through diversification of supply. The revitalization of the yield position is unthinkable without
urban situation of the conditions for infrastructure investments, new facilities on offer, tradi-
tional crafts and production, including complementary sectors which create circumstances for
full utilization of capacities in season and “off-season”.

Unfortunately, economic crisis is not the only limiting factor for creating of innovative urban
concept and architectural recognition. Limiting factors are also lack of knowledge and good
practice, neglect and marginalization of profession and aforementioned absence of a systematic
approach, long-term vision and harmonization of branch, regional and strategic performances,
which limits planners to create functional spatial plans for a dynamic and sustainable economic
development. In the conditions of globalization, where market mechanism and the principle of
competitiveness dominate, the incompleteness and imperfections of urban performances radi-
cally limit business opportunities of economic entities.

4. A NEW URBAN-ARCHITECTONIC VISION OF JAHORINA TOURIST

DESTINATION IN THE FUNCTION OF GROWING BUSINESS
PERFORMANCES AND DYNAMIZATION OF DEVELOPMENT

From the very beginning, development of the Jahorina tourist destination took place in the con-
text of a poor country, where the first steps were taken by enthusiasts and proprietors inspired
by the beauty of the landscape and the extraordinary natural and climate conditions of the
complex. Although prosperity periods and certain significant events, before all the 1984 Winter
Olympics, generated investment and development conditions for tourism, the approach and phi-
losophy of development did not change significantly, as this resource is recognized as a complex
rather than a tourist destination, which is not just a semantic difference.

In architectural and urban terms, the complex is understood as a set of objects and functional
possibilities for realization of program contents and the needs of users, while destination im-

22
 URBAN AND ARCHITECTURAL PERFORMANCES IN THE FUNCTION
OF DEFINING OF STRATEGY OF SUSTAINABLE DEVELOPMENT OF TOURIST DESTINATION

plies a broader context of attractions, organization and functions, which unambiguously indi-
cates both larger functional possibilities and scope, as well as evident commercial potential and
promotional recognizability. In that sense, Jahorina is still positioned as a complex today rather
than a tourist destination, because of the vision of development up to date, planned interventions
and inadequately perceived implications, but also because of negative political changes, the dis-
solution of the country, wars, devastation of infrastructure and facilities.

Due to improvisation and the absence of systematic approach in formulating a development

vision, strategic decision makers have for many years preferred the development of skiing in-
frastructure and accommodation capacity without fully considering the possibilities generates
integrated and harmonized infrastructure setting. Infrastructure setting cannot be optimized
without a creative vision and strategic spatial planning that defines the construction conditions
by urban-architectural mechanisms, broad enough, but also with important details and neces-
sary coverage in spatial and substantive sense. Otherwise, all approaches that favor a single
infrastructure segment significantly limit urban planners and architects, so that designed solu-
tions appear as a limiting framework for valorization of potential.

The current state of urban and architectural performances is not at a level that would allow re-
structuring of the complex and its transformation into a prestigious tourist destination without
redefining the concept of development and significant investments. The new approach should
be conceived on contemporary spatial planning principles by formulating the interaction mech-
anisms of natural, social and economic resources to generate sustainable development.

In such an approach, it is important to create urban and architectural solutions, based on analyt-
ical view of the current situation, that will enable functional parameters for valorization so as
to effectively use all the opportunities provided by: (1) existing facilities and infrastructure of
the complex for creating of contents enabling diversification of offer and the growth of capacity
utilization scale by taking advantage of all comparative advantages of natural and economic
parameters, (2) social infrastructure in the immediate hinterland (East Sarajevo and Sarajevo),
(3) complex hinterland; rural regions in the Northeast, East and Southeast and urban hinterland
of East Sarajevo and Sarajevo in the West, and (4) contemporary science of spatial planning in
order to formulate urban architectural determinants for achieving of sustainable development.

1. Existing facilities and infrastructure of the complex allow significant improvements and
redefining of urban solutions, which should be used to interpolate sports, recreation, cul-
tural events, seminars, congresses, student and professional events and meetings, art colo-
nies, festivals and happenings, with interventions to improve and diversify the contents of
operational logistics, in order to create conditions for diversification of offer and transition
from seasonal to year-round business. Certainly, in all of this it is necessary to revitalize
promotional activities, with serious systematic effort and rehabilitation of Jahorina as an
Olympic mountain and rare and exceptional tourist resource. Focusing on urban-archi-
tectural settings and prioritizing new investments is a rational solution given the circum-
stances of the crisis and limited funding sources.

2. An impressive and representative social infrastructure in the near hinterland is undoubt-
edly developmental advantage that should be used to address strategic and operational
constraints, both in the development and business domains, with intention to generate
partnerships in the implementation of projected sustainable development goals.

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3. The effort to create mechanisms for valorization of potentials of rural environment of

gravitational regions in the East and urban hinterland of East Sarajevo and Sarajevo in the
West by creating conditions for development of traditional businesses and crafts, their pro-
motion and branding in the function of offer diversification, is of great importance, which
will stimulate demand growth not only in the urban hinterland, but beyond.

4. Contemporary science of spatial planning has largely affirmed a multidisciplinary ap-

proach to the studying of this phenomenon, emphasizing the need to harmonize natural,
social and economic performances in order to achieve long-term sustainable development,
which is ultimately a strategic civilization act. Scientific propositions and good practice
analysis in this field benefit small underdeveloped economies in formulating sustainable
development strategies, with the phenomenology of space being an extremely complex and
demanding issue that implies the necessity of continuous, sophisticated professional care
and regulation, in order to generate optimal contribution to economic and social develop-
ment, and maintain natural balance.

Encouraging is the fact that, both at global level5 (in Europe) and domicile (in the Balkans),
operational efforts and measures have been evident for almost 90 years to affirm and apply
scientific principles and propositions of functioning in this important area through normative
and management actions, which resulted in the adoption of appropriate documents that sought
to achieve certain harmonization and standardization of solutions. Thus, in 1933, the European
Council of Spatial Planners (ECSP) adopted the Athens Charter, and in 1998 issued a new Ath-
ens Charter with the ambition to address the problems and recommend ways to address many
challenges of spatial development at the threshold of the new century. The new Athens Charter
has undergone appropriate adjustments and revisions at the 2003 and 2010 meetings, and the
revised text entitled “European Spatial Planning Charter” was adopted at the ECSP Assembly
held in Barcelona in 2013. It is expected that recognizing the importance of space will provide
effective mechanisms for eliminating the negative implications that have generated incompetent
managerial decisions and improvisations at the global and local level in the past on natural,
social and economic structures.

5. CONCLUSION

This paper not only highlights the basic doctrinal and methodological determinants of urban-ar-
chitectural solutions, procedures and actions, but also addresses their importance in the process of
creating effective economic development strategies, with basic message that only an interdiscipli-
nary approach can reliably view all relevant aspects of this complex phenomenon. Confirmation of
principle points of view is also found in the analysis of economic position of the Jahorina tourist
complex, where it is evident that one of the important causes of the crisis is the neglect of the
importance of spatial planning, urban and architectural performances in profiling infrastructural
conditions for a sustainable development. Neglecting the importance of spatial planning, urbanism
and architecture has negative implications for development, because infrastructure often appears
as a limiting factor of diversification and business adaptation to changing economic conditions.

As in the current conditions of globalization, competition, information and mobility of factors are
increasing - the risks of survival of companies, industrial branches and sectors are also increas-
5
Development of European strategies and spatial development and planning policies is carried out through
activities of two central European organizations – Council of Europe and European Commission.
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 URBAN AND ARCHITECTURAL PERFORMANCES IN THE FUNCTION
OF DEFINING OF STRATEGY OF SUSTAINABLE DEVELOPMENT OF TOURIST DESTINATION

ing, if available potentials in the necessary and sufficient volume are not valorized. Valorization
of potentials is influenced by numerous factors and mechanisms of combining them within a
given framework, that is, space, and above all material resources, knowledge and organization.

Everything is located in space; nature, society and economy with dynamic interactions that
disrupt the balance of the system by generating risks that endanger functioning and threaten the
survival of the entities individually and of the system as a whole. This knowledge has primarily
contributed to positioning the principle of sustainable development as a universal point of view
and the principle of civilization, in which the dimension of space has a dominant importance
and determination. Because of the risks that complicate functioning and endanger survival,
planning that effectively adjusts space performances and creates conditions for optimizing po-
tential valorization and sustainable development is required.

Due to the lack of systematic approach and sophisticated vision, urban solutions, which position
Jahorina primarily as a ski resort are preferred, which is not enough for sustainable develop-
ment in areas with a stable season of six to eight months or longer, without urban solutions,
infrastructural and business portfolio extending the season from ten to 12 months. In addition to
other shortcomings in the business portfolio, neglecting the importance of architectural recog-
nition of facilities, landscapes and environment has significantly limited the positioning of this
remarkable natural treasure as a prestigious and prosperous tourist destination.

REFERENCES

Fukujama, F. (2002). Kraj istorije i poslednji čovjek. Beograd: CID, Romanov.

Korica, R. (2008). Infrastruktura, saobraćaj, urbanizam, arhitektura. Beograd: Arhitektonski
fakultet Univerziteta u Beogradu.
Saks, D.D. (2014). Doba održivog razvoja. Beograd: CIRSD and JP “Službeni glasnik”.
Tuševljak, S. (2014). Treba (li) nam nacionalni program izlaska iz krize - Šta (ni)smo mogli to
nismo razumjeli. Beograd: Srpska akademija nauka i umjetnosti.
Tuševljak, S. (2017). Institicionalna ekonomija danas – šta (ne) možemo uraditi bolje, Zbornik
radova - Naučni skup „Ekonomija danas, Institucije i ekonomija - šta (ne)možemo uraditi
bolje“, Univerzitet u Istočnom Sarajevu, Andrićgrad, 1. i 2. septembar 2017.
Tuševljak, S. & Tomić, Ž. (2015). Doctrinal and management controversies of debt growth of
small open economies in terms of globalization -What must or need not the Republic of
Srpska and Bosnia and Herzegovina do? Univerzitet Nižnji Novgorod
Simović, M., Jovašević, D. & Simović, V. (2016). Privredno kazneno pravo. Istočno Sarajevo:
Pravni fakultet.

25
 A SYSTEMIC APPROACH TO THE MANAGEMENT
OF MUSEUM HERITAGE:
THE CASE OF BASILICATA REGION MUSEUM POLE (ITALY)
Sonia Ferrari1
Nicolaia Iaffaldano2
Vito Roberto Santamato3

DOI:

Abstract: The main aim of this paper is the definition of the distinctive features of museum networks
and systems with a focus on the potential of specific organizational and management solutions in terms
of optimization of museums’ effectiveness and efficiency, especially in Italy.
Research regarding the Museum Pole of the Basilicata Region (MPBR) in Southern Italy will be pre-
sented. The MPBR is recognized as a successful and innovative form of large-scale (compatible with the
limited size of the region) sharing of strategies, services, organizational structures, cultural planning,
scientific contents, and technical and administrative tools, also following the nomination of Matera as
‘European Capital of Culture 2019’. The research is based on existing data and qualitative interviews
with the MPBR management and other stakeholders.
Keywords: Museum Network, Museum System, Systematic Approach.

1. INTRODUCTION

T hanks to the rise over the last decades in Italy of a large number of museum networks
and systems, although with very different characteristics from each other, the systemic
approach to museum heritage management has been brought to the attention of scholars, espe-
cially in the economic, business and management fields. Reticular organizational structures and
management models based on the systemic perspective have also been formally recognized as
the best solutions to optimize the effectiveness and efficiency of museums, especially in Italy.
In fact, Italian museums are mostly small, widely scattered all over the territory and mainly
of local interest. In addition, they are burdened by heavy internal financial, organizational and
productive constraints.

The main aim of this paper is the definition of the distinctive features of museum networks and
systems with a focus on the potential of specific organizational and management solutions in
terms of the optimization of museums’ effectiveness and efficiency. For this purpose, the busi-
ness, economics and management literature will the basis to outline the theoretical framework,
with particular reference on the one hand to the business networks and, on the other hand, to the
characteristics of the Italian museum heritage. Subsequently, the attention will be focused on the
implementation of museums reticular structures and on their management in a systemic approach.

1
University of Calabria, Department of Business and Law Science, Campus di Arcavacata, 87036, Rende
(Cs), Italy
2
University of Bari, Ionian Department of Law, Economics and Environment, Via Lago Maggiore ang. Via
Ancona, 74121, Taranto, Italy
3
University of Bari, Department of Economics, Management and Business Law, Largo Abbazia Santa Sco-
lastica, 70124, Bari, Italy
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Conference Proceedings

In particular, the paper aims to:

• clarify the distinctive features of museum networks and systems, considering the para-
digms of the vital systemic approach;
• identify the main probable advantages achievable through the implementation of these
solutions, also considering the literature that postulates the integrated enhancement
of the territory and its cultural resources for the creation of innovative tourist routes.
These routes would be richer in terms of capillarity and significance compared to the
common tourist routes. In addition, this perspective would make it possible to obtain a
more adequate spatial and temporal distribution of the tourist flows in order to achieve
economic, social and cultural sustainability;
• indicate the most appropriate methods for implementing and operating museum net-
works and systems;
• identify the most critical issues with regard to Italian experiences.

Research regarding the Museum Pole of the Basilicata Region (MPBR), in Southern Italy, will
be presented. The MPBR is recognized as a successful and innovative form of large-scale (com-
patible with the limited size of the region) sharing of strategies, services, organizational struc-
tures, cultural planning, scientific contents and technical and administrative tools, also follow-
ing the nomination of Matera as ‚European Capital of Culture 2019’. The research is based on
existing data and qualitative interviews with the MPBR management and other stakeholders.

2. LITERATURE REVIEW

The post-modern change in the socio-economic context, with particular regard to market con-
ditions, has led companies to modify their productive and competitive strategies towards an
inter-company and network cooperation (Albertini, 1990; Lorenzoni, 1897; 1990; 1992; Mariti,
1980). As a consequence, starting from the last twenty years of the twentieth century, inter-or-
ganizational structures have been spontaneously experimented by small Italian companies. In
the current era of the experience economy (Pine & Gilmore, 2000), the network is becoming the
most widespread form of production and consumption (Rullani, 2008; Thorelli, 1986; Vacca,
1986; Vicari, 2008).

In the literature the terms “museum network” and “museum system” are not clearly defined.
Therefore, it seems appropriate to propose, even if briefly, a differentiation between these terms
referring to the paradigms of the vital systemic approach (Golinelli, 2011). A museum net-
work can be defined as a structural arrangement produced by the establishment of cooperative
ties among several museum organizations, or the set of museum-components and the relation-
ships between them. In a holistic perspective, a museum system can be seen as a management
structure: it will originate when some of the pre-set relationships between the museums of the
network are actually implemented to achieve a specific objective. The museum system can
therefore be defined as a structure-network of active museums. Therefore, multiple systems (or
sub-systems) can emerge from a museum network, depending on the specific activity that they
aim to carry out jointly. It should be noted that the term network will be used to indicate system-
ic management models based on network organizational structures (Golinelli, 2012; Iaffaldano
& Mariella, 2014; Montella, 2003 and 2009).

From a cultural point of view, the Italian museum collections are mutually complementary
because they come from places that are culturally cohesive and widely spread throughout the

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 A SYSTEMIC APPROACH TO THE MANAGEMENT OF MUSEUM HERITAGE:
THE CASE OF BASILICATA REGION MUSEUM POLE (ITALY)

territory. For this reason, the networks are decisive in making explicit the most important his-
torical connections between the collections of each museum and between these and the ter-
ritorial context. This is also the prerequisite for developing landscape enhancement policies,
according to an integrated and systemic approach, so as to capture the strategic value of places
(Bonel et al., 2005; Ferrari, 2013; Ferrari & Gilli, 2015; Franch, 2002; Gregori, 2005; Iaffaldano,
2013; Cirillo, 2016; Johnson et al., 2015; Martini, 2005; Pencarelli & Splendiani, 2008; Soren,
2009). A satisfactory experience of places needs to be facilitated with routes offered thanks to
special tools; they could be the Italian museums thanks to their widespread diffusion and local
character. The strategy of the museum-territory could be very useful for this purpose (Dragoni,
2005; Montella, 2003).

Also the recommendations of the Italian ministerial decrees move this direction in that they
face the theme of the relationship between museums and territory warning that “the territory as
a widespread museum [ ...] can be enjoyed and respected only if it finds in the museum-institute
a suitable location for the interpretation and communication of its values” (DM May 10, 2001).
Also, the International Cultural Tourism Charter: Managing Tourism at Places of Heritage Sig-
nificance (ICOMS, Paris 1999) pursues the enhancement of systems for the management of
cultural heritage to make single and overall meanings accessible to users (Hu, 2019).

Moreover, the networks seem to be indispensable to overcome the financial, organizational and
productive constraints and the structural economic limits due to the low number of visitors
(Bagdadli, 1995, 1997 and 2001). Indeed, it could help to achieve decisive economies of scale,
as well as saturation, specialization and learning economies. At the same time, the network
would make it possible to achieve objectives linked to differentiation strategies. It would be
particularly effective for the implementation of differentiated marketing policies to intercept the
multiple interests that move the different clusters of demand and, therefore, to attract more and
more visitors. With reference to the promotional activities, the network would allow the prestige
to increase and also enhance the image of the whole and of each museum-component (Bollo,
2012; Zan, 1999).

3. THE BASILICATA REGION MUSEUM POLE RESEARCH METHODOLOGY

The MPRB has been analyzed as a particularly interesting case with respect to the research ob-
jectives of the paper. This case, that has been recognized by many as a successful and innovative
form of large-scale sharing of strategies, services, organizational set-ups, cultural addresses,
scientific contents, and technical and administrative tools, therefore, seems to be a model. From
this case it could be possible to obtain appropriate design and implementation suggestions.

A qualitative empirical investigation responding to exploratory aims has been carried out by the
authors with the aim of providing a description of the composition process, the functioning and
the results achieved by the museum system, with a focus on its main strengths.

The analysis of the case was first conducted by reviewing the main studies on the subject in the
literature (Bagdadli, 1997; Cabasino & Trimarchi, 1997; Gioli, 2001; Pezzoni & Vago, 2000).
The information acquired was then integrated analyzing institutional documents and conduct-
ing in-depth interviews with stakeholders - operators in the tourism and cultural heritage sec-
tors. This approach was chosen because the qualitative method is more interactive, in-depth
and sensitive in the study of human behaviour, attitudes, ways of thinking and motivations. The

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survey was based on 10 in-depth face-to-face and semi-structured interviews, each lasting be-
tween 40 and 60 minutes. All interviews were recorded and transcribed the same day to ensure
minimal information loss. A subsequent step was to structure meanings using narrative, leaving
the stories of participants as they were told.

Data analysis followed a deductive coding approach. The data were managed by hand through
a thematic analysis. The three main themes identified are as follows:
• how MPRB was born and has evolved,
• impact of the nomination of Matera as2019 European Capital of Culture (ECC) on the
MPRB,
• effects of the new management method on MPRB operational results.

These themes are useful to study the main objects of our research.

4. FINDINGS AND DISCUSSION

4.1. How the MPBR was born and has evolved

As in all Italian regions, the MPBR was born thanks to the Franceschini Reform between 2014
and 2015 (Marzano & Castellini, 2018). Coordinated by the Directorate General of Museums,
the Pole is the connection point between the center and the periphery; it aims to foster the
dialogue between state and local authorities and between public and private museums for the
construction of the regional museum system. The MPBR coordinates human, technological
and financial resources of various museums in order to offer the public cultural and exhibition
activities, quality reception and educational services. It supports the creation of local networks,
that involve different actors for the development of cultural itineraries and the growth of the
territory.

The PMRB is one of the smallest but also one of the most homogeneous Italian poles. The net-
work is mainly composed of archaeological museums (8) and also by other important but small-
er museums, and an exhibition site in the Ducal Palace of Tricarico. The core of this homogene-
ous network is the National Museum of Medieval and Modern Art in Palazzo Lanfranchi, that
is a historical-artistic museum. It was, as one interviewee tells us, the fulcrum of the process of
appointment of Matera as European Capital of Culture 2019.

The work preceding the birth of the Pole was carried out around this museum (36,833 visitors
in the year 2018). This museum has strategically chosen to open itself to the community. This
truly new methodology represented the basis of the Matera-Basilicata 2019 Foundation (which
handled the entire candidature process). In the first years of building the candidature it was a
scientific and operational committee. This method of openness, total accessibility, involvement,
participation, and concrete work with the community was immediately shared by the other
stakeholders and it was, as one interviewee explains, the distinctive trait for the construction
and then the implementation of the candidacy, of Matera-Basilicata 2019. Another interviewee
adds that: the networking process began with some events, the week of culture, the night of
the museums, the day of the landscape, creating a coordinated program with all or almost all
the museums. We involved associations and protagonists of local cultural life in this program.
Therefore, the MPBR museums can be considered as museums of the territory, or museums that
can intersect the interest of the major stakeholders with those of local community.

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 A SYSTEMIC APPROACH TO THE MANAGEMENT OF MUSEUM HERITAGE:
THE CASE OF BASILICATA REGION MUSEUM POLE (ITALY)

Regarding the existence of networks of operators in Matera, four of the interviewees confirm that
there are several collaborative networks in different sectors. However, we are told by one of them
that, there is not a large intersectoral network. In particular, there are many micro-networks that
work and others that do not work. In tourism, specifies another, a network is needed. However,
adds one interviewee, there is not a subject able to coordinate all the promotional activities.

The individualism of the various subjects cannot be overcome. Each subject has its own cartel,
formed by other subjects that act as its satellites; the networks are not created among peers, one
of the interviewees complains.

4.2. Impact of the nomination of Matera as 2019 European Capital of Culture (ECC)
on the MPRB

In 2018 the visitors of the MPBR were 262,000, with revenues of 219,000 Euros. These data
are defined as “very positive” by the Pole management, and they confirm the boom in visitors
registered in Matera in the previous year.

The extraordinary challenge and the notable responsibility were not only of those who led the
process of creation of the network, but also of all the institutions that joined them to achieve the
result. According to one interviewee, it became a shared cultural working method.

The objective of creating a museums network in a small, limited and homogeneous environment
such as that of Basilicata could be concretized, while elsewhere it would be much more diffi-
cult. Museum Poles with 40, 45 or 50 museums, in fact, cannot really put their structures into a
network, because they are different and scattered, they have heterogeneous needs, perspectives
and problems. Instead, with the exception of Palazzo Lanfranchi, our museums are more ho-
mogeneous. The latter, however as one of the interviewees explains, was easily included in the
network having been the engine of the whole process.

The network was the element that led to the nomination of Matera. The ECC recognition was
obtained by the whole region, by all the 130 municipalities in the region, but also by the neigh-
boring regions, Puglia, Calabria, and Campania, he/she goes on.

But the network was not born only thanks to the nomination: it was the result of the Franceschini
Reform, which aims at the concrete realization of the National Museum System, says an inter-
viewee. And he/she adds: So, a certain direction, that of the network, had already been started
and it was easy then with the arrival of the new collaborators, archaeologists and architects to
build a wider team. The main part of the ECC program was carried out together with the MPBR.

As for the legacy of the ECC event, one of the interviewees says something very important: We
adopted a new method and way of thinking, which is now the task of all those who live in our
area to carry on.

4.3. Effects of the new management method on MPRB operational results

Our museums have no autonomy in any sense, so the MPRB is the main subject in the organization
and management of the activities. Being a Pole allows us to achieve certain results, we are told. An
interviewee says: Many museums in Basilicata cannot be autonomous because they draw just a few

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Conference Proceedings

tens of thousands of Euros a year. The museums are managed with a portfolio logic and the Pole acts
as the implementing entity for the activities that each museum carries out. The expenses of the mu-
seums are in charge of the Pole, which collects the revenues. The efficiency and effectiveness of the
system are, however, limited by bureaucratic problems and lack of personnel.

The strategic programming is common. The result is that, we are told, every museum has a
different positioning, a precise identity, but the objective is not to increase the revenues, an
interviewee says.

The museums of the Basilicata Region have been set up and proposed to the public not as treas-
ure chests in themselves, but as episodes of a story that continues in the city and in the territory,
as a door through which to introduce the visitor to the uninterrupted diffuse museum, in which
the real Italian competitive advantage consists. To this end, the museum-territory strategy was
implemented and considered decisive for the systemic enhancement of the historical-cultural
heritage of the Basilica, the management of the Pole explains. However, there are no joint tick-
ets and shared price policies. In addition, the museums do not have online reservations or forms
of collaboration with tour operators.

To complete this picture about the BRMP, we must add that some of the interviewees stress that
these territories cannot accommodate large flows of visitors, there is the risk of overtourism
and a potential lack of tourism sustainability. There is a pressure on the Murgic plateau, rich in
rock churches; they cannot anthropize the area of the plateau, one of the interviewees explains.

5. CONCLUSION

The paper presents findings that have implications both at a theoretical and a managerial level.
In fact, it illustrates the peculiar characteristics of the Italian museum heritage and aims to focus
on the potentially achievable advantages related to the adoption of the network as organizational
solution and to the implementation of its systemic management. The MPBR case is illustrated as
an empirical finding of the theoretical reflections. It is recognized by many as a successful and
innovative form of large-scale sharing of strategies, services, organizational structures, cultural
addresses, scientific contents, and technical and administrative instrumentation.

The study highlights that the network could allow Italian museums, that are widespread through-
out the territory, mainly of local interest and burdened by heavy internal constraints, to opti-
mize management effectiveness and efficiency. The network can reduce the production costs,
enhance the overall production capacity and increase the qualitative and quantitative level of the
offer. The Pole museums can attract a growing number of visitors and achieve significant econ-
omies of scale. As a consequence, it could obtain important plant and business costs reductions
and revenue increases.

Furthermore, network museums could make their cultural heritage more accessible, not limit-
ing their value to the aesthetic-formal aspect. This could happen because the network signifi-
cantly helps to make explicit the historical connections between the objects of each museum and
between them and the context of origin, presenting them to the public as material testimonies
of the culture spread in a certain time and place. It is legitimate to expect from this informa-
tion-educational function the increase in the human capital of visitors, the strengthening and the
dissemination of the community identity and, therefore, a greater fulfillment of the public func-

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 A SYSTEMIC APPROACH TO THE MANAGEMENT OF MUSEUM HERITAGE:
THE CASE OF BASILICATA REGION MUSEUM POLE (ITALY)

tion of Italian museums. At the same time, the network could allow each museum to strengthen
its image and to make use of the integrated product created to better intercept the multiple
interests of the different demand clusters and, therefore, to attract an ever-increasing number of
visitors. Finally, the entire territory would be enhanced and a support for marketing and place
branding policies would be offered.

The study presents a model for the establishment of a regional museum network and for its man-
agement in a systemic perspective. In the future, this could become a reference model to provide
public decision makers in the cultural sector with useful suggestions related to the design and
development of such processes.

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34
 THE EVOLUTION OF THE ROMANIAN PASTRY. TRADITIONS,
EUROPEAN INFLUENCES, NEW TRENDS
Adina Săcara-Oniţa1
Andra-Teodora Porumb2
Ciprian Beniamin Benea3

DOI:

Abstract: In the last 30 years, the food industry and especially the pastry industry has experienced
a spectacular dynamic in the landscape of the Romanian economy. Few of the big companies in the
communist period in the field of bakery managed to maintain and adapt to the new, most of them went
bankrupt or divided into smaller departments. In the first years after the revolution, Romanian investors
look to invest mainly in bakery units specialized in bread, sometimes in simple salt or sesame bagels,
white or black bread rolls production. The pastry was not perceived as a profitable business, especially
due to the lack of qualified personnel and the lack of ingredients. The communist leadership consid-
ered the pastry products to be luxury products, for which raw materials would have been needed, but
these were mainly sent for export. In this paper we intend to show the recent evolution of the units in
the bakery field, highlighting three major trends: restoring in the foreground the Romanian tradition
from the interwar period with the reinterpretation of the classic recipes; taking over brands, concepts
and products that have been successful in France, Italy and Germany and which are the emblem of a
western lifestyle, with the rapid adoption in the confectionery and chocolate fields; adaptation to the in-
fluence of Hungarian and German gastronomic culture - especially in Transylvania. Last but not least,
we will show that pastry is nowadays reluctant for customers, especially due to the use of sugar and
margarine-type fats. The new trend is the introduction of butter in pastry following the French model,
but this aspect involves high costs, these new products can only be purchased by certain social classes.
In our opinion, genuine pastry will become a niche product.
Keywords: Bakery Field, Brand, Organizational Identity, Advertising Strategy, Web Site, Food Safety.

1. INTRODUCTION

T he bakery, and later the pastry, have had a spectacular evolution over the centuries. In this
paper we intend to show how these sectors evolved in Romania, the influences that marked
them, their current status and development prospects. These are extremely dynamic sectors,
with over 5,000 producers, which in the last years have registered a turnover of about 2.5 billion
Euro/ year.

2. SHORT HISTORY OF PASTRY

The pastry products were born from the handling of bread dough, being served at ceremonies
and solemnities. In the Greek and Roman world, bakers have started to make cakes using eggs,
wheat or oatmeal, milk, honey and wine, almonds, turmeric, figs, nuts and various types of
1
University of Oradea, Faculty of Economic Sciences, Department of International Business, 1 Universităţii
Street, Oradea, 410087, Bihor, Romania
2
University of Oradea, Faculty of Economic Sciences, Department of International Business, 1 Universităţii
Street, Oradea, 410087, Bihor, Romania
3
University of Oradea, Faculty of Economic Sciences, Department of International Business, 1 Universităţii
Street, Oradea, 410087, Bihor, Romania
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 ITEMA 2019
Conference Proceedings

cheese. In fact, it is said that the first cakes prepared were in the form of a pyramid and were
brought by the Greeks as an offering to Dyonisos.

After 1000 AD, Arab merchants brought spices and citrus fruits to Europe. The bakers began
to use more and more cinnamon, ginger, rice, sesame, cloves, nutmeg. In the thirteenth century,
the Turks brought pastry products to Europe. Also, in the Middle Ages, the Crusaders bring
sweet recipes to Europe, as well, which will be adapted by the chefs of the time.

At the end of the sixteenth century, with the discovery of the sugar cane, sugar begins to be used
in the composition of the pastry products. Thus, the production of chocolate, battered dough,
pastry and cream cakes develops, and the pastry business advances. The French import sponge
cake, macarons or marzipan from Italy. Ice cream is also created in Italy, and in 1566 the guild
of bakers appears. In Italy and France, the pie sheets are perfected. At the French royal court,
pastry masters invented and cooked pastry products for the kings of France.

In 1645, yeast was invented and more and more types of dough were produced. In the 17th cen-
tury, the term „dessert” appears, used to name the sweets served at the end of the meal. Cakes
are baked, at the beginning of the next century, butter cakes, and at the beginning of the 19th
century, egg and chocolate cakes.

It is said that the one who raised the pastry to the rank of art was Marie-Antoine (Antonin)
Carême, the cook of Napoleon, of the King of England, George IV, or of the Tsar of Russia,
Alexander. He also installs the toque that the bakers and cooks will wear.

At the end of the eighteenth century in Paris there were around 100 bakeries, and in France
more than 40,000. While the pastry and confectionery products had previously been reserved
exclusively for the nobility, with the industrial revolution more and more people had access to
these products.

In the nineteenth century, in the European countries, pastries and confectioneries knew an
unexpected success, even becoming meeting places for the bourgeoisie, cultural people and
politicians of the time. The confectioners and pastry makers were educated in Paris, Vienna,
Berlin, to then work in the capitals and big cities of the countries of origin and to develop their
own recipes.

3. THE PANIFICATION SECTOR IN ROMANIA

Romanians have a true cult for bread, which is in close connection to beliefs, traditions and cus-
toms. Bread is generally used for holidays and events (weddings, baptisms, funerals). Ordinary
people used to eat polenta, worked hard for earning their bread and never got to have sufficient
bread until some decades ago. It was only at the end of the 19th century and at the beginning of
the 20th century that bread and special bakery products (rolls, buns) were produced industrially,
in the army’s bakery units. These were the first high capacity production units, called „manu-
tanţe” (storehouses).

After the First World War, the first bakeries were created, and they used blenders and steam-heat-
ed ovens, the majority of which were “Dampf” type. Thus, the transition was made from man-
ual kneading and from the earth oven, heated with wood, to the first modern devices, meant

36
 THE EVOLUTION OF THE ROMANIAN PASTRY. TRADITIONS,
EUROPEAN INFLUENCES, NEW TRENDS

to increase both the quantity and the quality of the bread. In 1935, 36 mechanized bakeries
functioned in Romania, with a number of 700 employees. Bread became a basic food product.

According to the data obtained by the daily newspaper Gândul from the National Institute of
Statistics, a Romanian currently eats 546 grams of bakery and pastry products per day. This
figure places Romania above the European average, according to the data of the last Euroba-
rometer, which shows that a European consumes 300 grams of bakery and pastry products.

ROMPAN President Aurel Popescu said that in 2018 in the milling and bakery industry, there
were around 60,000 employees, with 10,000 less than in previous years, due to the massive
migration of the Romanian population to other European countries and also due to the closing
of vocational schools.

In Romania there still is a tradition of preparing bread in the house. From the market analysis
conducted by the research company Gallup we find that 28% of the participants stated that they
prepare bread and bakery products in their own homes, especially those in the rural area (39%
in the rural area and 19% in the urban area). The frequency is once or twice a week (43%), once
a month (23%), once every 2-3 months (11%) and daily (1%). More than half of them produce
around 1-5 kg ​​/ month, 15% produce 6-10 kg / month, 9% below 1 kg / month. On average, people
for whom bread baking is a hobby produce 7.6 kg / month. Bread is produced in homes, especial-
ly in the regions of Muntenia, Oltenia and Moldova (over 80% of the total quantity), followed by
Crişana-Maramureş and Banat. The method of preparation is largely traditional (manual knead-
ing and oven baking), only 4% of the respondents use household appliances. The reasons invoked
would be the taste, the lower costs, the health, and having the ingredients from own crops.

Even if many imported bakery products and frozen bakery products have recently entered the
Romanian market, being sold mainly in supermarkets, Romanians prefer local products. The
main reason is their concern for health, and the frozen products contain many chemicals (E
numbers, acidifiers and even bleaching agents).

Care for health is one of the premises that underlie the innovation attempts in the bakery field.
If up to now the producers of bakery products aimed at optimizing quality at a low price, now
it is intended to reap benefits in terms of nutrition, taste and health. Almost all companies, and
especially the new ones, try to offer new products, using natural spices instead of chemicals.
Researchers in the bakery field (Teodorescu, Toma, Pistol, 2019) claim that many spices (pep-
per, bay leaf, cloves, cinnamon, rosemary) have a therapeutic and nutritional potential thanks
to the antimicrobial, antioxidant and anti-inflammatory effect, as well as technological potential
since they work as true natural preservatives. However, they are also used in the pharmaceutical
industry, being part of many herbal remedies.

4. THE PASTRY SECTOR IN ROMANIA

In Romania, the transition from bakery to pastry takes place in the eighteenth century, when
chefs are beginning to be concerned with the creation of sweet products, to be served at the end
of the nobles’ meals. The oldest cookbook in Romanian Country dates from the 18th century. It
was written during Constantin Brancoveanu’s reign and included bread and dessert recipes. In
the capital, in the eighteenth century, there were already places where food and desserts could
be served. The most famous location in Bucharest where pastry and confectionery products

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could be served is „Capşa” (located on Calea Victoriei). It had a restaurant, a cafe, a confec-
tionery and a hotel, it was frequented by the capital’s elite, famous artists and politicians and
became the supplier of the Romanian, Serbian and Bulgarian royal houses. It is said that Emper-
or Franz Josef, Tsar Alexander II, Kaisers Wilhelm I and II, former French President Raimond
Poincaré or Greek Prime Minister Eleftherios Venizelos tasted the products prepared here by
Emil Frederic, a confectionery chef taught in Paris and who regularly brought samples of the
latest products made in Paris. Capşa was located on a place where in the seventeenth century
there used to be the home of a great Romanian boyar. In 1830 the house was bought by the for-
mer cook of the ruler Grigorie IV Ghica, an Italian who opened an Italian-Oriental restaurant
and a ballroom. Then the house was taken over by the Capsa brothers. One of them learned the
job at the „Boisier House” in France. The success of Capşa House has led to the increase of the
number of confectioneries and the emergence of several candy and chocolate factories.

Bucharest has been nicknamed, since the 19th century, the city of confectioners. There were
then about 15 confectioners. The most successful were the confectioners of Venice, Germany
and Turkey, which mainly served ice cream and sherbet. The best rated were the confection-
ery of some Italians („Giovanni” and „Comorelli”) and a French confectionery („Elefterescu”),
where fine cakes were served.

During the interwar period, the number of confectioners and cafés increased significantly. The
pastry chefs, who had attended schools already famous in France and Italy, proposed reinter-
preted products and own creations, prepared with local ingredients. They had their own recipe
book, with specialties that were only available in their stores, handwritten recipe books handed
down to the disciples. In order to open a pastry shop or a confectionery one had to have attended
a school and obtained a qualification.

After nationalization (1940-1950), all these units get into the state’s ownership, more specifical-
ly that of the „Cooperativa”, and the patrons and pastry masters become mere employees.

During the communist era, the state factories in the field of bakery were organized at national
level and centralized. Particular emphasis was placed on the production of bread, less white,
blacker. The main products were: white, black and bran rolls, sugar buns, cocoa buns, „brân-
zoici” (sweet cheese rolls), and buns with different fruit fillings. The pastry products were sold
through their own network of shops along with the bakery products.

The pastry products were seen as luxury products, accessible only to political activists or could
be obtained very difficultly, through interventions, in the last period before the revolution. A
plus of that period was the lack of harmful additives from the post-December period. The quan-
tity produced was not big, the raw material was sent for export to pay off the external debt, but
good quality raw material was processed. The creams were processed from local fruits, they
were made from milk and eggs, and so was the dough.

The equipment of these production units was rudimentary because the Ceausescu regime did
not want to invest in state-of-the-art foreign machinery, and the labour was cheap. With the rev-
olution, the centralized structure of the food area collapsed. The old management was changed,
the commercial relations with the raw material suppliers were stopped. The production units
were grouped into smaller units, some of them continued their initial activity, others were de-
stroyed, abandoned. The mammoth units could not adapt to the challenges of the market econ-

38
 THE EVOLUTION OF THE ROMANIAN PASTRY. TRADITIONS,
EUROPEAN INFLUENCES, NEW TRENDS

omy. Foreign investors, through different investment funds, have purchased and refurbished
some production units (Titan, Vel Pitar, Băneasa). The production units were relocated to the
outskirts of the big cities or in the surrounding areas, leaving room for commercial spaces, offic-
es or dwellings. The commercial spaces, i.e. the former bakery and pastry shops located in the
central areas, were rented or sold, getting into the hands of real estate opportunists, conclusive
examples being those of Titan factory in Bucharest or Pamora factory in Oradea.

In the first years after the revolution, Titan, Vel Pitar and Baneasa were the most important com-
panies in the field of bakery and pastry in Romania. They made large-scale bakery products, but
also „cozonac” (sweet bread), pasca (Easter cheesecake), sweet cheese rolls, buns, small sweet
rolls, crackers, salty pastries, pretzels, pies, which they first sold in their own stores, and then
through supermarket networks. Romanians are big consumers of cozonac (traditional dessert,
preferred by over 80% of Romanians according to ROMPAN statistics - Romanian Patronage
of the Milling, Bakery and Floury Products Industry), Easter cheesecake (the star of the Easter
celebrations), crackers, salty pastries, pretzels, which they sell even nowadays, especially dur-
ing holidays and events (weddings, baptisms, funerals).

After they had known success, companies such as Ana Pan (pastry company founded in 1990)
and Dobrogea Group (first a milling and bakery company, created in 1961, then a bakery and
pastry factory) introduced on the Romanian market the franchise with pastry products. In fact,
the public is increasingly focusing on quality products and brands.

Last but not least, famous companies in the 1900s are reopened by the descendants of the
founders. For example, the PETRU Bakery-Simigeria, founded in the capital in 1937, reopened
after the Revolution, out of the desire of the descendants of the baker named PETRU to revive
the traditions and recipes forgotten during the communist era. Today there is a PETRU store in
almost all the big cities of the country, where, in addition to the famous sweet and salty savory
specialties, they sell pizza, sandwiches and drinks.

Also, famous companies from abroad, for example PAUL bakery (founded in 1889 in Lille
- France) and who had gained success due to concepts such as opening the workspace to let
customers see how the products are baked, have opened franchises worldwide. The refinement
and the quality of the products of this brand have conquered the Romanian profile market. The
brand, which entered the Romanian market in 2008, also has a catering service, delivering
products to companies and private clients and even organizing candy bars for events, parties
and anniversaries. Another large company, Fornetti, of Hungarian origin, has opened numerous
sale points in Romania, especially in the Transylvania region. It offers frozen specialties, with
a constant quality that meets food safety standards (IFS Food and FSSC 22000 system). The
products are baked on site and served hot to customers. The Fornetti franchise system makes it
possible to obtain profits with small investments and minimal risks.

The Morarita brand offers specialties and frozen dough for pies and pastries especially through
the supermarket network. It is a facility for customers who want to save time and have hot
pastry specialties in their own home. The disadvantage is that margarine, vegetable oils and
artificial preservatives are among the ingredients of these products.

Another competitor for traditional pastries is Bella, a brand present in Romania for the last 9
years, which sells frozen specialties: dough, pies, patisserie, strudels. Frozen pastry is increas-

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ingly successful because it offers comfort, longer shelf life and affordable prices. Persistence
Market Research estimates that the frozen pastry segment on the European market will reach,
by 2024, 62.3% of the global market in the field. In Romania, the market and the consumption
of frozen foods are among the lowest in Europe, having approximately 5% of the bread market,
but this segment has a steady growth rate.

The latest trend on the Romanian and European market is the shift from pastry to restaurant.
Panemar brand, founded in 1993 in Cluj county, has succeeded in expanding its recipe for
success in neighbouring counties. Under the slogan „Bread with soul”, the company first pro-
duced bread and sweet bread with traditional recipes, taking care to comply with international
standards in food safety, quality management and environmental management (ISO 22000, ISO
9001, ISO 14001). Then they offered to the Romanian customers, in addition to the traditional
apple or cheese pies, international pastry specialties (muffins, Bavarian pretzels, Polish pretzels,
tiramisu, apple, cheese, or caramel strudel, croissants, cookies, brownies, cheesecake). Recent-
ly, it has introduced salads, sandwiches and soups, so customers can spend the entire lunch
break inside the pastry-restaurant.

Since the beginning of the twentieth century, Turkish pastry shops have been a constant suc-
cess, especially in the southern and south-eastern regions of Romania. Recently, such pastries
have also opened in the western region of the country. The baclava, the cataif and the sarailia
have always been preferred by a large number of Romanians.

At present, some bakeries and pastry shops in Romania (Boromir, Baneasa, Dobrogea, Vel
Pitar, Pambac, Bunexim) export traditional products and specialties (biscuits, sweet rolls, cook-
ies, pretzels, salty pastries, sweet bread) to the European countries where there are stores with
Romanian products and a large number of Romanians who have emigrated (especially France,
Italy, Spain, the United Kingdom, but also the countries of the Scandinavian Peninsula). Cus-
tomers are not only Romanians working abroad, but also foreigners who want to try new tastes.

5. CURRENT TRENDS IN CONSUMPTION

In what the bakery products are concerned, according to the „Study on the Bakery Products
Market and the Market of Flour Products”, for 2018, made by Rompan, the white, traditional
loaf, still holds a big share of the total market of bakery products, but the increase in the as-
sortment diversity with new tastes and flavours are key factors that can drive sales. Then come
the black bread, whole graham, rye bread, multi-grain bread, sales of which register increases,
especially in the urban areas, among women and young people, because the products are per-
ceived as healthier, as having fewer calories and are recommended by doctors.

In the last decade there has been a tendency to decrease the amount of bread consumed in Ro-
mania: consumption has decreased from 9.2 kg / month per capita in 2008 to about 8 kg / month
per capita.

There are significant differences in consumer behaviour depending on social class or region. Thus,
among the unemployed there is a marked increase in the consumption of bread, reaching even
monthly quantities of 9 kg / person, by 16% more than in 2017. In the regions with a lower standard
of living, such as Oltenia, Muntenia or the North-East Region (Moldova), an increase in the con-
sumption of bakery and bread products was seen in 2018, as compared to the previous year.

40
 THE EVOLUTION OF THE ROMANIAN PASTRY. TRADITIONS,
EUROPEAN INFLUENCES, NEW TRENDS

According to the GfK study, 82% of Romanians have bread daily, 7 percent less than in 2009
when this category of frequent consumers of bread was 89% (Gallup study). As the bread con-
sumption gradually decreases, the pastry consumption increases. The pastry products are not
basic products, but comfort products, they are usually consumed as a snack or as a dessert and
are preferred by young consumers from the urban area.

Given the current concern for a healthy diet, the frequency of consumption of these products is
slightly lower, with 1 in 4 respondents consuming them only once a week. Confectionery and
pretzels are products consumed especially by the inhabitants of the big cities, being a consump-
tion habit of the type „on the go”. The most consumed types of confectionery products are the
sweet bread and the fresh pastry (strudels, patisserie, pastries), by about 60% of consumers;
46% of consumers use to have cakes, sweet rolls and 39% - sponge cake; muffins / madeleines
and frozen pastry are the least consumed - 13% and 7% respectively. Even though it is in the last
place, in the last ten years the frozen pastry has registered a constant growth.

Consumers take into account, at the time of purchase, the quality and aspect of the products, the
price, the content of E’s and preservatives and the type of flour.

6. PASTRY SHOPS AT THE BEGINNING OF THE 21ST CENTURY

– CHARACTERISTICS AND DEVELOPMENT OPPORTUNITIES

In a desire to permanently evolve and reinvent themselves, investors in the confectionery and
confectionery field are concerned about:
• creating strong brands and promoting them through new communication channels (In-
ternet - websites and social media);
• accessing European funds;
• the possibility to expand by opening more patisserie in the franchise;
• permanent contact with market news, by participating in national exhibitions (for exam-
ple the GastroPan exhibition in Arad which will hold its 12th edition in March 2020) and
international exhibitions (Le Salon de la Pâtisserie - Paris, SIGEP - international exhibi-
tion of ice cream, confectionery artisan bakery - Rimini, Expo Sweet - Exhibition for the
confectionery and confectionery sectors - Warsaw, Artoza - International exhibition for
the bakery and confectionery sectors - Athens, Modern Bakery Moscow - International
exhibition for the bakery and confectionery industry - Moscow Bakepol - Specialized
fair for the bakery and confectionery industry - Krakow, Südback - Exhibition for the
bakery and confectionery industry - Stuttgart) or by participating in competitions for
professionals (The World Trophy of Pastry Ice Cream and Chocolate - Milan).
• innovation (new products, special or specialized, new ingredients, with health benefits,
new flavours, competitive prices, new technologies);

They try to achieve these goals by:

• focus on staff:
- sending the personnel to specialized courses, at home and abroad;
- reintroduction of apprenticeship under the guidance of pastry masters and confec-
tioners (returning to the tradition of the beginning of the 20th century);
• focus on product:
- the orientation towards the traditional Romanian confectionery, reinvented, the old
recipes adapted to the aesthetics and modern taste (for example „coliva” cone);

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- bringing to the attention of the Romanian customers some traditional products from
other countries with which Romania has affinities: France (croissant, macaroons, ma-
deleines, millefeuille / a thousand leaves, éclairs, small fruit tarts, artisan chocolate),
Italy (canollo), Germany (kremschnitt, linzer);
- proposing traditional products of the national minorities, the Hungarian and Ger-
man gastronomic culture having a strong influence especially in Transylvania (e.g.
kürtőskalács, hájas, Beigli, Bretzeln, Strudel);
- creation of high-quality products for the business environment (e.g. fresh pastry spe-
cialties + coffee „to go”, daily delivery of some pastry specialties to offices, creation
of product packages for corporate events - parties, coffee breaks, conferences, per-
sonalized gift baskets for partners on the occasion of the holidays);
• focus on aesthetics:
- publishing on social networks (especially Instagram) photos of new, beautiful and
elegant products, thus acting on the subconscious and on the purchase behaviour;
- adopting the concept of creative pastry - the baker becomes a designer;
• focus on ingredients:
- the use of quality ingredients, even if the price of products increases, as consumers
are becoming more sophisticated;
- creation of less sweet products, with less sugar, less butter or lard, with flour richer in fibre;
- replacement of the „star ingredient”, the chocolate, with fruits;
- introduction of vegan and raw vegan products, products without dough, only from
seeds and fruits;
- giving up artificial dyes;
- finding solutions to replace the ingredients that causes food allergies;
• focus on spaces and location:
- arrangement of mixed spaces (tea shop + pastry shop, cafe + pastry shop, bistro +
pastry shop / confectionery), preferred by young consumers;
• focus on customer:
- customer loyalty (small businesses, which are easier to control, require smaller invest-
ments, a small number of staff, a limited number of products, but have loyal customers);

The bakery sector is currently threatened by:

• catering services (1 strudel or croissant costs 2.2 lei compared to 4.5 lei in bakeries),
• the ‚menu of the day’, offered by restaurants (12-14 lei),
• the preference of young consumers for fast food.

7. CONCLUSION

The year 1990 marked a change in the consumers’ behaviour in Romania. They gave up the
products that were recommended based on the concept of „rational eating” imposed by the
communist era (according to which the basic product was black bread) and, faced with a rich
offer (due to the imports and to the national companies that diversified their production), they
started to prefer white bread and pastry specialties. Although over time theories have emerged
that white bread was not healthy, it still has the highest market share.

Gradually, the big producers of bread and bakery products began to manufacture confectionery
and pastry specialties, distributed through their own network of stores. Since the specialties are
more expensive, the profit obtained is bigger. According to the studies carried out periodically

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 THE EVOLUTION OF THE ROMANIAN PASTRY. TRADITIONS,
EUROPEAN INFLUENCES, NEW TRENDS

by the patronage, the market for bakery and pastry products is increasing year by year, the big
players on the market setting up special production lines for both fresh and frozen pastries. If
at first the basic production was bread, now the production focuses on pastry. Also, these big
producers are concerned with the implementation of the food safety management system.

The market for bakery and pastry products has become extremely dynamic and competitive.
Besides the big producers, small companies appeared, which developed, evolved and turned
into successful brands.

The range of pastry specialties has expanded, being enriched with products from France, Italy,
Germany, Turkey, Hungary. These were adapted to the Romanian tradition and tastes, being
assimilated by the population, who no longer perceives them as borrowed.

The range of ingredients has also been diversified. Enhancers and low-quality ingredients have
appeared on the market, allowing for reasonable prices to be set. At the opposite pole there are
the high-class ingredients, with which specialties are produced, but which have a limited num-
ber of consumers, with higher incomes, in the urban area, concerned about the quality of the
products and a healthy lifestyle.

The other social classes will increasingly focus on frozen products, the price of which is lower
and which we can find in the big chains of supermarkets.

The artisan pastry shops will only survive on the market as a niche sector, with high quality
products and located in strategic positions, with high business reputation, located in tourist are-
as and in the middle of the big cities, where there are potential customers with high purchasing
power.

In our opinion, the chance of the artisan bakery to survive is to make the shift toward the
restaurant. In the coming years, the pastry shop will become the place where one can have a
high-quality coffee, a delicious sandwich, and even a cream soup, a concept favoured by the
corporate customers and the young generation.

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milioane-de-cozonaci-80957

44
 HEAVY METAL ACCUMULATION AND CHEMICAL COMPOSITION
OF ESSENTIAL OILS OF SALVIA OFFICINALIS CULTIVATED
ON HEAVY METAL CONTAMINATED SOILS
Violina Angelova1

DOI:

Abstract: Comparative research has been conducted to allow us to determine the content of heavy met-
als and chemical composition of Salvia officinalis L oils, as well as to identify the possibility of Salvia
officinalis L. growth on soils contaminated by heavy metals. The experimental plots were situated at
different distances of 0.5 km and 15 km, respectively, from the source of pollution the Non-Ferrous-Met-
al Works (MFMW) near Plovdiv, Bulgaria. On reaching flowering stage the Salvia officinalis L plants
were gathered. The content of heavy metals in different parts of Salvia officinalis L. (roots, stems, leaves
and inflorescences) was determined by ICP. The essential oil of the Salvia officinalis L. was obtained
by steam distillation in laboratory conditions which was analyzed for heavy metals and its chemical
composition was determined.

Salvia officinalis L. is a plant which is tolerant to heavy metals and can be grown on contaminated soils.
Favorable is also the fact that heavy metals do not influence the development of the Salvia officinalis
L. as well as on the quality and quantity of the essential oil. Twenty-nine components were identified
in the oil. The main compounds of essential oi were as follows: α-thujone (15.927-18.912), camphor
(16.839-17.826), trans-thujone (5.379-11.575), 1,8-cineole (6.891-7.625), camphene (6.024-6.514), α-hu-
mulene (5.395-6.098), borneol (4.591-5.394), (e)-β-caryophyllene (3.868-4.576), limonene (3.458-4.612),
bornyl acetate (1.621-3.194), viridiflorene (2.449-5.633), β-pinene (2.174-2.223), allo-aromadendrene
(2.034-4.777). The compounds in the essential oil that decreased as a result of heavy metals pollution
are limonene, bornyl acetate and allo-aromadendrene, while the α-thujone, trans-thujone, camphor
and viridiflorene significantly increased. Observed increase of the levels of α-thujone, trans-thujone,
and camphor level in the leaves of sage grown on heavy metals polluted soil indicated an improvement
of the essential oil quality. The essential oil of Salvia officinalis L. can be a valuable product for the
farmers from the polluted regions.

Keywords: Heavy Metals, Contaminated Soils, Essential Oil Composition, Salvia Officinalis

1. INTRODUCTION

S alvia officinalis (sage, also called garden sage, common sage, or culinary sage) is a perenni-
al, evergreen subshrub of the Lamiaceae family, with woody stems, greyish leaves and blue
to purple flowers [1]. It is cultivated in the subtropical countries of Central and Eastern Europe,
Turkey, Algeria, Asia, America and Africa, Ukraine, India, Ceylon, Madagascar, Tunisia, Mo-
rocco, etc. [2-4]. In Bulgaria it is grown in the southern part of the country. The plant is essential
oil-bearing, honey-bearing and anti-erosion plant.

There are over 900 species of salvia. Salvia officinalis, Salvia sclarea and Salvia lavandulifolia
are of economic importance, as these three species have the highest content of aromatic sub-
stances.

1
Agricultural University-Plovdiv, 12 Mendeleev street, Plovdiv, Bulgaria
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The essential oil is obtained by steam distillation of fresh or dried leaves and inflorescences
of the plant. The sage essential oil can be used in the food and alcohol industries (as aromatic
vector in the production of salami, cheese and wine), in the pharmaceutical industry and in the
perfumery and cosmetics [5]. S. officinalis L. essential oil has antiseptic, anti-inflammatory,
antitumor, antispasmodic and antioxidant effects [6-8]. Its pharmacological properties depend
on the chemical composition of the essential oil.

The production of S. officinalis essential oil and its chemical composition have been the subject
of much investigation around the world. It has been found that monoterpene and sesquiterpene
hydrocarbons and their oxygen derivatives are predominant in the composition of S. officinalis
oil [9-11]. The qualitative characteristics of essential oils from different countries are similar,
but large quantitative differences in the content of the basic compounds have been found, sug-
gesting that these oils are likely to have different biological activity [6, 12-14]. The composition
of the oil depends on various factors, such as genetic origin [15], habitat [15-16], environmental
conditions such as temperature, day length, intensity of light [15,17-19], season [15], physiolog-
ical stage (harvest time) [18], plant parts used for essential oil extraction [15, 20], soil compo-
sition [21], etc. The development of S. officinalis also has an effect on the oil composition [22].
It was found that α-humulene, viridiflorol and manool are predominant in young leaf oil, while
the content of camphor or α-thujone is lower. In the older leaf oil, the content of α-humulene,
viridiflorol and manool declines significantly with the simultaneous increase in camphor and
α-thujone [23]. Cluster analysis shows that young leaf oil belongs to the α-humulene chemotype,
whereas old leaf oil originating in Serbia belongs to camphor chemotype, and old leaf oil orig-
inating in Croatia belonged to the thujone chemotype [24]. Due to the strong influence of these
factors the composition of the essential oil often does not match the profile defined according to
ISO 9909 [25], which according to Bruneton [26] is: α-thujone (18-43%), β-thujone (3- 8,5%),
camphor (4 , 5-24.5%), 1,8-cineole (5.5-13%), α-humulene (0-12%), α-pinene (1-6.5%), cam-
phene (1.5-7%) , citric (0.5-3%), linalool and bornyl acetate (maximum 2.5%).

Studies have been conducted to evaluate the content of heavy metals in medicinal and aromatic
plants [6, 27-29]. Some aromatic and medicinal plants have been found to be capable of accu-
mulating heavy metals when grown on contaminated soils [30]. The content of essential oil and
heavy metals in medicinal plants may be influenced by environmental conditions [31], soil geo-
chemical characteristics and plant habitat [6, 29, 32]. It was found that the content of the essen-
tial oil obtained from the fresh plant mass of the sage is not affected by the level of heavy metal
soil contamination [33]. Zheljazkov [33] found that peppermint can extract significant quantities
of heavy metals from the soil. It was found that the tested varieties of mint can be successfully
grown on soils highly polluted with heavy metals (in the region of NFMW – Plovdiv (Non-fer-
rous metals plant), without contamination of the final product - the essential oil. Despite the
reduction in the yield (14%) due to pollution with heavy metals, mint still remains very profita-
ble crop and can be used as an alternative to food crops. Some medical plants such as mint, St.
John’s wort, sage, marigold, marshmallow, cumin, garlic, garden sorrel, hemp and others can
accumulate large amounts of toxic heavy metals in their tissues. They can also be successfully
used in phytoremediation and can replace food crops grown under the same conditions [34].

The purpose of this study is to conduct a comparative study that will allow us to determine
the content of heavy metals and chemical composition of Salvia officinalis L oils, as well as to
identify the possibility of Salvia officinalis L. growth on soils contaminated by heavy metals.

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OF SALVIA OFFICINALIS CULTIVATED ON HEAVY METAL CONTAMINATED SOILS

2. MATERIAL AND METHODS

The experiment was performed on an agricultural field contaminated by Zn, Pb and Cd, situated
at different distances (0.5, and 15.0 km) from the source of pollution, the NFMW (Non-Fer-
rous-Metal Works) near Plovdiv, Bulgaria.

Characteristics of soils are shown in Table I. The soils were slightly neutral to alkalic with moderate
content of organic matter and essential nutrients (N, P and K). The pseudo-total content of Zn, Pb
and Cd is high and exceeds the maximum permissible concentrations (MPC) in soil 1 (S1) (Тable 1).

Table 1: Characterisation of the soils used in the experiment

EC, Organic P, mg/ K, mg/ Pb, mg/ Zn, mg/ Cd, mg/
Parameter pH N Kjeldal,%
dS/m C,% kg kg kg kg kg
Soil 1 (S1)
7,4 0,15 2,2 0,34 625,6 6960 2509,1 2423,9 64,3
0.5 km
Soil 2 (S2)
7,5 0,15 1,54 0,12 387,3 6780 49,4 172,7 1,0
15 km
MPC (pH 6.0-7.4) – Pb -100 mg/kg, Cd-2.0 mg.kg, Zn-320 mg/kg
MPC (pH >7.4) – Pb – 100 mg/kg, Cd – 3.0 mg/kg, Zn -400 mg/kg

The test plant was sage. Sage is grown according to conventional technology. 5 plants of each of
the areas were used for the analysis. Upon reaching the stage of flowering, sage was harvested
and the content of Pb, Zn and Cd in leaves was determined. The essential oil of the sage was
obtained by steam distillation in industrial conditions which was analyzed for heavy metals and
its chemical composition was determined.

Pseudo-total content of metals in soils was determined in accordance with ISO 11466[35]. The
available (mobile) heavy metals contents were extracted in accordance with ISO 14870 by a solu-
tion of DTPA [36]. The contents of heavy metals (Pb, Zn and Cd) in the plant material (leaves)
and in the essential oils of sage were determined by the method of the microwave mineraliza-
tion. The quantitative measures were carried out by ICP method (Jobin Yvon Emission - JY 38
S, France). Digestion and analytical efficiency of ICP was validated using a standard reference
material of apple leaves (SRM 1515, National Institute of Standards and Technology, NIST).

The chemical composition of the oils in hexane (1:1000) were analyzed on Agilent 7890А Gas
Chromatography system equipped with FID detector and Agilent 5975C mass spectrometer.

3. RESULTS AND DISCUSSION

The results presented in Tables 1 and 2 show that in the soil samples S1 (taken from the area
situated at the distance of 0.5 km from NFMW), the reported values for Pb were exceeding
MPC approved for Bulgaria and reached to 2509.1 mg/kg. In the area located at a distance of 15
km, the contents of Pb significantly reduce to 49.4 mg/kg. Similar results were obtained for Cd
and Zn. The results for the mobile forms of the metals extracted by DTPA show that the mobile
forms of Cd in the contaminated soils are the most significant portion of its total content and
reached to 57,2%, followed by Pb with 33,8 % and Zn with 9,8%.

In uncontaminated soils, again the mobile forms of Cd are the largest part of its total content,
followed by Pb and Zn.

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Table 2: DTPA –extractable Pb, Zn and Cd (mg/kg) in soils sampled from NFMW
Pb Cd Zn
Soils
mg/kg %* mg/kg % mg/kg %
S1 849.1 33,8 36.8 57,2 236.8 9,8
S2 21.5 43.5 0.7 70 38.9 22.5
* DTPA -extractable / total content
A significant accumulation of Pb is found in the leaves of the sage. The content of this element
reaches up to 108,1 mg/kg in leaves of the sage grown at a distance of 0.5 km from NFMW (Ta-
ble 3). Probably a portion of heavy metals absorbed by the conduction system moves from the
roots to the above-ground parts of the sage and are accumulated predominantly there. Probably
a portion of the accumulated heavy metals in the above-ground mass of the sage is also due to
aerosol pollution, which can be explained by the anatomical and morphological characteristics
of the crop. The greater accumulation of Pb in the leaves is probably due to the fact that the
leaves of sage are covered by many short soft, which favors the attachment of the aerosols and
their accumulation therein. The content of Cd in the leaves of the sage grown at a distance of 0.5
km from NFMW reaches up to 1.3 mg/kg, values considered to be non-toxic to plants. Accord-
ing to Kabata-Pendias [37] 5.0 mg/kg Cd is considered to be a toxic value for the plants. Our
results show the low ability of the sage to accumulate Cd in the above-ground mass.

The content of Zn in the stems and leaves of the sage grown at a distance of 0.3 km from
NFMW reaches up to 120.4 mg/kg, as these values are also less the critical values for plants -
100-400 mg/kg.

With increasing the distance from NFMW a clear trend is seen towards reducing the content
of heavy metals in the leaves of the studied crop. Significantly lower is the content of heavy
metals in the leaves of the sage grown at 15 km from NFMW. The content of heavy metals in
the leaves of the sage grown at 15 km from NFMW reaches up to 0.27 mg/kg Pb, 0.02 mg/kg
Cd and 13.6 mg/kg Zn.

Table 3. Content of Pb, Cd and Zn (mg/kg) in leaves and essential oil of sage
Pb Cd Zn
leaves oil leaves oil leaves oil
S1 (0.5 km) 108,1 0,15 1,27 nd 120,4 1,3
S2 (15.0 km) 0,27 0,14 0,02 nd 13,6 0,89
n.d. - non detectable
The heavy metal content in the essential oil from sage was also determined. The results ob-
tained show that the majority of the heavy metals contained in the leaves of the sage do not pass
into the oil during the distillation, therefore their content in the oil is much lower. Pb content
in the essential oil of sage reaches up to 0.15 mg/kg, Zn up to 1.3 mg/kg, while the content of
Cd is below the limits of the quantitative measurement of the method used. Significantly lower
are the figures in the essential oil of sage grown at a distance of 15 km from NFMW - 0,14 mg/
kg Pb and 0,89 mg/kg Zn. The results obtained show that the content of heavy metals in the
essential oils is much lower compared to the leaves of the sage, and the amounts of Pb, Zn and
Cd in the oil of sage are lower than the accepted maximum values and meet the requirements of
an environmentally friendly product. Our results are in accordance with the ones established by
Zheljazkov et al. [33, 38], which found that the heavy metal content in the essential oils of the
lavender, basil and mint is very low and is not affected by the level of soil contamination with
heavy metals.

