Third International Scientific Conference “Economy and Integration: Using knowledge to move from recession to prosperity”, 2013 (Tuzla, Bosnia and Herzegovina) , 2013
Ever since the establishment of the first venture capital firms in 1946, the US venture market ha... more Ever since the establishment of the first venture capital firms in 1946, the US venture market has maintained the top position in the financial world. The US venture capital funds investments in 2011 reached $29.5 billion (3,937 companies), while the investment level in 2012 was slightly lower: $26.5 billion (3,698 companies). Compared to the US market, European venture capital industry is much smaller, but certainly not insignificant: European venture capital funds invested €3.9 billion in more than 3,000 companies in 2011.
In Australia and Asia, venture capital continues to grow, exceeding $3 billion in 2011, significantly increasing its share in total private equity investments compared to previous years. Considering the available data, the requirements associated with the venture capital development and the nature of financial markets in those regions, it is reasonable to expect the continued increase of the intermediaries influence on financial markets movements. It is anticipated that the future activities of these financial intermediates will have a strong influence on further development of capital markets and overall investment growth opportunities. Supporting development of small and medium enterprises stimulates regional development, especially with regards to employment, technology, and overall economy.
The aim of this paper is to analyse the current status and development trends of venture capital industry in the three financial regions (USA, Europe, and Australasia) over the past decade and establish some trend indicators that could be valuable to less developed regions (such as Western Balkans and Bosnia and Herzegovina). The paper will focus on the time analysis and comparative overview of capital funds, investments/divestments, and relevant trends, aiming to highlight the indicators and factors that could assist in predicting the venture capital development in other, less progressed economic regions.
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Developing countries with predominantly bank-oriented financial systems and lacking market depth are not attractive to new investors. Maintaining status quo in these conditions means further economic deterioration and reduced chances for success. Thus, it is essential that developing countries consider steps towards financial liberalization or deregulation, which will help open the borders for capital flows and attract new investments and ideas. Deregulating steps can involve changes to interest rates determination, restructuring of financial institutions, abolishment of direct loans allocation practices, promotion of prudential regulation, establishment of new banks/multi-facets financial institutions, etc. Deregulation affects all sectors of the economy, i.e. increased savings bring new investments, directly contributing to higher production and employment growth, spreading the tax burden to a larger group, and enabling further savings and investments.
However, financial deregulation does not guaranty quick economic growth for developing countries because changing financial rules could motivate the domestic capital going abroad, increased volatility can create serious challenges for banks, while overly relaxed rules can make investors nervous. The key to success is in determining the appropriate balance between the level of financial liberalization and sufficiently flexible and effective regulatory framework that will support economic growth and maintain investor confidence.
The main goal of this paper is to analyse and critique the process of financial liberalization in developing countries and to motivate the policy makers to consider available lessons when creating their balanced approach to financial liberalization and regulation processes towards financial development, openness, and integration in the global financial landscape.
Keywords: financial liberalization, financial regulation, economic development, developing countries
One of the important components of a well-functioning financial system is effective regulation that can provide confidence in the system as well as support the transformation. Global experience has taught us that financial liberalisation supports the economy growth, but also that the development efforts do not bring the same results everywhere. Developing countries such as Bosnia and Herzegovina can increase their chances for economic growth through liberalisation, creating new investments through increased deposits, which also increases the risk of banking crisis due to higher volatility. Therefore, it is important to look at the process of financial liberalisation and integration in combination with regulatory transformation. In case of BiH this also includes the role of the currency board. Policymakers in developing countries such as BiH can find valuable learning lessons in literature and empirical research that can be useful in better understanding the benefits and challenges associated with financial liberalisation. The experience from other countries clearly shows that there is a fine line between progressive liberalisation actions and effective regulations to support the transformation and provide confidence in the financial system. Open communication and encouragement of ideas among the main economic players (including general public) are the key elements in designing a balanced response to financial globalisation and transformation efforts.
The paper addresses some historical elements relevant to predominantly bank-oriented financial systems characteristic to many developing countries such as BiH, as well as pros and cons associated with economic development efforts, currency board, prudential regulation, and supervision practices.
Keywords: transformation of the economy, financial system, financial liberalisation and integration, prudential regulation and supervision, Bosnia and Herzegovina (BiH)
This paper analyses companies’ capital structure, solvency, and liquidity management during and after the global financial crisis. The research covers a comprehensive dataset related to companies in the Federation of Bosnia and Herzegovina and their financial performance.
The dynamic panel regression model was used to check the significance of the capital structure and indebtedness impacts on firms liquidity during five consecutive years (2009-2013). The research findings are focused on the overall production and processing industry as well as nine sectors that deserve special consideration.
