Editors
Stanković, M.
Nikolić, V.
PaKSoM 2022
4th Virtual International Conference
Path to a Knowledge Society-Managing Risks and
Innovation
Proceedings
Publishers
Complex System Research Centre, Niš, Serbia
Mathematical Institute of the Serbian Academy of Sciences and Arts
Serbia, Niš, December 08-09, 2022
Proceedings of
4th Virtual International Conference
Path to a Knowledge Society-Managing Risks and Innovation
Serbia, Niš, December 08-09, 2022
Editors:
Prof. Dr. Miomir Stanković and Prof. Dr. Vesna Nikolić
Technical Editor:
Dr. Lazar Z. Velimirović
Published by:
Complex System Research Centre, Niš, Serbia, and
Mathematical Institute of the Serbian Academy of Sciences and Arts
Printed by:
Copy House, Niš, Serbia
Number of copies printed: 100
The publishing year: 2023
Printing of this edition has been financially supported by
Serbian Ministry of Education, Science and Technological Development
ISBN 978-86-82602-00-2
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VIRTUAL international conference Path to a Knowledge Society-Managing Risks and
Innovation (4 ; 2022 ; Niš)
Proceedings [Elektronski izvor] / 4th Virtual international conference Path to a Knowledge
Society-Managing Risks and Innovation PaKSoM 2022, Serbia, Niš, December 08-09, 2022;
[organizer] Mathematical Institute of the Serbian academy of sciences and arts; [co-organizers
Research and Development Center "IRC ALFATEC" [and] Complex System Research Centre];
editors Stanković, M. [Miomir], Nikolić, V. [Vesna]. - Niš : Complex System Research Centre:
Mathematical Institute of SASA, 2023 (Niš: Copy house). - 1 elektronski optički disk (DVD); 12 cm
Sistemski zahtevi: Nisu navedeni. - Nasl. sa naslovne strane dokumenta. - Tiraž 100. - Bibliografija
uz svaki rad.
ISBN 978-86-82602-00-2 (CSRC)
а) Знање -- Менаџмент -- Зборници б) Предузећа -- Пословање -- Иновације -- Зборници
в) Информациона технологија – Зборници
COBISS.SR-ID 111014665
PaKSoM 2022
4th Virtual International Conference
Path to a Knowledge Society-Managing Risks
and Innovation
Organizer:
Mathematical Institute of the Serbian Academy of Sciences and Arts
Co-organizers:
Research and Development Center “IRC ALFATEC”
Complex System Research Centre
Supported by:
Serbian Ministry of Education, Science and Technological Development
Program Committee
Chair:
Prof. Dr. Miomir Stanković
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
Members:
Prof. Dr. Zoran Stajić
Faculty of Electronic Engineering, Serbia
Prof. Dr. Vesna Nikolić
Faculty of Occupational Safety, Serbia
Dr. Lazar Z. Velimirović
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
Prof. Dr. Bojan Srđević
Faculty of Agriculture, Serbia
Prof. Dr. Ilija Hristoski
Faculty of Economics Prilep, Republic of North Macedonia
Prof. Dr. Constantin Ilie
Universitatea OVIDIUS din Constanta, Romania
Prof. Dr. Aleksandar Janjić
Faculty of Electronic Engineering, Serbia
Prof. Dr. Radomir Stanković
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
Prof. Dr. Constantinos Challoumis
National and Kapodistrian University of Athens, Greece
Prof. Dr. Gabrijela Popović
Faculty of Applied Management, Economics and Finance, Serbia
Prof. Dr. Maja Đurović
Faculty of Mechanical Engineering, Serbia
Prof. Dr. Francisco Leandro
City University of Macau, Macau SAR, China
Prof. Dr. Marko Serafimov
Faculty of Mechanical Engineering, North Macedonia
Prof. Dr. Detelin Markov
Faculty of Power Engineering and Power Machines, Bulgaria
Prof. Dr. Zoltán Szira
Faculty of Economics and Social Sciences, Szent István University, Hungary
Prof. Dr. Milena Stanković
Faculty of Electronic Engineering, Serbia
Prof. Dr. Oleg Sergeevich Sukharev
Institute of Economics of the Russian Academy of Sciences, Moscow, Russia
Dr. Ivana Marinović Matović
Addiko Bank AD, Serbia
Prof. Dr. Snajay Kumar Mangla
Maharaja Agrasen Insitute of Management Studies, India
Prof. Dr. Mustafa Yasan
Sakarya University Faculty of Law, Turkey
Prof. Dr. Sraboni Dutta
Birla Institute of Technology, Mesra, Ranchi, India
Organizing Committee
Chair:
Dr. Lazar Z. Velimirović
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
Members:
Prof. Dr. Zoran Stajić
Faculty of Electronic Engineering, Serbia
Dr. Petar Vranić
Mathematical Institute of the Serbian Academy of Science and Arts, Serbia
Dr. Dušan Tatić
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
Dr. Radmila Janković Babić
Mathematical Institute of the Serbian Academy of Science and Arts, Serbia
M.Sc. Jelena Velimirović
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
M.Sc. Ivana Veličkovska
Mathematical Institute of the Serbian Academy of Sciences and Arts, Serbia
M.Sc. Ljubiša Stajić
Research and Development Center “IRC ALFATEC”, Serbia
M.Sc. Biserka Mijucić
Research and Development Center “IRC ALFATEC”, Serbia
M.Sc. Danijelа Protic
Serbian Armed Force, Serbia
Table of Contents
Green Bonds: Novel Opportunity for the Serbian Capital Market? ………....….3
Vladimir Mirković, Marina Iliev Matić
Digital Transformation of Public Administration and Services in Hungary …..11
Edit Soós
Contemporary Tendencies and Barriers in Knowledge Management in
Tourism …................................................................................................................19
Borislav Kolarić, Goran Stojićević, Jelena Ignjatović, Aleksandra Đorđević
The Foundations for the Future Innovation Ecosystem - A Digital Twins
Framework Approach …........................................................................................27
Branko Perišić, Ana Perišić
The Managerial Prerogative of Employer and Internal Labour Mobility: Where
are the Boundaries? ………………………............................................…………35
Tijana Kovačević
Risk Management during Storing of Hazardous Substances …....................….43
Goran Tepić, Nina Ivanović, Mihaela Tarakčija
The Simulation of Stabile Systems for Fire Extinguishing as Advance Step in
Fire Protection ……………....….....................................................................…....51
Radoje B. Jevtić, Ivana D. Janković, Momčilo B. Randjelović
Blockchain as a Methodology in the Implementation of Sustainable Tourism ..57
Vladimir Živanović, Marko Živanović
Transportation Problem with Additional Bounded Capacity ….....................…65
Bratislav Lukić, Goran Petrović
Using the MCDM Approach to Evaluate Smart and Sustainable Cities ….........73
Ibrahim Badi, Željko Stević, Muhammad Lawan Jibril
Multimedia Systems in Education ………...............................................………..79
Marko Marković, Neda Ilić, Ana Kresović Kolundžić, Maja Đurović-Petrović,
Jasmina Lozanović
Mitigating COVID-19 Crisis Effects in SMEs by Knowledge Management …..85
Ivana Marinović Matović, Anđela Lazarević
The Significance of Sustainability and the Management of the Green Economy
using Modern Technology …..…...................................................................…...93
Biljana Ilić, Zorica Djurić
The Importance of Innovation and Creativity of Employees in Modern
Organizations ……...............................................................................….............101
Dragana Kovač, Edit Terek Stojanović, Mihalj Bakator, Mila Kavalić, Verica
Gluvakov, Maja Gaborov
Education for Perception and Interpretation of Reality in the Digital
Environment ……......………................................................................................107
Branko Marković
Open Innovation Paradigm ………………...................................................…...113
Vanja Vukojević, Milenko Tanović
The Role of Innovation Capital in Developing Youth Entrepreneurship ….....117
Dragan Ćoćkalo, Mihalj Bakator, Sanja Stanisavljev, Edit Terek Stojanović,
Miloš Vorkapić
Development through Social Entrepreneurship: Perspectives and Evidence from
Croatia ……..............……............................................................................….…123
Tihana Sudarić, Ivana Hrg Matušin, Jadranka Deže
The Impact of Blockchain Technology on the Accounting Information
Systems ..................................................................................................................129
Tanja Janaćković, Marko Janaćković
Family Business Management in the Knowledge Era …..............................…..137
Sandra Stojadinović Jovanović, Bojan Krstić, Violeta Domanović
Digital Transformation in the Field of Education using an Innovative
Solution ..................................................................................................................143
Aleksandra Tašković, Angela Fajsi, Slobodan Morača
Innovation Management in the Concept of Smart Cities ……....……...............151
Bojan Krstić, Milica Jovanović Vujatović, Marija Jovanović
Role of Artificial Intelligence for Promoting Financial Inclusion …………….159
Reena Agrawal
Modeling the Time-based Maintenance Strategies with Petri Nets ……..........165
Ilija Hristoski, Tome Dimovski
Basel 3.1 – New Regulatory Framework for Banks ……......……......................173
Vesna Martin
Research and Development of Human Resource Management in Serbian
Organizations ….….......................................................................................……181
Tijana Krušković, Biljana Ilić, Slavica Anđelić
Measurement of Innovation in Economic Growth Research …….........…....…187
Nataša Stanojević, Slobodan Kotlica, Katarina Zakić
The Way to Understand the Use of Technology for the Purpose of Developing
Gastronomic Tourism …..…................................................................................195
Drago Cvijanović, Tamara Gajić, Dragan Vukolić
Analysis of the Influence of Types of Multimedia Content in Posts on Social
Networks on the Success of Posting ……...……………………………………..203
Đorđe Petrović, Ivan Pantelić, Dejan Beljić
Education and Knowledge about Sustainable Development Goals ..............…209
Milica Stanković, Jovana Džoljić, Tiana Anđelković, Suzana Stojković
Naïve Bayes Classifier Model for Predicting Admission in Master’s Program
Based on Academic Grades ……......................................................................…217
Kavita Gupta
Knowledge Management Strategy, Resources and Competences ….…………223
Milovan Rogan
Funding Models in the European Startup Ecosystem ……………………....…229
Aleksandar Vekić, Jelena Borocki, Ana Ivanić, Galina Žižakov
Intellectual Capital and Emergencies …..…...………………………………….237
Jelena Malenović-Nikolić, Uglješa Jovanović
Performance Quality: A Measure of Organizational Complexity ……………245
Dragoljub Šarović
Digital Transformation of the Teaching Process using Mobile Devices and
Dedicated Software …………………………...................................................…249
Momčilo B. Ranđelović, Radoje B. Jevtić, Ivana D. Janković
The Importance of the Evaluation of Investment Projects in Local Government
Units …………………………..……………………………………………….…257
Dragan Dokić, Vesna Gantner
Bankruptcy Proceeding as a Result of Fraud: Characteristics and
Consequences …….………………………………………………………..….…265
Zorica Jović
Commercializing University Knowledge in Serbia – An Empirical Evidence ..273
Viktorija Petrov, Zoran Drašković, Đorđe Ćelić, Zorica Uzelac
Understanding Employee Innovative Behavior in Serbia: A Comparison with
EU Country ……………………………………………………………...………281
Bojana Milić, Milan Lečić, Jelena Spajić, Dunja Bošković, Danijela Lalić
Problems
of
Quantitative
Measurement
Technological
Level
of
the
Economy …………………………………………………………………………287
Oleg Sukharev
Competencies for the Knowledge Economy and Reducing Unemployment .....291
Milica Stanković, Tiana Anđelković
The Legal Interpretation as a Decision-Making Algorithm ……...………...…299
Živorad Rašević, Marko Ćitić
Remote Working in the Digital Age: Benefits and Potential Negative Effects ..307
Jelena Lukić Nikolić
The Role of Social Media in Coups d'État …………………………………...…313
Tanja Milošević, Nina Milošević
Nexus
between
Intellectual
Capital
and
Organizational
Learning
Capability …………………………………………………………….…….....…321
Matea Zlatković Radaković
Choice of Methodology for Management IoT Project ……………………....…329
Maja Gaborov, Jelena Grujić, Dragana Kovač, Mila Kavalić, Stefan Ugrinov
Consumer Behavior and its Influences in 2022 ………………………….…..…337
Lenka Veselovská
Investigating Digital Divide in European Rural Areas as a Barrier to Knowledge
Sharing ……..………………………………………………………………….…343
Anđelka Stojanović, Aleksandra Radić, Sanela Arsić, Isidora Milošević
Quis custodiet ipsos custodes: Ethical Dillemmas of the KM Governed
by AI …………………………………………………………………………...…351
Željko Bjelajac, Aleksandar M. Filipović, Lazar Stošić
Industrial Property Rights as Types of Capital in Commercial Companies in
Turkish Law ……………………………………………………………….….…359
Mustafa Yasan
Advantages and Limitations of the Implementation of Intelligent Inventory
Management Systems in the Supply Chain ………………………………….....365
Nebojša Zorić, Vijoleta Vrhovac, Stevan Milisavljević, Dejan Ilić, Stana Vasić
Crises and Innovations in Tourism - Development of Creative Tourism …….373
Snežana Štetić, Igor Trišić
Web Scraping Analysis: Gender Differences in Local Online Media
Mentions ….……….……………………………………………………..……….381
Bojan Baškot, Maja Barišić
Improving Digital Competences of Persons with Disabilities as a Precondition
for an Inclusive Digital Economy: Evidence from Serbia ………………..……389
Milena Lazić, Valentina Vukmirović
Comparative Analysis of Human Development at the Global Level ……….…395
Suzana Stojković, Milica Stanković, Tiana Anđelković
School Culture as a Predictor of School Identity ………………………………403
Dinko Jukić
Data Protection in Innovation under the European Union Legislation ………411
Iris Bjelica Vlajić
Metaverse and its Impact in Healthcare ………………………………….….…419
Sayani Ghatak, Sayan Chakraborty, Radha Debal Goswami, Hrithik Paul
The Influence of Mobile Phones on Children and Youth - General
Overview …………………………………………………………………………427
Nenad Perić, Olja Arsenijević
Knowledge Management in the Hotel Industry as a Relevant Contribution to the
Development of the Tourism Sector …………………………………..…..……433
Borislav Kolarić, Jelena Ignjatović, Goran Stojićević, Aleksandra Đorđević
Legal Issues in Managing and Sharing Research Data ......……………………441
Jelena Banović, Aleksandra Bradić-Martinović
Simulation of Evacuation of Immobile Persons as a Modern Evacuation
Problem ……………………………………………………………….………….449
Radoje B. Jevtić, Ivana D. Janković, Momčilo B. Randjelović
A Multiple-Criteria Approach to RFID Solution Provider Selection ……...…457
Gabrijela Popović, Goran Milovanović, Đorđe Pucar
The Moderating Role of Employee Commitment and its Impact on Employee
Involvement and Organizational Productivity …………………………..….…465
Soumi Majumder
Importance of Reverse Logistics on Green Supply Chain Performance: An
Empirical Study ....................................................................................................471
Saniye Yıldırım Özmutlu, Korhan Arun
Nature Prefers Sustainable Structures: Implications for Large-Scale Political
Self-Organization …………………………………………...……………...……477
Jacob C.W. Billings
Mediating Role of Knowledge Management Process in Turning Intellectual
Capital and Social Capital into Innovation Capability and Sustainable
Performance of SMEs …………………...………………………………………481
Anh Tuan Pham, Quoc Trung Pham
How Did the Slovak Labour Market Change during the Coronavirus
Crisis? ……………………………………………………………………………489
Lucia Bartková
History of Statistical Thinking: From Uncertainty to Uncertain Knowledge ..497
Jan Kalina, Lubomír Soukup
Impact Factor of the Rest Rewarding Taxes ………………………...…………505
Constantinos Challoumis
Innovative Management based on the Application of Internal Audit in the Public
Sector of the Republic of Serbia ……………………………………...…………513
Jelena Vitomir, Sonja Tomas-Miskin, Goran Vitomir, Slobodan Popović
Features of Preschoolers’ Use of Digital Media: New Socio-Cultural
Context ………………………………………………………………………..….519
Rubtsova Olga, Klopotova Ekaterina, Smirnova Svetlana, Sorokova Marina
Training Pre-service Teachers for using Educational Software in Order to
Improve the Quality of the Mathematics Teaching in Primary Education ..…521
Radoslav Božić, Ivica Nikolić, Violeta Petković
Organizations of the Planetary Civilization: Change between the Organization
of 2022 and 2092 …………………………………………………………………523
Sergey Ivanov
The Human Development Index as a Function of the Measure of Human
Development in Serbia with Reference to the Countries of the Region .………525
Mirjana Štaka
The Elaboration of Computer Game System for the Measurement of HigherOrder Cognitive Skills by Middle-School Students ……………………………527
Evgeniya Gavrilova, Elena Shepeleva, Yulia Tokarchuk
Profitability of Pakistan’s Banking Sector and COVID-19 ………………...…529
Syed Ahsan Ali Gardazi, Shumaila Zeb
Impact of Financial Technology on Financial Inclusion and Financial
Performance: Empirical Evidence from Financial Sector of Pakistan ….……531
Sehar Saleem, Shumaila Zeb
Teens’ Communication via Social Media: Risks vs Opportunities ……...……533
Tatiana Poskakalova, Margarita Khusnutdinova, Olga Salomatova
Education in Antimicrobial Stewardship: Awareness of Antibiotics in Drinking
Water ……...…………………………………………………………………..…535
Nikola Puvača, Svetlana Ignjatijević, Jelena Vapa Tankosić, Radivoj Prodanović
PaKSoM 2022
Green Bonds: Novel Opportunity for
the Serbian Capital Market?
Vladimir Mirković1, Marina Iliev Matić2
1,2
Economists Association of Belgrade, Belgrade, Serbia
1
vladamirkovic@orion.rs, 2marina.matic25@gmail.com
Abstract—Indisputable role of capital markets in
global economic and financial system and their
significant impact on a country’s overall level of
development, especially could be highlighted in
those countries which experienced transition
period toward an open market economy. Among
those countries is the Republic of Serbia, which
made an extraordinary effort in establishing an
efficient and effective capital market, but reached
results could be assessed as quite below
expectations. Despite generally unfavorable
evaluation of Serbian capital markets, the
segment of the government bond market
functions relatively comparatively. This paper
presents an overview of the current situation in
the Serbian bond supported by relevant figures,
which comprehensively describe achieved level of
development. Furthermore, in the context of
increasing importance of ESG investing on a
global level, some countries (and the Republic of
Serbia among them) participated in the issuance
of green bonds, as a type of climate-related
financial instruments. This type of ESG bond
could be assessed as a novel opportunity for
revitalization of the Serbian capital market,
upgrading both sides, supply and demand. Paper
is analyzing potential impact of green bonds on
prospective financial market development.