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OF SALVIA OFFICINALIS CULTIVATED ON HEAVY METAL CONTAMINATED SOILS

The results of the chromatographic analysis of essential oils obtained by processing of leaves of
sage grown at a different distance from NFMW are presented in Table 4. The values of the main
components of the essential oil of sage are compared with the requirements of ISO 9909 [25] for
the sage oil. ISO 9909 [25] for medicinal uses regulates the amounts of the following constitu-
ents in the essential oil: α-thujone (18.0-43.0%), camphor (4.5-24.5%), 1,8- cineole (5.5-13.0%),
trans-thujone (3.0-8.5%), α-humulene (≤12.0%), α-pinene (1.0-6.5%), camphene (1.5-7.0%), li-
monene (0.5-3.0%), bornyl acetate (≤2.5%) and linalool+linalyl acetate (≤1.0%).

Table 4. Composition of oil of sage (%) obtained by processing fresh leaves

S1 (0.5 km) S2(15.0 km)
№ Compound RI ISO 9909
% of TIC
1 (Z)-Salvene 865 0,237 0,275
2 α-Pinene 939 4,308 3,414 1,0-6.5
3 Camphene 952 6,514 6,024 1.5-7.0
4 Sabinene 969 0,182 0,218
5 β-Pinene 979 2,223 2,174
6 Myrcene 990 0,949 1,267
7 α-Terpinene 1018 0,167 0,215
8 p-Cymene 1026 0,416 0,533
9 Limonene 1029 3,458 4,612 0.5-3.0
10 1,8-Cineole 1031 7,625 6,891 5,5-13.0
11 γ-Terpinene 1061 0,341 0,474
12 beta-Linalool 1097 0,394 0,308 <1
13 cis-Thujone 1102 18,912 15,927 18-43
14 trans-Thujone 1112 5,379 11,575 3,0-8,5
15 Camphor 1143 17,826 16,839 4,5-24,5
16 trans-Pinocamphone 1160 0,568 0,623
17 Borneol 1165 5,394 4,591
18 Terpinen-4-ol 1177 0,457 0,542
19 α-Terpineol 1189 0,659 0,508
20 Bornyl acetate 1285 1,621 3,194 <2,5
21 (E)-β-Caryophyllene 1419 4,576 3,868
22 α-Humulene 1454 6,098 5,396 <12,0
23 allo-Aromadendrene 1461 2,034 4,777
24 γ-Muurolene 1477 0,527 0,493
25 Viridiflorene 1493 5,633 2,449
26 γ-Cadinene 1513 0,805 0,722
27 δ-Cadinene 1524 0,246 0,374
28 Ledol 1565 0,173 0,116
29 Caryophyllene oxide 1583 0,117 0,105
Total 97,839 98,504
RI - Relative Index; TIC - Total Ion Current

Good quality sage oil must contain a high percentage (> 50%) of epimeric α- and β-thujones and
<20% of camphor [4]. Α-Thujone is known to be more toxic than β-thujone, due to many of the
biological effects of sage.

The results we obtained show that oxygen-containing monoterpenes (1,8-cineole, α-thujone and
β-thujone, camphor, borneol and bornyl acetate) are predominant in oil, but significant differences
in their content are observed in oils from contaminated and uncontaminated area. The content
of 1.8-cineole ranges from 6.89% in the uncontaminated soil (S2) to 7.63% in the contaminated
area (S1); α-thujone from 15.30% (S2) to 18.91% (S1), β-thujone from 5.38% (S1) to 11.58% (S2);

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camphor from 16.84% (S2) to 17.83% (S1); borneol from 4.59% (S2) to (5.39 (S1); and bornyl ace-
tate from 1.62% (S1) to 3.19% (S2). Significant amounts of sesquiterpenes were also found in the
oil: α-humulene, which ranges from 5.40% (S2) to 6.10% (S1); viridiflorene from 2.45% (S2) to
5.63 (S1); (E)-β-caryophyllene from 3.87 (S2) up to 4.58% (S1) A negative correlation was found
between the ratio of the amount of α- and β-thujones to the ratio of camphor and borneol in oils,
and the higher content of α- and β-thujones corresponds to a lower content of camphor and bor-
neol. Similar results were obtained from Kustrak et al. [18] and Pitarevic et al. [39], who found an
inverse relationship between the ratio of thujones and camphor in most oils.

Higher levels of sesquiterpenes viridiflorene, humulene and γ-Cadinene are observed in the
oils from the contaminated area compared to the oil from the uncontaminated area. Oils from
both regions have significant amounts of camphor (16,839% -17,826%), as well as high levels of
α-thujone (15,297% - 18,912%) and β-thujone (5,379% -11,575%).

Stancheva et al. [40] found a higher yield of essential oil from sage grown in heavy metal-contami-
nated soils, which is confirmed by our results. They found that the amounts of α-thujone, β-thujone
β-cariophyllene and viridoflorol decreased as a result of heavy metal contamination, while the
amounts of camphor, borneol, 1,8-cineole and bornyl acetate increased. According to Stancheva et
al [40], the decrease in the levels of α- and β-thujones and the increased level of camphor in sage oil
grown on heavy metal contaminated soil leads to a deterioration in the quality of the essential oil,
which is not confirmed by our results. The oils from contaminated area oil contains more α-pinene,
camphene, 1,8-cineole, β-linalool, α-thujone, borneol, (e)-β-caryophyllene, α-humulene, viridif-
lorene, γ-cadinene, smaller quantities of myrcene, α-terpinene, p-cymene, limonene, γ-terpinene,
β-thujone, trans-pinocamphone, bornyl acetate, allo-aromadendrene, δ-cadinene, ledol and identi-
cal amounts of β-pinene, (Z)-salvene, γ-muurolene, caryophyllene oxide. The probable cause of the
difference in the results obtained is due to the ways of cultivation of plants – field vs. vessel trials.

The results of most studies [18, 39, 41] show great variability of components in sage oil. Franz
[42] points out that the difference in the composition of the essential oils within a species seems
to be the rule rather than the exception; and is influenced by three main factors: (a) individual
genetic variability, (b) plant parts and stage of development, and (c) environment. All these fac-
tors influence the ways of biosynthesis of the biologically active components in plants and will
subsequently affect the ratio between them.

Most studies have found that oxygen containing monoterpenes (1,8-cineole, camphor, α-thu-
jone, β-thrujone, borneol and bornyl acetate), in an amount of 54.9 to 74.5%, represent the
main part of sage oil. The monoterpene fraction (1, 8-cineole, camphor, α-thujone, β-thujone,
borneol and bornyl acetate) ranged from 0.7 to 23.0%. Of the sesquiterpene fraction (3.4-15.0%),
(E)-B-caryophyllene and x-humulin are in the highest amounts. Oxygen-containing sesquiter-
penes (3.8-275. %) predominate viridiflorol and manool (0.3 and 8.2%),

Couladis et al. [24] reported that oxygenated monoterpenes (1,8-cineol, ˛α- and ˇβ -thujone,
camphor, borneol and bornyl acetate) predominate in the oil, their quantities varying widely.

Craft et al. [23] finds that monoterpenoids α-thujone (17–27%), 1,8-cineole (12–27%) and cam-
phor (13–21%) predominate in oil, with smaller amounts of β-thujone (3, 8–6.0%), camphene
(3.5–5.3%) and sesquiterpene α-humulene (3.1–4.4%). There are reports that sage oil from Italy,
Romania, the Czech Republic, Portugal and Turkey are characterized by a high content of cam-

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OF SALVIA OFFICINALIS CULTIVATED ON HEAVY METAL CONTAMINATED SOILS

phor (22.0 to 31.79%) as a major component in the oil [43]. In contrast, oils in other countries
such as Italy, Yugoslavia, Bulgaria and Iran are characterized by their large amount of oxygen
monoterpenes, with α-thujone, 1,8-cineole and camphor as the main compounds known to ex-
hibit antimicrobial, anti-inflammatory and antioxidant properties [44].

Tucker and Maciarello [45] describe five chemotopy groups based on four major components:
(1) camphor> α-thujone> 1,8-cineole> β-thujone; (2) camphor> α-thujone> β-thujone> 1,8-ci-
neole; (3) β-thujone> camphor> 1,8-cineole> α-thujone; (4) 1,8-cineole> camphor> α-thujone>
β-thujone; and (5) α-thujone> camphor> β-thujone> 1,8-cineole.

Jug-Dujakovic et al. [46] based on data from eight major components (α-thujone, camphor, β-thu-
jone, 1,8-cineole, β-pinene, camphene, borneol and bornyl acetate) distinguish three Dalmatian
sage chemo types from Dalmatia: (A) α-1 thujone , 8-cineole> β-thujone; (B) β-thujone> α-thu-
jone> camphor ≈ 1,8-cineole; and (C) camphor> α-thujone> 1,8-cineole> camphene ≈ borneol.

Our results show that sage oil from the uncontaminated area belongs to camphor-chemotype
camphor (16.84)> α-thujone (15.93)> β-thujone (11.58)> 1,8-cineole (6.89), whereas the oil from
the contaminated area belongs to the thujone-chemotype (α-thujone (18.91)> camphor (17.83)>
1,8-cineole (7.63)> β-thujone (5.38). The results obtained by us confirm that each sage plant has
a unique chemical composition and individual chemotype of the oil.

The chromatographic profile shows a complex mixture of components contained in sage oil. Fig-
ure 1 shows the classification of the identified compounds based on functional groups. The highest
is the content of oxygen-containing monoterpenes (60-62), followed by monoterpenic hydrocar-
bons (19%), sesquiterpene hydrocarbons (13-18%) and oxygen-containing monoterpenes (3-6%).

Figure 1: Classification of the identified compounds based on functional groups

Similar results were obtained by Damyanova et al. [41] for oil originating in Bulgaria (ox-
ygen-containing monoterpenes (59.15%), sesquiterpene hydrocarbons (24.37%) and monoter-
penic hydrocarbons (14.66%). The results are in line with those of Santos-Gomes and Fer-
nandes-Ferreira [20] and Farhat et al. [48], who find that oxygen-containing monoterpenes are
essential components in sage oil.

The observed differences in the profile of the essential oils of sage when grown on contaminated
and uncontaminated soils may be due to the conditions of cultivation of the plants are related to
soil contamination.

The main components contained in sage oil grown on contaminated soil are within the standard
except limonene, which slightly exceeds the corresponding value in the standard. The content
of trans-thujon and limonene from uncontaminated soil oil exceeds the specified values ​​in ISO

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9909, while the content of α-thujon is below the values in ISO 9909. The content of all other oil
ingredients in our study was within their respective values ​​of the ISO standard.

The composition of the oil from the contaminated area complies with the requirements of 9909
for the use of S. officinalis oil for medical purposes.

4. CONCLUSION

Based on the results obtained the following conclusions can be made:

1. Salvia officinalis L. is a plant which is tolerant to heavy metals and can be grown on
contaminated soils.
2. The amounts of Pb, Zn and Cd in the oil of sage grown on contaminated soil (Pb -2509.1
mg/kg, Zn -2423.9 mg.kg, Cd – 64.3 mg/kg) are lower than the accepted maximum val-
ues and meet the requirements of an environmentally friendly product
3. The highest is the content of oxygen-containing monoterpenes in essential oils of sage
(60-62), followed by monoterpenic hydrocarbons (19%), sesquiterpene hydrocarbons
(13-18%) and oxygen-containing monoterpenes (3-6%).
4. The main components contained in sage oil grown on contaminated soil are within the
standard except limonene, which slightly exceeds the corresponding value in ISO 9909.
5. The content of trans-thujon and limonene from sage oil from uncontaminated soil ex-
ceeds the specified values ​​in ISO 9909, while the content of α-thujon is below the values
in ISO 9909.
6. The composition of the oil from the contaminated area complies with the requirements
of 9909 for the use of S. officinalis oil for medical purposes.

ACKNOWLEDGEMENT

The financial support by the Bulgarian National Science Fund Project DFNI Н04/9 is greatly
appreciated.

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the temperate belt. Plant med., vol.58, pp. 680-686.
[18] Kuštrak, D., Kuftinec, J., Blazevic, N. (1984) Yields and composition of sage oils from diff erent
regions of the Yugoslavian Adriatic Coast, J Nat Prod., vol. 47, pp. 520-524.
[19] Hadri, A., Gomez del Rio, M., Sanz, J., Coloma, A., Idaomar, M., Ozanas, B. (2010) Cytotoxic
activity of α-humulene and transcario-phyllene from Salvia officinalis in animal and human
tumor cells, An R Acad Nac Farm., vol.76, pp.343-356.
[20] Santos-Gomes, P. C., Fernandes-Ferreira, M. (2001) Organ and seasoned-pendent variation
in the essential oil composition of Salvia officinalis L. cultivated in two different sites, J Agric
Food Chem., vol.49, pp. 2908-2916.
[21] Piccaglia, R, Marotti, M., Galletti, G. C. (1989) Effect of Mineral Fertilizers on the Composition
of Salvia officinalis Oil, Journal of Essential Oil Research, vol.1, pp. 73-83.
[22] Lakušić, B.S., Ristić, M.S., Slavkovska, V.N., Stojanović, D.L.J., Lakušić, D.V. (2013) Vari-
ations in essential oil yields and compositions of Salvia officinalis (Lamiaceae) at different
developmental stages, Bot. Serb., vol.37, pp.127–139.
[23] Craft, J. D., Satyal, P., Setzer, W. N. (2017) The Chemotaxonomy of Common Sage
(Salvia officinalis) Based on the Volatile Constituents, Medicines, vol. 4, pp. 47,
doi:10.3390/medicines4030047
[24] Couladis, M., Tzakou, O., Mimica-Dukic, N., Jancic, R., Stojanovic, D. (2002) Essential oil of
Salvia officinalis L. from Serbia and Montenegro, Flavour Fragr. J., vol. 17, pp. 119–126.
[25] ISO 9909 (1997), Oil of Dalmatian sage (Salvia officinalis L.).
[26] Bruneton, J. (1999) Pharmacognosy, Phytochemistry Medicinal Plants. Lavoisier Intercept,
London, UK

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[27] Amr, S., Đorđević, S. (2000) The investigation of the quality of Sage (Salvia officinalis) orig-
inating from Jordan, FACTA Universitatis Series: Working Living Environmental Protection,
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[28] Angelova, V., Ivanov, K., Ivanov, R. (2005) Heavy metal content in plants from family La-
miaceae cultivated in an industrially polluted region, Journal of Herbs, Spices and Medicinal
Plants, vol.11, pp.37-46.
[29] Blagojević, N., Damjanović-Vratnica, B., Vukašinović-Pešić, V., Đurović, D. (2009) Heavy Met-
als Content in Leaves and Extracts of Wild-Growing Salvia Officinalis from Montenegro, The
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[30] Angelova, V. (2012) Potential of some medicinal and aromatic plants for phytoremediation of
soils contaminated with heavy metals, Agrarni Nauki, vol. 4(11), pp. 61-66.
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Effect of the environmental conditions on essential oil profile in two Dinaric Salvia species: S.
brachyodon Vandas and S. officinalis L., Biochemical Systematic and Ecology, vol.35, pp.473-
478.
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52, pp.1361-1371.
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Zn and Fe) upon the growth, productivity and quality of lavander (Lavandula angustifolia Mill)
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plants to various pollutants, Journal of Field Crops Central Research Institute, vol.16(1-2), pp.
1-10.
[35] ISO 11466. (1995) Soil quality - Extraction of trace elements soluble in aqua regia.
[36] ISO 14780. (2001) Soil Quality- Extraction of Trace Elements by Buffered DTPA Solution.
[37] Kabata-Pendias, A. (2001) Trace Elements in Soils and Plants, 3rd ed. CRC Press LLC, Boca
Raton.
[38] Zheljazkov, V. D., Craker, L.E., Baoshan, X. (2006) Effects of Cd, Pb and Cu on growth and
essential oil contents in dill pepper mint, and basil, Environ. Exp. Bot., vol. 58, pp.9−16.
[39] Pitarević, I., Kuftinec, J., Blažević, N., Kuštrak, D. (1984) Seasonal variation of essential oil
yield and composition of Dalmatian sage, Salvia officinalis, J Nat Prod., vol.47, pp.409-412.
[40] Stancheva, M., Geneva, M., Hristozkova, M., Boychinova, M., Markovska, Y. (2009) Essential
oil variation of Salvia officinalis (L.), grown on heavy metals polluted soil, Biotechnol. and
Biotechnol. Eq., vol. 23, pp. 373-376.
[41] Damyanova S., Mollova S., Stoyanova, A., Gubenia, O. (2016) Chemical composition of Salvia
officinalis L. essential oil from Bulgaria, Ukrainian Food Journal, vol. (4), pp.695-700.
[42] Franz, C. (1993) Genetics. On: Hay RKM & Waterman PG (eds.), Volatile Oil Crops: Their
Biology, Biochemistry and Production, pp. 63-96, Longman: Harlow, UK.
[43] Dob, T., Berramdane, T., Dahmane, D., Benabdelkader, T., Chelghoum C. (2007) Chemical
composition of the essential oil of Salvia officinalis from Algeria. Chem. Nat. Compd., vol.43,
pp.491-494.
[44] Radulescu, V., Chiliment, S., Oprea E. (2004) Capillary gas chromatography-mass spectrom-
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[45] Tucker, A.O., Maciarello, M.J. (1990) Essential oils of cultivars of Dalmatian sage (Salvia offic-
inalis L.). J. Essent. Oil Res., vol.2(3), pp. 139-144.
[46] Jug-Dujakovic, M., Ristic, M., Pljevljakušic, D., Dajic-Stevanovic, Z., Liber, Z., Hancevic, K.,
Radic, T., Šatovic, Z. (2012) High diversity of indigenous populations of Dalmatian sage (Salvia
officinalis L.) in essential-oil composition. Chem. Biodivers., vol. 9, pp. 2309–2323.

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 SCALING BLOCKCHAIN FOR AGRICULTURAL SECTOR:
THE AGRIDIGITAL CASE
Roberto Mavilia1
Roberta Pisani2

DOI:

Abstract: New technologies are playing a fundamental role in the postmodern era of globalization where
interpersonal interactions at the international level and the exchange of goods, services, information
and capital are the basis of all activities. The agriculture sector is constantly facing numerous challeng-
es including the steady growth of the population, climate change, the increasing number of catastrophes,
the loss of biodiversity and the spread of parasites. New technology applications such as Blockchain,
Internet of things (IoT), drones, Big Data and artificial intelligence can provide the various players in
the agriculture value chain with new tools and key technologies to improve production and distribution
processes. To demonstrate the importance of applying the Blockchain in the agriculture sector, the case
of the AgriDigital platform will be examined. AgriDigital is a cloud-based raw materials management
platform that has started the implementation of the Blockchain in agricultural supply chains.

Keywords: Blockchain, Agricultural Sector, Innovation Management.

1. INTRODUCTION

N ew technologies are playing a fundamental role in the postmodern era of globalization

where interpersonal interactions at the international level and the exchange of goods, ser-
vices, information and capital are the basis of all activities. Blockchain technology, in particular,
is attracting more and more interest from the academic world but also from the corporate sector.

By allowing immutable and decentralized transactions, Blockchain technology is applied in

various sectors, financial and non-financial sectors.

More specifically, the agriculture sector is constantly facing numerous challenges including the
steady growth of the population, climate change, the increasing number of catastrophes, the loss
of biodiversity and the spread of parasites. Therefore, innovation in agricultural processes is nec-
essary to overcome them and make agriculture a profitable activity for small and large farmers.

New technology applications such as Blockchain, Internet of things (IoT), drones, Big Data and
artificial intelligence can provide the various players in the agriculture value chain with new
tools and key technologies to improve production and distribution processes. Despite its great
potential, it is essential to also consider the relative costs and implementation risks in assessing
the possibility of using it within the sectors of the economy.

1
ICRIOS – Invernizzi Center for Research on Innovation, Organization, Strategy and Entrepreneurship –
Bocconi University, Via Sarfatti 25 – 20136, Milan, Italy
2
MEDAlics – Research Center for Mediterranean Relations – Via del Torrione 95 – 89125, Reggio Calabria,
Italy
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To verify whether a process could benefit from a Blockchain-based solution, the first step is to
identify use cases, followed by the identification of the fundamental guidelines of the process
(including regulatory requirements, stakeholders, legal framework, interoperability with the
existing system and other key requirements) and then the determination of the technology that
could help address the challenges in the particular case analyzed. In many cases, in fact, a much
simpler digital solution could be the answer to the problem.

To demonstrate the importance of applying the Blockchain in the agriculture sector, the case of
the AgriDigital platform, an Australian company based in Sydney, will be examined. AgriDig-
ital is a cloud-based raw materials management platform that has started the implementation of
the Blockchain in agricultural supply chains, which represents a significant example of the ben-
efits that these solutions can bring to agricultural businesses and entrepreneurs. The platform
allows the management of goods, the traceability of food and the perfect information of custom-
ers regarding the origin of the products using precisely a Blockchain protocol. In addition, Agri-
Digital is continuing to invest and develop new solutions to expand its horizons to new sectors.

2. BLOCKCHAIN LITERATURE REVIEW

The birth of the Blockchain is linked to the publication of the white paper entitled „Bitcoin:
A Peer-to-Peer Electronic Cash System” in 2008 by Satoshi Nakamoto, whose identity is still
unknown.

This paper describes a purely peer-to-peer version of electronic money known as Bitcoin.

With this event, Blockchain technology, literally a chain of blocks, made its public debut. The
Blockchain is a type of Distributed Ledger Technology (DLT), a distributed, shared, encrypted
database that acts as an irreversible and incorruptible repository of information. It is a digital
platform that stores and verifies the entire chronology of transactions between users through the
network (Nakamoto, 2008)

There is no unanimously accepted definition of blockchain. Nevertheless, it is possible to out-

line three complementary conceptualizations of this technology (Mavilia and Pisani, 2018)

From a technical point of view, the Blockchain is a database consisting of a ledger divided
between users and can be openly inspected; it is not, therefore, physically present in a single
server, but is placed on several computers at the same time, all synchronized real-time.

From the business point of view, it is a network where transactions, exchanges of values ​​and
exchanges of goods between users can be carried out without the existence of central mediators.

On the other hand, from a legal point of view, the Blockchain validates transactions, replacing
the old centralized bodies.

To date, the most promising applications of this technology can be seen in the financial sector.
Additional fields of application can be identified in the insurance sector (Dai and Vasarhelyi,
2017), data protection, intellectual property protection, electronic voting system, identity veri-
fication but also government services, the health sector and medical research (Nichol, 2016), in
general for social purpose and catching-up of developing countries (Mavilia and Pisani, 2019).

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THE AGRIDIGITAL CASE

3. BLOCKCHAIN APPLICATIONS IN AGRICULTURAL SECTOR

To generalize, the applications of this technology can be divided into two macro-groups: finan-
cial and non-financial applications.

As for the second area of application, numerous studies and numerous pilot projects have been
launched to evaluate the blockchain applications in the agricultural sector, as following (Tripoli
and Schmidhuber, 2018):

The agricultural supply chains present substantial inefficiencies, which affect all the players in
the chain, from producers to consumers. It is estimated that the cost of operational supply chains
constitutes two-thirds of the final cost of goods (Niforos, 2017).

The blockchain stores immutable records that are transparent and, in theory, accessible to any
user. This technology has the potential to create huge efficiencies for each actor in the supply
chain. The blockchain provides a platform for traceability in agricultural supply chains. It is
thus able to keep track of the origin and guarantee the authenticity of agricultural products. In
fact, food is the most direct way to get in touch with a place (Baralla et al., 2018).

This solution will make regulatory control easier as the product can be traced along the entire
supply chain and possible fraudulent behavior that is discouraged in this way can be identified.
However, elements such as hierarchy, Blockchain experiences and the industrial sector have a
significant impact on logistics professionals in this field. (Hackius and Petersen, 2017).

The greater traceability of the production and processing of agricultural products will improve
the ability to ensure compliance with food standards (national and international) and sustaina-
bility.

In addition, the agricultural sector will benefit from the blockchain to reduce costs, risks for
sellers and banks and bring greater efficiency gains to supply chains for commercial financing
operations. The blockchain uses smart contracts to automatically execute payment settlement in
real time, evaluating delivery first, then verifying that the buyer has sufficient funds and finally
securing the funds on behalf of the buyer awaiting delivery. These smart contracts can facilitate
entrepreneurial collaboration of inter-organizational business processes in the context of smart
rural supply chains (Prause and Boevsky, 2019).

The blockchain can also increase access to commercial finance. Commercial finance has not
been able to meet demand, particularly from SMEs and emerging economies. Other types of
financial services, such as payment, insurance and credit services, can also be carried out using
this technology, thus helping the actors in the agricultural supply chain to reduce risk, manage
liquidity and maximize returns.

As for payments, for many players in the agricultural value chain, financial transactions are
mainly based on cash. This process is slow and expensive and is subject to risks such as theft
and loss. Digital payment services make it possible to reduce costs and risks deriving from cash-
based transactions, also generating data on the cash flows of the actors in the value chain that
can be used to assess credit risk.

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As for insurance applications, agricultural insurance is a risk management tool that helps sta-
bilize agricultural income and investments in the event of losses. Insurance payments would
become fully digitized and automated with the use of smart contracts and better insurance
coverage would be possible.

As regards the credit sector, the main impediments for financial institutions to supply credit
products to the sector are the cost of maintaining remote areas, the lack of data to assess the
creditworthiness of the applicants or the guarantees.

The blockchain could provide financial institutions with data on the operations of farmers and
other players in the value chain necessary to provide numerous financial services.

Agricultural markets are inherently volatile and agricultural and price incomes are vulnerable to
exogenous shocks. Derivatives are used as a risk management tool to cover price risk and set a fu-
ture price for the harvest. The blockchain could also be applied in agricultural derivatives markets.

Through blockchain technology, users are able to build digital identities. Blockchain technology
generates a large amount of data from transactions in agricultural supply chains and agricul-
tural financial services. The blockchain technology stores each recorded transaction, able to
provide the actors in the supply chain with detailed records of their operations, financial service
activities and more accurate and better-quality market information.

Blockchain technology could potentially act as a core technology that integrates other emerging
digital technologies into its platform to continuously improve the management of the agricultur-
al supply chain such as artificial intelligence, IoT, big data and 3D printing.

In addition, the blockchain is able to address many of the shortcomings of traditional land reg-
istry. This is because it provides a secure, fast and immutable method for registering land titles,
which will promote trust in the reliability of the system. A virtuous example is land manage-
ment in Ghana (Ender, 2019).

4. CASE STUDY: AGRIDIGITAL

AgriDigital was founded to solve some challenges of agri-food supply chains (FAO, 2019). The
main crucial issues are related to some problems such as: The payment of the farmers is not
contextual to the delivery of the goods; buyers do not have access to flexible financing to pay
farmers; consumers do not know where the food comes from.

The AgriDigital platform simplifies and automates business processes for farmers and buyers,
acquiring data on the goods and facilitating the transfer and reconciliation of data. The platform
offered a huge leap forward in the management of raw materials.

Three pilot projects were conducted using the blockchain in order to generate a digital title
on a physical product and perform payment on the blockchain, use the blockchain to track the
movement of goods.

The objective was to verify whether the AgriDigital platform, supported by the blockchain,
could facilitate the purchase and sale transactions.

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 SCALING BLOCKCHAIN FOR AGRICULTURAL SECTOR:
THE AGRIDIGITAL CASE

These pilot projects have demonstrated the ability to eliminate counterparty risk by performing
commodity transactions on a blockchain, allowing the supply chain to operate effectively and
efficiently.

5. LIMITS, CHALLENGES AND RECOMMENDATIONS

The AgriDigital raw materials management platform is one of the existing blockchain solutions
able to show how this technology can be a profitable solution for companies. This case study
allows us to show how the applications of the blockchain can be feasible even in a non-financial
context in terms of application potential.

These solutions aim to eliminate counterparty risk and reduce existing inefficiencies in the ag-
ricultural sector in order to bring more autonomy and control to farmers and their businesses.

However, there are some critical issues and additional challenges that need to be taken into
consideration linked to the intrinsic characteristics of the blockchain technology and beyond.

First of all, it is necessary to create a robust digital infrastructure of IoT devices, sensors and
integrations to ensure that the digital resource is reliable.

To do this, it is also necessary to have certainty about the inputs to be certified at each step to
ensure that the information contained on the Blockchain is not only immutable but also accurate
and truthful.

A further element to be taken into consideration is related to the level of digital connectivity that
can be a problem in certain areas of the world where the connection is limited or even absent.

In order for these blockchain applications to be realized it is crucial that incentives are provided
and that cooperation between the different actors in the value chain is encouraged.

Sometimes it happens that the various stakeholders have different and even conflicting interests.

All these aspects can be a reason for delaying the positive applicability and implementation of
these blockchain solutions.

6. CONCLUSION

Through the analyzes carried out, this paper investigated how new technologies and, in par-
ticular, Blockchain technology can be implemented in various projects and initiatives in the
agricultural sector, aiming to create trust within value chains and make them transparent and
sustainable, integrating all the main stakeholders. Despite this, it is also true that there are still
many aspects to be improved and problems to be solved, both technically and beyond.

The case of the AgriDigital platform, specifically, shows how it is possible, through the new
technological tools, to mitigate the counterparty risk in agricultural transactions up to eliminat-
ing it, making secure payments and allowing the traceability and transparency that agricultural
value chains need.

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Further future research will aim to investigate if and how the challenges that still characterize
these applications can be definitively overcome so as to confirm the Blockchain as a safe, reli-
able and transparent way to guarantee the traceability and integrity of agricultural products, in
addition to further applications in the same sector.

REFERENCES

Baralla, G., Ibba, S., Marchesi, M., Tonelli, R., & Missineo, S. (2018, August). A Blockchain
Based System to Ensure Transparency and Reliability in Food Supply Chain. In European
Conference on Parallel Processing (pp. 379-391). Springer, Cham.
Dai, J., & Vasarhelyi, M. A. (2017). Toward blockchain-based accounting and assurance. Jour-
nal of Information Systems, 31(3), 5-21.
Eder, G. (2019). Digital Transformation: Blockchain and Land Titles. OECD Global Anti-Cor-
ruption & Integrity Forum.
FAO (2019). Blockchain for Agriculture Opportunities and Challenges. ISBN 978-92-5-131227-
8.
Hackius, N., & Petersen, M. (2017). Blockchain in logistics and supply chain: trick or treat?
In Proceedings of the Hamburg International Conference of Logistics (HICL) (pp. 3-18).
Mavilia R., & Pisani R. (2018). Management delle nuove tecnologie per l’inclusione e l’inno-
vazione sociale. EGEA Editore.
Mavilia, R., & Pisani, R. (2019). Blockchain and catching-up in developing countries: The case
of financial inclusion in Africa. African Journal of Science, Technology, Innovation and
Development, 1-13.
Nakamoto, S. (2008). Bitcoin: A peer-to-peer electronic cash system.
Nichol, P. B., & Brandt, J. (2016). Co-creation of trust for healthcare: The cryptocitizen frame-
work for interoperability with blockchain. Research Proposal. ResearchGate.
Niforos, M. (2017). Beyond Fintech: Leveraging Blockchain for More Sustainable and Inclusive
Supply Chains. International Finance Corporation (IFC) EM Compass Note, 43, 45-46.
Prause, G., & Boevsky, I. (2019). Smart contracts for smart rural supply chains. Bulgarian Jour-
nal of Agricultural Science, 25(3).
Tripoli, M., & Schmidhuber, J. (2018). Emerging Opportunities for the Application of Block-
chain in the Agri-food Industry. FAO and ICTSD: Rome and Geneva. Licence: CC BY-
NC-SA, 3.

60
 IDENTIFICATION OF THE SPORTS PREDISPOSITION
AS A SOCIAL RISK MANAGEMENT ELEMENT
Elena Fefilova1
Natalia Pazdnikova2
Yuliya Karpovich3

DOI:

Abstract: The relevance of activities on sports selection and sports orientation of children, including
in order to assess health risks, is substantiated. A method for identifying a sports predisposition based
on sports selection and orientation methods has been formed, and testing has been conducted. As part
of the study, a group of participants was identified for which recommendations were made to limit
the use of sports due to health risks. A financial risk assessment was carried out. The suggestions are
formulated for using the methodology for identifying sports predisposition as a risk management tool.
Aim of the study is the health risk assessment based on the methodology of sports selection and orientation.
Materials and methods. The methods of theoretical analysis and generalization, the bibliographic
method of searching and studying scientific information, and system analysis are used.
Keywords: Sports Selection, Sports Orientation, Health Risks, Risk Management

1. INTRODUCTION

A new stage in the development of the Russian Federation is marked by the large-scale imple-
mentation of national projects as an instrument designed to ensure a qualitative change in the
standard of living of the population in all areas. One of the key indicators of the national project
„Demography” involves an increase in the proportion of citizens who are systematically involved
in physical education and sports, up to 55%. This goal, in addition to popularizing the aspects of
a healthy lifestyle, involves ensuring a competitive sports infrastructure and the development of
the institution of sports training, including institutions of the municipal, regional and federal lev-
els that operate within the framework of the budget for results-based budgeting and provide state
social services. Note that in the framework of federal law, the criterion for distinguishing between
the categories of “sports” and “physical education” is the implementation of competitive activity.

In accordance with the Budget Code of the Russian Federation, such institutions operate within
the framework of the state (municipal) assignment mechanism and provide sports training ser-
vices in Olympic, non-Olympic sports, sports for people with disabilities in the context of the
stages of initial preparation, training, the stage of improvement of sportsmanship, stage of high-
er sportsmanship, while financing is carried out according to the normative per capita principle
per one Nima, provided the job. To determine the quality of the service, it is assumed to use an
indicator that reflects the sustained interest of those involved in the sport (the share of students
enrolled in the next stage), and the athlete’s compliance with the federal standards. Note that the
factors of conducting competitive activity and its effectiveness, which are fundamental for the
formalization of sports training, are ignored.
1
Perm National Research Polytechnic University, Komsomolsky Avenue, 29, 614990 Perm, Russia
2
Perm National Research Polytechnic University, Komsomolsky Avenue, 29, 614990 Perm, Russia
3
Perm National Research Polytechnic University, Komsomolsky Avenue, 29, 614990 Perm, Russia
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Every year, about 30-40 percent of people undergoing sports training are screened out during
the transition between stages, including for health reasons and due to non-compliance with con-
trol standards. In addition, because of the initially non-optimal choice of sport, a young athlete,
having spent years training, reaches the limit of his physical, anthropometric, psychological
capabilities, which leads to stagnation or deterioration of sports results.

The issues of planning the volumetric indicators of state sports training services (the number of
people involved in the preparation stage) are determined by the following factors: limited budget
funding (planning is carried out “from the reverse”), the level of provision of the territory with
sports organizations, and material and technical equipment. At the same time, considering the
institute of sports of the highest achievements, the question of forecasting optimal for ensuring
the formation of a competitive sports reserve, the number of participants remains unresolved
(Bakulev S.Е. et al., 2017; Aleshin I.N., 2018). At the same time, domestic researchers determine
the low level of efficiency of forecasting competitive activity by insufficient awareness and use
of information about the sports makings of future athletes (Zebzeev V. V., 2015).

In addition, in the framework of modern scientific research, a conclusion has been drawn about
possible negative consequences for the physical and psychological health of athletes, especially
significant in cases of applying inappropriate loads to the body’s capabilities applied at all stages
of sports training (5-8). So, according to research, the initial number of visits to medical institu-
tions of young athletes is 3.7 times higher than the value of a similar indicator among children
who are not involved in sports (Avdeeva T. G., 2009). At the moment, there is an extremely high
level of sports improvement and competition, which leads to an increase in the intensity of the
training process, an increase in loads and aggravates the influence of risk factors on the health
of young athletes.

Thus, the relevance of enhancing the activities of sports selection and orientation of children,
the development of technologies for identifying sports orientation is obvious.

2. METHODOLOGY

In the framework of studying the processes for identifying a sports orientation, the establish-
ment of a conceptual apparatus is of particular importance: sports selection is a system of or-
ganizational and methodological measures, including pedagogical, psychological, sociological
and biomedical research methods, on the basis of which the abilities of children, adolescents
and youths for specialization are identified in a particular sport or group of sports, while sports
orientation reflects the opposite process – definition of sport or specialization areas, the most
appropriate level of abilities, inclinations and interests of the child (Volkov V.M., Filin V.P.,
1983). In the first case, the goal is to identify the most gifted children for sports, in the second
- the determination of the sports path for both young athletes and children involved in physical
education. At the same time, a number of authors consider orientation as one of the stages of
selection, which is an activity to determine a narrow sports specialization in a particular sport
(Volkov V.M. et al., 1983; Melikhova T.M., 2006).

It should be noted that activities within the framework of sports orientation require the use
of more complex technology for its implementation, analysis of an extensive methodological
and methodological base, as well as tools for processing and interpreting test results. At the
same time, domestic researchers highlight the problem of the lack of unified methodological

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 IDENTIFICATION OF THE SPORTS PREDISPOSITION
AS A SOCIAL RISK MANAGEMENT ELEMENT

approaches to assessing abilities and justify the need to review, systematize and update existing
methods (Shvarts V.B., Khrushchev S.V., 1984), in addition, the need for the use of information
technologies in testing is substantiated.

Basically, the following aspects of sports orientation and selection are distinguished: pedagog-
ical (assessment of motor function, motor skills, coordination abilities, etc.), psychological (de-
termination of personality characteristics, structure of psychological activity, identification of
interest in activities), biomedical (assessment of health, morphological and functional character-
istics of the body, level of adaptation to physical activity, etc.), sociological (study of motivation,
the influence of family, sport, team) (Sergienko L.P., 2013).

3. DISCUSSION

As part of the study, we have developed a methodology for identifying a sports orientation and
assessing health risks, based on a comparison of test results with standard indicators established
for the corresponding gender and age group by domestic researchers. The criteria used in the
diagnostic process are shown in table 1.

Table 1 - Criteria for sports orientation

Criteria group Complex factors Tests and indicators
Speed ​​abilities 30 m running
Flexion-extension of the arms in an
Muscular strength
emphasis lying
Vestibular resistance Roymberg test
Pedagogical (assessment
Stamina Planck, torso lift
of physical qualities)
Tilt forward from a standing / lying
Flexibility
position
Coordination Ability Coordination Ability
Speed ​​and Power Ability Long Jump
Biomedical Level of Physical Development Body Mass Index (WHO)
(Anthropometric) Body Proportionality Proportionality Index
Persistence of Attention Schulte Tables
Reaction rate Hand-eye reaction
Individual personality characteristics Individual typological questionnaire
Type of nervous system tapping test
Psychological
Testing to determine the type of
Type of temperament
temperament
Test for determining leading
Formation of motives for activity
activities

In order to ensure the coverage of various sports in assessing predisposition, our methodology
in terms of assessing physical qualities contains tests and indicators that, on the one hand, are
accessible and feasible for the subject, on the other hand, correspond to those complex factors that
reflect physical fitness requirements, presented by various sports (N.G. Ongienko, I.S. Voropai,
L.P. Sergienko, P.V. Ostashev, etc.), in accordance with relevant approaches, the coefficient of sig-
nificance of criteria for a sport (in accordance with the accepted classifications of sports, Olympic
and non-Olympic sports are distinguished, which in turn are divided into winter and summer
sports, as well as by groups that characterize the features of the activities carried out in the frame-
work of training for these types: cyclic, martial arts, applied, difficult coordination, shooting,
speed-strength, technical), determined by factors of the age of the beginning of reception and the
degree of influence of the studied abilities, qualities, inclinations on sports s results.

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Evaluation within each criterion involves determining the individual level of motor abilities
based on the correlation of an individual test result with normative indicators, the scale includ-
ing the allocation of unsatisfactory results and hazard markers, which are the basis for generat-
ing information about the presence of health risk.

The integral assessment of physical qualities (AFQ) for the jth sport (group of species) is calcu-
lated by the formula:

AFQ j = FQ1 * s1 + FQ2 * s2 + ... + FQi * si (1),

where: F
 Q - coefficient of the individual level of motor abilities according to the i-th criterion;
s - coefficient of significance of the i-th criterion.

A feature of anthropometric criteria is the need to consider each of them in relation to the specif-
ic requirements of the sport (group of sports). When evaluating the obtained value is compared
with a given model characteristic, which is optimal for a specific group of sports.

Psychological criteria determine the need to use a significant number of instrumental methods
(G. Aizenk, O.E. Yashchin, A.A. Krylov, S.A. Manichev, E.P. Ilyin, etc.), each of which has its
own calculation algorithm and scale results. In order to unify in accordance with the signifi-
cance of the test results for a sport, these parameters are reduced to a 5-point system (0–2 points
–– health risk, 3-4 –– satisfactory, 5 –maximum level of compliance).

Comprehensive diagnostics of a sports orientation is a choice from an array of ratings for each
of the studied sports (groups) that are most relevant (in accordance with the rating scale) to the
athlete’s individual profile, the level of his abilities, qualities and inclinations. A separate group
is formed by persons with respect to whom a health risk is identified during sports.

It should be noted that the technology for identifying sports orientation based on the presented
methodology involves the use of an information system that allows you to collect, store, process,
analyze large amounts of data.

4. RESULTS

As part of the testing of the methodology, testing was organized for participants in the Perm In-
ternational Marathon (September 2019): a sample of children involved in athletics (at the sports
and fitness, primary or sports and fitness stage of sports training) was formed, aged 6 to 15 years.

The organizational and technical parameters of the testing made it necessary to include short,
easy to implement, and, at the same time, significant tests in the process of sports selection in
the diagnostic process of sports involvement (test to determine leading activity (psychologi-
cal criterion), measurements by anthropometric criteria, rapid assessment - power, coordination
abilities). Interpretation of the results provides for the development of recommendations for prac-
ticing complex coordination sports, which assess the complexity and beauty of the movements
performed (for example, ski biathlon) - the first group; cyclic sports, requiring a primary man-
ifestation of endurance, with a significant duration of competitive exercises (athletics, cycling,
etc.) - the second group; recommendations of daily physical activity in accordance with the rec-
ommendations of the All-Russian Health Organization (health risks identified) - the third group.

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 IDENTIFICATION OF THE SPORTS PREDISPOSITION
AS A SOCIAL RISK MANAGEMENT ELEMENT

Table 2. - Distribution of test results (gender and age composition)

Age and gender category Group 1 Group 2 Group 3
Girls (6-10 years old) 32,20% 40,68% 27,12%
Boys (6-10 years old) 17,81% 60,27% 21,92%
Girls (11-13 years old) 29,63% 44,44% 25,93%
Boys (11-13 years old) 24,00% 85,19% 7,40%
Girls (14-15 years old) 40,00% 60,00% -
Boys (14-15 years old) 20,00% 80,00% -
Average meaning 27,27% 56,90% 15,83%

The results of the study showed a rather high level of predisposition to cyclic sports - about 60%
of the total number of participants.

Almost a third of young athletes showed indicators that form a positive prognosis in the frame-
work of complex coordination sports.

Within the age group of 14-15 years, recommendations for physical activity were not formed
due to the presence of health risks (group 3), which demonstrates the effectiveness of the imple-
mentation of sports selection and orientation at the training stage.

At the same time, on average, in relation to 16% of the participants recommendations were
made to limit sports, which are caused not only by unfavorable forecasts of competitive activity,
but also by health risks. More than half of the children in this group are between the ages of 6
and 10 years and the availability of information about sports predisposition, taking into account
the average age of admission to the initial stage of sports training (9-10 years), provides parents
and teachers with the opportunity to form a health-saving path for the development of the child.

In the framework of the study, in addition to the individual (private) nature and social orienta-
tion of the risks to the health of children involved in sports, it is possible to single out financial
risks of a general nature, the subject of which is the institution of public administration. An
assessment of such risks can be made on the basis of information that 21.9% of those involved
in the initial stage of sports training (11-13 years old) have abilities, qualities and inconsistencies
that do not correspond to sports, which directly affects the results of fulfilling control standards
and the implementation of competitive activity and determines the inefficient use of budget
funds for the training of such an athlete. For example, for the consolidated budget of the Perm
Territory, the assessment of this risk is 33.5 million rubles (based on the average value of stand-
ard costs for the provision of sports training services at the initial stage - 52.4 thousand rubles
per year for the student and the number of students at the stage initial training).

The health risks under study also determine the frequency and nature of visits to medical in-
stitutions for children whose physical indicators do not correspond to the level of training load
in the framework of the chosen sport. The object of financial risk in this situation is the health
authorities and compulsory health insurance funds, an assessment of such a risk at the Perm
Territory is 7 million rubles. per year (based on the funding standard of 15.3 thousand rubles
per person per year from all sources and the number of people involved).

The total financial risk assessment at the level of the Russian Federation is 9.1 billion rubles.
(including 1.92 billion rubles for the budget of compulsory health insurance funds).

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CONCLUSION

As part of the study, the methods of sports selection and orientation were used to manage social
risks (children’s health). Diagnostic mechanisms for sports predisposition provide increased
competitiveness of sports activities, sustained interest in sports and the effectiveness of the pro-
vision of public sports training services by minimizing the cost of preparing a sports reserve.
The application of the methodology for identifying a sports predisposition as a risk management
tool will make it possible to mitigate the health risks of students by identifying the level of com-
pliance of their abilities and inclinations with the requirements and potential loads.

REFERENCES

Aleshin I.N., Slinkina N.E., Samoilova E.L. (2018) The uncertainty and nonlinearity in sports
training course, manifestations and implementation. Problemy sovremennogo pedagog-
icheskogo obrazovaniya, no.58-3, pp.33-40.
Avdeeva T. G. (2009) Introduction in children’s sports medicine. Moscow: GEOTAR-Media,
176 p.
Bakulev S.E. (2009) Improvement of the success forecasting effectiveness of combat sports
athletes taking into account genetic bases of patrimonial, interspecific and intraspecific
orientation. Uchenye zapiski universiteta Lesgafta, no.11 (57), pp. 35-39.
Bakulev S.Е., Dveirina О.А. (2017). Determination of number of athletes for prospect, nearest
and current reserve as a way to manage preparation of sports national teams of the Russian
Federation. Uchenye zapiski universiteta Lesgafta, no.4 (146), pp. 17-26.
Gavrilova E.A., Larintseva O.S. (2018) Risk factors for sudden cardiac death in athletes at var-
ious stages of sports training according to a cardiac examination. Sportivnaya meditsina:
nauka i praktika, 2018, no.2, pp.33-37.
Makarov L.M. (2017). Sport and sudden death in children. Rossiiskii vestnik perinatologii i
pediatrii, no.1, pp.40-46.
Melikhova T.M. (2006) Implementation of principles and technologies of sports selection and
orientation. Uchenye zapiski universiteta Lesgafta, 2006, no.22, pp. 37-41.
P. Taylor, L. Davies, P. Wells, J. Gilbertson, W. Tayleur. (2019) A review of the Social Impacts
of Culture and Sport. Available at: https://assets.publishing.service.gov.uk/government/
uploads/system/uploads/attachment_data/file/416279/A_review_of_the_Social_Impacts_
of_Culture_and_Sport.pdf (02.10.2019).
Sergienko L.P. (2013) Sports selection: theory and practice. Moscow: Sovetskii sport, 1048 p.
Shvarts V. B., Khrushchev S. V. (1984) Biomedical aspects of sports orientation and selection.
Moscow: Fizkul’tura i sport, 1984, 151 p.
Volkov V.M., Filin V.P. (1983) Sports selection. Moscow: Fizkul’tura i sport, 1983, 176 p.
Zebzeev V. V. (2015). Comparative analysis of the morphological features of Nordic combined
skiers representing the different types of competitive qualification. Uchenye zapiski uni-
versiteta Lesgafta, no.5 (123), pp. 75-79.

66
 IMPLEMENTATION OF QUALITY CONTROL ON SOIL SAMPLING

Zorica Sovrlić1
Daniela Urošević2
Ivan Svrkota3

DOI:

Abstract: Adequate soil sampling with the implementation of quality control guaranties high accuracy
outputs of chemical analysis of the sampled soil. Mining and Metallurgy Institute Bor, as accredited
scientific institution, sampling the soil from various locations according to the previously established
sampling plan and to the standards ISO 18400-101 and 180400-104. The standards define the sampling
scheme. Control of compulsory monitoring of sampling quality is done by ISO 18400-106 standard.
Monitoring the quality control of the sampled soil, means formation of Trip blanks and Field blanks.
Developed quality control plan monitors the status of the mentioned blanks, which considers the initial
chemical composition of the zero blank, its way of packing and transport to the place where sampling
occurs, preservation and storage as well as chemical analysis on specific elements. During 2019, Mining
and Metallurgy Institute conducted quality control after every sampling on 6 locations. Comparative
chemical analysis of the blanks after the sampling, started with zero blank, resulted in non-existence of
cross contamination of the sampled soil. Conclusion is that the sampling was implemented according to
the given procedures and standards.

Keywords: Quality Control, Soil Sampling, Blank Samples.

1. INTRODUCTION

S oil is a complex heterogeneous matrix composed of mineral and organic solid matter, liquid
and gaseous components and living organisms. (Alloway,1995.) It presents the important
part of the urban ecosystem which directly or indirectly has impact on life quality and people’s
health. Industrial and urban development of human society among many advantages and bene-
fits, results in environmental pollution and soil pollution as well. So, it is of the great importance
to do the soil control and analysis more frequently. Soil samples for the analysis can be taken
in disturbed or in undisturbed condition, depending which parameters are to be examined. Soil
sampling is performed according to the criteria applicable in the Republic of Serbia, and to the
following standards:
• ISO 18400 Soil quality- Sampling/part 101; Frame work for the preparation and appli-
cation of the sampling plan, 2007.
• ISO 18400 Soil quality-sampling- part 102; selection and application of sampling tech-
niques, 2017.
• ISO 18400 soil quality- sampling –part 104; strategies, 2018.Ways of taking disturbed
and undisturbed field samples are defined in ISO 18400-104 standard:
• Systematic unaligned sampling pattern
• Circular grid
• Stratified random sampling
1
Mining and Metallurgy Institute Bor, Zeleni bulevar 35, 19210 Bor, Serbia
2
Mining and Metallurgy Institute Bor, Zeleni bulevar 35, 19210 Bor, Serbia
3
Mining and Metallurgy Institute Bor, Zeleni bulevar 35, 19210 Bor, Serbia
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Transport, storage, preservation and preparation of samples for the analysis are defined by
standards ISO18400 Soil Quality-Sampling-Part105; Packaging, transport, storage and preser-
vation of samples.

2. SAMPLING QUALITY CONTROL

Sampling quality control has 3 main goals: Monitoring and detecting errors which may occur in
the process of sampling; sampling error control and to present the sampling variability.

Precondition for accuracy and reproducibility of analytical results is sampling quality control
that includes the following:
• Representativeness of the sampled material
• Prevention of contamination and unwanted changes or changes made on the samples
during terrain sampling, pre-treatment of the samples if it is necessary, transport, stor-
age and preservation of samples
• Adjustment to all protective measures on the field

Laboratory preparation for sampling quality control occurs by using field and trip blanks, gath-
ering control samples of every field sampling (double samples) in order to check the sampling
precision.

3. TRIP AND FIELD BLANKS

Trip blanks are used to detect prospective mutual contamination of blanks during the transport.
Sample container or any other agent for sample storage, identical to the one used for samples,
must be filled with soil or any other material that resembles the soil. The parameters that are
to be analyzed must be presented before the container fills. Container or the agent for sample
storage closes and together with samples is transported back to laboratory. Blank is than at the
same time analyzed with gathered samples.

Trip blank is analyzed on chemical elements on which the soil samples will be analyzed, before
going to the terrain, and packaging in container for preserving blanks and after the transport
to the laboratory. This way confirms or eliminates the possible cross contamination of samples
during the transport.

Field blanks are similar to trip blanks but are used in order to reveal inconsistency in entire pro-
cess- from the sample taking to the laboratory analysis. The sample must go through the entire
process, from the field sampling, transport to the laboratory, preparation on the ring mill and
chemical analysis. This way confirms or eliminates possible inconsistency in entire process,
considering transport than preparation and chemical analysis at the end.

4. CONTROL SAMPLES

As it is already mentioned, in order to implement the quality control, the double samples are
taken on the terrain to show the quality of sampling on previously defined points for sampling.
They provide information that ideally rejects all errors of possible contamination sources, in-
consistencies in sampling and check the applied analytical techniques.

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 IMPLEMENTATION OF QUALITY CONTROL ON SOIL SAMPLING

In order to gain insight in sampling quality, r-control maps are established (map of duplicate
samples). In r-control map are input the controlled values, differences of the compatible results
of the repeated analysis of control samples.

5. RESULTS AND DISCUSION

The following text will present the results of the analyzed chemical parameters of the zero
blank, trip and field blank, control samples, processed in R-control maps. Sampling location,
analysis of the double soil samples on previously defined points of sampling, for the period
from April to May will not be presented in this project. Location on which the soil monitoring
occurs–once per month, is presented as Location 1, and is situated in Eastern Serbia. According
to the previously established sampling plan, all the necessary requests for sampling are defined,
on the mentioned location, figure 1 and figure 2.

Figure 1. Figure 2.
Site Sampling at Site 1 Sampling quality control, field blank

Table 1 shows the results of analyzed chemical parameters of zero, field and trip blank. (month
April). Results of the analyzed control samples (April -November) are presented in table 2.
Table 3 presents the relative range and average value of measuring. Table 4 presents control
limits of all R–charts (control maps). Chemical analysis of examined parameter, Tables 1 and 2.
on control soil samples, zero, trip and field blank, was done in duplicate. The difference of the
obtained values is put in R –chart for each examined parameter and presented on charts 1-8.
According to the duplicate differences of the analyzed parameters(R- range), the control limits
of R- charts are calculated central line, warning limit and the limit of action are also presented
in R- charts , it can be clearly seen that there is no outlier -the values that jump out from the
calculated limits. It is of the great importance to mention that the blank analysis is done after
every sampling and compared with zero blank.

From Tables of analyzed blank, Table 1, on the same chemical elements as well as on the control
samples, we can conclude that the contamination of samples during the transport is excluded
and no inconsistency in the entire process from sampling to chemical analysis. By comparative
analysis of the examined element, trip and field blanks, marked as 5Te-4 and 6Te-4, with zero
blank, mostly comes to concurrence of analyzed parameters which are done before they went
on the terrain and after they came back to laboratory.

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Table 1.
Comparative chemical analysis of zero-blank from field and transport blank
Element, ppm
Sample name
Cu Be Zn Co Pb V
33.3 1.3 82.3 15.5 20.6 101.6
0-Blank
33.6 1.2 82.5 15.3 20.5 101.1
34.4 1.3 83.6 15.6 20.6 102.1
5Te-4
34.3 1.2 83.8 15.3 20.6 101.9
34.1 1.3 82.9 15.5 20.5 101.2
6Tr-4
34.7 1.3 83.0 15.4 20.6 101.2

Table 2.
Chemical analysis of control samples
Element, ppm
Sample name
Cu Be Zn Co Pb V
1K-1 53.0 1.2 74.6 10.6 23.0 109.8
1K-2 52.9 1.1 74.3 10.4 23.5 109.6
2K-1 54.5 1.2 72.3 13.8 22.7 105.6
2K-2 54.4 1.1 72.4 13.5 22.8 105.2
3K-1 76.3 1.2 89.6 12.9 26.5 125.3
3K-2 76.4 1.3 88.9 12.9 26.2 124.9
4K-1 67.4 1.1 73.8 14.2 26.6 113.3
4K-2 67.8 1.2 74.5 14.1 26.7 113.8
5K-1 117.2 1.1 79.3 21.2 19.9 116.8
5K-2 117.4 1.2 78.4 21.6 20.0 115.9
6K-1 123.5 0.98 80.5 20.6 21.6 223.8
6K-2 124.0 0.97 80.4 20.5 21.8 222.6
7K-1 142.6 1.0 87.2 18.6 19.9 142.2
7K-2 142.1 0.97 87.4 18.5 21.2 141.1
8K-1 144.1 1.2 78.6 13.1 22.5 135.7
8K-2 144.2 1.2 77.9 12.9 22.7 135.2

Table 3.
Relative range and mean of measurement, ppm
Sample Cu Be Zn Co Pb V
name R Sr.vr. R Sr.vr. R Sr.vr. R Sr.vr. R Sr.vr. R Sr.vr.
0-Blank 0.3 33.45 0.1 1.25 0.2 82.4 0.2 15.4 0.1 20.55 0.5 101.35
5Te-4 0.1 34.35 0.1 1.25 0.2 83.7 0.3 15.45 0.0 20.60 0.2 102.0
6Tr-4 0.6 34.40 0.0 1.30 0.1 82.95 0.1 15.45 0.1 20.55 0.0 101.2
1K 0.1 52.95 0.1 1.15 0.3 74.45 0.2 10.5 0.5 23.25 0.2 109.7
2K 0.1 54.45 0.1 1.15 0.1 72.35 0.3 13.65 0.1 22.75 0.4 105.4
3K 0.1 76.35 0.1 1.25 0.7 89.25 0 12.9 0.3 26.35 0.4 125.1
4K 0.4 67.6 0.1 1.15 0.7 74.15 0.1 14.15 0.1 26.65 0.5 113.55
5K 0.2 117.3 0.1 1.15 0.9 78.85 0.4 21.4 0.1 19.95 0.9 116.35
6K 0.5 123.75 0.01 0.975 0.1 80.45 0.1 20.55 0.2 21.7 1.2 223.2
7K 0.5 142.35 0.03 0.985 0.2 87.3 0.1 18.55 1.3 20.55 1.1 141.65
8K 0.1 144.15 0 1.2 0.7 78.25 0.2 13 0.2 22.6 0.5 135.45

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Table 4.
Results of R-Limits of control chart: CL central line, WL alert limit, and AL detection limits
Sample Cu Be Zn
name CL WL AL CL WL AL CL WL AL
0-Blank 0.272 0.684 0.8911 0.067 0.1689 0.2198 0.381 0.958 1.2476
5Te-4 0.272 0.684 0.8911 0.067 0.1689 0.2198 0.381 0.958 1.2476
6Tr-4 0.272 0.684 0.8911 0.067 0.1689 0.2198 0.381 0.958 1.2476
1K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
2K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
3K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
4K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
5K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
6K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
7K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
8K 0.25 0.627 0.816 0.06 0.169 0.220 0.46 1.161 1.511
Co Pb V
CL WL AL CL WL AL CL WL AL
0-Blank 0.1818 0.456 0.5941 0.272 0.6849 0.891 0.5363 1.347 1.7526
5Te-4 0.1818 0.456 0.5941 0.272 0.6849 0.891 0.5363 1.347 1.7526
6Tr-4 0.1818 0.456 0.5941 0.272 0.6849 0.891 0.5363 1.347 1.7526
1K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
2K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
3K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
4K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
5K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
6K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
7K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124
8K 0.175 0.439 0.571 0.35 0.879 1.143 0.65 1.632 2.124

Figure 3. R control charts for V, Cu, Be, Zn, Pb, Co

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6. CONCLUSION

On the location 1, the soil sampling was done every month according to the standards given
above. Results of the analyzed parameters on the sampled soil are not part of this work, for jus-
tified reasons, except blanks and control samples. Their analysis is done according to the law,
without any exception. The sampling and sampler control were done in laboratory in two ways:
• With blanks,
• and with taking control samples in duplicate.

Results of chemical analysis of control samples are presented on R-control chart, made of the
range of two measurements and of the difference in results of two measurements. The value of
the arithmetical range is used as a central line (CL). Standard deviation is used for calculation of
control limits where the Al is limit of action and WL is warning limit. Results from the R-con-
trol map present that all the results of analyzed parameters on blanks and control samples, go
into range of measuring and are acceptable, and can be used for further statistic data, as well
as the quality of sampling and measurements in specific period of time. The double samples
are used for monitoring the sampling quality and precision of analytical laboratory processes.
Field and trip blanks illustrate the effects of managing the sample, they reveal the contami-
nations such as dust and atmospheric precipitation. The conclusion is that the Laboratory for
preparation in Mining and Metallurgy Institute, adequately conducts the quality control on soil
sampling, that results in high accuracy of chemical analysis outputs.

ACKNOWLEDGMENT

The authors are grateful to the Ministry of Education, Science and Technological Development
of Republic of Serbia for financial support for projects TR34005 „Development of advanced
materials and technology for multifunctional application based on ecological knowledge”, TR
33023 „Development of Technologies for Flotation Processing of Copper Ore and Precious Met-
als in Order to Achieve Better Technological Results”

REFERENCES

Standard SRPS ISO / IEC 17025, General requirements for the competence of testing and cali-
bration laboratories, (2017).
Standard ISO 18400 Soil quality — Sampling —Part 101: Framework for the preparation and
application of a sampling plan, (2017).
Standard ISO 18400 Soil quality — Sampling —Part 102: Selection and application of sampling
techniques, (2017).
Standard ISO 18400 Soil quality — Sampling —Part 104: Strategies, (2018)
Law on Land Protection („SG RS”, No. 112 of December 30, 2015).
The Regulation on the Limit Values of Polluting, Harmful and Hazardous Substances in Land
(Official Gazette of RS, No. 30 of 20 April 2018)

72
 SEARCHING FOR THE MANAGERIAL IMPLICATIONS
IN ITALIAN AUTONOMOUS MUSEUM.
WHAT ARE THE PERSPECTIVES AND BARRIERS?
Marianna Marzano1
Monia Castellini2

DOI:

Abstract: The Italian public museums have been involved by a Reformation that has changed their
status from non-autonomous museums to autonomous museums (Decree 171/2014 by the Ministry of
Cultural Heritage and Tourism). This change has had significant implications for the Italian museums,
introducing new managerial practices that has an impact on the system museum overall. Usually, pub-
lic museums are supported by public funds. The autonomy could be a first step in overcoming critical
issues that could be found in museums, aimed at supporting strategic and decision-making objectives
and evaluating performance.
Often, the literature has revealed that the lack of managerial cultural is due to barriers (ideological,
technical and, organizational) that do not permit the development of managerial practices.
Through a documental analysis, it has been investigated the main management innovations and its
accounting implications. Consequently, the degree of compliance of the museums with del legislator’s
request has been analysed.
Keywords: Management, Accounting, Performance, Italian Museums.

1. INTRODUCTION

O ver the years the Italian cultural sector and, specifically the museum sector, has been indi-
rectly affected by the reform processes that have involved the national public system driven
by the introduction of company logics attributable to the New Public Management paradigm
(Hood, 1991; Guthrie and Parker, 1990; Osborne and Gaebler, 1992; Cepiku et al., 2008). The
process of change for the Italian museum system was characterized by two main lines of inter-
vention. One is the reform path that involved the national public system as a whole and therefore
also the museum organizations (as peripheral realities, not autonomous, of the central admin-
istration); the second concerns the introduction of ad hoc regulatory interventions however
limited in their scope of managerial change (Marzano and Castellini, 2018).

Over the last five years, however, the Italian cultural sector has also undergone a specific and
targeted reform process aimed at implementing managerial logic, principles, and tools in line
with the NPM assumptions (Zan, 1999; Bonini Baraldi, 2007), oriented towards the pursuit of
institutional goals.

The studies on the museums have underlined many features that characterize this field. The first
limit has been identified in the dependence totally on public funding that has required the in-

1
Department of Economics and Management – University of Ferrara – Ferrara, Via Voltapaletto 11 - 44124
Ferrara (FE), Italy
2
Department of Economics and Management – University of Ferrara – Ferrara, Via Voltapaletto 11 - 44124
Ferrara (FE), Italy
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tensification of the communicative dimension to find external resources. The problem of funds
(Donato, 2013) is accentuated with the reduction and resizing of public financial resources.
Another element that has emerged from the sector is the poor propensity to results and the in-
adequate attention to the planning and definition of objectives to be pursued in terms of quality
and quantity, the development of an organizational culture oriented to results and control, as
noted in other sectors of public administration.

The main concerns the lack of autonomy and, consequently, the subordination from the central
structure in terms of decision-making, organization, and economic-financial management.