The findings and recommendations resulting from this study are designed to help various decision makers develop better understanding of the relationship between the economic crisis and companies capital structure management. The paper covers a review of relevant literature, a brief theoretical framework, and research methods as well as findings, descriptions, and explanations of the analysis results. The resulting recommendations can be useful to corporate officials, financial markets participants as well as economic policy decision makers. Moreover, it may serve as motivation for other researchers to undertake further study in the area of financial management.
Keywords: company’s capital structure, solvency, liquidity management, global financial crisis, Federation of Bosnia and Herzegovina
In Australia and Asia, venture capital continues to grow, exceeding $3 billion in 2011, significantly increasing its share in total private equity investments compared to previous years. Considering the available data, the requirements associated with the venture capital development and the nature of financial markets in those regions, it is reasonable to expect the continued increase of the intermediaries influence on financial markets movements. It is anticipated that the future activities of these financial intermediates will have a strong influence on further development of capital markets and overall investment growth opportunities. Supporting development of small and medium enterprises stimulates regional development, especially with regards to employment, technology, and overall economy.
The aim of this paper is to analyse the current status and development trends of venture capital industry in the three financial regions (USA, Europe, and Australasia) over the past decade and establish some trend indicators that could be valuable to less developed regions (such as Western Balkans and Bosnia and Herzegovina). The paper will focus on the time analysis and comparative overview of capital funds, investments/divestments, and relevant trends, aiming to highlight the indicators and factors that could assist in predicting the venture capital development in other, less progressed economic regions.
Many studies have acknowledged the direct link between productivity and the level of employee satisfaction. This work aims to establish and recognise some of the main factors associated with the job satisfaction of banking employees in the Federation of BiH and provide useful guidance to bank managers in this region and beyond, as a contribution to their continuous improvement efforts in business and people management during these challenging times.
The research is predominantly based on the survey conducted in the banking sector of the Federation of BiH in 2013. The survey sample covers 529 respondents that represent 7.4% of the overall banking employee sector base of 7,130. The analysis of survey results, supported by empirical research and the review of related literature, revealed that job satisfaction amongst the bankers is determined by a wide spectrum of factors such as: demographic characteristics, management and supervision, monetary compensation, non-monetary recognition, work environment, job responsibility and type of tasks, social atmosphere at work, and general satisfaction with life.
While job satisfaction is a widely used term, there is no agreed definition of what it really covers when it comes to work and life in general. Hoppock (1935) defined job satisfaction as a combination of various psychological, physiological, and environmental conditions that would prompt a person to honestly believe they are satisfied with their job. These factors were considered as personal, subjective reactions toward working environment and directly dependent on the inner feeling of each person (Hoppock, 1935, in Tsai, Yen, Huang & Huang, 2007, p.160). Seal and Knight observed job satisfaction from a psychological viewpoint: they related it to the overall emotional or evaluation responses from the employees to the job itself (Seal &Knight, 1998, in Tsai, Yen, Huang & Huang, 2007, p.160). Cranny, Smith, and Stone defined job satisfaction as an emotional reaction of an individual to their job, based on their comparison of the outcomes at the workplace and their desires (Cranny, Smith & Stone, 1992, p. 1). This goes in line with Locke’s definition from 1976 that defines job satisfaction as “… a pleasurable or positive emotional state resulting from an appraisal of one’s job or job experiences” (Locke, 1976, p. 1300).
Based on these definitions it can be concluded that job satisfaction is in fact an individual attitude towards work that involves cognitive (certain assumptions and beliefs about the job), emotional (feelings towards the job), and evaluative (job assessment) reactions to their job. The review of the recent literature identified some new elements of the job satisfaction phenomenon. For example, in the paper called “Deconstructing Job Satisfaction Separating Evaluations, Beliefs, and Affective Experiences”, the author argues that standard treatments of job satisfaction have inappropriately defined satisfaction as an affect and in so doing have obscured the differences among three separate constructs that contribute to the overall job satisfaction. These key constructs are: overall evaluative judgments about the job, affective experience at work, and fundamental beliefs associated with the job. The paper showed that clearly separating these constructs is more consistent with the current, basic research and theory on attitudes as well as the theory of “subjective well-being (SWB)”. The author also asserts that separation of the constructs can produce better job satisfaction predictions than a single criterion, suggesting the new areas of research and development of new measurement systems that do not treat satisfaction and affect as equivalent constructs (Weiss, 2002, p. 173).