Additionally, authors emphasized constraints
related to the current level of development in the
bond market segment and past experiences with
the inclusion of certain bonds categories in the
market, such as corporate bonds and
covered bonds.
Keywords – green bonds, capital markets, ESG,
circular economy
I.
INTRODUCTION
Regulation and supervision of the Serbian
capital market is in the jurisdiction of Republic
of Serbia Securities Commission (hereinafter:
ISBN: 978-86-82602-00-2
SC). In the accession process toward EU, SC
has a very important function through adoption
of regulatory rules which are already well
known and established in EU countries. The
main purpose of adopted regulatory framework
is promotion of transparency, as well as
protection of shareholders’ rights and investors’
interest. All active participants in the Serbian
capital market should possess valid license,
approved by the SC.
At the end of 2021, new Law on Capital
Market was adopted in Serbia to reflect the
major priorities which are defined by Strategy
for Development of the Capital Market for the
period 2021-2026. Adoption of new Law on
Capital Market represents important step in the
process of further harmonization with legal and
institutional framework valid within EU
country members. The former Law on Capital
Market, introduced in 2011, was partially
aligned with EU framework, whilst this new
legislation which entered into force on 5
January 2022 is more detailed and tailored to
EU framework.
Additionally, it should be noted that
implementation of the Law will start with delay
of one year, i.e., 6 January 2023. Market
participants, which operate due to license
approved by SC, are obliged to harmonize, and
align operations within proscribed deadline
counting from the date of their entry into the
force. In the meantime, on 16 July 2022 new
Law on the Capital Market bylaws with set of
20 rulebooks came into force. The bylaws were
published in the Official Gazette of RS No 77,
on 8 July 2022 [1].
The “golden age” for domestic capital
market was marked after the period of mass
3
privatization at the beginning of XXI century
which is simultaneously the period of economy
transition toward open economy principles. In
that period, accelerated mass privatization and
a positive global economic situation enabled a
great expansion of the capital market. But it
does not mean that the capital market was
placed on neither a sound basis nor that capital
market development in the Republic of Serbia
was in the line with similar markets in
regulated, open economies. The excess of
capital available at that time covered up all
anomalies of non-matured, young market,
which were completely exposed in the later
years of the global financial crisis.
Starting from the point that the consensus of
economic policy makers is necessary for
creation of efficient capital market, it was
obvious that above mentioned consensus is
much more difficult to establish in transition
economies (such as Serbia) that are moving
from non-market to open economies. The
absence of politicians’ will is the most common
explanation for the Serbian capital market poor
development, because in the vicious circle of
dominant political and economic elites there
was no place for some kind of equality, in
which clear and predictable rules would be
established.
Despite generally unfavorable evaluation of
Serbian capital markets, the segment of the
government bond market functions relatively
comparatively [2]. This paper briefly described
the major events in the Serbian capital market
emphasizing
the
bond
market
and
its infrastructure.
II.
OVERVIEW OF THE BOND MARKET
Debt financial instruments in the form of
so-called “old savings bonds” were the first
high-quality financial instruments listed on
Belgrade Stock Exchange (hereinafter: BSE).
Those bonds appeared when Serbian
government recognized the debt of state-owned
banks regarding savings in foreign currency
and for that purpose government issued bonds
with maturity dates at the end of year marking
May from 2002 till 2016. Converted old saving
bonds in the period August 2002 – November
2022 are shown in Table I.
The face value of issued bonds was
EUR 4.2 billion and there was brought some
measures to make trading with this type of debt
4
TABLE I. VOLUME OF CONVERTED SAVINGS BONDS [3].
Bonds RS –
Series
Ticker
ISIN
Volume of
conversion
(EUR)
ARS2002
ARS2003
ARS2004
ARS2005
ARS2006
ARS2007
ARS2008
ARS2009
ARS2010
ARS2011
ARS2012
ARS2013
ARS2014
ARS2015
ARS2016
RSMFRSD60544
RSMFRSD38805
RSMFRSD62078
RSMFRSD64033
RSMFRSD40710
RSMFRSD60130
RSMFRSD60916
RSMFRSD31842
RSMFRSD14186
RSMFRSD18757
RSMFRSD93024
RSMFRSD68018
RSMFRSD73810
RSMFRSD79726
RSMFRSD70279
TOTAL:
111,991,622
187,026,202
203,273,235
236,160,910
223,854,487
219,560,225
221,111,483
227,400,888
237,551,554
251,346,140
267,788,152
287,956,819
311,577,665
335,047,901
350,252,954
3,671,900,237
instrument more attractive, e.g., exclusion from
tax burden [4].
Old savings bonds played a great role in
Serbia as an instrument that brings back
confidence into the Serbian financial system,
especially the most prominent part, the banking
sector.
As global financial crisis emerged and the
spillover effect was obvious even in Serbia, the
government of the Republic of Serbia issued
government Treasury bills and bonds in 2009.
This issuance of government bonds was part of
a wider strategy intended for debt market
development, but it also was not successful.
Concretely, issued bonds were not traded
frequently and even when trading was realized
those deals were not based on market
principles, already through direct contract with
in advance known counterparty. Furthermore,
debt securities of municipalities and cities were
not affirmed yet by expectations.
The most quality segment of the Serbian
bond market makes government bonds.
According to Serbian legislation, government
debt securities are instruments denominated in
domestic or foreign currency, where the issuer
is government or competent ministry.
Mentioned bonds are registered in electronic
form in Central Securities Depositary and
Clearing House [5]. Financial stability of the
issuer determines the rating of bonds which is
also a crucial indicator of bond’s riskiness.
With emerging of Covid-19 pandemic in
2020, National bank of Serbia (hereinafter:
NBS) introduces several measures which could
have the connotation of reform. As part of
measures to support liquidity in domestic
currency (dinar), the NBS included dinardenominated corporate bonds from the nonfinancial sector (with a maximum maturity of
up to 10 years and a creditworthiness rating of
D “Acceptable creditworthiness” and higher
assigned by the Serbian Business Registry) to
the list of securities that can be used in
monetary operations, i.e., repo and other
permanent transactions.
The maximum investment amounts in
corporate bonds are defined by the NBS and SC
regulations. Total amount of corporate bonds
which the NBS can accept in monetary
operations is RSD 55 billion, while the
maximum exposure related to individual issuer
is RSD 11 billion. The highest total nominal
amount of an individual issue or tranche of
corporate bonds that can be accepted in
monetary operations is 70% of the total
nominal value of the issue of individual issuer
[6]. The key point in the development of
corporate bond market is personified in attempt
of the NBS inclusion as a buyer of these
securities on the secondary market.
According to Table II, it is evident that the
largest amounts of corporate bonds are
concentrated in public companies or companies
in which the state is the majority owner (e.g.,
Telekom Srbija with RSD 23.5 billion, JP
Jugoimport SDPR RSD 15.3 billion with its
related parties Complex Combat Systems and
PMC - Inženjering RSD 5.405 billion and RSD
2.82 billion, respectively). By analyzing the
structure of the issuers which mostly participate
in the total issue of dinar corporate bonds,
critical opinions, that strengthening and
developing the capital market was not
achieved, gain even more importance. The only
side that benefits from this type of bond was
state and para-state systems that obtained the
necessary liquidity, which they certainly could
not have achieved through regular means e.g.,
through the bank’s loan [7]. The former NBS
governor Dejan Šoškić very convincingly
proved that the issuance of illiquid corporate
bonds “practically represents a completely nontransparent state subsidy to certain private or
state-owned enterprises”, adding that it is
“funding of enterprises through primary
issuance based on discretionary decisions of the
central bank” [8].
Types of corporate bond that bear slightly
higher fixed returns than government bonds are
TABLE II.
CORPORATE BONDS OVERVIEW [9]
Issuer
A&M Solution Team
Mlekara Šabac
Anador Konsalting
Borbeni složeni
sistemi
Energoprojekt
Holding
Graditelj-Beograd
JP Jugoimport SDPR
Mediolanum Invest
PMC - Inženjering
RT Consulting
Sagittarius Project
System
Telekom Srbija
Nominal value
(in 000 RSD)
2,860
60,000
6,240
Maturity
Date
01.09.2023
21.06.2024
23.12.2022
5,405,000
09.09.2027
3,300,000
35,000
15,275,000
235,200
2,820,000
3,300
30.12.2025
16.03.2023
10.09.2025
20.09.2026
09.09.2025
16.10.2023
2,860
23,500,000
26.05.2023
25.09.2025
known as covered bonds. Their main
characteristic is personified in twofold
collateralization for investors. “Investor in
covered bonds possesses collateral in the equity
of issuer (i.e., financial institution or bank) or
priority right over cash flow derived from loan
that was a basis for issuance of covered bond
(in the case of issuer bankruptcy)” [10].
Recognizing the importance of covered
bonds and the opportunity to include them in
the numerator of liquidity coverage ratio as a
part of highly liquid assets, NBS defined the
role of covered bonds and main preconditions
for their inclusion in documents such as:
“Decision on Capital Adequacy of Banks” (RS
Official Gazette, No 103/2016, 103/2018,
88/2019, 67/2020, 98/2020, 137/2020, 59/2021
and 67/2022) and “Decision on Liquidity Risk
Management by Banks” (RS Official Gazette,
No 103/2016). In most countries, the area of
covered bond is regulated by special acts (“lex
specialis”) or by general legislative framework.
Despite efforts of NBS and precise definition of
provisions related to the covered bonds
regulation (which are more than solid ground
for primary issuance and active trading in the
secondary market), results in practice could be
assessed as unsatisfactory.
Poor development in the segment of
covered bonds market is one more missed
opportunity for improvement of the Serbian
capital market. Neither good legislative basis
nor general interest in a widening number of
financial
alternatives
has
influenced
dramatically on the potential positive
movements in the Serbian capital market.
5
Apart from the bond market, which is in
detailed elaborated in this paper, it should be
pointed on several facts about the equity market
as an important part of the capital market in the
Republic of Serbia. The equity market was
developed parallel with the mass privatization
program, one of the main characteristics of all
transition countries in the process of adjustment
to the open economy. Privatization was realized
in four stages in a period between 1991 as the
first stage and 2010 as the final stage.
After the mass privatization of companies,
the equity market became more liquid and
came into the sphere of interests of domestic
mutual funds and foreign investors. Instead of
affirmative development of the stock market,
there was a grotesque situation: business is
controlled by politicians and manipulated in the
manner that avoids appearing in the stock
market is acceptable behavior, even if citizens
of the Republic of Serbia are massively
represented in the ownership structure of those
companies. Undoubtedly, authors of this paper
have a long-lasting feeling that none of the
interests’ groups has any interest in developing
the equity market and collecting capital
through BSE.
It is a very devastating fact that the initial
public offering (hereinafter: IPO) of Serbian
private company Fintel Energija realized at the
end of October 2018, was the first completed
Serbia’s IPO since 1940. In Fintel’s IPO, more
than 1.5 million shares were issued, which was
the minimum threshold for a successful
process. The company raised EUR 6.3 million
for the development of business and expansion
of network of wind parks in Serbia. Shares of
Fintel Energija have been added to the Prime
Listing section on BSE [11].
BSE suffers from several shortcomings such
as: the small number of high-quality listed
companies in the equity market, the lack of
IPOs and the absence of liquidity. Until above
mentioned isolated case of Fintel Energija IPO,
Serbia has not recorded any IPOs for almost the
whole century. The government has never used
IPOs for mass privatization purposes, whilst
private companies have not raised capital
through IPOs either.
Those facts explain why the Serbian equity
market is in a very difficult situation for a
decade and a half. Together with the high
number of delisting companies in recent years,
BSE is suffering from the absence of attractive
6
investment alternatives. It is characterized by
the absence of large scale institutional investors
and existence of fewer financial instruments in
comparison with developed markets, i.e.,
tighter options among several investment
alternatives. Insufficient level of development
in terms of financial instruments available in
the Serbian capital market and unawareness of
domestic investors regarding investment
opportunities (as well as the absence of the
politicians’ will) together influenced on
inadequate deployment of the capital market.
Transition period in Serbia lasts too long, so
necessary changes were not realized in terms of
adequate adjustment to the major principles of
an open market economy. Missed opportunities
and experiences from the past could give
another impulse for development of the Serbian
capital market. From the point of view of
everyday life, the circular economy topic
became one of the most interesting topics.
The importance and necessity of orientation
on the circular economy are well understood
and recognized by international financial
institutions (e.g., EBRD, EIB, etc.) which place
their investment projects in the green economy
on target markets based on cooperation with
local banks interested in this type of lending.
Nowadays, all market participants should act in
the favor of “green” behavior. As green
behavior became the standard for our
civilization, new sources of funding emerged
and became important. Some of the novel
funding sources could have a great impact on
the prospective development of capital markets.
Currently, when the acronym ESG
(consisting of words: Environmental, Social
and Governance) is widely used and recognized
as a mainstream holistic approach worldwide,
understanding green bond securities and the
importance of the green bond market is more
than desirable. “ESG helps stakeholders to
understand how an organization is managing
risks
and
opportunities
related
to
environmental,
social,
and
governance
criteria” [12]. The definition of ESG issues is
dynamic due to the fact that society applies
different classification
criteria over time,
resulting from new information (e.g., the
impact of carbon dioxide emissions) or
changing perceptions. Certainly, ESG concept
is based on three pillars: environmental, social
and governance with the prevailing orientation
on health and safety issues, pollution reduction,
and corporate philanthropy.
The introduction of green bonds changed
the outlook of bond markets worldwide,
creating new opportunities for financial market
participants as well as society as whole, and
simultaneously contributing to healthier and
cleaner environment. The central part of this
paper is dedicated to the topic of green bonds.
III.
GREEN BONDS: NOVEL OPPORTUNITY
Green securities support the financing of
activities and projects primarily aimed at
environment protection. This is specifics and
innovation inherent for green securities, making
a crucial difference in comparison with
traditional securities, considering that the issuer
of green securities is obliged to collect funds
that are used for financing of green projects or
business activities. Collected funds could be
directed to: energy efficiency (including
construction of energy efficient buildings);
sustainable waste management; sustainable
agriculture and forestry; sustainable water
management; preservation of biodiversity;
clean transport and adaptation to climate
changes [13].
In the absence of unique definition, in this
paper is cited the World Bank quotation
regarding green bonds. “A green bond is a debt
security that is issued to raise capital
specifically to support climate-related or
environmental projects” [14]. It is characterized
with the specific usage of the collected funds,
for the purpose of financing projects which are
aligned
with
environmental
standards.
Although green bonds are distinguished from
regular bonds by their main purpose, when it
comes to the analysis of the major features,
green bonds have the same characteristics as
any other type of bond, such as: maturity,
coupon, price, and credit quality of the issuer.
From the risk management point of view, green
bonds are less riskier than regular bonds and
shares as well as less dependent upon
unpredictible macroeconomic events. It is
generally accepted that green bonds are priced
very close to regular bonds; meaning that
investors are not willing to give up a return or
pay extra for the green aspect of the bond and
related reporting.
Among the first issuers of green bonds were
multilateral development banks. For example,
The European Investment Bank (EIB) issued a
€600 million Climate Awareness Bond in 2007
that focused on renewable energy and energy
efficiency sectors. The main feature of these
bonds is reflected in the linkage of returns with
an equity index (instead of a fixed coupon)
giving them the character of so-called
“structured bonds”. At the end of 2020, EIB is
a world leader in green bonds issuing over EUR
33.7 billion raised across 17 currencies, of
which the EUR equivalent of 6.8 billion is
reached in 2020 [15].
The International Bank for Reconstruction
and Development (IBRD) issued its first green
bond in 2008 in the amount of approximately
US$ 440 million for several reasons. The first
reason is related to the support of climatefocused projects meeting demand from
Scandinavian pension funds. Second, this is a
part of World Bank's strategy to introduce
innovation in climate finance and third, this
help regarding raising awareness among
investors and the financial community about
climate change actions and their global
consequences. As of the end of June 2015, the
IBRD has issued US$ 8.5 billion in over 100
green bond transactions in 18 currencies,
supporting about 70 climate mitigation and
adaptation projects around the developing
world [16]. The process of green bonds issuing
is very similar worldwide so in this paper is
presented the World Bank process that
encompasses four stages (Fig. 1).
The Republic of Serbia is among the
countries in Europe which are heavily affected
by the impact of climate change. In the spirit of
successful tackle with potentially devastating
effects, Serbia has joined the global efforts
intended to movement toward a green
economy. Initially, Green Bond Framework is
Figure 1. Green Bond Process in World Bank.
7
created to support environmental protection and
raise funds from the international capital
markets [17]. Through the green bonds agenda,
the level of awareness regarding sustainable
financing will increase, while Serbia takes the
responsibility for the promotion of green
behavior in capital markets.
In March 2021, Serbia adopted the Law on
Climate Change, which establishes a system for
reducing greenhouse gas (hereinafter: GHG)
emissions and contributing to the achievement
of necessary GHG emissions in order to avoid
adverse effects of climate change. The law
harmonizes domestic legislation with EU
regulations and directives and it is planned to
be implemented with following strategies:1)
Low Carbon Development Strategy; 2) Action
Plan for the Implementation of the Strategy;
and 3) Programme of Adaptation to Changing
Climatic Conditions. Later, in April 2021, the
Law on the Use of Renewable Energy Sources
was adopted with the purpose to accelerate the
decarbonization of Serbia’s energy sector.
The Republic of Serbia signed the Sofia
Declaration on the Green Agenda for the
Western Balkans in November 2020. By
signing, Serbia committed to implementing of
the following five pillars: 1) Climate, energy,
mobility; 2) Circular economy; 3) Depollution;
4) Sustainable agriculture and food production;
and 5) Biodiversity. The Green Bond
Framework has been established to present
details on obligations that the government
intends to fulfill as an issuer of green bonds.
The Framework is tailored to align with the
Green Bond Principles, published in June 2021
by the International Capital Market Association
(ICMA) and its four core components: use of
proceeds; process for expenditure evaluation
and selection; management of proceeds and
reporting [18].