With particular regard to this last aspect, the absence of a system of autonomy in this sense has
been significant, which has conveyed the museums belonging to the public towards an expense
reporting system.

Autonomy has been declined at least in three main aspects: the first concerned the introduction for
museums of an own accounting system, moving away from management (no longer in economy)
that saw the processing of financial information in the budget of the membership body. The sec-
ond refers to the introduction of both financial and economic-asset accounting; the third relates to
the management of resources deriving from revenues for ticketing and other activities (donations,
rents, etc.) through the introduction of a treasury and cash service at a credit institution.

Also, in this context, as it happened in the past for other sectors of the Italian public system and
not only, it may be necessary to intervene to analyse and understand the real state of the art and
degree of implementation of the reform started with the decree 171/2014.

The main studies are been implemented in a context where did not exist the autonomy, giving
evidence about the importance to implement the strategies and how the museums needed for
managerial tools to be managed. Actually, the studies are not compared to the economic-fi-
nancial autonomy and its degree of application within the museums. If the autonomy and the
implementation of accounting system is an informative tool to support for the management,
consequently it is important firstly to investigate the degree of compliance of the museums with
the legislator’s requests, answering to the following research question:
• Regarding the accounting provisions defined by the Legislator, what is the degree of
regulatory compliance by autonomous state museums?

It has been conducted a documental analysis of 32 autonomous museums, searching the budget
and final balances during the period 2016-2019.

The study is structured in six sections: following the introduction, there is the theoretical back-
ground on the focus of the study on the museums and the Italian reform of the Ministry of
Cultural Heritage. The third section explains the research framework, the fourth develops the
analysis and, finally, there are the final considerations.

The work permits us to understand the implications of the reform analyzing the reform accord-
ing to the implications of the autonomy and applications of accounting practices required. The
study should give also a contribution to the literature on the effects of autonomy and accounting
in the cultural sector. On the other hand, the study could give a contribution to the practitioners
to understand the point of weakness and cope with the problem of the relevance of guidelines.

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2. THEORETICAL BACKGROUND.

2.1. Museums and autonomy: which implications for performance and accounting.

As underlined by the researchers, the influence of New Public Management reforms has rede-
fined the management of public sector to reinvent the governance of the public administration
and to translate some practices derived by the private sector within the public field (Hood, 1991;
Osborne and Gaebler, 1992; Cepiku et al., 2008). Sometimes, it happens a gap between the goal
of the reforms and the conditions to apply the normative requirements in practice (Pavan and
Reginato, 2004) and, the troubles to introduce managerial practice within the public admin-
istration (Ongaro and Valotti, 2008). At the same time, among the sectors that are influenced
by this new paradigm, it emerges the scenario of cultural heritage, introducing the concept of
management in this field (Thompson, 2001; Zan, 1999, 2003).

This closeness of cultural heritage to economic and managerial principles had generated a de-
bate between the experts of both areas (Bourdie, 1992). The researchers have focused on the
interests of the studies on the performance of museums, strategies and, the accounting systems
to favor the introduction of a control and management process.

Most museums were not capable to implement managerial strategies for two main reasons high-
lighted by the studies; the first because they aim to perceive social mission and do not consider
the economic sustainability (Migale, 2001), the second reason subsists because they are based
on the public funds (Sibilio Parri, 2004).

The introduction of accounting has been considered as an element to use for the performance
measurement that could introduce improvement through management and control (Chirieleison,
1999). The introduction of accounting within the public museums is linked to the reform of the
public sector and to the level of autonomy granted to them to do not depend on the central admin-
istrative structure. Indeed, the reform of the public sector, in general, has noted the role of auton-
omy, because the condition of autonomy permits to introduce financial and economic autonomy.

Autonomy, so that it can be considered as such and offer a capacity for action and a certain de-
gree of responsibility, must allow the independence of an organization from the point of view:
of decision-making choices (autonomy of will), of the attribution of possession of the collections
or properties (property autonomy), monitoring of inflows and outflows of monetary resources
(financial autonomy), the ability on the one hand to find resources and on the other to manage
them adequately (economic autonomy) (Chirieleison, 2002). As highlighted, for cultural organ-
izations in general, the degree of autonomy is in relation to the form of management adopted
(Del Sordo et al., 2012), i.e. the legal framework determines the level of autonomy, the degree of
accountability and the documentation accounting that must be provided in compliance with the
requirements of the Legislator.

The autonomy granted to the public museums has been seen as a first element that hinders the
management, but as noted by Chatelain-Ponroy (2001) there are other kinds of obstacles such as
ideological, technical, and organizational.

Paulus (2003), analysing how French and American museums measure the performance, sus-
tains the relevance of factors such as effectiveness and efficiency to manage the museums.

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Indeed, the analysis of the characteristics of scenario permits to select the methods to manage
the museums according to the objectives and approaches adopted by museums (Dainelli, 2003).
Turbide and Laurin (2009) reveal the importance to measure the results but using a multidimen-
sional approach that takes into consideration the features of the cultural organizations such as
the resources, cultural assets and, collectivity.

Gstraunthaler and Piber’s (2012) research has shown that accounting data has often been con-
sidered synonymous with quality and performance. Nevertheless, this is an incomplete view
because, as they show, quantitative data must be integrated with qualitative ones. According to
this research, the accounting data support the selection of activities, actions and key figures that
allow the strategic objectives to be achieved.

In Italy, the studies about the introduction of accounting system within the public museums
are still few, and they are the explorative studies (Gori and Fissi, 2012). Until 2014, the year
of introduction of the new reform of cultural heritage, with the exception of private museums,
the Italian public museums have not an accounting system because depending on the central
administration.

2.2. Museum’s reform and economic & financial autonomy.

The Franceschini Reform has brought about a structural change, with a top-down approach,
substantially intervening on the entire structure of the Ministry, in order to respond to the ex-
penditure revision logic, implementing an organizational decentralization and redefining the
relationships between the center and the periphery (Casini, 2016; Cammelli, 2015).

The regulatory intervention has had a wide impact on the museum sector, where the main meas-
ures include:
• the creation of a General Directorate for Museums (DGM);
• seventeen Regional Museum Centers;
• regional Secretariat;
• reduction of the number of Superintendencies;
• selection initial of 20 cultural institutes of I and II management level between museums
and archaeological parks - extended subsequently to 32 with successive decrees (DM 44
of 23/01/2016) and dependent from the DGM and not more from the Superintendencies
of belonging.

With reference to the museums designated as special autonomy, reference is made to a technical
/ organizational-scientific autonomy, the autonomy that in turn refers to L.352 / 97 „Provisions
on cultural heritage” which initiated the first form of experimentation, which made the Super-
intendency of Pompeii autonomous.

For the museums, designated as such, the following has been envisaged: the redefinition of their
organizational structure by expanding the functional areas; the establishment of the Board of
Directors chaired by the director of the museum, the Scientific Committee and the Board of
Auditors; the elaboration of a „reinforced” Statute (subject to approval), the only instrument of
regulatory autonomy in the absence of regulatory capacity and making talk, in this respect, of
„autonomy retained” (Forte, 2015: 7).

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The form of management of state museums and of local institutions belongs to the budget as-
sumes the exclusive nature of a document of planning and reporting of resources, a condition
from which the so-called „super museums” selected are currently excluded thanks to the au-
tonomy. Autonomous museums are required to carry out an accounting report that shows “the
planning and results of financial and accounting management of economic resources available
to the museum „, in compliance with the principles of publicity and transparency” (art.3 DM
December 23, 2014).

Furthermore, in terms of resource management, one of the new features concerns the possibility
of generating and managing one’s own cash flows and reinvesting them in activities; redirecting
only 20% of the revenues deriving from the ticketing and rents to a solidarity fund in compli-
ance with the principle of equalization; facilitating the acquisition of donations, defining the
ticketing parameters.

The studies about the reform of Ministry of Cultural Heritage in Italy has been analyzed accord-
ing to many juridical perspectives (Pastori, 2015; Cammelli, 2016a, 2016b; Carmosino, 2016;
Casini, 2016a, b, 2017) highlighting the structural changes introduced by the reform, the new
features of text law and which kind of innovation and incertitude observed.

The management perspective has been introduced by the researchers to give evidence of the
reforms’ effects on the governance of the public cultural system. Marzano and Castellini (2018)
use a network governance perspective to give evidence of the process of the decentralization
finalized to grant the autonomy and to enforce the process of the exchange between public and
private realities.

In 2018, after the conference in Rome at the MAXXI museum, it has been elaborated a report
thanks to the contribution of some managers of the autonomous museums. This document rep-
resents a first summary and testimony of the management of the autonomous museums that
introduce the critical issues that emerged during the beginning years of management (Barrera
et al., 2018), such as no guidelines, paucity of human resources and specialized, restricted au-
tonomy, and so on. Giusti (2018) aims to verify if the requirements of normative dispositions are
really satisfied, recurring to the case study on the Gallerie Nazionali di Arte Antica of Rome.

In the analysis of reform is delineated the importance of the human resources (Zan et al., 2018)
finalized to find a new approach for the management of human resources because around that
there is the trouble on the low understanding of the notion of management.

3. RESEARCH FRAMEWORK

The study has as its reference universe the 32 museums involved in the MiBACT reform, which
has led to the conferral of autonomy for them. From the sites of the museums, all the informa-
tion and documentation developed in compliance with the requirements of accounting law have
been extrapolated from the section on transparency. The documentation concerns the period
2015-2018 for 20 museums that obtained autonomy in 2014 and 2016-2018 for the remaining
12 structures that were affected by the subsequent decree 44/2016. The documents refer to the
accounting period and not to the year of publication.

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According to the L.352/97 that regulates the autonomy, museums were asked to draw up eco-
nomic-financial communication documents divided into budgets and final balances. The budget,
with authorization, constitutes a limit to the expenditure commitments and is divided into:
1. Financial estimate;
2. A general overview of financial management;
3. Budget estimate.

These documents are followed by the Planning Report, the multi-year Report; the Demonstra-
tion Table of the presumed administrative result; the report of the board of auditors.

The documents of a final nature relating to the economic-financial management results are:
1. Budget account
2. Income statement
3. Balance sheet
4. Explanatory notes

The annexes to the general report are added to the production of these information documents:
Administrative situation; the Management Report; the report of the board of auditors. These
documents are selected and analyzed to detect the degree of completeness if present on the
museums’ websites.

4. THE INTRODUCTION OF THE NEW ACCOUNTING SYSTEM

IN MUSEUMS: ANALYSIS OF THE PUBLISHED DOCUMENTATION.

Consultation on museum websites has made it possible to become aware of the documentation
produced since the start of autonomy. Not all information relating to the pre-reform period can
be found, as for state museums, in the absence of autonomy, the publication obligation did not
apply. The analysis concerns two groups of museums, respectively those made autonomous in
2014 and 2016. The results refer to the economic-financial year and not to the year of publication.

As shown in Table (1), about the situation of the 20 museums (granted autonomy in 2014) during
the first year of activity, not all museums have fully fulfilled the required accounting production.
An unstable trend emerges that reveals the low degree of completeness of the documentation. In
2015, only 60% completed a financial forecast plan, of which only 15% in accordance with the
accounting harmonization standard. The figure falls further if we consider the elaboration of
the management budget (45%), economic (15%), the multi-year budget is drawn up by 25% and
only 5% reports the presumed administrative result.

In 2016, the situation improves, especially to the extent that, although not all the museums pres-
ent the same documentation, there is an increase in the percentage of 15% of museums that be-
gin to prepare the forecast documentation according to the obligation of harmonization. While
the subsequent years record a percentage, decrease compared to the forecast budgets. With re-
gard to the final accounting documents, excluding those for the 2018 year, it emerges that in the
years 2015-2016 approximately 60% provided the financial and management reporting, given
that it is attested around 5% for 2017. In 2018, after four years, the situation is not improving,
because the number of documents contained on the website is still low and incomplete. Only
half of the museums have produced the cash flow and financial statement, followed by 40% that
have elaborated on the balance sheet.

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The documentation on the surveys on operating events is the one that has the highest degree of
default in the four-year period considered, in fact the Income Statement and the Balance Sheet
are only processed by 30% of the museums in 2015, by 35% in 2016 and 2018, and 5% in 2017,
demonstrating the high level of variability.

Table 1. Forecasting documents_ AUTONOMOUS MUSEUMS dpcm 171/2014

Year 2015 2016 2017 2018
Decisional financial estimate 60% 75% 60% 15%
Budget Management 45% 75% 70% 35%
Summary overview 15% 45% 40% 25%
Budget Estimate 10% 30% 50% 40%
Multi-year financial statements 25% 40% 35% 15%
Forecast administrative result 5% 10% 25% 25%

Table 1.1. Reporting documents_ AUTONOMOUS MUSEUMS dpcm 171/2014

Year 2015 2016 2017 2018
Cash flow statement 55% 60% 5% 55%
Financial statement 60% 60% 5% 50%
Income statement 30% 35% 15% 35%
Balance sheet 30% 35% 5% 40%
Explanatory note 15% 10% / 10%
Administrative situation 35% 35% 5% 25%
Programmatic Report 10% 20% 15% 15%

Regarding the twelve museums that obtained autonomy with the 2016 DM (Tab. 2 and 2.1)
a similar situation emerges for the museums involved in the first „experimentation”. In fact,
in 2016 only 50% presents the financial budget and 60% the management budget. Particular
attention is to be paid to the fact that, despite the obligation, of that 50%, as many as 42% did
not adapt the writing of the budget to the accounting harmonization rules. Moreover, also for
this second tranche of museums, we highlight how much the percentages with respect to the
economic surveys are substantially low, surpassing by a little 40% of the museums involved.

Table 2 Forecasting documents_ AUTONOMOUS MUSEUMS DM 44 del 23/01/2016

Year 2016 2017 2018
Decisional financial estimate 50% 67% 25%
Budget Management 58% 83% 50%
Summary overview 17% 42% 17%
Budget Estimate 25% 25% 17%
Multi-year financial statements 8% 33% 25%
Forecast administrative result 17% 33% 25%

Table 2.1. Reporting documents_ AUTONOMOUS MUSEUMS DM 44 del 23/01/2016

Year 2016 2017 2018
Cash flow statement 33% 25% 25%
Financial statement 42%   25%
Income statement 42% 8% 25%
Balance sheet 42%  / 8%
Explanatory note 17% 8% 8%
Administrative situation 25%  / 8%
Programmatic Report 17% 25% /

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As noted for the first part of the museums, the situation is the same. In this case, there are very
few museums (only the 25%) that have presented the cash flow, financial and income statement.

Table 3. Comparison forecasting documents_ AUTONOMOUS MUSEUMS 2014 and 2016

First Year of autonomy Museums (2014) Museums (2016)
Decisional financial estimate 60% 50%
Budget Management 45% 58%
Summary overview 15% 17%
Budget Estimate 10% 25%
Multi-year financial statements 25% 8%
Forecast administrative result 5% 17%

Table 4. Comparison reporting documents_ AUTONOMOUS MUSEUMS 2014 and 2016

First Year of autonomy Museums (2014) Museums (2016)
Decisional financial estimate 55% 33%
Budget Management 60% 42%
Summary overview 30% 42%
Budget Estimate 30% 42%
Multi-year financial statements 15% 17%
Forecast administrative result 35% 25%

Comparing the first year of autonomy for both categories of the museums (Tab. 3 and 4), the
analysis permits us to observe that the situation is not changed. Rather, it looks worse despite
the experience of the previous implementation of the Reform. But, if for the first year is expect-
ed a not totally uniformity, it could be considered negative to notice the same practice in 2018,
after 5 and 3 years respectively from the status of autonomy.

5. RESULTS

The analysis of the accounting documents gives a panorama on the degree of compliance of the
autonomous museums. From the analysis emerges many interesting results for the museums for
which autonomy is introduced for the first time.

In general, there is a general state of non-compliance, which is evident from the consultation of
forecast and final documents.

Meanwhile, comparing the documents of the museums, there is high variability and fragmen-
tation compared to the documentation presented. Moreover, a positive data is related to a suf-
ficient degree of adequacy to fulfillment for the financial decision-making and management
budget (where with the exception of the first year of the start of the 2014 and 2016 autonomy,
there is a slightly lower percentage).

Another element that underlines the paucity of a long-term vision is the lack of a multi-year
vision that can be found in the low percentage of multi-year financial statements present.

Finally, for these museums, there is a low capacity to draw up a summary document, such as the
general picture and the presumed result of administration, in relation to the forecast documents
already prepared.

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6. FINAL CONSIDERATIONS

The present study represents an analysis proposal with respect to understanding the repercus-
sions of autonomy within state museums, of which only an experiment for Special Superintend-
ence had taken place in the past. At the start of the study, a low percentage of museums were
found which following the formalities imposed by the Legislator, show complete accounting
documentation. In response to the first research question, therefore, there is a low degree of
compliance with the law. Further information that comes from the analysis of the presence of
documentation shows how much museums are more fulfilling in preparing a financial budget
and less the final balance sheet. In this way, museums can hardly take advantage of the ad-
vantages deriving from an accrual accounting that allows seeing the connection between the
resources consumed and the results achieved.

The lack of attention to the fulfillment of the results involves multiple observations. The first
concerns the evidence that, as noted for the other public administrations (Guthrie, 1998), also
for the museums interested in the reform, there are difficulties in implementing changes as per
legislation. This aspect, fundamentally, depends on the lack of introduction to the reform and
changes taking place, as well as the shortage of preparation for the required changes.

Another consideration, that permits to read these results, consists in the presence of human re-
source able to manage compliance to the requests and the know-how able to manage the areas
of economic autonomy, bringing to the attention its „advantages” (Zan et a., 2018). Untrained
human resources ready for the changes introduced, employees not aware of the advantage deriv-
ing from the use of accounting data implies a lack of understanding of the effects that autonomy
can generate. (Mussari, 2011).

The level of the incompleteness of the obligations could bring out a poor propensity to monitor
economic efficiency (Sibilio Parri, 2004), a phenomenon not new for this sector and in general
for the public administration. In fact, there is the repetition, for the museum sector, of the same
mechanisms, already occurred for the public administration sector with the introduction of
reforms.

Finally, the level of compliance gives photography about the adaptation of autonomous mu-
seums to the new regulatory provisions, but the incompleteness of data could be linked to the
feature of the public sector and to the presence of technical and organizational obstacles (Chat-
elain-Ponroy, 2001). Indeed, these obstacles are translated into the troubles due to the personnel
policies and waiting for the turnover or insertion of new professional figures, lack of preparation
and guide to the innovations introduced, the new accounting system not supported by ad ade-
quate knowledge to recur them.

Future developments in the work could lead to an understanding of the reasons why museums
are non-compliant and whether the accounting system is considered and used as an information
tool for management purposes. The expected results would allow having a greater knowledge
with respect to the link between autonomy and management in the cultural sector, in an attempt
to understand if “some areas of autonomy are not fully understood in their innovative and/or
exploited scope or, otherwise, are insufficient cultural and financial resources indispensable for
this purpose „(Mussari, 2001, p.20).

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 ADEQUACY OF THE AMOUNT OF OWN RESOURCES
OF FOOD ACCOUNTING ENTITIES IN 2018 IN SLOVAKIA
Katarína Tasáryová1
Renáta Pakšiová2

DOI:

Abstract: It is very important for these companies to choose an adequate asset resource structure in
order to eliminate risks in their business. It includes, for example, the risks associated with reduced
solvency due to high indebtedness, thus the high value of external assets and low liquidity of assets. On
the other hand, the high level of own resources of assets is not an unambiguously positive indicator,
as own resources of assets are objectively one of the most expensive. Establishing an adequate level of
own resources of assets in company is a key role of management in its optimal business setup towards
long-term positive business results. The aim of the paper is to assess the adequacy of the amount of own
resources of food business in 2018 in Slovakia on the basis of financial analysis indicators.

Keywords: Equity, Capital, Non-Current Assets Long-Term Liabilities, Golden Rule of Financing

1. INTRODUCTION

T oday, companies are becoming increasingly demanding in terms of competition. There is

a constant increase in the number of companies aiming to achieve the best possible market
position. It is important for these companies not only to make profits and reduce costs, but also
to optimally set up the resources to finance their respective types of assets, given the obvious
advantages and disadvantages of each. Therefore, business entities have to look for an answer
to the question of how they will finance their assets. Optimizing the resources of property fi-
nance is a very demanding and time-consuming process for which the company is making a lot
of effort. Property resources can be explored from two perspectives. The first aspect deals with
the origin of assets, the subject of which is the perspective of the company, which is the basis
of the division of resources into own and foreign. Own resources represent the contributions of
the owners and foreign liabilities are associated with the obligation to return these resources to
the creditor within a specified time. Second, the legal aspect refers to claims of third subjects
against the company, which have a dual nature (Šlosárová, 2018):
• legal claims of various creditors of the company, such as employees, suppliers, state,
banks, and so on,
• legal claims of owners to the assets of the company.

The assessment of the adequacy of the amount of own resources of company property is impor-
tant for several reasons. To assess the adequacy of the amount of own resources it is possible to
use the golden rule of financing, where the sum of non-current assets should correspond to the
amount of own resources and long-term liabilities. The adequacy of own resources means not
only that the company can finance its business mainly through its own resources, but also that
it is creditworthy in the eyes of its business partners. It will also avoid liquidity problems. In

1
University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
2
University of Economics in Bratislava, Dolnozemská cesta 1, 852 35 Bratislava, Slovakia
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cases where short-term foreign (recoverable) resources are at most equal to current (short-term)
assets, it is more likely to be able to settle its liabilities on time.

When examining food companies operating in Slovakia in 2018, it is necessary to analyze

data from the individual financial statements of these companies. The financial statements are
available on the publicly available state-managed website of the register of financial statements
(http://www.registeruz.sk) or the private company Finstat (https://www.finstat.sk). The authors
included all companies with the scope of SK NACE from 10110 to 11070 in the research. From
the published financial statements of individual companies for the year 2018 the balance sheet
containing the items of assets and liabilities of examined companies is relevant for authors
research. The following items are selected from the items of assets and liabilities: non-current
assets, equity and long-term liabilities. Based on the data sets obtained for the whole group of
food industry companies in the Slovak Republic, the authors analyzed the fulfillment of the re-
quirements of the golden rule of financing for 2018. Visualization of the results of the research
is presented in the form of tables and graphs.

2. THEORETICAL BASIS FOR THE ASSESSMENT OF THE ADEQUACY

OF THE AMOUNT OF THE OWN RESOURCES OF COMPANIES

Financing through own resources is often more expensive than financing through external re-
sources. The way, form and technique of own funds financing depends, firstly, on the choice of
the legal form of business and, secondly, on the size and procedure of collecting the owners’
deposits according to the size of the company (Šebo, 2014). The company’s own resources are
cumulated as owners’ deposits and the components produced from the company’s profits during
its existence and represent long-term resources of financing.

In the case of optimum financing of assets, it is necessary to respect, among other things, the gold-
en rule of financing, which expresses the coherence between the availability of financial resources
and the tying of assets acquired through them. Pursuant to that rule, the resources by which the
various components of assets are financed should be available in the undertaking for at least the
period during which the relevant component of assets is committed in the undertaking.

Own resources are a permanent resource, which is always available to the company. In account-
ing, own resources are defined as equity, which is generally described in the Accounting Act
as a difference between assets and liabilities. In § 2 par. article 2 of the Accounting Act (2019)
states: “The accounting is to account for facts about the state and movement of assets, the state
and movement of liabilities, the difference between assets and liabilities, income, expenses,
takings, outgoings and profit or loss”. The definition of the difference between assets and lia-
bilities is dealt with in the accounting procedures for entrepreneurs3 in § 59 par. 1, where it is
determined that equity is the difference between assets and liabilities. The difference in assets
and liabilities is an indirect definition of equity based on a modified extended balance sheet
equation having the form:

Equity = Assets - Liabilities (1)

3
Decree of the Ministry of Finance of the Slovak Republic no. 23054/2002-92 laying down details of ac-
counting procedures and framework chart of accounts for entrepreneurs accounting in the double entry
bookkeeping system, as amended (hereinafter referred to as “accounting procedures”).
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 ADEQUACY OF THE AMOUNT OF OWN RESOURCES
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The accounting procedures for double-entry bookkeeping entrepreneurs list the equity com-
ponents with the appropriate numerical and verbal representation of the framework chart of
accounts for entrepreneurs where specific equity components are accounted for (Table 1).

Table 1. Numerical and verbal indication of equity account

Number of account Name of account
411 Capital
412 Share premium
413 Other capital funds
414 Valuation differences from the revaluation of assets and liabilities
416 Valuation differences from revaluation in mergers, fusions and divisions
417 Legal reserve fund from capital contributions
418 Indivisible fund from capital contributions
419 Changes in capital
421 Legal reserve fund
427 Other funds
428 Retained earnings from previous years
429 Accumulated losses from previous years
431 Economic result of approval
Source: Decree of the Ministry of Finance of the Slovak Republic no. 23054/2002-92 laying down de-
tails of accounting procedures and framework chart of accounts for entrepreneurs in the double entry
accounting system, as amended

The Commercial Code characterizes net business assets, which are “business assets after de-
duction of obligations incurred by the entrepreneur in connection with the business” (Commer-
cial Code, § 6 paragraph 3). Equity is formed by own resources of financing business assets of
the entrepreneur according to a special regulation (Commercial Code § 6, paragraph 4). In sim-
plified terms, equity can be said to be an accounting expression of net assets or, conversely, net
assets expressed in accounting are called equity. Since part of the business assets do not meet
the definition of assets under the Accounting Act and part of the liabilities under the Commer-
cial Code do not meet the definition of liabilities under the Accounting Act, part of the business
capital cannot be considered part of equity, which means that this part is not recognized in the
balance sheet (Farkaš, 2018).

The most important component of equity is the capital, which represents the monetary expres-
sion of the sum of monetary and non-monetary contributions of all partners to the company
(Commercial Code § 58, paragraph 1). The capital is compulsorily created by limited liability
companies of at least € 5,000, joint stock companies of at least € 25,000 and simple companies
for shares of at least € 1. In the case of cooperatives, the capital is made up of the sum of the
membership deposits on which the individual members of the cooperative undertake to repay
and whose minimum amount is equivalent to € 1 250. Limited partnerships are not legally
obliged to create registered capital, but the Commercial Code provides for a minimum deposit
of limited partners in the amount of 250 € (Srnišová, 2018).

3. ANALYSIS OF FOOD COMPANIES IN SLOVAKIA IN 2018

Pursuant to the legislation of the Slovak Republic, companies accounting in the double entry
bookkeeping system report equity in the balance sheet. The balance sheet is one of the compo-
nents of the financial statements (Šlosárová, 2017). Companies are required by the Accounting
Act to deposit the financial statements in the register of financial statements, which is publicly

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available on the website http://www.registeruz.sk. Financial statements and information on in-

dividual companies as well as financial results are also provided by the private company Fin-
stat. In both sources, data is generated in the form of table to a limited extent. To obtain more
extensive and detailed data, it is necessary to add data from individual financial statements that
are relevant to author’s research. These data include, for example, equity, long-term liabilities
and so on.

The subject of the research are food companies established in the Slovak Republic. In 2018,
there are 2,045. In accordance with the golden rule of financing, the resources used to finance
assets should be available at least for the period during which the assets in question are tied to
the company. It follows from the foregoing, that when examining golden rule of financing, all
long-term resources can be included in the research, that is to say, in addition to equity, long-
term liabilities, because these are available in company for more than 1 year. Long-term liabil-
ities include the following items: long-term trade payables, other long-term payables and long-
term bank loans. From the food companies examined in 2018, 20.83 % of companies are able to
finance their assets through their own resources, 44.84% of companies do not meet the golden
rule of financing, so long-term resources are not sufficient to finance assets. For the remaining
undertakings, compliance with the golden financing rule cannot be determined because they do
not recognize non-current assets or equity. 6.65% of the examined food companies need long-
term liabilities in addition to equity to finance non-current assets (Graph 1).

Graph 1. Assessment of Compliance with the Golden Funding Rule

Source: Own calculations based on company’s financial statements

The examined companies have a different legal form of business, with the most represented lim-
ited liability companies and the least state-owned enterprises. The authors focused on meeting
the golden rule of financing and also on the reported equity. From the balance sheet of individ-
ual companies, three items are relevant for the author’s research, namely equity, non-current as-
sets and long-term liabilities. The golden rule of financing is fulfilled, if the value of equity and
long-term liabilities is equal to or higher than the value of non-current assets. From the point of
view of the analysis of the group of companies, that meet the golden rule of financing according
to their legal forms, the most are limited partnership (90.60%), followed by joint stock compa-
nies (7.68%) and the remainder being limited partnerships and cooperatives. From the examined
companies state-owned enterprises and simple companies for shares do not meet the golden rule
of financing (Table 2). This structure was expected due to the uneven distribution of the number
of companies by legal form of business.

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OF FOOD ACCOUNTING ENTITIES IN 2018 IN SLOVAKIA

Table 2: Structure of companies according to the legal form of business

and meeting the golden rule of financing in each legal form of business
Share of companies
Share of legal form of
Total number of Number of companies in legal form of
Legal form of business on meeting
companies in legal meeting the golden business meeting
business the golden rule of
form of business rule of financing the golden rule of
financing (in %)
financing (in %)
General partnership 8 3 37.50 0.58
State-owned
1 - - -
company
Limited liability
1912 472 24.69 90.60
company
Limited partnership 6 1 16.67 0.18
Simple company for
2 - - -
shares
Cooperative 13 5 38.46 0.96
Joint stock company 103 40 38.83 7.68
Total 2 045 521 - 100
Source: Own calculations based on company’s financial statement

According that one of the relevant items in the assessment of the golden rule of financing is
equity, it is necessary to assess its amount in terms of legal forms of business. Limited liability
companies, joint stock companies, simple companies for shares, limited partnerships and co-
operatives have a prescribed amount of equity or minimum deposit, so these companies should
not report zero or negative equity, because this would mean for a particular company, that it
does not have enough own resources to cover the assets, which means the property is covered
by foreign resources (liabilities). Also, company would have to convert assets into cash as soon
as possible to ensure liquidity. From the examined companies, limited liability companies have
the highest representation, of which 73.22% recognize a positive equity (Table 3).

Table 3: Structure of equity in individual legal forms of business

Legal form of Total number Share of Share of Share of Total (in %)
business of companies companies in legal companies in legal companies in
in legal form of form of business form of business legal form of
business with positive with negative business with no
equity (in %) equity (in %) equity (in %)
General
8 100 - - 100
partnership
State-owned
1 100 - - 100
company
Limited liability
1912 73.22 25.16 1.62 100
company
Limited
6 66.67 33.33 - 100
partnership
Simple company
2 50.00 50.00 - 100
for shares
Cooperative 13 84.62 15.38 - 100
Joint stock
103 90.29 8.7 0.97 100
company
Source: Own calculations based on company’s financial statement

The examined food companies are represented in all regional territorial units of Slovakia, with
the Banská Bystrica region ranking first and the Bratislava region ranking last (Figure 1).

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Figure 1: Assessment of the golden rule of financing in individual regions in Slovakia

Source: Own calculations based on company’s financial statement

4. FUTURE RESEARCH DIRECTIONS

The future research will focus on the assessment of the structure of equity and the dependence
of the amount of equity and specific types of assets, as well as efforts to identify direct sources
of financing of the acquired fixed assets. It will also analyze the distribution of profit and the
settlement of losses in companies in relation to their consequences in business performance and
profitability in subsequent accounting periods. The causes of the established reporting of zero
or negative equity of some companies in 2018 will also be analyzed. The observed differences
in the fulfillment of the golden rule of financing in relation to the national economic parameters
of the territorial units of Slovakia will be further analyzed.

5. CONCLUSION

Own resources represent a permanent resource for a company that exists in the company through-
out the business. These are long-term resources that are constantly available in the company, so
they should be tied especially to non-current assets, that are used by a particular company in the
long term. In accounting, equity is understood as equity, which is the difference between the
entity’s assets and liabilities. At the inception of the company, equity consists of deposits that
individual partners invested in the company (Máziková, 2016). During the conduct of business
activity is created from internal or external resources. Internal resources are resources created
by the company’s own operations, from the profit. External resources are obtained from exter-
nal environment, respectively they arise from changes in the company’s external environment,
such as donations received from partners or positive valuation differences from the revaluation
of assets. The most important component of the equity of companies is the capital representing
the monetary expression of the sum of monetary and non-monetary contributions of all partners
in the company.

Research has shown that only 20.83% of food companies meet the golden rule of financing
in the Slovak Republic in 2018, which means that they have enough own resources to cover

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OF FOOD ACCOUNTING ENTITIES IN 2018 IN SLOVAKIA

non-current assets. Taking into account the long-term liabilities available to businesses for more
than one year, the results increased by only 6.65%. At 34.33% of food companies, compliance
with the golden rule of financing cannot be determined, because they do not show one of the
necessary items for research, equity, non-current assets or long-term liabilities. The remaining
companies do not have enough own resources and long-term liabilities to finance non-current
assets, which means that non-current assets are also covered by short-term liabilities, which
may cause the company’s solvency and liquidity problems.

When analyzing the amount of equity, the most attention is given to limited liability companies,
as they have the highest representation in the examined food companies. In these companies,
the value of the capital should be at least € 5 000, which means that the value of the equity in
these companies should not be zero or negative. Research shows that 92.41% of limited liability
companies report positive equity. Zero, respectively the negative equity of companies indicates
that their liabilities are equal, respectively higher than their assets. This situation is negative not
only for company’s owners, but also for creditors. If this situation arises, companies should try
to increase the value of equity as soon as possible so that its total amount reaches positive value.

According to the individual regions of the Slovak Republic, the Banská Bystrica Region is the
first in terms of compliance with the golden rule of financing, where 26.44 % of food companies
have enough own resources to cover non-current assets. The last place is the Bratislava Region,
where only 15.94 % of companies meet the golden rule of financing.

The total research shows that in 2018, approximately one quarter of food companies in Slovakia
meet the golden rule of financing, which is a very low percentage. The majority of companies
should seek to increase equity so that they are able to finance their business mainly from their
own resources while increasing credibility with creditors.

ACKNOWLEDGMENT

This article is an output of the project APVV no. APVV-16-0602 “Enhancement of the rele-
vance of the accounting data in the SR - from expenses to value”.

REFERENCES

Farkaš, R. (2018). Vlastné imanie obchodných spoločností. Účtovné aspekty. Bratislava: Wolters
Kluwer.
Máziková, K., Ondrušová, L. & Seneši, N. (2016). Účtovníctvo vlastníckych transakcií. Brati-
slava: Wolters Kluwer.
Opatrenie MF SR č. MF/23054/2002-92, ktorým sa ustanovujú podrobnosti o  postupoch
účtovania a rámcovej účtovej osnove pre podnikateľov účtujúcich v sústave podvojného
účtovníctva v znení neskorších predpisov.
Srnišová, P. (2018). Záporné vlastné imanie ako indikátor existencie transakcií medzi spri-
aznenými osobami: Negative Equity as an Indicator of the Existence of Transactions
Between Related Parties.  MMK 2018: recenzovaný sborník příspěvků z mezinárodní
Masarykovy konference pro doktorandy a mladé vědecké pracovníky, ročník IX., 17. – 21.
prosince 2018, Hradec Králové, Česká republika. (pp. 381-386). Hradec Králové: MAG-
NANIMITAS.
Šebo, A. (2014). Podnikov financie. Nitra: Vydavateľstvo SPU.

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Šlosárová, A. (2018). Zmeny vo vykazovaní položiek vlastného imania v súvahe podnikateľa a

ich vplyv na finančnú situáciu účtovnej jednotky: Changes in presenting of equity items in
balance sheet of entrepreneur and their impact on financial position of accounting entity.
AIESA – budovanie spoločnosti založenej na vedomostiach: zborník: 16. medzinárodná
vedecká konferencia: Bratislava, 5. - 6. november 2015. (pp. 376-386). Bratislava: Vyda-
vateľstvo EKONÓM.
Šlosárová, A., Blahušiaková, M. (2017). Analýza účtovnej závierky. Bratislava: Wolters Kluwer.
Zákon č. 431/2002 Z. z. o účtovníctve v znení neskorších predpisov.
Zákon č. 513/1991 Zb. Obchodný zákonník v znení neskorších predpisov.

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 THE INFLUENCE OF THE GEOGRAPHICAL AREA
ON WINE PRODUCTS. A CASE STUDY
Camelia Slave1

DOI:

Abstract: Geographic Information Systems allows visualization of spatial data (data with an associat-
ed GPS location) in the form of a map and analyzes the relationships and patterns between data layers.
Geographic Information Systems (GIS) create friendly maps that are visually understood by both grow-
ers and researchers.
By reporting different data collections in a geographic area, Geographic Information System, can help
manufacturers better understand spatial models and relationships to make management decisions. Var-
iability in a geographical area has economic consequences; Understanding this variability is the first
step towards efficient vineyard management.
From a digital altitude model - DEM (a grid that covers the known territory) we can deduce:- hypsomet-
ric map, to define the area for producing certain varieties of wine vertically; soil map, to define areas
with soil type; CLC map showing the coverage of the land; relief units map, types of geomorphological
units in the study area.

The purpose of the article is to present the current situation of vineyards located in the Vrancea
County.
Keywords: Geographical Information Systems (GIS), Production, Maps, Viticulture.

1. INTRODUCTION

T he origins of the vineyards are losing in time. The archaeological excavations discovered
fossils and plants in warehouses dating from the Paleocene and Eocene period. Today there
are rough 24.000 of vine varieties, of these only 150 are used in a generalized way and of these
9 varieties produced the classical wines. [8] The vine corresponds to the genus Vitis, it classified
distinctly way in the family Vitaceae, Vitidaceae, Ampelidaceae, it is belonging botanical order
of Rhamnales, but included the Rhamnaceae and Leeaceae family. The genus Vitis is subdivided
into two subgenuses: Euvitis (authentic grapes) and Muscadinia (her fruit is called muscadin).

The first regions where the wine appeared, that think was certified by archaeological discov-
eries are in Armenia and Azerbaijan. From these areas it reaches in Greece (oinos) and Rome
(vinum). From Rome it spreads to the Roman provinces. Once time the vine is introduced into
the Roman Empire, the way of organizing the territory begins to improve, land improvement
(irrigation, drainage), different planting distances (for common and tree-bearing crops), fertili-
zation (organic, green, liquid).

The vineyard plantation is mentioned among the first agricultural crops on the territory of an-
cient Dacia. There are evidences that the first traces of viticulture activity in the present territo-
1
University of Agronomic Sciences and Veterinary Medicine of Bucharest, 59 Mărăști Blvd, Bucharest,
Romania
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ry of Romania date back to the Neolithic period, when the gathering and hunting tribes became
stable, they are practicing agriculture and animals’ husbandry. [3] [5]

In Mesopotamia (today Iraq), the vineyards dates from the 4th millennium BC, more exactly,
from the Sumerian period. The first consignment was doing by Strabo (63 BC-19 BC), he de-
scribes the fact that the vineyards horns were very large, so two people could reach them with
their extended arms.

In ancient Hebrew is mentioned the existence of the famous „Chanaan grape” today being the
variety of Raisin vine of Palestine. In the old Babylon the vineyard was used for food and land-
scape. [8]

The situation of vineyards plantations. Today, more than half of the total area planted, world-
wide, with vineyards is in Europe. In Asia the largest plantations there are in Iran, Turkey and
China. The highest density of plantations from Africa is founding in Egypt and South Africa. In
South America, the largest plantations are founding in Argentina, Brazil and Chile.

Since 2010 in Europe, the area planted with vineyards has been reduced because to adapt the
provisions of the Wine Market Common Organization, as follows:
• France reduced the area planted by 1% to 825,000 ha,
• Italy reduces the area cultivated by 2% and has 798,000 ha of vine,
• Of worldwide Argentina, Chile and the United States have maintained same area cul-
tivated during Brazil, China and New Zealand increased by 1%, Australia has reduced
cultivated area by 3% and South Africa by 1%.

The geographic information systems can be seen as a useful tool in agriculture because some
goals can be reached more easily by monitoring input and output data. So, it can also reduce the
negative effects on the environment. [11]

2. VINEYARD OF ROMANIA

Among the wine producing countries of the European Union, Romania occupies the 5th place
on the vineyard surface, 6th place on the production of grapes and wine and owns one third of
European Union vineyards. At national level, the area cultivated with vines occupies about 1.4%
of the entire agricultural area of the country, and the South-East region owns 41.5% of this area.

The explication of this performance resides in the unique or difficult to imitate local resourc-
es: in the South-East region there is an extensive area cultivated with vineyards and a long
wine-growing tradition, supported by the favorable climate and the sub-regions soils specific.
The South-East region produces 43% of the Romanian wines, being the first place in the country
in terms of the area of the vineyards, with 40.2% of the wine area of the country - mostly located
in Vrancea County. In Vrancea county are cultivated about 25,000 ha with vineyard - of which
“only about 3,000 hectares with harvest declaration. Vrancea is strongly divided, with about
10.000 owners in the area.

Table no 1. shows the production site per hectare for the period 2013 - 2017. It is noted that dur-
ing this period there is an increase in production in the private sector and in individual agricul-
ture holding. 2014 is an exception because we have a production decrease.

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 THE INFLUENCE OF THE GEOGRAPHICAL AREA ON WINE PRODUCTS. A CASE STUDY

Table 1. Average production of grapes per hectare, by ownership

Years
Macroregions,
Vineyards 2013 2014 2015 2016 2017
Property forms development regions
categories Kg/ ha
and counties
Kg Kg Kg Kg Kg
Total Vrancea 6609 5615 5926 5809 7044
Totally
– fruit Private sector Vrancea 6558 5621 5907 5794 7032
vineyards of which: Individual
Vrancea 6420 5547 5692 5498 7001
agricultural holdings
Total Vrancea 6763 5894 6231 6134 7075
Grafted Private sector Vrancea 6707 5904 6213 6120 7061
vineyard of which: Individual
Vrancea 6573 5854 6004 5823 7028
agricultural holdings
Source: Romania’s Statistical Yearbook, 2013, 2014 [13]
Table 2 shows the occupied areas (Ha), the largest cultivated areas are with grafted vineyard,
and the smallest ones are with table grapes where we have a decrease since 2013 to 2017. In wine
grapes the largest cultivated area was in the year 2013.

Table 2. Vineyards on fruit – surface, on property forms

Years
Macroregions
Vineyards 2013 2014 2015 2016 2017
Property forms development regions
categories Ha
and counties
Ha Ha Ha Ha Ha
Total Vrancea 25351 23791 24267 24176 24355
Totally
– fruit Private sector Vrancea 25020 23459 24024 24072 24251
vineyards of which: Individual
Vrancea 21968 21188 21678 21713 22121
agricultural holdings
Total Vrancea 22515 20954 21429 21282 21512
Grafted Private sector Vrancea 22184 20622 21186 21205 21408
vineyard of which: Individual
Vrancea 19136 18356 18848 18883 19286
agricultural holdings
Total Vrancea 2836 2837 2838 2894 2843
Hybrids
vineyards on Private sector Vrancea 2836 2837 2838 2867 2843
the fruit of which: Individual
Vrancea 2832 2832 2830 2830 2835
agricultural holdings
Total Vrancea 4619 3889 3886 3872 3889

Table grapes Private sector Vrancea 4617 3886 3884 3870 3887
of which: Individual
Vrancea 4543 3845 3836 3836 3838
agricultural holdings
Vrancea 20732 19902 20381 20304 20466
Wine grapes
Vrancea 20403 19573 20140 20202 20364
Source: Romania’s Statistical Yearbook, 2013 -2017 [13]
Table 3 shows the grape production obtained at ha on property forms, the largest wine grape produc-
tions were obtained in 2013 and in 2017. The weakest harvests were obtained in 2014 respectively.

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Table 3. Total grape production, by ownership

Years
Macroregions
Vineyards Property 2013 2014 2015 2016 2017
development regions
categories forms Tons
and counties
Tons Tons Tons Tons Tons
Total Vrancea 167556 133592 143798 140436 171567
Totally
– fruit Private sector Vrancea 164084 131857 141899 139468 170529
vineyards of which: Individual
Vrancea 141028 117524 123384 119388 154868
agricultural holdings
Total Vrancea 152269 123496 133518 130542 152196
Grafted Private sector Vrancea 148797 121761 131619 129777 151158
vineyard of which: Individual
Vrancea 125774 107457 113156 109955 135542
agricultural holdings
Total Vrancea 15287 10096 10280 9894 19371
Hybrids
vineyards on Private sector Vrancea 15287 10096 10280 9691 19371
the fruit of which: Individual
Vrancea 15254 10067 10228 9433 19326
agricultural holdings
Total Vrancea 33067 23377 27524 25686 27347

Table grapes Private sector Vrancea 33047 23354 27506 25666 27327
of which: Individual
Vrancea 32400 23130 27150 25350 26962
agricultural holdings
Total Vrancea 134489 110215 116274 114750 144220

Wine grapes Private sector Vrancea 131037 108503 114393 113802 143202
of which: Individual
Vrancea 108628 94394 96234 94038 127906
agricultural holdings
Source: Romania’s Statistical Yearbook, 2013 -2017 [13]

2.1. Study area

The geographical location of the Vrancea County is defined by the intersection of the parallel-
45º North latitude and the meridian - 26º East longitude, which gives it an external position to
the Carpathian Curve, in the South-East of Romania. In relation to the neighbouring admin-
istrative units of the same rank, Vrancea is bordered by Bacau County to the North, Vaslui to
the North-East, Galaţi to the East, Brăila to the South-East, Buzău to the South and Covasna
to the West. The major relief units that define the position of Vrancea County are the Vrancea
Mountains, which occupy the western third, the sub-Carpathian sector between and Zăbrauţi
and Râmnicu Sărat in the central area and the central part with the Siret Plain, which covers the
eastern third. Within these limits the county totals 4857.03 km2.

The climatic characteristics of Vrancea County are those specific to the situation at northern
latitude of 46° and in the continental area. These two elements determine the temperate transi-
tion continental climate, with specific characters determined by the altitudinal floor (from the
level of the plain, up to over 1700 m). And with local influences that impose topo climate of
depression type. The layout of the relief in steps, which descend to the east, opens wide space,
first of all, to the east-continental influences but at the same time to the influences of northern
and southern climate. At the same time, the Carpathians Curvature has the function of a natural
discharge for the western air masses.

To create hypsometric map, soil map, relief unit’s map and CLC map using the software ArcGIS
10.5 was used digital elevation model (DEM) with a resolution of 30 m, Corine Land Cover
2000, Soil Map of Romania at 1: 200000 scale.

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 THE INFLUENCE OF THE GEOGRAPHICAL AREA ON WINE PRODUCTS. A CASE STUDY

The DEM was downloaded free from (www://geo-spatial.org) and all the used vectors were
downloaded free from (http://www.opengis.org). The use of land map was obtained from CO-
RINE Land Cover. [10] [12]

The CORINE Land Cover is a vector map with a scale of 1:100 000, a minimum cartographic
unit (MCU) of 25 ha and a geometric accuracy better than 100m. It maps homogeneous land-
scape patterns, i.e. more than 75% of the pattern has the characteristics of a given class from the
nomenclature. This nomenclature is a 3-level hierarchical classification system and has 44 class-
es. In order to deal with areas smaller than 25ha a set of generalisation rules were defined. [4]

The Hypsometric map was the first created map (Figure 1). The role of hypsometric map is to
show how altitude varies within the studied area. Vrancea County is divided into 6 altitudinal
classes. The altitude varies between 4 – 1.774 m. [7]

The largest area is occupied by the plain area between 4 – 364 m (green color) in the East. In the
western part are the sub-Carpathian hills area (365 – 843 m) followed by the mountains (brown
and white colour).

Figure 1. The hypsometric map of study area

Vrancea County has a high natural potential. Regarding, the soil, the renewable resource, from
the East to the West, we notice the following zone characteristics:
• the plain area;
• the sub-Carpathian hills area;
• the mountain area.

The lower Siret Plain and the Ramnic Plain are characterized by alluvial soils in the meadows
and lowlands. Chernozems are characteristic on the interfluves and the gray soils are in the
contact area of the plain with the sub-Carpathian hills.

In the area of the sub-Carpathian hills there are brown podzolite, podzolic, clay-alluvial and
brown soils that offer favourable conditions for the pastures, meadows and forest vegetation
development. In this area, agricultural crops find less favorable conditions. It is the relief step of
the surfaces occupied by orchards and vineyard plantation.

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The mountain area is characterized by acid brown soils and podzolic brown soils which have
led to the forest steps vegetation development consisting of mixing forests (deciduous forests)
at altitudes below 900 m and at altitudes between 900 and 1600 m, also. At higher altitudes are
developed spruce forests, alpine meadows, blueberries, alder and juniper.

Figure 2. The soil map of study area Figure 3. The land use map of study area
The Corine Land Cover map provides information on how the lands in the study area are used.
The analysis of the map shows that the area with the greatest viticulture potential is in the
sub-Carpathian hills. This area is delimited in the northern part of the forests and in the south
of the fruit trees and berry plantation. (Figure 3) [1]

The relief map shows how the relief units are distributed in Vrancea County. The plain units are
located in the eastern areas; the western part is the area of the sub-Carpathian hills. Here are
located most vineyards plantation in the Vrancea County. (Figure 4)

Figure 4. The relief units map of study area

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 THE INFLUENCE OF THE GEOGRAPHICAL AREA ON WINE PRODUCTS. A CASE STUDY

3. CONCLUSION

Productivity is a fundamental characteristic of any agricultural plant; it is appreciated after the

economic weight of the main product made at the surface unit. In the case of vineyards, the
main economic product consists of grapes. [2]

Grape production is actually the result of a heterogeneous complex of interactions between va-
rieties, biotope conditions and the technology used. It is ultimately conditioned by all the factors
that influence in some way the potential and actual fertility as well as the growth processes. The
better the biotope conditions are in harmony with the biological requirements of the variety, the
higher-level production.

Each variety is characterized in terms of production by a certain biological potential. Some more
vigorous varieties, in general, ensure large grape production (15 - 22t/ha and even more) (Galbe-
na de Odobesti, Zghihara de Husi, Berbecel, Black Babeasca among the varieties of wine, Afuz
Ali, Italy, Cardinal among those for the table). Other varieties such as: Grasă de Cotnari, Pinot,
Tamaioasa romanesca, Cabernet Sauvignon, show other biological and productive properties
and give smaller grape productions (5 - 10t/ha), but with higher quality performances.

REFERENCES

[1] Bajocco S., De Angelis A., Perini L., Ferrara A., (2012) The impact of Land use/Land Cov-
er Changes on Land Degradation Dynamics. A Mediterranean case Study, Environmental
Management, May 2012, Issue 5, pp 980 -989
[2] Creasy, G. L., Creasy L. L., (2009). Crop Production Science in Horticulture, Volume 16:
Grapes. Wallingford, Oxon, GBR: CABI Publishing, p 117.
[3] Dumitriu I. C., (2008) Viticultura, Editura Ceres, Bucureşti
[4] Kasereka K., Yansheng G., Mbue I.N., Samake M., (2010) Remote sensing and geograph-
ic information system for interfering land cover and land use change in Wuhan (China),
1987-2006 Journal of Sustainable Development, Vol 3, No. 2, pp 221 -229
[5] Leonowicz A.M., Jenny B., Humi L., - (2009) Automatic generation of hypsometric layers
for small scale maps, Computers and Geosciences 35 (10), October 2009, pp 2074 -2083
[6] Neamţu, I., (1994), Viticultura practică, Ed. Ceres, Bucureşti
[7] Patton J.C., Crawford P.V., (2013) The perception of hypsometric colours – The cartograph-
ic Journal, volume 14, pp 115 -127
[8] Robinson, J. (1986). Vines, grapes & wines, Oxford University Press
[9] Smart, R.E., Robinson M.D., (1991), Sunlight into Wine: A Handbook for Wine-Grape
Canopy Management, Wine Titles, Hyde Park Press, Adelaide, Australia
[10] www://geo-spatial.org
[11] https://land.copernicus.eu/pan-european/corine-land-cover/clc-2000.
[12] http://www.opengis.org
[13] http://www.insse.ro/cms/

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 NATURAL PROTECTED AREAS FROM ROMANIA.
A CASE STUDY OF DANUBE DELTA
Camelia Slave1

DOI:

Abstract: The Danube Delta is recognition as natural international capital in Romania. In 1991 it was
designated as Ramsar site and World Natural Heritage Site for a surface of 50% of its area. Also, in 1992
it is recognized as a Biosphere Reserve. The Danube Delta is a large protected area at international
level, but at national level certain areas of the Danube Delta are only natural reserves. The Danube
Delta is recognized as a Natural Biosphere Reserve by Government Decision 248/1994. In 1994, a GEF
(Global Environment Facility) project was set and Park Administration implements the management
plan. The Danube Delta has so far been the only protected area with its own administration. At national
level, will be provided support for the establishment and strengthening of the necessary institutional
framework, for the adoption of the laws on protected areas and strengthening legislative framework.
Also, for preparation human resource which is a public participation component of popularization the
idea of nature conservation and protected areas. The purpose of this article consisted of choosing Dan-
ube Delta area where the possible floods occur due to different weather phenomenon. To do this using
ArcMap 10.5 programs were conducted a simulation map of flooding in the area under study.

Keywords: Convention, Danube Delta, Habitat, Protected Area, Maps.

1. INTRODUCTION

T he first modern, world-wide intergovernmental treaty on the conservation and sustainable

use of natural resources is the „International Convention of Importance Wetlands Particu-
larly as a Water bird’s Habitat” signed on February 2, 1971 in the Iranian city of Ramsar, on the
coast sea Caspian.

The Convention on Wetlands of International Importance, in particular as a habitat for aquatic

birds, signed at Ramsar, Iran, in 1971, established February 2 as World Wetlands Day. Romania
is a contracting party to the „RAMSAR” Convention as of September 21, 1991 (through the
adoption of Law no. 5 of January 25, 1991). The declared objective of the Convention was to
conserve the wetlands, fauna and flora that serve as aquatic bird habitat and which constitute
the most important resources of economic, natural, scientific and recreational value. The choice
of these areas, according to the Convention, is based on the international role from ecologi-
cal, botanical, zoological, limnological, hydrological, taking into account their importance for
aquatic birds in all seasons. First of all, The Convention establishes for the States Parties, the
requirement to develop and implement the management plans, so as to favour the conservation
of these areas by creating reservations and rational use of their reserves.

The wetland as a Ramsar site represents a recognition of the importance and proper manage-
ment of areas worldwide. [11]

1
University of Agronomic Sciences and Veterinary Medicine of Bucharest, 59 Mărăști Blvd, Bucharest,
Romania
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The concept of Wetlands includes a wide variety of ecosystems that have the following common
aspect: the presence of both land and water for most of the year. According to the definition
given by RAMSAR, the wetlands are extremely diverse. The Convention defines wetlands as
stretches of ponds, marshes, natural or artificial waters, permanent or temporary, where the
water is standing or flowing, sweet or salty, including stretches of seawater whose depth at
ebb does not exceed six meters. Regardless of the types of wetlands, they are characterized by
the fact that they share a fundamental feature, namely: the complex interaction of their basic
components - soil, water, animals and plants, elements that, in conjunction, perform numerous
functions and provide multiple products that have supported people over time.

In the broad sense, nature protection has as its main objective the unaltered preservation of the
natural ecosystems (eco - background) and the genetic background at global and regional level,
in order to ensure the balance between the natural components of the environment, and between
them and the human society.

In the present conditions, when in the extended territories the pressures exerted by the different
ways of using the lands on the natural patrimony of the planet have reached critical values, the
protection and the conservation of the nature occupy a priority place in the field of the concerns
of the specialists in the field. [7].

Anthropic pressure had the greatest impact on the flora and fauna biodiversity, the plants and
animals being the most vulnerable natural elements of the environment, in relation to human
activities; their existence is inextricably linked to the quality of the other components of the
landscape. Between 2013-2015, Romania held the Presidency of the Standing Committee of
the RAMSAR Convention. For the period 2015 - 2018 Romania was a member of the Ramsar
Standing Committee. This year (2019) World Wetlands Day was celebrated on February 2.

From a historical point of view, the Danube is mentioned in documents from the Greek and Roma-
nian eras. If the Greeks called the Danube – Danubius - the Romans used the name Danubius for the
upper course and Istros for the lower. Herodot, who between 454-447 BC. has visited the shores of
the Black Sea reaching the river Nistru, describes Istros as being the largest of the rivers seen so far,
and mentions that the river flows into the sea through five arms. Ptolemeu, in the Antonin Itinerary,
gives the coordinates of all the points described by him at the mouths of the Danube River. Polybi-
us (201¬120 BC), Strabo (58 BC - 25 AD), Ovidius (43 BC - 17 AD), Plinus the Elder (23¬79 AD;
Naturalis Historia), and Flavius Arrianus (~ 95¬175 AD; Periplus Ponti Euxini) in their writings
bring information about the Danube Delta, from which the following can be synthesized: formation
of the delta already started, the Danube flowed into the sea through a greater number of arms than
today, the delta front was located much to the west of the current position, in front of the mouths
of the river were six islands, the largest being known as Peuce (Pomponius Mela, 1st century AD).

The Danube Delta is the most representative delta in Europe and one of the most complexes in
the world and is the best-preserved delta in Europe. It is also considered to be the third area of
ecological importance in the world. This represents a major attraction by the presence within it
of a variety of vegetation and fauna - fish and ornithological. Here there is the richest and most
varied ornithological fauna in Europe, namely over 300 species of birds, some of them declared
nature monuments and are protected by law.

In 1991 it was included in the UNESCO World Heritage List as a biosphere reserve.

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2. GENERAL PRESENTATION

The „Danube Delta” Biosphere Reserve has a total area of 580,000 hectares and includes mor-
phologically and genetically units distinct physical and geographical, by point of view: the Dan-
ube Delta itself, the Razim-Sinoie lake complex, the maritime Danube up to the Cotul Pisicii,
the Isaccea-Tulcea sector with the flood zone, the Sărături Murighiol lake and the Black Sea
coast from the Chilia arm to Cape Midia, including the territorial sea up to the 20 m isobath.

The position of the reservation is defined by the following geographical coordinates: 28°10’50”
(Cotul Pisicii) and 29°42’45” (Sulina) East longitude; 45°27’ (Chilia arm, at km 43) and 44°20’40’
(Cape Midia) North latitude. Of the total area of the reserve, more than half (312,440 ha) is rep-
resented by the aquatic and terrestrial natural ecosystems included in the list of areas with uni-
versal heritage value (the Convention of Universal Natural Heritage) as well as those destined
for ecological reconstruction, areas that constitute the public domain of national interest. The
rest of the areas include embanked for fish farming, agriculture area and forestry (about 80,000
hectares). These areas are provided in Law 18/1991, including private land or public property of
local interest within the localities or territories of the communes (about 29,000 hectares) as well
as a marine buffer zone of about 103,000 hectares.

The Danube Delta climate is temperate continental with Pontic influences, some areas have
semi-arid climate. Precipitations are low, around 360 mm/year, and cloudiness is the lowest in
Romania. The multiannual temperature average is 11 degrees Celsius. Summers are warm with
minimal rainfall; winters are relatively mild with minimal snow cover which is kept only in
harsh winters for short periods.

In Patlageanca, the Danube has a flow of 6400m³/s (on average), and is divided into two arms,
in North Chilia and in South Tulcea. The Tulcea arm near the Cetatea Ismail is divided into two
arms: Sulina and Sf. Gheorghe.
• The Chilia arm transports 60% of the Danube’s waters and alluvium. Along the arm are
located settlements, Periprava and Chilia Veche.
• Sulina branch is located in the middle of the Delta, has 71 km length and transports 18%
of the Danube water volume.
• Sf. Gheorghe arm carries 22% of the flow. At discharge point, the Sacalin Islands are
considered to be a beginning of the secondary delta

The territory of the Delta is par excellence a land of waters. The dozens of lakes, canals, streams
and marshes that are part of it are the main elements of the Danube Delta biosphere’s hydro-
graphic system, of course along with the main arms of the Danube.

The most important lakes are: Roşu, Puiu, Puiuleţ, Lumina, Tătaru, Merhei, Matiţa, Fortuna,
Gorgova, Trei Ozere, Erenciuc. Channels are the main circulation system in the Danube Delta.
The canals provide from the lakes fresh water and water transport support. The largest channels
are: Dunavăţ, Cordon Litoral, Litcov, Dranov, Caraorman, Crasnico. And the most important
streams are: Păpădia, Litcov, Lopatna, Şontea.

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3. FORMATION OF THE DANUBE DELTA

The Danube Delta was formed in an old Black Sea bay, Tulcea Bay. It has been filled with al-
luvium since the Quaternary period. The filling was done in several phases, being favoured by
the low tide of the Black Sea.

The first phase consisted of the formation of a coastal cordon that partially is blocked by the
Tulcea Bay.

In the second phase, the bay is completely closed and becomes a lagoon. In the next phase, the
third, lagoon is filled with alluvium and in the newly formed marsh area the Sfântu Gheorghe
arm - the oldest arm of the Danube - is formed. Also, in this phase the Babadag bay is closed,
forming the lagoon complex Razim Sinoe.

In the fourth phase, the initial coastal cordon is pierced on the alignment of the present Crişan
locality by a new arm of the Danube - Sulina, which is rapidly advancing towards the sea due
to the large amount of alluvium.

In the fifth phase, the coastline is crossed again this time by the Chilia arm, near the future
locality Periprava. Currently this arm carries the largest amount of water and alluvium, contrib-
uting to the formation of new territories of the Danube Delta.

The Danube Delta is a relief unit of Romania located in the East, being the newest of the coun-
try, a plain in the training stage. The flooding process is carried out by the Danube, which spills
significant amounts of alluvium every year, in the Black Sea, thus contributing to the growth of
the Delta. [3]

From a geomorphologic point of view, the Danube Delta is an alluvial plain in formation, where
the marshy areas are covered by reef and abundant vegetation and a large number of lakes and
canals. The Danube Delta looks like a large equilateral triangle with sides of about 75-80 km.
The average altitude is 0.52 m, most of the territory is below one meter and 20% of the Danube
Delta is below sea level.

The dunes and the shales are the largest formations in the delta, and they are also the highest
areas of this water’s paradise (Letea Grind - 12.4 m, Caraorman Grind - 7 m). The most impor-
tant dunes in the Danube Delta are: river dunes (Chilia, Caraorman, Pardina, Stipoc), river-mar-
itime dunes (Letea, Sărăturile, Crasnicol) and smaller dunes Zăton Buhaz, Crucea, Creţu, C.A.
Rosetti.

The most important types of soils encountered in the territory of the Danube Delta are: alluvial
soils, limnosoils, psamosoil and white soils. [8]

The territory of the Danube Delta can be divided into two geographical sub-regions: the Danube
Delta itself (located between the arms of the river) and the Razim Sinoe lagoon complex, locat-
ed south of the Sfântu Gheorghe arm. Delimitation is practiced, also between the river delta and
the maritime delta. [3]

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A CASE STUDY OF DANUBE DELTA

4. MATERIAL AND METHODES

The digital elevation model (DEM) was used for hypsometric map that can be found free of
charge on CGIAR-CSI geo-portal in WGS84 geographical projection [CIAT, site accessed in
Sept, 2019]. [10].

A Digital Elevation Model (DEM) is a grid or a raster of square cells whose cell value is the
land surface elevation in the centre of cell. The DEM has a spatial resolution of 30 m. Digital
Elevation Model (DEM) is the digital representation of the land surface elevation with respect
to any reference datum. DEM is frequently used to refer to any digital representation of a top-
ographic surface. DEM is the simplest form of digital representation of topography. DEMs are
used to determine terrain attributes such as elevation at any point, slope and aspect. Today, GIS
applications depend mainly on DEMs. [9]

The program used to create maps for this study case is ArcGIS 10.5. It has WGS84 projection
and was transformed in Stereographic 1970 projection. (Figure 1).