With the increase in recognition of the direct relationship between employee satisfaction and the business success, so did increase the overall interest in the job satisfaction phenomenon, in both academic research and practice. This growing interest in the employee attitude towards work can be linked with the modern business practices that created a new trend where people and their knowledge are treated as organisational assets and a critical factor in achieving and maintaining competitive advantage. The human resources are being more and more recognised as the valuable source of knowledge, new ideas, and productivity that are hard to acquire, copy or imitate across different organisations.
The relevance of job satisfaction among bank employees to the overall bank performance becomes even more important under the challenging conditions associated with the global recession, especially due to the accompanying increase in non-performing loans (NPLs) and the cost of provisions for potential losses associated with credit as well as the consequential fall in profitability. The developing countries face even more challenges in their banking sector, where banks and other financial organisations are fighting for survival on local, regional, and global markets. Therefore, the identification and analysis of elements that can help developing banking sector in countries such as Bosnia and Herzegovina (BiH) build their business and stay afloat becomes even more critical, highlighting the importance of the quality human resources and the factors that may influence employee job satisfaction, ultimately influencing the degree of business success.
As part of this study a successfully completed IT project was selected and used to evaluate the practicality of the common project successes evaluation criteria, as well as to help identify the factors that cause creation of the unplanned and unforeseen organisational impacts introduced by projects.
The case study was organised around the lifecycle of the selected project, taking into account the vital elements such as project environment (the organisation, industry, business and IT processes relevant to study), project details (scope, duration, risk, cost, objectives) and related business and technology strategy.
The paper describes how the case study was conducted: from formulation of research questions, data identification, collection, analysis to presentation of findings:
The key data elements that were identified covered project-specific data such as cost, solution and applied project management methodology; and more organisational-specific components such as maintenance arrangements, overall culture, structure of IT and business environment and relevant business, strategic and management processes.
The case study relied on interviews, observation and examination of documents as the primary data collection methods.
There were 23 formal participants in the case study, which covered direct participants of the project and relevant impacted parties (both business and technical). The interview questions were organised in line with the IT project process grouping adopted by the organisation, which helped focus the data around logical parts of the case study, for easier analysis. This grouping of the interview questions provided a logical framework for the discussion with the interviewees, helped with the analysis of collected data and structure for meaningful presentation of the results.
The data analysis was based on interpretational analysis techniques, namely pattern matching and explanation building. The data was coded at three levels: high-level (open coding), low-level (axial coding) and selected coding (development of themes) to allow for grouping in line with desired, Software Development Life Cycle (SDLC)-based, presentation of the case study results.
The case study results were presented as a narrative, with specific findings related to each SDLC step of the selected IT project and linked with the main research questions, while specifying some key interview responses.
The overall findings of this research were primarily based on the case study analysis and were presented under the following headings: project impact factors, cost management approach, communication between projects, political and people related factors, overlapping projects and their impacts, planning, skills , project and process issues, changes in the project environment and vendor selection.
The case study created a set of observations and findings that were highlighted as common across many similar projects: confirmation of impacts and their relevance, organisational readiness to address the issue, the impact factors, cross-industry relevance and recommended actions
Overall, the article highlights the case study as a very effective research method in identifying the factors that cause the unforeseen impacts created by projects in the organization where the study was conducted.
Developing countries with predominantly bank-oriented financial systems and lacking market depth are not attractive to new investors. Maintaining status quo in these conditions means further economic deterioration and reduced chances for success. Thus, it is essential that developing countries consider steps towards financial liberalization or deregulation, which will help open the borders for capital flows and attract new investments and ideas. Deregulating steps can involve changes to interest rates determination, restructuring of financial institutions, abolishment of direct loans allocation practices, promotion of prudential regulation, establishment of new banks/multi-facets financial institutions, etc. Deregulation affects all sectors of the economy, i.e. increased savings bring new investments, directly contributing to higher production and employment growth, spreading the tax burden to a larger group, and enabling further savings and investments.
However, financial deregulation does not guaranty quick economic growth for developing countries because changing financial rules could motivate the domestic capital going abroad, increased volatility can create serious challenges for banks, while overly relaxed rules can make investors nervous. The key to success is in determining the appropriate balance between the level of financial liberalization and sufficiently flexible and effective regulatory framework that will support economic growth and maintain investor confidence.
The main goal of this paper is to analyse and critique the process of financial liberalization in developing countries and to motivate the policy makers to consider available lessons when creating their balanced approach to financial liberalization and regulation processes towards financial development, openness, and integration in the global financial landscape.