In September 2021, for the first time the
Republic of Serbia issued a green Eurobond
worth EUR 1.0 billion (issue date: 23
September 2021), with a maturity of seven
years (i.e., 23 September 2028). The coupon
rate was set at 1.00%, which is the lowest
coupon rate ever, whilst a yield rate stood at
1.262%. Investor demand in the auction
exceeded EUR 3 billion. Bonds are listed for
trading on London Stock Exchange Regulated
Market. The following ratings are assigned to
these bonds: Standard & Poor’s Global Ratings
Europe Limited (“S&P”): BB+; Moody’s
8
Investors Service, Inc. (“Moody’s”): Ba2; Fitch
Ratings Limited (“Fitch”): BB+. For
comparative purposes, it is interesting that at
the same time a conventional 15Y Eurobond
was issued in amount of EUR 750 million
(coupon rate 2.05% and a yield rate of 2.3%),
while the demand for longest maturity Serbian
Eurobond exceeded EUR 2.5 billion [19].
This green bond issuance established the
Republic of Serbia as the only non-EU country
which issued a green debt financial instrument.
According to accepted obligations, collected
funds will be used to finance or refinance
expenditures aimed at the even more
sustainable growth of the Serbian economy.
Namely, it means that Serbia will be focused on
investments in the following areas: renewable
energy, energy efficiency, transport, sustainable
water management and pollution, prevention,
and control [20].
According to the Institutional Shareholder
Services (hereinafter: ISS) ESG Country Rating
the Republic of Serbia shows a medium
sustainability performance on key ESG issues
faced by sovereign issuers. The overall ISS
ESG rating methodology is graded on a twelvepoint scale from A+ (excellent performance) to
D- (poor performance or country fails to
demonstrate commitment). The country rating
assigned to Serbia is C, which is marked as a
moderate performance [21].
Successful issuance of green bonds is
another important step in the recognition of the
Republic of Serbia as a credible country in the
eyes of reputable investors. It should be noted
that since July 2021, dinar denominated bonds
of the Republic of Serbia have been included in
the J.P. Morgan GBI-EM Global Diversified
index, one of the benchmark indices of bonds
issued in local currencies of emerging
economies. J.P. Morgan indices included three
benchmark issues of dinar bonds with the
original maturity of 7, 10 and 12.5 years,
maturing in 2026, 2028 and 2032 respectively.
The weight of dinar bonds in the GBI-EM
Global Diversified
index equals 0.3%.
Additionally, these bonds are included in GBIAggregate
(GBI-AGG)
and
GBI-AGG
Diversified indices, which cover government
bonds in domestic currencies of advanced and
emerging economies, as well as in J.P. Morgan
ESG (JESG)
GBI-EM index,
which
incorporates ESG factors in decision-making
on investment in fixed income assets [22].
US$ billions
600
508.8
500
400
269.3 298.2
300
172.5
159.5
200
100
84.5
37.0 46.1
0
2014 2015 2016 2017 2018 2019 2020 2021
Figure 2
Value of green bonds issued worldwide
from 2014 to 2021 [23]
The growing popularity of green bonds as a
financial instrument worldwide is justified with
annual issuance in 2021 which exceeds US$
500 billion (see Fig. 2), with volume growth to
hit US$ 1 trillion. There was recorded
significant growth in green bond issuance from
financial and non-financial corporates, where
both together represent 44% of cumulative
green bond volume.
Among financial institutions, the largest
single deal during 2021 was related to China
Development Bank (valued at US$ 6 billion),
whilst in the non-financial sector the largest
transaction was the issuance of the green bond
by Ford Motor Company in the amount of US$
2.5 billion [24].
IV.
CONCLUSION
There is no segment of society that is
isolated from the climate changes and
environmental protection which are taking
place in our everyday life. Thus, it is wrong to
present the tackle against climate change as
something that only concerns the aspect of
energy and the environment. Truly, above
mentioned issue is a matter of achieving intergenerational justice as well as recognition of
the future generations’ right to a cleaner and
better quality of life. Perhaps the most
important segment is establishing cooperation
between civil society organizations and the
economy, as well as achieving the widest
possible social consensus in the tackle against
climate changes.
The transition toward the green economy is
not something that can be postponed and wait
for several decades or election cycles. In this
sense, there is a high degree of social
awareness in the Republic of Serbia that there
may
be
material
damage,
financial
consequences, and loss of human life because
the continuation of the environment
destruction. On the wave of the global moment
created by acceptation of the Paris Agreement,
Serbia should use all advantages and define the
directions of economic development for the
next few decades.
Focusing on healthier life and consequently
leading to the survival of our planet, one of the
most actual segments of green behavior is ESG
investing, particularly investing in green bonds.
The green bond market worldwide experiences
significant growth and a positive trajectory is
continued despite of current Russia-Ukraine
conflict and changes in the geopolitical sphere.
The Republic of Serbia recognized the
opportunities by widening the offer of financial
instruments with issuance of the green
Eurobond at a face value of EUR 1 billion on
the London Stock Exchange in Q3 2021.
Making a debut in the growing green bond
market, which is primarily led by the
engagement of European countries, Serbia
made a huge step and gave optimism to the
public and stakeholders that the Serbian capital
market will be back on the positive path after
almost one and a half decades of stagnation.
In this paper is given a comprehensive
overview of the circumstances in the Serbian
bond market during XXI century, with a
general conclusion that almost all aspects
(except government bonds) failed to crucially
influence on capital market revival. Likewise,
the equity market shared the destiny of the
bond market, so the absence of IPOs and
shallow liquidity are a burden for more than a
decade. In described, not an idyllic picture,
there is an upcoming phenomenon in the form
of green bonds as a novel opportunity and new
chance for the Serbian capital market
development. Despite failures and negative past
experiences in the bond market, Serbia has one
more opportunity to develop its capital market.
Certainly, green bond issuance will not be
another fallacy in the market. On the contrary,
authors’ express the attitude that focusing on
green bonds will create necessary preconditions
for financing or refinancing projects which are
primarily intended for environmental protection
as an ultimate objective. Green bonds, as an
innovative type of bonds, could be very useful
tool for prospective green innovations and
extension of green behavior in all spheres of
business and life.
9
REFERENCES
[1]
Republic of Serbia Securities Commission (2022).
New Law on the Capital Market bylaws come into
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en/news/actual/780-new-law-on-the-capital-market-b
ylaws-come-into-force.
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Serbia-Capital-Market-Development-Technical-Note.
[3] Central Securities Depositary and Clearing House
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[4] Miladinovski, S. (2012). Razvoj tržišta dužničkih
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miladinovski.pdf.
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obveznice u okviru monetarnih operacija – istine i
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showcontent/index.html?id=15796&konverzija=no.
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obveznica od strane NBS? Available at: https://www.
danas.rs/vesti/ekonomija/sta-znaci-kupovina-korporat
ivnih-obveznica-od-strane-nbs/
[9] Central Securities Depositary and Clearing House
(2022). Aktivni FI registrovani u CR HoV –
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hov.rs/?Opcija=5&TipHartije=kratkorocne.
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opportunity for recovery of Serbian capital market.
FACTA Universitatis Series: Economics and
Organization, 14(4), 359-372.
[11] Balkan Energy Green News (2018). Fintel Energija
uspešno zaključila prvi IPO u Srbiji nakon 80 godina
– trgovanje počinje 20. novembra. Available at:
https://balkangreenenergynews.com/rs/fintel-energijauspesno-zakljucila-prvi-ipo-u-srbiji-nakon-80-godinatrgovanje-pocinje-20-novembra/.
[12] Peterdy, K. (2022). What is ESG (Environmental,
Social, and Governance)? Available at: https://corpor
atefinanceinstitute.com/resources/esg/esg-environmen
tal-social-governance/.
10
[13] Vella, H. (2018). Global Green Bond Partnership:
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curated/en/400251468187810398/pdf/99662-revisedwb-green-bond-box393208b-public.pdf.
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en/OLD-investor_relations/cab/in dex.htm
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/en/projects-operations/environmental-and-social-poli
cies.
[17] Public Debt Administration (2021). Green Bond
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mework_vf.pdf.
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inciples-guidelines-and-handbooks/green-bond-princi
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-debt-tops-1trn-in-2021/.
PaKSoM 2022
Digital Transformation of Public
Administration and Services in
Hungary
Edit Soós1
1
University of Szeged Faculty of Law and Political Sciences, Szeged, Hungary
1
soos.edit@gmail.com
Abstract—The Government of Hungary launched
the state territorial administration reform in 2010.
The study examines the structural changes
affecting territorial public administration under
the influence of digitalisation. The anticipated
trends of territorial administration development
since 2010 are included in public policy strategic
documents with designated intervention areas,
which intended to create a public administration
that is highly professional, and efficient with short
administrative deadlines, thus creating serviceoriented state operations enjoying the confidence
of the public. Since 2010 the state administration
and IT legislation have expanded and changed
with the objective to replace paper-based
administration with electronic administration.
Digitalisation of public administration provides
both public servants and citizens with a multitude
of advantages. The process of digitalisation should
give significant attention to citizens’ needs. The
latest developments show that clients have become
very demanding in terms of public administration
and require simple, fast, and transparent services.
Efficient digitalisation must be an integrated
process that creates a context favorable to the
reviewing of administrative procedures and to
makes them simpler. The paper presents the
results of the Hungarian e-administration in the
context of EU developments. To evaluate the
performance of e-administration, the analysis uses
the Digital Economy and Society Index (DESI), the
data and reports of the e-Government Benchmark,
which focuses on e-public administration, and the
data of Eurostat.
Keywords - public administration, customerfriendly services, digital administration, front-office
systems, back-office systems
ISBN: 978-86-82602-00-2
I.
INTRODUCTION
The Government of Hungary (2010-2019)
fundamentally reconstructed the central state
system. The reforms launched in 2010, aiming at
the central state administration, resulted in
centralisation, further strengthening the role of
the Prime Minister and further broadening the
competence of its apparatus, organisational
integration, and the reduction of the number of
central authorities.
After the 2010 change of government, a
complex public administration development
programme was introduced, which is aimed at
the renewal of public administration on a
completely new basis. The directions of public
administration development and the operating
framework of Hungarian public administration
were formalised in strategic documents. The goal
of these documents is to improve the efficiency
of the operation of the state and the quality of
administrative services and to create an effective
national public administration.
Public administration is concerned with the
organisation, activities, and behaviour of
administrative agencies and officials in the
conduct of governance. It was an important
strategic goal for Hungary to modernize its
public administration and to increase the use of
modern information and communication
technologies in the interactions between state
institutions themselves as well as between state
institutions and citizens.
The objective of the study is to approach
digitalisation transformation processes in public
administration between 2010 and 2020. The
11
strategic governmental goal meets the
expectations and challenges of the European
Union towards Hungary to modernise its public
administration and to increase the use of modern
information and communication technologies
(ICT) in the interactions among the state
institutions themselves and between the state
institutions and citizens.
The development process of the European
integration prioritises answering the question of
how public administration can be understood in
the European standardisation process, especially
at organisational-institutional level and with
regard to the activities and operations of public
administration. The deepening European
integration brings forward the institutional
harmonisation of the government systems of the
EU Member States, particularly from a
functional and value-oriented point of view. This
process is about the unification of the member
states’ administrative authorities and their
administrative procedures [1]. With all these
taken into account a development of the
European Administrative Space, as an informal
entity, is a harmonized synthesis of values
realized by the EU institutions and the Member
States’ administrative authorities through
creating and applying the EU law [2]. This effort
will result in the approximation of the national
administrations of the Member States, bringing
closer the administrative cultures and models on
national administrations. These states have to
take into consideration common values and
administrative principles, such as reliability and
predictability, accountability, openness and
transparency, effectiveness and efficacy.
But, different countries need different
governance systems in terms of both principles
and structure. However preferable redesigns of
governance depend significantly on specific
conditions and problems. Before identifying the
tasks of governance and working out required
redesigns, we need to look at the environments
within which governance will have to operate in
the foreseeable future and the problem domains
with which it will have to cope [3].
Member States are modernising their public
administrations by introducing digital public
services. “Development of the information
society is not possible without a well-functioning
electronic government (e-government)” [4]. The
foundation of e-government are systems of
electronic customer support (i.e. front-office
systems) and systems responsible for supporting
12
internal processes and administrative procedures
(i.e. back-office systems). Front-office is the
outer sphere, providing customer service and
customer contact with units of public
administration. Front-office systems are
therefore systems for electronic communication
of clients with public administration units [5].
The structure of the article is as follows. The first
part of the article describes the types of existing
systems in public administration and briefly
characterizes them. The author gives best
practices and their use in Hungary with the
following divisions: front-office systems, backoffice systems, and integration of these systems.
The last part of the article presents the findings
of the study, as well as the achievements related
to the use of ICT in public administration.
II. REFORMS OF THE STATE
ADMINISTRATION (2010-2020)
The Fundamental Law of Hungary, adopted
on 25 April 2011, brought about radical changes
in state administration [6]. The reform process
has brought the effectiveness of the central
government’s decision-making system to the
forefront in European terms, and without this, it
would have been impossible to implement
changes in the public administration system.
The directions of public administration
development were formulated in the public
policy strategic documents, the Magyary Zoltán
Public
Administration
Development
Programmes (MP 11.0, MP 12.0). In the
Government Decree No. 1602/2014. (XI. 4.) [7]
on the setting up of the State Reform Committee,
the Government decided on the reform of state
services, the reform of state administration
services (in the framework of this, the creation of
the national network of government windows),
and the continuation of the transformation of the
territorial public administration [8].
A. Reforms of the Territorial Public
Administration (2011-2020)
The territorial administration reform is part of
the overall reform of public administration which
was primarily triggered by a diagnosis of the
weaknesses, inefficiencies, and bottlenecks in
the structure of Hungarian public administration
at all levels of government. As a result, the public
administration lacked stability, predictability,
certainty, and uniformity of process across the
country and among the administrative actors
involved in policy formulation, regulatory
decision-making and administrative service
delivery [9].
As part of the operational and organizational
renewal of the public administration, in
accordance with Act CXXVI of 2010 (XI.19.)
and the Government Decree No. 66/2015 (III.
30.), the capital and county government offices
were established.1 The altogether 20 government
offices are located in the county seat cities and in
the case of the capital city and Pest county in
Budapest [10,11]. In accordance with Article
17(3) of the Fundamental Law, ’the capital or
county government offices are the territorial
state administration organs of the Government
with general competence’.
The tasks of government offices are to
coordinate the implementation of government
policies at the territorial level. They exercise
coordinative, authority-type, proposing and
consultative powers, allowing the adjustment of
central decisions, and policies to territorial
characteristics. The government offices are
strictly controlled by the central government, and
integrate a diverse set of special and general
administration services [12]. With the
establishment of capital and county government
offices on the 1st of January 2011 the first phase
of the integration of territorial state, the
administration was completed.
An important step towards a less bureaucratic
public administration was the setting up of the
system of physical points of single contact. In
January 2011, in accordance with Government
Decree No. 288/2010 (XII.21.), Government
Windows, an integrated network of service
contact centres was established. The
Government Windows started to operate as the
front offices of Government Offices. The onestop shops provide information and other
administrative services from initiating and
handling to closing a procedure to citizens in
3,000 different types of administrative cases. The
delegated tasks show various pictures and
embrace almost all public sector services (e.g.
agriculture, employment and welfare benefits,
personal document services (passport, ID card,
driving license), vehicle administration,
customer protection, national register tasks, etc.)
For the general public, the Government
1
The capital and county government offices are led by
government officials whose task is to coordinate and help the
implementation of governmental tasks at a territorial level.
2
The settlement structure of Hungary is laid down in the
Constitution. Settlement-level units are villages, towns and
Windows represent a customer-friendly, singlewindow administration system. By 2019 there
are altogether 295 Government Windows in
Hungary which make it easier for citizens to
personally administer their affairs, served by
36,000 civil servants.
In the second phase of systemic integration,
on the 1st of January 2013, districts were
established [13]. The administrative district
offices comprise the lowest-level territorial units
of state administration.
In accordance with Act XCIII of 2012
(VI.25) and Government Decree No. 218/2012.
(VIII. 13.) on the district (capital’s district)
offices, there are 174 provincial offices and 23 in
the capital were established [13,14]. Their
function is to carry out administrative tasks
below the county level. The districts grant the
vast majority of public services to all Hungarian
citizens. With the establishment of district
offices, the goal of the Government is to create a
customer-friendly administration, and modern
administrative districts in order to help reduce
costs to society and to operate more effectively
and with more attention to the needs of
the public.2
III.
DIGITAL TRANSFORMATION OF PUBLIC
ADMINISTRATION AND SERVICES
In December 2020, the Hungarian
government signed the Berlin Declaration on
Digital Society and Value-Based Digital
Government, thus reaffirming its commitment –
together with other EU Member States – to foster
digital transformation in order to allow citizens
and businesses to harness the benefits and
opportunities offered by modern digital
technologies. The Declaration aims to contribute
to a value-based digital transformation by
addressing
and
strengthening
digital
participation and digital inclusion in
European societies.
Technology
is
bringing
innovative
opportunities into the public sector and has the
potential to improve interactions between
governments and citizens through the
simplification of procedures, as well as
contribute to customer-friendly administration.
The digital transformation of government means
the capital, which necessarily cover the whole area of
Hungary. Out of the 3,155 settlements of the country 346 are
towns (1 of which is the capital and 23 are towns of county
rank), and 2809 are villages.
13
the modernisation of public administration and
enhanced digital interactions. There is growing
interest in digital transformation that provides
benefits for society at large.
The modernisation and transformation of
electronic public administration in Hungary and
the development of the necessary legal
environment have been greatly influenced by EU
requirements. The expectations of the EU are the
informatisation, modernisation, and alignment of
public administration.
Hungary has made decisive steps towards
fostering interoperability and improving its eGovernment systems within the framework of
the comprehensive New Széchenyi Plan (20072013). Between 2007 and 2013 Hungary used
European Union co-financed projects to develop
the back office and front office functions of
electronic public administration. These funds
were available through the Electronic
Administration Operational Programme (EAOP)
and
the
State
Reform
Operational
Programme (SROP).
Nevertheless, the use of e-services by its
citizens was still below the EU average. In order
to improve citizens’ life quality, the
competitiveness of businesses and the efficiency
of the state a better understanding of public
processes is needed in order to improve the
networks, tools, services, and competences of
public administrations.
conditions caused by the fast development of
ICT technologies. In April 2012 [15]., with the
amendment of Act CXL of 2004 on the General
Rules of Administrative Procedures and Services
by Act CLXXIV of 2011, and the introduction of
the so-called regulated electronic administration
services, the legal preconditions for eGovernment services were established [16]. In
July 2015 a new law on the Hungarian e-ID card
has been adopted, and the new card was issued at
the beginning of 2016, replacing three different
cards, hence further simplifying the lives
of citizens.