Figure 1. The map of the study area – Danube Delta

The map of the study is a hypsometric map and has 10 altitudinal classes. The altitudinal values
are between: - 27.00 – 200.00 m

The studied area includes positive and negative relief forms:

• The deltaic area is represented by the positive relief representing 13% of the delta sur-
face and is formed by dunes;
• The negative relief (0 m level) is represented by the depressions in which the waters of
the Danube were installed, through the main and secondary arms, streams, marshes;

In the southern part, the Danube Delta continues with a large lagoon - Razim - Sinoie, formed
by blocking an old bay with a sand ridge;

On the edge of the Razim - Sinoie lagoon is a narrow coastal plain called the Razim - Sinoie
lagoon coastal plain. [2] [3]

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Figure 2. The geological map Figure 3 The flow direction

of the study area of the study area

The geological structure of the Danube Delta is made up of a crystalline foundation over which
a sedimentary cover is represented transgressive by a succession of Paleozoic, Triassic, Jurassic,
Cretaceous, Neogene and Quaternary deposits, determined by deep and small drilling in the
area. (Figure 2) [2] [4] [5] [6]

Flow accumulation was performed using Flow Accumulation tool in ArcMap. (Figure 3)
GIS functions as spatial analysis is capable to produce new information based on analysis of
data stored in the system. [1]

GIS is a tool for planners to analyze the planning region. Results of the determination of flood-
prone areas are expected to be a consideration for decision makers so as not to focus settlement
construction in areas prone to flooding. In addition, the need for flood mitigation efforts in this
area such as the construction of dikes, dredging to increase the capacity of the river as well as
perform other businesses from upstream to downstream to prevent flooding.

5. CONCLUSION

The vision for the Danube Delta region (2030) is: „An attractive area - with valuable biodiversi-
ty and dynamic business environment, with low/medium economic level in both traditional and
modern fields - where people live in harmony with nature, integrating economic activities in
the tourism, agriculture and fisheries sectors, with adequate support provided by urban service
centres.”

The economic, social and ecological price paid for disturbing the functions of the wetlands is
enormous. This resulted in numerous expenditures to restore the lost and degraded hydrological
and biological functions of the wetlands.

Plants and soils in wetlands play an important role in water purification, removing high levels
of nitrogen and phosphorus, and in some cases even toxic chemicals. This role is important
in preventing eutrophication, a process that leads to rapid growth of algal mass, which means
that the surface of the water is completely covered by plants. Thus, in the water mass, light and

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 NATURAL PROTECTED AREAS FROM ROMANIA.
A CASE STUDY OF DANUBE DELTA

therefore photosynthesis are greatly reduced, which is why there is not enough oxygen, although
the demand is increasing through the multiplication of organisms.

Wetlands often play a crucial role in flood prevention. By storing water in the soil or by retain-
ing it on the surface of lakes or marshes, wetlands reduce the need for expensive construction.
Wetlands contribute to the recharge of underground aquifers.

Wetlands acts as purifying drinking water systems; it protects the lands from floods and are
considered the most productive ecosystems in the world. Their structure and functions are de-
termined by the hydrology of the area. This category of ecosystems is about ten times more
productive than ordinary ecosystems. Because, in addition to the solar energy contribution,
they receive an additional energy represented by the entrances of the areas with which they
are in permanent contact, water and land. Thus, the circulation of water is crucial for ensuring
their productivity. Organic matter excess (biomass) can be stored or exported to neighbouring
ecosystems.

Wet areas tend to slow down the force of water, encouraging the storage of sediments that will
reach the water. Nutrients are often associated with sediments and can be stored at the same
time. These nutrients, especially nitrogen and phosphorus from agricultural sources, but also
from industrial discharges, can accumulate in the basement and can be transformed by chemical
and biological processes or taken by the wetland vegetation, and can then be effectively removed
from system.

REFERENCES

[1] Bukari S.M., Ahmad M. A., Wai T.L., Kaamin M., Alimin N., (2015) Spatial Analysis in
determination of flood prone areas using geographic information system and analytical
hierarchy process at process at Sungai Sembrongs catchment, - Soft Soil Engineering In-
ternational Conference,
[2] Coteţ P., (1973) Geomorfologia României, Editura Tehnică, Bucureşti,
[3] Gâştescu P., Ştiucă R., (2008) Delta Dunări – Rezervație a biosferei, Editura Dobrogea
Constanța,
[4] Giosan L., Donnelly J.P., Constantinescu S., Filip F., Ovejanu I., Vespremeanu-Stroe A.,
Vespremeanu E., Duller G.A.T. (2006). Young Danube delta documents stable Black Sea
level since the middle Holocene: morphodynamic, paleogeographic, and archaeological
implications. Geology, 34(9): 757-760,
[5] Ionesi L., (1994) Geologia unităţilor de platformă şi a orogenului Nord-Dobrogean, Editu-
ra Tehnică, Bucureşti,
[6] Mutihac V., (1990) Structura geologică a teritoriului României, Editura Tehnică, Bucureşti,
[7] Romanescu G., (1995) Delta Dunării – privire geografică, Editura Glasul Bucovinei, Iaşi,
[8] Rusu I., Niță L., (2004), Pedologie – Solurile României, Editura Eurobit, Timișoara,
[9] https://www.researchgate.net/publication/319454004_DIGITAL_ELEVATION_MOD-
EL_DEM_IN_GIS,
[10] CIAT, site accessed in Sept, 2019
[11] https://www.researchgate.net/publication/228148278_The_Ramsar_Convention_on_Wet-
lands_Assessment_of_International_Designations_within_the_United_States

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 INNOVATION AND AGGREGATION:
A GOVERNANCE MODEL TO SUSTAIN COMPETITIVENESS
OF WINE COMPANY IN SOUTH ITALY*
Nicolaia Iaffaldano1
Andrea Sestino2

DOI:

Abstract: The paper aims to analyze the relationship between property and business in wine coopera-
tives, defining its contribution to the firm’s development and competitiveness based on a customer-cen-
tered perspective.
On-desk analysis of theoretical and literature contributions on the studies about relations between
businesses, with particular attention to the Viable System Approach. On-field analysis with the method-
ology of case studies, in order to verify the analysis proposed model depth.
The study has enabled to carry out: 1) identify operational measures which could sustain wine compa-
nies’ competitiveness also taking advantages from the territory; 2) define an analysis model concerning
supply relationships useful in order to observe the automated development potential, production and
commercial relationship.
Keywords: Aggregation and Innovation, Customer Relationships, Competitiveness.

1. INTRODUCTION

N owadays, complexity in competitive systems requires companies operating in wine sec-

tor to face changes in management practices in order to be oriented towards a dominant
principle, specifically about customers’ relationships. Thus, companies must increasingly act
according to a customer-centered logic or operate in order to activate relational mechanisms
with their customer aimed to interact following contributing to develop companies’ ability to
adapt and stimulate trust in consumers (Costabile, 2001; Kotler et al., 2012; Siano et al., 2004;
Gummesson, 2005).

The implementation of these mechanisms requires to define an operating structure and several
business processes able to activate a path aimed to adopt relational mechanisms with customers
useful for monitoring their behavior and activating product adaptation paths in order to make it
constantly in line with market expectations as well; additionally, companies should be able to
activate paths aimed to defining supply chain control and coordination mechanisms in order to
guarantee and sustain aforementioned activities.

Furthermore, it might be interesting highlight that in the case of the wine industry, the imple-
mentation of the proposed strategy requires to consider also the competitiveness of the wine
companies always related not more just only referring to the product made, but is also consider-
* Although the paper is a shared work, paragraphs 1, 2, 4 are to be attributed to Nicolaia Iaffaldano, to An-
drea Sestino and Nicolaia Iaffaldano the paragraph 3.
1
University of Bari, Ionian Department of Law, Economics and Environment, Via Lago Maggiore ang. Via
Ancona, 74121, Taranto, Italy
2
University of Bari, Ionian Department of Law, Economics and Environment, Via Lago Maggiore ang. Via
Ancona, 74121, Taranto, Italy
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ing a complex set of elements binding products to the wide range of components in the consid-
ered territory in which it is made.

Thus, the paper is aimed to propose considerations about the role of relationship between the
property, that in the cooperative model analyzed is represented by the farmers primary sup-
pliers of raw material, and the wine company with the final scope to understand its potential
contribution to development and competitiveness in considered company. Particularly, these
relationships will be observed using a model in which the level of coordination and control of
operational activities is considered, defining the characteristics of each relational typology ana-
lyzed founded according to pursuit of competitiveness.

The proposed framework assumes that competitiveness and therefore the relationship with the
consumers are strongly influenced by the ability of the entrepreneurial reality to adapt its prod-
uct and so the processes realized, at the changing needs of the final consumer.

Considering these scopes, the paper aims to define a typical behavioral pattern in terms of
activities and processes to be activated by the adoption of a Viable System Approach (VSA)
perspective (Golinelli, 2000; 2002; 2008) fundamental in order to pursuit competitiveness of
wine companies. Furthermore, the research aims to identify characteristics usually support
relationships - in the considered case generated due to the relationships between the property,
i.e. farmers, and the grape manipulating company - who must be possessed in order to allow
companies developing of competitiveness wineries in the current competitive context; experi-
ence of a successful reality in the panorama of Apulian wine production cooperatives will be
considered and in which technologies able to automatize production processes and relations
with the final customer have been implemented.

Therefore, current competitive context requires adaptability who can’t be separate from the
activation of relational mechanisms based on sharing common growth paths or from adoption
of innovative technologies able to simplify the supply chain (Grando et al., 2010; Signori, 2004;
Borghesi, 2001; Santovito, 2005; Maizza, 2001; Massaroni, 2002) because aimed to maximize
performance and competitiveness.

2. TERRITORIAL AND WINE COMPANIES’ RELATIONSHIP

IN A VIABLE SYSTEM APPROACH

Wine companies who choose to operate according optimization value to be transferred on the
final consumers requires a development of organizational structures that cannot be separated
without considering its systemic nature and the synergistic relationships activated with the sub-
systems make up the wine production supply chain and supersystems represented by distribu-
tion and consumption.

Considering a relational perspective, the systemic nature of viticulturally industries is based on

the research of consonance (Golinelli, 2000, 122-124) activated with its sub-systems referred to
macro-areas of their own supply chain and identifiable in the system of agricultural production,
in the wine-production system, in the bottling and packaging system.

Literature and particularly specific studies (Mastroberardino, 2002, 37 and follow.) investigat-
ing the systemic characteristic of the wine business, fundamental for this work revealing the

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produced effect considering the relationships between the aforementioned systems. The rele-
vance of these relationships is more evident when these sub-systems provide the wine system
with resources for its functioning is considered; break them down during the analysis might
mean follow a reductionist approach with a related partial analysis in which a holistic approach
can be framed in its optimal context.

For nature, wine companies also interact with a high-level of systemic entities that reveal expec-
tations and survival influence considering they possess resources essential for its functioning.
These entities are several different according literatures (Golinelli, 2000, 191; Barile et al., 2003;
Calabrese & Vesci, 2003) considering their relevance might be distinguished direct systems
from the indirect.

In the first group might be considered the system of distribution, communication, consumers
and institutions responsible for controlling compliance with the rules, which have important
resources for the functioning of the system (Mastroberardino, 2002, 284 and follow.; Santovito,
2005). In the second group (definable as over-indirect systems) the tourism system, the sys-
tem of culture and traditions, the landscape-environmental system might be considered. These
entities affect the system on a mediated basis because when properly coordinated might able
to facilitate the process of recognition/purchase of the product (wine) according virtue about
pre-existing knowledge of the related origin territory or due to appropriate communication
strategies also able to represent the considered territory (Orth et al., 2005; Busacca et al., 2006).

Thus should not forget that in the current competitive context the wine, as all typical products,
possesses for nature, or might be influenced through marketing strategies, territorial connota-
tions related to specific attributes: the intrinsic value related to origin territory in which is made
(Van Leeuwen & Seguin, 2006), propensity to quality as the sharing of cultivation and produc-
tion techniques, integration of the supply chain and physical, anthropic and cultural dimension
considering territory (Fait, 2008; Baccarani & Golinelli, 2001; Rullani, 1999).

Preliminarily is useful identify the possible training paths of a systemic model that might move
from the bottom (following a bottom-up approach) or from the actions of institutional over-sys-
tems (following a top-down approach). Depending on the systemic approach adopted the opti-
mal genesis will be conditioned by the ability to correctly interpret the vocation, to design and
communicate a unique identity compatible with this vocation considered (Fait, 2010).

Most competitive and advantaged system according a perspective of knowledge economy are
those that beginning from a low level might able to spread the know-how in order to generate
high value products oriented to the consumers’ needs. Therefore, the wine business system
must realize synergies derived from the availability of use in resources and from coordination
of univocal actions coherently to a customer-centered logic.

As sub-systems we refer to wine companies or their aggregations: in some geographical areas

they do not possess compulsory requisites able to provide a suitable stimulus to the system in
the process of completing due to lack of knowledge, financial and, often frequently, reduced
size. In this perspective and by observing the reality emerges how in a specific geographical
area characterized by wine production, subjects considered for our purpose might be Consor-
tiums of Quality protection such as Doc/Docg and obviously local institutions aimed to the
enhancement of the territory such as Provinces, Boards of Trade.

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Assuming as fundamental the relevance of the synergistic relationships that wine companies
activates with the related sub-systems and the supra-systems on the territory in which operates,
a possible operation model is traced considering mechanisms deputed to make it possible:
• the creation of production prerequisites that might evolve and innovate considering con-
sumer’s needs; this involves the adoption of product management processes that might
control its evolution considering consumers’ behavior and needs;
• the control and the coordination of the supply chain functional to the adaptation of the
final product to the consumers’ needs;
• the correct perception of the wine-territory relationship which when appropriately com-
municated might become a driving force that consumers can recognize and an identifi-
cation brand based on the sustained synergy.

Construction of an activity plan for companies might not ignore considerations towards the
governance model adopted especially in sectors such as the wine industry in which there are
widespread approaches inspired to act diffusely according specific trajectories reflecting prop-
erty’s willingness. Considering assumptions, the presented model is developed as a cooperative
model in which suppliers are the owners of the rights of ownership in the same company, it’s
compulsory establish common rules aimed to carry out activities specifically referred to those
functional to the realization of the final product.

The adoption of common paths allows the pursuit univocal goals otherwise unreachable. In
extremely fragmented production structures (such as those present in Italy) the activation of
functional production mechanisms aimed to satisfy demand market cannot be separated from
the adoption of shared protocols on the cultivation, collection and supply of raw materials.

3. CASE STUDY: EXPERIENCE IN CANTINE DI SAN MARZANO

In order to pursue the aim of research it is necessary identify characteristics that the supply re-
lationships generate and particularly in this case study due to the relationship occurred between
the property and the company we provide not only a theoretical framework but analysis about a
successful case study in the Apulian landscape as well.

Particularly from the proposed operating approach perspective a primarily attempt will be made
to understand if the operating mechanisms connected both to product management and to the
control and coordination of the supply chain allow automatic adaptation to customer needs. The
behavioral model has been observed with particular consideration of a specific entrepreneurial
experience that today have to create mechanisms in order to activate relationships with its con-
sumers through identifying their needs and finally contributing to increase trust relationships
with them.

Cantine di San Marzano di San Giuseppe is located in the province of Taranto, representing
a combination of productive and commercial skills: born in 1962 is clearly achieving several
advantages in terms of competitiveness. Its combination is based on a shared Production Phi-
losophy on the enhancement of native vineyards and on the control of wine quality whole the
process from the vineyard to the bottle.

The experience of Cantina di San Marzano comes from the contribution of the 1200 mem-
bers who in 2019 contributed by conferring about 190 thousand quintals of grapes reaching a

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production of about 130-150 thousand hectoliters of wine. The success of the winery is to be
attributed to its expertise in managing a fragmented portfolio of producers: on a total area of ap-
proximately 1,800 hectares the management of land is directly carried out by the winery regard
an extension of approximately 120 hectares and about 55 hectares of vineyards of Primitivo,
Negroamaro and aromatic white Malvasia.

Therefore, we tried to observe and appreciate the matter of relationships made with grape pro-
ducers in order to incorporate them in a context following a coordination model useful for
observation and analysis. The proposed model considers two determined variables in the identi-
fication and definition of the relationships: the grade of management uniformity and the grade of
information interaction (figure 1), as items useful in order to observe the levels of coordination
and control in the supply network.

The first variable defines the level of management uniformity of the activities carried out for
each participant, focusing the attention on the type of raw material to be made, the techniques of
cultivation of the vine, the definition of the treatments and the periods of intervention, the defi-
nition of the quality standards, the standards to be complied with for collection and conferment.
The second variable related to the grade of participation in the process which influences the
shared decisions concerning aforementioned activities and the process of sharing information
concerning the state of the sector/industry and the related markets.

The proposed matrix summarizes our suggestions. Particularly the adoption of a long-term
approach requires an activation of systemic relational mechanisms in which there are decisions
taken according the participants decisions sharing following a bottom-up approach guided by
the transforming company also able to manage a two-way information flow with contents rang-
ing from productive variables to consumers requests and consumption choices.

Other types of relationships define cases that might be defined as rigid, when management uni-
formity is to be attributed to a power assumed by the non-shared guide company and that does
not allow to optimize the potentialities of the participants; furthermore, unfinished relationships
might be expressed when the production purposes are not shared and pursued while being com-
patible in sharing information.

Figure 1. Coordination and control in supply chain relationships

Source: our elaboration from Fait & Iazzi, 2012, 13

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Market relations (fig.1.) are those in which the company who need for raw materials turns to the
market indiscriminately versus anyone who does not have the possibility of long-term planning.

The experience of Cantine San Marzano highlights an unfinished path according the definition
of systemic relations in the matrix, but in achievement phase following an empirical analysis.
Relations with producers are characterized by a certain managerial autonomy which is mitigat-
ed by checks carried out by the winery on the territory and by scheduling of the conferment
periods during which raw material is checked. The controls during the ripening phase are fre-
quent. The management of the treatments and crops is defined by producer together with the
agronomist of the company using “spy plants” equipped with technological sensors that contin-
uously detect and send data to a central station that stores and processes return information and
additional data allowing to pursue achieved results. Additionally, intense information exchange
about the management of the crops and the choice of the type of vineyard might be considered.

The direct commitment of the company in the cultivation is carried out on a reduced area that
allows the application of principles and practices not adoptable in hypothesis of cultivations
carried out by third parties even when members of the cooperative. Particularly, the extension
cultivated directly - around 350 hectares monitored, redeveloped and selected - aims to discover
autochthonous productions and enhance them.

The total production reaches about 10 million bottles and the expected turnover for 2019 is 60
million euros, 70% of which is achieved thanks to exports to 76 countries (Germany, Switzer-
land, Japan, United Kingdom, Holland and Brazil in first place). Cantine San Marzano is one of
the reference players in the Doc of the Primitivo di Manduria and in Puglia.

With particular regard to supply relations, currently management mechanisms might be as-
cribed to farmers’ capacities combined with those of the company, also considering the price
recognized for the contribution, highlighting the need for a path yet to be completed, more
complicated when in presence of the generational shift which between winegrowers is usually
not easy. For this reason, the San Marzano management hopes adoption of increasingly and
coordinated relational systems in order to ensure quality raw materials functional to the pro-
ductions to achieve.

The company is currently engaged in a supply chain project in which the automation of pro-
duction processes and relations with the end customer are provided and supported by useful
tools such as Customer Relationship Management (CRM) platforms. The shared information
platform (such as an ecosystemic platform) is able to ensure controlled management and con-
tinuous monitoring of processes. Additionally, the platform is also able to bring the productive
reality closer to the consumer integrating technological, methodological and data tools in var-
ious segments of the supply chain. Consistent with this objective CRM is increasingly able to
automate relationships with consumers, stimulating a greater involvement in construction of the
final product (co-production).

4. CONCLUSION

The research carried out identified foundations on the role that aggregation and innovation
might have when integrated in a customer-centered perspective as a driver of the competitive-
ness for wine companies.

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According this approach we observed both the activities useful for wine companies in order to
enhance production and the characteristics that supply relationships must manifest, particularly
in case of cooperative business models, to ensure adaptation at consumers’ needs and therefore
competitive capabilities for business.

Aggregation assume this role when in a systemic perspective it synergistically combines critical
company resources (such as organizational capital, productive potential, image and credibility
and so on) with those of the actors with whom it is in direct relation without neglecting the
primary role of the territory at which belong (i.e. agronomic and productive heritage, vocation,
entrepreneurial culture, human factors).

Clearly, the proposed this path must be completed with a second dimension, the innovation,
which might consider as a cultural, technological and marketing value.

Considering the competitiveness drivers analyzed, the adoption of the relationship study model
might be a useful tool aimed to qualify prerequisites for growth in wine companies and inter-
esting insights in order to define a path to follow for a correct setting. Additionally, the need
to undertake an overall growth path undoubtedly cannot ignore innovation in both production
and supply chains and therefore in consumers relationships as well. This last aspect must not be
neglected in a perspective of market analysis and monitoring in constant adaptation.

The application of the proposed model at the case study about Cantine San Marzano contribute
to highlight how this company today is as a completing system considering supply relationships
activated with those who represent the property. This is because some prerequisites such as
production control, using technological sensors exist, while other ones, particularly related to
aggregation might be opportunely coordinated, combined and controlled even more deeply and
aimed to be oriented towards a customer-centered vision. However, the company is currently
implementing new technologies that deal with aspects concerning control and transformation of
raw materials, even considered production process including bottling and traceability contribut-
ing to identification, involvement and maximum consumers care and satisfaction.

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Borghesi, A. (2001). I processi di supply chain management, product development management
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Fait, M., & Iazzi, A. (2012). Aggregazione e innovazione: un modello di governance per la com-
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 THE LEADER OF THE NEW GENERATION:
HUMBLE, CONNECTOR AND CONSCIOUS
Marius Calin Benea1

DOI:

Abstract: Romania has few authentic leaders. And a lot of imagined leaders. Although the managers
and entrepreneurs of today have access to profile information and an elite of specialists to advise them
on leadership, few are willing to make the transformation from the native concept of „boss” to the one
as an authentic leader. And fewer are those who then internalize in depth the concepts learned in the
dedicated coaching programs. We have chosen to oppose this pessimistic reality at the other extreme,
that of the humble leader. In counterpart of the paradigm formed by bosses, managers, leaders or di-
rectors with a function that gives them power. This paper debates the concept of humble leader, often
confused with the humble or modest leader.

Keywords: Leadership, Humility, Learning.

1. INTRODUCTION

D igital transformation is complex and dynamic. Technological changes happen exponential-

ly, combinatorial and recursively, which entails profound and rapid changes. Therefore, we
cannot predict the future starting from the past, because the future will not be any longer an
extension of the present. Thus, the digital transformation and its implications for leadership and
organizations must be addressed holistically.

There is great need for leadership and new leadership is needed.

The causes that increase the need for skills of leadership are:
• The world is very complex and the information is active and a lot. Understanding
reality and filtering the information requires critical thinking. All these are a source
of stress; therefore, we need people to help those who need to reinvent themselves and
regain performers.
• Competition is fierce, because there is no geography anymore.
• The work environment is multigenerational as a result of performance in medicine,
of mentality change and of economic pressures. At work four generations will meet -
with mentality, needs and different characteristics. Thus, leaders must create a culture
of diversity.

Therefore, there is a great need for competent and performant leaders. And today, perfor-
mance in leadership is reached by humbleness, consciousness and connection.

1
„Politehnica” University Timișoara, Faculty of Engineering Hunedoara, Revoluţiei 5, cod 331128, Hune-
doara, Romania
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2. MANY MAY CONTEST HUMBLENESS

AS BEING A QUALITY OF A LEADER

The universe of small and large companies has all kinds of leaders: appointed, self-styled, or
simply LEADERS. We’ll stop at the characteristics of the last category because it is the most
valuable. For them everyone “fights”:
• Natural positive attitude, balanced, cooperative, opened, valorized;
• Empathy, the capacity to mobilize people (project connector), to take quick decisions,
to designate and delegate clear tasks to their teammates;
• Firmness, coherence, vision, inspiration;
• Resistance, tolerance and moderation in crisis situations;
• The power to listen and understand the needs and expectations of those their lead;
• The generosity to teach the others what you know that might help them make progress.

Many may contest humbleness as a leader’s quality. He must be strong, invincible, and just to
lead. And yet ... the way in which a leader relates to the power he has will always create the dif-
ference. The one that holds so many tools to lead people and remain aware of his primary role,
which is to act in the service and in the interest of others, will be hard to beat!

From a realistic perspective, the management board of a large company will hesitate to hire a
leader with such a human face.

In the absence of professional assessments within the leaders of multinational companies, me-
dium or small, it is hard to identify this rare quality. In the wider area of leaders that I admire in
this direction, I think of Jacques Attali, a prominent theorist in economics and social sciences,
writer, first director of the European Bank for Reconstruction. A contemporary thinker of great
strength, that with humbleness and the strength of his mind, he devotes for years the activity to
some causes global concerns, such as environmental protection.

This type of leader is successful simply because it is excellent at what he does and has a
very good relationship with his ego. No need to write his title on all doors, does not put big
picture hallways, does not feel the need to say “I’m your boss, I’m right!” His success is only
an attribute, the value of his work lies in the fulfillment which feels directly contributing to
progress of the company and its people.

The present education system of factory type cannot cope with the knowledge-based econo-
my. And here, in Romania, the younger generation has enormous potential. The anachronistic
system in which the young learn, their family life poor in transmitting moral values, models,
general knowledge, responsibility and engagement, misses from the start this potential. With
exceptions, of course. Therefore, it is becoming increasingly difficult to identify talents, to train
them for professional performance and leadership. All seek leaders, few manage to find them.

3. THE MAIN ROLE OF A LEADER

IS TO BE THE KEEPER OF THE COMMON GOOD

Humbleness is, indeed, often equated with modesty or, at least, with submissive behavior. From
this perspective it is incompatible with management. Human groups need leaders, it is a deep
need, atavistic, transmitted by genes from one generation to another. Need is not absurd. There

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have existed in past times a number of natural experiments of some micro-companies built in
extreme situations: the shipwrecked. For someone who reads the history of hundreds of ship-
wrecks whose histories are known, begin to emerge quite clear some models.

The evolution of these micro-communities, always in limit situations, is very different, radical-
ly different. Some of them manage very well in the survival game. Others don’t, most of their
members perish. Very few are found themselves in the middle. The difference between the two
extremes is always the same: reporting on general human social rules and a respected leader,
but not authoritarian. The lack of presence of a domineering, oppressive leader or of leadership,
always led to the disappearance or drastic reduction of communities.

A good leader, however, cannot be neither humble nor submissive, because then he no longer
acts as a leader. He must, however, understand, first, what is that role. Many leaders see them-
selves as a unique source (or main) of power and authority of the group, owners of all decisions,
the source of vision of the future and of ways of action. He is the model of the heroic leader. If
they retire from this position, these leaders do it based on delegation, they give to others from
their power, with discretion and implicit understanding that they can take it back at any time.
This leading behavior causes addiction from others, passivity or sometimes rebellion and con-
flict. It can give good results, but is totally dependent on the quality of the leader and his ability
to keep order in the group.

But this isn’t, in fact, the role of a leader, not this of leader people really need. The main role
of a leader is to be guardian of the common good. Is the person who keeps the community
alive, gathers people around each other, keeps and maintains human social values, distinguishes
between good and evil, defends common morality? The leader is the one who gives power and
cohesion to the community and greatly increases its transmitting capacities to perform and sur-
vive in difficult situations. In such a united community, difficulties are obstacles to overcome,
they unite and gather. In a community led in an authoritarian way the difficulties are excuses to
diminish efforts, they disperse people. From here the completely different results they obtain.

A leader who assumes this role, of catalyst for community, is a leader that leads from the inside,
is a leader in the literal sense of the word. Latin, as Romanian, defined well this role: leads,
takes with him, gathers people around him and leads from the middle of them. From this
position, such a leader does not perceive himself as a hero on a pedestal. Moreover, he doesn’t
seek and does not want this position because he knows that there can no longer exercise this
purpose as well. He understands that he is not superior to others, but their catalyst. In this key
must be understood, in fact, humbleness.

In the Christian culture, humbleness often has religious and monastic connotations. The reason
for this is that its Teacher is the first and best example of the subject: “Jesus was neither hum-
ble nor submissive nor naive. When it was necessary, He knew to be fierce and sharp. But
He was never the head of his followers, but their source of well and wiseness. And these
qualities changed the world.”

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4. THE AUTHENTIC LEADER HAS THE COURAGE

TO CLIMB DOWN FROM THE PIEDESTAL
AND TO ADMITT THE FACT THAT HE HAS DOUBTS

Leadership has always been closely linked to success and success to the results you get. Which
obviously must be positive. The projects I have undertaken in recent years, remembered me Vol-
taire’s saying “the success which does not have followings does not mean anything”. Because,
in fact, if you don’t have someone to share the joy of a great result, what good to strive to get
it? I think the essence of the new generation leader actually means not only to get the people to
follow your plan, but also to share with them the satisfaction of success. And because success is,
somehow, the end of the road you go through with the team, you must first learn to listen, that is
to be humble. To know how to unite the energies of all and put them to work as a whole, means to
connect the individual energy to the target of the group. That means to be a connector.

And finally, to be aware means to understand that without your team you would have failed in
achieving the goal, so basically to understand that success is for each member. There was much
talk in recent years, in public, about the differences between a leader and a boss and the results
obtained in the two situations. Leader is not only the one who assumes responsibility for both
success and failure, leader is the one that takes time to listen to his people. And to achieve this,
the leader must step down from the pedestal. He must meddle with his team to sit at the same table
with them, observe them and to listen to them. And to admit, when it is appropriate, that he is a
man and that he makes mistakes just like them.

There are such leaders in Romania in general entrepreneurs who have started to work side by
side with their teams and who never forgot from where they left. In the world, some examples,
have drawn my attention - Dalai Lama is one of them, Nelson Mandela is another example and I
think we could include here Elon Musk. This kind of leader relates to success through the benefits
brought to the people that they have represented and through the positive changes they have gen-
erated in the societies to which they belonged. The courage that they had, that to descend from the
pedestal and recognize that they have doubts, that although they don’t know all the answers they
still do not give up, are attributes that have made them the most admired, most respected most
followed people. These leaders are the ones who had imprinted new attributes to the Napoleon
type of leadership which we all knew. As society and economy have their own dynamics, the
same is with leadership.

The digital age means another type of connection, is to use machines to see better the people, to
know better, to optimize the processes. Basically, with the help of the technology, you can form a
team whose members can be anywhere in the world, but can work as if they are in the same office.

With technology, you can discover the man in your team faster than ever before. The leader be-
comes more a connector of interests, of objectives and needs of his team members.

To understand the new generation, including future leaders, the first who should be involved are
parents and teachers, by active listening, giving up templates such as “do as I did” or “I know
better”. Give them the freedom to express, to reveal the creativity. To empower them and give
them options or to explain the options and risks and let them choose. Responsibility of every act
or activity at school is to prepare them for responsible job or business they will have at adulthood.

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5. A HUMBLER WORLD, ESPECIALLY IN THE BUSINESS AREA,

WOULD BE A BETTER WORLD

One research reference in the study of organizational leadership is the one by Jim Collins, de-
scribed in the book “Good to Great: Why Some Companies Make the Leap ... And Others Do
not “. Collins studied 11 companies in top 1000 richest ones that had performance below aver-
age for 15 years and then another 15 years above average.

What made possible this jump performance was due to the leadership changes. Collins talks
about competitiveness without fear accompanied at the same time, by another ingredient, which
may seem paradoxical, namely humbleness. Further research shows that employees who work
for humble leaders, without desire for self-promotion and pointed to see themselves as resources
to facilitate team performance are more involved and remain longer in the company.

In my work experience with leaders from different organizations in Romania, multinational

and big entrepreneurials, I found that better retention and the desire of people in the company
to submit additional effort to achieve the results are possible because these leaders share the
merits with all others and thus creates a sense of trust in others. Often there is no link between
confidence and actual competence, and not because there are not enough realistic people, but
because most see themselves better than they really are.

Being humble in business means being able to share the success with the team, to relate to
success in the plural, to take responsibility for what goes less well, to be open to feedback,
to be able to pull ahead and to recognize those who you work with, to behave properly,
fairly, to perceive yourself as a resource for the team you drive, to not assume special priv-
ileges, believing you can do anything and that you are entitled to everything.

Low self-esteem, the feeling of insecurity, emotional immaturity is correlated with the desire to
be the center of attention, to be seen, supported by others, validated. Therefore, often, in business,
histrionic behavior, seductive, manipulative may mask a need to verify that “you’re good enough”.

The leadership based on humility model seemed taken, until recently, from the biblical
stories. In terms of collective mindset, in the capitalist business environment, it was cooler to
be charismatic, knowing-all, seductive, bold, aggressive etc. If we read through the articles from
10-15 years ago, we will find out that at that time, the discourse about what leadership means
was associated with the glorification of some features such as “sociability”, “confidence”, “cha-
risma” etc. The first useful exercise for any leader, especially for a charismatic one, is to look in
the mirror and if he sees perfection, he should ask and listen to feedback from colleagues and
team. There are also advantages of the trust in oneself:
1. You feel good to think you are better than others, whether it is perhaps only an illusion;
2. This illusion helps (up to a point) to convince the others that you are more valuable than
you really are.

The organizations must begin to understand and recognize what really matters to make perfor-
mance to see clearly what is the pattern of behavior of leaders validated by employees and that
leads to success. Leadership is the ability to form and maintain teams to achieve performance,
not the ability to stand out and get as many privileges for oneself. A humble world, especially in
the sphere of business, and also in society would be a much better world.

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6. THE SUCCESSFUL LEADER IS THE MOST DETERMINED

AND ADAPTABLE PERSON ON EARTH

Internationally, I see humble leaders in Queen Elizabeth II of Great Britain („I know that I have
a female body, but I have the heart and courage of a King”), Nelson Mandela („Brave people
are not afraid to forgive for the sake of peace”), Mother Teresa, the universal symbol of leading
peace and love („beware that all who come to you leave better and happier”).

In Romania, the masterly example of a humble leader, connector, conscious, wise is Queen
Maria of Romania („In the years of pain I learned to pray”).

I believe that the Romanian leader is one of the most valuable in the world - I refer only to those
who made the revolution and changed in good everything they touched and not for a moment
the kind of leader abusive, domineering, dictator. In Romania, the leaders emerged with the fall
of communism and were stated in a country that did not even exist in the vocabulary words
manager, entrepreneur, market economy, leadership, capital, business.

So, the digital age, as any transformation is for successful leaders a new challenge, a new path
for development, innovation and differentiation. They embrace change, whatever it may be, and
live fully this state. A true leader sees beyond the symptoms and seeks the causes of problems,
taking into account the idea of „Change
​​ yourself and you will change the world”.

When we no longer blame everything that happens when we will overcome the victim condi-
tion of an educational model or system, when we will see the greatness and wonder of life in
everything around us, when we will look and act consciously - in present moment - making
new choices of high vibration, as is our divine being, with kindness, compassion, respect for
everything around us and when we will embrace change as the most beautiful answer to life,
then we will become leaders of our own lives and we will be able, through our model, to inspire,
to challenge and to form real leaders.

7. FUTURE RESEARCH DIRECTIONS

The new challenges of leadership in the digital economy - Based on the words of Pearl
Zhu: “In a world of well-defined problems, directors are required to exercise influence over
volatility, manage uncertainty, simplify complexity, and resolve ambiguity in the 21st-century
digital environment” we indicate the factors ensuring future leadership performance: per-
formance, growth mindset, data mining, business talent, digitization.

To have talent for business (business acumen) means not only understanding and knowing the
business environment, but also having the ability to make choices depending on the context,
not based on habits and automatism. The context is changing, and if we consider it, we will
make performance.

In emergency situations, when we are under pressure, we act on instinct. So, learning must be
accompanied by transformation.

Thus, a future leader must increase the speed and agility of transformation, to support leadership
for change, to support collaboration and create growth through learning and organizational culture.

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In this way one can pass from independence to interdependence, from control to connec-
tion, from individual to group and from alliances to network.

Agility is based on respect, courage, openness, concentration and dedication.

8. CONCLUSION

You cannot do business without character. First you need to create values, which then
have to support skills. Among the inadequate skills there are: individual competition through
the destruction of ideas, procrastination and the habit of freezing (fight or flight became fight or
freeze) – which generates depression and anxiety.

Being adaptable does not mean to develop safety mechanisms, but to create value.

Leadership skills are more awaken than developed. The role of the leader is to awaken ex-
isting leadership skills in people. He can do that by being himself the model of leadership that
they seek and ensure them their proper context so that the necessary transformation can be
produced in them.

8.1. Leadership key elements.

The leader must not lose touch with the people he leads. His role is to create characters and
develop people. And for that he has to understand the times and adapt the learning to the future.

REFERENCES

Collins, J.C., (2001). Good to Great: Why Some Companies Make the Leap... and Others Don’t,
New York, U.S.A, Publisher: William Collins
Pearl, Z., (2018). Digitizing Boardroom: The Multifaceted Aspects of Digital Ready Boards,
Morrisville, North Carolina, U.S.A. Publisher: Lulu.com

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 IMPACT OF CONSOLIDATION PROCEDURES
ON THE IMPLEMENTATION OF THE INFORMATION
ACCOUNTING FUNCTION
Artur Jastrzebowski1
Zofia Wierzbinska2
Marek Wierzbinski3

DOI:

Abstract: Financial reporting is often referred to as the result of all activities undertaken within the
accounting system. As an element of financial accounting, it is associated with the implementation of
various functions attributed to accounting. However, the area of financial reporting itself is divided into
two elements - single reporting and consolidated reporting. Consolidated reporting is a characteristic
process with its own procedures and assumptions. Therefore, the question should be asked whether the
differences do not affect the implementation of the basic accounting function - information function.
The purpose of the article is to present the impact of implementing the characteristic procedures of
the financial statements consolidation process on the implementation of the accounting information
function.
The study was divided into three parts, preceded by an introduction and completed with conclusions.
The first part describes the essence of the accounting function with particular emphasis on the in-
formation function. The second part presents a model process of consolidating financial statements
according to IFRS regulations. The last section of the study presents an analysis of the characteristic
points of the consolidation process and assesses their impact on the implementation of the accounting
information function.
The work was based on the method of analyzing literature sources, the comparative method and the
method of synthesis.
Keywords: Information Accounting Function, Consolidation, Financial Statement.

1. INTRODUCTION

F inancial reporting is often referred to as the result of all activities undertaken within the ac-
counting system. As an element of financial accounting, it is associated with the implemen-
tation of various functions attributed to accounting. However, the area of financial reporting
itself is divided into two elements - single reporting and consolidated reporting. Consolidated
reporting is a characteristic process with its own procedures and assumptions. Therefore, the
question should be asked whether the differences do not affect the implementation of the basic
accounting function - information function.

1
Poznań University of Economics and Business, Department of Accounting and Financial Audit, al. Nie-
podleglosci 10, 61-875, Poznan, Poland
2
Poznań University of Economics and Business, Department of Management Accounting, al. Niepodleglo-
sci 10, 61-875, Poznan, Poland
3
Poznań University of Economics and Business, Department of Management Accounting, al. Niepodleglo-
sci 10, 61-875, Poznan, Poland
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2. THE ESSENCE OF THE ACCOUNTING INFORMATION FUNCTION

According to many theorists (Butterworth 1972; Feltham, 1968; Gos 2008), the essence of ac-
counting is closely related to the generation and processing of information. Moreover, the in-
volvement of accounting in the process of supporting managerial decision making through the
provision of appropriately tailored information is so large that some scientists define it as an
information system (Kunz & Tymińska, 2014, p. 44).

The importance that is assigned to the process of handling information by the accounting sys-
tem causes that the information function is often recognized as the primary accounting foun-
dation (Brzezin 1998).

The subject of interest in this area is information understood as a product of the accounting
system, presented to recipients in an aggregated form with the use of financial statements of
entities (International Financial Reporting Standards 2014, p. 36). All processes in the compa-
ny’s accounting focus on processing data as a resource obtained by the accounting system into
information that is a product of its operations.

The features of information depend on the accounting subsystem under which they were pre-
pared. According to the International Financial Reporting Standards (2014, p. 42), information
in the financial statements should be characterized by two fundamental features:
• Usefulness,
• faithful presentation.

The usefulness of information should be considered as the impact of information on changing

the user’s decision (International Financial Reporting Standards 2014, p. 42-43).

On the other hand, a faithful presentation means that the information should present transac-
tions and other events that took place in a business unit. Information having the feature of faith-
ful presentation is complete, impartial and it does not contain errors (Rówińska 2013, p. 377).

The unambiguous description in the literature that the described accounting function provides
information for the needs of the entity’s management and for external recipients is an expression
of the fact that in the accounting theory it can be distinguished (Poetschke 2011, p. 16):
• external information function,
• internal information function.

It is generally believed that financial accounting, i.e. one of the accounting subsystems, is re-
sponsible for the provision of information to external users. Its goal is to show the company’s
assets and capital, as well as to register factors that shape the entity’s financial result. Informa-
tion created as a part of the financial accounting is retrospective and constitutes the main source
of shaping the image of the entity. Provision of information for external stakeholders is realized
(mainly) via financial statements (Kurek & Zielińska 2000, p. 145-146).

It should be noted that the growing economic risk increases the scope of information about the
entity desired by external users. This process forces the continuous evolution of financial state-
ments and the entire accounting system in such a way that accounting can provide information
for the largest possible group of stakeholders.

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ON THE IMPLEMENTATION OF THE INFORMATION ACCOUNTING FUNCTION

The internal information function is realized by both the financial accounting and management
accounting subsystems. Information generated by financial accounting is not sufficient for the
needs of making optimal economic decisions by the entity’s management.

According to Kurek and Zielińska (2000, p. 147), one of the reasons for this situation is a high de-
gree of formalization in obtaining information within the framework of the financial accounting.
According to the above-mentioned authors, the emerging gap is filled with management accounting,
which is focused on supporting the decision-making process. The information generated in the man-
agement accounting subsystem is informal and it is largely shaped by individual needs of the entity’s
management. They are based on data expressed both in monetary measure and in natural units.

An important aspect of information generated as a part of management accounting is its orien-

tation, not only on the past, but also the future of the entity. The generated information enables
the development of plans that show different variants of the formation of assets, sources of fi-
nancing and the entity’s financial result.

In conclusion, it should be stated that the essence of the information function is to provide in-
formation for decision-making purposes in a complex manner - both to external users (mainly
information from the financial accounting subsystem) and internal users (in particular, informa-
tion from the management accounting subsystem).

The subject of interest of this article is the area of the external accounting function that presents
information with the use of financial statements. There is a question - how do the procedures
implemented in the process of preparing the consolidated financial statements affect the perfor-
mance of the information function?

3. SHAPE OF THE CONSOLIDATION PROCESS

IN FINANCIAL STATEMENTS

The process of consolidating financial statements is (in essence) an implication of the accounting
principle of the superiority of economic content over form. The basis for the need to implement the
consolidation process is the occurrence of a special relation between two entities. Among the enti-
ties operating on the market, there may be three groups of impacts, presented in the figure below.

Figure 1. Types of relations between enterprises

Source: Own study

The first of the presented forms of impact has the most formal character. The connection be-
tween entities results from the capital involvement of one entity in another entity. It is also the
most transparent and easily traceable type of connection. Impact bases can be highlighted on
the basis of specific assets and liabilities of units.

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The second type of relationship has a less formal nature in relation to the capital relationship. In
this case, the entities do not engage their capital, but their relationship results from personal re-
lationships. A condition for the occurrence of a personal relationship is connected with making
decisions in operational and financial policy by allied people.

The last of the identified types of business combinations and the least formal interaction is a
purely business relationship. It occurs when entities are not related by capital or personnel.
However, due to specific market conditions, one entity can actively influence the activities of
another business entity.

Despite the fact that from the point of view of conducting business activity, each of these forms
of impact can significantly affect the functioning of the entity, according to many regulations
(including regulations contained in the International Financial Reporting Standards (IFRS
no.10)), the consolidation process covers only interactions with a capital nature.

However, it would be incorrect to believe that each form of capital involvement will result in
the need to prepare the consolidated financial statements. In this regard, the power of influence
should be decisive. The figure below shows models of capital involvement.

Figure 2. The impact of companies

Source: Own study

The „ordinary investment” is the least engaging form of capital relationship. In this case, the
entity acquired shares in another entity, but it is not interested in being an active owner. In most
cases, such an acquisition has a purely speculative nature.

Another form of interaction is the significant impact. In this case, the entity wants to remain
an active investor and it wants to have an impact on the functioning of the subordinate entity.
However, the number of shares or other conditions prevent this entity from making autonomous
decisions.

The entity exerts greater impact on a subordinate entity in the case of joint control – when in
consultation with another co-owner (on the principles of consensus) binding operational and
financial decisions regarding the subordinate entity are made.

The strongest form of influence is control, i.e. the situation when the parent entity can autono-
mously manage the operations of the subordinate entity. According to the definition presented
in paragraph 6 of the standards (IFRS 10), the investor exercises control over an entity, in which
an investment has been made, when (due to his involvement in this entity) he is exposed to
variable financial results or when he has the right to variable financial results and the ability of
influence the amount of these financial results by exercising power over the entity.

In conclusion, according to paragraph 7 of the regulation (IFRS 10), the investor exercises con-
trol over the investee, when the investor (simultaneously):
• exercises authority over the entity, in which the investment was made,

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• due to his involvement in this entity, in which the investment was made, he is exposed
to variable financial results or has right to variable financial results,
• has the possibility of using the power to exert influence on the amount of his financial
results.

While evaluating whether he exercises control over the investee, the investor takes into account
all facts and circumstances. The investor reassesses whether he exercises control over this entity
- if the facts and circumstances indicate that there has been a change in one or more of the three
control elements listed above (IFRS 10, par. 8).

When specifying the issue of exercising power, the regulations specify (IFRS 10, par. 10-14)
that the investor has power over the investee, if the current rights give him the ability to manage
relevant areas in the area of shaping operational and financial policy on a current basis. The
power results from the possessed rights. Sometimes the evaluation of power is obvious. For
example, when it is obtained directly and exclusively from voting rights granted on the basis
of capital instruments such as shares and then it can be assessed taking into account the voting
rights from these shares. In other cases, the assessment is more complex and it will require
consideration of more than one factor – for example, when the power results from one or more
contractual arrangements. An investor (with the ability to control the relevant activities on an
ongoing basis) has the power even when these rights have not been exercised yet. An evidence
that the investor has exercised his right to control the relevant activities can help in determin-
ing whether the investor has power (while this type of evidence is not sufficient to determine
whether the investor has power over the investee). However, the investor, who only has protec-
tive rights, has no power over the investee and (consequently) he has no control over this entity.

Ultimately, the power can be understood as active influence in the following areas (IFRS 10,
par. B11-B12):
• sale and purchase of goods and services,
• management of financial assets during their lifetime (including defaults),
• selection, acquisition and disposal of assets,
• conducting research and development works regarding new products and processes,
• establishing the financing structure or obtaining financing,
• making operational and capital decisions regarding the investee, including setting budgets,
• appointing and paying for key management personnel of the unit, in which investments
were made, or service providers, as well as terminating service contracts or employ-
ment contracts with them.

Compliance with the guidelines contained in the above regulations enables to identify the oc-
currence of impacts in the form of control. This, in turn, involves the use of the full consolida-
tion method in the process of preparing the consolidated report.

The consolidation procedure of full method (itself) will not always be carried out in the same
way and it depends on the time of its implementation. There are two characteristic moments for
the preparation of the consolidated financial statements:
• moment of the purchase of shares,
• any other balance sheet day.

In accordance with paragraph B86 of the standard (IFRS 10), consolidation includes:

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• grouping of similar items in assets, liabilities, equity, revenues, costs and cash flows of
the parent entity and its subsidiaries;
• compensation (excluding) of the carrying amount of the parent entity’s investment in
each of subsidiaries and the portion of the equity of each subsidiary that corresponds to
the parent entity’s share (IFRS 3 explains how to recognize the goodwill arising in this
situation),
• total exclusion of assets and liabilities, equity, revenues, costs and cash flow of the
capital group relating to transactions between entities of this capital group (profits and
losses, related to transactions within this group that are recognized as assets such as
inventories and fixed assets, are completely excluded). Losses on transactions within
the group can mean impairment that requires indication in the consolidated financial
statements.

As a consequence, the shape of the exemplary full consolidation procedure (at the time of ac-
quisition) is presented in the figure below.

Figure 3. Consolidation procedure at the time of the purchase of shares

Source: Own study

The consolidation process (at each balance sheet date following the date of acquisition of shares
guaranteeing control) constitutes both the repetition and continuation of the sequence at the
time of purchase. The reference system is shown below.

Figure 4. Consolidation procedure as at the balance sheet date

Source: Own study

It should be noted that the elements marked with the symbol „*” are not mandatory. Their oc-
currence depends on actual conditions, and in particular on the transactions concluded between
the entities belonging to the capital group and on the relation between the purchase price of
shares and the fair value of the acquired assets (net).

The next section discusses individual stages of the consolidation process in the context of their
impact on the implementation of the information accounting function.

4. IMPACT OF CONSOLIDATION PROCEDURES

ON THE IMPLEMENTATION OF THE INFORMATION FUNCTION

As it was indicated, the information accounting function focuses on the provision of informa-
tion to various user groups in order to support their decision-making processes. However, in
order to understand its correlation with the consolidation process, it is necessary to consider
who is the user of the consolidated financial statements.

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Various groups of users of financial statements are identified in the literature, in particular
(Cole, Branson & Breesch 2011, p. 110):
• auditors,
• shareholders,
• investors,
• employees,
• creditors,
• consultants,
• competitors,
• tax authorities.

However, not all of these users are equally interested in the information from the consolidated
financial statements. For example, investors or lenders will use the consolidated report mostly
to assess the immediate environment of the entity, as well as to assess the opportunities and
threats related to the functioning of the entity within the capital group.

Undoubtedly, the main users of information from the consolidated financial statements are the
owners. Their goal is to obtain (through this report) the answer to the question: how much is
their property worth (which is formally separated into individual companies included in the
capital group). As a consequence, the positive impact of consolidation procedures will be exert-
ed when the application of the procedure makes the presented value real (from the point of view
of the parent entity’s owner).

Apart from the process of identifying the entities belonging to the capital group, the combina-
tion of individual reports concerning entities included in the capital group should be considered
as the first stage of the consolidation procedure. Of course, taking into account the main owner’s
information need, summing up the data of individual entities enables to obtain the aggregated
information about the value of property. However, further analysis shows that simply addition of
individual items can contribute to double recognition of individual categories of assets, sources
of financing, revenues and costs. Therefore, abandoning the consolidated financial statement at
this stage would contribute to the reduction of its usefulness, and thus to diminishing the im-
portance of the information function.

Therefore, after summing up the reports, there should be a stage related to the correction of the
data obtained in accordance with paragraph B86 of the standard (IFRS 10). Initially, capital
adjustments are conducted in order to:
• correct the double recognition of capitals and assets, by removing the acquisition value
of shares held by the parent company in subsidiaries and by eliminating the equity of
individual subsidiaries,
• consider the goodwill / profit on a bargain purchase,
• consider the non-controlling share.

Removal of the purchase price of shares and equity of the subsidiary enables to avoid double
disclosure of subordinate entity’s assets and capitals contributed by owners to the group within
the framework of business financing. The correct implementation of the procedure enables to
obtain the value of „clean” assets and sources of financing. This, in turn, can be the basis for
the evaluation of the entire capital group’s value, and thus the property belonging to its superior
owners.

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However, it should be remembered that capital adjustments cannot always be limited to the re-
moval of the purchase price for shares and equity. If there are differences between the purchase
price and the fair value of the net assets and the acquisition of a majority of shares rather than
an overall block of shares, it will also be necessary to include other elements that will enable to
balance the consolidated financial statements.

The difference in the valuation of the subsidiary’s shares and assets may result in the creation of
a category of goodwill or profit on a bargain purchase. In addition to enabling the balancing of
assets and liabilities in the consolidated statements, both elements will also provide information
about the actual relationships between entities at the time of acquisition of shares and about the
opportunities or threats facing the subsidiary. Therefore, the owner obtains not only data about
the market value of subsidiaries, but also data about its expected future shape.

The value of non-controlling interests determined on the basis of the regulations of IFRS (IFRS
10), and in particular paragraphs B89 and B90, enables not only to fill the accounting gap
created after the initial reduction of assets and liabilities, but also to obtain information that
goes beyond the standard information resource determined in a separate statement of financial
position. While in the case of separate statements, capital is presented from the point of view
of all owners, the separation of non-controlling interests, i.e. the value of capital attributable to
minority shareholders of the subsidiary, in the consolidated statements allows for a clear sep-
aration of the values attributable to owners of the parent entity and donors of the capital (from
outside the group).

The next phase includes corrections related to the effects of transactions within the capital
group. In particular, the following corrections are recognized at this stage:
• revenues and expenses,
• receivables and liabilities,
• unrealized profits retained in inventory,
• unrealized profits retained in other assets.

Pursuant to paragraph B86 of the standard (IFRS10), the aim of the above categories and their
equivalent is to clean the consolidated financial statements from the effects of transactions that
took place within the group in a given period. Again, the implemented procedure not only cor-
rects information errors arising in the first step (involving the collection of financial statements),
but it also provides new data covering aggregated information about transactions conducted
within the group. The owner can easily control both the volume and structure of sales and pur-
chases, as well as the margins realized in these processes.

The last of the listed characteristic elements of the consolidation process covers other correc-
tions, including:
• goodwill impairment test,
• determination of the value of non-controlling shares.

In the event of the acquisition of assets with the book value lower than the value of the acquired
shares, the resulting difference is referred to as goodwill. It is presented as an asset. As already
mentioned, this process (carried out at the time of capital corrections) can be considered pos-
itively in the context of the implementation of the information accounting function. However,
this category also involves the procedure for updating the value of newly created assets.

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Goodwill is reduced in accordance with the IFRS regulations when the value of the cash-gen-
erating unit (on which goodwill is based) is lower than its carrying amount. From the point of
view of the information function’s implementation, accounting departments are forced to verify
the value of cash-generating units, and thus the owner can easily verify whether impairment of
these areas of activity is realized in accordance with the adopted assumptions (whether it does
not require in-depth analysis).

The last of these areas are non-controlling interests. As in the case of goodwill / profit on a
bargain purchase, the identification and disclosure of items in the statement of financial position
enables to maintain the correct performance of the information function. Further actions related
to the revaluation (based on paragraph B94 IFRS 10) enable to obtain aggregated data that di-
vides the generated net assets into the part attributable to owners of the parent entity and to the
remaining part for third parties involved in subsidiaries.

5. CONCLUSION

The essence of the information function is to provide internal and external users with informa-
tion about the entity in a complex manner and enabling them to make rational decisions on the
basis of the obtained information. The article focuses on the external aspect of the information
function - where information (mainly from the financial accounting system) serves users, who
do not have direct access to the functioning of the entity.

The economic situation leads to the formation of various relationships and connections between
enterprises. This causes that the financial results of various entities mix with each other. Eco-
nomic and personal connections between entities do not affect their financial reporting – unlike
capital connections. This makes it possible to present the result of related entities as a whole
- which is justified, because thanks to the possession of a capital share in another entity, the
company becomes (in a sense) an owner of its assets along with the liabilities. Moreover, the
company has the right to participate in profits of this entity. Therefore, these rights are indirectly
attributed to the owners of the parent company. The owners may be interested in comprehensive
information about the property and financial situation, as well as the financial result of the group
(as a whole).

In order to ensure the presentation of this information and the implementation of the informa-
tion function (especially in the external aspect), consolidated financial statements are prepared.
This article presents the procedure for preparing such reports and the impact of specific consol-
idation procedures on the implementation of the information function, taking into account the
areas interested in this information.

REFERENCES

Bedford, N. M. & Onsi, M. (1966). Measuring the value of information-an information theory
approach. Management Services, 1, 16.
Brzezin, W. (1998). Ogólna teoria rachunkowości, Częstochowa, Publisher: Wydawnictwo Po-
litechniki Częstochowskiej.
Butterworth, J. E. (1972). The Accounting System as an Information Function. Journal of Ac-
counting Research, 10(1), 1-27. https://doi.org/10.2307/2490216

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Cole, V., Branson, J. & Breesch, D. (2011). The illusion of comparable European IFRS financial
statements. Beliefs of auditors, analysts and other users. Accounting and Management
Information Systems, 10(2), 106-134. http://dx.doi.org/10.2139/ssrn.1521445
Feltham, G. A. (1968). The Value of Information. The Accounting Review 43(4). 684-696. https://
www.jstor.org/stable/243630
Gos, W. (2008). Wybrane uwagi na temat istoty rachunkowości, Zeszyty Teoretyczne Rachun-
kowości, (44), 69-78.
International Accounting Standards Board (2014). Międzynarodowe Standardy Sprawozdaw-
czości Finansowej. Według stanu na dzień 1 stycznia 2013r., Warszawa, Publisher: SKwP.
International Accounting Standards Board (2017). IFRS 10 Consolidated Financial Statements.
Kunz, B. & Tymińska, A (2014). System informatyczny rachunkowości i jego rola w świe-
tle ustawy o rachunkowści. Financial Science, 3(20), 44-58. https://doi.org/10.15611/
nof.2014.3.03
Kurek, H. & Zielińska, H. (2000), Informacyjna funkcja rachunkowości. Zeszyty naukowe
Akademii Ekonomicznej w Krakowie, 553, 139-149.
Poetschke, H. (2011). Istota systemu rachunkowości. Podstawy Rachunkowości, Poznań, Pub-
lisher: Wydawnictwo Uniwersytetu Ekonomicznego w Poznaniu.
Rówińska, M. (2013). Cechy jakościowe sprawozdania finansowego jednostek gospodarczych.
Zeszyty Naukowe Uniwersytetu Szczecińskiego, 757, 375-382. http://www.wneiz.pl/nau-
ka_wneiz/frfu/58-2013/FRFU-58-375.pdf

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 MANAGEMENT OF INFORMATION
IN ECONOMIC DIPLOMACY
Marek Csabay1

DOI:

Abstract: With regard to diplomacy information of various kind are in the very center of its operation
and at the same time the purpose of existence. The paper discusses from the theoretical perspective the
process of information management in economic diplomacy. The author shortly identifies the mandate
of economic diplomacy in processing information based on the Vienna Convention on Diplomatic Re-
lations from 1961 and focuses on the basic description of main information processes that take place
within economic diplomacy. Part of the paper also discusses the role of information in diplomacy
through areas of diplomatic action that may benefit from the information processes as well as their
main receiving bodies.

Keywords: Economic Diplomacy, Management, Information Processes.

1. INTRODUCTION

D iplomacy does not have a generally accepted theoretical definition, although its nature as
a traditional means of conducting international relations through diplomatic agents is uni-
versally recognized not only by both academic and non-academic resources but also by norms
of international public law. International relations include economic affairs among states; thus,
we may speak of economic diplomacy as a means of their facilitation.

It is important to admit that the practice of economic diplomacy has many variations with some
of them based more on customary praxis and acceptance by the receiving state than by strict in-
terpretation of the Vienna Convention on Diplomatic Relations. Moreover, economic diplomacy
is frequently used as a synonym or portrayal of actions by states that would seem to be better
described as parts of international economic relations (e.g. exports, imports, investments), trade
policy (e.g. application of some trade-political instrument) or other external economic policy
while safeguarding economic interests abroad.

All of the above-mentioned areas of external economic activity have one aspect in common and
that is their significant reliance on accurate, timely and exact information. Diplomacy is by its
nature a mediator and processor of information. It collects and distributes information while
exercising its tasks as an observing, negotiating and reporting arm of the government abroad.

2. DEFINITION OF ECONOMIC DIPLOMACY

Before we proceed to a further elaboration on information management processes in economic

diplomacy, we have made a brief stop at its definition in order to establish a clear framework for
the purposes of this paper. As mentioned already above, the term economic diplomacy is often
generally used in a broader meaning that covers not only international exchange of goods and
1
Institute of International Business, Faculty of Economics and Business, Pan-European University, Temat-
inska 10, 85235 Bratislava, Slovak Republic
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services but also other components of international economic relations including international
movement capital and labor as well as activities leading to coordination or adoption of economic
policies. In a narrower and in our opinion more appropriate sense it is a part of public service,
a government body established abroad based originally on customary practice and later on
written sources of international law in a form of a foreign service governed by a domestic body,
usually a ministry of foreign affairs or, eventually, a ministry responsible for external economic
relations.

Various definitions can be demonstrated by following selected approaches, which of course do

not represent a complete and comprehensive overview of authors dealing with this issue. Bayne
and Woolcock (2004) and Okano-Heijmans (2011) hold that economic diplomacy deals with in-
ternational economic relations. As Woolcock states (2013), economic diplomacy may be defined
by the decision-making process and negotiations in international economic relations “in core
issues such as trade, investment and finance...also included are topics, such as the environment
and development, that have considerable economic implications for policies in that areas”.
These authors refer to trade, commercial, financial, investment and environmental diplomacy
as specific forms of economic diplomacy.

The use of various other economic adjectives forms another element for understanding contem-
porary economic diplomacy. Historically, the first on the scene was the trade diplomacy aim-
ing to promote the development of bilateral commercial relations and protect the commercial
interests abroad. As Carron de la Carrière (1998) states just at the beginning of his renowned
work: ‘la diplomatie économique était autrefois tout simplement une diplomatie commerciale’.
We may find several similar statements commenting on importance of cross-border entrepre-
neurial relations in diplomacy and vice versa elsewhere: commerce was ‘a traditional interest
of diplomacy’ (Barston, 2006) and ‘the importance of diplomacy for business has always been
emphasised’ (Hamilton and Langhorne, 1995).

Slovak school of economic diplomacy based on works by Tóth (1994), Tóth and Horváthová
(2006) or Csabay (2019) tends towards a narrower definition of economic diplomacy as a specif-
ic type of civil service, activity of state bodies responsible for international economic relations
and their representatives in representing the country vis-à-vis other countries focusing on the
achievement of goals and tasks of the country’s external economic policy through negotia-
tions and by other legitimate means. With a general approach of this paper established by the
before-mentioned definition we abstract from authors dealing with specific sectoral types of
economic diplomacy, e.g. commercial diplomacy, trade diplomacy, investment diplomacy or
innovations diplomacy (i. a. van Bergeijk, 2009, Ruël, 2012, Naray, 2008 and others) in further
discussion due to the limitations of this paper.

3. ROLE OF INFORMATION IN ECONOMIC DIPLOMACY

As already indicated in the text above, the core of diplomatic activities resides in areas related
to information and their processing. The mandate in this regard can be found in the wording of
the Article 3 of the Vienna Convention on Diplomatic Relations from 1961, which states that the
functions of a diplomatic mission consist, inter alia, in:
a) Representing the sending State in the receiving State;
b) Protecting in the receiving State the interests of the sending State and of its nationals,
within the limits permitted by international law;

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 MANAGEMENT OF INFORMATION IN ECONOMIC DIPLOMACY

c) Negotiating with the Government of the receiving State;

d) Ascertaining by all lawful means conditions and developments in the receiving State,
and reporting thereon to the Government of the sending State;
e) Promoting friendly relations between the sending State and the receiving State, and
developing their economic, cultural and scientific relations.

Especially the third, fourth and eventually the fifth point shall be regarded as the ground for
gathering, processing and presenting of information of various kind related to inter-state rela-
tions. Information exchange is the essence of cooperative behavior in international relations
materialized in existence of diplomacy. With regard to economic diplomacy this stands in no
lesser extent than it is valid for political diplomacy.

Cooperative behavior exercised by economic diplomacy may acquire various forms: it can be
observed in networking and liaising activities of diplomats, consultations, negotiations, report-
ing, creation of informal and binding regulations, etc. Networking of diplomats is a major vehi-
cle of economic diplomacy, providing room for getting and keeping in contact with partners as
well as exchanging information. Moreover, networking is a way of informally influencing the
decisions made by partners and building positions for negotiations that might follow. Progress
in promoting economic interests and addressing the issues resulting from economic relations
between countries is made rather by applying cooperation methods than by applying a confron-
tational approach (Csabay, 2014).

The use of information in economic diplomacy on both macro (i.e. affecting the business envi-
ronment like setting rules and regimes, negotiating treaties) and micro (i.e. affecting the indi-
vidual companies or business cases) levels of action is similarly variable as the mentioned forms
of diplomatic activity. It spreads from a simple transfer of raw information eventually even to a
sophisticated consultancy, in particular it may receive a form of:
• Providing information;
• Promoting the country, industry or a particular company;
• Promoting the cooperation between businesses and matchmaking;
• Negotiation, lobbying, problem solving and conflict resolution including dispute settle-
ment;
• Advisory and consulting services to government, industries or individual companies;
• Education and training.