Keywords: financial liberalization, financial regulation, economic development, developing countries
One of the important components of a well-functioning financial system is effective regulation that can provide confidence in the system as well as support the transformation. Global experience has taught us that financial liberalisation supports the economy growth, but also that the development efforts do not bring the same results everywhere. Developing countries such as Bosnia and Herzegovina can increase their chances for economic growth through liberalisation, creating new investments through increased deposits, which also increases the risk of banking crisis due to higher volatility. Therefore, it is important to look at the process of financial liberalisation and integration in combination with regulatory transformation. In case of BiH this also includes the role of the currency board. Policymakers in developing countries such as BiH can find valuable learning lessons in literature and empirical research that can be useful in better understanding the benefits and challenges associated with financial liberalisation. The experience from other countries clearly shows that there is a fine line between progressive liberalisation actions and effective regulations to support the transformation and provide confidence in the financial system. Open communication and encouragement of ideas among the main economic players (including general public) are the key elements in designing a balanced response to financial globalisation and transformation efforts.
The paper addresses some historical elements relevant to predominantly bank-oriented financial systems characteristic to many developing countries such as BiH, as well as pros and cons associated with economic development efforts, currency board, prudential regulation, and supervision practices.
Keywords: transformation of the economy, financial system, financial liberalisation and integration, prudential regulation and supervision, Bosnia and Herzegovina (BiH)
This paper analyses companies’ capital structure, solvency, and liquidity management during and after the global financial crisis. The research covers a comprehensive dataset related to companies in the Federation of Bosnia and Herzegovina and their financial performance.
The dynamic panel regression model was used to check the significance of the capital structure and indebtedness impacts on firms liquidity during five consecutive years (2009-2013). The research findings are focused on the overall production and processing industry as well as nine sectors that deserve special consideration.
The findings and recommendations resulting from this study are designed to help various decision makers develop better understanding of the relationship between the economic crisis and companies capital structure management. The paper covers a review of relevant literature, a brief theoretical framework, and research methods as well as findings, descriptions, and explanations of the analysis results. The resulting recommendations can be useful to corporate officials, financial markets participants as well as economic policy decision makers. Moreover, it may serve as motivation for other researchers to undertake further study in the area of financial management.
Keywords: company’s capital structure, solvency, liquidity management, global financial crisis, Federation of Bosnia and Herzegovina
In Australia and Asia, venture capital continues to grow, exceeding $3 billion in 2011, significantly increasing its share in total private equity investments compared to previous years. Considering the available data, the requirements associated with the venture capital development and the nature of financial markets in those regions, it is reasonable to expect the continued increase of the intermediaries influence on financial markets movements. It is anticipated that the future activities of these financial intermediates will have a strong influence on further development of capital markets and overall investment growth opportunities. Supporting development of small and medium enterprises stimulates regional development, especially with regards to employment, technology, and overall economy.
The aim of this paper is to analyse the current status and development trends of venture capital industry in the three financial regions (USA, Europe, and Australasia) over the past decade and establish some trend indicators that could be valuable to less developed regions (such as Western Balkans and Bosnia and Herzegovina). The paper will focus on the time analysis and comparative overview of capital funds, investments/divestments, and relevant trends, aiming to highlight the indicators and factors that could assist in predicting the venture capital development in other, less progressed economic regions.
Many studies have acknowledged the direct link between productivity and the level of employee satisfaction. This work aims to establish and recognise some of the main factors associated with the job satisfaction of banking employees in the Federation of BiH and provide useful guidance to bank managers in this region and beyond, as a contribution to their continuous improvement efforts in business and people management during these challenging times.
The research is predominantly based on the survey conducted in the banking sector of the Federation of BiH in 2013. The survey sample covers 529 respondents that represent 7.4% of the overall banking employee sector base of 7,130. The analysis of survey results, supported by empirical research and the review of related literature, revealed that job satisfaction amongst the bankers is determined by a wide spectrum of factors such as: demographic characteristics, management and supervision, monetary compensation, non-monetary recognition, work environment, job responsibility and type of tasks, social atmosphere at work, and general satisfaction with life.
While job satisfaction is a widely used term, there is no agreed definition of what it really covers when it comes to work and life in general. Hoppock (1935) defined job satisfaction as a combination of various psychological, physiological, and environmental conditions that would prompt a person to honestly believe they are satisfied with their job. These factors were considered as personal, subjective reactions toward working environment and directly dependent on the inner feeling of each person (Hoppock, 1935, in Tsai, Yen, Huang & Huang, 2007, p.160). Seal and Knight observed job satisfaction from a psychological viewpoint: they related it to the overall emotional or evaluation responses from the employees to the job itself (Seal &Knight, 1998, in Tsai, Yen, Huang & Huang, 2007, p.160). Cranny, Smith, and Stone defined job satisfaction as an emotional reaction of an individual to their job, based on their comparison of the outcomes at the workplace and their desires (Cranny, Smith & Stone, 1992, p. 1). This goes in line with Locke’s definition from 1976 that defines job satisfaction as “… a pleasurable or positive emotional state resulting from an appraisal of one’s job or job experiences” (Locke, 1976, p. 1300).