One of the most important elements of the
Hungarian e-Government strategy is the National
Info-communication Strategy (NIS) 2014-2020
[17]. The purpose of this strategy was to give a
comprehensive overview of the situation of the
Hungarian information society and the ICT
market, to define the ideal target situation, and to
identify professional trends, and development
targets in info-communications.
I made interviews with administrators and
executives in public administration to reveal the
relationships between public administration and
customers with the aim of identifying problems
arising when customers conduct their
administrative affairs. The areas covered in the
interviews – the digital infrastructure and digital
competences – overlap the governmental
intervention areas of the National Infocommunication Strategy.
The obligation to register companies online
was announced in 2008 with the aim of reducing
the number of paper forms. This obligation was
preceded by the adoption of a Decree on
intelligent e-Forms and a new Act on the eAcknowledgement form. In addition, company
registration
was
eased
through
the
implementation of a simplified procedure that
reduced the time needed for this process to a
single hour.
Based on their experience, civil servants
identified
several
weaknesses of
the
transforming e-administration.
The purpose of the Government is to
accelerate procedures, reduce administrative
burdens, more widely computerise state-tocitizen relations, ensure the cooperation of the
bodies of e-administration, and provide the
public with more modern and efficient public
service. (During the deregulation process around
200 outdated e-Government-related regulations
have been removed.)
2. The authority cannot expand beyond its
sphere of competence, so problemsolving must be the most important aspect
of decision-making. Therefore, it is
important to have customer-friendly
communication with the client. The most
important expected behaviour for solving
an emerging problem is professionalism,
simplicity, and proper communication
with customers by the agent after
determining whether the client represents
The new legal framework gradually
introduced after 2012 is open and technology
neutral, thus can better adapt to changing
14
1. According to the opinion of civil servants
it is necessary to organize IT training for
administrators, organize e-administration
training, improve technical conditions,
operate a unified professional system, and
provide information to customers.
a
direct,
definite,
uncertain style.
distant,
or
3. There is a huge backlog with regard to
digital illiteracy, the use of interactive
technologies is still limited among the
Hungarian population, and they do not
have competitive knowledge. The same
statement applies also to the employees
and managers of enterprises, and there is
also some backlog in the digital
competencies
of
public
administration employees.
4. It was important to develop electronic
offices and systems which provide direct
services to customers. The separation of
front and back office functions began on
a standardised basis and this helped to
improve user satisfaction.
5. During the administration several einterfaces are used: a General Form Filler
Program (ÁNYK), Customer Access
Portal (KRID Identifier), Document
Management System (Poseidon, KÉR),
Hungarian National Chamber of Civil
Law Notaries (MOKKIT), Hungary's
courts of law, e-KAT (document signing,
verification, extension).
6. The use of e-interfaces requires different
access codes; many e-systems have to be
used; e-interfaces do not have a uniform
datasheet; the filing system constantly
changes (uploading and downloading
documents, document management) in
many cases the lack of proper technical
background (computers are outdated).
7. There are more than 300 professional
systems in Hungary that are not
compatible with each other. The ongoing
projects aim to create IT connections
between them, making the administration
simpler and faster, and becoming more
customer-friendly.
8. The use of e-interfaces requires different
access codes and, in many cases, there is
a lack of technical background
(computers are outdated).
During the 2014-2020 programming period,
particular attention has been paid to the
implementation of e-government projects cofinanced by the European Union. In order to
achieve this goal, the Public Administration and
Public Service Development Operational
Programme (PADOP) invested over 935 million
euros, including nearly €795 million from EU
funding (75.7 % from the European Social Fund
and 24.3 % from the Cohesion Fund), to
reinforce the services provided by the
public authorities.
The PADOP is in line with the Public
Administration
and
Public
Services
Development Strategy 2014-2020 and the
National Info-communication Strategy 20142020 of Hungary. In both of the strategies, the
“Digital State” concept appears as one of the key
areas that need to be developed. Both of these
strategies emphasize the primary importance of
interoperability. Therefore, the development of
interoperability on the legal, organisational,
semantic, and technical levels is an important
objective within the projects financed by
the PADOP.
As part of the implementation of strategic
interoperability objectives of the European
Union, the Hungarian Parliament adopted a law
on interoperability, Act No. CCXX of 2013, on
the general rules of cooperation between
registries of the national and local governments.
The intention of this law was to establish and
increase cooperation between registries of
national and local governments. The expected
benefits were to increase the competitiveness of
the state, increase the cost-efficiency of public
administration operations, and promote crosssector cooperation.
In order to create efficient digital services
interoperability is required between IT systems
and services. In 2015, the specific legislation on
digital public administration was provided by
Act No CCXXII of 2015 on the General Rules
for Electronic Administration and Trust Services
(e-Administration Act). The strategy aims at the
development of the infrastructure required for the
electronic services (IT, back office), the
development of e-administration services, and
their connection at an adequate level, with the
greatest possible interoperability.
The
e-Administration Act
regulates
cooperation in the field of information
technology between bodies providing electronic
administrative
services,
as
well
as
interoperability. The e-Administration Act aims
to achieve interoperability and cooperation
between State registries. More specifically, it
strongly encourages bodies to obtain
information, decisions, and statements from
cooperating bodies if the information, decisions,
15
or statements are made or already obtained by
these cooperating bodies by electronic means.
The cooperation includes government bodies,
local authorities, other legal entities vested with
administrative competence, court, public
notaries, court bailiffs, public prosecutors, most
of public utility companies, public service
providers, and public sector companies. The
legislation also allows the entities of the private
sector to join this cooperation by considering
themselves to be bound by the regulations
of the Act.
IV.
BEST PRACTICES
A. Interoperability Platforms for Public
Administrations and Local Governments
The Hungarian Central Government Service
Bus (KKSZB) is an interoperability platform that
aims to ensure a service-oriented and
standardised connection between national base
registries and the different specific public
administration information systems by unifying
communication methods. More specifically, the
KKSZB makes it possible to connect systems
with different technological, operational, and
integrational levels, as well as to reduce
redundant data storage and data integrity errors
resulting from former practices. The KKSZB
ensures
electronic
communication,
interoperability, and secure data exchange of
authentic
data
among
public
administrative authorities.
The KKSZB may be joined by a service
provider and client at the same time, making it
technically possible for applications targeted at
citizens and businesses to reach all services
provided by the connected service providers via
the KKSZB, as long as they have permission to
do so. The KKSZB service bus will be a “plugin” based system, to which any kind of service
can be connected. In the year 2021 on the client
side, 570 organisations or services are connected
(175 in the live environment and 345 in the
test environment).
According to the e-Administration Act, all
public administration bodies providing eGovernment services are obliged to publish their
services on the SZÜF Portal. The new customfriendly electronic administration user interface,
SZÜF, has replaced the former magyarorszag.hu
(hungary.hu) Portal is the point of the single
contact portal of Hungary. The SZÜF Portal
features a more modern design as well as a life-
16
event-based approach for publishing existing eGovernment services.
B. The Central Application Service Provider
(ASP)
Due to the need of spreading unified
technical quality standards and ensuring optimal
use of investment and operational resources, a
centralised application service-providing model
has been applied to promote local government
digitalisation. The Central Application Service
Provider (ASP) pilot was launched in 2015. The
Hungarian Municipality ASP is a good practice
of local government digitalisation aligned with
the European Interoperability Framework which
is a key instrument for establishing interoperable
digital public services at all levels of
public administration.
Based on the Application Service Provider’s
central hardware and software infrastructure, the
e-service provides integrated back-office
systems (financial management software,
municipal document management software,
industrial and commercial management
software, property cadastre, inheritance
registration system, e-Administration web portal
and online form management) for the daily tasks
of the municipalities, as well as client-side eGovernment services, on a single platform for all
3,155 municipalities connected. Another
important benefit of the platform is that improves
interoperability and reuse of existing solutions
such as the regulated electronic administrative
services provided by the state (the “building
blocks” of electronic administrative processes),
and fosters the once-only principle.
C. The e-ID Cards for User Authentication
A good example of reusing existing solutions
is the use of e-ID cards for user authentication.
As a result, the local government employees can
only access the Municipality ASP’s applications
by using their own electronic identity cards.
Another example of reuse to highlight is the
electronic administration service provision
process, where the project has integrated the
centrally
provided
regulated
electronic
administrative services to comply with eGovernment policy criteria and the relevant legal
provisions. It was also an important requirement
that interconnection with external systems and
base registries had to be done via the Central
Governmental Service Bus (KKSZB) technical
interoperability platform.
online
availability
usability
mobile
friendliness
86,8
83
87,2
91
90,5
87
88,4
73
76,3
84
91,2
89
Source: e-Government Benchmark Report Country
Factsheets
2021
2020
2019
2018
2017
2016
2015
2021
2020
2019
TABLE III. INTERNET USE: SUBMITTING
COMPLETED FORMS.
2018
EU
EU
Hungary
Hungary
average
average
(2019)
(2020)
(2020)
(2019)
Source: Eurostat Information Society Indicators
2017
Usercentricity
Hungary
42 37 49 42 48 47 53 53 60 73
%
EU
average 44 42 46 46 48 49 52 55 57 58
%
2016
TABLE I. E-GOVERNMENT PERFORMANCE ACROSS
POLICY PRIORITIES IN THE FIELD OF USER-CENTRICITY.
INTERNET FOR INTERACTION WITH PUBLIC
AUTHORITIES.
2015
This process is promoted by the Superfast
Internet Programme which was started in 2015
with the goal of providing at least 30Mbps
broadband connection in every part of Hungary.
As part of the Programme, 500,000 new network
TABLE II. PERCENTAGE OF INDIVIDUALS USING THE
2014
Civil servants argue that the electronic
management of cases is a constraint, an
unreasonable burden on customers who do not
have the right competencies or sufficient
background. The measure becomes customeroriented when the concerned target groups –
citizens, micro and small enterprises – have the
appropriate IT skills (See Tables II and III.).
Although there was progress in the
digitalization of enterprises in 2021, most
Hungarian enterprises do not exploit the
opportunities offered by digital technologies.
21% of the companies use enterprise resource
planning software to share information
electronically (EU average: 38%), and 13% rely
2013
The European Commission’s European
Interoperability
Framework
Monitoring
Mechanism presents the overall good
performance of Hungary, with particularly
positive results within the Interoperability layers.
Among the Priority areas of the e-Government
Action Plan (2016-2020) is the User-Centricity.
This indicates the extent to which a service is
provided online, its mobile-friendliness, and the
usability of the service (in terms of available
online support and feedback mechanisms)
(See Table I).
In sum, Hungary ranks 22nd out of the 27 EU
Member States in the Digital Economy and
Society Index (DESI) 2022 [18]. On Human
capital, the country ranks 23rd, scoring 38
compared to the EU average of 46. 49% of
individuals have at least basic digital skills,
below the EU average of 54%. 3.1% of graduates
studied ICT (EU average: 3.9%), and ICT
specialists still represent a relatively low share of
the workforce (3.9% versus 4.5% in the EU).
2014
The e-Government services provided access
for citizens to the most important administrative
affairs and the digital public services have played
a key role in maintaining public trust in the state
during the crisis.
2013
By 2018, the majority of public
administration bodies providing digital public
services had implemented at least the minimum
level of provision of e-Government services, in
accordance with the e-Administration Act.
Throughout 2019 and 2020, the growing
tendencies continued, as several developments
have taken place leading to more modern, userfriendly electronic services.
termination points were established by the end of
2018, with further developments underway. The
Superfast Internet Programme 2.0 was launched
in January 2019, aiming to further develop the
networks, raise the capacity to at least 100Mbps
available anywhere in the country, and further
develop optical networks with Gigabit
capabilities to expand the Gigabit broadband
network coverage. In 2020, the Hungarian
government plans to adopt the Gigabit Hungary
Strategy that, in line with EU goals, aims to cover
the whole territory of the country with at least
1Gbps per household and enterprise by 2030.
2012
CLOSING REMARKS
2012
V.
Hungary 20 18 24 24 24 29 37 39 37 66
%
EU
average 22 21 25 25 27 29 33 36 38 44
%
Source: Eurostat Information Society Indicators
17
on social media (EU average: 29%) or send einvoices (EU average: 32%) [18].
Hungary can only perform well if the
obstacles blocking the further upswing of the
sector are considerately and consistently
dismantled in the future.
ACKNOWLEDGMENT
The research was supported by the ICT and
Societal Challenges Competence Centre of the
Humanities and Social Sciences Cluster of the
Centre of Excellence for Interdisciplinary
Research, Development and Innovation of the
University of Szeged. The author is a member of
the Digitalization and Democracy research
group.
REFERENCES
[1]
[2]
[3]
[4]
[5]
18
Torma, A. (2011). The European Administrative Space
(EAS). European Integration Studies, (9)1, 149–161.
Csatlós, E. (2016). Perspectives of the Cooperation of
National Administrative Authorities in the EU.
Jogelméleti Szemle, (3), 45-55.
Dror, Y. (2002). The capacity to govern. A report to
the Club of Rome. London-Portland-Or: Frank
Cass Publishers.
Ziemba, E. (2012). Miejsce e-administracji w
kreowaniu społeczeństwa informacyjnego – teoria i
praktyka. Roczniki Kolegium Analiz Ekonomicznych
SGH, (24), Oficyna Wydawnicza SGH, Warszawa.
Descours, D. (2015). Front-office and back-office
systems in public administration units in Silesian
voivodship. Studia Ekonomiczne. Zeszyty Naukowe
Uniwersytetu Ekonomicznego w Katowicach,
(278), 120-140.
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[7]
[8]
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[11]
[12]
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The Fundamental Law of Hungary. (2010). (25 April
2011)
Government Decree 1602/2014.(XI. 4.) on the setting
up of the State Reform Committee.
Horváth, I. L. (2017). The reform of the territorial
public administration from 2010 to the present, with
special emphasis on the re-interpretation of the
customer-service model. Új Magyar Közigazgatás,
(10)1, 22-31.
Magyary Zoltán Public Administration Development
Programme. Ministry of Public Administration and
Justice, Government of Hungary, Budapest,
10 June 2011.
Act CXXVI of 2010 (19. XI. 2010) on the capital and
county government offices, the amendment of
territorial integrity, and the establishment of the capital
and county government offices.
Government Decree No. 66/2015. (III. 30.) on the capital
and county government offices and the district
(capital’s district) offices.
Hajnal, Gy. & Kovács, É. (2013). Coordination
practice. Government windows: One-stop shops for
administrative services in Hungary. Budapest:
Corvinus University, COCOPS.
Act XCIII of 2012 (25. VI. 2012) on the formation of
the districts and on the necessary amendments of the
related acts.
Government Decree No. 218/2012. (VIII. 13.) on the
district (capital’s district) offices.
Act CXL of 2004 on the General Rules of
Administrative Proceedings and Services
Act CLXXIV of 2011 on the amendment of the Act
CXL of 2004 on the General Rules of Administrative
Procedures and Services.
National Infocommunication Strategy (2014-2020).
Development Strategy of the Infocommunications
Sector (2014-2020).
European Commission. (2022). Digital Economy and
Society Index (DESI). Hungary.
PaKSoM 2022
Contemporary Tendencies and
Barriers in Knowledge Management in
Tourism
Borislav Kolarić1, Goran Stojićević2, Jelena Ignjatović3, Aleksandra Đorđević4
1,2,3,4
1
Academy of Applied Studies Šabac, Šabac, Serbia
2
kayak@mts.rs, csugoran@mail.com, 3jignjatovic985@mail.com, 4aleksandradj993@mail.com
Abstract—The modern business environment is
changing
rapidly,
creating
unpredictable
competitive challenges. The tourism and
hospitality industries are particularly susceptible
to such unplanned changes and are forced to react
quickly in order to resolve adverse business
situations. In a rapidly changing global business,
knowledge management has become an integral
part of business strategy. Knowledge is recognized
as a rather powerful tool that supports
organizations and the entire tourism industry in
creating an effective model for achieving
competitive advantage and achieving the desired
business
performance.
Many
business
organizations have implemented these strategies
or are in the process of implementing them. The
purpose of the paper is to present the importance
of knowledge management in the modern
challenges of tourism business, as well as to
propose the conditions necessary for successful
implementation. In addition to the introduction,
the paper consists of three parts. The first part of
the paper points out the importance of knowledge
management both in the global context and as a
contribution to the development of tourism. The
second part of the paper is focused on the barriers
that may appear in knowledge management
processes, while the third part presents some
methods that can be used to avoid the mentioned
barriers and thereby create conditions for the
successful
implementation
of
knowledge
management. At the end, the concluding
considerations of the author are given.
Keywords – tendencies, barriers, knowledge
management, tourism.
ISBN: 978-86-82602-00-2
I.
INTRODUCTION
Changes in the business world and the
modern market environment impose the need for
changes in organizational management. Business
processes are changing the focus from industrial
production to knowledge and information, with
the help of information technologies that support
them. The intellectual capital of the company
includes the intellect of the employees, ¨knowhow¨, as well as the processes of creating
knowledge. Generating and using new
knowledge to encourage innovation, in the
function of developing a new product or service,
plays one of the key roles for competitiveness in
all spheres of business operations, including the
tourism sector. Although the key role of
knowledge as a competitive tool has long been
recognized, the emergence of knowledge
management as an academic field is much more
recent. The more significant role of knowledge
management, in the function of increasing
organizational performance and gaining
competitive advantage, dates to the beginning of
the 80s. As a competitive tool, process
fundamentals include the identification of
relevant knowledge and its collection, transfer
and sharing, as well as provision, in the sense that
organizations are designed to optimize flows and
manage them effectively. This requires an open
decentralized environment where individuals are
empowered to see knowledge as a resource to be
shared, not hoarded. The knowledge of
employees, who are able to use it, generates new
ideas that are essential for gaining a competitive
advantage.