In particular, the use of information related to different areas of action exercised by economic
diplomacy is more closely explained in Table 1.

Table 1. Use of information in various areas of diplomatic action

Area of Action Role of Economic Diplomacy
Providing up-to-date, detailed, timely and accurate information for relevant recipients
Reporting on macro and micro levels that is necessary for the success of external economic
operations.
Nation branding and creating goodwill and positive image of the country or industry.
Promotion Organising national or industrial presentations and providing support and assistance for
companies at international fairs and exhibitions abroad.
Matchmaking and promoting of other means of contact development, organizing
Cooperation business missions, economic workshops, negotiating and assisting in negotiations,
organizing and participating in social events, diplomatic entertaining.

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Area of Action Role of Economic Diplomacy

Negotiation in the narrow sense, exercising influence on the decision-making process of
relevant foreign institutions in order to achieve or enhance benefits in accordance with
Negotiation
the country’s economic interests, solving of problems in economic relations, dispute
settlement and conflict resolution in general on both macro- and micro-economic level.
Providing advice on specific questions of external economic relations on both macro-
and micro-economic level, incl. advisory and consultancy to government bodies,
Consulting
industries, providing basic advice to companies in the process of establishing and
developing business abroad, etc.
Education Participation in territorially focused business seminars and training of diplomatic staff.
Source: author

4, INFORMATION PROCESSES IN ECONOMIC DIPLOMACY

The prevailing part of diplomatic activities in the field of economic diplomacy - whether pro-
tection of state economic interests, representation and representation of the state, preparation of
negotiations and negotiations with foreign partners, creation of international regime and rules,
lobbying, conflict and problem solving, promotion, training activities, counseling and messag-
ing - they take place within two basic and traditional categories of diplomatic activities that are
closely interrelated: networking activities (or liaising) and reporting activities (or intelligence).

Diplomatic networking can be described as a contact with foreign and domestic partners, which
are relevant for the fulfillment of the objectives of economic diplomacy. Exercising economic
diplomacy in a foreign territory usually requires meeting with three categories of partners:
• officials and public servants of the receiving state,
• members of the diplomatic corps in the country of accreditation,
• representatives of the private (business) sphere.

Within the diplomatic mission, there is a natural division of labor between its members, de-
pending on their status. Part of the networking activity of economic diplomacy is covered by
the head of the mission (ambassador), e.g. in relation to the heads of state or government and
members of the government. Lower levels shall be covered by delegated staff, either in their par-
ticular capacity giving them responsibility for a certain area of economic affairs or based on an
instruction from the head of the mission. In addition to obligatory contacts with representatives
of ministry of foreign affairs of the receiving state, the former case includes mostly representa-
tives of economic ministries, specialized government agencies (trade promotion organizations,
export credit agencies, etc.), customs authorities, standardization bodies and other relevant in-
stitutions. Representatives of international economic organizations may also be included in this
category.

The partners in the accredited diplomatic corps are, according to the appropriate level, the other
heads of diplomatic missions or economic diplomats. Partners from the private sector form a
relatively heterogeneous group, ranging from business associations and economic, industrial or
trade chambers through financial institutions, economic think-tanks, exhibition centers, con-
vention centers and media companies to individual entrepreneurs active in business with the
diplomat’s home country.

Networking activities take place in formal environments such as meetings, workshops, confer-
ences, seminars, exhibitions, etc., but also in informal social events, which are inherently part
of diplomacy.

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 MANAGEMENT OF INFORMATION IN ECONOMIC DIPLOMACY

An important point is that a similar extent of contacts must be developed by economic diplomacy not
only in the country of operation, but also at home in the sending state since both represent a source
of impulses for its activities and – more importantly – a list of potential recipients of its outputs.

Establishing contacts in the three above-mentioned categories is one of the primary tasks that
an economic diplomat must master. Contacts represent a primary, although not the only, source
of information for an economic diplomat. The second main source is data and information con-
tained in political and analytical documents, registers and databases. Since diplomacy as such,
including its economic branch, is a system of handling information, together these two source
groups represent inputs into the information processing (see Figure 1).
Networking Other sources
I. phase ▼ ▼
Input Information gathering
▼
▼
Verification of information and analytical activity
II. phase creating added value
Processing ▼
Decision on recipients
▼ ▼
▼ ▼
Reporting Networking
III. phase
▼ ▼ ▼ ▼
Output
Sending regular or Consulting services Cooperation Negotiation or other
irregular information and advisory activities diplomatic activities

Figure 1. Economic Diplomacy as an Information Process

Source: author

The information process takes place according to the instructions that economic diplomacy
fulfills in the territory of accreditation. Instructions set out the priorities that individual actors
in foreign territories pursue - in some cases it may be a search for business or investment oppor-
tunities, in others, an establishment of a trade regime or other economic cooperation.

The first phase of the information process includes the collection of information from network-
ing and other sources, i.e. it takes place as part of a routine activity, which is normally carried out
by economic diplomacy in accordance with the instructions sent. The information process can
also be initiated by a specific impulse from the domestic environment, either from the manage-
ment department or from the business environment, from which economic diplomacy receives
an inquiry. The range of information obtained by economic diplomacy is very diverse - from
information on economic developments in the territory, on market developments, on prepared or
implemented economic policies, changes in business legislation, through customs information,
technical standards, sanitary and phytosanitary norms, import rules, demands and supplies, all
the way to requests to verify information about potential and existing business partners.

The second phase is the process of verification and analytical evaluation of obtained informa-
tion. While the first phase places requirements on the economic diplomat with regard to his / her
communication and social skills, the second phase requires the ability of analytical and critical
evaluation of the obtained information in relation to its content and source, and thus verification
of its relevance, completeness, truthfulness and credibility. The aim of the analytical activity
is to create added value resulting from the local expertise of the diplomat. On this basis, it is

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possible to make a decision on possible recipients of the information, unless they are determined
on the basis of the instruction.

The list of recipients may include the head of the mission, headquarters (the respective minis-
try, its responsible managing unit or territorial desk), other state institutions or private sector
entities. In the case of a decision on recipients of information containing business opportunities
obtained by economic diplomacy through its own initiative (it means when not responding to a
particular request from a particular company), transparency and equal opportunities between
potential business beneficiaries must be strictly maintained. The usual procedure in such a case
should be, if circumstances allow it, to give the information to a representative business associ-
ation or a chamber rather than directly forward it to a particular entrepreneur.

The outcome of the information process is intelligence activity – reporting by means of sending
regular and irregular information to the headquarters or to a designated recipient. The intelli-
gence activity of economic diplomacy results either from the requirements defined in general
instructions, or from the ad hoc requirements from the managing department or the business
sphere, or – eventually – from the findings gathered on its own initiative. Regular reports in-
clude annual surveys of economic developments in the country or countries of operation, up-
dates of the territory’s basic information or an overview of major economic events (such as trade
fairs, contracting B2B and B2G events, innovation and investment conferences, etc.). Irregular
reporting includes i.e. information relevant for visits and negotiations by state officials and other
information based on the requirements of state institutions as well as any business-related in-
formation intended for the private sector. In most cases, the output is either in form of sending
information for further processing by the recipient or in form of formulating recommendations
to the state authorities or consultancy services to the business sphere.

An alternative outcome of the information process is the follow-up networking in the form of
cooperative events of different nature for state or private participants, eventually continuation
of negotiations or other diplomatic activities in the never-ending cycle of gathering, processing
and sending information through economic diplomacy as a negotiating arm of the state while
fulfilling the tasks and objectives of the external economic policy.

5. FUTURE RESEARCH DIRECTIONS

The aim of the paper represented at the same time its most significant limitation – by describing
the theoretical framework of the processing of information within and by the economic diplo-
macy it omitted a deeper analysis of its practical application. At the same time, this defines the
area for possible future research of this topic e.g. by means of comparative analysis of practical
application of various information processes and management of information flows in different
national systems of economic diplomacy.

6, CONCLUSION

Economic diplomacy, as well as diplomacy in general, relies significantly on accurate, timely and
exact information. Diplomacy is by its nature a mediator and processor of information. It collects
and distributes information while exercising its tasks as an observing, negotiating and reporting
arm of the government abroad. The article 5 of the Vienna Convention on Diplomatic Relations,
which defines the functions of the diplomatic mission, forms the ground for gathering, processing

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and presenting of information of various kind related to inter-state relations. At the same time, we
can state that information exchange is the essence of cooperative behavior in international relations.

The use of information in economic diplomacy on both macro (i.e. affecting the business en-
vironment like setting rules and regimes, negotiating treaties) and micro (i.e. affecting the in-
dividual companies or business cases) levels of action spreads from a simple transfer of raw
information to a sophisticated consultancy, which may receive a form of providing information;
promoting the country, industry or a particular company; promoting the cooperation between
businesses and matchmaking; negotiation, lobbying, problem solving and conflict resolution
including dispute settlement; advisory and consulting services to government, industries or
individual companies; or even education and training.

As described in the last part of the paper, information management within the economic diplo-
macy takes place in three phases – information gathering from networking and other sources
as an input into the system, information processing including the verification, evaluation and
analysis of gathered information and reporting to various recipients from both public and pri-
vate sector or other diplomatic activity as an output.

ACKNOWLEDGMENT

This research was supported by the Grant Agency Academia Aurea [GA/7/2019].

REFERENCES

Barston, R. P. (2006). Modern Diplomacy. Harlow: Pearson Education

Bayne, N. & Woolcock, S., (2004). The New Economic Diplomacy: Decision Making and Ne-
gotiation in International Economic Relations. Hampshire: Ashgate
Van Bergeijk, P. A. G. (2009). Economic Diplomacy and the Geography of International Trade.
Cheltenham: Edward Elgar Publishing Limited
Carron de la Carrière, G. (1998). La diplomatie économique: le diplomate et le marché. Paris:
Economica
Csabay, M. (2014). Export-Promoting Policy and Economic Diplomacy: Contemporary Con-
cepts and Instruments. In: Sipko, J., Dudáš, T. & Csabay, M. (2014). International Eco-
nomics and Finance. (pp. 82-149) Praha a Bratislava: Wolters Kluwer
Csabay, M. (2019). Ekonomická diplomacia. Teoretické východiská, riadenie a prax v medz-
inárodnom podnikaní. Bratislava: Wolters Kluwer
Hamilton, K. & Langhorne, R. (1995) The Practice of Diplomacy. London: Routledge
Naray, O. (2008). Commercial Diplomacy: A Conceptual Overview, 7th World Conference of
TPOs, The Hague
Okano-Heijmans, M. (2011). Conceptualizing economic diplomacy: the crossroads of interna-
tional relations, economics, IPE and diplomatic studies. In: The Hague Journal of Diplo-
macy, Vol. 6, No. 1, pp.7–36
Ruël, H. (Ed.). (2012). Commercial Diplomacy and International Business. A Conceptual and
Empirical Exploration. Bingley: Emerald Group Publishing Ltd.
Tóth, Ľ. (1994). Protokol a etiketa v diplomacii a obchode. Bratislava: THB
Tóth. Ľ. & Horváthová. K. (2006). Hospodárska diplomacia. Bratislava: Sprint
Woolcock, S. (2013). Economic Diplomacy. In: Kerr, P. & Wiseman, G. (Eds.): Diplomacy in a
Globalizing World. Theories and Practices. (pp. 209-225) Oxford: Oxford University Press

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 WORLD BANK IN THE WORLD’S ECONOMY

Irena Andreeska1

DOI:

Abstract: The World Bank is one of the largest world’s resources for financing the countries in devel-
opment, whose main target is helping poor countries with the use of their financial resources and large
experience. In today’s world there are at the same time very rich and very poor and the challenge for
reducing poverty is very big. The World Bank works on going through these differences by helping the
governments of the member countries in their intentions to invest into education and health centers, to
provide water and electrical energy, as well as on the fight against illnesses such as AIDS and malaria,
protection of living environment and providing a decent life standard. Financial help from World Bank
for the Republic of North Macedonia provided realization of line of activities as well as continuing of
international liquidity of the country.

Keywords: World Bank, Developed Countries, International Monetary Fund, Financial Transactions,
Economic Growth.

1. INTRODUCTION

T he World Bank is a world-class organization focused on social and economic growth and
has invested hundreds of billions of dollars in developing countries. The World Bank pro-
motes development through access to information resources, advisory services, concessional
lending to poor countries, private sector loans, targeted investment funds, microcredit, develop-
ment initiatives, investment insurance and international arbitration regulations. The core mis-
sion of the World Bank is to: support the economic and social progress of developing countries,
so that their people can live a better and more fulfilling life. On average, annually, the Bank
lends approximately $18 billion to the governments of about 80 developing countries to support
more than 225 projects. In addition to loans, the Bank offers technical assistance and govern-
ment policy advice.

«Our dream is a world without poverty» is the primary motto of the institution that speaks of a
better tomorrow, promising better education and a better life in general.

The subject of explicit elaboration here will be the World Bank, relations with its sister institu-
tion - IMF, analysis of activities in developing countries and the most important segment - credit
arrangements that the Republic of Macedonia has established with the World Bank.

2. INTERNATIONAL MONETARY FUND VERSUS WORLD BANK

The Bretton Woods institutions, collectively referred to as the International Monetary Fund and
the International Bank for Reconstruction and Development. The World Bank, was created in
1944 to maintain international liquidity and restore the system of convertible currencies. The
international financial community has imposed primary responsibility to the World Bank for
1
Komercijalna banka AD Skopje, Orce Nikolov 3, 1000 Skopje, PVPU Euro College Kumanovo, North
Macedonia
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financing economic development. The Bank’s first loans were intended to finance the rebuild-
ing of Western Europe’s war-torn economies. When the goal was met, attention was directed to
helping poor countries around the world.

The International Monetary Fund and the World Bank are not affiliated in any formal way, but
often coordinate economic activities in the targeted regions.

The key differences between the International Monetary Fund and the World Bank are shown
in the following comparative analysis:

Table 1. Features and Objectives of the World Bank and International Monetary Fund
World Bank International Monetary Fund
Promote economic development of poor Promote a global agenda for maintaining
countries in the world. international monetary stability.
Special financial assistance through the Assistance to all Member States - developed
International Development Association (IDA) and developing countries - who are
for poor countries with a GDP per capita of temporarily facing balance-of-payments
less than $865 per year. problems.
Encouraging private enterprises in developing Replenish Member States’ currency reserves
countries through the activities of the by allocating special drawing rights in
International Finance Corporation (IFC). proportion to their quotas.
Financial resources acquired through lending Financial resources provided on the basis of
on the international bond market. paid quota of Member States.
It owns authorized capital of $ 184 billion, of Owns fully available quota of 145 billion
which member states pay about 10%. SDR (about $ 215 billion).
7000 employees from 181 Member States. 2300 employees from 184 Member States.
The President of the Bank is always a US The IMF President is a citizen of one of the
citizen. Western European countries
Priority goals: Priority goals:
Investing in human capital by increasing the Consultations and cooperation between
amount of investment in education. Member States to resolve international
Supporting social development and institution monetary problems.
building as key elements of poverty Encourage balanced growth in international
reduction. trade with a goal to achieving high
Increasing the ability of government bodies employment rates, real income growth, and
to provide quality, efficient and transparent productive resource development.
services. Exchange rate stability and avoiding
Supporting private business development. competitive currency depreciation.
Multilateral system of international
payments, in order to avoid foreign exchange
restrictions.
Short-term financial resources to correct
short-term disturbances in the balance of
payments.
Source: William A Delphos: Inside the World Bank, Washington, 1997, page 28

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 WORLD BANK IN THE WORLD’S ECONOMY

These two institutions, often equated by the public, are obvious contrasts that highlight dif-
ferences in their cultures, styles and missions: one is dedicated to eradicating poverty and the
other to maintaining global stability. Unlike the IMF, which sends its resident representative
to developing countries, a significant portion of the World Bank staff lives permanently in the
country they are trying to help.

2. WORLD BANK ACTIVITIES IN DEVELOPING COUNTRIES

According to the set criteria of the World Bank, national economies are classified into three
groups: low developed, middle developed and highly developed economies. Underdeveloped
and mid-developed economies are often referred to as developing economies (developing coun-
tries). The terms industrialized or developed refer to states whose economies are highly de-
veloped. This classification, statistically expressed in accordance with the projections for the
average annual GDP per capita by country, implies:
• $ 765 for low-income countries,
• From $ 766 to $ 3,035 for middle- to low-income countries,
• From $ 3,036 to $ 9,385 for intermediate - advanced countries,
• $ 9,386 for highly developed countries.

The graphic story of the World Bank’s average GDP per capita by individual countries is as follows:

Graph 1: Classification of countries according to level of development

Source: The World Bank: Getting to know the World Bank, Washington D.C. page 42

The main question in which group from the presented graphical classification according to the
degree of development would appear the states as Indonesia, Bangladesh, Slovenia and Croatia?

The answer would be: Indonesia and Bangladesh as representatives of certain poor regions
of East and South Asia are classified in the group of underdeveloped countries, Croatia and
Slovenia of the region of Europe are ranked as follows: Croatia in the group of middle-to-low
developed with intension to middle to high developed countries and Slovenia in the group of
medium-high-developed countries.

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The Bank’s loans are usually approved with a repayment period of 20 years and a grace period
of 5 years from the date the loan is used.

In order to increase the volume of funding for less developed countries, the Bank began co-fi-
nancing various projects in the mid-1970s. It co-finances with public national and international
development agencies, commercial banks and other development financing institutions.

3. THE RELATIONS OF THE REPUBLIC OF NORTH MACEDONIA

WITH THE WORLD BANK

The Republic of North Macedonia belongs to the group of middle-low-developed countries

according to the average per capita income of $ 2,380 per year. It is located at the junction
crossing important transport routes linking Central and Eastern Europe with South and South-
east Europe. The small territory, the relatively high degree of economic openness (foreign trade
accounts for 90% of GDP), surrounded by neighboring countries make the country susceptible
and vulnerable to external influences that are particularly relevant.

The state has had a long transition from a centrally planned to a market economy, with efforts
for economic reform in many sectors often interrupted. The primary objective of the Republic
Macedonia is to become a member of the European Union (EU). It was the first country to sign
a Stabilization and Association Agreement with the EU in April 2001, and was granted candi-
date status in November 2005.

With the Republic of Macedonia’s membership in the World Bank in 1993, and meeting all the
necessary requirements, the World Bank Board of Directors provided realization of many pro-
jects intended for private sector development, infrastructure improvement and providing social
welfare in the country.

By analyzing the Republic of North Macedonia’s established arrangements with the World Bank
and the country’s economic growth projections with financial assistance from the Bank, we will
recognize its particularly important role in stimulating the functioning of crucial sectors.

4. CONCLUSION

The World Bank Group today represents one of the most significant sources of international fi-
nancial support for development. Its primary task is to provide a combination of funds and ideas
to improve living standards and eliminate poverty in the many developing countries in which it
operates. The conditions under which Bank loans are approved are extremely favorable, and no
developing country could obtain a loan under these terms from any other financial institution,
especially those held by private equity. The Bank is not tasked to finance the development of
developed countries, but to provide loans to countries in those regions that do not have the eco-
nomic capacity to withstand borrowing under the usual conditions of the international capital
market, nor have the bargaining power to obtain favorable loans from well-known financial
institutions.

Despite significant World Bank engagement, the world is still far from overcoming the problem
of poverty, given that about 3 billion people on the planet survive on less than $ 2 a day and
about 1.2 billion on less than $ 1 a day.

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The Republic of North Macedonia is in a phase of economic development which requires coop-
eration with the World Bank.

The arrangements the Republic of North Macedonia has with the World Bank are financing
structural reforms that have had long-term results.

More significant reforms have been made towards achieving macroeconomic stability, main-
taining a stable exchange rate, reducing the budget deficit, building a modern legislative frame-
work, promoting the private sector, establishing a social protection system, creating effective
banking regulation, of the privatization process.

The economic policies and reforms implemented in cooperation with the World Bank should
be consistent with the reforms and policies of convergence and integration into the European
Union, as a long-term strategy of the Republic of Macedonia.

REFERENCES

Irena Andreeska, Doctoral dissertation, The global financial architecture and the phenomenon
of poverty, St. Ciril and Methodius, 2010, Skopje
Biljana Sekulovska-Gaber: International Organizations and Integrations, Faculty of Economics,
Skopje, 2003
Irena Kikerkova: International Economics, Faculty of Economics, Skopje, 2003
Todor Todorov, Armen Kadriovski: International Economics, Skopje, 2006
Todor Todorov, Dimo Dimkov: International Management, Faculty of Economics, Prilep, 2001
Branislav Pelevic: International Economic Relations, Faculty of Economics, Belgrade, 1999
Alan M. Rugman and Alain Verbeke: Global Corporate Strategy and Trade Policy, London and
New York 2003

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 SILICON SAVANNAH – INNOVATION ECOSYSTEMS OF AFRICA
WITH A SPECIAL REGARD TO KENYA
Szabolcs Szolnoki1
Árpád Papp-Váry2

DOI:

Abstract: In Africa, where 60% of the population is under 25 years, the enormous and diverse business
environment suffers from a number of problems, ranging from access to funding to gaps in government
support and weaknesses in the education system. Undoubtedly, there is the need for better governance
among the continent’s nations in order to catch up and to develop creative economies with high added
value products. Considering Kenya, the information and communication industry can be a breakthrough
point thanks to positive, “enabler regulation” and governmental support. The authors believe that the
IT sector could serve as an “escape card” from the captivity of history and geography. Astonishingly,
85% of the population is employed in agriculture while the country is called ”Silicon Savannah”. 43
financial institutions, around 1000 startups and an emerging FinTech ecosystem can be identified with
several dominant Chinese and Indian corporates. Furthermore, Google, IBM and other tech multina-
tionals are also present. IBM opened its 12th development center in Nairobi, Kenya’s capital found in
1899 with a current population of 5.6 million. Large technology companies are promoting business and
idea competitions across the continent in the field of internet and communication technologies. Since
half of the 580.367 km2 country is arid or semi-arid, the Kenyan market is also interesting for foreign
AgriTech companies besides the IT industry. It is indisputable that large companies cannot replace the
government in creating the basis of a prosperous business environment, nonetheless they do have a
beneficial effect on the building of networks and providing opportunities for ideas to emerge. Univer-
sities can achieve similarly positive results. The Stanford alumni network has already been successful
in Africa. By the coordinated activities of former students outside California the organization creates
jobs, generates revenue, and has a positive social impact. Kenya has undergone significant political,
structural and economic reforms over the past decade, largely contributing to sustainable economic
growth and social development. The August 2010 Constitution introduced a new system of political and
economic governance that promoted a greater level of investments, strengthened accountability and the
development of local public services. Forecasts for the near future show that GDP growth is expected to
rise to 5.8 percentage points in 2019, supported by a boom in agriculture, a more favourable business
climate and a reduction of political uncertainty. In the medium term, GDP growth is projected to 6% in
2020, depending on private sector credit growth, ongoing remittances, debt and expenditure manage-
ment and global oil prices. However, the main challenges are still poverty, inequality, climate change,
economic exposure and vulnerability to internal and external shocks. Kenya has every chance of be-
coming a success story for Africa through its growing young population, dynamic private sector, highly
skilled workforce, better infrastructure, new constitution and central role in East Africa. Key economic
and social goals include reducing the poverty rate and inequality, improving governance, creating co-
hesion between market needs and educational curricula, adapting to climate change, achieving rapid
and sustained growth in investment and corporate productivity.

Keywords: Kenya, African Startups, Innovation, Startup Savannah.

1
University of Pécs, Pécs, Ifjúság útja 6, 7624 Magyarország, Hungary
2
Budapest Metropolitan University, Budapest, Nagy Lajos király útja 1-9, 1148 Magyarország, Hungary
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1. KENYA IN THE 21ST CENTURY – DEVELOPMENT GOALS

T he eighty-five percent of the population works in agriculture; smallholder farming is wide-

spread. Half of the country lies in an arid or semi-arid area, therefore advanced irrigation
technologies, agricultural training programmes, organic products and materials, machines and
equipment facilitating water retention offer a good opportunity to enter the Kenyan market –
nevertheless, European and non-European competitors are also present.

Forty-three financial institutions are registered in Kenya; therefore, it is also called Silicon
Savannah. There are more than 1000 operating start-up enterprises and the FinTech (financial
technology) industry plays a prominent role. The field is dominated by Chinese and Indian com-
panies, but Google, IBM and other multinational IT companies are also present. IBM opened
its 12th development centre in Nairobi, the capital of Kenya, founded in 1899, with a current
population of approximately 5.6 million people. Google is active in Kenya and Northern Africa
as well. Large technology enterprises in the field of internet and communication technologies
announce business and idea competitions all around the continent. Large enterprises cannot
perform governmental tasks required for the development of the business environment, but
they do have a beneficial effect on the creation of a network of connections, giving room to the
unfolding of ideas. Universities may achieve similarly positive results. For example, the coop-
eration of former students in the framework of the Stanford alumni network creates jobs, gen-
erates incomes and has a positive social impact outside California, and they have implemented
successful projects in Africa as well.

Kenya has also implemented significant political, structural and economic reforms in the past
decade, which mostly facilitated sustainable economic growth and social development. Howev-
er, the most important challenges are still poverty, inequality, climate change and the exposure
of the economy, its vulnerability by internal and external shocks.

Kenya’s recent political reform originates from the adoption of the new constitution in 2010,
which introduced bicameral legislature, decentralised county government, and judicial and elec-
toral bodies authorized by constitution. As a result of the latest presidential election on 17 October
2017, President Uhuru Kenyatta started his second and final five-year term on 28 November 2017.

The constitution of August 2010 introduced a new system of political and economic governance
with the aim of facilitating bigger investments, strengthening accountability and the building of
public services at the local level.

While economic activity deteriorated after the 2008 global recession in economy, growth has
gained new momentum in the past five years, reaching 5.7 percentage points in 2018. Economic
growth has been facilitated by a stable macroeconomic environment, low oil prices, the boom
of tourism, remittances and the government-led infrastructural development initiative.

According to forecasts for the near future, the increase of the gross domestic product (GDP) is
expected to increase to 5.8 percentage points in 2019, which is fuelled by the boom of agricul-
ture, a more favourable business climate and easing political uncertainty. In the medium term,
the growth of the GDP must increase to 5.8 percentage points in 2019 and 6 percentage points
in 2020, which depends on private sector credit growth, increasingly strengthening remittances,
the management of public debt and spending, and global oil prices.

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WITH A SPECIAL REGARD TO KENYA

General information

Capital city: Nairobi

Area: 580.367 km2

Population: 44,4 million people

Currency: Kenyan shilling (KES)

Languages: Swahili, English

Figure 1: A map of Kenya. Source: Free World Maps

In the long term, the adoption of prudent macroeconomic policies helps to preserve Kenya’s
robust economic performance. This includes fiscal and monetary prudence and the reduction of
the deficit to 4.3 percentage points for 2019/2020 according to the Medium-Term Expenditure
Framework. The consolidation of the budget must avoid jeopardising state investments into
critical infrastructure and economic production capacities.

Table 1. The most important economic indicators

Unit of
Name of indicator 2012 2013 2014 2015 2016 2017
measurement
Value of GDP
Billion EUR 100.22 107.83 115.64 123.58 132.50 141.48
(current price)
Change of GDP (real) % 4.56 5.88 5.36 5.72 5.87 4.89
Per capita GDP at
EUR/capita 999.07 1064.80 1156.65 1173.91 1267.01 1306.26
current prices
Inflation (HICP) % 9.38 5.72 6.88 6.58 6.30 -
Unemployment rate % - - - - - -
Export value Billion EUR 9.71 9.51 9.74 9.20 8.58 9.04
Import value Billion EUR 15.52 15.85 17.57 15.31 13.99 16.53
FDI outflow Billion EUR 0.21 0.17 0.07 0.21 0.14 0.22
FDI inflow Billion EUR 1.20 0.97 0.71 0.54 0.34 0.58
Source: Export Hungary

The long-term development plan appears in the so-called ”Vision 2030” document announced
by the president in December. The four major development priorities are: manufacturing, uni-
versal health care, affordable housing and food security.

Kenya has already met certain objectives outlined in the Millennium Development Goals
(MDG). The country has achieved results in the reduction of child mortality, increasing the
enrolment ratio in primary education, and closing the gender pay gap in education. The state
intervention and the increase in expenditure promise positive results in the fields of health care
and education. The development of a fairer health care system is facilitated by decentralised
health care and free birth mother care in all public health facilities.

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Kenya has every chance of becoming one of Africa’s success stories as a result of its ever-grow-
ing young population, dynamic private sector, highly skilled workforce, better infrastructure,
new constitution and the country’s central role within East Africa. The most important econom-
ic and social goals are: decreasing the poverty rate and inequalities, developing governance,
creating cohesion between market demand and the curriculum of education, adaptation to cli-
mate change and achieving a rapid and sustainable increase in investment and the productivity
of companies.

2. THE WORLD BANK AND KENYA

The strategy of the World Bank Group (WBG) in terms of Kenya is to support the government’s
”Vision 2030” strategy to eradicate extreme poverty and increase welfare among the whole
society. The Country Partnership Strategy (CPS) FY14-18 was revised in June 2017 and focus-
es on the development of economic competitiveness and sustainability and the protection and
assistance of vulnerable people. The CPS extended to 2020 expects 1 billion USD investment
by the International Development Association (IDA), the International Bank for Reconstruction
and Development (IBRD), the International Finance Corporation (IFC) and the Multilateral
Investment Guarantee Agency (MIGA).

IDA’s current portfolio includes 35 projects with support totalling approximately 6.5 billion
USD – this includes 28 national projects (5.3 billion USD) and seven regional projects (1.2
billion USD). The greatest investments are allocated for infrastructural developments, while
the social sector takes the second place. Further fields supported through projects include agri-
culture; decentralisation; government; justice, law and order; disaster risk management; forced
migration; private sector development; development of statistical capacity.

A few examples of projects accepted recently:

• Kenya Social and Economic Inclusion Project (250 million USD), providing support for
poor and vulnerable households by facilitating their access to services and expanding
their social safety net;
• Kenya Industry and Entrepreneurship Project (50 million USD), increasing the innova-
tive capacities and productivity of Kenyan enterprises.

IFC’s investment portfolio in Kenya amounted to 951.3 million USD on 30 June 2018. Seventy
percent of this portfolio focuses on the financial sector, health care, manufacturing, services to
farmers and infrastructural projects. IFC plans to improve the investment climate and provides
expert advice especially in four priority areas announced by President Kenyatta: manufactur-
ing, affordable housing, general medical care for everyone, food security. They would support
access to financing, sustainable business activities, public-private partnerships (PPP) and the
improvement of the investment climate by approximately 25.6 million USD.

In the framework of MIGA’s portfolio, 148 million USD has been invested, providing financial
resources for three projects launched in order to the private investments in the energy sector. In
the near future, a major transport project worth approximately 1 billion USD and two energy
sector developments are expected. MIGA works in close cooperation with a unit of the Ministry
of Finance specialised in PPP matters in order to promote high priority projects, especially in
the field of infrastructure development and housing.

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WITH A SPECIAL REGARD TO KENYA

3. KENYA NATIONAL INNOVATION AGENCY

Kenya National Innovation Agency (KENIA) is a state company that belongs to the Ministry of
Education, and was established under the provisions of the Science, Technology and Innovation
Act. The basic role of the Agency is to develop and manage Kenya’s National Innovation Sys-
tem. The Agency is therefore responsible for the coordination, promotion and regulation of the
national innovation ecosystem.

In accordance with government policies regarding the encouragement of innovation, entrepre-

neurship and self-sustaining economy, the Agency works on the embedding of scientific, tech-
nological and innovation management developments in the national production system. The
Agency develops and manages the Kenya National Innovation System, thus institutionalising the
relationship between universities, research institutes, the private sector, government and other
sectors. It draws up national standards for innovation based on international best practices, and
fosters innovative ideas created by individuals, educational institutions and the private sector.

Moreover, the Agency cooperates with other relevant institutions in the creation and regular up-
dating of an innovational database. The Agency is also going to increase the investors’ knowl-
edge and consciousness regarding intellectual property rights, create and maintain an award
system to reward the development of novel innovations in a presidential or other form, and be-
come an executive of national innovation and trade policies. The Agency incubates innovation
and development projects, creating synergies.

4. KENYA INDUSTRIAL RESEARCH

AND DEVELOPMENT INSTITUTE (KIRDI)

The Kenya Industrial Research and Development Institute (KIRDI) is a state-owned company
supervised by the Ministry of Industry, Trade and Cooperatives. Its task is to research and de-
velop industrial and related technologies in a multidisciplinary way, including mechanics, elec-
tronics, chemicals, ceramics and building materials, food, leather, textile, ICT, environment and
energy. The developed technologies are handed over to micro, small and medium enterprises
and large enterprises to increase their competitiveness and productivity.

The aim of Vision 2030 is to make Kenya a newly industrialising middle-income country which
will be able to provide all its citizens with a high standard of living in a clean and safe environ-
ment by 2030. In order to facilitate the implementation of the strategy, KIRDI’s transformation
into a world-class research organization was identified as one of the priority projects of the man-
ufacturing sector. KIRDI’s transformation into a world-class research organization involves the
development of the research, technology and innovation ecosystem and the skills development
of human capital (scientists and engineers).

Research, technology and innovation play a key role in the achievement of the four big ob-
jectives. The increasing of the added value can only be achieved through research, product
development and the application of modern production technology. Increasing the share of man-
ufacturing industry in the GDP largely depends on the productivity and competitiveness of
manufacturing industry. Productivity and competitiveness mostly depend on the type and na-
ture of applied technology. Food security and nutrition depends on agricultural productivity and
post-harvest farming, which are also largely based on technology. It is necessary to decrease

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the costs of agricultural and post-harvest machinery by producing them locally. The provision
of affordable universal health care and national coverage largely depends on the availability and
costs of diagnostic equipment and medicines. Producing diagnostic equipment and medicines
locally increases costs, thus contributing to their availability and affordability. The provision
of affordable housing mostly requires the use of innovative technologies that may decrease
the costs of building materials. KIRDI develops value-added manufacturing technologies and
forwards these to the SME sector. The transferred technologies increase the productivity and
competitiveness of enterprises, thereby enabling them to grow, create jobs and increase their
contribution to the GDP.

5. CHANDARIA BUSINESS INNOVATION AND INCUBATION CENTRE

The Centre aims to be an internationally recognised business innovation and incubation in-
stitution providing mentoring and encouragement for the students and employees of Kenyatta
University and other Kenyan citizens, in order to make them the engine of economy and future
employers.

The Chandaria Business Innovation and Incubation Centre (Chandaria-BIC) was launched in
July 2011 with the mission of supporting Kenya’s pioneering and innovative ideas. Its focus is
to support 120 start-up enterprises each year (70% by Kenyatta University students and 30% by
external applicants). Innovators receive important services such as business development con-
sulting, initial capital, offices, phones, high-speed internet, stationery, administrative support,
professional guidance and mentoring for 12 months with an extension option. They define vari-
ous milestones for each enterprise selected for participation in the programme that they have to
reach in order to receive further support.

REFERENCES

Marshall, Tim (2018): A földrajz fogságában, Tíz térkép, amely mindent elmond arról, amit
tudni érdemes a globális politikai folyamatokról (”Prisoners of Geography. Ten Maps That
Tell You Everything You Need to Know About Global Politics”), Park, Budapest, ISBN:
9789633554111
Pasquier, Martin (2013): Africa is the Future, but their Innovation Ecosystems Need Help,
retrieved: 11.04.2019., https://www.innovationiseverywhere.com/africa-future-innova-
tion-ecosystems-need-help;
Külgazdasági és Külügyminisztérium, Külkereskedelmi Főosztály (”Ministry of Foreign Af-
fairs and Trade, Department of Foreign Trade”), Export Hungary, retrieved: 13.04.2019,
http://exporthungary.gov.hu/
The World Bank In Kenya; retrieved: 15.04.2019., https://www.worldbank.org/en/country/ken-
ya/overview
Kenya National Innovation Agency website, retrieved: 18.04.2019., http://www.innovationagen-
cy.go.ke/
Kenya Industrial Research and Development Institute (KIRDI) website, retrieved: 19.04.2019.,
https://www.kirdi.go.ke/
Chandaria Business Innovation and Incubation Centre website, retrieved: 19.04.2019., http://
www.ku.ac.ke/chandaria-biic/
Kenya Physical Map, Free World Maps, retrieved: 19.04.2019., http://www.freeworldmaps.net/
africa/kenya/map.html

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 APPLICATION OF NEW INFORMATION
AND TELECOMMUNICATION TECHNOLOGIES
IN RUSSIAN EDUCATIONAL MANAGEMENT
Evgeniya Yazovskikh1
Oksana Yatsenko2

DOI:

Abstract: According to the state program “Information Society (2011-2020)”, one of the priority areas
in Russia is to improve the quality of education based on information technologies.
After adopting the new federal law “On Education in the Russian Federation”, the development of
new information and telecommunication technologies has become an urgent need. The law specifies
the rules that allow educational institutions to use e-learning, distance learning technologies, and a
network form for implementing educational programs. New information technologies in education have
launched new opportunities: self-study, distance learning, tutoring, consulting, coaching.
Modern globalization of higher education, a two-tier system, the standards of the third generation and
three plus actualize the problem of ensuring the quality of education, forming for the graduates a pool
of competencies that meet the challenges of the labor market. The problem of the quality of training
bachelors and masters, their postgraduate employment is of particular importance in connection with
the orientation of educational institutions to the practical implementation of acquired competencies.

Keywords: Information Technologies, Educational Management, Telecommunication Technologies,

Web-Quest.

1. INTRODUCTION

A t present, the role of information technologies in people’s lives has significantly increased.
Modern society is involved in the general historical process, called informatization. This
process includes the accessibility of any person to information sources, the penetration of infor-
mation technologies into scientific, industrial, public spheres, a high level of information services.

The processes occurring in connection with informatization of society contribute not only to the
acceleration of scientific and technical ones, intellectualization of all types of human activity,
but also the creation of a qualitatively new information environment of the society that ensures
the development of human creative potential.

One of the priorities of modern society is informatization of education, which is a system of

methods, processes, software and hardware tools integrated to collect, process, store, distribute
and use information in the interests of its consumers. The purpose of informatization is the
global intensification of intellectual activity through the use of new information technologies:
computer and telecommunication.

1
Ural federal University named after their first President of Russia B.N.Yeltsin, Mira str. 19, Yekaterinburg,
620002, Russia
2
Ural federal University named after their first President of Russia B.N.Yeltsin, Mira str. 19, Yekaterinburg,
620002, Russia
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According to Gorbunova and Subbotina (2013), information technologies provide the following
opportunities: organizing the rational cognitive activity of learners during the educational pro-
cess; making students study more effectively by involving them in a multimedia context and
arming their intellect with new conceptual tools; building an open education system that pro-
vides each individual with their own learning path; involving in the process of active learning
categories of students who differ in their abilities and learning style; using specific properties of
the computer that help individualize the learning process and turn to fundamentally new cogni-
tive tools; intensifying all levels of the educational process.

Altinentova and Rozhko (2016) confirm that computer technologies are designed to become an
indispensable part of a holistic educational process that significantly increases its efficiency.
As most researchers point out, the trends towards computerization of education will accelerate
regardless of conditions.

Krasovskaya and Isaberova (2017) declare that today, the Ministry of Education of the Russian
Federation pays great attention to informatization of the educational process, since the use of
information technologies significantly increases the number of pedagogical teaching methods
for students. In 2002, the Ministry of Education of the Russian Federation developed “The draft
federal component of the state educational standard of general education in computer science
and information technology”.

Informatization of the educational space also determines the new approach to the organization
of the educational process, to the methodological and didactic support. New methods and means
of developing media education and information culture of students are needed.

A generation of Dot Com students has already been formed, for whom the perception of audio-
visual information is more common than the printed one. Former readers gradually transformed
into viewers with clip thinking.

Students often use Internet resources only by copying ready essays and course papers. Passive
perception of information, consumer attitude to the media, plagiarism of texts, form stereotyp-
ical thinking, distorted outlook.

As Polat (2017) says: “For the development of a moral, creative, self-minded person, not only
a much larger amount of information than that a teacher, a textbook, and teaching aids can
provide, but a large variability of information, reflecting different points of view, different ap-
proaches to solving the same problems is required”.

Modern educational practice requires the use of various methods of working with the infor-
mation and communication environment. First of all, these are tasks for independent work of
students based on Internet resources: a thematic list of references (Hotlist), a multimedia album
(Multimedia Scrapbook), a collection of examples (Subject Sampler), a treasure hunt (Treasure
/ Scavenger Hunt).

A new format of textbooks for students, Smart textbooks is needed today. The problem of a
“new generation textbook” as a means of increasing the effectiveness of training students, en-
hancing independent work through improvement in the comprehensibility of educational mate-
rials, and the ergonomic quality of educational material in recent decades has been intensively

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IN RUSSIAN EDUCATIONAL MANAGEMENT

discussed in the pedagogical literature. Particularly relevant is the availability of such textbooks
in universities where the integration of science and education takes place (Novikova, 2018).

One of the current and more complex working methods of students with Internet sources is a
Web Quest. The concept of web quests was developed in the United States at the University
of San Diego in the mid-1990s by professors B. Dodge and T. March. A web quest is the most
difficult for both students and teacher.

The web quest is aimed at developing students’ skills of analytical and creative thinking. A
teacher who develops a web quest should have a high level of subject, methodical, and informa-
tional and communication competence.

As a part of the learning process, the topic of web quests can be diverse, problem tasks can be
differentiated by degree of difficulty. The results of the web quest, depending on the material be-
ing studied, can be presented in the form of a web page, computer presentation, video journals,
case study, essay, poster presentation, publication, and presentation at a conference.

A web quest is an educational website, a project dedicated to the independent research work of
students (usually in groups) on a specific topic with references to various web pages. Its struc-
ture consists of several required sections:
1. introduction (theme, relevance and value of the project);
2. task (goal, objectives, conditions, problem and their optimal solution);
3. process (phased description of the work process, distribution of roles, responsibilities of
each participant, Internet references, final product);
4. assessment (scale for self-assessment and evaluation of the work of group members,
assessment criteria developed by the teacher);
5. conclusion (summing up, prospects for further study of this problem).

After presenting the results, projects are usually posted on the Internet to familiarize other
students.

According to T. March, a good educational quest should have an intriguing introduction, a

clearly formulated task that provokes higher-order thinking, a distribution of roles that provides
different perspectives on the problem, and a reasonable use of Internet sources (Fedorov, 2016).

2. CONCLUSION

Web quest help students rise their’ self-esteem, solve motivation problems, form the culture of
communication and social behavior in general. The work on the web quest introduces students
to professional computer skills, makes it possible to realistically assess their communication ca-
pabilities, improves academic performance by summarizing, fixing and repeating the training
and additional material, organizing its practical application, and eliminating gaps in education.

In the process of creative work, students are involved in research activity. They don’t only
reproduce ready-made knowledge, but also integrate new ideas, learn to work quickly with
information, classifying it, participate in defining their own educational trajectory, prepare for
continuous continuing education.

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REFERENCES

Gorbunova L., Subbotina E. Use of information technologies in the learning process. Young
Scientist, 4 (2013), 544.
Altimentova D., Rozhko K. Information technologies in education. Concept, 11 (2016), 826.
Krasovskaya L., Isabelovqa T. Application of information technologies in education. Scientific
result. Pedagogy and psychology of education, 3 (2017), 29.
Polat E. New pedagogic and information technologies in the education system, Academia, Mos-
cow, 2017.
Novikova, A. Media educational quests. Innovations in education, 10 (2008), 71.
Fedorov A. Media Education: Creative Tasks for Students and schoolchildren. Innovations in
education, 4 (2016), 175.

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 COMMUNICATION WITH CUSTOMERS
THROUGH SOCIAL NETWORKS
– EVIDENCE FROM THE REPUBLIC OF CROATIA
Višnja Bartolović1
Maja Validžić2

DOI:

Abstract: Consumer behavior and the buying decision process are influenced by social and personal
factors. The subject of this paper is communication with customers through social networks in the eight
largest Croatian companies. To this end, eight of the most well-known retail chains in Croatia were
selected and analyzed in mid-2019, five of which are grocery stores and three are specialized drugstore
chains. The paper aims to analyze the type and intensity of two-way communication (between retail
chains and customers) through the social networks used by retail chains for promotional activities in
the Republic of Croatia. Three social networks were analyzed: Facebook, Twitter, YouTube. A signif-
icant proportion of retailers have recognized the benefits of advertising through social networks, but
still, some have not recognized social networks as a platform for two-way communication between
followers and retailers.

Keywords: Social Networks, Retail chains, Customers.

1. INTRODUCTION

M arketing as a mechanism tries to identify customer needs and enable them to use products
and services in an efficient and measurable manner. Online Marketing wants to provide
information accessible to potential users and influence on their decision-making process of buy-
ing goods at the market of final consumption (Nivetha & Sudhamathi, 2019).

Nowadays, the business environment is changing at a rapid pace and managers are under tre-
mendous pressure of exchanging new information. Communication must be as accurate and fast
as possible with as less interference as possible. In everyday life, as in management, successful
communication is one of the most important skills that can be practiced (Kraljević, Perkov, 2014).

The role of promotion management is to effectively carry out promotional activities and the
aim of promotional communication is to stimulate a reaction in the form of product purchases.
For this process it is important to define the following aspects (Dobrinić, Gregurec, 2016): The
target audience is determined by the marketing activities that precede the promotion as part of
market segmentation, target market definition, market research,
a) Communication (promotional) goals are highly dependent on overall marketing goals
and are organizational and time aligned with them;
b) Designing messages that, in addition to content, in the creation of the message, pay at-
tention to the structure of the message and the source of the message (e.g. professionals
or celebrities promote a particular product);

1
College of Slavonski Brod, Dr. Mile Budaka 1, Slavonski Brod, Croatia
2
College of Slavonski Brod, Dr. Mile Budaka 1, Slavonski Brod, Croatia
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c) The choice of media depending on the form of contact, the media are divided into per-
sonal (face-to-face conversation, letter, telephone marketing, internet in various groups)
and impersonal (billboards, posters, TV commercials, etc.). Since direct contact is es-
tablished with personal communication, feedback is immediately obtained, while this
is not the case with impersonal communication channels;
d) Feedback. Communication is successful if the recipient understood the message in the
desired way. In order for the company to know that the promotion has been success-
fully done, feedback is collected (e.g. by surveys, but ultimately by the final customer
response in the form of product purchases). It could be said that the best feedback is
product sales statistics and a financial report.

Advertising is a paid, mass form of communication. Considering the channels that are used,
advertising is generally impersonal. The aim of advertising can be to inform the target audience
and create awareness about the existence of a new product, its characteristics, usefulness, etc.
Information activities are especially important in the phase of product launch. Other advertising
goals are persuasion, reminder and additional confirmation (Kotler, Keller, 2008 p. 569).

In the second half of the twentieth century, when marketing began to be taken as a serious and
one of the key factors in the business of a company, a scientific discipline began to develop,
studying the psychology and behavior of consumers. „Market experts have realized that the
goals of the company will be easier to achieve if they consider the needs of consumers and offer
them a range of products and services on the market that will better meet their needs” (Grbac,
Lončarić, 2010, p. 16)

Consumer behavior and marketing are two concepts that are inseparable from one another,
because „marketers should know how consumers think, feel, and behave in relation to subjects,
places, ideas, and other objects in a particular space and time” (Grbac, Lončarić, 2010, p. 18).

After researching the consumer preferences, based on the results obtained, the marketing mix
– color, size, packaging and main features of the product – is defined and determined. Next
step is to define prices and pricing strategies, for example, to put a high price and promote the
product as exclusive and approve periodic discounts or to put as lower price as possible, attract
consumers on that way, etc. Given all the above, it is also determined in which stores the prod-
uct should be available and what forms of communication to use to attract consumer attention
(Grbac, Lončarić, 2010).

„As a scientific discipline, consumer behavior is defined by Kotler and Keller who point out:
Consumer behavior is the study of how individuals, groups and organizations select, buy, use
and dispose of goods, services, ideas or experiences to meet their own needs and desires” Gr-
bac, Lončarić, 2010, p. 19).

When researching and studying customer behavior, the priority is not to monitor consumption,
but rather behaving while making a purchase decision, during the purchase process itself, and
to continue to use or discard the product (Grbac, Lončarić, 2010).

For marketers, it is important to study the level of customer satisfaction of a product or service and
why the customer is satisfied or dissatisfied to adapt marketing tactics and the product itself, all
for the sake of greater consumer satisfaction and ultimately for the achievement of company goals.

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2. COSTUMER BEHAVIOR AND BUYING DECISION PROCESS

Consumer behavior in the interaction with the environment is constantly changing and no mat-
ter how much is researched, there will always remain certain unknowns. In the modern age
of rapid change and the use of computers, scientists have realized the importance of seriously
researching the effects on customer behavior, so some theoretical models have been developed
to help frame how certain stimuli affect an individual and thus analyze and „measure” them
(Kesić, 1999).

As noted earlier, purchasing decisions are influenced by a variety of components and factors,
both external and internal. Purchasing decisions can be made rationally, based on careful con-
sideration, but can also be made spontaneously. There are five stages to the decision-making
process: cognizance of the problem, seeking information, evaluating alternatives, deciding to
buy, and post-purchase behavior (Grbac, Lončarić, 2010, p. 141).

Earlier it was stated that the customer has a specific motive to buy a product. The motive is
mainly the desire to satisfy one of the needs or desires of the customer and in order to realize
the purchase, the individual must be aware of that need. This is a phase that encourages the
consumer to be active.

Awareness of the problem is the discovery of the difference between the real state in which the
consumer is in relation to the state in which he or she would like to be. The greater the difference
between these two conditions, the greater the motivation to solve the problem. For example, if a
person’s car breaks down constantly, they will be aware and motivated to buy a new car, and if
they have a relatively good car, they will not easily decide on a better version of an existing one.
Realizing of the person that he/she have the problem is influenced by perception, and perception
is influenced by the internal and external factors mentioned in the previous chapters. It is the job
of marketers to stimulate consumer recognition of the problem, that is, to create an idea of need,
even if there is none. After becoming aware of the need, the consumer will start collecting infor-
mation on the existence and availability of the product / service, product characteristics, as well
as pricing information, and will evaluate alternative options based on the information collected.
The consumer first begins with an internal search for information (he remembers everything
he knows about that product category, looks at product brands, remembers his own experiences
with the product, etc.), then, in order to collect additional information, he moves outside to col-
lect information (Grbac, Lončarić, 2010). Consumer information sources are diverse and some
are managed by marketers. Sources managed by marketers are „important sources for generating
awareness and stimulating product interest among consumers” (Grbac, Lončarić, 2010, p. 148)

In addition to marketing, personal sources such as family, friends, work colleagues, as well as
previous product experience are an important source of information. This is a category of infor-
mation sources that the consumer particularly trusts. The third group of information sources are
independent sources, such as specialized magazines, special websites, etc. When buying every-
day used products, the consumer does not engage too much to find information about them, so
the ideal marketing strategy for such a product group is to advertise intensively how to help
the customer recall the product more quickly and to make it known to him, while for high-risk
products, marketers need to ensure that information from relevant sources is available to the
consumer. After the consumer has gathered information about the products, he will choose one
of the alternatives – mostly one that he thinks is a better solution for him. Advertising informs

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the public about opening a branch, offering and assortment of a shop and current actions, and for
this purpose, mass media are often used – TV advertisements, advertisements on the Internet,
advertisements in print media, leaflets in mailboxes and the like. Brands can also be a reason
why a shopper will choose a store (Grbac, Lončarić, 2010).

In a sea of many diversified products, manufacturers need to ensure the brand recognition of their
product through quality brand management, but for good business results they have to adapt their
approach to retail stores and their customers. „This approach to shoppers in retail, by manufactur-
ers and retailers, is often referred to as shopper management” (Muller, Singh, 2006, p. 85).

When it comes to retail customer behavior, it is important to know who the customer is and what
is important to them, what are the key factors that influence their behavior and which of these
factors may be affected. In order for retail stores to better position themselves and reach targeted
consumers, they need to identify and segment people with similar characteristics. Customers
thus differ in their behavior, attitudes, dynamics, and social and demographic characteristics.
Once the target group has been identified, an access strategy is defined (for example, families
with young children spend more than couples without children, which is why many retailers
have special baby loyalty programs and loyalty cards) (Muller, Singh, 2006).

3. RESEARCH BACKGROUND

The survey collected data on observed companies in the following categories: global rank, coun-
try rank, total visit per domain, device distribution (desktop vs. mobile), Engagement (Monthly
visits, Unique visitors, Visits / unique visitors, average visit duration, pages per visit and bounce
rate), Channels overview and Social traffic.

The first part of the survey will show data for the TOP 5 companies in activity 4711 Retail sale
in non-specialized stores mostly food stores, beverages and tobacco (Konzum, Lidl Croatia,
Plodine, Kaufland Croatia, Spar Croatia).

And, the second part of the survey collected data from the TOP 3 companies in activity 4719 Oth-
er retail sale in non-specialized stores (Dm-drogerie markt, Müller shop Zagreb, Bipa). These
are companies operating in the Republic of Croatia, although established in other countries (Ger-
many, Austria). There are only two domestic companies in the TOP 5: Konzum and Plodine.

For the purpose of the research, the five largest retail chains operating in the Republic of Croatia
were selected: Konzum, Kaufland, Lidl, Plodine and Spar and the three largest drugstore retail
chains DM, Bipa and Mueller.

According to the business data of the top ten retailers, these five selected retailers (Konzum,
Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia) hold close to 72% of the market with
HRK 24.2 billion. Dm-drogerie markt is in eighth place in terms of sales revenue on the same
scale, therefore it is in the TOP 10 retail chains in the retail sector (Institute of Economics Za-
greb, 2019). Konzum plus d.o.o. (formerly Konzum dd) is the largest Croatian retail chain with
a share of about 30% in the Croatian market. Konzum plus, having around 10,000 employees,
is one of the largest employers in the country and has as many as 500,000 purchases every
day in over 600 Konzum stores. (Konzum.hr official site, 2019). One of the most well-known
consumer goods retailers is certainly Kaufland. It is part of the German Schwarz Group, which

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also owns Lidl. The first store in Croatia, opened in 2001 in Karlovac. By 2009, Kaufland had
twenty-five branches in Croatia, while today there are 39 (Kaufland.hr official site, 2019).

Lidl is its first 13 stores in Croatia in 2006. Today in Croatia Lidl operates 93 stores throughout
Croatia (Lidl.hr official site, 2019).

Spar is the Austrian chain of stores that opened the first Interspar hypermarket in Zadar in 2005.
Since 2009, a market format known as Spar has been created and first opened in Varaždin in
2014. Today, Spar in Croatia has a network of stores of 93 supermarkets (Spar) and 21 hypermar-
kets (Interspar) and employs over 4300 employees (Spar.hr official site, 2019).

The first Plodine store was opened in 1993 in Rijeka, and in the beginning of 2000, it started
with more significant openings of modern-day supermarkets. Today, there are 83 supermarkets
operating in Croatia, with more than 3,500 employees (Plodine.hr official site, 2019).

The first DM store in Croatia was opened in Zagreb in 1996, and today there are 157 in Croatia
and employ about 1500 employees (DM-drogerie markt.hr official site, 2019). The first Müller store
opened in Zagreb in 2006, and there are currently 18 of them. At the beginning of 2017, he took
over Kozmo drugstores and thus approached DM in business and income (Müller official site, 2019).

The first Bipa store in Croatia opened in 2007 in Vinkovci, and today has more than 100 branch-
es and over 600 employees (Bipa.hr official site, 2019).

4. RESEARCH RESULTS

According to the National Classification of Activities, these 8 enterprises are classified into two
types of activities:
• Activity 4711 Retail sale in non-specialized stores with food, beverages or tobacco pre-
dominating (Konzum, Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia),
• Industry 4719 Other retail sale in non-specialized stores (Dm-drogerie markt, Müller
shop Zagreb, Bipa).

A study by the Competition Agency shows that in the food and groceries sector in 2017, the
market concentration indicator for the top ten traders was 82.2 percent, unchanged from 2016,
while the concentration indicator for the top five retailers accounted for 66.2 percent in 2017, an
increase of 65.1 percent from 2016 (Institute of Economics Zagreb, 2019). The position of TOP
10 retail companies in the ranking in the Republic of Croatia is shown in the table:

Table 1. Sales revenue 2017

Company Sales revenue (in billions of kn; kn1 = €0.13)
Konzum 8,9
Lidl Hrvatska 4,6
Plodine 3,8
Kaufland Hrvatska 3,5
Spar Hrvatska 3,4
Dm-drogerie markt 1,7
Müller trgovina Zagreb (Fininfo.hr) 1,4
Bipa (Fininfo.hr) 0,46
Source: Institute of Economics Zagreb, 2019, Fininfo, 2019

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Table 2. Displaying the number of followers on social networks

and YouTube channels in Croatia on 30th August 2019
Instagram follower / YouTube channel
Retail chain: Likes on Facebook
posts / video subscribers
Kaufland 216 000 13 600 – 182 1 700 – 220
Konzum 254 300 10 400 – 506 / – 1300
Lidl 377 000 72 600 – 820 5 200 – 1 700
Spar 173 400 1 291 – 124 474 – 536
Plodine 210 300 1 699 – 45 225 – 699
DM 495 000 153 000 – 1623 13 000 – 2 200
Müller 105 500 4 495 – 150 -
Bipa 463 800 88 900 – 802 1 100 – 135
Source: authors

The data in Table 2 shows that all the chains are active on social networks. Of the consumer
goods stores on Facebook and Facebook followers, Lidl.hr has the most likes, while in drug-
stores market Dm-drogerie markt.hr holds the advantage. The surprising chain is certainly
Müller.hr, which has Facebook likes on all eight stores, and has relatively few followers on In-
stagram and on YouTube channel (or not easy to find, which also supports the fact that they are
not overly engaged). Instagram is a social network where trends such as fashion and beauty are
mostly represented, so it is to be expected that drugstores – DM-drugstores markt.hr and Bipa.
hr have the most followers of the observed eight retail chains, followed by Lidl.hr.

4.1. Activity 4711- Retail Sale in Non-Specialized Stores Mostly Food Stores, Beverages
and Tobacco (Konzum, Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia)

According to Website Analysis Overview Report, period between August 2019-October 2019,
Country Rank for selected companies are shown in figure 1.

Figure 1. Global and country rank of compared analysed sites

Source: Website Analysis Overview, 2019

Next analysis is number of total visits. Number of total visits represent sum of all visits per time
period (August-November 2019).

Next figure 2 shows number of total visits per domain:

Lidl Croatia is leading retailer in total visit per domain (46 %). Konzum has 22 % of total visits.
On 3rd place is Kaufland with 17 % of visits, on 4th place is spar.hr and 5th is Plodine.

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Figure 2. Domain
Source: Website Analysis Overview, 2019

Next figure 3 shows device distribution in the same period. Device distribution shows percent of
incoming traffic from desktop vs. mobile web. Lidl Croatia has leading position in this segment
and the reason is in good quality of mobile app.

Figure 3. Device distribution (desktop vs. mobile web)

Source: Website Analysis Overview, 2019

Next figure 4 shows Engagement. The average engagement metrics are calculated for the selected
time range. Lidl has leading position in monthly visits, unique visitors. Konzum has leading posi-
tion in average visit duration and bounce rate. Spar has leading position in number of pages per visit.

Figure 4. Engagement
Source: Website Analysis Overview, 2019

Next figure 5 shows Marketing Channels: direct channel, e-mail, referrals, social channel.

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Figure 5. Marketing Channels

Source: Website Analysis Overview, 2019

Most of incoming traffic comes from direct marketing channels, and from organic search. In
direct channel Konzum has 32,37 %, Kaufland 33,7 %, Plodine 28,37 %, Lidl 49,37 % and Spar
24,75 %. Marketing Channel “Social” shows next metrics: Konzum 2,52 %, Kaufland 4,05 %,
Plodine 1,9 %, Lidl 2,14 %, Spar 0,93 %.

Social traffic is shown in the next figure – Leading social networks that drove traffic to the se-
lected site on desktop.

Figure 6. Social Traffic

Source: Website Analysis Overview, 2019

According to Figure 6 Social Traffic (Desktop Only-Facebook on Croatian market) shows that
Plodine (90,46 %) and Kaufland.hr have leading position. Lidl.hr have 84,8 % social traffic on
Facebook, Konzum 75,28 % and Spar 56 %. On YouTube Spar.hr has leading position (39,83 %),
Konzum has 20,51 %, Lidl.hr has 15,05 %, Kaufland.hr 8,37 % and Plodine.hr 3,99 % of Social
Traffic. Twitter are using only Konzum (0,86%), and Spar.hr (4,17 %). Complete different situation
for these retail chains is on their domestic market. For example, Kaufland.de uses Facebook in
49,08 % and YouTube in 35,18 %, on Germany market. Lidl.de uses Facebook (42,75 %), VKon-
takte 23,71 % and YouTube 23,43 %. Spar.at uses Facebook 50,871 %, and YouTube 43,07 %.

4 .2. Activity 4719- Other Retail Sale in Non-Specialized Stores

(Dm-Drogerie Markt.hr, Müller.hr, Bipa.hr)

According to Website Analysis Overview Report, period between August 2019-October 2019,
Country Rank is showed in figure 7. Next analysis is number of total visits. Number of total
visits represent sum of all visits per time period (August-November 2019).

Figure 8. shows number of total visits per domain. Dm-drogerimarkt.hr is leading retail chain
in total visit per domain with 74,10 % share of mobile device distribution.

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Figure 7. Global and country rank of compared analysed sites

Source: Website Analysis Overview, 2019

Figure 8. Total Visits and Device Distribution

Source: Website Analysis Overview, 2019

Next figure shows Engagement. The average engagement metrics are calculated for the selected
time range. Dm-drogerie markt.hr has leading position in monthly visits and unique visitors.
Mueller.hr has leading position in average visit duration, bounce rate and leading position in
number page per visit.

Figure 9. Engagement
Source: Website Analysis Overview, 2019

Most percentage of incoming traffic comes from direct marketing channels, and from organic
search. In direct channel dm-drogerie markt.hr has 11,82 %. Mueller.hr 17,78 % and Bipa.hr
28,03 %. Marketing Channel “Social” shows next metrics: Bipa.hr has 3,04 %, Mueller.hr 3,19
% and dm-drogerie markt.hr 2,83 %. Social traffic is shown in the next figure.

Figure 10. Channels Overview

Source: Website Analysis Overview, 2019

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According to Figure 6 Social Traffic (Desktop Only) shows that Facebook is leading social net-
work in communication with customers. YouTube is 2nd. Very interesting data for dm-drogerie
markt.de on German market shows that dm-drogerie markt.de in Germany use YouTube similar
as Facebook (41,7 % on YouTube vs. 42,26 % on Facebook). The same case is also for Mueller.
de, which uses Facebook in 57,62 % vs. YouTube 27,96 %. The same case is also for Bipa.at.
Bipa in Austria uses Facebook and YouTube 58,04 % vs. 34,00 %.

Figure 11. Social Traffic

Source: Website Analysis Overview, 2019

5. CONCLUSION

Social networks are a platform where businesses can promote themselves and reach customers.
With every announcement, feedback is immediately obtained in the form of likes and com-
ments, allowing the promotional campaign to be immediately refined and promoted.

The analyzed data indicate that Facebook is the largest social network used by chains in both
types of retail activity observed.

The paper aims to analyze the type and intensity of two-way communication (between retail
chains and customers) through the social networks used by retail chains for promotional activ-
ities in the Republic of Croatia. Three social networks were analyzed: Facebook, Twitter, You-
Tube. A significant proportion of retailers have recognized the benefits of advertising through
social networks, but still, some have not recognized social networks (Mueller on YouTube) as a
platform for two-way communication between followers and retailers.

On the Croatian market, foreign retail chains with headquarters in Austria and Germany use
Facebook the most, while in their domestic markets (Germany and Austria) they use almost
equally Facebook and YouTube.

For example, Mueller.hr does not use YouTube in the Croatian market at all, while its remain-
ing two competitors use YouTube on the Croatian market as a channel of communication with
customers.

Mobile web has a leading position as opposed to a desktop device. As a recommendation for
further research into the use of social networks in retail chains it would be advisable to observe
connection between the behavior of the population by age and the preferred social network, also
preferred method of communication (desktop vs. mobile web).