Based on these definitions it can be concluded that job satisfaction is in fact an individual attitude towards work that involves cognitive (certain assumptions and beliefs about the job), emotional (feelings towards the job), and evaluative (job assessment) reactions to their job. The review of the recent literature identified some new elements of the job satisfaction phenomenon. For example, in the paper called “Deconstructing Job Satisfaction Separating Evaluations, Beliefs, and Affective Experiences”, the author argues that standard treatments of job satisfaction have inappropriately defined satisfaction as an affect and in so doing have obscured the differences among three separate constructs that contribute to the overall job satisfaction. These key constructs are: overall evaluative judgments about the job, affective experience at work, and fundamental beliefs associated with the job. The paper showed that clearly separating these constructs is more consistent with the current, basic research and theory on attitudes as well as the theory of “subjective well-being (SWB)”. The author also asserts that separation of the constructs can produce better job satisfaction predictions than a single criterion, suggesting the new areas of research and development of new measurement systems that do not treat satisfaction and affect as equivalent constructs (Weiss, 2002, p. 173).
With the increase in recognition of the direct relationship between employee satisfaction and the business success, so did increase the overall interest in the job satisfaction phenomenon, in both academic research and practice. This growing interest in the employee attitude towards work can be linked with the modern business practices that created a new trend where people and their knowledge are treated as organisational assets and a critical factor in achieving and maintaining competitive advantage. The human resources are being more and more recognised as the valuable source of knowledge, new ideas, and productivity that are hard to acquire, copy or imitate across different organisations.
The relevance of job satisfaction among bank employees to the overall bank performance becomes even more important under the challenging conditions associated with the global recession, especially due to the accompanying increase in non-performing loans (NPLs) and the cost of provisions for potential losses associated with credit as well as the consequential fall in profitability. The developing countries face even more challenges in their banking sector, where banks and other financial organisations are fighting for survival on local, regional, and global markets. Therefore, the identification and analysis of elements that can help developing banking sector in countries such as Bosnia and Herzegovina (BiH) build their business and stay afloat becomes even more critical, highlighting the importance of the quality human resources and the factors that may influence employee job satisfaction, ultimately influencing the degree of business success.
As part of this study a successfully completed IT project was selected and used to evaluate the practicality of the common project successes evaluation criteria, as well as to help identify the factors that cause creation of the unplanned and unforeseen organisational impacts introduced by projects.
The case study was organised around the lifecycle of the selected project, taking into account the vital elements such as project environment (the organisation, industry, business and IT processes relevant to study), project details (scope, duration, risk, cost, objectives) and related business and technology strategy.
The paper describes how the case study was conducted: from formulation of research questions, data identification, collection, analysis to presentation of findings:
The key data elements that were identified covered project-specific data such as cost, solution and applied project management methodology; and more organisational-specific components such as maintenance arrangements, overall culture, structure of IT and business environment and relevant business, strategic and management processes.
The case study relied on interviews, observation and examination of documents as the primary data collection methods.
There were 23 formal participants in the case study, which covered direct participants of the project and relevant impacted parties (both business and technical). The interview questions were organised in line with the IT project process grouping adopted by the organisation, which helped focus the data around logical parts of the case study, for easier analysis. This grouping of the interview questions provided a logical framework for the discussion with the interviewees, helped with the analysis of collected data and structure for meaningful presentation of the results.
The data analysis was based on interpretational analysis techniques, namely pattern matching and explanation building. The data was coded at three levels: high-level (open coding), low-level (axial coding) and selected coding (development of themes) to allow for grouping in line with desired, Software Development Life Cycle (SDLC)-based, presentation of the case study results.
The case study results were presented as a narrative, with specific findings related to each SDLC step of the selected IT project and linked with the main research questions, while specifying some key interview responses.
The overall findings of this research were primarily based on the case study analysis and were presented under the following headings: project impact factors, cost management approach, communication between projects, political and people related factors, overlapping projects and their impacts, planning, skills , project and process issues, changes in the project environment and vendor selection.
The case study created a set of observations and findings that were highlighted as common across many similar projects: confirmation of impacts and their relevance, organisational readiness to address the issue, the impact factors, cross-industry relevance and recommended actions
Overall, the article highlights the case study as a very effective research method in identifying the factors that cause the unforeseen impacts created by projects in the organization where the study was conducted.