19
The role of knowledge management in the
tourism sector is reflected in providing
employees with easy access to the latest,
specialized knowledge. This is especially
important in the hospitality industry because the
success of the facility depends on providing
guests with an excellent experience. If
employees are slow to provide accurate
information or solutions, the customer is less
likely to return, or may even show their
dissatisfaction through negative “word of
mouth” or negative reviews on social media. A
knowledge management solution is a system
that enables a tourism institution to store and
organize the collective knowledge of its
employees. This enables the collection of
individual employee knowledge and its
transformation into organizational knowledge,
which remains even if the employee leaves the
organization. This creates a centralized source of
knowledge that employees can easily access to
learn company policies, procedures, best
practices, and other relevant job information.
organization, it is embedded in the minds of
employees, as well as in organizational routines,
processes, practices, and norms, which are
sometimes
called
socially
constructed
patterns [2]. Knowledge represents a wellorganized
combination
of
information,
assimilated within a set of rules, procedures, and
operations, learned through experience and
practice [3]. The literature has classified
knowledge into two main types: tacit and
explicit. Explicit knowledge is knowledge that
can be seen, shared, and easily communicated to
others. It is often referred to as “know-what” and
can be represented in both words and numbers
and as such could be shared in manuals,
specifications, and data science [4]. In support of
the above, Smith adds that knowledge can be
stored in a codified form in databases on different
types of media so that [5]:
The goal of modern business is the
development of an organizational structure and
culture, in which knowledge is easily shared
among the members of the organization, both
through social and electronic networks. In
contrast to the transfer of explicit knowledge,
there is the issue of sharing implicit knowledge
among organizational members. The degree of
its disclosure and sharing within the organization
can largely determine the level of competitive
advantage. For an organization that wants to
successfully adopt knowledge management
(KM), the practice of knowledge sharing must be
integrated into the daily routines of the
organization's employees. However, there are
many factors that can have a negative impact on
the successful exchange of knowledge within an
organization, known as KM barriers. They most
often appear as a product of the imperfection of
the organizational structure and organizational
culture, but they can also come from sources that
are not directly under the control of the
organization.
The most explicit knowledge is in the form of
raw data, such as documents containing staff
work experiences, descriptions of events,
interpretations of data, beliefs, guesses, hunches,
ideas, opinions, judgments, and proposed
actions [6].
II.
IMPORTANCE AND CHARACTERISTICS OF
KNOWLEDGE MANAGEMENT
Knowledge can be defined as a fluid mixture
of framed experiences, values, contextual
information, and expert insight, which provide a
framework for evaluating and incorporating new
experiences and information [1]. In an
20
can easily be transferred to the recipient
without any misunderstandings;
can be reused for different purposes
within organizations.
On the other hand, Nonaka describes tacit
knowledge as “know-how” knowledge, which
depends on personal skills, expertise and
develops through training and experience, while
it is difficult to transfer through communication
with others [7].
Tacit knowledge is harder to share because it is
embedded in a person's memory. DeLong and
Fahey (2000) described tacit knowledge as what
we know but cannot explain [8]. These authors
indicate that tacit knowledge is:
embodied in mental processes;
derives from practice and experience;
expressed
abilities;
transmitted in the form of learning by
doing and watching.
through
applications
of
Knowing how to solve a problem using tacit
knowledge refers to personal interpretation,
abilities, and skills [9]. Tacit knowledge depends
on personal skills, expertise and is developed
through training and experience, and is difficult
to transfer through communication with others.
The realization of organizational knowledge
depends on the people who interpret, organize,
plan, develop and execute those socially
constructed templates. Most importantly,
organizational knowledge depends on specific
situations and does not always depend on
absolute truths or quantitative facts.
Therefore, it can be concluded that
organizational
knowledge
has
some
characteristics. They refer to the subtle, implicit,
built-in, sometimes invisible knowledge,
assumptions, values, and mindset that pervade an
employee's behavior, decisions, and actions.
III. THE ROLE OF KNOWLEDGE
MANAGEMENT IN TOURISM
The structural complexity and integration of
different service sectors means that tourism
needs to be constantly renewed in order to
compete with the diversity of options and
competitors in the world. Tourism, as an industry
that provides services to a large extent, depends
on the quality of human capital and the key
competencies and knowledge they possess.
The importance of knowledge in tourism is
becoming greater, due to the specificity it
possesses, the characteristics of the products and
services it offers, as well as the clients
themselves and the services they use [10].
In an economy characterized by experience
and knowledge, tourists are looking for more
personal and transformational experiences,
which requires constant innovation and
adaptation to attract new customers and retain
existing ones. Kirillova (2016) state that the
knowledge economy shifts the axis of wealth to
sectors where products and processes are
intensive in knowledge, intelligence, and
technology [11]. Show and Williams (2009)
emphasize the importance of knowledge as one
of the most powerful drivers of innovation,
productivity,
and
competitiveness
in
tourism [12].
Knowledge management and its dimensions
are essential for the sustainability of
organizations [13]. The role of knowledge is
recognized as a relevant factor for planning
sustainable activities in tourism [14]. Knowledge
management has been analyzed in various
studies, which enabled the determination of the
impact of KM on innovation constructions [15].
It is an input for the development of innovative
products and processes. Knowledge is a highly
sought-after resource in the present time, because
there is a lot of volatility and fluidity, which
forces tourism destinations and their businesses
to become dynamic and innovative [16]. In such
an environment, Tussiadiah (2014) understands
that it is necessary to offer differentiated and
exclusive products and services, which cause
unforgettable experiences, to stand out and
survive in the market [17].
Tourism is very specific in terms of the
balance between client expectations and reality,
as well as the balance of “supply and demand”. It
is necessary to create a well-organized system of
knowledge and management in the destination,
so that subjects can:
create knowledge about the destination
(for its economic, cultural, historical,
and ecological values);
collect and analyze existing knowledge
(especially knowledge about good
practice);
ensuring access to knowledge to all
interested parties and the public, etc.
IV. BARRIERS IN KNOWLEDGE
MANAGEMENT PROCESSES
Knowledge sharing is defined as a process in
which individuals exchange knowledge, which
includes their work experience, expertise, knowhow, information, ideas, and suggestions that
jointly create new knowledge [18]. The existence
of informal and formal mechanisms in
knowledge
exchange
strategies,
within
organizations, is necessary for such strategies to
be implemented.
The absence of these mechanisms is
considered one of the relevant barriers for
knowledge sharing and acquisition. In addition,
the process of codifying knowledge in databases
is often complicated and unclear, creating
difficulty when attempting to access or retrieve
knowledge from databases [19]. On the other
hand, employees often do not have time to
communicate with each other due to workload,
which is an inhibiting factor in the knowledge
exchange process [20].
An organization rarely has a unique culture
because each employee has a subculture, which
differs from the subcultures of other employees,
which makes it difficult to build collective
21
practices and procedures [21]. The boundaries of
functional departments and the arrangement of
work activities by premises greatly influence
knowledge
exchange
activities
among
employees [20]. A motivational moment must be
added to all the above. Motivation is considered
one of the main factors needed in the
development of the organization, in the direction
of knowledge exchange, which should be
designed and formulated considering the
different needs and expectations of employees.
Motivation can be provided through the
recognition and inclusion of knowledge
performance in performance evaluation
systems [22]. When motivated, employees share
knowledge easily. If there is a lack of
management and leadership, who will only
expect their employees to share their thoughts
and ideas, just because it is the right thing to do,
the processes and exchange of knowledge within
the organization will not come to life [23]. Long
(1997) sees the main sources of barriers in KM
processes within organizational culture and
technological infrastructure [24]. Singh and Kant
(2007), expand on the potential causes of barriers
in KM processes, emphasizing the importance of
motivation and rewards [25]. To the above,
Črnjar and Dlačić (2014) add the factor of human
resources as a significant barrier in the
implementation of KM [26]. They concluded that
potential HR barriers are cultural effects,
personal anxiety, resistance to change and
inadequate motivation policies.
technologies such as business intelligence,
knowledge base, collaboration, portals, user
management systems, data collection, workflow
support KM activities, while the choice of
appropriate technology improves company
performance [25]. Technological infrastructure
enables data collection, definition, storage,
indexing and linking of data and digital objects
to support management decisions [27]. The lack
of technological infrastructure is one of the
obstacles in the implementation of KM.
Riege
(2005)
hypothesized
that
technological barriers to KM can be summarized
as follows [23]:
legacy systems cause a lack of
integration between systems and
operational processes;
faulty business software system;
lack of maintenance and updating of
software and hardware;
technical support of the IT system
hinders communication flows and
knowledge exchange;
employees are unable to predict what the
new technology can and cannot do;
the mismatch between integrated IT
systems and the needs of individuals
limits the sharing process;
lack of understanding, training,
familiarization, and experience of the
objectives, uses and benefits KM;
increase resistance to the use of new KM
systems.
Technological infrastructure provides great
support in KM processes. A wide range of
Organizational culture defines basic beliefs,
value norms and social customs, which govern
the way individuals act and behave in the
organization. It is the sum of shared
philosophies, assumptions, values, expectations,
attitudes, and norms that bind organizations
together [28]. McDermott and O'Dell (2001)
place culture as one of the key inhibitors of KM
implementation [21]. A good organizational
culture implies cooperation and trust. Trust is one
of the aspects of knowledge-friendly cultures,
which fosters the relationship between
individuals and groups, thus enabling a more
proactive and open exchange of knowledge [29].
Figure 1. Possible sources of inhibiting factors in
KM implemantation procesess
22
The absence or minimal level of cooperation
hinders the transfer of knowledge between
individuals and groups. Also, if the organization
does not have an appropriate organizational
culture, which includes a reward system for
knowledge exchange, methods of encouraging
cooperation among employees and management
support, the implementation of the knowledge
management process will not have adequate
support [30]. In most cases, employees are
reluctant to share their knowledge with others
because they fear losing their jobs. In the last
case, they will share it only with selected
employees [31]. Similarly, some managers are
afraid of sharing their partial or more complex
knowledge because it could affect the rate of
growth and promotion of their subordinates,
relative to themselves, which could lead to them
losing their position. They believe that
knowledge is the source of power and success.
All the above causes a loss of willingness and
motivation to share knowledge among
employees, which leads to limited knowledge
sharing and which results in the obstruction of
the knowledge management process [32].
Organizational goals cannot be achieved if
organizations do not integrate the concept of
motivation and rewards for their employees.
Motivation can be provided through recognition,
visibility, and inclusion of knowledge
performance in assessment systems and
incentives [22]. Motivation can be internal or
external. Rewarding and recognizing an
employee, in tangible form for their efforts to
share knowledge, is extrinsic motivation, while
intrinsic motivation is intangible in nature [33].
Employees easily share their knowledge when
they are motivated. It is crucial for the exchange
of both types of knowledge, tacit and explicit
knowledge. Lack of motivation and reward
system is also an obstacle, as it discourages
people to create, share and use knowledge.
Without establishing organizational reward and
recognition systems, it is very difficult to align
KM with the business needs of organizations.
V. METHODS OF SUCCESSFUL
IMPLEMENTATION OF KNOWLEDGE
MANAGEMENT
There is a great benefit to knowledge, which
flows freely through the organization. However,
various cultural, social, and technological
barriers often limit the effective flow of
knowledge among workers. Organizational
culture affects the level of cooperation within the
organization, and good cooperation is the key to
successful knowledge exchange. As noted by
Sveibi and Simmons (2002), a collaborative
climate was one of the main factors affecting the
effectiveness of knowledge programs, as it
improves knowledge sharing and organizational
effectivenes [34]. To achieve high innovation
performance, in service tourism organizations, a
better team culture, which supports the exchange
of knowledge, must be developed. The literature
related to the implementation of KM indicates
that certain factors such as a climate of trust and
openness, a smoother organizational structure,
management support for multifunctional
cooperation and teamwork, as well as the
application of modern information technologies
play a very important role in the success of a KM
project.
Widen-Wulff and Suomi (2007) developed a
framework for creating an organization-wide
knowledge sharing information culture that
includes knowledge sourcing, organizational
learning, and business process reengineering
[35]. They are of the opinion that the
organization must provide basic resources such
as technology. When resources become
available, the organization should ensure that
basic resources are converted into competence,
that is, that employees know how to use these
resources. The authors also argue that the
concept of organizational learning must be
embedded in the organization. Most importantly,
recognize that an organization's workforce is
more than just a collection of skilled individuals.
These experts must adapt their skills to be able to
distribute their expertise through formal and
informal networks.
Cross et al. (2001) suggested mapping
knowledge flows across different boundaries in
an organization to gain critical insight into where
management should focus efforts to promote
collaboration [36]. Knowing what someone else
knows (knowledge) is a precursor to looking for
a specific person, when faced with a problem that
needs a solution. However, knowing who to
contact is only useful if that person can be
reached in time. Access is influenced by the
closeness of one's relationship, as well as
physical proximity, organizational design, and
use of collaborative technology. Once access is
available, knowledge can only be shared if the
expert understands the problem, as experienced
by the person seeking help (engagement). At this
point, the expert can shape his knowledge to help
solve the problem. Finally, the safety of the
person seeking the knowledge is of utmost
concern. Being able to admit a lack of knowledge
and ask for help results in creativity and learning.
23
Cross et al. (2001) believe that it is
particularly important to identify the points of
creation and exchange of knowledge that have
strategic importance [36]. Examples of domains
that could yield this type of benefit include senior
management networks, collaborative initiatives,
joint ventures, alliances, and communities of
practice. Communities of practice are a common
knowledge sharing or transfer technique. In a
Community of Practice, groups of individuals
share knowledge of common work practice over
a period of time, even though they are not part of
a formally constituted work team. Communities
of practice often cut across traditional
organizational boundaries. The purpose of this
organizational structure is to enable individuals
to acquire new knowledge more quickly [37].
Speaking about social groups, it should be
understood that the collective knowledge of
teams or groups represents the intellectual wealth
of many institutions. In this direction, knowledge
management can be viewed as a harmonious
working environment in which employees [38]:
store best practices in knowledge
repositories;
talk to colleagues;
write reports and analyses;
openly express their comments and give
suggestions and answers;
document their insights into problems,
use the existing knowledge base to
accomplish their tasks.
VI.
A culture must be created, which will
improve the exchange of knowledge and the
acceptance of knowledge management. It is
necessary to find the best way to implement
knowledge into the company's business strategy.
Also, an effective knowledge management
system must include all employees in a kind of
knowledge community, which uses, shares and
transfers knowledge. The key is that
management cannot just expect knowledge
sharing to happen on its own. Instead,
management must be the driver of knowledge
sharing within the organization.
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25
26
PaKSoM 2022
The Foundations for the Future
Innovation Ecosystem - A Digital
Twins Framework Approach
Branko Perišić1, Ana Perišić2
1
2
Singidunum University, Belgrade, Center Novi Sad, Novi Sad, Serbia
Faculty of Technical Sciences, University of Novi Sad, Novi Sad, Serbia
1
bperisic@singidunum.ac.rs, 2anaperisic@uns.ac.rs
Abstract—Innovations are the main drivers of
overall social progress that exhibits its value
delivery mission in the contemporary context,
where the term ecosystem attributes that
particular context. The innovation ecosystem is a
composite entity encapsulating structural and
behavioral dimensions of participating systems,
integrated into a hyper-system-of-systems space.
Its
inherent
complexity
demands
the
specification, modeling, and development of
appropriate digital twin. This work presents the
conceptual model of the digital twin as a
software-empowered framework. It assumes the
creative interoperability of two essential
innovations domain driving forces learning and
performing as innovations reflections.
Keywords: innovation ecosystem, digital twins,
software frameworks, system-of-systems, hyper-helimodel
I.
INTRODUCTION
Innovation is an old and traditional area of
social research that has shaped society through
every historical epoch or stage. Modern, postindustrial edge is mainly driven by constant
change as the origin of all known progress. The
innovation thereby appears as a mutable hyperdimensional concept. Currently, it is dominantly
reflexive on its knowledge foundations.
Innovation is decentralized and depersonalized
through a group rather than individual
endeavors, heterogeneous due to widespread
over global performing networks, and
ubiquitous by its very essence [1]. In published
articles and conference papers, the innovation
definition and modeling aspects, have been
elaborated in different contexts. The empirical
ISBN: 978-86-82602-00-2
work analysis shows that the majority of
innovations emerge from Science and
Technology
Studies,
Economics,
and
Economics geography [2].
The inherent complexity of individual
problem domains induces a model-driven
approach. Modeling is a well-established
paradigm for coping with complexity. The
abstraction level of model ingredients directs its
expressiveness
and
usability
regarding
particular context structure and behavior. The
popularity of combinatorial complexity
representation by biological helix-based models
(DNA) has foundered the concept of sustainable
ecology in the innovations domain. The
introduction of the innovation ecosystem
concept directly influenced past, current, and
future research and development activities and
emerged with the establishment of different
innovation ecosystem frameworks.
The proliferation of information and
communication technologies has dramatically
changed the innovation domains transposing
them into digital transformation. Mapping
between problem domains and corresponding
digital transformation solution domains
emerged throughout the “digital twin” concept
promoting an innovation ecosystem paradigm as
problem domain abstraction. It ultimately leads
to the model-based software framework
specification and development as a driving idea
of our research directions. The rest of the paper
has the following structure:
The conceptual background section
elaborates on the relevant referent
27
research and concepts that influenced
it;
Framework foundations are discussed
in section III, while section IV
contains the proposed software
framework concepts, principles, and
model fundamentals;
The concluding section summarizes
the
fundamental
framework
advantages and opens further research
and development directions.
II.
CONCEPTUAL BACKGROUND
The conceptual background of innovation
ecosystem framework development has a long
tradition in publications concerning the
technology's impact on social development. The
cross-reference analysis of representative
publications
distinguishes
several
mainstream directions:
The first is the transition from an
innovation system to an innovation
ecosystem through extensive concept
formulations and definitions or
redefinitions
while raising the
importance level of organizational
context and structure;
The second mainstream focuses on the
role of modeling and conceptual
models of the innovation ecosystem;
The third mainstream focuses on the
framework concepts at different
abstraction levels;
The fourth follows the evaluation
principles
and
techniques
that
established ecosystem metrics while
enforcing sustainability;
The fifth elaborates on domainspecific
aspects
of
innovation
ecosystem development through the
institutionalized driving forces.
During the early 1990s, national innovation
programs referenced innovations through a
system concept. A system is an organized
collection of elements that closely collaborate to
achieve a mutually agreed set of goals.
Engineering assumes a skilled movement
through an unknown environment. Reference
[3] describes systems engineering as a
transdisciplinary approach to successful systems
28
development and operation where the term
“successful” assumes systems that satisfy their
stakeholder's needs. The term innovation
ecosystem appeared in the early 2000s as a
challenging shift toward meeting the emerging
growth of knowledge-based approaches in
economics, organizational sciences, research,
development,
industry,
education,
and
engineering. The further justification of the
innovation ecosystem paradigm, elaborated in
[4], considers it a “smart system” explained by
the characteristics of complex adaptive systems.