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REFERENCES

Bipa.hr official site: https://www.bipa.hr/ (26. August 2019.)

DM-drogerie markt.hr official site: https://www.dm-drogeriemarkt.hr/hr_homepage/ (26. Au-
gust 2019.)
Dobrinić, D. & Gregurec, I. (2016). Integrirani marketing. Varaždin, Croatia: Fakultet organ-
izacije i informatike.
Grbac, B. & Lončarić, D. (2010). Ponašanje potrošača na tržištu krajnje potrošnje. Rijeka, Cro-
atia: Ekonomski fakultet Rijeka.
Institute of Economics Zagreb: Sektorske analize, https://www.eizg.hr/userdocsimages/publik-
acije/serijske-publikacije/sektorske-analize/sa_trgovina_2019.pdf
Kaufland.hr official site: https://www.kaufland.hr/ (25. August 2019.)
Kesić, T. (1999). Ponašanje potrošača. Zagreb, Croatia: Adeco.
Konzum.hr official site: https://www.konzum.hr/ (24. August 2019.)
Kotler, P. & Keller, K.L. (2008). Upravljanje marketingom, 12. izdanje, Zagreb, Croatia: Mate
d.o.o.
Kraljević, R. & Perkov, D. (2014). Menadžment tržišnih komunikacija. Zagreb, Croatia: Liber-
tas-Plejada.
Lidl.hr official site: https://www.lidl.hr/hr/index.htm (25. August 2019.)
Muller, J. & Singh, J. (2006.): Category management, Zagreb, Croatia: Internacionalni centar
za profesionalnu edukaciju.
Müller.hr official site: https://www.mueller.hr/ (26. August 2019.)
Plodine.hr official site: http://www.plodine.hr/ (25. August 2019.)
Portal Fininfo, https://www.fininfo.hr/Poduzece/Pregled/mueller-trgovina-zagreb/Detal-
jno/83907
Similar web: Website Performance, https://pro.similarweb.com/#/website/worldwide-overview/
dm-drogeriemarkt.hr,mueller.hr,bipa.hr/*/999/3m?webSource=Total
Similar web: Website Performance, https://pro.similarweb.com/#/website/worldwide-overview/
konzum.hr,kaufland.hr,plodine.hr,lidl.hr,spar.hr/*/999/3m?webSource=Total
Spar.hr official site: https://www.spar.hr/ (25. August 2019.)

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THE OPTIMAL PROJECT GOVERNANCE FRAMEWORK
FOR CONTRACTED ENGAGEMENT MODEL
Srđan Atanasijević1
Tatjana Atanasijević2
Monika Zahar3

DOI:

Abstract: At Comtrade, Project Management Organization (PMO) is committed to providing the high-
est standard of project management services to guide projects from initial planning and design through
engineering and construction and finally to execution and approvals.
One of the first steps of successful project governance is to develop and agree with customers the ap-
propriate engagement model, which is typically determined by the client and by the type of its business
environment that dictates the pricing model.
However, these agreements alone do not ensure satisfying results. PMO needs to be the driving force
for establishing good and mature project governance management as a significant investment and cru-
cial element for the success of every project and business growth.
This paper examines current pricing and engagement models, focusing on balancing its risk and ben-
efits, discusses how a PMO shape project governance model to ensure project realization for a specif-
ic pricing model would. Research provides strategic approaches on how to identify and set a useful
performance measurement metric and track key performance indicators aligned with diverse business
models toward project goals accomplishments to build long-term success.
Keywords: Project Management, Project Management Office, Project Related KPI, Project Govern-
ance, Software Engineering Engagement Models, Performance Management Framework.

1. INTRODUCTION

N owadays, complexity and rapid changing on markets make a concern for senior managers
and necessitate developing a dynamic strategic framework to cope with those challenges.
“Software is eating the world,” wrote Marc Andreessen, co-founder and general partner of
venture capital firm Andreessen Horowitz, in an essay published in The Wall Street Journal in
2011. In such economic pressure to reduce time to market for each company software is a cru-
cial ingredient. Software engineering projects rarely operate in isolation within an organization
and are usually delivered to satisfy broader strategic priorities [1]. This pressure has driven an
increase in the number of projects undertaken simultaneously within organizations, and conse-
quently, the complexity of managing their interdependencies [1]. Project Management Organi-
zation (PMO) is committed to provide the highest standard of project management services and
to guide projects from initial planning and design through engineering, construction and finally
to execution and approvals. Projects lacking adequate senior management support cannot deliv-
er the expected business benefits to an organization.

1
Comtrade Group, Comtrade Digital Services, Dublin, Ireland
2
Comtrade Group, Comtrade Digital Services, Dublin, Ireland
3
Comtrade Group, Comtrade Digital Services, Dublin, Ireland
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1.1. Organizational Governance and Project Governance

Project governance and project success are in tight correlation. Governance systems cannot op-
erate without the active support of the management system. In his article [2], Muller concluded
that Governance starts at the corporate level and provides a framework to guide managers in
their daily work of decision-making and action-taking. At the level of projects, Governance is
often implemented through defined policies, processes, roles, and responsibilities, which set a
framework for peoples’ behavior and in turn influences the project.

Governance sets the boundaries for project management activities, by [2]:

• Defining the objectives of a project. These should be derived from the organization’s
strategy and clearly outline the specific contribution a project makes to the achievement
of the strategic objectives,
• Providing the means to achieve those objectives. This is the provision of or enabling
access to the resources required by the project manager,
• Controlling progress. Evaluate the appropriate use of resources, processes, tools, tech-
niques, and quality standards in the project.

Without a governance structure, an organization runs the risk of conflicts and inconsistencies
between the various means of achieving goals, such as processes and resources, thereby causing
costly inefficiencies that negatively affect both smooth running and bottom-line profitability.

Project governance is the set of policies, regulations, functions, processes and responsibilities
that define the establishment, management, and control of projects, programs, or portfolios [4].

Practical governance of project management ensures that the project portfolio of the organiza-
tion remains aligned to organizational objectives, and is delivered efficiently and effectively, in
a sustainable manner.
• Corporate Governance is the system of rules and practices that dictates how organiza-
tions are directed and controlled,
• Project Governance focuses more specifically on project activities.

This interrelationship is effectively presented in Figure 1.

The project governance framework needs to provide coherence between corporate governance and
project governance, provide a guide for those involved in projects, and ensure that project roles and
responsibilities are well understood. The management of a project is much like the governance of
an organization [4]. Four key elements must be considered to support effective software project
governance: portfolio management, project sponsor, PMO, and effective project management.

The role of management is to make decisions within the framework set by governance.

Governance of project management provides senior management confidence:

• An overview of all project management activities,
• A big picture of how organizations use resources,
• A risk assessment of their portfolio of projects,
• A rough metric of improvement in managing projects relative to others in the industry,
• Linkages of senior management with actual project execution management.

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FOR CONTRACTED ENGAGEMENT MODEL

Approaches to governance vary by the particu-

larities of organizations. Managers influencing
the design of project governance should be aware
of the importance of a stakeholder devotion to
success [3]. The factor of project success com-
prises five sub-dimensions (project efficiency,
organizational benefits, project impact, potential,
and stakeholder satisfaction) [2, 3].

One of the first steps of successful project gov-

ernance is to develop and agree with customers
the appropriate engagement model, which is
typically determined by the client and by the
type of its business environment that dictates
the pricing model.

Figure 1. Project governance is the system In the separate chapter, we will discuss typical
of rules and practices that operates on a sub- project engagement models in software engi-
set of a project and organizational metrics neering and KPI related to communicate project
intended to align project goals with corpo- delivered value to the organizational and pro-
rate targets ject stakeholders.

2. METHODOLOGY

In this article, we will use a case study type of research. Through the research process, we will
apply a combined qualitative and quantitative research method.

By using qualitative methods, we will focus on recognizing the customer engagement models
used today in practice by answering the question: what types of customer engagement models
are present in the software development market today.

By applying quantitative analysis to a sample of project portfolios of the observed global mid-
sized software companies, we will reduce the number of recognized engagement models to
those that are more prevalent.

In the process of identifying representative engagement models, we will use the well-known
principle formulated by Vilfredo Pareto, or the 80-20 rule, expressed in this case, that 80% of the
contracted engagement models come from 20% of the dominant ones that we want to recognize.

Recognized dominant customer engagement models will be described in detail, and the second cycle
of qualitative and quantitative analysis will be performed on them to identify key project metrics.

By quantitative analysis, we will identify a subset of project metrics that are of interest to cor-
porate management.

To properly select and identify effective set of metrics for efficient project governance, we will
focus on the following dimensions: monitoring the financial status of a project, its profitability,
quality, customer satisfaction, resource utilization, and creation of new IP assets.

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3. RESULTS

Based on Harmon and others [6], the pricing decision is one of the most critical decisions that a
firm can make, whether planning the introduction of a new information technology (IT) service
or repositioning an existing IT service. They distinguish two groups of pricing modes based on
the value it provides to the end customer: cost-based pricing models and value-based pricing
models. Cost-based pricing models include the following strategies: Flat pricing, Tiered pric-
ing, and Performance-based pricing [5]. Value-based pricing strategies were established on the
premise of how customers perceive value [5]. Perceived value is defined in terms of the tradeoff
between perceived benefits to be received and the perceived price for acquiring the product or
service that delivers those benefits. These benefits are based on several drivers, including Eco-
nomic-value drivers, Performance Value, Supplier Value, Buyer Motivation.

This approach is sometimes a little bit complicate to implement. In past years, this approach
evaluates in a more straightforward and most effective. Today’s market of software engineering
services differentiates three remain pricing models (PRM) and based on them dozen customer
engagement models (CEGM). Main pricing models are linear, non-linear, hand agile.

Linear pricing models are based purely on the relationship between time and material (effort and
rate). The service provider is paid based on the resource provided or the effort spent on the re-
quired duration of the agreed time. We distinguish the following customer engagement models:
dedicated team, time, and material (T&M) and fixed price (FP).

Non-linear pricing models decouple the relationship between time and material. Typically, T&M
and FP do not offer much scope for modification and changes. Service providers have realized
the necessity to be flexible to satisfy their customers. This demand has led to innovations in
engagement models that suit varying needs. We distinguish the following engagement models:
hybrid, managed service, outcome-based engagement and transactional.
Customer Prevalent
Pricing Model Engagement Project # Projects
Models Methodology
Time and
Material Agile 132
(T&M)
Linear Pricing Fixed Price
Waterfall 51
Models (FP)
Dedicated team
(DT) Mix 13
/ Budgeted

Other models N/A 26

Figure 2. Typical Engagement models in middle software company

used on 80% of projects, in 6 years

Finally, the third group of pricing models is based on an agile software delivery approach. Un-
der Agile, we distinguish the following customer engagement models: capped T&M, cost target
contract, and incremental delivery CEGM.

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FOR CONTRACTED ENGAGEMENT MODEL

Figure 3. Typical breakdown of customer engagement models

in middle size software company, in the six years

The survey was conducted on a data set covering the details of 220 projects for more than 100
customers in the six years (2014-2019). Research results identified that customers prefer just
three customer engagement models. Figure 2 and Figure 3 presents key findings of this quanti-
tative research: Time and material, Fixed price, and Dedicated team (budgeted) are recognized
as prevalent customer engagement models, Table 1.

4. DISCUSSION

Customers should choose a pricing model based on the type of project they have. If they have
a clear understanding of their project and a limited budget, then a fixed-price model should be
used. Clients should avoid including lots of functionality in this case and instead focus only on
core features. If the project is quite flexible and requirements change frequently, then the time
& materials model should be applied.

Table 1. Main features of dominant customer engagement model

in Software Engineering projects
Model When to use Advantages Disadvantages Project type
Finalized pricing. Rigid terms. MVP
projects with limited
Strict deadlines. Long planning. Limited features
Fixed-price (FP) budgets and definite
Predictability. Miscommunication Limited budget
deadlines.
Little management. risks. Clear requirements
Flexible Uncertain deadlines. Unclear scope
projects with
requirements. Undefined budget. Dynamic
Time & materials changing
Hourly rates. Need to manage the requirements
(T&M) requirements and
Product quality. process Long term projects
long-term projects
Transparency. Hard decisions.
Entirely predictable Low efficiency for Long partnership
budget, a monthly short-term projects. Focus on
Dedicated team business partners
payment based on Team members have performance and
(DT) with established
delivered hours. fewer opportunities quality of services
/ Budgeted relationships
The customer to learn new Specialization
manages it. techniques

When parties have a long-term relationship, they can work according to the dedicated team or
budgeted model. In a nutshell, customers must balance their expectations of quality, deadlines,
and price.

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Table 2. Sample of KPI performance measures, recommended

for specific customer engagement model
Area Project metrics CEGM
Sales Revenue, Gross Profit, Gross Profit Margin (value and YoY) All models
Gross Profit per Delivered FTE, Billable Utilization T&M
Finance
Total Costs, Cost of service delivery, Subcontractors cost All models
The ratio of estimated project costs to actual costs Fixed Price
Customer Engagement All models
Customer Profitability Score All models
Customer
Customer Satisfaction Index, Customer Complaints T&M
Service Level Agreement (SLA) failures All models
Delivery capacity and YoY, effort (FTE), Subcontractors share All models
Utilization, Onsite Delivery effort T&M
Engineering
Done/Closed, Done/Lost resource requests, Monthly Lost Rev T&M
Project Schedule Variance, Number of Change Requests Fixed Price
Issues found by Customers and QA All models
Issues found in code review All models
Quality
Safety incidents All models
Milestones accuracy Fixed Price

Once dominant customer engagement models have been identified, project metrics analysis is
approached. Organizations need a reliable project performance measurement program to im-
prove their software development process continuously [7,8]. Business process performance
measurement and software process performance measurement tackle similar research ques-
tions: the development of methodologies and metrics to measure, control, manage, and improve
a process. Business process performance measurement defines requirements for Key Perfor-
mance Indicators (KPIs) that are ignored by the software metrics community. Based on the
research of Guillermo Montero and other associates [9], they identified a set of 26 proposed key
process indicators; a dashboard of 26 indicators narrowed from the original 83 has been created
after using three consultation rounds seeking consensus within a panel of seven experts shown
in Table 2. Based on that research and conclusions presented in the paper [9] they formulate
criteria based on the following aspects, related to KPI:
• Contents should consider project indicators, economic/financial ratios, earned value
analysis and indicators related to project risks;
• Data must be as specific and accessible as possible;
• Data collection needs to be efficient and cost-effective;
• Stakeholder’s perspective has to be considered;
• The scorecard should be transferable.

Table 2 shows project metrics related to reporting by organizational areas and project sponsors.
The CEGM column shows which metrics is applicable in which engagement model.

5. CONCLUSION

This paper examines current pricing and engagement models, focusing on balancing its risk and
benefits, discusses how a PMO shape project governance model to ensure project realization for
a specific pricing model would [10]. In this paper, we explore a subset of project metrics that are
candidates for project governance. Project management should be monitored from the perspec-

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FOR CONTRACTED ENGAGEMENT MODEL

tive of project sponsors, company management, and customers [11]. The resulting KPIs should
reflect the financial status of the project, the quality of deliverables, risks, customer and team
satisfaction. Organizational management is interested in monitoring the realization of revenue
and expenditure planning, profitability, resource utilization, current customer satisfaction [12].
Research provides strategic approaches on how to identify and set a useful performance meas-
urement metric and track key performance indicators aligned with diverse business models
toward project goals accomplishments to build long-term success.

REFERENCES

[1] Too, E. G., & Weaver, P. (2014). The management of project management: A conceptu-
al framework for project governance. International Journal of Project Management, 32(8),
1382-1394.
[2] Muller, R. (2017). Project governance. Routledge.
[3] Joslin, R., & Müller, R. (2016). The relationship between project governance and project
success. International Journal of Project Management, 34(4), 613-626.
[4] Alie, S. S. (2015). Project governance: #1 critical success factor. In PMI® Global Congress
2015. Orlando, Florida: Project Management Institute.
[5] Association for Project Management. (2012). APM body of knowledge. (6th ed.). Bucking-
hamshire: Association for Project Management.
[6] Harmon, R., Demirkan, H., Hefley, B., & Auseklis, N. (2009). Pricing Strategies for Infor-
mation Technology Services: A Value-Based Approach. In 2009 42nd Hawaii International
Conference on System Sciences (pp. 1-10). Big Island, HI, USA: IEEE.
[7] Atanasijevic, S. (2016). Approach to project management in dynamic reality – Differences
between traditional and agile approaches. doi:10.13140/RG.2.2.10519.27047/1.
[8] List, B., Bruckner, R. M., & Kapaun, J. (2005). Holistic software process performance meas-
urement from the stakeholders’ perspective. In 16th International Workshop on Database
and Expert Systems Applications (DEXA’05) (pp. 941-947). Copenhagen, Denmark: IEEE.
[9] Montero, G., Onieva, L., & Palacin, R. (2015). Selection and Implementation of a Set of Key
Performance Indicators for Project Management. International Journal of Applied Engineer-
ing Research, 10(18), 39473-39484.
[10] Atanasijević, S. (2013). Case Study: How to establish global PMO Office. doi: 10.13140 /
RG.2.2.18446.82247/1.
[11] Dragićević, D., Milosavljević, A., & Atanasijević, S. (2013). Combination of traditional and
agile project management methodologies on software project of health information system
in Ministry of Defence of Republic of Serbia. In 16. International Conference of Quality
Management. Belgrade: ICDQM.
[12] Atanasijević, S. (2019). Project Management on AI Projects. doi: 10.13140/
RG.2.2.10771.02080/1.

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 BEST PRACTICES FOR PEOPLE WITH DISABILITIES
ADOPTED IN ITALIAN NATIONAL PARKS
Giulio Mario Cappelletti1
Alfredo Ernesto Di Noia2
Giuseppe Martino Nicoletti3

DOI:

Abstract: The accessibility of a natural protected area should be seen as a possibility for people with
special needs to access to a structure or open space in order to fully enjoy their services and activities.
The European Union has issued numerous documents on the accessibility and a resolution on equal
opportunities for disabled people in all fields, including leisure time. Also, in Italy there are very de-
tailed regulations on accessibility and social inclusion, both at the state level and at the region level of
the individual. Following these rules, several Italian national parks have adopted guidelines to make
their areas accessible and provide physically challenged people with all the services. The aim of this
paper is to examine legislation and best practices adopted to make accessible the Italian national parks
to people with disabilities.

Keywords: Disabilities, Natural Parks, Protected Natural area, Accessibility.

1. INTRODUCTION

I nternational Union for Conservation of Nature (IUCN) has defined protected areas as “a
clearly defined geographical space, recognised, dedicated and managed, through legal or oth-
er effective means, to achieve the long-term conservation of nature with associated ecosystem
services and cultural values” (Dudley, 2008) (IUCN UNEP WWF, 1980).

Laws and technical standards have been established to delineate the requirements and actions
necessary to ensure the accessibility of a public place. On the matter the United Nations has pub-
lished various documents: the Universal Declaration of Human Rights of 1948 (United Nations,
1948), the Declaration on the Rights of Mentally Retarded Persons of 1971 (United Nations,
1971), the Declaration on the Rights of Disabled Persons of 1975 (United Nations, 1975), the
Declaration on the Rights of Deaf-Blind Persons of 1979 (United Nations, 1979), the Resolution
37/52 of 1982 called the World Program of Action Concerning Disabled Persons (United Nations,
1982), the Standard Rules on the Equalization of Opportunities for Persons with Disabilities of
1994 (United Nations, 1994), the Global Disability Action Plan 2014-2021 (WHO, 2015), the
Convention on the Right of the Persons with Disabilities of 2016 (United Nations, 2016).

The „accessible tourism” or the so-called „tourism for all” is a set of structures and services
made available to people with disabilities or special needs so that they can enjoy the opportunity
to travel, enjoy and take part in events without facing any problems or difficulties, in conditions
of autonomy, but also of safety and comfort (Setola et al., 2018).

1
University of Foggia, Department of Economics, CESETEA, via Caggese, 1 – 71121 Foggia (Italy)
2
University of Foggia, Department of Economics, CESETEA, via Caggese, 1 – 71121 Foggia (Italy)
3
University of Foggia, Department of Economics, CESETEA, via Caggese, 1 – 71121 Foggia (Italy)
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Additionally, some studies have highlighted the benefits that outdoor activities have for the pop-
ulation and even more for people with disabilities (Maller et al., 2015).

A service is defined accessible when the information on it can be easily found and are easily
accessible and usable by people with disabilities, especially when there is qualified and trained,
and there are also other accessible facilities (such as hotels, restaurants, museums, transport
etc.).

Some disabilities can be temporary (for example pregnancy), others which are permanent since
birth or after accidents or illnesses or linked to the old age. The disabilities include:
• Physical disability: for example, inability to walk;
• Sensory disabilities (visual, auditory);
• Intellectual disabilities (Down syndrome, autism, etc.);
• Food disabilities (celiac disease, allergies to certain foods, diabetics etc.) (Vila et al., 2015).

Accessible tourism should be able to provide people with special needs and their families’
equal rights and participation in social life through a range of services: autonomy in traveling
and as users of various services, information reliability on the structures, satisfying personal
needs for the whole holiday. (Darcy 2010) (Kastenholz et al. 2015) (McKercher and Darcy 2018)
(Michopoulou and Buhalis 2013). Many laws on disability issue have been enacted in order to
achieve these objectives, even for tourist services and nature tourism, to give all those people
the opportunity to enjoy protected natural areas.

2. REGULATIONS: REQUIREMENTS FOR STRUCTURES

FOR THE RECEPTION OF THE DISABLED

2.1. International Regulations

The Convention on the Rights of Persons with Disabilities (CRPD), approved by the United
Nations General Assembly on 13 December 2006, aims to „promote, protect and guarantee
the full and equal enjoyment of all human rights and all fundamental freedoms of people with
disabilities and to promote respect for their intrinsic dignity”. In particular, article 9, concerns
accessibility, and claims that States must take „...adequate measures to guarantee people with
disabilities, on an equal basis with others, access to the physical environment, to transport, to
information and communication systems and technologies, and other equipment and services
open or provided to the public, both in urban and rural areas...”. These measures also include
the identification and elimination of obstacles and barriers limiting accessibility (such as archi-
tectural barriers) (United Nations, 2016).

The Global Code of Ethics for Tourism (GCET) adopted by the World Tourism Organization in
1999, highlights the role of tourism, collectively, acknowledging and strengthening social and
cultural ties between peoples, while respecting their diversity. The Code, on the individual lev-
el, highlights, on the one hand, that tourism allows everyone to enjoy rest, cultural knowledge
and enjoyment of natural resources. On the other hand, the Code emphasizes that the develop-
ment of tourism needs to respect the natural and cultural environment. Thus, all actors must
aim at protecting the environment. Moreover, another objective of the Code is to ensure to all
tourists, including those with special needs, the right to access to the natural area equally and
without any impediment (UNWTO, 1999).

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The Montreal Declaration, drawn up by the Bureau International du Tourisme Social in 1996,
defines social tourism. The goal is to strengthen the concept that tourism, stating that it must be
accessible to all without distinction, should allow the greatest number of people accessing to it.
The principles enshrined in the Declaration, recognizing the physical, social and economic ben-
efits deriving from social tourism, aim at the inclusion of all the potentially interested subjects
and wish a fight against inequalities towards all those who have a different culture, have less
financial means, have reduced physical abilities or live in a developing country (ISTO, 1996).

2.2. European Regulations

The Charter of Fundamental Rights of the European Union was proclaimed on 7 December
2000 in Nice (Nice Charter) and defines a group of rights and freedoms of exceptional impor-
tance to be guaranteed to all citizens of the Union. Article 26 states that „The Union recognizes
and respects the right of disabled people to benefit from measures aimed at guaranteeing their
autonomy, social and professional integration and participation in community life” (European
Union, 2000).

The European Union has issued others specific documents, among the most important resolu-
tions, there’s the one released on 26 November 1993 about the accessibility of transport (Euro-
pean Union, 1993) and another one published on 20 December 1996 on equal opportunities for
disabled people in all fields (European Union, 1996), including leisure time.

2.3. Italian Legislation

Also, in Italy there is a detailed regulation on accessibility and social inclusion, both at the state
level and at the level of the individual regions. Following these rules, several Italian national
parks have adopted guidelines to make their areas accessible and offer all the services that peo-
ple with special needs (www.turismoaccessibile.eu).

Law no. 118/1971 is the first Italian law, which reaffirms the need for public buildings to be
accessible to all and introduces the restriction on the removal of architectural barriers in the
existing buildings.

The Law no. 41/1986 provides funding for specialized renovations to the elimination of archi-
tectural barriers with the obligation of compliance with the Decree of the President of the Italian
Republic no. 384/78 also extended to interventions carried out with grants or public subsidies.
This law establishes the „general design criteria”: accessibility is no longer considered as a
discretionary element but becomes a quality requirement, indispensable even in the presence of
historical-artistic constraints. In fact, the highest level of accessibility assumes that every part
of the building and its equipment can be used by all persons, including those with reduced or
impaired motor or sensory capacities. Indeed, the highest level of accessibility presupposes that
every part of the unit and its actions have been used by all people, including those with reduced
or impaired motor or sensory skills, easily and safely.

The Decree of the Minister of Public Works n. 236/1989 defines the three levels of building
quality, lists the different types of buildings, indicating the degree of usability required, that is,
whether the buildings must be accessible (art. 4), visitable (art. 5) or adaptable (art. 6).

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Law no. 104/1992 (framework law on the handicap) highlights the need to make sports facilities,
bathing facilities, motorway services, collective transport services, accommodation facilities
and related tourist services, building structures and buildings accessible to all users’ railway
carriages of the Italian State Railway Authority, by benefitting from subsidized housing. It also
provides the possibility of carrying out temporary works to overcome architectural barriers for
historic buildings which are subject to restrictions. The Decree of the President of the Italian
Republic no. 503/1996 was issued with the main objective of standardizing the regulations for
public buildings with those for private buildings (the aforementioned Ministerial Decree no.
236/1989).

3. BEST PRACTICES ADOPTED IN ITALIAN NATIONAL PARKS

The accessibility of a protected area is measured by the degree of accessibility of places and
structures connected to it; that usability should also be seen as a possibility for people with spe-
cial needs to access a structure or open space to fully enjoy services and activities connected
to it or related to it. There are many projects and best-practice models in terms of accessibility
and usability for the disabled promoted in recent years, one of the first steps was the Norcia
Declaration in 2003. This document asks the European Union to „define a community policy
for protected natural areas; to introduce in European programs particular attention to the use of
nature for citizens with disabilities; to start the discussion on a non-discrimination directive on
disability as the conclusion of the European Year „while member states are asked to” promote
good practices and train park staff, technicians and operators”. Managing bodies play an impor-
tant role to ensure accessibility in parks. These entities must include in their statutes and regu-
lations instruments that allow the usability and training of park operators and technicians. This
is also a function of the creation of an „accessible building” that places the individual („able”
and „disabled”) at the center even before the more formal and aesthetic canons. In this sense,
the „Universal Design” or „Design for all” approach is aimed at designing spaces without taking
into account age and psychophysical ability. (www.appuntiturismo.it) (www.italiaccessibile.it).

Subsequently, in 2003, the „Parks for all: usability for an extended user” project, created by
the ACLI Anni Verdi Association, communicated the problems of accessibility for the usabil-
ity of all citizens and competent or decision-makers in protected natural areas, sites, services,
equipment and means of transport. This communication took place through the creation of the
website www.parchipertutti.it and implementation of „Guidelines for accessibility and use of
national parks by a consumer extended to persons with disabilities, the elderly, the children”.
These guidelines provide the rules to monitor accessibility of all disabled persons to the existing
structures of a park (www.minambiente.it).

The Italian Federation of Parks and Natural Reserves (Federparchi) has grouped a list of all the
paths and nature trails of the Italian Protected Natural Areas, which are currently accessible to
all. These include: the path for the blind (PLIS Colline di Brescia), the underwater path for disa-
bled (Protected Marine Area of the Cinque Terre), the nature trail for the blind and the sensor of
Parco Naturale Lombardo della Valle del Ticino, a path for everyone at Sacro Monte di Varallo
(www.europarc.it) (www.parks.it).

An important contribution was also one of the National Parks. Italy has 24 national parks, and
some of them have adopted practices to facilitate access to people with disabilities. Below there
is a review of the best practices implemented by the Bodies to make the Parks more accessible.

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ADOPTED IN ITALIAN NATIONAL PARKS

In the Cinque Terre National Park, there is an underwater path for the disabled (www.parcona-
zionale5terre.it).

In the Circeo National Park, a walkway has been built which is also accessible to people with
walking difficulties. In addition, the project was implemented in the park: „The friendly park”
intended for children of primary school and kindergarten, which also includes the participation
of children with disabilities to stimulate their sensory skills, to encourage inclusion and raise
the acceptance of their communities (www.parcocirceo.it).

The Dolomiti Bellunesi National Park Authority proposes, in collaboration with the AIPD (Ital-
ian Association of People Down), a guided excursion program and environmental interpretation
workshops in areas of the park, which are accessible to the disabled. The activities are designed
specifically for disabled people, according to different disabilities, and people with Down syn-
drome. These activities are extended to all, to bring „able-bodied” people closer to the reality
experienced daily by the disabled. Some examples of eligible activities are: workshops on flower
scents and tactile recognition of natural objects for blind people, recognition of the noises of
the forest and of the verses and songs of the animals, excursions „silent” with earplugs to un-
derstand the reality experienced by deaf. In the park, three parking areas have been created for
disabled people with public toilets, one of which for disabled people. The Dolomiti Bellunesi
National Park has also joined the „Nature without barriers” initiative, promoted by Federtrek
– Hiking and the Environment (a federation made up of about 40 associations), which brings
together events throughout the national territory to promote participation in nature excursions,
including of people with disabilities (blind, with reduced mobility or with other difficulties)
(www.dolomitipark.it).

In the Gargano National Park, two paths for the visually impaired were completed, complete with
signs with Braille characters, handrails with a guide and parapet function, pile drivers, and two
specific tables for people with motor disabilities complete with benches. Within the framework
of facilitating accessibility for people with disabilities in the protected sea area of the Tremiti
Islands, various initiatives have been implemented, in particular a diving course to guide blind
people accompanied by diving instructors (Cappelletti et al., 2019) (www.parcogargano.it/).

The Gran Paradiso National Park has expanded the tourist offer of the protected area also for the
disabled. On their website, there is a section where you can find information on the accessibility
of the protected natural area, the accommodation facilities, and on some paths in the area. The
information of Park structures and potentially accessible routes was collected; each structure
has its own detail sheet in order to inform about the degree of accessibility (www.pngp.it/par-
co-accessibile).

The Gran Sasso National Park and Monti della Laga, in implementation of the Action Plan of
the European Charter for Sustainable Tourism, allows free use of the persons concerned of five
carriages „joelette”, a special mode of transport, with the help of two companions, it also allows
people with disabilities and impaired mobility to walk the paths of the park. Through a network
of operators, it is thus possible for people with special needs to take advantage of accessible and
sustainable tourism-recreational offers (www.gransassolagapark.it/).

At the National Park of La Maddalena there are two walkways for the disabled that allow direct
access to the beach and the sea. All those architectural barriers that prevented access have been

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removed. There are also parking spaces reserved for the disabled near the entrance to the cat-
walks www.lamaddalenapark.it.

Inside the Monti Sibillini National Park, a path has been created with environmentally friendly
material that can also be used with strollers and wheelchairs (www.sibillini.net).

The Sila National Park devotes particular attention to ensuring maximum accessibility to all
its visitors. In particular, the Visitor Centers „Cupone” and „A. Garcea” are equipped with two
means of transport for people with reduced mobility, the wheelchairs for the disabled called
“Joelette”. The Park Authority has printed information brochures in Braille for the blind. The
„Cupone” visitor center offers itineraries for visitors with walking difficulties and for blind and
partially sighted people. There is also a „Botanical Garden” accessible to the blinds, thanks to
the presence of panels of mp3 audio files that explain the various essences present. At the Visitor
Center „A. Garcea” there is a path dedicated to people with motor disabilities. It has been also
realized a path equipped with tactile signaling systems orientation to the ground and handrails
and tables describing the surroundings, built on a metallic substrate with alphanumeric char-
acters in Braille for blind and visually impaired (www.parcosila.it/it/visita-il-parco/turismo-ac-
cessibile).

4. CONCLUSION

In this paper, the accessibility legislation and the best practices adopted in the National Parks in
Italy have been presented. The legislation available to encourage the development of accessible
tourism in Protected Natural Areas has allowed the proliferation of the best practices in many
Italian national parks. From this study, it emerged that, to encourage their diffusion in the Pro-
tected Natural Areas, it would be appropriate to define guidelines that organize such a system
according to positive experiences of accessibility for people with disabilities. This could be
done, more easily, by creating a network between the management entities of the national parks
that have implemented these best practices, reaching even to the creation of an association that
certifies a label dedicated to „accessible park” with the highlight levels of accessibility.

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the accessibility requiring market in the context of tourism, Information & Management,
50, 229–239.
Ministero Ambiente-ACLI Anni Verdi, (2003). Parchi per tutti, Linee guida dei parchi italiani
https://www.minambiente.it/sites/default/files/archivio/biblioteca/dpn_linee_guida_parchi.pdf
Setola N, Marzi L., Torricelli M.C. (2018). Accessibility indicator for a trails network in a Na-
ture Park as part of the environmental assessment framework, Environmental Impact As-
sessment Review 69, 1–15. (Accessed 04.11.2019).
Simon D., (2010). Inherent complexity: Disability, accessible tourism and accommodation in-
formation preferences, Tourism Management, 31, 816-826.
United Nations (1948) Universal Declaration of Human Rights, Resolution 217A, 10 December
1948.
https://www.un.org/en/universal-declaration-human-rights/ (Accessed 09.11.2019).
United Nations (1971) Declaration on the Rights of Mentally Retarded Persons, Resolution 2856
(XXVI) of 20 December 1971.
https://www.ohchr.org/EN/ProfessionalInterest/Pages/RightsOfMentallyRetardedPersons.aspx
(Accessed 10.11.2019).
United Nations (1975). Declaration on the Rights of Disabled Persons, Resolution 3447 (XXX)
of 9 December 1975.
https://www.ohchr.org/EN/ProfessionalInterest/Pages/RightsOfDisabledPersons.aspx (Ac-
cessed 10.11.2019).
United Nations (1979). Declaration on the Rights of Deaf-Blind Persons, Decision 1979/24
https://digitallibrary.un.org/record/33974 (Accessed 10.11.2019).
United Nations (1982). World Programme of Action Concerning Disabled Persons, Resolution
37/52 of 1982.
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United Nations (1994). Standard Rules on the Equalization of Opportunities for Persons with Dis-
abilities, Resolution A/RES/48/96, 4 March 1994. https://www.un.org/development/desa/
disabilities/standard-rules-on-the-equalization-of-opportunities-for-persons-with-disabil-
ities.html (Accessed 10.11.2019).
United Nations, (2016). Convention on the Right of the Persons with Disabilities of 2016. https://
www.un.org/disabilities/documents/convention/convention_accessible_pdf.pdf (Accessed
10.11.2019).

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UNWTO (1999). Global Code of Ethics for Tourism, https://www.accessibletourism.org/re-

sources/unwto_global_code_of_ethics_en.pdf
(Accessed 10.11.2019).
Vila T.D., Darcy S., González E.A., (2015). Competing for the disability tourism market – A
comparative exploration of the factors of accessible tourism competitiveness in Spain and
Australia, Tourism Management, 47, 261-272.
WHO (World Health Organization) (2015), Global disability action plan 2014-2021 https://
apps.who.int/iris/bitstream/handle/10665/199544/9789241509619_eng.pdf;jsession-
id=1EA3C5B20D412D999753500107FDFB7B?sequence=1 (Accessed 10.11.2019).
www.turismoaccessibile.eu (Accessed 11.11.2019).
www.appuntiturismo.it (Accessed 11.11.2019).
www.italiaccessibile.it (Accessed 12.11.2019).
www.europarc.it (Accessed 12.11.2019).
www.parks.it/indice/Esentieripertutti.php (Accessed 12.11.2019).
www.lamaddalenapark.it (Accessed 12.11.2019).
www.parconazionale5terre.it (Accessed 12.11.2019).
www.parcocirceo.it (Accessed 12.11.2019).
www.dolomitipark.it (Accessed 12.11.2019).
www.pngp.it/parco-accessibile (Accessed 12.11.2019).
www.gransassolagapark.it/ (Accessed 12.11.2019).
www.sibillini.net (Accessed 12.11.2019).
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Contribution of Authors

Introduction, Conclusion and References (Cappelletti G.M., Di Noia A.E.); Regulations Re-
quirements for Structures for the Reception on the Disabled (Cappelletti G.M.); Best Prac-
tices Adopted in Italian National Parks (Di Noia A.E.); Supervision (Nicoletti G.M.).

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 INTERCULTURAL TRENDS IN TOURISM
OF THE MONTENEGRIN COAST
Maria Popovic1
Dijana Medenica Mitrovic2

DOI:

Abstract: In this article tourism is seen as a form of contact between representatives of different cul-
tures. Here are presented trends which are arising from the meetings of representatives of the local
population on the one side and tourists on the other, as bearers of different cultural identities and values.
In the first part of the article, which is based on theoretical approaches, are listed tendencies at the
global level and interpreted the results of research of relevant institutions in the field of tourism.
The second part of the article examines the tradition of intercultural contact in the tourism of Monte-
negrin coast. There is given the review of the structure of tourists who are staying in this region, by
the number of visits and nights spent. The article gives analysis of current trends, compare them with
global and outlines the most significant changes that tourism development brings.
The article links global socio-cultural, economic, political and other influences that determine changes
in the representation of certain traditional tourists.
Dominantly is being analyzed the period of the last five years during the summer tourist season, when
the period of the intercultural contacts is largest.

Keywords: Tourism, Culture, Interculturalism.

1. TRENDS OF INTERCULTURAL MEETINGS IN THE WORLD

C ontemporary travels, dominantly for tourism purposes, show an intensive tendency of

growth throughout the previous two decades. However, it should be emphasized, that this
is relatively constant trend of past decades. Increasing of economic standard, the availability of
destinations with cheaper flight tickets, as well as an increasing marketing presence of destina-
tions globally had a big impact on a growth of tourist-motivated trips. There is bigger and bigger
number of countries where tourism is the main economic activity and that see their perspective
precisely in tourism development.

The most recent UNWTO researches (e-unwo.org) speak in favor of the fact that global consump-
tion in tourism reached over US $ 1.4 trillion during 2018. According to the above China has the
highest consumption by far, followed by the USA, Germany and the United Kingdom – Great
Britain, France, Australia, Russian Federation, Canada, Korea and Italy. Real increase of spend-
ing on tourist trips was most increased by France and the Russian Federation, followed by USA.

The information that were provided by World Tourism Organisation, exactly speaks about in-
creasing trend of number of tourists in the world. In the chronological plane, we note moderate
1
Faculty for Business and Tourism Budva, Adriatic University Bar, Montenegro, Rozino bb 85310 Budva,
Montenegro
2
Faculty for Business Management Bar, J. Tomasevica 30/78, Montenegro
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and constant increase of number of tourists in the period from 1980. to 2005. with an increase
from 240 million to 750 million of tourists. The more intensive increase through the next seven
years, is noted at the end of 2012. with the incredible and record number of one billion tour-
ists. That one, extremely growing trend, is continued until 2018. as we can see on the sketch 1.
Screenings of the World Tourist Organisation speaks in favor of the distinctly growing trend
in the number of tourists until 2030. when this number is expected to increase to 1.8 billion of
tourists (sketch number 3).

Figure 1: International tourist arrivals (million) and tourism receipts (USD billion).
Source: e-untwo.org

Figure 2: Top 10 countries by international tourism spending, 2018.

Source: e-untwo.org

Figure 3: Forecast of increase of international tourist’s arrivals until 2030.

Source: e-untwo.org

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 INTERCULTURAL TRENDS IN TOURISM OF THE MONTENEGRIN COAST

The growing tendencies of the number of the tourists in the world, speak in favor of intensify-
ing the number of intercultural meetings, on almost every meridian of the world. This fact is
confirmed by the results of the research of UNWTO where it is said that only four from five
tourists travel to its region.

2. TOURISM OF MONTENEGRIN COAST

Tourism as strategic economic activity in Montenegro is being recognized in 1960s of the last
century and it is being incorporated into the state system, through systematic decisions that will
improve it permanently. Since then, mass tourist arrivals have marked its more or less constant
development, with periods of stagnation or almost complete disruption after the big Earthquake
1979. and also, in the periods of sanctions and wars from 1991. to 2000. After the devastating
earthquake, followed period of reconstruction was lasting about four years with the generous
assistance of all former Yugoslavs republics and foreign help and assistance. After the earth-
quake, especially devastated was the Montenegrin coast.

The next phase of stagnation of trends of tourism development in Montenegro is caused by

major political fractures on the Balkan political scene. Specifically, it came to a breakdown of
Yugoslavia, the extremely powerful economic and political crisis, devastating wars in the envi-
ronment and sanctions.

Apart from the mentioned periods, the second half of the last century is marked by several
essential elements, which have contributed to the growing trend of tourist movements on the
territory of Montenegro:
• Active investment politics,
• Development of a tourist infrastructure and material base of tourism,
• Increased number of highly qualified staff who deals in tourism,
• Adoption of strategically important documents that set guidelines for the future devel-
opment of Montenegrin tourism.

For our research we will cite as a relevant, piece of information of the growth of tourist traffic
from the period from 1960. to 1990., considering it according to the statistics of the realized
tourist traffic (table no.1: according to Radovic, 2010:47). Just before the devastating Earthquake
of 1979, it is marked the highest increase in the number of tourists (in the 1978) and they were
dominantly domestic.

The structure of the guests at the beginning of the period mentioned, shows relatively low
representation of foreign tourists, in 1960s – just 8%, while its maximum/highest percentage
is marked in 1987. – 31%. As its can be seen, the maximum number of registered tourists was
recorded in 1987s with 1,281,962 tourists.

It should be emphasized that tourist traffic at the level of Montenegro is traditionally dispro-
portionately realized, and also, we can tell that Budva is the capital of Montenegro in terms of
traffic tourism. The entire coastal region also has a higher turnover than other regions.

„Market specifics are reflected in the long-term trend of demand towards the Mediterranean,
with sea and sun as primary motives, emphasized seasonal concentration in the period from
June to September, differentiation prices by season with the peak in July and August, lower

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decline in June and September, and a general decline, below the economically acceptable lev-
el in April, October, and the months preceding and following them, predominantly focusing
on organised traffic and allotment sales, significantly reduced market interests in winter etc.”
(Ratkovic,2003:132). In the observed period mountain tourism is in the initial phase. Central
and northern regions, in the comparison with the Coastal, are very far. The most important step
forward was made in Zabljak, which tourist offer is leading in relation to other northern munic-
ipalities. Valorisation of resources in the municipalities: Kolasin, Plav and Rozaje – „it is only
in the stage of humble beginnings” (Ratkovic,2003:132).

Table no.1: Tourist traffic from 1960. to 1990.

Guests Overnights
Year
total domestic foreign total domestic foreign
1960. 239.711 230.583 19.128 1.597.348 1.518.482 78.865
1965. 409.336 315.265 94.071 2.784.819 2.188.471 596.348
1970. 593.000 401.000 192.000 4.424.446 2.859.735 1.564.711
1975. 883.141 599.088 284.053 6.991.142 4.742.555 2.248.625
1978. 1.195.225 845.699 349.526 9.300.624 6.587.148 2.713.476
1979. 521.714 378.463 143.351 2.921.185 2.142.555 778.630
1980. 874.169 655.612 218.557 7.298.773 5.569.591 1.729.182
1985. 1.241.957 863.280 378.677 10.513.545 7.105.143 3.408.402
1987. 1.281.962 879.591 402.371 10.823.867 7.060.215 3.763.652
1988. 1.189.200 828.800 360.400 10.011.300 6.661.400 3.349.900
1989. 1.192.100 861.400 330.700 9.945.200 6.915.500 3.029.700
1990. 1.112.700 808.100 304.600 9.352.808 6.423.100 2.929.700
Source: Statistical Office of Montenegro (yearbooks), by: Radović, 2010.

Radovic also talks about great concentration of tourist traffic in the coastal municipality Budva
and sums up the following data: in 2008., the total number of nights spent in this area of munic-
ipality amounted to 42% of the total number of overnight stays in the territory of Montenegro,
23% domestic and even 45% foreign guests (Radovic,2010:52). According to annual informa-
tion, provided by Ministry of tourism of Montenegro, similar trend is being continued in 2009
– looking at the number of nights spent in Budva ahead with the 44% of total numbers of nights
realized. (Figure 4)

Figure 4: The number of overnights in municipalities in 2009,

Ministry of tourism and NTO, 2010.

The period of last decade of the tourism development of Montenegrin coastal is marked by a rise
of numbers of visits and overnight stays (table No.2).

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 INTERCULTURAL TRENDS IN TOURISM OF THE MONTENEGRIN COAST

Table No.2: The number of realized arrival and overnights from 2010. to 2018.
Year Number of arrivals Number of overnights
2010 1 262 985 7 964 893
2011 1 373 454 8 775 171
2012 1 439 500 9 151 236
2013 1 492 006 9 411 943
2014 1 517 376 9 553 783
2015 1 713 109 11 054 947
2016 1 813 817 11 250 005
2017 2 000 009 11 953 316
2018 2.204.856 12.930.334
Source: Statistical yearbooks, MONSTAT 2010-2019.

MONSTAT comparative data supports their thesis. Table No2. gives comparative figures data for
the period from 2010 to 2019 for the whole year. In the structure of overnight stays by types of
tourists in 2018, the Montenegrin coastal is dominantly represented. Coastal towns record rep-
resentation of about 95% an average annually (according to Statistical yearbook 2018, Monstat).

3. TOURISTS ON THE MONTENEGRIN COAST

AND TENDENCIES OF INTERCULTURAL MEETINGS

The tendency of increasing of intercultural meetings is immanent to the tourism development of

Montenegro. Statistically data from the National Tourist Organisation and the Monstat – Bureau
of Statistics testify to this through an overview of tourist arrivals and overnight stays by coun-
try of origin. The first decade of 21st century is marked dominantly with the tourists from the
former Yugoslav countries. However, and here came to changes, as well. If we compare years
2006 and 2010, we can record that the number of tourists from Serbia decreased from 68,82% to
41.16%, and the increase of the number of tourists from Bosnia and Herzegovina from 4.65% to
8,16% in 2010. Except of these marked changes, Montenegro like a destination is again becom-
ing more interesting to the European market, predominantly to Russian market, with a steady
increase – from 2.31% in 2004 to 11.09% in 2010. (according to Popovic, 2014).

Intercultural meetings tend to grow in this decade as well. Sketches cited no.5,6,7,8,9, that are
following this text, testify through an overview of the structure of tourists by the number of
overnight stays by country of origin in 2014,2015,2016,2017 and 2018.

Figure 5: Tourist structure for August 2014. by the overnights realized, MONSTAT, 2014.

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Figure 6: Tourist structure for August 2015. by the overnights realized, MONSTAT, 2015.

Figure 7: Tourist structure for August 2016. by the overnights realized, MONSTAT, 2016.

Figure 8: Tourist structure for August 2017. by the overnights realized, MONSTAT, 2017.

The most represented guests in the observed period are guests from Russia and Serbia. In the
territory of Montenegro, they are not considered as new guests. The former Yugoslav territory
is dominant broadcast market in the tourism of Montenegrin coast. Intercultural meeting and
communication between host and guest here it is very close, due primarily to the same lan-
guage, similar value standards, good knowledge of opportunities in the region, famous natural
and anthropogenic characteristics of the Montenegrin coast. Many decades of living in the same
country contributed to this. The traditional representation of Russians on the coast of Montene-
gro has made that intercultural communication between host and guest is expected to be famil-
iar and predictable. Most political, economics, the social and cultural changes that have taken

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place in this region have an impact on intercultural communication, so the traditional guest is a
relic of the past and the new guest is the reality. It is the same with the guests from Ukraine and
the other countries of the former USSR.

Current trends, which primarily characterize 2018 and the past season, are increasing guest
representation from Western Europe: United Kindgom, France, Germany, Poland... This are
famous guests because they are traditionally associated with so-called „golden-age” of Monte-
negrin tourism. Golden age of Montenegrin tourism lasted from the beginning of 1960s to the
beginning of 1990s. We can say that in the period mentioned, the most of tourists were Germans
and Englishmen, like in the other Mediterranean countries. Big season lasted for seven months.
(according to Ratkovic, 2003). Evocative contents contribute to good intercultural communica-
tion. Plus, there it is a tendency of native population to learn their languages and learn about
their culture. Traditional Montenegrin hospitality has generally come to the expression in the
host-guest relation. This relationship has a personal character that is evidenced through the rela-
tionship of the guest and travel agent but also through the relationship of guests communicating
in the destination. The quality of that relationship is conditioned by the nature of relationship
and the openness to intercultural communication for both – as guest so as host.

Figure 9: Tourist structure for August 2018. by the overnights realized, MONSTAT, 2018.

Readiness for intercultural communication depends on many factors and for our research we
will list just the most important ones. The values of other cultures should be well-known. In
Montenegro, this field is mastered in formal and non-formal education. Intercultural manage-
ment is the part of syllabus of most tourism programs. In addition, in higher-education institu-
tions are being organised courses for tourist guides and managers on various levels, where also
can be studied cultural determinants of the most represented broadcast markets. Also, within
the hotel companies are being developed training programs which enable good intercultural
communication.

Intercultural communication is affirmed by tourists` willingness to open for values which desti-
nation provide. In addition to planned visits and excursions intended for tourists, in some hotels
of the Montenegrin coast are being organised thematic nights, which aim is promotion of the
local culture, gastronomy and folklore. Practice shows that tourists have a higher degree of in-
terests for these contents, they are happy to visit it and actively participate in its performance.
Also, animation content programs provide tourists the opportunity for greater openness and
direct integration into the local cultural context.

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Avoiding the stereotypes contributes to better intercultural communication (Stanojevic,

2008:147). Formal and non-formal education, panel discussions and consultants affirm the over-
coming of stereotypes in the wider community and tourism employees are trained to prevent
stereotypes and exclude it from the professional practice. Flexibility is the most prevalent chal-
lenge in the intercultural communication, which requires deeper analysis and more appropriate
treatment. It is an imperative of modern tourism primarily because its current tendencies imply
development and permanent changes on the global and local level.

4. CONCLUSION

In this article, we talked about intercultural interactions in tourism and intercultural trends in
the tourism of Montenegrin coast. Its concluded that the very fast growth of tourism develop-
ment increased the opportunities for intercultural meetings. This fact provides UNWTO where
it is marked that four of five tourists today travel to their region.

From 1960s until today, tourism in Montenegro had periods of less or more development and
periods of total stagnation (after the big earthquake in 1979). The entire Montenegrin coast is
more developed in field of tourism than the other regions (northern and central part of the coun-
try). Budva is the most developed tourism municipality in Montenegro. The development of the
mountain tourism is just at the beginning.

Tendency of growth of intercultural meetings is characteristic in the tourism development of

Montenegro. The most important relation is between host and guest. Guests from Serbia and
Russia are not new guests. The intercultural meetings with Russian tourists have done famous
and predictable relation between guests and hosts.

As the tourism is being developed, tourists travel to Montenegro from Western Europe – Unit-
ed Kingdom, France, Germany, Poland. With these tourists started so-called „golden age” of
Montenegrin tourism.

Through different programs (excursions, thematic nights, animations) native people are doing
their best so that tourists can learn about Montenegrin culture, tradition, heritage, language,
gastronomy. The response of tourists to this is at the high level of interest.

At the end, we can say that the flexibility is imperative of modern tourism and the challenge
which is in the intercultural communication most representative.

REFERENCES

Radovic, Miljan (2010): Tourism geography of Montenegro, Faculty of tourism, hospitality and
trade, Bar and Faculty for tourism and hospitality, Kotor.
Ratkovic Rade (2003): Montenegro’s Strategic position at the beginning of the Third Millen-
nium, Time and Progress – Montenegro at the turn of the Millennium (book 63), CANU,
Podgorica
Maria Popovic (2013): Cultural and tourist valorisation of historical core of Cetinje, Communi-
cations, media and culture, Yearbook of the Faculty of Culture and Media of Megatrend
University in Belgrade

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Zecevic Stanojevic, Olgicа (2007): European cultural environment, European University, Bel-
grade
Zecevic Stanojevic, Olgica (2008): Cultural relations, European University, Belgrade
Jagic, Stjepan (2004): „Immanence of interculturalism in tourism “, Sociology of Villages (Jour-
nal of spatial and sociocultural development research), Zagreb

Publications:

UNWTO Tourism highlights 2018 Edition

Statement No.257, Statistical Office of Montenegro, Podgorica, 2014.
Statement No.213, Statistical Office of Montenegro, Podgorica, 2015.
Statement No.181, Statistical Office of Montenegro, Podgorica, 2016.
Statement No.172, Statistical office of Montenegro, Podgorica, 2017.
Statement No.34, Statistical Office of Montenegro, Podgorica, 2019.
Work programme for 2017, National tourist organisation of Montenegro, Podgorica, January
2017.

Internet sources:

www.e-unwto.org
www.monstat.org

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 LIMITATIONS OF INTERCULTURAL MANAGEMENT
IN THE DEVELOPMENT OF TRADE RELATIONS
BETWEEN COUNTRIES
Dalibor Misirača1
Dragan Gnjatić2

DOI:

Abstract: With the internationalization of business and the fact that many organizations are expanding
into multiple different countries, it is important that managers understand the impact of national cul-
ture on businesses. National culture determines the rules that determine how businesses operate in a
social context. There are different cultures in the world today, so, from the point of view of international
management it is very important to understand their influence on thinking, beliefs, behaviors, percep-
tions, managers’ attitudes, their stereotypes, ideology, approach to strategy formulation, decision mak-
ing, attitude towards risk, attitude towards cooperation and competition, orientation towards stability
or innovation, and tendency towards change. The primary role of intercultural management is based on
the creation of patterns that will follow the flow of national specificity in the field of international busi-
ness. The aim of this scientific discipline is based on achieving better integration of different peoples
and raising the level of tolerance in international business. The commonly used foreign trade analysis
indicators in international business rely on import-export components and their volume. The purpose
of this paper is to show, in addition to basic indicators of trade, the extent to which the multicultural
effect has contributed to the development of trade relations of individual countries and to determine the
possibility of creating conditions for optimal business in the globalization world. The methodology of
work will be based on research of customer orientation and their preferences for individual products in
accordance with primary indicators and indicators based on intercultural bases.
Keywords: Intercultural, Management, Trade, Globalization.

1, INTRODUCTION

G lobalization, as the new name for the idea of ​​conquering the world, is a phenomenon that
is as old as the civilization itself. This idea has historically emerged through „the influence
of world religions, imperial conquests, expansion of trade networks”, and it only kept changing
its „forms, directions and intensities from one epoch to another or from one stage of social de-
velopment to another.” (Grgušević, 2010)

Electronic global village, multinational corporations, satellite information transmission, dig-

itization, transnational media conglomerates, information industry, entertainment industry,
increasing interconnectivity, world system are just some of the direct associations to the phe-
nomenon, formerly known as Americanization, increasingly referred to as mundialization or
globalization, or a global cosmopolitan society (Zubanović & Roca, 2010).

Globalization, as a process that has been present for several decades, has led to many changes
in all segments of life. The most significant consequences of the globalization process are the
integration of countries, the formation of a global market, global companies, global brands,
1
University of Travnik, Bosnia and Hercegovina
2
University of Travnik, Bosnia and Hercegovina
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global culture and even global consumers. Globalism is a process that affects business systems,
their organizational structure and all available resources with the aim of perceiving the world as
one market (Žikić & Koščec, 2012).

In a time marked by so many changes, innovations, advancements in technology, telecommuni-

cation facilities, complicating and accelerating the business process, the average customer fails to
manage at all (Zakić & Milutinović, 2013). The world of modern times is characterized by strong
development of information, capital, service products and people with a tendency to erase national
borders; the globalization is being perceived as a world without borders, and the development of the
Internet and advanced communication technologies enable virtual access, immediate availability of
information and involvement in business processes that occur in all parts of the world (Bedeković &
Golub, 2011). With so much information coming from all over the world, the contemporary customer
doesn’t get time to think of how is it that a product comes to his or her let us say European country
from Vietnam, Thailand or let’s say Argentina. Customers like to use different products and they buy
them without thinking about how these products came to them, how contracts were made in order to
have those sold in their country, and certainly they are not thinking about what (cultural) specifics
the business people from their home country encountered in order to make a deal with some other
foreign business people. Someone will say that they don’t even have to think about it if they just want
to buy. But is that really the case? It should be emphasized that the globalized world is full of things
and achievements that were not possible until just a year ago, and this is certainly a success of the
modern age. On the other hand, situations that have been known for centuries and are not good, such
as cultural conflicts, still exist and unfortunately do not show a tendency to calm down. Therefore, it
is not surprising that the number of scientific papers, books and articles dealing with the conflict of
human existence is at a very high level. It is precisely from all of the above that one concludes that
it is a good idea to have a scientific discipline developed in the field of economics, more precisely
management, which can help us understand other nations and nations, and thereby reduce the level
of potential cultural conflicts while increasing the level of tolerance. Intercultural (cross-cultural or
comparative, depending on how it gets translated) management as a relatively young scientific dis-
cipline is primarily tasked with promoting business results at the organizational level of companies.
Namely, multinational companies generally have a highly diversified national employee structure,
which can cause great problems for the company if employees are not understood because they do not
come from the same environment, and the ways of communication, titling and addressing them are
completely different. At the next level, this discipline aims to prepare business people for specifics in
the process of negotiating with people from other cultures and climates. In order to achieve this, it
is necessary to combine knowledge in the field of culture (history, tradition, customs, religions) with
knowledge in the field of economics (economic systems of the country, the way organizations work,
the system of economic legislation, human resources management), politics (political organization
of the country and the way the Government operates), including even sociology (basic social norms,
stratification of society, needs and motivation of the population). Thus, the multidimensionality and
stratification of this discipline enable understanding of the system of work with other peoples and
nations, thereby leading to greater awareness of the cultures of other nations and creating greater
tolerance in international business (Zakić & Milutinović, 2013).

2. BASIC NOTIONS

In order to understand the concept of business culture, and in relation to that the scientific dis-
cipline that deals with it, and that is the intercultural management, it is necessary to define the
notion of culture in advance. The word culture derives from the Latin verb colere, which in

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IN THE DEVELOPMENT OF TRADE RELATIONS BETWEEN COUNTRIES

translation means to cultivate, refine or nurture. There are many definitions and meanings of
culture, and the word is used in anthropology, sociology, philosophy, art, as well as in the fields
of economics and agriculture. The notion of culture was among the first studied by anthropol-
ogists. Thus, the anthropologist Edward Tylor states: “Culture or civilization is such a complex
entity that encompasses: knowledge, belief, art, law, morals, customs and all other abilities and
habits acquired by a man as a member of society” (Mojić, 2007).

The definition of culture provided by Kroeber and Kluckhohn in their monograph Culture:
A Critical Review of Concepts and Definitions states: “Culture consists of patterns of behav-
ior, explicit and implicit, acquired and transmitted through symbols, representing a distinct
achievement of human groups, including their embodiment in artifacts; the core of the culture
is made up of traditional (i.e. historically derived and selected) ideas and in particular their
associated values; on the one hand, cultural systems can be considered as products of action
and, on the other, a precondition for further action” (Mojić, 2007). According to anthropologist
Clifford Geertz, culture signifies a historically transmitted pattern of meaning based on sym-
bols, a system of inherited conceptions expressed in symbolic forms, through which people
communicate, renew and develop their knowledge of life and attitudes toward it (Zakić & Milu-
tinović, 2013). Sociologist Ralph Linton believes that: “The culture of a society is the way of life
of its members; a collection of ideas and habits they learn, share and transmit from generation
to generation” (Haralambos & Holborn, 2002). „Culture is a pattern of behavior transmitted to
members of a group by the previous generation of that same group,” reads one of the reflections
by a sociologist Stuart Hall (Zakić & Milutinović, 2013). The Dutch sociologist Geert Hofstede
states that: „culture is a collective programming of the mind that distinguishes members of one
group from others” (Zakić & Milutinović, 2013). The development of management as a scien-
tific discipline during the 1970s caused management to no longer be approached as a process
consisting only of planning, organizing, motivating and controlling (Jovanović, 2009), but also
to be looked at as he knew dimension of management that will take into account the influence
of national culture on the management system. According to Nancy Adler, one of the leading
authors in the field of organizational behavior: the “cross-cultural management is a study of the
behavior of people in organizations in different cultures and nations of the world. This discipline
focuses on describing organizational behavior within countries and cultures, on comparing
organizational behavior between countries and cultures, and, perhaps most importantly, on the
interaction of people from different countries working in the same organization or within the
same work environment” (Mojić, 2007). Authors Mića Jovanović and Ana Langović Milićević
believe that: “Intercultural management is a process of imposing, mixing, accepting and mu-
tually preserving cultural values ​​between different civilizations for the purpose of business
globalization” (Jovanović & Langović Milićević, Interkulturni izazovi globalizacije, 2006).

The notion of globalization and the economic aspect of this notion must be defined here.

The notion globalization is derived from the word „global” which means totality, and globalism
is a way of looking at what is happening globally. Globalization would thus imply a social pro-
cess that strives for the inclusiveness and uniqueness of the world (Lončar, 2005).

Globalization is a set of complex social processes that characterize the modern world system. In
the sense most commonly attributed to it today, globalization implies a trend, potentially gener-
al, of overtaking the important political, economic and cultural features of Western civilization
by other constructors of the world system. Although the term „globalization” has been used fre-

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quently in the academic world over the last two decades, the opinion motivated by the growing
awareness of the ever-decreasing influence of physical distance on actors in social processes
is as old as the development of the first fast transport technologies, such as rail. A well-known
sociologist Anthony Giddens gives the following definition of globalization: „Globalization can
thus be defined as the intensification of social relations on the world plane, which connects
distant places in such a way that local events are shaped by events that have taken place miles
away” (Giddens, 1998).

The key idea behind globalization is free market capitalism, while the fundamental element of
globalization is the expansion of the world trade through the elimination or reduction of trade
barriers, like import duties. According to the World Bank, at the peak of the Cold War in 1975,
only 8% of countries around the world had liberal free capital market regimes, with foreign direct
investment at the time being only USD 23 billion. By 1997, the number of countries with a liberal
economic regime equaled 28% and foreign investment equaled USD 644 billion, while today
most open economy countries are involved in the world trade (Mahmutović & Talović, 2014). The
erosion of customs and other safeguards were the most striking events since the end of World War
II that have led to consistent growth in the world trade (Kirkbirde, 2001). The establishment of the
GATT, or more recently the WTO, has especially contributed to the abolition of various trade bar-
riers, resulting in revolutionary economic trends in the growth of world trade and GDP (Kurtović,
Pušara, & Hadžović, 2003). In addition, creation and opening of markets with the globalization
process also brought about changes in certain sectors which underwent structural transformation
with more or less success, and were affected or gained in importance along with this globaliza-
tion process (Hadžiahmetović, 2011). A very important component of globalization is the inter-
national movement of capital, which is facilitated by its liberalization. According to Mašić, „the
liberalization of capital movements by most industrialized countries has been the most significant
factor in the process of financial globalization” (Mašić, 2010). Das considers that the liberalization
and deregulation of the domestic financial sector, together with the liberalization of the capital
account, represent the key determinants of financial globalization (Das, 2004). A similar view is
taken by Čaušević discussing financial globalization as a consequence of financial deregulation
or liberalization (Čaušević, 2005). Liberalization has led to integration in the capital market and,
as Masson points out, has become another important feature of globalization (in addition to trade
liberalization) that has expanded in recent years (Masson, 2001).

3. CONSUMER ATTITUDES AND PREFERENCES

Consumers have numerous attitudes towards products, services, etc. Whenever consumers are
asked whether they like or dislike a product, service, particular store, or ad topic, they are asked
to express their attitudes. Attitude describes one’s relatively ongoing evaluations, feelings, and
preferences for a product, service, object, person, or idea. Although manifested in relation to
concrete things, an attitude is general in nature, and that determines the ways in which one
perceives, feels and reacts. It is conditioned by the content of the whole personality, especially
its unconscious part, it is determined by the impact of the past, the present and the imagined
future of the given personality. Attitudes differ from other patterns of beliefs, desires, opinions,
and behaviors by some general criteria. An important feature is their durability, though they are
not conclusive and invariable over time. They are just resistant to change for months and years
and in that they are different from a set of appropriate moods and other patterns. An important
feature of attitudes is their affective component, which distinguishes them from many rational
patterns (Krstić, 1996). A person with a negative attitude towards something, refuses to receive

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information that speaks against her or his attitude, and if such information still comes, she or
he will censor it.

Attitudes are formed by one’s own experience or by others’ experience. This means that the at-
titudes, which are relevant for purchase, shaped as a result of personal product experience, oral
information received from others (reference groups, especially family and friends), or as a result
of exposure to mass media advertising, the Internet, and other forms of promotion. It is impor-
tant to point out that while attitudes can be derived from behavior, they are not the same thing
as behavior is. As learned preferences, attitudes have a motivational quality, in other words,
they can direct the consumer towards a particular behavior or distract him or her from a certain
behavior. Therefore, it is not surprising why the attitude problem is among the most important
and commonly researched problems in consumer research. Attitude is an acquired, relatively
lasting and stable organization of emotions, evaluations and reactions to a process, product/
service or element of a marketing strategy. Despite consistency, attitudes are not necessarily
persistent, they can change. Take for example a consumer who has a greater propensity for
German cars than Japanese cars. We would expect her or him to buy the German car brand at
the next purchase, which would be in line with her or his views. However, circumstances often
preclude a harmony between attitude and behavior. In the case of consumers from the example,
the problem of financial opportunities may arise and he or she may conclude that a particular
Japanese car is a more realistic choice than a German one. Therefore, we need to consider possi-
ble situational influences on consumer attitudes and behavior. By a situation we mean events or
circumstances that at some point in time affect the relationship between attitude and behavior.
Attitudes are always directed toward a goal – an object. If there is a change in attitude, there is a
change in the lifestyle of the consumer. Attitudes also differ in whether they reflect hedonistic or
useful properties in consumption. Numerous studies have been undertaken to determine the de-
gree of interdependence of consumer attitudes and behavior. The general conclusion is that the
degree to which an attitude influences behavior depends to a large extent on the way in which
the attitude is formed. Attitudes formed on direct experience have a much stronger influence on
behavior than indirect ones (family, friends, media, the Internet…).

Psychological theories explain two types of attitudes that differently influence people’s behav-
ior, namely the extraverted and the introverted attitudes.

The extraverted attitudes orient the person towards the outside world and are easier to be rec-
ognized and influenced on.

The introverted attitudes orient the person towards the inner world and can sometimes lead to
unpredictable behavior of the consumer.

The extraverted consumers are willing to communicate with professionals about their products
or services, while introverted consumers prefer to make their own purchasing decisions. Atti-
tudes are always aimed at a goal. If there is a change in attitude, then there is a change in the
lifestyle of the consumer.

Psychologists, being guided by a desire to understand the relationship between attitude and
behavior, have focused on defining attitude structure, to better explain or predict consumer
behavior. According to the three-component attitude model, attitudes consist of a cognitive,
affective, and conative component.

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The cognitive component is made up of knowledge, experience, expectations and beliefs towards
the object of inquiry to which one has an attitude. The cognitive or learning component is infor-
mation that a person has about the object of observation. This information includes knowledge
of the object, beliefs about the properties of the object, and judgments about the relative meaning
of each of those properties. For example, people may recall the names of several ski resorts such
as Aspen, Alta or Snowmass without being reminded. This is called familiarity without being re-
minded. The names of other ski resorts are likely to be remembered when a travel agency official
mentions them, which is referred to as familiarity after being reminded. However, knowledge
of ski resorts is not limited to familiarity. Based on the experience of one’s friends, brochures,
magazines and other sources, one forms views on the properties of each of these centers.

The affective or emotional component is expressed through degrees of affection or aversion to

the object and is expressed through desire, curiosity, longing and admiration for the product/
service. A liking or affective component is an overview of a person’s feelings about a particular
object, situation, or person on a scale from I like – I dislike, or favorable – unfavorable, i.e. pos-
itive-negative. When choosing from several alternatives, liking is perceived as a preference for
one over other options. Some people may like all the features of a ski resort except the location
because it takes a long time to get there.

The conative component means the consumer’s willingness to approach or distance herself or
himself from the object and is expressed through the intention to buy, loyalty to the product,
product preference, etc. Intentions (an action component) usually relate to a specific period of
time that depends on one’s buying habits and the time that is being planned. A great advantage
in terms of intentions is that they include information about the consumer’s ability or willing-
ness to pay for something or take some other action. One may prefer Aspen over all other ski
resorts, but because of the price he or she does not intend to go there next year.

Within psychology, various instruments for measuring attitudes have been developed. Some of
them are widely used for market research purposes. Attitude research presents one of the most
important issues of importance for understanding consumer behavior (Živković, 2011).

We have known and studied consumer attitudes for over 60 years, but we do not yet have a
complex method to investigate them. Instead, different, essentially partial methods are still used
today, most often investigating individual components and dimensions of consumer attitudes
(Gutić & Sadrić, 2011).

3.1. Measuring Attitudes

Marketing managers are particularly interested in consumers’ attitudes in terms of what their
beliefs are about particular products/services and brands. If some beliefs are wrong and prevent
buying, experts will want to launch a campaign to correct those beliefs.

Attitude measurement primarily means looking at the likelihood of consumer action (Topalović,
2010). A distinction is made between intention and attitude. Success in measuring consumer atti-
tude depends on the specificity of the goal. In exploring facts, cognition, knowledge, and beliefs,
we in fact attempt to explore only the cognitive component of attitudes. If, however, we examine
the feelings, opinions, desires, or expectations of a product/service, we only examine the affec-
tive component of attitudes. Consumer actions, plans, activities and intentions direct us to only a

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conative component of attitudes. By exploring all these categories together (integrated), we can
realistically reach consumers’ attitudes and their dimensions. There are also different methods of
testing each of these categories. This fact alone poses a serious dilemma when choosing a method
or multiple methods (combining them mutually) when examining consumer attitudes.

Most of the questions in the surveys used in marketing research are formulated to measure at-
titudes. Answering questions helps decision makers to formulate products or services to fit the
needs of different segments. What management really wants to understand and precisely affect
is the behavior.

From the point of view of diagnostic explanatory capabilities, attitude measurement has a huge
advantage over behavioral measurement. Attitude measurement can help to understand what
features of a new product concept are acceptable or unacceptable to the consumers, as well as
what their perception of the advantages and disadvantages of competing alternatives is.

Assessment scales are the most commonly used instrument for measuring consumer attitudes.
They are Likert, Thurstone, Gutmann, Stapel scales, multidimensional scales, and attitude bat-
teries. In addition, attitudes can be measured by in-depth interview techniques and projective
techniques. Given that consumers’ attitudes are extremely complex mental structures influ-
enced by many known and unknown factors, it is not possible to investigate effectively the de-
terminants and all the complexities of attitudes and their manifestation using one technique (i.e.
any of these techniques). Depending on the type and structure of the attitudes, as well as their
role in specific behavior towards the product/service or brand, testing and measurement should
be undertaken using and combining multiple methods.

3.2. Consumers’ attitudes

The easiest way to show consumer behavior is through these three steps:
1. defining consumer preferences or preferences, that is, finding practical descriptions of
why people prefer one another over another;
2. defining budget constraints that are reflected in incomes that limit the amount of goods
that consumers can buy;
3. defining the choice of consumers who, with the given preferences and limited incomes,
buy the combination of goods that maximize their satisfaction, that is, their well-being.

For the combination of goods that a consumer buy we use the term market basket or commodity
bundle. It is, in fact, a list of certain quantities of one or more goods, and may refer to the quan-
tities of food, clothing, and footwear, or rent that the consumer buys each month.

The question is how consumers choose market baskets, that is, how they decide how much food
they will buy each month, how much clothing, and how much they will spend on housing. Con-
sumers generally choose the market baskets which put them in the best possible position.

Consumer behavior theory is based on three basic assumptions about people’s preferences, i.e.
preferences for one market basket over another, which apply to most people in most situations:
• totality – the preferences are considered to be total, that is, consumers can compare and
rank all possible baskets, but may also be indifferent to them, which means that they are
equally satisfied with any basket;

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• transitivity – preferences are transitive which means that if the consumer likes more
basket A than basket B, and basket B than basket C, then she or he will also prefer bas-
ket A over basket C.

More is better than less – consumers are always more inclined towards better than less, and
even when less is good, these assumptions do not explain consumers’ preferences, but give
them a degree of rationality, and by using indifference curves, consumer preferences may be
graphically shown. The indifference curve shows all combinations of market baskets that give
a person the same level of satisfaction, so a person is indifferent towards all baskets that are on
the same curve, and with earlier assumptions about the consumer preferences, we know that
the consumer can always show greater preference for one market basket over another, or be
indifferent to both.

4. CONTRIBUTION OF INTERCULTURAL MANAGEMENT

TO THE DEVELOPMENT OF TRADE RELATIONS BETWEEN COUNTRIES

It is very important for managers who manage international business to understand the impact
of culture on decision-making style and process. Culture influences decision-making through the
wider context of national culture that produces collective patterns of decision-making, as well
as through a culturally based value system that acts on the individual perception of the deci-
sion-maker or on the personal interpretation of the situation. However, the extent to which mana-
gerial decision making is influenced by culture varies from country to country. Thus, for example,
the empirical research conducted by M. Hitt, B. Tyler, and D. Park indicated that there is a greater
cultural homogenizing influence on the cognitive models of Korean managers than on American
managers, whose individualistic tendencies lead to different decision-making patterns. The way
culture influences managerial decision-making in international business is studied through varia-
bles involved in each stage of the rational decision-making process: defining problems, gathering
and analyzing relevant information, considering alternative solutions, making best decisions and
putting them into practice. One of the most significant cultural variables is related to adopting an
objective or subjective approach. While the Western approach is rational based (managers inter-
pret the situation and consider alternative solutions based on objective information), this is not
common throughout the world. Many, such as Latinos, are more subjective and largely base their
decision-making process on emotions (Ivanović, Arsenović, & Pajkić, 2010).

Although we can talk about the existence of multicultural societies, multicultural societies are
no longer the exception, but the rule. Such a multicultural social situation shatters all boundaries
and opens people’s doors to something different. The removal of these borders has been greatly
contributed by globalization, which brings the world together in very unusual ways. Apart from
visible physical differences, culture is very important in the life of each individual. Through cul-
ture we identify with the society in which we live, but also, we find ourselves through culture.
Given the multitude of cultures that surround us, it is essential to create a dialogue among the
different ones (Nešković, 2012).

Intercultural processes, as much as they may be necessary, being that in today’s global environ-
ment one cannot do business unless other cultures and behaviors are understood, they are at the
same time inevitable, given that they cannot be stopped. Whether we like it or not, there are foreign
companies present in every country that employ people of different nationalities, thus creating
an environment where it is necessary to accept those people and at the same time understand

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them so that the company can function. Therefore, it is necessary to understand that intercultural
management as a new scientific discipline can greatly contribute to understanding the diversity of
other people and contribute to their better understanding. In the field of management or marketing,
there are many examples of the types of misunderstandings that can arise if one does not take into
account the specificities of particular cultures (Zakić & Milutinović, 2013). Thus, for example, in
Japan, the bargaining system is such that business partners first get to know each other at a first
meeting and only slowly agree on a deal at a later date. A manager who is unfamiliar with such
a bargaining system could probably think after the first meeting that the deal has not been closed
and that the negotiations are over (Jovanović, Interkulturni menadžment, 2004). Or, for example,
white in Europe signifies purity, innocence – and in Asian countries it is a symbol of death, so
when choosing a particular product to a particular market, great care must be taken in choosing the
color. Most Asian nations have a cult of keeping someone else’s good name in check, so in having
an interlocutor with whom they are about to close a deal or already do business, one must take care
not to offend or humiliate the interlocutor, because then the deal is off. It is therefore necessary to
take into account their cultural characteristics, which was particularly evident from previous inter-
cultural research in order to produce the desired results. Given that globalization inevitably leads
to intercultural conflicts, there is a need for public scrutiny and understanding of both our own
culture and other peoples’ cultures. In today’s world, tolerance is highly needed, perhaps more than
ever. Countries inhabited by a large number of nations, such as the US and the EU, have shown that
understanding diversity is the key to success for the modern state, i.e. community (Zakić & Miluti-
nović, 2013). Would America be the same country as we know it today if it were not inhabited by so
many members of different peoples, races, and religions who are very different from the dominant
Anglo-Saxons, such as: Italians, Jews, Hispanics, African-Americans, Japanese, and Chinese? To-
gether, these nations have created a state that is today the only global superpower and have shown
that despite all the conflicts that inevitably exist within such a multinational state, tolerance and
acceptance of others and different ones can be achieved. The history of conflict between different
races and nations in this country is quite long and this is not only the specificity of America, but a
characteristic of any modern state that exists. But one of the basic tasks of every state would have
to be to create such legal frameworks and norms that would facilitate the processes of adjustment
and inclusion of citizens of other than the major nationality in the life and work of that state. It
would be logical to assume that this right is granted to everyone through the constitutions and laws
of different states, but unfortunately the situation is often different in practice. This is why various
conflicts occur, resulting in increased racial and national intolerance. Probably, in an ideal world,
there would never be any conflicts or wars, in which culture would be one of the reasons for reflec-
tion and conflict, but unfortunately there still are such conflicts, and it is necessary to explain them
and see what they have to do with intercultural management.

The word conflict has a Latin origin (conflictus) and it denotes: a conflict, collision, fight, quar-
rel, dispute ... Contemporary theory has given a great number of papers and definitions on the
topic of conflict. According to one of them, by Boulding, an American sociologist and econo-
mist – author of Conflict and Defence: A General Theory, “a conflict can be defined as a state
of competition in which the parties are aware of the incompatibility of the potential of future
positions and in which each party wishes to occupy a position that is incompatible with the
wishes of the other party”. (Zakić & Milutinović, 2013) “ A conflict is a social state in which at
least two parties (individuals, groups, states) participate: having completely different starting
points, seemingly irreconcilable, and pursuing different goals, which can only be achieved by
one of the parties and/or using completely different means to achieve a specific goal.” (Zakić &
Milutinović, 2013) cites Ulrike C. Wasmuth. (Gugel, 2006)

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Looking at the global changes that are just happening, one cannot but conclude that it will take a
long time for the world to get used to the fact that the changes are happening minute by minute,
and that the life we know from twenty or thirty years ago no longer exists. The conflicts that oc-
cur on this occasion require people to have a high level of awareness of what the negative resolu-
tion of such conflicts will bring about. There are many texts, discussions and conclusions in the
literature on how these problems can be addressed. We will begin with theory and then see how
theory and practice work in this case, and how they can be applied in intercultural management.
When we talk about how conflicts arise, what their dynamics are and how we can resolve them,
then we are talking about the very stages of conflict. According to Günter Gugel, there are three
basic stages of conflict development: the first is the initial phase, then the escalation phase, and
finally the resolution phase. In the first phase there are latent or manifest conflicts according to
this author, which do not have to have a negative effect in themselves, and which escalate in the
escalation phase. During the next phase, conflicts are resolved and some compromise is sought,
in order to help to overcome the conflict. Conflicts in the cultural field cannot be solved quickly
and easily, and as a result, scientists have tried to give their vision of bridging them, in order to
reduce them overall and subsequently have the business results improved. According to Andrea
Williams, there are three possible ways of resolving cultural conflicts, which are being applied
in contemporary training and courses in international business and intercultural management
(Zakić & Milutinović, 2013).

Nowadays, companies are increasingly encountering new contacts, people and companies from
other countries. In order to achieve desirable positive relationships and successful communica-
tion and cooperation in all these diverse situations, leading to the closure of business contracts
and the realization of successful sales, it is necessary to know the specifics of negotiation and
principles of communication with members of other cultures. Knowledge of the characteristics
of business culture and how to negotiate is an essential prerequisite for successful cooperation.
Only in this way it is possible to always have successful business cooperation everywhere, with-
out the appearance of any misunderstandings and bad emotions that can affect the negative out-
come of the negotiations. Good intercultural communication ensures the expansion and develop-
ment of business and generation of higher levels of profit (Ivanović, Arsenović, & Pajkić, 2010).

In showing interest in the cultural dimension of the problem – each of the parties to the conflict
must understand that the conflict has a cultural dimension in itself. Also, there must be a will on
both sides of the conflict to resolve all levels of a particular conflict, including the one concern-
ing culture. In order to resolve the conflict appropriately, the conflict resolution process must go
through four stages. In the first phase, it is necessary that the opposing parties tell each other
what specifically bothers them about the other party’s behavior. During the second phase, the op-
posing parties should learn the cultural characteristics of the other. In the third phase, each party
tells the other how the same situation would be resolved within their culture and what solution
would be reached. The final, fourth stage is characterized by the resolution of cultural conflict.

By learning about other cultures – people can avoid intercultural conflicts if they learn about
other people’s cultures that they come into contact with, or interact with. This knowledge can be
gained through various types of training related to cultures of other nations, reading books on
other cultures and learning from their previous experience. One of the more important ways to
embrace other cultures is to know and study one’s own culture. By developing cultural aware-
ness with adopting other people’s cultural habits and customs, it is possible to break the cultural
stereotypes we have about other nations and their cultures. Modifying an organizational struc-

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ture within a company in which there are cultural conflicts often shows that the organizational
structure of a company follows the cultural values ​​of only one (ruling or dominant) culture and
thus causes dissatisfaction with members of other cultures. In such situations, it is necessary to
change the organizational structure in a way that will more respect the values ​​of members of
other cultural communities.

It can be said that knowing what cultural conflicts are, how they arise and how to overcome
them can certainly lead to improved understanding among business associates from different
countries working in the same companies, as well as to better deals. All initial research con-
ducted for the purpose of understanding other cultures, and which have emerged as an aid to
a better understanding of the business systems of other countries (such as the researches by
Hofstein, Schwartz, and the GLOBE project, as explained in this paper) have contributed to
understanding the importance of the other people’s culture, traditions and history in today’s
globalized world, and giving them much greater importance in contemporary business than it
was the case before.

5. CONCLUSION

The contemporary development of management in the world is characterized by the expansion

of the areas of application, the introduction of new methods and techniques and the increased
use of information technologies, the strengthening of the role of managers, project managers
and teamwork, and the development of modern approaches and specialized management dis-
ciplines. The international management must take into account cultural risks at macro levels,
which are as real as political risks. Therefore, competency and flexibility in the domain of
culture is essential when designing a particular international business strategy. As mentioned
above, the primary role of intercultural management is based on the creation of patterns that
will follow the flow of national specificities in the field of international business.

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 BLOCKCHAIN TECHNOLOGY APPLICATION AREAS
IN THE SMART CITY INFORMATION SYSTEMS
Zoran Ćirić1
Otilija Sedlak 2
Stojan Ivanišević3

DOI:

Abstract: By cross-referencing benefits of blockchain technologies and critical issues and weak points
of smart city information systems, one may conclude that blockchain systems are just the right solution
for smart city information systems. However, this may not be true and applicable generally let alone
universally. Traditional information system requires an increased level of security and availability of
service when they have to be exposed to the public and used by the tens of thousands of inhabitants
within a city. On the other hand, blockchain technologies offer a completely new combination of tech-
nologies to solve security and reliability issues as well as the availability of service and failsafe toler-
ance. The scope of this work is to analyse literature as well as available use cases to detect areas of a
successful application for information systems that are using blockchain in the smart city.

Keywords: Blockchain, Smart City, Feasibility Study, Information Systems.

1. INTRODUCTION

T his paper elaborates potential applications of blockchain technology found within the sci-
entific literature. In an attempt to create analysis that is easier to understand, potential
applications are divided by the component of the smart city that they are related to. Accepting
blockchain technologies and exploring ways to apply these technologies to addressing challeng-
es in smart cities is a research direction and represents a new area that has not been sufficiently
explored through the prism of scientific research, because blockchain technologies were recent-
ly adopted with creation of Ethereum Enterprise Alliance in 2017. The result of the research in
this paper is to show the possibility for improvement of sustainability within a smart city with
the application of blockchain technology and to search for a scientific founded framework for
the application of blockchain technologies in the smart cities.

In scientific literature, blocking technology has not been sufficiently explored since its begin-
ning is related to 2008 [2], with wider acceptance by large corporations only in 2017 [1]; there-
fore, there are not enough scientific studies of the application of this technology in practice.
Governments are very cautious with application for these technologies and far more carefully
that real sector. Because smart cities are ruled by the government sector that is naturally more
conservative, real-life applications within e-Government and other government-related smart
city aspects are scarcer.

1
University of Novi Sad, Faculty of Economics Subotica, Segedinski put 9-11, Subotica, Serbia
2
University of Novi Sad, Faculty of Economics Subotica, Segedinski put 9-11, Subotica, Serbia
3
JKP Informatika Novi Sad, Bul. cara Lazara 3, Novi Sad, Serbia
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2. BLOCKCHAIN TECHNOLOGY

Blockchain technology, which became known primarily thanks to bitcoin (Bitcoin), is a type
of distributed system technology further referred to as Distributed Ledger Technology (DLT),
which is defined as a „distributed, shared, encrypted database that serves as irreversible and
non-recoverable (non-corrupt) information repository”. [1] When blockchain technology is used
to create a platform, the product is a digital platform that stores and verifies the entire transac-
tion history between its users anywhere on the network. From a technical point of view, block-
chain is a „database consisting of chronologically arranged series of transactions known as
blocks” about which each proposed transaction must be checked with the certainty and integrity
of that particular block „. [2]

Once the information is entered, it can never be deleted [3]. Block technology is described in the
literature as a database and as a network equipped with a built-in security system and internal
integrity. [4]

3. POTENTIAL BLOCKCHAIN TECHNOLOGY APPLICATIONS

IN THE SMART CITY

In order to start the analysis of potential blockchain applications in the smart cities, it is neces-
sary to tie application areas with smart city components. One of the known definitions of the
smart city (ITU) is: „A smart and sustainable city is an innovative city that has extensive use of
information technology using them to develop the quality of life level, city administration, by
taking into the account the needs of current and future generations in the same way as it takes
into account economic, social and environmental aspects”. [5]

Between all views in contemporary scientific literature list of smart city components from Lom-
bardi et al. [6] have been taken as starting point. According to this group of authors, smart city
components are:
1. Smart economy – viewed as industry as an aspect of urban life;
2. Smart citizens – knowledge and human capital;
3. Smart governance – e-Government and open data;
4. Smart mobility – logistics and infrastructures;
5. Smart environment – sustainability;
6. Smart living – livability and quality of life and security.

A brief literature review is examining examples of the application of blockchain technology in

order to contribute to the sustainability of a smart city as well as any limiting circumstances
related to the application.
Component Potential applications:
Smart economy Blockchain-based sharing services: The sharing economy can be defined as an economic/
– industry social model that broad sectors of the population can employ to collaboratively make use
of under-utilized assets, in which supply and demand are interacting for the supply side to
directly provide products/services. The overall aim of a sharing business, which can be both
profit-oriented and non-profit oriented, is to improve the use of under-utilized assets and
reduce transaction costs. [7],[8],[9]
Fintech industry and crypto economy: The key advantage of this technology lies in the fact that it
enables the establishment of secured, trusted, and decentralized autonomous ecosystems for vari-
ous scenarios, especially for better us age of the legacy devices, infrastructure, and resources. [10]

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Component Potential applications:

Smart citizens Digital identity: blockchain solutions provide digital identities based on cryptography and
– knowledge and anonymity. Identity verification and authentication technologies, as one of the applications
human capital of blockchain-based solutions – and the focus of our own efforts at SecureKey Technologies
– have been critical components in service delivery in both sectors due to their power to in-
crease trust between citizens and the services they access. [17],[18]
Smart Health: system for sharing patients’ data between institutions in safe and anonymous
manner. [19]
Digital content distribution: The blockchain-based digital content distribution system was
developed. Decentralized and pear-to-pear authentication mechanism can be considered as
the ideal rights management mechanism. The blockchain has the potential to realize this
ideal content distribution system. [20]
Smart governance E-government: a group of authors discuss use of blockchain technology as a platform for
– e-Government various applications in e-Government and furthermore as an emerging support infrastruc-
ture by showing that blockchain technology demonstrates a potential as well as discussing
limitation factors. [21],[22]
Smart mobility Supply chain management: Blockchain technology promises overpowering trust issues and
– logistics and allowing trustless, secure and authenticated system of logistics and supply chain informa-
infrastructures tion exchange in supply networks. [11]
Transportation: Blockchain can be used to build an intelligent, secure, distributed and au-
tonomous transport system. [12]
Electric vehicle charging: shared changing for electric vehicles and biding for the energy.
[13],[14]
Logistics – a group of authors made a great review of potential applications of blockchain
in logistics. [15]
Food supply management: blockchain solutions provide tracking of goods prom production
to final consumers. [16]
Smart Sustainable supply chains – Sustainable, and especially green, supply chains can benefit from
environment blockchain technology, but there are also caveats. [23]
– sustainability Smart grid – Emerging markets must attract significant international financing to meet their
goals for mitigating carbon pollution and increasing access to clean, affordable, reliable, and
resilient energy. The authors* of this note examine how blockchain technology can—if paired
with smart, interconnected devices—promote needed investments by both improving investment
processes and promoting the adoption of modern energy systems and business models. [26]
Smart living Public safety – The idea of smart cities is developing extremely rapidly, integrating smart grid,
– livability and services, building, house and appliances, these subsystems must be able to interact, connect,
quality of life and and control remotely, collaboratively, to achieve a better quality of life, sustainability, energy
security saving, social and economic development. The widespread of Smart City depends heavily on
the capability of users to understand and handle the ICT, IoT and BC. [24]
Within a permissioned blockchain network, a microservices based security mechanism is in-
troduced to secure data access control in a smart public safety system. [25]

4. CONCLUSION AND FURTHER RESEARCH

The review of the contemporary scientific literature shows that the scientific literature discusses
potential applications of smart cities within specific subcomponents of the smart city. Improved
privacy, security, availability and heterogeneous architectures correspond with strong points
of blockchain technology, because blockchain based systems provide strong security together
with total anonymity; their distributed nature also increase availability and finally their nature
is interoperable. Because of these strong points of blockchain technologies, a greater number
of potential applications and subsequently real-life applications and scientific discussions and
studies exist in relation to the economy, mobility and supply chain management and e-Govern-
ment. Literature view on the potential application of blockchain technology that increase envi-

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ronmental sustainability and main contribution of blockchain to smart environment is perceived

as contribution in sustainability of information systems within smart cities, supply chains im-
provement and new business models in energy systems.

In scientific literature, papers are dealing with the applications of blockchain technology to
increase the sustainability of smart cities, as shown in the literature review. The available sci-
entific literature, however, does not analyse these applications through a prism of smart city
components, but rather through more narrower application areas.

However, the authors did not find any working framework for the implementation of informa-
tion systems projects (IS) based on these technologies in the scientific literature. According to
the authors, it is necessary to mark the areas of application of this technology in smart cities and
to continue to explore ways of applying to define the success factors and results indicators for
the implementation of the IS projects based on block technology.

In order to conduct further study of this subject applications of blockchain technologies in smart
cities should be divided into potential and theoretical found within scientific literature and re-
al-life application within existing smart cities. Further study of successfully applied blockchain
information systems needs to be conducted in order to identify smart city components and
particular subsystems where blockchain technologies showed improved results and increased
sustainability compared to traditional information systems.

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org/handle/10986/31200 License: CC BY-NC-ND 3.0 IGO.

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 ORGANIC AGRICULTURE IN THE DEVELOPMENT
OF A GREEN ECONOMY
Larisa Jovanovic1
Dragan Živković2
Mario Lukinovic3
Milan Jankovic4

DOI:

Abstract: Sustainable development is a modern concept of economic development, which enables long-
term economic growth rates to be achieved with better utilization of scarce natural resources and a
better quality of life for the population to preserve the environment and reduce social inequalities. Care
for the quality and way of life of the population integrated into this concept takes into account the needs
in the context of intense globalization and fast-growing markets of present and future generations.
Among the economic activities, it is necessary to identify those that contribute most to the economic
growth and sustainable development in terms of development opportunities. Considering that the Re-
public of Serbia occupies a favorable geographical position, has significant natural resources and a
good workforce, agriculture stands out as one of the economic activities that significantly contribute to
economic growth, with recognizable development potentials.
Organic production makes a significant contribution to achieving the goals of a green economy and
green growth. Thanks to well-defined principles and standards, as well as a certification system, its
positive impact on the health and life of all living things, the environment and natural resources is
enabled. Both of these concepts are based on the same principles and offer numerous opportunities
for improving the standard of living, developing underdeveloped countries and achieving sustainable
development. In European countries, organic production is a model for sustainable rural development.
The intention of this paper is to investigate the possibilities and necessary incentive measures for the
sustainable development of organic agriculture in the Republic of Serbia and compare the organic food
production growth in European countries and in Serbia.
Keywords: Organic Agriculture, Agroecology, Green Economy, Organic Farming, Sustainable Rural
Development, European Union, Republic of Serbia.

1. INTRODUCTION

Unlike conventional agricultural production, organic farming is designed to meet the demands
of quality food, human, animal and ecosystem health.

The concept of organic agriculture is closely related to the concept of green economy and has
a positive impact on the achievement of its basic goals in the sector of healthy food production
and environmental protection. On the other hand, the green economy creates the conditions for
the application and development of organic agriculture.

1
University ALFA BK, Palmira Toljatija 3, Belgrade, Serbia
2
University ALFA BK, Palmira Toljatija 3, Belgrade, Serbia
3
University Union, Faculty of Law, Maršala Tolbuhina 36, Belgrade, Serbia
4
Faculty of Business Studies and Law, Jurija Gagarina 149a, Belgrade, Serbia
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Based on international agreements, organic farming and processing of organic products are
defined as a management system based on the standards of the International Federation of Or-
ganic Agriculture Movements (IFOAM), national and local laws, regulations and guidelines for
producers and their associations, which, with the support of the community and society as a
whole, achieve common goals:
• protection of land and water resources,
• prevention of adverse effects on ecosystem health and human health,
• increasing biodiversity, and
• production of high quality and health food (IFOAM, 2019).

The main support for organic plant production is organic fertilizers such as: solid and liquid ma-
nure, fallow, various types of compost, thirties, plants intended for vegetable fertilization, pomas,
sawdust, molasses, seaweed, and the use of some fertilizers is allowed; mineral origin powder of
rocks, calcium and magnesium fertilizers, calcium algae, gypsum, crude phosphates, bone meal,
etc. In addition to these fertilizers, the use of microbiological preparations is very significant.

The Republic of Serbia lags significantly behind the EU countries in the organic food sector.

Organic farming was developed to solve the problems caused by conventional methods in food
production. These problems are related to soil erosion and degradation, pollution of surface wa-
ters and ecosystems. Organic agriculture causes less damage to the environment, human health
and ecosystems for the following reasons:
• chemical pesticides and fertilizers are not used, thus eliminating risks to human health
and environmental pollution,
• care for ecosystem health and biodiversity conservation is achieved through the main-
tenance of biological cycles,
• nutrient recycling and land restoration reduce the risk of pollution in the surrounding
territories,
• recovery of soil through winter by using winter crops or plants that cover the soil, there-
by improving soil quality, reducing the risk of erosion, degradation and compaction.
• Pest control is performed using biological, selective or mechanical methods and in-
volves increasing the population of beneficial insects and enhancing biodiversity.

Research shows that organic products contain 50% more vitamins, minerals, enzymes and oth-
er micronutrient components than conventional products. Also, organic products are the only
guarantee that no genetically modified food is introduced into humans and animals.

According to the definition of FAO (Food and Agriculture Organization) and WHO (World
Health Organization), organic farming uses production processes in accordance with the princi-
ples of sustainable rural development with the use of indigenous resources and recycling, there-
by achieving complex farm with crop and livestock production. As the basic idea of ​​organic
production is based on the thesis that exploitation should be adapted to natural conditions and
enable normal habitat recovery, organic farming is also called self-sustaining. Organic farming
is an attempt to identify methods that should enable organic food production while reducing the
negative impacts of intensive agricultural production on ecosystems.

Transformation of conventional agriculture into organic farming becomes crucial for achieving
green economy goals (Janković, Jovanović, 2018)

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2. STRATEGIES OF EUROPEAN COUNTRIES

IN ORGANIC AGRICULTURAL DEVELOPMENT

The experience of economically developed European countries shows that advances in organic
food production have come from government subsidies, which stimulate organic farming.

In addition, it should be underlined that the production of milk and meat in developed countries
has reached such a level that the state stimulates the reduction of production of these basic prod-
ucts as the needs of the population are encountered. Accent is placed on preserving a healthy
environment because animals are known to be major pollutants of ecosystems, especially land,
as their excrements contain a large amount of undigested matters and drugs that disrupt the
balance of the soil, and it is worryingly endangered.

Figure 1 – Numbers of organic producers in Europe by country 2016

Source: FiBL-AMI survey 2018 based on national data sources and Eurostat.

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Animals create 130 times more waste products than humans. All modern biotechnology (pro-
duction of enzymes, probiotics, chelating forms of microelements, organic selenium and chro-
mium, oligosaccharides, etc.) is realized in order to maximize the use of nutrients in the organ-
ism and to eliminate undigested food from the environment.

In this sense, the aim of the European countries in the future is to reduce commercial pro-
duction and to accelerate the production of quality seed material in both crop production and
genetic material of the tested animals’ throats selected for high production. High quality seed
material of plant and animal origin has been obtained by the development of molecular biology
and genetic engineering, all for the sake of making big profits, and is a sublimated knowledge
that needs to be valorized through this profit. More than 45% of organic production in the Euro-
pean Union consists of grasslands and meadows for organic livestock production.

2.1. Organic producers and importers

There were more than 370,000 organic producers in Europe in 2016 (FiBL – AMI survey, 2018).
The countries with the largest number of producers were Turkey (almost 68,000) and Italy (more
than 64,000). Spain, France, and Germany had only half of the producers that Turkey and Italy
had. Next countries were Austria, Poland and Greece. Romania, Bulgaria, Switzerland, Swe-
den, Finland and Portugal had significantly smaller number of producers. North Macedonia,
Slovakia, Ukraine, Serbia and Montenegro had about 10 to 15 times fewer organic food produc-
ers than Italia and Spain (see Fig. 1).

Compared to the growth in 2015, the increase in numbers of producers was higher (+7 percent)
in Europe. Over the decade 2007-2016, the number of producers in Europe increased by 76
percent.

Figure 2 presented the number of processors and importers. This number increased in almost
all European countries in 2016. In Europe, there were about 66,000 processors. The country
with the largest number of processors is Italy (26%), and the country with the most importers is
Germany (FiBL – AMI survey, 2018).

Figure 2: Europe: Distribution of organic producers (left) and processors (right) 2016
Source: FiBL-AMI survey 2018, based on national data sources and Eurostat.

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The growth of the organic sector in both European Union as well as Europe overall in 2016 was
accompanied by two trends:
1. Overall double-digit growth of 11.4 percent in Europe,
2. Growth of organic farmland continued albeit at a slower pace, at 6.7 percent in Europe
overall and 8.2 percent in the European Union.

In 2016, in Europe 13.5 million hectares were organic. Spain continues to be the country with
the largest organic area in Europe (more than 2 million hectares), followed by Italy (1.8 million
hectares) and France (1.5 million hectares).

At present, however, only 2.7 percent of the total agricultural land in Europe is organic farm-
land, the percentage going up to 6.7 percent in the European Union countries.

Organic retail sales in Europe were valued at 33.5 billion euros. The European Union represents
the second largest single market for organic products in the world after the United States (Fi-
BL-AMI survey, 2018).

Figure 3: Europe: Growth of the per capita consumption 2000-2016

Source: FiBL-AMI survey 2018 based on national data sources

Figure 4: Europe: The countries with the highest per capita consumption 2016
Source: FiBL-AMI survey 2019 based on national data sources.

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In 2016 European consumers spent 40,8 euros on organic food per person (European Union:
60,5 euros). Per capita consumer spending on organic food has doubled in the last decade (Fig
3). The most money for organic food paid Swiss (274 euros per capita), Danes 227 euros, citi-
zens of Sweden, Luxembourg, Austria and Lichtenstein – about 200 euro per capita.

The data analysis shows that there are still large discrepancies between European countries.
Even though organic agricultural land in some countries in Central and Eastern Europe account
for large shares of the overall agricultural land, consumer spending, although growing, remains
low as a proportion of total spending on food in these countries (Willer et al., 2018).

3. ORGANIC AGRICULTURE IN THE REPUBLIC OF SERBIA

AND LEGISLATIVE FRAMEWORK

Organic production started in the Republic of Serbia long before the adoption of the legislative
framework. In the vicinity of Blace in 1989, the Lion foods company started its first organized
organic production. The development of the non-governmental sector will start in Subotica next
year with the founding assembly of the Terras Association (Simić, 2017).

Today’s producers of organic products in Serbia are facing irregular and incomplete market sup-
ply of seed and planting material, insufficient quantities of biological plants for the protection of
products, organic fertilizers and compost.

In 2006, the most important legal act in the field of organic production in Serbia was adopt-
ed: The Law on Organic Production and Organic Products (2006-2019). In addition, the field
of organic production in the Republic of Serbia is regulated by the Rulebook on Control and
Certification in Organic Production and Organic Production Methods (2011-2012), Rulebook
on Documents Submitted to the Authorized Control Organization for Issuance of Certificate of
Performed Control, as well as on the Conditions of Sale of Organic Products; it also lays down
the conditions for the certification of organic import products, as well as the conditions and
manner of sale of organic products together with products from conventional production (2010).
The organic product must be recognizable and properly labeled so as not to be confused with
another, conventionally produced. The Organic Production Act regulates the production of ag-
ricultural and food products obtained by organic production methods. The law targets the goals,
principles and methods of organic production, the method of control, labeling and certification
of organic products. The processing, storage, transport, transport, import and export of organic
products, supervision of entrusted operations, and other issues of importance for organic pro-
duction are particularly welcome.

The goal of the Organic Production Law is to implement organic food production methods with
rational use of energy and natural resources, as well as respect for biological cycles and bio-
diversity, without the use of harmful chemical agents (pesticides, artificial fertilizers, growth
regulators, genetically modified components).

The law defines plant production, certification of organic products, control of products and
organizations that carry out control, labeling of organic products, organic product and organic
production, and also determines the length of the period of conversion of conventional pro-
duction to organic, as well as certification, methods of processing organic product and phases
in organic production. The Act provides for severe penalties for the sale of organic products

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without certification and (or) without special labeling of the products. The bylaws to the Ordi-
nance on the Conditions for Obtaining a Certificate or Certificate for Organic Products specify
the manner in which documentation is issued The Rulebook on Technological Procedures in
the Processing of Products Produced by Organic Production Methods, Cleaning Methods and
Cleaning Agents for Process Lines defines the permitted ingredients, additives and auxiliary
substances in food processing (2006).

In 2010 the new legal act on Organic Production was adapted. Organic production Law was
focused on financing organic production in the Republic of Serbia. This law provides for the
allocation of incentive funds.

According to the current legal framework, the implementation of incentive funds for the devel-
opment and improvement of organic production is envisaged, from three sources:
• the budget of the Republic of Serbia,
• donation, and
• other funding sources.

Support measures can be classified into two main groups:

• Measures explicitly intended to develop and promote organic production,
• Accompanying measures for the development and improvement of organic production.

The first group of measures may include aid measures for households and other eligible bene-
ficiaries:
• during the conversion period or during production period to ensure continuity of pro-
duction on the farms,
• in the process of certification of organic production and organic products,
• in the process of education and training for organic production,
• to set up demonstration experiments in the organic production and development of the
organic sector in the work of the agricultural advisory service,
• when joining.

The second group of measures (the so-called accompanying measures) are not exclusively in-
tended for the development of organic production, but the holdings engaged in this production
can use them, or indirectly benefit from them. These are measures such as:
• assistance aimed at promoting and protecting local products,
• funds for systematic control of the fertility of arable agricultural land,
• support for the export of agricultural products,
• support for the implementation of quality systems.

As a result of the implementation of incentive measures, from 2010 to 2017 there was an increase
in the total area under organic production and an increase in the number of producers (Table 1).

During the four years the area under organic agriculture has increased by over 100%, almost the
same as the number of producers, while the number of subcontractors has quadrupled (table 2).

Largest share in organic production of agricultural products in Republic of Serbia has fruits
(34%), followed by cereals (31%), industrial crops (19%), forage (10%), vegetables (2%) and
medicinal and aromatic herbs (Fig. 5)

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Table 1. Organic production in Serbia 2010-2017

Year Organic Area (ha) Share in %* Organic producers
2010 8.635,00 0.17 137
2011 6.236,73 0.12 323
2012 6.340,09 0.13 1061**
2013 8.228,01 0.16 1281**
2014 9.547,83 0.27 1867**
2015 15.298,00 0.44 2289**
2016 14.358,00 0.41 2794**
2017 13.423,12 0.38 6.153**
* Share of organic production in total agricultural land in Serbia
** Subcontractors involved
Source: Calculated using FiBl database https://statistics.fibl.org/еuropе/kеy-indicators

Table 2. Arable and meadows area under organic production in Serbia (2013-2017)
2013 2014 2015 2016 2017
Total area (ha) 8227.99 9547.83 15,298.01 14,357.92 13,423.13
Arable area (ha) 5355.25 7998.47 13,398.19 12,929.00 11,874.85
Meadows / pastures (ha) 2872.74 1549.36 1,899.82 1,428.92 1,548.28
Number of manufacturers 259 291 334 390 434
Number of subcontractors 1022 1575 1955 2794 5719
Number of manufacturers
1281 1866 2289 3184 6153
(with subcontractors)
Source: Directorate for National Reference Laboratories,
RS Ministry of Agriculture, Forestry and Water Management

Figure 5: Structure of crops production on the territory of the Republic of Serbia in 2017.
Source: Directorate for National Reference Laboratories,
Ministry of Agriculture, Forestry and Water Economy

According to statistics of the Ministry of Agriculture, Forestry and Water Economy of the Re-
public of Serbia, in period 2011-2018 the total area under organic production increased 3 times,
while the number of producers of organically certified products doubled (table 3).

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Table 3. Structure of Organic Production in the Republic of Serbia (Source: http://www.dnrl.

minpolj.gov.rs/o_nama/organska/organska_proizvodnja_u_srbiji.html)
Description / Year 2013 2015 2016 2017 2018
Organic status 2793 3232 2552 4665 5138
Sheep Conversion period 1238 1616 1826 - -
Total 4031 4848 4378 4665 5138
Organic status 57 100 223 87 284
Pigs Conversion period 118 132 60 - -
Total 175 232 283 87 284
Organic status 1853 2593 2560 3099 3594
Cows Conversion period 323 153 335 - -
Total 2176 2746 2895 3099 3594
Organic status 81 1117 1115 2048 1486
Goats Conversion period 865 569 291 - -
Total 946 1686 1406 2048 1486
Organic status 1362 1079 3122 4415 6735
Poultry Conversion period 28 301 36 - -
Total 1390 1380 3158 4415 6735
Organic status 12 16 2 47 0
Donkeys Conversion period 9 4 0 - -
Total 21 20 2 47 0
Organic status 48 90 6 177 114
Horses Conversion period 162 128 159 - -
Total 210 218 165 177 114
Organic status 603 471 1735 2307 3061
Bee Societies Conversion period 1337 2033 1143 - -
Total 1940 2504 2878 2307 3061
Organic status 0 0 0 0 0
Carp Conversion period 655 0 0 0 0
Total 655 0 0 0 0

At the moment, the primary task of agriculture in Serbia is to work on programs for the develop-
ment of healthy organic food in parallel with the programs for the promotion of animal feed pro-
duction. In order to encourage more intensive development of organic production in our country
and to define measures and activities for overcoming obstacles to better development of organic
production, in 2018, the Organic agriculture development Plan was adopted as an integral part
of the National Rural Development Program (2018). Continuous harmonization of regulations
in this area, one of the goals foreseen in the Plan for the development of organic production.

Organic farming requires an increase in the number of employees. Greater participation of ed-
ucated workforce is needed, implementation of agro-technical measures that cost nothing but
bring benefits: optimal sowing time and density, crop rotation, as well as mechanical plowing,
waste recycling, water resource management, and proper selection of seed and variety material
for specific locality. The fragmentation of agricultural holdings in rural areas does not consti-
tute an obstacle to the development of organic agriculture. However, the merging of agricultural
holdings into cooperatives with state direct investments and grants encourages the development
of organic agriculture in Serbia (Beslać et al.,2018).

Organic agriculture is considered as a more sustainable alternative to conventional agriculture. It

represents the only safe path to a transition to a green economy that leads to the advancement of
the well-being of human society and social equality, with a significant reduction in environmen-

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tal risks. This means that organic farming offers solutions to reduce poverty and hunger while
improving environmental performance. However, the application of organic farming requires
numerous changes in the whole food chain, from producers to end consumers, as well as changes
in their behavior. Considering the numerous diversities of agriculture in different countries, one
single solution and model of transformation towards organic agriculture cannot be distinguished.
In this path of transformation, new, modern, ecological technologies can provide significant sup-
port for the development of organic agriculture and enable it to become a world standard, not an
exception. In this paper we will try to explain the role and importance of organic agriculture and
its relationship with the concept of green economy (Jankovic, Jovanovic, 2018).

The experience of developed countries, which are more involved in organic production, has
shown that farmers from larger estates are also beginning to engage in organic farming.

4. MARKETING SUPPORT FOR ECO ZONE DEVELOPMENT

AND ORGANIC FOOD MARKETS

In the developed countries of the EU and the world in recent years, there is a lack of organic
products due to increased market demand, but also a lack of basic agro-ecological conditions due
to increased pollution of soil, water and air). Therefore, less developed countries where agro-eco-
systems are still preserved are given a chance to increase their exports. Fruits and vegetables,
eggs, meat and meat products, cheeses, kajmak, honey, medicinal, spicy and aromatic herbs,
forest and nuts and other organic farming products are increasingly in demand in the EU market.

Serbia has significant natural potential for the development of organic agriculture and the pro-
duction of quality and safe food. Geographic location, climate, land composition and other
features of natural sites represent natural resources for the development of organic agriculture.
The existing climatic-pedological and ecological benefits of our country provide extremely fa-
vorable conditions for the cultivation and production of the best quality health food. However,
the degree of use of natural resources, primarily land, is insufficient. Out of about 4.252 million
hectares of arable land, a small part is organically cultivated. Bearing in mind the areas of farms
now under organic production in Serbia (Cvetković, Marić 2019)

Key partners in the marketing of organic food production are agricultural family farms, ag-
ricultural cooperatives and other similar associations, processing companies, intermediaries,
companies and other institutions and organizations from the non-commercial sector, as well as
individual consumers (Mitrović et al.,2019). Each partner works in the common interest, thus
contributing to the development of healthy organic food production through the competences it
possesses compared to the performance of other partners.

Public and private financial institutions are expected to provide financial and technological
assistance to cooperatives and individual family farms, as well as marketing assistance to ag-
ricultural cooperatives, cooperatives and other associations in the development of marketing
concepts and organizational structuring of marketing management (Živanović et al., 2019).

Starting from the basic idea about the possibilities of development of green economy and organic
agriculture in order to produce quality health-safe food, using natural resources, it is necessary
to develop projects of economic ecozones, similar to other countries in the environment (Gulič,
2019). Within them, it is necessary to define areas that meet the most stringent environmental

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standards, provide support to the local community, inform the population where the greatest de-
velopment opportunities are, educate the population to prepare land for the production of health
food through the application of composting.

Encouraging the development and application of biotechnology processes in the food process-
ing and quality control and food safety in accordance with the HACCP methodology and ISO
22000 standards (Jovanović et al., 2012), raising the level of processing and finalization, as well
as new ways of storing, and transporting health food are the tasks of processors – partners in
the concept of marketing management.

The experience of European Union countries indicates that the biggest contribution to the
growth of the organic food market comes from the chains that absorb up to 70 percent of all
products belonging to this category, and then from the business sector – restaurants, schools,
kindergartens, hotels, hospitals.

That is why it is needed to offer assistance to the trading companies in our country by all other
partners in the field of product range, development of modern product design and packaging,
distribution, storage, display and promotion of healthy organic food at the point of sale, in or-
der to attract consumers. Specialized scientific research and educational institutions are tasked
with the scientific and professional development of all partners in the development, production,
marketing and quality control of health-safe organic food.

5. CONCLUSION

Organic farming is often proposed as a more sustainable alternative to conventional agriculture.

It represents the only reliable path to a transition to a green economy that leads to the progres-
sion of the well-being of human society, with a substantial decrease in environmental risks.
However, the implementation of organic farming requires many changes in the whole food
chain, from producers to end consumers, as well as changes in their behavior. Taking into ac-
count the many diversities of agriculture in different countries, it is not possible to recommend
a single solution and model of transformation towards organic farming.

Available data on organic farming shows that the European organic food sector is well devel-
oped. Relatively high shares of agricultural land, continual growth of the area and the number
of operators, as well as a fast-growing market, show the exceptional dynamics that the organic
food market and the corresponding sector has in many European countries. The organic food
market is growing faster than production, and domestic supply cannot meet demand.

Although conventional production still forms the main part of the agri-food industry in all Eu-
ropean countries, organic farming is becoming its important component. The European organic
food market recorded a growth rate of 11.4%. The highest growth was determined in France
(22%). In the decade 2007-2016, the value of European and EU organic food market has more
than doubled. This is due not only to greater consumer awareness in environmental, health and
nutrition problems, but also mainly to the fact that the industry has recognized new require-
ments and chances through the formation of a new, very important and profitable market sector.

Serbia has great potential for organic production. Climate, soil and natural resources provide
favorable conditions for organic farming, a long tradition in food production, as well as proxim-

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ity to a large and ever-growing organic food market in the EU. The largest demand for organic
products is in larger cities due to higher purchasing power. Organic product prices are up to
30% higher than conventional product prices.

Land in Serbia has been largely recovered due to reduced use of artificial fertilizers and pesti-
cides. Isolated land parcels and livestock isolated land parcels and livestock farms can be used
to produce and increase exports of health food. Organic agricultural production means fully
controlled production. In order to be grounded in one area, it must meet precisely defined condi-
tions relating to the isolation of land for organic production and processing plants from pollution
sources, then the chemical and microbiological status of water, the harmonious development of
plant and livestock farming production and training of experts and manufacturers with the ob-
ligation to constantly innovate knowledge. Serbia, with its natural resources and environmental
conditions, as well as quality staff, still meets the above conditions. Nevertheless, organic agri-
culture is a marginal sector in Serbia.

Without the help of the state, this production can hardly withstand the competition of conven-
tional production, since its economic effects are realized only after many years. It is extremely
important that incentives are adequately created and tailored to the needs of the manufacturer.
Producers involved in organic production have higher production costs and these higher produc-
tion costs are the result of higher labor force participation on the one hand and additional control
and certification costs on the one hand, and lower crop production and production.

Through an adequate marketing campaign, it is necessary to attract foreign investors who would
support the development of organic agriculture in our country, especially investors from coun-
tries that import organic food. This would indirectly stimulate the growth of the organic food
market and change the lifestyle of our consumers. Consumer education in this regard is the task
of marketing management.

REFERENCES

Beslać M., Belokapić P., Beslać J., Finansiranje i proizvodnja organskih proizvoda u funkciji
održivog privrednog razvoja, Ecologica 90 (2018), 326-330.
Cvetković A., Marić M., Značaj finansijske podrške i druge pomoći države razvoju organske
poljoprivrede u Republici Srbiji, Ecologica, Vol. 26, No 94 (2019), 212-216.
Gulič A., Kriterijumi za prostorno planiranje privrednih zona u smeru razvoja zelene ekonomije
u Sloveniji. Ecologica, Vol. 26, No 93 (2019), 21-25.
Janković M., Jovanović L., Organska poljoprivreda i zelena ekonomija, Ecologica, Vol. 25, No
91 (2018), 507-511.
Jovanović L., Pešić-Mikulec D., Pavlović I., Granski standardi kvaliteta i bezbednosti u preh-
rambenoj industriji i primarnoj proizvodnji. Ecologica, Beograd 2012, p.270.
Mitrović Lj., Mitrović A., Mitrović S., Zadruge u funkciji održivog razvoja Srbije, Ecologica,
Vol. 26, No 93 (2019), 49-54.
Simić I., Organic Agriculture in Serbia at a Glance 2017, National Association Serbia Organica,
2017.
Živanović B., Cvejić A., Sikimić U., Perspektive finansiranja organskog stočarstva modelom
bankarskog kredita u Republici Srbiji, Ecologica, Vol. 26, No 96 (2019), 525-534.
Willer, 2018, https://orgprints.org/34670/1/willer-etal-2018-european-statistics.pdf, accessed
11.02.2020.

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Fibl-AMI survey, 2018

IFOAM, 2019, https://www.ifoam.bio/en/news/2019/02/13/world-organic-agriculture-2019, ac-
cessed 11.02.2020
Law on Organic Production and Organic Products (Official Gazette of RS, 62/2006, 30/2010,
17/2019).
National Rural Development Program (Official Gazette of RS, 60/18).
Rulebook on control and certification, 2011-2012, Pravilnik o kontroli i sertifikaciji u organ-
skoj proizvodnji i metodama organske proizvodnje (Official Gazette of RS, 48/2011 and
40/2012).
Rulebook on documents, 2010, Pravilnik o dokumentaciji koja se dostavlja ovlašćenoj kon-
trolnoj organizaciji radi izdavanja potvrde, kao i o uslovima i načinu prodaje organskih
proizvoda (Official Gazette of RS, 30/10).
Rulebook on technological procedures, 2006, Pravilnik o tehnološkim postupcima u preradi
proizvoda proizvedenih po metodama organske proizvodnje, metodama čišćenja i sredst-
vima za čišćenje tehnoloških linija, dozvoljenim sastojcima, aditivima i pomoćnim sup-
stancama u preradi hrane (Official Gazette of RS, 62/06).
http://www.dnrl.minpolj.gov.rs/o_nama/organska/organska_proizvodnja_u_srbiji.html, ac-
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https://statistics.fibl.org/, accessed 11.02.2020

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 THE IMPACT OF GLOBALIZATION
ON THE DIGITAL ECONOMY IN BULGARIA
Maria Kicheva1
Nadezhda Petkova2

DOI:

Abstract: Globalization is the reason for significant changes in all spheres of life. Its effects on the
world economy have been observed for a long time. The impact of globalization is an important eco-
nomic matter and its research is as important.
The aim of this research is to track the trends in the development of the digital economy in Bulgaria
and the corresponding occurring change which follow it. Bulgaria established itself as one of the key
centers for innovative development in 2018 and one of the reasons for that is precisely the globalization
in the sphere of economy and information and communications technologies. The country’s digital
economy forestalls the trends and grows 2.5 times faster than the economies of the big five on the Euro-
pean Union’s market. The transformation of the Bulgarian economy would increase its competitiveness
and would place it at a leading position in the region. Due to these and many other reasons it is impor-
tant for these matters to be analyzed from a scientific point of view.
This paper contributes for the clearer formulation and understanding of the matters related to globali-
zation as a whole, but also for tracking its impact on the state of digital companies in Bulgaria. Similar
research can be applied and further developed for each and every European country and more.
Keywords: Globalization, Digital Economy, Bulgaria, Innovation.

1. INTRODUCTION

T he globalization of the world gives opportunities for a new, “global” demand, an exchange of
new products and services and cultural enrichment to be created. Globalization is what elim-
inates market’s boundaries by creating innovative opportunities for the entrepreneurial business.
Globalization is an important factor for the worldwide economy’s development. It is a phenome-
non that leads to both prosperity and in the same time to problems in different spheres of society.
“Globalization” is a term commonly used as a synonym for the increasing internationalization
that supposes the shift of influence from national governments to transnational corporations.
The process itself is connected to the distribution and interpenetration of ideas, capital, technol-
ogy, and elements of culture. In the face of economic globalization, a new necessity might have
emerged: a necessity for consideration and/or re-consideration, as well as one for an analysis of
its impact on the economic and social development of separate regions and especially a necessity
for an effective management of the factors that influence those processes. Globalization influenc-
es the regional distribution within the framework of every national economy differently. Having
in mind the set of factors that constitute such global economic model, which includes newer and
newer technologies, new markets, etc., the contribution of science on bringing forward non-tech-
nological innovations (marketing or organization related ones) will become more and more im-
portant. The role of the human factor, the approaches and the mechanisms for impacting people

1 South-West University „Neofit Rilski“, Faculty of Economics, Department of Economics, 66 Ivan Mihay-
lov Str., Blagoevgrad, Bulgaria
2 South-West University „Neofit Rilski“, Faculty of Economics, Department of Economics, 66 Ivan Mihay-
lov Str., Blagoevgrad, Bulgaria
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is more clearly defined due to the efforts of the scientific community. Accordingly, the result
from the scientific contribution will be measured through using people as the most valuable asset
and possible carrier of a continuing advanced competitive advantage for every economic entity.

One of the phenomena that occurred mostly due to the processes related to globalization in terms
of technology is precisely the digital revolution for the last few decades. According to the Digital
Economy Report (2019), “The digital economy continues to evolve at breakneck speed, driven by the
ability to collect, use and analyse massive amounts of machine-readable information (digital data)
about practically everything” (p.1). The report also notes that “The expansion of the digital economy
creates many new economic opportunities. Digital data can be used for development purposes and
for solving societal problems. It can thus help improve economic and social outcomes, and be a force
for innovation and productivity growth. Platforms facilitate transactions and networking as well as
information exchange. From a business perspective, the transformation of all sectors and markets
through digitalization can foster the production of higher quality goods and services at reduced
cost. Furthermore, digitalization is transforming value chains in different ways, and opening up new
channels for value addition and broader structural change” (2019, Digital Economy Report, p.3-4).

2. THE DIGITAL ECONOMY IN BULGARIA

A number of companies and organizations create innovative solutions for this new era. This corre-
sponds to the increase in users and consumers of the new generation of product and services. Every
day, around 360 million Europeans work, study, shop, buy and sell online and this number keeps
constantly growing. With the help of digital technologies, we see the improvement of systems of
communication, education, health, transport, manufacturing, security, agriculture, as well as the
definition of solutions to combat climate change. Many of these changes have appeared due to the
processes of development and globalization in the field of technology. In Bulgaria, cutting-edge
solutions are being developed by both startups and traditional businesses and their innovative
teams. Those people are also the capital for developing the innovative economy of the country.

On the one hand, Bulgaria has very high chances of transforming its economy through digital-
ization. Thus, it will increase the country’s competitiveness and it will become a leader in the
region in this field. There are many ideas, projects and development opportunities already. An
evidence of the country’s potential is the fact that the digital economy in Bulgaria is growing
significantly in comparison to the tendencies in Europe. The rate of increase is two and a half
times faster than the one of the Big 5 on the market of the European Union (Germany, France,
Italy, the United Kingdom and Spain) as we can see in Figure 1. of the paper.

The period between 2012 and 2016 has been a very successful one for the digital economy in Bulgaria
as an increase of 8.2% has been reported while the one of the Big 5 on the market is 3.1%. The coun-
try outnumbers the other countries in Central and Eastern Europe (CEE) as well where the increase
is on average 6.2%. However, it is still behind the digital pioneers – the most digitalized countries on
the continent are the Northern nations. For example, Switzerland’s digital economy growth is 9.9%.

Traditional drivers of success are getting less and less significant. This is the reason why there
is a focus on digitalization all over the world. According to McKinsey & Company’s analysis
(2019), “Bulgaria can build on its strong digital economy growth to catch up with Digital Front-
runners” (p.4). Moreover, it is what can bring additional €8 billion of GDP until 2025. They are
also predicting the amount for the whole region (CEE) to reach up to €200 billion.

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Figure 1. The potential of the Bulgarian digital economy.

Source: McKinsey & Company, The Rise of the Digital Challenges: How digitalization can become
the new growth engine for Bulgaria Central and Eastern Europe (2019)

Also, according to the IMD World Digital Competitiveness Ranking, which is a ranking of 63
countries from all over the world including some European Countries, Australia, Canada, Chile,
USA, Saudi Arabia, Russia and more, Bulgaria ranks 45th for 2019. If we look at the separate
factors included in the report, we can see that the country has moved from 54th place in 2015
to 45th in 2019. In terms of the factor knowledge there is an upward movement for the last four
years. As far as the factor technology is concerned, there is a steady result and when it comes to
future readiness the country also shows a great improvement, moving from 59th place in 2015
to 48th place in 2019.

However, there are some challenges before the development of the digital economy in Bulgaria
as pointed out in the report Innovation Ship Bulgaria Digital 2018. Some of them include: there
is a shortage of qualified personnel which turns out to be a major difficulty for new or already
established digital companies; heavy administrative procedures and lack of institutional sup-
port are also important barriers for the rapid expansion of the field.

On the other hand, if we compare Bulgaria to all state-members of the European Union in terms
of DESI (Digital Economy and Society Index) for 2019 we see in Figure 2. that it ranks last.
Despite the potential that the digital economy in Bulgaria has, as we have discussed in the paper
before, its rank decreased due to two main reasons: a limited performance in some of the DESI
dimensions measured and better performance of the other member states in some of the indica-
tors included in the index. The indicators included in the index are connectivity, human capital,
use of Internet services, integration of digital technology and digital public services.

All these factors are very important for the digitalization of the economy which in 21th century
has the potential to bring great opportunities for growth, increased competitiveness and im-
proved business environment in a country as a whole.

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Figure 2. Digital Economy and Society Index (DESI) 2019 ranking

Source: European Commission, https://ec.europa.eu/digital-single-market/en/scoreboard/bulgaria

The results of the European Commission’s report show that Bulgaria performs relatively well
in connectivity, especially as regards to the wide availability of ultrafast and mobile broadband
networks. It has also made significant progress with the e-government dimension, with growing
number of users and a high score for the provision of digital public services to businesses. How-
ever, Bulgaria scores well below the average in human capital, its overall level of digital skills
being among the EU’s lowest. People with at least basic digital skills account for 29 % of the
total Bulgarian population, against an EU average of 57 %. Only 11 % of people have skills that
are above basic, which equals almost one third of the EU average. Bulgaria also performs well
below the average in integrating digital technology. Companies are not yet taking full advantage
of the possibilities offered by online commerce: 6 % of SMEs sell online (against the 17 % of the
EU average), 3 % of total SMEs are selling cross-border and an only 2 % of their turnover comes
from the online segment. Bulgaria has a National Programme linked to the programming of EU
structural funds called „Digital Bulgaria 2025”, which outlines some measures to improve con-
nectivity, public services and private sector integration of digital technologies. However, this is
not an overarching strategy to support digital transformation in Bulgaria. A concept note for the
Industry 4.0 strategy was elaborated in 2017 but it is still a draft. The areas of intervention in-
cluded in the Concept for digitalisation of the business, export orientation and competitiveness
are as follows: building a stable relationship between the industry and the science in the country
and a fastened integration of Bulgaria into European and international programs and projects;
technological renovation of the Bulgarian economy through the introducing of standards, creat-
ing appropriate infrastructure, establishment of specific mechanisms for the improvement and
market penetration of technological innovations; creation of human, scientific, organizational
and institutional capacity for the development of Industry 4.0 in Bulgaria.

3. FUTURE RESEARCH DIRECTIONS

The transformation of the Bulgarian digital economy would increase its competitiveness and
would place it at a leading position in the region. Due to these and many other reasons, discussed
in this paper, it is important for these matters to be analyzed from a scientific point of view. There
is not enough research on the topic in Bulgaria and this was the reason why the authors decided to
focus on it in this paper. Future research on the matter should be directed at qualitative and quanti-

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 THE IMPACT OF GLOBALIZATION ON THE DIGITAL ECONOMY IN BULGARIA

tative measures implemented in assessing the state and potential of the digital economy in Bulgar-
ia, similar to the ones analysed in the paper. Moreover, different possibilities for institutional and
private initiatives and policies should also be discussed and further developed. Thus, providing a
favourable environment in which all types of digital businesses in Bulgaria would thrive.

This paper contributes for the clearer formulation and understanding of the matters related to
globalization as a whole, but also for tracking its impact on the state of digital companies in
Bulgaria. Similar research can be applied and further developed for each and every European
country and more.