It emerges from a deep understanding of the
agents' dynamics, relationships, interactions,
and results disseminated among social system
layers (cultural, political, and economic). In [5],
based on the comparison of selected references,
the authors emphasize three newly introduced
details concerning novel dimensions of future
innovation positioning: the enlarged scope of
innovation,
the
innovation-conductivity
environment (ecosystems connected over a
network), and different studies concerning
ecosystems. Innovation ecosystems, as a
metaphor for collaborative innovation networks,
perfectly align with the 21st-century concept of
co-creation networks. That is why the term
innovation system demands an upgrade to an
innovation ecosystem that better suits current
and future effective worldwide policymaking.
Engineering an innovation ecosystem roughly
includes process and product dimensions. As a
complex, dynamic, communication-based,
discrete system (product), its building assumes a
systematic, disciplined, and measurable process.
In [6], the authors elaborate on an attempt to
systematize stages and phases of ecosystem
development as a contribution to frameworkbased approaches. They define the innovation
ecosystem as a multidimensional business
environment, a strategic macro-level social
actor whose role is to catalyze or mediate all
other heterogeneous stakeholders (actors). In
[7], the author focuses on definitions, concepts,
relationships, and boundaries as critical
influencers. The elaboration suggests two
general views of innovation ecosystem
structural (multilateral collaboration subject’s
metaphor) and affiliation (a metaphor for
macro-level
interactions).
Contemporary
research and development activities elaborated
on and discussed in [8,9] have opened further
refinements
of
innovation
ecosystem
fundamentals. The aspects of transformation
from innovation systems to innovation
ecosystems are discussed in [10]. The
systematization of tangible and intangible
dimensions and the openness principle
involvement have firmly influenced our
approach
to
innovation
ecosystem
fundamentals modeling.
Considering the second research and
development
mainstream
conceptual
background references cluster over Helix
models ranging from the initial triple
(university–industry–government
relations),
through quadruple (triple + media-and-culturebased public), and to quintuple (quadruple +
natural environment) Helix models, discussed
in [11-15]. Model-driven development and
model-driven software development are still
challenging disciplines [16]. Combining generic
modeling principles with different helix models
has influenced the selection of an open, hyperhelix model as a foundation for innovation
ecosystem model building.
The framework concept emerged from
theoretical
discussions
and
digital
transformation aspects of sustainable innovation
ecosystem development. Digital transformation
of complex real-world systems is generally a
business process transformation in an enterprise
architecture context powered by the appropriate
framework. A framework may be defined as a
physical or conceptual foundation that supports
or guides building a particular artifact or
performing a particular activity. It is similar to a
skeleton that gives shape, form, and strength to
the basic structure of observed objects or
phenomena. Framework favors reusability by
managing overall control flow and orchestration
of dynamically configured components in an
inversion of control manner. According to the
abstraction level, frameworks cluster into three
main categories: conceptual, theoretical, and
operational.
Theoretical frameworks encapsulate a single
formal theory as a context in which underlining
domain understanding is gained and
investigated. Conceptual frameworks are
analytical tools focused on the segregation of
concepts and ideas that, entirely or partially,
integrate one or more formal theories with other
related concepts and heuristics. Operational
frameworks are digital twins of either or both of
their counterparts. The representative references
dominantly address theoretical and conceptual
innovation ecosystem frameworks. In [17], the
authors elaborate on an open systems model
adapted as a framework powered by
extensibility features. In [18], the author
presents and discusses several software aspects
of innovation frameworks. The sustainability
aspects of conceptual framework development
and its foundation in innovation ecosystem
standardization have been the focus of [19]
elaboration. In [20], the author introduces an
orchestrating ecosystem through the multilayered framework. The institution-developed
approach to the conceptual framework,
examining the impacts of innovation
ecosystems, and formulation on the national
level has been the focus of [21]. In [22], the
author introduces the foundations of an
information ecology theory as the theoretical
framework for digital innovation ecosystems.
The authors put particular emphasis on
answering the following two main questions.
How are the efforts of autonomous actors
embedded in the ecosystem's architecture
integrated into a coherent whole? What role do
digital technologies play in this integration? The
authors claim that the presented theory can
inspire the development of next-generation
information systems for ecosystems as a new
organizational form. In [23], the authors
formulate a circular model of four main
mechanisms
that
drive
ecosystem
transformations through disruptive innovations
as an ordered set (transformation forces,
opportunity identification, value alignment, and
revitalization). In the concluding section, the
authors raise four groups of challenging
questions. The first group addresses ecosystem
transformation forces/changes, among which
the inclusion of novel technologies, like
Artificial Intelligence and Blockchain, seems
promising. The second group introduces
ecosystem opportunity identification and its
impact on ecosystem transformations (actors'
role and position change, new strategies and
substitutes, and disruptive technology changes).
In the ecosystem value alignment phase, the
authors claim that the orchestration foundation
and orchestrators' directing abilities are crucial
too. The final challenging group focuses on
ecosystem revitalization aspects. The main
focus is on how the new capabilities appear in
the ecosystem context and influence its
transformation. Considering the complete
framework elaboration the presented vision is
an example of an operational category. The lack
of published work on the operational framework
category justifies our approach to softwareempowered innovation ecosystem framework
specification and development. The analytical
29
framework for comparison and evaluation of
different innovation strategies is the main topic
of [24] elaboration. The analytical framework
runs on simple rules and a four-dimensional
model (objectives, scope, advantages, and
flaws). The generic approach to complexity
visualization and reduction, supported by a
software framework [25], drives and directs our
approach to its incorporation, as a plug-in, in the
future
innovation
ecosystem
software framework.
Domain-specific aspects of innovation
ecosystem formulation and development are the
mainstream in published literature. The main
reason for such a situation is the long-lasting
domination of structural vs. behavioral aspects
of
innovation
ecosystem
architecture
specification. The recent publications elaborate
on actors that are the building blocks of the
innovation ecosystem architecture and direct its
behavior. In [26], the authors present a
sublimating discussion on joint forces to “create
value”, as a fundamental goal of any
organizational system. In [27], open innovations
concepts are re-discussed and revitalized. In
[28], the authors elaborate on the open hub
concepts in transforming fundamental principles
of propriety-based innovations. In [29], the
authors address industrial endeavors, while [30]
focuses on a so-called forgotten sector
(innovation medium and low technology
sectors). In [31], the authors address small and
medium size enterprises' role in India's
innovation ecosystem context, while [32]
elaborates on inter-firm knowledge transfer as
an innovation incubating force. In [33], the
authors focus on Big Science organizations' role
in innovation ecosystem architecture. The
essential impact of high education is elaborated
in [34,35], while Smart knowledge management
is at the core of [36] content.
The most influencing mainstream, the digital
transformation towards software-supported
interoperability
innovation
ecosystem
framework, is currently inadequately elaborated.
In a software framework-empowered innovation
ecosystem, the mainstream challenges are the
interoperability paradigm and the information
technologies that support it.
III.
Learning refers to an intellectual process of
acquiring knowledge, skills, values, and virtues,
through experience, study, or education. It is
inherently informal and may, consciously or
unconsciously, occur through education,
personal improvement, schooling, training, or
experience. Education is a process-oriented,
well-structured, and formal approach to
learning. Change is the root of all learners,
learning is the root of all changes, and changes
are the driving forces of all innovations (Fig. 1).
This blending and reflexive context
incrementally builds an actor's mindset
(collective or individual) and improves the
overall cognitive abilities. For the quite long
time, all the relevant innovation influencers
(researchers, educators, policymakers, and
business leaders) struggled over knowledge and
skills compliance with the overall work
processes mantra. At the same time, knowledge
is rapidly expanding. Technologies and work
processes are dramatically changing and
demanding more sophisticated skills. Education
and learning disciplines, as they are inherently
inert but rational in their very nature,
desperately need a lifelong foundation. The
embedded timeline splits into appropriate
segments (stages or states) that usually appear
like marathons rather than sprints. They need a
fundamentally new global approach compliant
with the Science of Learning and Development
Performing
Learning
Innovations
THE INNOVATION ECOSYSTEM
DRIVERS
The main origins of all innovations (Fig. 1)
are learning (formal, non-formal, and informal)
and performing (education, teaching, training,
30
researching, practicing, meditating, specifying,
and generally doing). The interoperability of
future innovation ecosystem actors' strategies
assumes
the
forward-looking
approach
accenting the methods and techniques that
would appear and closely collaborate or
cooperate. Future interoperability addresses
past, current, and future heterogeneous
component
integration
in
an
interoperable manner.
Figure 1. The Origins of all Innovations.
(SoLD) principles and practices. The result is a
cooperative and collaborative education,
learning, and performing ecosystem that is the
foundation for an innovation-based society.
IV.
THE DIGITAL TWIN - A SOFTWARE
FRAMEWORK MODEL
Digital transformation of complex realworld systems is generally a business process
transformation in an enterprise architecture
context powered by the appropriate framework.
Artificial intelligence (AI) applications and
massive dataset-handling technologies radically
change the digital transformation process,
methods, and tools. The multidisciplinary and
interdisciplinary study contents, better aligned
to the society's well-being and sustainability,
appear as a must. It assumes total support
framework openness and collaboration between
all relevant actors of the entire social
community.
Creating a digital twin is a
contemporary modeling strategy for the
sustainable
transformation
of
complex,
operational, real-world systems into a
collaborative network of all relevant actors
(stakeholders). The process of engineering
System-of-systems addresses these aspects from
theoretical and practical angles. The inherent
complexity of such an endeavor assumes raising
the level of abstraction and suppressing all
underlining details until relevant contextdependent information or data is available upon
the elicitation and analysis activities. The hyperframework modeling paradigm delegates the
final decision on the concrete platforms or
technologies until appropriate.
Fig. 2. presents The Generic Ontology Meta
Model of the system of systems abstraction. It
represents a static meta-structure of an arbitrary
complex actor in the innovation ecosystem
framework model.
Figure 2. The Generic Ontology Meta Model.
handled dimensions. The innovation ecosystem
abstraction aggregates the collection of
Dimension abstractions over an associative
meta-class designated as the Configuration. The
crucial association enabling multi-level
representations
of
arbitrary
dimension
represents a recursive aggregation supported by
the InternalStructure associative meta-class and
the ExternalLinking interface. The Dimension
abstract meta-class specializations declare an
open set of main meta-class groups with
different tangibility levels. They range from
highly tangible (Actors, Capital, and
Infrastructure) to mostly intangible (Ideas and
Knowledge) and context-tangible (Regulations,
Interfaces, Culture, and ArchitecturalPrinciple).
The highest abstraction level assumes the
enterprise architecture (EA) modeling approach.
Fig. 4 presents a starting model of the highest
abstraction granularity level actors participating
in the innovation ecosystem integration model.
Each actor is an abstract entity capable of
storing, processing, servicing related users, and
Two-folded composite mechanisms, defined
by
the
InternalTopology
and
the
ExternalCollaboration associative meta-classes,
enable the creation of hyper-structures as the
main characteristic of the collaborative systems
model. The role of the rest of the meta-classes is
straightforward
regarding
the
naming
convention used in the above ontology model.
Fig. 3 presents a multilevel and
multidimensional meta-model of framework-
Figure 3. Framework Dimensionality Meta Model.
31
software framework usage. Fig. 5 presents the
organizational model of
Personal Area
Actors/Stakeholders. The specified large data
objects (PersonalProfile, PersonalPortfolio,
PersonalCredentials,
and
SessionHistory)
tokenized with the associated descriptors enable
the dissemination of data, information,
knowledge, and wisdom accumulated during the
personal actor's lifecycle.
V.
Figure 4. Personal Area Actors Model.
communicating with another abstract entity.
The DistributedDataLayer supports the
adaptation of the potential heterogeneity by
mapping and transforming all necessary
artifacts that flow over the innovation
ecosystem communication infrastructure. The
specified large data objects (InstitutionProfile,
InstitutionPortfolio,
and
CredentialsPot),
tokenized with the associated descriptors,
enable the dissemination of data, information,
knowledge, and wisdom accumulated during the
entire actor's lifecycle.
Personal actors are rarely present in coarsegrained models. We find this category of actors
or stakeholders challenging fine-grained
participants that are crucial for specified
CONCLUSION
The innovation appears as a mutable hyperdimensional entity and is dominantly reflexive
on its knowledge foundations. The conceptual
background of innovation ecosystem framework
development has a long tradition in publications
concerning the technology's impact on social
development. The most influencing mainstream,
the digital transformation towards softwaresupported interoperability innovation ecosystem
framework, is currently inadequately elaborated.
In software framework-empowered innovation
ecosystem, the mainstream challenges are the
interoperability paradigm and the information
technologies that support it. The systematization
of tangible and intangible dimensions and the
openness principle involvement have firmly
influenced our approach to innovation
ecosystem fundamentals modeling.
Future interoperability addresses past,
current, and future heterogeneous component
integration in an interoperable manner. The
hyper-framework modeling paradigm delegates
the final decision on the concrete platforms or
technologies until appropriate. To cope with the
complexity of the innovation ecosystem, we
suggest a software framework foundation that,
over communication-intensive infrastructure,
supports Corse-grained and Fine-grained actors'
orchestration. The proposed ontology model
enables a hyper-dimensional representation of
underpinned concepts and opens a novel hyperhelix foundation. The future research directions
will stream to the communication-oriented
software prototype specification, modeling,
and development.
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PaKSoM 2022
The Managerial Prerogative of
Employer and Internal Labour
Mobility: Where are the Boundaries?
Tijana Kovačević1
1
Faculty of Law, University of Belgrade, Belgrade, Serbia
1
tijanarkovacevic@gmail.com
Abstract—The managerial prerogative of an
employer is manifested in the right of an employer
to manage the work of employees on a daily basis.
It implies that an employer determines in which
way employees shall perform work by giving them
specific working assignments. However, the
content of work and duties that fall under a job
description can only be tentatively stated in the
employment contract. This is for the reason of an
impossibility of foreseeing all the details related to
the execution of the performance during the
course of employment. Hence, the employment
contract as a continuous contract places more
emphasis on modifications related to terms and
conditions of employment. Since changes can be
made to the detriment of the weaker party in the
employment relationship, it is necessary to ensure
protection of employees while recognizing the
right of employers to manage the company in
order to achieve best business results.
Keywords - contract of employment, right to
manage, internal labour mobilty
I.
INTRODUCTION
The term “prerogative” is typically used with
the meaning of a special right or privilege
exclusively granted to a particular individual,
class or establishment [1]. Also, it is defined as
the power to make decisions or influence the
behavior of others. For the first time, it was used
in Roman law under the name praerogativa,
which means the prior right [2]. Historically, in
the decision-making process, holders of the right
to vote, who belonged to a certain group, were
the first to vote and, in that sense, were
considered privileged [3]. Since they had
preferential treatment they actually expressed
their opinions before others, which made them
ISBN: 978-86-82602-00-2
more important members of the society. As
Kahn-Freund in his capital work noted,
regardless of a type of society there will always
be those who will have more social power [4].
Social power is defined as the capacity to assert
control and give orders. It was very present
between the master and the servant from which
modern
employment
relationship
was
derived [5]. In that respect, the employee is
subordinated to the employer who has the power
to command.
The category of social power is inherent in
the employment relationship where employers
issue work assignments which employees should
properly accomplish. Hence, at the heart of the
employment contract lies the act of submission
of one contracting party to another. It can be said
that the employee’s duty to obey and the
employer’s right to manage are two sides of the
same coin. Thus, the employer’s right to manage
arises from the relationship of subordination in
which the employee acts under the authority of
the employer. Hence, “not only does the contract
of employment constitute the foundation of the
employment relationship, but it also provides the
legal basis for the employer’s right to manage an
employee” [1].
Based on that premise, the employment
contract is characterized as the prerogative
contract, which reflects the power imbalance of
the contractors. Alternatively, it is also described
as a transaction between two qualitatively
distinct parties, for the reason that the employee
and the employer are legally and economically
unequal subjects of law [6]. There are two main
arguments that confirm this statement.
35
First, the employee-employer relationship is
governed in accordance with the unilateral predetermined terms and conditions of employment.
If truth be told, the employee cannot influence
the working conditions but may or may not
accept the working conditions predetermined by
the employer. [7]. Thus, the employer has the
right to draft the employment contract, while the
employee has the choice to sign off or give up on
the job. The unequal negotiating power between
the employer and the employee is considered to
be the most significant characteristic of this type
of contract [8].
In theory, the content of the contract of
employment is determined by mutual consent of
the employer and the employee, while in practice
the interest of the employer prevails. Namely, the
employee and the employer have different
interests, since the employer wants to reduce
costs and maximize profits, while the employee,
on the other hand, wants more favorable working
conditions and higher earnings. In connection
with that, the ownership of capital as the basis of
economic and social power provides the
employer with the legal entitlement to dictate the
terms of the employment contract [9]. Second,
the contract of employment is a legal instrument
under which the employee undertakes to perform
work for the benefit of the employer follow its
directives. Hence, by entering into an
employment contract, the employee voluntarily
waves part of his autonomy and submits himself
to the authority of the employer [10].
II.
THE CONTENT OF THE MANAGERIAL
PREROGATIVE OF EMPLOYER
From a theoretical standpoint, the managerial
prerogative of employer is a legal concept which
strives to explain the position of the employer in
workplace governance. Actually, it represents
the distribution of power within the workplace
where the dominant position is taken by the
employer who unilaterally makes decisions [11].
In a practical sense, the employer prerogative is
reflected in the legitimacy to delegate work tasks
and instructions for the performance of certain
work.
Thus, managerial authority can be manifested
in a number of ways. The first is exercising
control over the personnel in order to gain more
control over their work-related activities.
Precisely, personal control entails that the
employer issues work guidelines, organizes the
work of employees by choosing time and place
of work as well as determining the manner and
36
conditions of work performance [1,12]. To
ensure the best possible organization of work the
employer has the right to continuously manage
their employees.
Beside that, employers are authorized to
make decisions concerning the implementation
of individual and general policies of the
organization with the aim of gaining extra profit.
Furthermore, employers make decisions
regarding the dynamics of production, usage of
tangible assets and the mode of performance in
the market [13]. In fact, the activities of planning,
organizing, coordinating and controlling the
working environment are typical managerial
activities exercised by the employer in the course
of running a business. It means that an employer
has the right to organize, manage, control and
distribute the work in the enterprise. Indeed,
without those functions the employer would not
be able to successfully carry out his commercial
activities [14].