4. CONCLUSION

Globalization has made it possible for business enterprises to conduct business operations that
extend beyond their areas of establishment It has become increasingly easy for businesses of all
types to participate in the world market because of IT, which virtually any business can access.
Improved access to information by business enterprises supposes the opportunities to reach a
greater consumer base. This is necessary even more due to the globalization of human capital,
which is characterized by the easy migration of skills between countries. Because of the oppor-
tunities offered by information and communication technologies, the vision of perfect competi-
tion is also becoming a reality, which was not possible until recently. Competition is fostered by
the increasing size of the market opened up through globalization.

Bulgaria’s digital economy has also been greatly influence by the processes of globalization and
the data analysed in this paper shows the great potential of the field, but also some challenges
that it is facing. The implications of the research can be differentiated as follows: despite some
impressive successes, the small digital companies are facing numerous challenges; there are
some problems related to the dynamic of their ecosystem, the localization and solution of which
are of great importance; the creation of future state policies specifically aimed at supporting and
facilitation of the work of small and medium digital companies and start-ups is of great impor-
tance for their future, etc. When it comes to education necessary for this field, it is important
that programs both at school and at universities are directed more at digitalisation studies and
practices and less at old-fashioned disciplines and theories.

REFERENCES

European Commission. (2019). Digital Economy and Society Index (DESI) 2019 Country Re-
port, Bulgaria. retrieved from https://ec.europa.eu/digital-single-market/en/scoreboard/
bulgaria
IMD World Competitiveness Center. (2019). IMD World Digital Competitiveness Ranking
2019, retrieved from https://www.imd.org/wcc/world-competitiveness-center-rankings/
world-digital-competitiveness-rankings-2019/
McKinsey & Company (2019). The Rise of Digital Challenges. How digitalization can become
the new growth engine for Bulgaria and Central Eastern Europe (CEE), retrieved from
https://digitalchallengers.mckinsey.com/files/McKinsey_Digital%20Challengers_Per-
spective_on_Bulgaria_online.pdf
United Nations (2019). Digital Economy Report. Value Creation and Capture: Implications for
Developing Countries. United Nations Conference on Trade and Development. Geneva,
retrieved from https://unctad.org/en/PublicationsLibrary/der2019_overview_en.pdf

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 THE SUBURBANIZATION PROCESS AND QUALITY OF LIFE

Aleksander Ostenda1
Tetyana Nestorenko2
Iryna Yemchenko3

DOI:

Abstract: The issue of the suburbanization process (urban sprawl) is so important and at the same
time still evolving that it forces constant updates and adaptation of research methods to the current
situation. That is why it is so important to interest in this issue the greatest number of researchers
who could comprehensively conduct research on these phenomena in an open knowledge exchange
model. This is an extremely important and urgent problem, especially in the area of effective models
and methods of public management that will enable effective management of space, accessibility and
mobility so that cities develop intelligently, not only intensively, and to exclude extensive development
as much as possible - deprived of control and affecting many areas of public and social life, the natural
environment and, above all, the quality of life of residents. The authors of research indicate the impact
of suburbanization on the perceptible and real quality of life of suburban residents. It seems necessary
to take a systematic approach to the phenomenon of suburbanization and to make an attempt to shape
it by the local government thanks to responsible public management in this area, which is particularly
important in the broader context, when taking into account the full economic, psychological and social
costs that the whole society incurs as a result of the spill Polish cities regardless of their size.

Keywords: Suburbanization, Urban Sprawl, Quality of Life.

1. INTRODUCTION

S uburbanization, from the English word suburb, is a stage of city development characterized
by a planned development of the outskirts of the city and the suburban zones. Periphery
areas of the city turn into residential space in this stage of development, while the city center
undergoes depopulation, leaving room for administrative buildings, public utility facilities, of-
fices, and shops4. As opposed to planned suburbanization, uncontrolled building over of subur-
ban areas is referred to as exurbanization or urban sprawl and is a result of the demand for new
construction and the practices of developers which are harmful to the natural environment.5 It
is accompanied by deindustrialization and the degradation of city centers.6

The issue of the spread of cities is significant enough and constantly evolving to force us to update
and adapt our research methods to the current situation. That is why, it is important to arouse the
interest of as many researchers as possible in this topic, so that they would be able to conduct com-
prehensive studies on these phenomena in a model of open exchange of knowledge. This is a very
1
Katowice School of Technology, Rolna str.43, Katowice 40-555, Poland
2
Berdyansk State Pedagogical University, Shmidta str 4, Berdyadsk 71112, Ukraine
3
Lviv University of Trade and Economics, Tuhan-Baranovsky str.10, Lviv 79000, Ukraine
4
Encyklopedia archytektury. https://archirama.muratorplus.pl/encyklopedia-architektury/suburbanizac-
ja,62_4357.html
5
A. Majer: Socjologia i przestrzeń miejska. (Sociology and Urban Space) Warsaw: PWN, 2010, p.209
6
H. Izdebski : Ideologia i zagospodarowanie przestrzeni.(The Ideology of Space Management) Warsaw:
Wolters Kluwert Poland, 2013, p. 78
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significant and pressing issue, especially in the area of effective models and methods of public
management, which will enable effective management of space, accessibility and mobility so that,
cities can develop intelligently and not only intensively and to exclude, whenever the possibility
arises, extensive development – bereft of control which influences many areas of public and social
life, the natural environment, but most of all the quality of life of the city’s inhabitants.

2. QUALITY OF LIFE AND PERCEIVED QUALITY OF LIFE

In the subject literature there are terms such as: quality of life and perceived quality of life. It
is inappropriate to use them interchangeably. It is very important to differentiate between them.
Quality of life refers to an objective dimension.

The starting point in formulating any kind of conclusions on the subject always boils down to
external conditions, the objective reality of a person being a source of stimuli and experiences.
On the other hand, perceived quality of life is connected with the subjective attitude to reality.
This is an evaluation shaped by emotions and feelings. It concerns the subjective dimension

Objective quality of life is similar in meaning to the term living conditions (or level of life)
which mean all the objective conditions of infrastructural character in which the society (social
groups, households and individuals) lives. They are mainly connected with: material condition,
existential security and environmental security of the life of an individual. In defining objective
quality of life, the data used is generally available in public statistics. Examples of measures
used include average lifespan, monthly income and residential area.

Subjective quality of life is an evaluation of fulfilment of needs. Although, in literature of the

subject there are numerous different definitions of this category there is a certain similarity be-
tween them. It is based on the subjective perception of one’s own life within the framework of a
specific system of values and under specific social, economic and political conditions. Examples
of measures here include satisfaction with one’s health, received income and residential situation.7

The complete picture of the quality of life is obtained studying both its objective and subjective
dimension. In order to study objective quality of life we may use the ready-made sets of indica-
tors provided by subject textbooks (e.g. indicators of sustained development developed for the
Ministry of the Environment or indicators used within the framework of Urban Audit).8

The multidimensionality of the issue of quality of life is also reflected in another division of
this concept. The aforementioned ones belong to the trend which may be called normative.
They assume the existence of a certain ideal state – a norm, towards which every person should
strive. His quality of life is an expression of the differences between the norm and the actual
state. There are also definitions, according to which quality of life is connected with the wealth
of experiences and not the fulfilment of needs.

Since the quality of life is a multidimensional concept with a rather loose definition connected
with the profession or expertise of the person who is defining it, it is difficult to measure. The
7
T. Borys, P. Rogala (ed.), Jakość życia na poziomie lokalnym – ujęcie wskaźnikowe (Quality of Life on a
Local Level – Indicator Approach), UNDP, Warsaw 2008 pp.13-14.
8
P. Rogala, Zaprojektowanie i przetestowanie systemu mierzenia jakości życia w gminach (Designing and
Testing the System of Evaluation of Quality of Life in Municipalities), University of Economics in Wroclaw,
Faculty in Jelenia Góra, Jelenia Góra – Poznań 2009, p. 7.
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 THE SUBURBANIZATION PROCESS AND QUALITY OF LIFE

difficulties in providing a precise definition of the term quality of life have led to a situation
in which there is a lack of universal tools which would precisely define its level. Most likely, it
would be easier to respond to a question why the level of the quality of life is measured than why
it should actually be done. Despite the difficulties of this concept, the authors have attempted to
answer the question posed in the title.

Currently in Poland we can observe progress in the phenomena of suburbanization around not
only main cities but also smaller ones. Suburbanization processes that take place in Poland and the
forces that cause them are similar to processes and forces that occur in other countries. For exam-
ple, among the forces driving suburbanization were marketization of urban land, the shift of in-
dustrial land to tertiary use, transportation improvement, the availability of foreign and domestic
capital, housing rehabilitation in the city, and new housing construction in the suburbs of China.9

Due to the political system which was in place prior to 1989, in Poland these phenomena had
not commenced until the turn of the XX and XXI centuries. The main factor determining a de-
cision about place of residence in Poland is the price of real estate. However, living in suburban
areas adds other circumstances and aspects unknown to or forgotten by people deciding to live
“outside the city”, which significantly influence the quality of their subsequent lives.

Key factors which determine quality of life of the residents of suburban areas are:
1. Employment
Access to employment is severely limited in suburban areas. Suburban quarters are
characterized by the fact that they fill the role of bedrooms for “core” cities10, where the
services provided by the core-city are not available. That is why, in deciding to live in
the suburbs, a daily long commute to work must be assumed. The results of research
conducted previously show that 43% of Poles commutes to work by car every day, de-
voting on the average 7 hours weekly to this task.11
2. Education and care for children aged 3 and under
Families with small children, who are not of school age, often move to suburban areas.
However, even at the stage of pre-school and earlier, these families encounter problems
connected with availability of these kinds of facilities for their children. Frequently the
towns and villages which experience the phenomena of suburbanization are not able to
provide a sufficient offer, to care for their new inhabitants. More often than not this situa-
tion leads to the necessity of using private preschools and nurseries. There is especially a
lack of nursery facilities, living in the suburbs there is virtually no possibility of utilizing
such facilities be they public or even private. That is why, young parents wanting to find
care for their small children are often forced to select a facility (usually private) in the
„core city”, or to employ a babysitter. The first solution is definitely associated with addi-
tional hours spent in the car, since usually the nursery is not found near the place of em-
ployment. The second option is connected with employing a stranger and “allowing” this
person to enter your home, entrusting them with care over a small child. As far as quality
of life is concerned the lack of access to care for children under the age of 3 in our nearest
surroundings, decreases said quality at the same time increasing costs of living.

9
Yixing Zhou & Laurence J. C. Ma. Economic restructuring and suburbanization in China, 2000, Urban
Geography, 21:3, 205-236
10
Core city- a city most often the province or county capital around which a circle of suburban areas is cre-
ated („bedroom”)
11
Center for Public Opinion Research, 2012
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3. Environment
Many decisions about choosing our place of residence are made with the conviction that
the natural environment is in a better condition in suburban areas. However, these are
only appearances, which do not have much in common with the actual situation. The
phenomena of suburbanization is a car-dependent phenomena which means it has a
negative impact on the natural environment. Compact cities generate much less carbon
dioxide created by transport than suburbs. Approximately 30% of nitric oxide emis-
sions and 30% of carbon monoxide emissions are a result of car traffic. That is why
suburbanization contributes to air pollution. In addition, there are permanent changes
to spatial landscape due to suburbanization.
4. Health
As far as health is concerned suburbanization contributes to a non-hygienic lifestyle.
We become used to cars, without which we are unable to carry out our daily duties such
as shopping, doctor visits, taking children to school. Cars result in people not walking
and basically treating their automobile as something that is a necessity without which
they cannot function. At the same time, they want to drive up “right to the doorstep” to
avoid any kind of walking.
Another aspect connected with health is access to health care. In suburban areas access
to a doctor is generally more difficult due to greater distances. Primary care physicians
generally have their offices in suburban areas. However, when it comes to specialist care
our possibilities are greatly diminished, as it is generally located solely in the “core”
cities. The same goes for hospitals. Therefore, taking into account access to health care,
quality of life worsens significantly as people move to suburban areas.
5. Access to emergency services
The readiness of emergency services is another element, which for example, due to
lower population density and the „spread” of areas contributes to the lowering of the life
quality of residents. The commute of emergency medical services to suburban areas is
longer than in the city. According to the Act on Public Emergency Services the median
commute time – on a monthly basis – is no greater than 8 minutes in a city with over 10
thousand inhabitants and 15 minutes outside a city with over 10 thousand inhabitants.12
6. Access to public space
As studies have shown new residents do not use such spaces, even if they are available.
However, the spaces in which residents do show interest require (similarly to work and
school) driving. Access to other areas e.g. those connected with physical activities in
suburban areas in Poland has a decisive impact on the decrease of life quality in these
areas in comparison with city inhabitants.
7. Feeling of being rooted in the local community, interpersonal relations and participa-
tion in the life of a given community
In the process of suburbanization, it is customary to treat residences as places for sleep-
ing or perhaps those used for weekend relaxation. Residents find it hard to become
rooted in the local community.
New inhabitants moving into small towns and villages, at the same time contribute to
the total annihilation of their old structures. Most of the inhabitants do not know one an-
other, they do not get involved in the life of the local community, their lives are mainly
focused on home-work (school) – home commutes and they simply to not have time to
establish and develop neighborly relations.

12
Act from 8 September 2006 on Public Emergency Services
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 THE SUBURBANIZATION PROCESS AND QUALITY OF LIFE

8. Access to public transport and walking access

When we are talking about the intelligent development of cities, about the development
of space in the human scale, accessible on foot, one that does not overburden, a key
element of such space is public transport. It is due to public transport that space can be
recovered to be used by people. However, under Polish conditions living in suburban
areas is equivalent with the necessity to use our own cars in order to ensure transport
to work, school and to ensure all other kinds of services (even basic ones). Transport
in suburban areas is badly organized and unattractive for the user. Agglomerations are
slowly trying to implement changes, however in this case such steps are inadequate.13

As studies have shown the phenomenon of suburbanization has not only numerous economic
consequences but psychological ones as well. Suburbanization causes the loss and permanent
change of landscape and brings about significant costs, which are incurred both by the society
as well as public administration. People who decide to live in suburban areas rarely make this
decision based on in-depth analysis of results of such a move, founded on a multi-dimensional
analysis of potential gains and losses, both in the economic dimension as well as the social
one. Most of them decide, based on the criterion of price of real estate alone. However, in case
of suburban zones making decisions solely taking into account initial costs of purchase is bur-
dened with a significant risk. Living in suburban zones generates significantly higher costs of
transport, each household requires two or more cars to function “normally”, without which life
seems virtually impossible. A car becomes a necessary attribute of functioning in the suburbs,
thanks to which people can get to work, take children to school and take care of their basic
needs, such as shopping and visits to the doctor. However, the aspect of costs connected with
suburbanization is only a single aspect of this phenomenon.

Suburbanization has a negative influence on the experienced and real level of quality of life,
which unfortunately (at least under Polish conditions) is relatively much lower in comparison
with the quality of life in well-managed cities. Settlements in villages made up of people who
are not employed in agriculture or gardening and who work and fulfill their basic needs in the
city, unfortunately do not provide peace and quiet and the possibility to rest close to nature,
since these aspects are suppressed by the unfavorable limits in access to fulfilling basic needs,
including substandard public infrastructure. Inhabitants of these areas are often forced to live
with limitations to basic infrastructure elements such as: lack of sidewalks, lack of hard-surface
access roads, low-level technical infrastructure, lack of sewage systems, lack of social infra-
structure, lack of decent public space enabling them to spend free time. These limits result in a
more difficult access to numerous services and places which are a norm for inhabitants of cities.
Despite all that, subsequent generations of Poles make the decision to settle down in the sub-
urbs, driven mainly by dreams of their own house with a garden and the price of purchasing a
property. Unfortunately, costs connected with suburbanization are incurred not only by people
deciding to live in those areas, such costs are incurred by society as a whole through increased
public expenditures, which are rarely balanced out by increased income.

13
A. Ostenda, M. Fojud, M. Błaszczak, Ekonomiczne i psychologiczne aspekty rozlewania się miast, (The
Economic and Psychological Aspects of City Spread) Katowice School of Technology, Katowice 2016, pp.
26 – 36
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3. CONCLUSION

The conducted research and source material studies unanimously point out the necessity (espe-
cially under Polish conditions) to carry out a system-wide approach to suburbanization and for
the local government to influence it through responsible public management in this area, which
is particularly important in a wider context when we take into account total economic, psycho-
logical and social costs incurred by the society as a whole which are a consequence of the spread
of Polish cities regardless of their size.

REFERENCES

Act on from 8 September 2006 on Public Emergency Services.

Borys T., Rogala P. (red.), Jakość życia na poziomie lokalnym – ujęcie wskaźnikowe (Quality of
Life on a Local Level – Indicator Approach), UNDP, Warsaw 2008 pp.13-14.
Center for Public Opinion Research, 2012.
Encyklopedia architektury. https://archirama.muratorplus.pl/encyklopedia-architektury/subur-
banizacja,62_4357.html
Izdebski H.: Ideologia i zagospodarowanie przestrzeni (Ideology and Management of Space).
Warsaw: Wolters Kluwert Polska, 2013, p. 78.
Majer A.: Socjologia i przestrzeń miejska (Sociology and Urban Space). Warsaw: PWN, 2010,
p.209
Ostenda A., Fojud M., Błaszczak M., Ekonomiczne i psychologiczne aspekty rozlewania się
miast (The Economic and Psychological Aspects of City Spread), Katowice School of
Technology, Katowice 2016, pp. 26 – 36
Rogala P., Zaprojektowanie i przetestowanie systemu mierzenia jakości życia w gminach (Design-
ing and Testing the System of Evaluation of Quality of Life in Municipalities) University of
Economics in Wroclaw, Department in Jelenia Góra, Jelenia Góra – Poznań 2009, p. 7.
The core-city – a province or county capital around which a circle of suburban areas („bed-
rooms) is created
Yixing Zhou & Laurence J. C. Ma. Economic restructuring and suburbanization in China,
2000, Urban Geography, 21:3, 205-236, DOI: 10.2747/0272-3638.21.3.205

240
 WHAT DRIVES THE BELIEFS IN BITCOIN? – SURVEY RESULTS

Zuzana Rakovská1

DOI:

Abstract: This paper examines the factors that affect the sentiment towards bitcoin of the given pop-
ulation - their beliefs about the future development of investors’ interest in bitcoin in two weeks, one
month, and one-quarter period ahead. To do so, it employs data from a unique longitudinal survey,
which was conducted in six waves during the period from September to December 2018 on a balanced
sample of 141 university students. The variety of factors are considered in the study, such as the collec-
tion of socio-demographic factors, expectations about dynamics of popular currency pairs, the degree
of financial knowledge, respondents overconfidence or the technology acceptance factor. Using the or-
dered probit for panel data, this study found the support for the above mentioned factors at least in the
one studied horizon. Moreover, it was shown that respondents evaluate also the past returns of Bitcoin
when shaping their beliefs.

Keywords: Sentiment, Cryptocurrencies, Economic Expectations, Longitudinal Survey.

1. INTRODUCTION

B itcoin, the most popular cryptocurrency, has been gaining increased attention since at least
2011 when it experienced the first abnormal profits. In the following years, its price rocket-
ed even further, and many authors started to ask the question of what factors drove such extreme
dynamics. Compared to fiat currencies, bitcoin is not traded by large, sophisticated institutions/
investors, and its value is not connected to the performance of a single country or to the political
changes. Therefore, the answer could not be found in traditional economic or financial theories.
One of the possible explanations could be linked to the behavioral concept of sentiment - the
aggregate of population beliefs and emotions that are not justified by fundamental news. Even
though the literature about the effects of sentiment on cryptocurrencies has been established
already (Kristoufek, 2013, 2015; Bukovina & Marticek, 2016; Mai et al., 2017; Kim et al., 2017),
little is known about drivers of population beliefs towards these crypto assets.

There are some studies that employed survey data to examine various factors that affect own-
ership and purchase intention (Stix, 2019) or the adoption and usage (Nicholls, 2017; Henry,
2018) of cryptocurrencies, but those studies did not consider respondents expectations or beliefs
about those assessed. Schuh & Shy (2016) used the data from a question in Survey of Consumer
Payment Choice from year 2015, which asked the respondents about the qualitative perceptions
about future development of Bitcoin prices. Authors calculated the qualitative forecast errors
out of those observations and analyzed their effects on the awareness, adoption and use of Bit-
coin (and other cryptocurrencies). They suggested that respondents are not likely to correctly
assess the future Bitcoin price in short periods.

The aim of this paper is to examine in panel settings the various factors that affect beliefs in
the most popular cryptocurrency – Bitcoin. As suggested in the above mentioned studies, the
aggregate level of beliefs in Bitcoin, or in other words – the sentiment towards Bitcoin, is the
1
Masaryk University, Faculty of Economics and Administration, Lipova 41a, 602 00 Brno, Czech Republic
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powerful determinant of future price of this cryptocurrency. Understanding what components

affect the aggregate sentiment on micro-level and what is the direction of this relation is hence
an important task.

2. BITCOIN SURVEY, DATA AND DESCRIPTIVE STATISTICS

This study employs the balanced panel data from online longitudinal survey which was con-
ducted in six waves (on bi-weekly basis) during the period from September 2018 to December
2018. The sample of respondents consists of all 141 students from the Faculty of Economics and
Administration, Masaryk University, who were enrolled in the course Financial Markets in the
winter semester of 2018/20192. Each wave lasted for five days (Monday - Friday) during which
the students were able to respond. Figure 1 shows the dynamics of Bitcoin price (in US dollars)
and the periods of individual waves.

Figure 1. Bitcoin price (in US dollars) and the Survey Waves

Source: https://www.coindesk.com/

Survey was built in such a way that the completion of all its six waves, was the necessary con-
dition for receiving the grade from the Financial Markets course. Therefore, each student had to
respond to all six surveys before he or she was allowed to enter the final exam. In order to offset
the unwilling effects of this mandatory approach, such as the tendencies of students to respond
inaccurately or falsely to questions simply because the act of responding is what matters and not
the content of the answers itself, each surveys included a contest scheme which yielded addi-
tional points for the “winning” students. In particular, each wave contained one or two guessing
questions about the future exchange rate (price in US dollars) of Bitcoin in two weeks or in one
month time and ten students with the most accurate guess for each of those guessing questions
were rewarded by two points. Hence, the total of 16 additional points could have been received
by any student. Because the minimum score for the students to pass the exam was 60, it could
be hypothesized that this reward scheme increased the overall quality of the survey responses
compared to the situation without such incentives. The socio-demographic characteristics of
respondents (see Table 1) suggest that the analysis might suffer from the sample selection bias –
all the respondents are young students of economic programs. Nevertheless, such a population
could be considered to be the next generation of bankers, investors or accountants who will in
turn shape the perceptions of community about financial innovations as a whole. Therefore,
despite the relatively small and homogenous sample, this study could provide useful results that
might indicate some interesting statistical relations.
2
The syllabus of the course is available on https://is.muni.cz/predmet/econ/podzim2018/BPF_FITR?lang=en.
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 WHAT DRIVES THE BELIEFS IN BITCOIN? – SURVEY RESULTS

Table 1. Socio-Demographic Characteristics of Respondents

Number % Number %
Gender Age
Male 68 48 < 25 136 96
Female 73 52 >= 25 5 4
Nationality Study Programmes
Czech or Slovak 139 99 only econ. 114 81
Other 2 1 econ. and other 27 19
Source: author

The main focus of the survey was respondents’ sentiment towards Bitcoin as well as the overall
awareness and usage of cryptocurrencies. Each wave contained two sets of questions. The first set,
“longitudinal” questions, appeared in all the waves (or in the first wave and then in every second
wave) and asked survey participants about they beliefs/expectations of the future development of
Bitcoin exchange rate, as well as other national exchange rates or real estate prices. The reason for
repeating the same questions in each wave was the fact, that the sentiment (optimistic/pessimistic
beliefs about something) is not constant in time, therefore, by capturing its dynamics across indi-
vidual waves, it is possible to examine what factors stand behind its high, low or unchanged value.
The second set, “cross-sectional” questions, was aimed on respondents’ socio-demographic char-
acteristics or other characteristics related to cryptocurrencies that are time-invariant and therefore,
it was unique for the given wave. This study employs only the part of the results from both sets
and hence, represents the pioneering work, which utilizes the data from this longitudinal survey.

As discussed in the Introduction, the aim of this paper is to examine the various factors that drive
population’s beliefs about Bitcoin. As a measure of respondent’s beliefs, the dependent variable,
we used the results for the longitudinal question which appeared in all the survey waves and asked
respondents the following: “How do you see investors’ interest in Bitcoin in the horizon of two
weeks/one month/one quarter?”. There were five possible answers to this question: (1) substantial
decline, (2) decline, (3) no change, (4) increase, and (5) substantial increase. It can be hypothe-
sized that the respondent who believes in cryptocurrencies and expects increase in its demand
would answer by either (4) increase or (5) substantial increase. Similarly, a person who is pessi-
mistic about Bitcoin would most probably choose one of the first two answers. Note, that results
for this question are available in three versions – horizons. Question about the two-week horizon
was asked in all six waves, while the one-month and one-quarter horizon questions appeared only
in the first, third and fifth wave. Figure 2 depicts histograms for those three dependent variables. It
can be seen that respondents strictly prefer the middle three categories - increase, no change and
decline, to the upper and bellow extreme categories in the first two considered horizons, while the
no change responses in the horizon of one quarter reaches the same degree of preference as the
extreme answers do. This might suggest that respondents do not expect extreme movements in the
investors’ interest towards Bitcoin in shorter periods. However, when one considers longer hori-
zons, respondents seem to shift their neutral views to more polarized beliefs. Another interesting
aspect is that the amount of pessimistic answers (decline) increases across waves. An explanation
might be found in Figure 1, which shows that the price of Bitcoin in US dollars rapidly decreased
during the survey period, which in turn, might have induced the spread of negative “sentiment”.

Table 2 lists the explanatory variables (factors) that are used in this study together with their
short characteristics and type of the question from which they were constructed. Variable fintest
and overconf were constructed as the first principal component of the several cross-sectional
questions. There are two reasons for applying the principal component analysis (PCA). Firstly,

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by employing only one variable instead of four or five, the amount of controls in the regression
is reduced; which has in turn positive effects on the estimation properties. Secondly, both finan-
cial literacy and over confidence, are latent concepts that could not be directly measured. By
observing several manifestations of those behaviors via several well-aimed questions and then
by capturing only the common component, construction of more representative measure was
available of either financial literacy or overconfidence.3 4

Figure 2. Histogram of Bitcoin price (in US dollars) and the Survey Waves
Source: author

Table 2. Description of Explanatory Variables

Variable Name Survey Question Type Characteristics
male What is your gender? CS Dummy: 1 if male, 0 if female
other_than_econ Dummy: 1 if the student studies other
- CS programme besides the economics and
0 otherwise
fintest index of financial literacy which was
created as the first principal component
- CS of four dummy variables3 (1 if the
student respondent to the financial
question correctly and 0 otherwise)
overconf index of overconfidence which was
created as the first principal component
- CS of five dummy variables4 (1 if the
student exhibited overconfidence and 0
otherwise)
pref_crypto_all Dummy: 1 if the student answered
at least once that he/she prefers the
- CS investment in cryptocurrencies to
other financial and real assets, and 0
otherwise

3
The first question was aimed at the overall understanding of field of finance (interest rates, inflation, risks),
the second question focused on returns in the financial market and the third and fourth questions asked
students about the exchange rates.
4
Two dummies were created by evaluating students over confidence when answering the question whether
they think they would receive the points from the given survey. Two dummies were constructed as the
indication of students’ over confidence in receiving the concrete grade from the Financial Markets course
(the question was asked firstly in the second wave and then in the sixth wave). The last dummy was built
from the students’ assessment of the overall ability to obtain more points in total than others.
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 WHAT DRIVES THE BELIEFS IN BITCOIN? – SURVEY RESULTS

Variable Name Survey Question Type Characteristics

late_majority, In relation to the adoption of new Dummy: 1 if the respondent marks the
early_majority, technologies, I would describe myself as: given category and 0 otherwise (base
early_adopter, laggard, late majority, early majority, CS category is laggard)
technology_ early adopter or technology enthusiast?5
enthusiast
czkeur_neg_2w How do you expect the exchange rate of Dummy: 1 if the respondent expects
the Czech crown (CZK) to the euro (EUR) L decline and 0 otherwise
to develop in the horizon o 2 weeks?
eurusd_neg_2w How do you expect the exchange rate of Dummy: 1 if the respondent expects
the euro (EUR) to the US dollar (USD) to L decline and 0 otherwise
develop in the horizon o 2 weeks?
realest_neq_1q In your opinion, how will real estate Dummy: 1 if the respondent expects
prices in the Czech Republic evolve L decline and 0 otherwise
within one quarter?
btcret_14d average returns of Bitcoin price in USD
over last 14 days that directly preceded
- - the day when the respondent completed
the survey (returns are calculated as
simple returns in percent)
Note: CS – cross-sectional type of question, L – longitudinal type of question
Source: author

2. DRIVERS OF BELIEFS IN BITCOIN - RESULTS5

In order to assess the effects of selected explanatory variables on the panel of respondents’ be-
liefs in Bitcoin, it was decided to use ordered probit model for panel data6. The choice of model
follows the nature of the dependent variable which is in its sense represented by ordered choice
between (1) substantial decline and (5) substantial increase. The description of the model could
be found for example in Greene (2012, p. 787), who also states that one needs to be very careful
in interpreting the coefficients of this model because the standard interpretation known from
OLS models does not apply. The most practical way of interpreting the results is by so called
predicted probabilities when the predictor is set to a concrete value and the rest of the variables
are in their mean values.

Table 3 reports the estimated coefficients from running three regressions, one for each depend-
ent variable: Bitcoin beliefs in 2-week horizon (btctrend_2w), 1-month horizon (btctrend_1m)
and 1-quarter horizon (btctrend_1q). The table lists also the cutpoints (Cut1 to Cut4) on the
latent variable that are used to differentiate extreme pessimism from pessimism (Cut1), then the
pessimism from neutrality (Cut2) and so on when values of the predictor variables are evaluated
at zero. No measure of R-squared is available after running the ordered probit for panel data, but
the value of likelihood ratio chi-square statistics for all the three specifications suggest that the
models as a whole are statistically significant, as compared to the null model with no predictors.
5
Innovators are characterized by a high level of willingness to invest in new technologies, test and share
their experience with other similarly focused people or groups. Early adopters differ from innovators by
being more cautious about news, but they are one of the first people to adopt new technology and influence
others with their opinions. Early majority fully embraces innovative technologies after a longer period of
time (later than the previous two groups) and he/she rarely affects others. Late majority is someone who
is conservative and is characterized by a great deal of caution. By adopting technology, late majority is
trying to keep up with groups that have already adopted them. Laggard is defined as someone who accept
innovative technologies at a time when they are already commonplace.
6
xtoprobit command in Stata was used to process the estimation.
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From the results in Table 3, it can be concluded that the variety of significant factors that impact
beliefs in Bitcoin differ for the three horizons. Not surprisingly, the average past returns of Bit-
coin represent a significant driver of respondents’ expectations, which means that respondents
evaluate the historical evolution of this crypto-currency when shaping the beliefs. Students’
assessment of the future dynamics of exchange rates (czkeur_neq_2w and eurusd_neg_2w)
as well as their expectations about the future prices of real estate in the Czech Republic (real-
est_neq_1q) turned to be significant drivers as well; however, the effect is not maintained in all
three specifications.

Table 3. Ordered Probit for Panel Data – Estimated Coefficients

(1) (2) (3)
btctrend_2w btctrend_1m btctrend_1q
Explanatory Var. Coef. S.E. Coef. S.E. Coef. S.E.
male -0.131 (0.107) -0.465*** (0.161) -0.472*** (0.161)
other_than_econ -0.217* (0.126) -0.0147 (0.189) 0.174 (0.188)
finlit 0.220** (0.101) 0.380** (0.151) -0.0798 (0.150)
overconf 0.0530 (0.0526) 0.168 **
(0.0787) 0.0720 (0.0779)
pref _crypto_all 0.218* (0.123) 0.331* (0.183) 0.218 (0.182)
late_majority 0.248 (0.321) 0.554 (0.485) -0.0483 (0.478)
early_majority 0.285 (0.297) 0.588 (0.449) 0.0292 (0.442)
early_adopter 0.367 (0.314) 0.678 (0.474) 0.319 (0.468)
technology_enthusiast 0.398 (0.456) 1.265* (0.712) 0.166 (0.702)
czkeur_neg_2w -0.0781 (0.101) 0.0713 (0.166) -0.130 (0.160)
eurusd_neg_2w -0.249*** (0.0950) -0.274* (0.145) -0.194 (0.141)
realest_neg_1q -0.348** (0.140) -0.358 (0.228) -0.470** (0.224)
btcret_14d 0.255*** (0.0421) 0.112** (0.0494) 0.0960** (0.0478)
Cut1 -1.791*** (0.334) -1.878*** (0.509) -1.686*** (0.490)
Cut2 -0.0900 (0.323) 0.347 (0.489) -0.209 (0.483)
Cut3 0.898*** (0.324) 1.101** (0.491) 0.116 (0.483)
Cut4 2.603*** (0.350) 3.155 ***
(0.535) 1.603 ***
(0.493)
N 767 381 381
chi2 65.36 33.40 23.98
Notes: * p < 0.10, ** p < 0.05, *** p < 0.01
Source: author’s calculations in Stata
Table 4: Predicted Probabilities for finlit
Outcome of btctrend_2w Pred. Prob. for finlit = 0 Pred. Prob. for finlit = 1
Substantial decline (1) 0.039 0.024
Decline (2) 0.399 0.334
No change (3) 0.343 0.358
Increase (4) 0.210 0.270
Substantial increase (5) 0.008 0.015
Source: author’s calculation using Stata

Table 4 lists the calculated predicted probabilities for one interesting relation found in the first
model specification: the effect of finlit on btctrend_2w. The rest of the predicted probabilities are
not reported due to paper-size limitations. For example, the probability of respondents having op-
timistic beliefs (Increase (4)) when the financial literacy score is equal to 1 (all the financial ques-
tions were answered correctly) and the rest of the variables are at their means is 27%. Interestingly,
the middle three options seems to have similar probability for both extreme finlit values ( finlit = 1
and finlit = 0) which corresponds to the way how the responses are structured as demonstrated in
Figure 1. Nevertheless, the further examination of the effects is left for the future research.

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 WHAT DRIVES THE BELIEFS IN BITCOIN? – SURVEY RESULTS

3. CONCLUSION

This paper examined the factors, both time-variant and time-invariant, that affect overall beliefs
about the most popular cryptocurrency – Bitcoin. The data from the unique longitudinal survey
were employed and the survey was conducted on the sample of university students in six waves
during the last four months of 2018. Respondents’ beliefs were measured by ordered-choice var-
iable which manifests the expectation about the dynamics of the investors’ interest in Bitcoin.
Such a variable could be viewed as a direct measure of sentiment – if the survey participant is
optimistic (pessimistic) about the future development of Bitcoin, he/she would probably respond
that they expect substantial increase or increase (substantial decline or decline) in investors’
demand for Bitcoin.

The results of the ordered probit model for panel data showed that respondents evaluate not only
the past returns of Bitcoin when shaping their beliefs but also, the way how they expect the de-
velopment of the exchange rates of national currencies matters. Several factors have significant
effects on Bitcoin beliefs from which the most interesting are financial literacy, degree of pref-
erence of Bitcoin to other assets or the respondents’ overconfidence. This study represents the
first application of the unique panel dataset that results from the subject longitudinal survey and
pioneer attempt to analyze the drivers of Bitcoin beliefs of individuals in the Czech Republic
environment.

ACKNOWLEDGMENT

The support from Masaryk University under project MUNI/A/1028/2018 is gratefully acknowledged.

REFERENCES

Bukovina, J., & Martiček, M. (2016). Sentiment and bitcoin volatility (No. 2016-58). Mendel
University in Brno, Faculty of Business and Economics.
Greene, W. (2012). H.(2012): Econometric Analysis.
Henry, C. S., Huynh, K. P., & Nicholls, G. (2018). Bitcoin awareness and usage in Canada. Jour-
nal of Digital Banking, 2(4), 311-337.
Kim, Y. B., Lee, J., Park, N., Choo, J., Kim, J. H., & Kim, C. H. (2017). When Bitcoin encoun-
ters information in an online forum: Using text mining to analyse user opinions and pre-
dict value fluctuation. PloS one, 12(5), e0177630.
Kristoufek, L. (2013). BitCoin meets Google Trends and Wikipedia: Quantifying the relation-
ship between phenomena of the Internet era. Scientific reports, 3, 3415.
Kristoufek, L. (2015). What are the main drivers of the Bitcoin price? Evidence from wavelet
coherence analysis. PloS one, 10(4), e0123923.
Mai, F., Shan, Z., Bai, Q., Wang, X., & Chiang, R. H. (2018). How does social media impact Bit-
coin value? A test of the silent majority hypothesis. Journal of Management Information
Systems, 35(1), 19-52.
Nicholls, G. (2017, September). Bitcoin awareness and usage in Canada. In Canadian Stata Us-
ers’ Group Meetings 2017 (No. 08). Stata Users Group.
Schuh, S., & Shy, O. (2016). US consumers’ adoption and use of Bitcoin and other virtual cur-
rencies. In DeNederlandsche bank, Conference entitled “Retail payments: mapping out the
road ahead.
Stix, H. (2019). Ownership and purchase intention of crypto-assets–survey results (No. 226).

247
 HEALTH MANAGEMENT IN THE 21ST CENTRY

Zdravko Petković1
Zdravka Petković2
Tijana Milanović3

DOI:

Abstract: An integrated management system is a comprehensive management tool that integrates all
elements of the business system into a single system, that is, to manage the processes in the organi-
zation, all to meet the requirements of stakeholders and achieve business goals. In the field of health,
the management system also presents a wide range of activities and knowledge that must be taken to
provide the highest quality health services. Management quality is a complex process, especially in the
field of healthcare. In today’s environment, managers need more than just understanding the concepts
of quality as well as how management is managed. They need to understand how to achieve quality in
the structure and relationships of a complex healthcare organization system. The challenges of manag-
ing the health system itself, are at increasing costs, both for performing operational activities and for
constantly investing in the acquisition of different knowledge of health care data through subsequent
operational use of the knowledge acquired, to obtain a set of strategic rules for health decision support
that can influence strategic decision making, planning and management of healthcare organizations.

Keywords: Management, Health, Management in Health, Health Organization, Ethics.

1. INTRODUCTION

M anaging and steadily placing management within healthcare is a major challenge for all
countries, especially in the 21st century. The concept of healthcare management includes
the roles, functions and responsibilities of the healthcare manager. These aspects are the focus
of many organizations as well as healthcare institutions as healthcare is a diverse field with
increasing opportunities. Management issues in health research provide an optimistic message:
improving management practices is a way to increase quality and productivity [3]. Therefore,
adopting better governance practices within health care could be a key part of addressing the
various challenges in the 21st century. The fact is that people’s general health and well-being are
health management programs, which are often not optimally managed, and the reason is not
only technical incompetence but also the results of inadequate management expertise.

Health professionals are often required and implied to have a significant amount of responsibil-
ity in management, that is, to have a managerial role in some way, and to connect their role as
a health worker through good practice, with effective health management. Healthcare training
should be restructured to include a new set of core competencies (knowledge, skills, abilities,
personal qualities, experience or other characteristics) - new „tricks” that prepare 21st century
healthcare professionals to manage today’s most common health problems. The overall purpose
of this paper relates to the analysis of health management in the context of the roles, responsi-
bilities and functions involved in health management.
1
Clinical Centre Belgrade, Serbia
2
Academy of Business Professional Studies in Belgrade, Kraljice Marije no. 73, Belgrade, Serbia
3
Academy of Business Professional Studies in Belgrade, Kraljice Marije no. 73, Belgrade, Serbia
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2. THE CONCEPT OF HEALTH MANAGEMENT SYSTEM

Improving population health is a challenge that all countries in both, developed and developing,
countries face. As healthcare has become more complex and specialized, a parallel has emerged
between health professionals and health care executives. While public health professionals gen-
erally look beyond the organization, that is, to society and the health needs of the population,
health care managers, on the other hand, tend to focus on the interior of the organization and
especially on the financially demanding sectors of secondary and tertiary care. In these sectors
that inevitably absorb the time and effort of managers and on the basis of which their perfor-
mance is evaluated [8].

One definition of management is that „management refers to the efficient use of resources and
enables people to work together to achieve specific goals” [6]. However, due to the specific
nature of the health care system, especially as it, along with other sectors, work with special-
ized staff with patients to improve the quality of living and working conditions, it is not easy
to define healthcare management. After many attempts to define health management, the most
commonly used definition has emerged, which reads: Health management can be the sum of
all measures taken to plan, organize, implement and evaluate many elements related to health
care system [15]. These measures are necessary to translate health policies into strategies, fur-
ther translate strategies into plans, plans into actions, and actions into decision-making on the
implementation of health programs and to enable health infrastructure to be developed, in such
a way as to ensure effective and efficient implementation health program [15]. Health manage-
ment manages the overall management of a healthcare facility, such as clinic or hospital. The
healthcare manager is responsible for ensuring that the healthcare facility functions as it should
in terms of the institution’s budget, goals, and community needs [5].

The person in charge of health care management also collaborates with medical staff execu-
tives on issues such as medical equipment, budgets, planning ways to ensure the facility meets
its goals, and maintains good relationships with physicians, nurses, and all department heads.
The health care manager also makes decisions about performance appraisal, staff expectations,
budgeting, social media updates, and billing [5]. Working in healthcare can be very rewarding;
especially when a person plays a role in helping others feel better. Health care management may
not be directly related to patient care, but patient care is only effective when there is a healthcare
facility management team. [5]

3. KEY AREAS OF HEALTH MANAGEMENT IN THE 21ST CENTURY

Across Europe, health policy decisions are increasingly influenced or accepted by those with
managerial responsibilities and professional management skills. The situation in public health
is different. In healthcare, roles within managerial responsibilities cannot be excluded. They
cannot afford to ignore or exclude an obligation if they want to make an impact by providing a
multifaceted strategy for improving health without becoming preoccupied with any of its health
components. Health system managers need to broaden their horizons in terms of the public
health perspective that it has to offer, and public health professionals, regardless of disciplinary
background, should accept management as a necessary skill. [14]

Health management is considered as an important area of public health skills and as such, it cov-
ers three key areas of health management: people management, planning and resource manage-

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ment. By exploring these areas, the goal is achieved in terms of providing information as well
as practical assistance [12]. Each of these areas is in itself a large area of study, and accordingly,
three vital topics are highlighted [12]: the importance of people, the importance of planning,
and the importance of systems. As primary care systems become more complex, more complex
forms of management become necessary. At the same time, patients’ and policy makers’ con-
cerns about quality of care have fueled the development of quality improvement policies [1].

4. CHARACTERISTICS OF HEALTH MANAGEMENT

Health management differs from general management in several important features. It should
be noted that the health system in particular is different from other systems. The main objective
of the health system is to work with other systems and sectors to promote health development
and better human health [13]. It is staffed by healthcare professionals and its primary goal is not
to make profit, but also to improve the quality of service provided to sick people. Health man-
agement is an organized system of agreed rules, functions and tasks, implemented by respon-
sible and organized individuals at different levels of health care, all with the aim of improving
human health [13].

Health care management basically means to satisfy and balance the interests of all participants
in the healthcare system, that is, in the healthcare organization. This applies to: clients - patients,
workers, institution and environment, the community in which the organization itself is located.
However, it can be said that the management of health system and health institutions, did not
fully follow or accept the ideas, all principles and theories, which were developed during the
XIX and XX centuries. This difference is a consequence of the specificity of the health system
in relation to classic large corporations and commercial enterprises [11].

Among the features in the development of the health care system, the most significant are [11]:
• • The health system did not have its „industrial revolution”.
• • Significant medical discoveries began to occur only at the end of the 19th and begin-
ning of the 20th centuries.
• • This system became a significant subsystem of the social system only after the First
World War, and especially after the Second World War (40s and 50s).
• • At the beginning of its development, the health care system was neither complicated
nor complex.
• • He was not adaptable to management development, due to his predominantly social
rather than commercial value.
• • The health system today is one of the complicated “subsystems” that has evolved over
the decades with the contributions of people, science, beliefs, commercial factors and
other social forces, but usually and most often without detailed study and systematic
planning.

Generally speaking, the health system must be one coherent whole, consisting of many intercon-
nected parts, components (sectoral and intersectoral), as well as the community itself. It must be
created so that all its parts work together and adapt to each other, all through communication and
division of labor. Evaluation of the health process and program is part of the process of managing
health development. In fact, the complexity of healthcare systems cannot be solved by one pro-
fession. Better management is a long-term strategy that is considered a long-term and constant
process for improving the quality of healthcare and improving organizational processes [4].

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5. HEALTH MANAGEMENT QUALITY IN 21ST CENTURY

Today, many point out that quality is a key success factor in the global market and, as such, is
proportional to the satisfaction of users of certain products or services. The successful business
of every company or organization cannot be imagined without an adequate quality system. De-
pending on the degree of social development, quality has always been more or less concerned
[9]. Health care quality is a multidimensional and multilayered concept intertwined with value
parameters about what constitutes good quality [2]. Quality management in a healthcare facil-
ity should be addressed by staff, in addition to their core profession. If quality management is
limited to only one organizational unit or one person in an institution, it cannot be presented
as quality management, because all healthcare professionals must be involved in the process
and implemented through all activities. Given that quality is emerging as a novelty in health-
care settings, it is desirable to define a description of tasks and responsibilities for all levels of
management, as well as to provide appropriate training to managers in quality management [7].

According to the World Health Organization (WHO) [14] high hospital performance is depend-
ent on the professional management provided by competent teams covering a wide range of
skills. The scope and content of hospital management, financial management and various forms
of administrative functions depend on the context and country [14]. Human resource workload
indicators are one of the parameters, which provide healthcare managers with a wide range of op-
tions, how to systematically make personnel decisions, in order to further manage their valuable
human resources [14]. Quality hospital services are efficient and human-centered. Related to this,
health services should be timely, equitable, integrated and efficient. Hospitals are reorganizing
processes and refocusing their logistical efforts to make care affordable, acceptable and contin-
uous from a patient perspective. High quality care also means that people are informed and em-
powered to make decisions regarding their own healthcare [10]. Improving the quality of services
provided in hospitals can potentially improve the operation of hospitals and increase customer
demand from users, as well as improve patients’ overall confidence in healthcare facilities.

Quality management wants to improve treatment efficiency and increase patient satisfaction
with the service. Care quality is an important factor that increases patient’s satisfaction. Good
quality care is also one of the essential parameters that is critical to achieving the Millennium
Development Goals [10]. However, quality is differently seen across communities. There is
much to be done to improve quality in health care programs. Health care managers need a thor-
ough understanding of not only the concepts but also the practical ways to improve the quality
of care within healthcare settings. [10].

6. CONCLUSION

Health is probably the highest priority for most citizens in a country. There is no doubt that
health management has influenced the development and improvement of the health system, its
organized, efficient and effective operation. At first, its impact was not particularly large, but
as the health system became more complex and complicated, so did the importance of man-
agement within management. The degree of health care provision in each health care facility
depends on the level of management professionalism provided.

Health care management is very important, so functionalities, roles and responsibilities are only
effective if adhered to by health care management. Today, when the health care system is quite

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complex, especially in the developed countries of the world, when it is necessary for society for
its social and economic development, when it is increasingly complicated and developed, and
when a large number of highly skilled personnel work in it, it cannot be managed. It must not be
neglected or implemented in any way without a clear concept of the development of appropri-
ate principles and good management, especially in the 21st century. Currently, there is a lack of
leadership and management capacity is a limitation, especially in operational terms of private
and public health levels. It is therefore clear that these efforts must be improved. Competencies,
roles and responsibilities should be clearly defined and performance measured.

Progress requires systematic work to identify needs and effective interventions; then implement
countries’ overall plan for developing leadership and management capacity; and that interna-
tional assistance be coherent in support of national plans. The work on recognition, promotion
of health management is of great importance. By focusing attention on building professional
capacities, strengthening managerial skills and abilities, as well as using positive examples and
experiences, so-called best practices, especially from developed countries, the entire healthcare
system is being given the opportunity to modernize and improve. The global healthcare indus-
try is at a central position to lead the integration of social, economic, environmental, health and
resource-balanced practices of the 21st century in the service of renewal and healing.

In order for the future to be better than the present, it is necessary to use various experiences,
both positive and negative, in order to achieve the goals. The development of health manage-
ment should be based on health development and on general development. 21st Century health
management should be one of the main prerequisites for furthering the health of a country.

REFERENCES

[1] Baker, R. (2000). Managing quality in primary health care: the need for valid information
about performance, Quality in Health Care.
[2] De Geyndt, W. (1995). Managing the quality of health care in developing countries (Eng-
lish). World Bank technical paper ; no. WTP 258. Washington, D.C.: The World Bank.
[3] Dorgan, S., Layton, D., Bloom, N., Homkes, R., Sadun, R., & Van Reenen, J. (2010).
Management in healthcare: why good practice really matters.  London: McKinsey and
Company/London School of Economics.
[4] Hartley, J., & Benington, J. (2010). Leadership for healthcare. Policy Press.
[5] Healthcare Management Degree Guide (2019). What is Healthcare Management Available
at https://www.healthcare-management-degree.net/faq/what-is-healthcare-management/
[6] Parker, L. D. (1984). Control in organizational life: the contribution of Mary Parker
Follett. Academy of Management Review, 9(4), 736-745.
[7] Pavlović, K. (2016). Model sistema menadžmenta kvaliteta zasnovan na teoriji komplek-
snosti, Univerzitet u Beogradu, Fakultet organizacionih nauka, Beograd.
[8] Pruitt, S. D., & Epping-Jordan, J. E. (2005). Preparing the 21st century global healthcare
workforce. Bmj, 330(7492), 637-639.
[9] Savović, I. (2006) Integrisani sistemi menadžmenta kvalitetom i bezbednost hrane inte-
gracijom procesa projektovanja razvoja, Akcija za kvalitet i standardizaciju Srbije.
[10] Sharma, K. (2012). Managing quality in health care, Institute of Health Management Re-
search, Jaipur 302011 India. 
[11] Stoner, J.,& Wanklen ,C. (1986 ) Management, 3rd Edition, PHI, USA.

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[12] Venter, W., Rendall-Mkosi, K., & Alexander, L. (2011). Health Management I Module
Guide, School of Public Health University of the Western Cape.
[13] Wexley, K. N., & Yukl, G. A. (1984).Organizational behavior and personnel psychology.
Richard D. Irwin.
[14] World Health Organization – WHO (2019). Management and Quality. Available at: https://
www.who.int/hospitals/management-and-quality/en/.
[15] Zečević, M. (1994) Menadžment, Fakultet za internacionalni menadžment, Beograd.

254
 THEORETICAL AND PRACTICAL CONSIDERATIONS
REGARDING THE CONTESTING PROCEDURE
IN THE FIELD OF PUBLIC PROCUREMENT
Diana Gorun1

DOI:

Abstract: In the case of the tenderers who took part in the procedure for awarding by public procure-
ment the framework agreement for service contracts whose tender has been declared incomplete or
losing, there is the possibility provided by the law to challenge the outcome of the procedure, according
to the provisions of the Law no. 101/2016 on remedies and remedies in respect of the award of public
procurement contracts, sectoral contracts and concession contracts for works and concessions of ser-
vices, as well as for the organization and functioning of the National Council for Solving Complaints.
Thus, the tenderers who consider themselves wronged in a law or in a legitimate interest by an act of a
contracting authority or by failure to resolve an application within the legal time limit, may request the
annulment of the act by obliging the contracting authority to issue an act or to adopt remedial meas-
ures, recognition of the alleged right or legitimate interest, using a administrative-judicial or a judicial
way, with the purpose of declaring the offer submitted or the contestant to be winner.
The competent authority at first instance in resolving these complaints is the National Council for Solv-
ing Complaints.
Against the rulings issued by the National Council for Solving Complaints, a complaint may be filed,
the resolution of which is within the competence of the Administrative and Fiscal Appeal Section of
the Court of Appeal in whose territorial jurisdiction the headquarters of the contracting authority is
located, according to the provisions of art. 32 par. 1 of the Law no. 101/2016, the decision of the Court
of Appeal being final.
Keywords: Offer, Award Procedure, Contestation, Right, Legitimate Interest, National Council for
Solving Complaints.

1. PRESENTING THE CASES

In the first presented case, the appellant S.C. CVT SRL filed an appeal against the act (decision)
by which, following the re-evaluation of the offers by the evaluation commission of the contract-
ing authority, the Academy of Economic Studies of Bucharest, it was ordered to restart the final
phase of electronic auction in SEAP, having as service object for promotion for projects funded
from non-reimbursable community funds, national scientific research projects, organizational
structures of ASE Bucharest, COD CPV ......

It was requested that by the decision that will be pronounced the cancellation of the contested
act would be canceled as unlawful and illegal and consequently the winning declaration of the
offer submitted by S.C. CVT SRL, as well as obliging the contracting authority the Academy of
Economic Studies of Bucharest at the conclusion of the award contract (framework agreement)
with S.C. CVT SRL.

1
Romanian-American University, Bd. Expozitiei No.1B, District 1, code 01210, Bucharest, Romania
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In motivating the appeal, it was shown that the company CVT participated as a bidder in the
procedure for awarding by public procurement the framework agreement for “Promotion ser-
vices for Lot 2, namely promotion services for:
a) projects funded from non-reimbursable community funds;
b) national projects of scientific research;
c) organizational structures of ASE Bucharest, COD CPV …, the contracting authority
being the Academy of Economic Studies Bucharest.

By letter of introduction, S.C. CVT expressed its agreement to participate in the auction, following
the invitation to participate published in the SEAP. At the same time, the technical offer and the
financial offer for Lot 2 were sent to the contracting authority, as well as the related documents.

Regarding the qualification documents requested from the bidders, only CVT SRL made them
available to the contracting authority, while the counter-bidder S.C. GA SRL did not present them.

Subsequently, by the address issued by the contracting authority, the Evaluation Commission
within it requested clarifications and possibly edifying documents in complement, regarding the
following aspects:
• statement regarding subcontractors;
• which is the document under which Mrs. FG was authorized by the legal representative
of the company to sign the documents submitted to the public procurement procedure.

In the opinion of the contesting company, the declaration regarding the subcontractors accord-
ing to form 14 was not completed because in the procurement sheet it was stated that there is
the obligation to complete only in case of the subcontracting intention. Therefore, if the tenderer
does not intend to subcontract - as is the case here, he was not required to complete form 14.
Therefore, the request of the contracting authority in this respect appears to be unjustified.

Regarding the document attesting the capacity of empowerment of Mrs. FG, it was revealed that the
empowerment was drawn up and signed according to the model given by the contracting authority,
a certified copy for conformity with the original being submitted with the award documentation.

By the address issued by the contracting authority it was communicated that the offer of the CVT
company is acceptable and compliant, therefore admissible and declared qualified for the final
stage of electronic auction for Lot 2, the same aspects being communicated by e-mail by SEAP.

After the expiration of the duration of the electronic auction, following the accession of SEAP,
it was visualized that CVT SRL’s offer took the 1st place in the ranking, therefore it is winning,
being both technically and financially compliant.

Surprisingly, although the next step should have been the conclusion of the framework agree-
ment, the contracting authority requested by a new address the written agreement regarding the
extension of the term of validity of the offer for another 30 days, reasoning that there are “ob-
jective needs for the extension. the period of evaluation of the offers submitted by the economic
operators participating in the procedure ‚’.

Subsequently, although the framework agreement should have been concluded, this did not
happen, the company concerned being informed that following the process of re-evaluating the

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offers by the evaluation commission of the contracting authority, on Lot 2 of the procedure the
authority the contracting party is to restart the final phase of electronic tendering in SEAP.

In the opinion of the contestant, the extension of the evaluation period of the offers submitted by
the economic operators participating in the procurement procedure, invoking ‚objective needs’
is totally unjustified and illegal.

Thus, under the conditions in which it was established that CVT’s offer is a winner (according
to SEAP), the contracting authority could not return to the decision even invoking the so-called
‚objective needs’. Basically, the decision to return to the initial decision by which the winning
bid was declared is unmotivated, invoking the „objective needs” being only a general argument,
which is not capable of justifying the decision to resume the final phase of electronic auction.

Moreover, the contracting authority proceeded in an unfounded manner when it decided to re-eval-
uate the tenders, following the initial evaluation and the SEAP communication of the auction result.

Under the conditions in which a compliant and admissible offer was ranked on the 1st place, the
contracting authority could no longer return on the decision, because the return can no longer in-
tervene after the auction result is established. Thus, through the practice of re-evaluation, the right
to conclude the framework agreement is violated, as a right gained after completing all the stages
of the tender procedure, which is why S.C. CVT SRL, injured in a legitimate interest, understood
to file an appeal, based on the provisions of art. 255, 256, 270 et seq. from O.G. no. 34/2006.

The practice of re-evaluating the contestant violated the right to conclude the framework agree-
ment, a right that he won after completing the tender procedure.

As it is considered damaged in a legitimate interest, the contestant requested the admission of

the contestation, the annulment of the annulment of the contested act as being unlawful and il-
legal and as a consequence the winning declaration of the offer submitted by CVT SRL, as well
as the contracting authority ASE Bucharest at the conclusion of the contract award (framework
agreement) with SC CVT SRL.

In another case, S.C. IGFP SRL filed an appeal against the act establishing and recording the re-
sult of the procedure for awarding the public procurement contract for the security service - COD
CPV…… .. of the Military Unit ………. Bucharest. It was requested that by decision to order:
• annulment of the public procurement procedure as being unreasonable and illegal and
as a consequence;
• obliging the contracting authority to resume the procedure under legal conditions and
to issue a new act respecting the award procedure.

It turned out that S.C. IGFP SRL participated in the award procedure by public procurement of the
contract of services COD CPV ………… of the contracting authority Military Unit ……. Bucharest,
having as object service of guard and intervention to military objectives with specialized companies
for 1 objective with 3 positions of 24 hours and 1 position of 12 hours (at the headquarters of the
contracting unit) and 1 objective with 3 positions of 24 hours (at point of work from Olt county).

Through the communication address they were informed that the company’s offer was not de-
clared a winner because the offered price was the highest. At the same time, it was communicat-

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ed that the winning bid belongs to another company, because this one “is appropriate in terms of
the requirements of the documentation for awarding the offer” and having a lower price.

In fact, in the case of the company declared a winner, only one of the two requirements that had
to be met cumulatively is fulfilled, namely the lowest price. But the second condition, consid-
ered essential, is by no means fulfilled because the winning bid does not correspond in terms of
the requirements of the award documentation.

Thus, according to the attribution documentation elaborated by the contracting authority, the
participation criteria and implicitly of eligibility of the economic operators registered in the
auction are the following:
• be registered with a competent authority;
• to have as field of activity the provision of security and intervention services;
• to hold the operating license issued by the General Inspectorate of the Romanian Police;
• to hold the emission license issued by the General Inspectorate for Communications
and Information Technology (I.G.C.T.I.);
• to have a security notice secret service level, issued by the security authority of the
Ministry of Defense.

Of all these conditions, that of holding the emission license issued by I.G.C.T.I. it was only ful-
filled by the IGFP company, the holder of its own emission license both in Bucharest and the
surrounding areas, as well as in the Olt area. The other two participating companies do not hold
such licenses, the holders of licenses for the use of the respective radio frequencies being other
companies, providers of public communications networks in the land mobile service. Or ac-
cording to the chapter „Required documents”, one of the 5 compulsory points is the holding of
the operating authorization and the emission license for the frequencies used issued by I.G.C.T.I.
This requirement implies implicitly owning a license, on behalf of the company participating
in the auction, and not on behalf of another economic operator. Moreover, even if it is admitted
that such a license can be rented, the condition is still not fulfilled because the two network
providers do not have licenses to use the frequencies for Olt County.

Therefore, the only company participating in the auction that fulfilled all the conditions of de-
mand was S.C. IGFP.

Compared to the ones shown and because they are considered to be injured in a legitimate
interest, they request the admission of the present contestation, the cancellation of the public
procurement procedure as being unlawful and illegal and as a consequence the contracting
authority is obliged to resume the procedure under legal conditions and at issuing a new act
respecting the award procedure.

In the third case, SC RPTC SRL filed an appeal against the act establishing and recording the
result of the procedure for awarding the public procurement contract for the cleaning services
for the Emergency Institute for Cardiovascular Diseases ..........COD CPV ............ and it was re-
quested that the decision be ordered:
• mainly, the cancellation of the procedure for awarding the public procurement contract
for reasons of illegality of the procedure in relation to the requirements provided in the
specifications;

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• in the alternative, annul the result of the procedure for awarding the public procurement
contract to S.C. SS S.R.L. and obliging the contracting authority to re-evaluate the of-
fers and, consequently, to issue a new act declaring the subscriber’s offer a winner, and
the S.C. offer. SS S.R.L. as inadequate.

Along with the company RPTC SRL, at the auction were registered and participated other four
companies cleaning services, among which S.C. SS SRL. As a result of the tender, the com-
mission for evaluating the offers from the contracting authority, following the analysis of the
offers through the award procedure, has designated our offer as a reform, and the winning one
as belonging to S.C. Septiclean Service SRL, the following were contested:

Mainly, it was considered that the contracting authority did not comply with the legal provisions
regarding the procedure for organizing the open tender.

Thus, regarding the personnel who were to serve for the fulfillment of the object of the public
procurement contract, there is only one mandatory requirement related to the minimum number
of requested personnel, respectively 75 persons. However, although the specifications were draft-
ed within the deadline stipulated by the law, after the opening of the procedure, the contracting
authority posted on SEAP, among other clarifications and one regarding „the personnel responsi-
ble for performing the subsequent contracts”, respectively: „you must present, for the personnel
you will make available to the institute, documents, proving that you have it, respectively copies
(signed and stamped in accordance with the original) after workbooks, flatbeds, etc.”.

Regarding this „clarification”, it was considered that this is clearly a new requirement and not
a simple clarification. In the case of new documents that are required to be submitted within a
so-called clarification, which is closely linked to a requirement of the specification, it is obvious
that it is qualified as a new requirement.

Regarding the circumstance that the auction was to take place on 14.12.2017, and the contracting
authority introduced a new requirement in the specifications on 08.12.2017, it is necessary to
cancel the procedure for organizing the auction.

Moreover, even if it is assumed that the request for new documents would not be a new require-
ment and would be a simple clarification, it does not comply with the provisions of the specifi-
cations adapted to the legal provisions regarding the deadline for its adoption and publication.
Thus, the alleged clarification, as defined and regulated both by the specifications, and by law,
had to be submitted by the contracting authority at least 6 days before the deadline for submis-
sion of tenders.

As this clarification was made on 08.12.2017, 08.49 a.m. and the deadline for submission of the
offer was on 14.12.2017, 10.00 a.m., the contestant considered that the legal term provided by
the law was not respected.

Moreover, the legal term established by the normative act is at least 6 days before the deadline
for submission of tenders. This term, following the legal interpretation according to the Civil
Procedure Code (general law whose provisions supplement the special provisions of Law no.
101/2016) must be calculated on free days, the first and last days not being taken into account.
In this sense, between the day of publication of the alleged clarification and the deadline for

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submitting tenders, there are no six full days, which again leads to the non-observance of the
tendering procedure.

For all the considerations mentioned above, the appellant requested the cancellation of the pro-
cedure for awarding the public procurement contract for reasons of illegality of the procedure in
relation to the requirements stipulated in the specifications.

Subsequently, in the event that the main reason for the appeal would be overlooked, it was re-
quested to cancel the result of the procedure for awarding the public procurement contract to
S.C. SS S.R.L. and obliging the contracting authority to re-evaluate the offers and, consequent-
ly, to issue a new act declaring the contestant’s offer as winner.

In conclusion, the only bidder participating in the auction that met all the eligibility conditions
was S.C. RPTC SRL.

Compared to the ones shown and because they are considered to be injured in a legitimate in-
terest, they requested the admission of the present challenge and consequently the contracting
authority is obliged to award the contract to the company that meets all the requirements in the
specifications and implicitly the disqualification of the company that did not submit at the right
time all the necessary documents.

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