On the other hand, the employee makes his
work skills available to the employer in the
production process [13]. In other words, after an
employment relationship is created, the
employee automatically becomes obliged to
participate in the company’s activities by
performing his working duties [12,15]. This
stems from the statement that both the employee
and the employer are responsible for achieving
economic goals. Consequently, employees are
seen as a human capital that helps the
organization to fulfil its business objectives. In
light of that, it is important to prevent
exploitation of the employees, but at the same
time it is important to give the employer some
amount of power in order to get the work
done [16]. On the whole, protection of the
employees from abuse of the employer’s power
has equal value for the employment relationship
as providing the employer with the right to
manage the company. “To state in right duty
parlance, the employer must have the right to
determine how his concern shall operate, what
should be the optimal unit labour ratio that fits
his enterprise, what should be the working
environment of his enterprise and other decisions
which incur costs and thus are a part of strategic
decision making exercise” [14].
Moreover, the managerial right of an
employer is a right by default, not guaranteed by
the contract or law. In accordance with the
freedom to conduct a business, the employer is
free to organize his activities in the way he
considers most effective. Trying to find the best
possible solution to earn profit and increase the
value of the enterprise the employer is
performing managerial functions, such as hiring,
firing, leading, organizing and controlling [16].
Thus, the employer is empowered to direct
employees, inputs, capital, equipment to fulfill
the company’s plans and target [17]. The
managerial prerogative of employer is a broad
category that covers all aspects of employment,
which means that the employer has the right to
transfer employees from one job to another or
from one workplace to another [15].
In that sense, the employer is allowed to
make some relevant changes within the working
process. Of course, changes may be caused inter
alia by the development of information and
communications
technologies,
knowledge
economy and global integration. Thus, whether
to increase productivity or adhere to
technological innovations, the employer may
wish to introduce changes in the organization and
performance of work [18]. But what happens
when the employer wants to enhance or further
their prerogative beyond the established ambit.
There are several ways in which the employer
can expand the boundaries of their authority. The
most common way is to strengthen its bargaining
power in the process of collective bargaining or
to impose on employees unilaterally changed
working conditions. In respect of that, Strydom
concludes correctly that “where an employer
cannot further its prerogative through collective
bargaining or participative management, it may
endeavour to achieve this by unilaterally
changing the terms and conditions of
employment of its employees in accordance with
its aims” [1].
In one of the leading Asian cases, managerial
prerogative is roughly defined as an unlimited
right of the employer to select, transfer, promote,
demote, dismiss and reemploy the employees
according to his free judgment [19]. That is to
say, the employer is authorized to determine any
and all working conditions based on its business
assessment. For this reason, by some accounts,
the employer power is more entrenched than ever
before, which raises the question of the denial of
the employees rights at the workplace [20]. This
position is taken because, in broad terms,
employer’s right to manage is limited by the
principle of good faith and employee rights. In
relation to that, a strong argument has been
presented that strengthening of the managerial
prerogative makes it more difficult for
employees to uphold their rights, which
counteracts democratization [18].
This further means that the contract of
employment as a product of consensus can only
be changed in the same manner, by mutual assent
of the employer and the employee [20].
Therefore, changes to the contract of
employment should also be decided by both
interested parties through their own discussions
and dialogs [21]. However, consensual theory in
labour law has been called into question due to
the trend of expanding the employer authority in
regard to contractual amendments while at the
same time encouraging the employee mobility.
When it comes to labour mobility, we can
differentiate two types of mobility: internal and
external. However, the analysis in the present
paper shall be limited only to internal labour
mobility, both functional and geographical.
III. IS THE TRANSFER OF EMPLOYEES
EMPLOYER SPECIFIC PREROGATIVE?
The employer has the right to run his business
and organize his workforce in the way he thinks
appropriate to achieve business goals. In other
words, in order to increase revenue the employer
may vary content of work in relation to the
changing demands of production. Also, the
employer has the prerogative to transfer an
employee from one job to another or from one
place of work to another for the sake of
production maximization. With the purpose of
giving deep insight into the complex nature of the
employer prerogative to transfer employees
within the same business establishment
prominent legal theorist emphasize the fact that
changes in working conditions must not affect
the amount of wages earned by the
employee [22].
Actually, some authors define transfer as “a
lateral shift causing movement of individuals
from one position to another usually without
involving
marked
change
in
duties,
responsibilities,
skills
needed
or
compensation” [23]. There are both positive and
negative aspects of internal transfers. For
instance, the positive aspect is that internal
transfers can offer employees new opportunities
and the potential to learn new skills and gain new
experiences. For employers, transfers provide the
ability to move employees into positions where
they may be more successful and
productive [24].
37
Moreover, the managerial right of employer
cannot be exercised in a way that employees
suffer losses of their guaranteed level of legal
protection. Simply stated, achieved employees’
rights must be maintained in case of transfer
within the enterprise. That is to say the employer
has a legal entitlement to transfer the employee
from one office to another as a part of his right to
organize his business provided that earned
income, benefits or other privileges are
preserved. In that matter, employee transfer is the
process of horizontal movement of the employee,
wherein there is a change in the job, without any
changes or revision in the remuneration, pay and
other financial benefits. Actually, it is a form of
internal mobility, in which the employee is
shifted from one job to another usually in a
different location, department, or unit [24].
Besides horizontal labour mobility which is
considered as a regular type of mobility there is
also vertical labour mobility. To be precise
vertical labour mobility is that in which there is
the movement of labour from one occupation to
another in the different grade or level. Hence,
“occupational mobility can be lateral (within a
broad class of jobs similar in socioeconomic
status) or vertical (from one job to a better or
worse job)” [25].
In the Spanish legal system, after the last
reform implemented to promote internal
flexibility, the employer prerogative to vary
substantial contractual provisions has been
significantly
expanded.
The
regulatory
framework has introduced a unique model of
internal flexibility through which a signed
agreement between the employer and the
employee is more “adaptable” to the business
needs and economic changes [26]. The Spanish
system contemplates the existence of two types
of functional mobility: the horizontal, also called
ordinary to be the most common in companies,
which is characterized by the change of activity
of the worker within the same professional
group, according to the decision of the
management of the company [27]. It means that
transfer occurs as a result of the employer
unilateral decision and consists of assigning the
employee tasks or functions different from those
originally established in the employment
contract [28].
In regard to vertical mobility or extraordinary
mobility, contractual changes are permitted
under certain conditions (notification of the
modification, existence of justifying reason, the
38
dignity of the employee is not violated etc.). The
problem here is that the changes are made by a
unilateral decision of the employer and not
through an annex, which casts doubt on the
contractual nature of the employment
relationship. In conclusion, depending on an
employer’s business decision, employees may be
obligated
to
performe
all
functions
corresponding to one professional group, or only
some of them, or functions belonging to more
than one professional group [29].
From a comparative perspective, the judicial
practice (including Spanish employment courts)
is inclined to implement the principle “solve et
repete”in the labour law system. Actually, this
principle has found its place in labor law in the
context of reviewing the managerial prerogative
of employer [27]. Namely, “solve et repete” is a
Latin aphorism which can be understood as
comply and then complain. Within the labour
law, it would mean that the employee can
question the validity of the employer’s order only
after he or she has acted on it. That being the
case, the employee breaches her duty to obey
when he or she questions the employer’s decision
on the occupational or geographical transfer.
Thus, the employer’s right to transfer employees
and to assign them new and different tasks and
the employee’s corresponding duty to work stand
out as the central legal issues [18].
The transfer of an employee is the most
common reason for concluding an annex to an
employment contract in Serbian law. The
Serbian legislator assigns a broad meaning to the
term relocation, which implies both functional
and geographical mobility [30]. In any case, the
transfer introduces changes in the existing work
schedule in order to meet new needs and fulfill
the interests of the working environment.
Internal transfer can either be temporary or
permanent depending on the decision of the
organization and the conditions under which the
transfer is made [31].
On the other hand, transfer on the grounds of
harassment and discrimination is considered as a
abusive employer practices since there are no
real technical, structural or organizational need
nor other objectively established reasons which
make it necessary to change the terms of the
contract. The change of the contract does not
include the change of the parties to the contract.
Changes to the terms of the employment
contract, especially those ones which are
essential as content of work or place of work is
related to the protection of labor interests. Taking
that into consideration, in Serbian law the
employer and the employee may change the
content of the employment contract only through
mutual agreement [32].
However, an exception exists only in the case
of jobs that are urgent when the transfer is
temporary for a maximum of 45 working days in
a period of 12 months [32]. In this case
temporarily transfer to another suitable job is
based on the employer’s unilateral decision.
Hence, there is only one extraordinary situation
when the employer may introduce changes in the
contract unilaterally without offering an annex to
the employee.
Thus, changes to the previously agreed
working conditions shall be made in the form of
an annex to the employment contract. In regard
to the procedure for changing the employment
contract the employer shall deliver to the
employee with an annex of employment contract
a written notice that contains the reasons for
changing the employment contract, the time
period in which the employee should take a stand
whether to accept or not the offered annex and
the legal consequences which may arise if the
annex of the employment contract is
rejected [33].
“Along with other basic principles, the
principle of job stability is the one which
concerns the performance of the contract, which
implies that the latter’s modification and
termination may occur in cases clearly set out by
the legislator” [34]. Further, the employer is
obliged to explain to the employee in more detail
what changes in the work process and
organization are reason for offer the annex to the
employment contract (e.g. increased volume of
work, rational use of working capacity of the
employee, change in the regulations on
organization and systematization of workplaces).
Pointing out the legal basis for concluding the
annex to the employment contract is considered
insufficient. Instead, it is necessary to state the
specific reason why certain changes are
needed [35]. Therefore, it is not enough that
employer indicates in the annex that changes are
made because of the “needs of the process of
organization” rather different formulation shall
be used with more precise wording [36]. Yet, the
employer himself determines when it is
necessary to transfer an employee from one job
to another. In other words, the employer is the
one who evaluates when the process and
organization of work requires changes in that
sense. However, the reasons for the transfer must
be real, i.e. they need to really exist and to be
objective [37].
Furthermore, transfer to another place of
work can only occur if the employer’s activity is
carried out in different locations. Consequently,
the employee may be transferred to different
organizational unit of the employer, branch, and
representative office. Due to the specific nature
of the employer’s activity (such as construction,
telecommunications, electricity distribution,
traffic etc.) the employee may be transferred to
another place of work with the same employer
without his or her consent [38]. This is prescribed
in order to prevent obstruction of the
performance of business activity. It is important
to emphasize that in this context it is irrelevant
the distance between the old and new place
of work.
On contrary, the second paragraph of the
article 173 Labour Act regulates that in case of
internal geographical mobility the distance from
the place where the employee had worked to the
place where he is transferred shall be less than 50
km [30]. Besides that, transportation shall be
organized that enables timely arrival to work and
return from work. In addition, compensation for
transportation costs shall be provided in the
amount of the price of a public transportation
passenger ticket [31]. Hence, an employee may
be transferred to another place of work in the
cases not precpecified only after his consent.
However, the Serbian legislator failed to clarify
whether these conditions are alternatively or
cumulatively set. Instead, used terminology leads
to the conclusion that the second exception
applies to all employers and not only to those
who perform specific activities.
Similiar to Serbian law, in Romanian labour
legislation as an exception, unilateral
modification of the individual employment
contract is possible only in the cases and under
the conditions presented in the Labour Code.
Moreover, changes may affect the essential
elements of the employment contract, such as
type of work and place of work [34].
IV.
LIMITATIONS OF AN EMPLOYER’S IUS
VARIANDI
At a time when the global economy is in a
downturn companies often use structural
adjustments, layoffs, and the employment
contract amendments to reduce costs or tide over
39
difficulties [38]. Therefore, employers may
change the originally established working
conditions in order to ensure the survival of the
enterprise. Consequently, the flexible adjustment
of the contract to the circumstances that have
changed is particularly important in this case.
However, the managerial prerogative of
employer must be subjected to legal limitations.
In principle, two approaches are possible.
One that allows the employer to make unilateral
changes under certain conditions, and the other
that prohibits it. Changing the essential elements
of the employment contract by the employer is
banned in Serbian law. On the contrary, the
consent of the employee and the employer
represent condition sine qua non for changing the
basic obligations from the employment contract.
On the other hand, the employer has the power to
vary working conditions which is not considered
as a modification of the employment contract
despite the fact that changes have an effect on its
non-essential elements [31].
In connection with that, modification of the
contract do not exist if the employee is requested
to perform tasks which are related to the tasks
that he or she regularly performs. The same
counts for the temporary changing in the form
and modality of the provision of work. It is noted
that changing the job by modifying the job
description does not constitute a change of
employment contract unless the nature of the
work performed changes. In that sense, the
employer power to order transfers is denied since
changes to the workplace and work content are
all changes to the contract, which require the
express consent of the worker before they can
take
effect.
Finally,
only
permanent
modifications of the essential elements of the
contract shall be considered employment
contract modifications, while modifications of
the working conditions outside of the essential
elements of the contract are regarded as an
expression of an employer’s ius variandi [33].
In Spanish law, quite reverse, ius varianti is
used to denote “a breach of consensus in an
employment contract” which allows the stronger
contracting party, within the limits set by law, to
unilaterally change the contract [28,38].
Although the terminology is different, the
problems are essentially the same, and such
problems have become increasingly prominent in
the context of the current global economic crisis.
Nevertheless, ius variandi is subject to
limitations which are reflected in the
40
socialeconomic requirements and morality.
Namely, the nature of the change must be such
that it does not harm or imperil honor, safeness,
dignity, interests or minimum rights of
employees [38]. For instance, if transfer is not
reasonable and necessary in terms of business, or
if it brings serious disadvantages to the
employee’s life, it will be deemed invalid.
Therefore, the decisions made by the employer in
course of its ius variandi shall be build on a
rational basis and indicated with the objective
business needs [39].
In order for the employer to unilaterally
change the employment contract, it is necessary
that the test of proportionality is applied.
Moreover, for the validity of unilateral changes
to the employment contract, the principle of
progression is developed alongside the
proportionality test. Abovementioned principle
prohibits leaving the minimum threshold of
guaranteed rights. In short, the application of the
principle of progression means the prohibition of
business policies or measures that threaten
acquired social rights. Taken together, the
employer can not arbitrarily and capriciously
determine the existence of grounds for changing
essential elements of the employment
contract [27].
Also, changes to the employment contract
must not be such as to cause material or nonmaterial damage to the employee [28]. Material
damage is reflected in wage reduction or
transportation costs increase, while non-material
damage is manifested in diminution of free time
[27]. It is important to mention that the
conditions are set cumulatively, so the absence of
one of them is considered abusive ius varianti.
V.
CONCLUSION
In recent years, the concept and scope of the
employer’s management authority has become
the subject of analysis by numerous experts. This
is due to the fact that economic changes has been
affecting the mode of business operation. In
connection with that, internal labour mobility has
become an increasingly common phenomenon as
a source of gaining competitive advantage. There
are two types of internal labour mobility which
are interrelated since the employee may move to
a different role, a different location, or both while
remaining employed by the same employer. As
described above, the functional mobility is
ability of the employer to assign different tasks
or functions to the employee in comparison to
work content previously
employments contract.
stated
in
the
Additionally, in situations where the
execution of the contract extends over time the
elements of the contract must be flexible and
adaptable. Since the employment relationship is
continuous in its nature the existing obligations
may no longer correspond to the interest of at
least one contractual party. Thus, at the time of
concluding the employment contract, it is not
possible to determine ab initio the exact
development of the planned activities. Therefore,
the employment contract as a continuous contract
places more emphasis on contractual
modification. In regard to contractual
modifications two main issues arise that is
limitation of the employer’s right to change the
employment contract within a reasonable and fair
boundary and finding the proper balance between
the employer’s right to manage and the
protection of employee’ rights.
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PaKSoM 2022
Risk Management during Storing of
Hazardous Substances
Goran Tepić1, Nina Ivanović2, Mihaela Tarakčija3
1,2,3
University of Novi Sad, Faculty of Technical Science, Novi Sad, Serbia
1
gtepic@uns.ac.rs, 2nina.ivanovic.ace@gmail.com, 3mihaela.tarakcija01@gmail.com
Abstract—The paper shows the classes of
dangerous substances as well as the accidental
events that occur during their storage. According
to the literature, VCE is the main hazard in
industrial complexes where an enormous amount
of flammable substances are stored (e.g.
hydrocarbons). The storage capacities of the
process industry are integral units of the logistics
system of hazardous substances and represent an
inevitability in the normal development of
production processes. Storage capacities have the
role of compensating for spatial and temporal
inconsistencies between delivered raw materials
and spatial capacities, that is, final products and
market requirements in the hazardous substances
system. The storage of hazardous substances is
classified as a high-risk logistics operation, the
capacity of which can be the source of
major accidents.
Keywords – risk, hazardous substances, VCE,
organization and management
I.
INTRODUCTION
Depending on the type and their class
(Fig.1), hazardous substances can belong to
different production and logistics systems.
There are frequent cases when one type of
hazardous substance passes from one system to
another, as well as through several subsystems
within one system (e.g. transport, storage and
distribution within the logistics system).
Although the majority of hazardous substances
are in the form of substances, those hazardous
materials that manifest through the physical
field in the form of radiation (radioactivity,
electromagnetic field, etc.) should not be
neglected. When these facts are taken into
account, as well as the pursuit of new
technologies, the constant increase in hazardous
substances becomes inevitable. The layman's
ISBN: 978-86-82602-00-2
Figure 1. Classes of hazardous substances.
understanding that modern innovations bring
clean (green) technologies is contradicted by the
fact that the number of dangerous substances is
increasing day by day. Modern innovations only
shift the focus of application of dangerous
substances from the sphere of substances to the
physical field, thus creating the illusion that new
43
technologies
of hazards.
contribute
to
the
reduction
Risk is a measurable hazard parameter to
which a process or phenomenon is exposed.
Risk is not a physical quantity, but an abstract
concept that unites the threat, the probability of
the occurrence of an undesirable event
(uncertainty), vulnerability, exposure and
consequences. Considering that risk unites
different physical categories, it cannot be a
classic physical quantity by its nature. Threat,
uncertainty, vulnerability, exposure and
consequences are different categories related to
the hazard of an event and if the risk were a
physical quantity, these parameters would
require special scales for implementation in the
form of risk.
However, if risk is viewed as an abstract
concept, then the aforementioned risk factors
(threat, uncertainty, vulnerability, exposure and
consequences) can be simply multiplied and
expressed in a normalized form via a risk
matrix. The greatest difficulty in risk analysis is
caused by the uncertainty of the occurrence of
some events.
II.
STORAGE CAPACITIES
The storage capacities of the process
industry are integral units of the logistics system
of hazardous materials and represent an
inevitability in the normal development of
production processes. Storage capacities have
the role of compensating for spatial and
temporal inconsistencies between delivered raw
materials and spatial capacities, that is, final
products and market requirements in the
hazardous materials system. The storage of
hazardous materials is classified as a high-risk
logistics operation, the capacity of which can be
the source of major accidents. This fact is best
illustrated by the fact that 17% of major
accidents in the chemical industry were related
to storage processes [1].
Fire is the most common cause of
warehouse accidents, which, due to its
escalating characteristics, easily spreads to a
larger part of the warehouse complex, causing
explosions, additional fires, gas clouds, etc.
That is why storage capacities are very sensitive
to the occurrence of domino effects, where fire
is generally the initial event in the escalation
process of an accident. This attitude is also
justified by data from the National Fire
Protection Association (NFPA), according to
44
which 13% of major fire accidents in the USA
in 2009 occurred inside hazardous materials
storage facilities, causing total losses of 69,98
billion $. Statistical data clearly show that in the
field of design, exploitation and maintenance of
storage capacities there are considerable gaps
that must be the subject of improvement in
future research related to increasing safety
working conditions.
The storage capacities of refinery complexes
and chemical plants are intended for the storage
of a huge amount of hazardous substances, the
hazard class of which depends on the type of
processing processes. Minor accidents of the
storage capacity of large process complexes can
lead to material damage that is measured in
millions of dollars, while major accidents are
accompanied by significant storage devaluation.
Major accidents are most often characterized by
a significant number of injured and dead,
damage to buildings located in the immediate
vicinity of the plant and endangering the
environment, which, due to court rulings on
compensation for damages, creates additional
financial pressure on companies and can be the
main cause of their bankruptcy. Since major
warehouse accidents have been recorded in the
past, many trade organizations and engineering
associations have learned from this experience
and over the past 60 years have made great
efforts to define strict engineering guidelines
and
standards
for
design,
operation
management, maintenance, installation of safety
systems and safety procedures, management of
storage capacities within the chemical process
industry complex. Current standards in the field
of storage installations for hazardous materials
in the USA are prescribed by leading
institutions, such as:
American Petroleum Institute – API,
American Institute
Engineers – AIChE,
American Society of
Engineers – ASME, and
National Fire Protection Association –
NFPA.
of
Chemical
Mechanical
The standards and instructions prescribed by
the mentioned organizations go beyond the
national framework of the USA, because they
served as a starting point for the legal regulation
of the area of storage of hazardous materials in
many countries around the world. Experiences
built into such regulations have paid dearly for
huge human casualties and immeasurable
material damage, and their purpose is to prevent
accidents, especially those of a larger scale,
through their compliance. The historical review
of accidents enables classification according to
the type of process complexes and storage
installations for a certain class of hazardous
materials, with the aim of valid categorization
of the accident causes. Statistical processing of
accident data is a much more complex task than
it seems at first glance, because the basic issue
of such a procedure is related to the relevance of
the analyzed causes and the used sources of
information, i.e. databases. The use of accident
information from a larger number of sources
certainly contributes to a better quality of the
statistical sample, and this should be the basic
guideline for the statistical analysis of all
accidents, including those related to the storage
of hazardous materials. Information that is used
exclusively from one source is always
accompanied by a certain degree of uncertainty
about the validity of the statistical cause,
especially if such databases are of a more
national character (such as FACTS, MARS,
ZEMA, etc.).
The first indicator of the poor quality of a
statistical sample of a database is a relatively
small number of data on a certain type of
accident for a class of dangerous substances.
The fact that some accidents with dangerous
substances are not recorded in a database cannot
be an excuse for researchers not to draw valid
conclusions. Also, it should be borne in mind
that the degree of accuracy of statistical analysis
directly depends on the size of the statistical
sample, because statistics work according to the
law of large numbers. The historical review of
accidents is only a necessary and not a sufficient
condition for an adequate risk assessment in the
hazardous materials system. The proof of this
attitude is best illustrated by the large accidents
involving hazardous materials that have
occurred in the last few years.
III.
RISKS OF STORING HAZARDOUS
SUBSTANCES
The basic direction in the systematic
analysis of storage risks with hazardous
substances includes a classified and categorized
historical review of accidents. In this sense, a
study that analyzes 242 process industry
accidents in the period from 1960 to 2003,
whose actors were storage tanks around the
world [2], can be highlighted. The results of this
research show that 74% of accidents occurred in
oil refineries, while fires and explosions were
present in 85% of the considered cases. The
main causes of these accidents were lightning
strikes in 33% of cases, human factor errors due
to inadequate handling and maintenance (30%),
while the rest of the accidents were marked by
equipment failures, sabotage, cracks and breaks
in installations, static electricity, open flames,
etc. The analysis of the considered accidents
unequivocally showed the possibility of the
absence of the majority of these accidents if
adequate
engineering
procedures
and
procedures had been followed. The overview of
storage capacity accidents is focused on tanks
with dangerous substances [3]. In addition,
Chang and Lin report that almost ¾ of the
accidents happened within refinery complexes,
where the actors were storage tanks [2].
Common types of accidents that can occur with
tanks containing hazardous substances include:
Vapor Could Explosion – VCE and
Boiling Liquid Expanding
Explosions – BLEVE.
Vapor
Accidental events that include the formation
of toxic cloud, jet flame, fireball, fire flash and
weak fire are mainly directly related to VCE
and BLEVE accidents through a cause and
effect. Individual occurrences of these events
can represent potential accidents only if they are
not causally or consequentially related to VCE
and BLEVE effects (release of a toxic substance
due to a valve leak or a weak fire with a small
amount of spilled flammable liquid). However,
it should be noted that a jet flame is an
indication of a forced release of a flammable
substance from a vessel (BLEVE) or stratified
vapor cloud (VCE). A fireball occurs as a
consequence of the escalation of accident events
during the occurrence of BLEVE accidents with
flammable substances and the ignition of an
explosive mixture during the initiation of VCE.
Based on this, it can be concluded that BLEVE
and VCE are complex accidents, since their
potential occurrence is coupled with the
initiation and occurrence of several accidental
events, such as the release of a flammable
substance, the formation of a jet flame,
fireball, etc.
IV.
VAPOR COULD EXPLOSION – VCE
Vapor Could Explosion – VCE (Fig 2.) is
the main hazard in industrial complexes where
enormous amounts of flammable substances
45
Figure 2. Illustrative presentation of VCE.
(hydrocarbons) are stored. During the last few
decades, quite a number of these accidents have
been recorded, which led to significant damage
or complete destruction of industrial complexes,
mostly in fuel storage facilities.
VCE are extremely complex phenomena
with the nature of their origin not yet elucidated,
and whose destructive potential depends on the
affected combustible mass, cloud dispersion and
reactivity of the gas mixture.
In order for VCE accidents to occur, the
following conditions must be met:
the spilled (discharged) substance must
be flammable;
there must be some ignition delay;
the range of the vapor cloud must be of
minimal size;
hydrocarbon vapors with air must form
a flammable mixture, that is, their
concentrations must be within the upper
and lower flammability limits, as well
as
necessary presence of turbulence.
In the context of the development of a gas
cloud, special attention should be paid to the
conditions under points b) and e). The necessity
of a delay in ignition affects the generation of a
larger amount of fuel vapor, and therefore the
mass of the explosive (combustible) mixture,
i.e. the gas cloud, is greater. Turbulence is
necessary for the formation of an adequate
mixture of vapor of the released substance and
air, which is achieved by means of fuel jet
discharge from installations and/or interaction
of the gas cloud with obstacles that exist to
contain it (walls, trees, buildings, etc.). The
main components of the vapor cloud formed as
a result of spilling gasoline include butane and
46
pentane, so their prominence in the explosive
effect should not be ignored when assessing the
risk and when it comes to a small degree of
evaporation. The size, concentration and
location of the gas cloud play a significant role
in these parameters, which was evident in the
example of an accident in 2009 in a large fuel
storage facility (capacity of 110,000 m3 for the
storage of gasoline, kerosene and diesel)
managed by the Indian Oil Corporation Jaipur
[4]. The assessment of accidents of this type in
order to identify the possible consequences of
the explosion includes two steps:
analysis of the first (initial) event in the
form of an accidental spill of a
flammable substance and
modeling the processes that precede the
emergence of VCE as an end-event.
The sequential development of events at the
occurrence of a VCE accident includes the
release of gasoline from the tank, filling of the
pool with spilled contents within the tank
embankment, continuous evaporation of the
spilled substance, formation of a dense vapor
cloud stratified at the ground, dispersion of the
vapor cloud, ignition and its explosion. Releases
of hazardous substances inside the HPI plant are
in most cases of a limited nature, thanks to the
presence of certain obstacles. The contours of
the gas clouds are determined by the
configuration of the installations, the depth of
which varies in the range of 1-2 m. However,
the release of petroleum products in open space,
as well as in the case of storage terminal
accidents, creates a cloud of hydrocarbon vapors
that can cover a large area (in the example of
the Jaipur accident, it was about 18 ha).
Experiences from previous accidents show that
gas clouds can move several kilometers in
relation to the location of evaporation. The
literature states that a fiery flash is a very likely
accidental phenomenon that leads to an
explosion in cases of delayed ignition of a vapor
cloud [5].
The Jaipur accident was caused by the spill
of 2116 t of gasoline containing 63.5% hexane
and 36.5% pentane, at an ambient temperature
of 30 0C, covering an area of 0.64 ha in an
interval of 80 min [4]. The accident occurred as
a result of a jet of gasoline from a damaged
Hammer Blind valve, which caused a cloud of
gasoline vapors weighing approximately 81 t,
sufficient to cause an explosion equivalent to 38
t of TNT [4]. Research conducted by the
Independent Commission of Inquiry shows that
the most likely source of igniting the gasoline
vapor cloud and causing the explosion is fireresistant electrical equipment or vehicle starting
located in the immediate vicinity of the
installations [6]. The Jaipur accident was
marked by several specifics, and they concern
the inadequately performed risk assessment and
the appearance of white clouds that preceded the
occurrence of powerful explosions. The
previous authors report that the considered
storage terminal is not significantly overloaded,
and therefore it was not considered as a
potential location for the occurrence of a vapor
cloud explosion, nor was a more serious risk
assessment performed. Another specificity of
the accident is related to the appearance of
white clouds at a low height from the ground.
Most hydrocarbons in an accidental spill are
initially cold and condensed, bearing in mind
that such liquids are under pressure or in a
cooled state. The state of hydrocarbons
immediately after a release is similar to the
behavior of a heavy gas, although at normal
(atmospheric) pressure and temperature the
released substance may be lighter than air. The
reason for such a situation can be the result of
three situations [7]:
the initially low temperature of
hydrocarbons leads to the condensation
of fuel vapors (e.g. gasoline) that are
trapped inside the droplets of the spilled
substance under normal atmospheric
conditions;
vapors of spilled hydrocarbons in
conditions of increased humidity affect
their condensation, whereby they are
trapped in the water mist, forming
aerosols, and
high density of spilled substance
(hydrocarbons) regardless of weather
conditions.
The conditions that lead to the formation of
vapor clouds are most often a compilation of the
above situations, among which the influence of
increased air humidity should be highlighted.
Aerosols formed from a mixture of hydrocarbon
vapor and water mist manifest as a white cloud
that reaches a relatively low height with
stratified development near the ground. The
vapor cloud formed under such conditions has a
slow movement and rise, especially if the wind
speed is low, which is a consequence of the
higher density of the gas cloud. This potential
despite the loss from the so-called wastage. of
cold gasoline results in the VCE effect [8]. In
the general case, the immediate ignition of the
gas cloud is manifested by a jet flame, a fiery
flash or an ascending fireball leading to its
dispersion. Sufficiently delayed and strong
ignition initiates the occurrence of a VCE
accident followed by a very powerful explosion
with the potential to cause extensive damage.
The basic elements that must be taken into
account when analyzing accidents caused by the
release of flammable substances include the
analysis of similar accidents and incidents that
occurred in the previous period, the
implementation of risk assessment techniques
with a focus on QRA methods, existing models
and software packages for accident simulation,
as well as an overview of previous research in
this area. These elements on the example of the
Jaipur accident show [4]:
gasoline jet spillage is characterized by
the development of vapor clouds of
large dimensions and significant density
at low altitudes;
buildings and trees represent potential
obstacles, so if they surround a
flammable vapor cloud, the appearance
of the VCE effect is quite certain, and
transition
from
deflagration
to
detonation may occur, producing
characteristically directional indicators.
The authors set as the main goal of this
study the quantification of the potential
overpressure caused by the VCE effect, using
the PHAST 6.51 software, which is based on the
PHA approach, and state that the maximum
estimated overpressure is about 1 bar. For the
sake of illustration, the overpressure of the
shock wave of the explosion that causes the car
to derail has values of (0.8-1.9) bar, while the
destruction of buildings occurs at an
overpressure in the range of (0.8-2.6) bar.
According to the established consequences of
the Jaipur accident, it can be stated that the
overpressure of 1 bar, created during the VCE
effect, was adequately assessed. Lessons that
can be drawn from this accident include [4]:
plants and installations with inherently
high hazards should incorporate
redundancy within safety systems and
ensure their maintenance at all times;
47
management
must
ensure
the
implementation of all identified
procedures relevant to the process
safety aspect of industrial capacity, and
a high degree of operational
competence, which is built on a
combination of knowledge
and
experience, should be maintained at all
times by all professional groups.
A similar type of accident occurred in 2005
at the Buncefield fuel depot (UK) when there
was a strong explosion and significant damage
to neighboring buildings due to the overflow of
gasoline from the tank [9]. This accident had a
prominent potential for the formation of a very
large flammable vapor cloud, given the
undetected prolonged spillage of gasoline. The
Buncefield incident led to significant changes in
the understanding of how an explosive cloud of
vapor can form from overfilled large tanks
designed to store highly volatile substances.
Namely, the independent commission of inquiry
under the auspices of the Health and Safety
Executive (HSE) and the Environment Agency
(EA) concludes in its report that the magnitude
of the overpressure due to the explosive shock
wave is much greater than the understanding of
the VCE effect that occurs at that moment could
predict [9]. In order to eliminate these doubts, a
working group was formed, which states that
the Buncefield accident could not have been
predicted by applying any significant hazard
assessment during fuel storage [10]. In
particular, concerns were raised regarding the
fact that the scale of the Buncefield accident
exceeded expectations, which was due to errors
in the interpretation of the way in which hazard
identification and risk assessment was
undertaken within the UK.
The assessment of the occurrence of a
possible explosion in industrial plants
accompanied by serious accidental hazards
implies the application of the following
regulations [9]:
the Control of Major Accident Hazard
Regulations – COMAH,
planning
(Hazardous
Regulations – P(HS)R.
V.
Substance)
ASSESSMENT AND IDENTIFICATION
The assessment of the occurrence of a
possible explosion in industrial plants
accompanied by serious accidental hazards
48
implies the application of the following
regulations [8]:
the Control of Major Accident Hazard
Regulations – COMAH,
planning
(Hazardous
Regulations – P(HS)R.
Substance)
The main objective of the COMAH
assessment is to prevent or mitigate the effects
of major accidents with hazardous materials that
may cause a harmful impact on human life and
health, as well as the environment. While
P(HS)R refers to land use planning according to
the Seveso III directives.
Both regulations are based on knowledge
incorporated in industry standards and
experiences derived from previous accidents.
Under these regulations there are no clearly
defined rules as to whether VCE should be
considered in a particular assessment situation,
but the HSE has developed some guidance
which may be of use in this regard, primarily
aimed at LPG. Factors that include VCE
hazards in risk assessment include [9]:
reactive
fuels,
hydrocarbons;
the
presence
of
(semi)confined
structures near the point of release of
hazardous substances;
a large amount of spilled fuel that is
sufficient to generate a gas cloud
containing more than 10 t of fuel vapor;
energetic release of fuel, i.e. spills from
pressurized storage tanks, and
presence of a strong ignition source.
i.e.
unsaturated
An important technique for identifying
potential factors that can influence the induction
of higher pressure during a steam cloud
explosion involves a review of previously
occurring incidents and accidents with a
detailed analysis of their causes. However, the
Buncefield accident report indicates very
limited
knowledge
about
high-pressure
explosions in heavy gasoline spills, whose
analysis is hampered by the specific conditions
of storage locations and the lack of adequate
risk assessment approaches [11].
By reviewing the previously accidents, three
important aspects can be derived for improving
hazard identification and risk assessment [9]:
the explosion mechanism at the
occurrence of a VCE accident must
include a wider range of generating
factors related to the pressure of the
shock wave, such as vegetation, car
parks, temporary buildings and the like;
spilling of a flammable substance and
the creation of a massive vapor cloud in
future risk assessments should be
considered with very low or zero wind
speed so that the modeling conditions
match the so-called. a floating cloud of
vapor with significant potential for
prolonged release of a hazardous
substance, and
all other influential factors in the event
of VCE accidents are related to the
prolonged release of substances due to
the absence of detection of a
flammable mixture.
VI.
CONCLUSION
An important technique for identifying
potential factors that can influence the induction
of higher pressure during a steam cloud
explosion involves a review of previously
occurring incidents and accidents with a
detailed analysis of their causes. In addition to
the regulations, aspects and factors for risk
assessment mentioned in the paper there are
several methods for determining the
overpressure in the VCE effect, such as
empirical models and Computational Fluid
Dynamics, because empirical models are
relatively simple, reflect the real situation only
for narrowly defined conditions, while
Computational Fluid Dynamics implies
software simulation under different conditions
with the application of a significant level of
knowledge and experience.
It is necessary to develop methodologically
oriented concepts based on expert systems that
would show the degree of risk for early warning
of accidents through existing standards,
regulations, methods, statistical analyzes and
procedures with complete compatibility with
available control and safety systems which
would significantly contribute to reducing of the
occurrence of accidents such as the VCE effect,
and thus would increase the degree of safety and
security of people, but also for the environment
and material costs.
REFERENCES
[1]
Vílchez, J. A., & Casal, J. (2010). El riesgo químico y
el territorio. Rev. Catalana Segur Pública.
[2] Tepić, G., & Kostelac, M. (2021). Accidents in the
System of Hazardous Substances. In 3rd Virtual
International Conference Path to a Knowledge
Society-Managing
Risks
and
Innovation,
(pp. 355-359).
[3] Chang, J. I. & Lin, C. (2006). A study of storage tank
accidents. Journal of Loss Prevention in the Process
Industries, 19(1), 51–59.
[4] Sharma, R., K., Gurjar, B., R., Wate, S., R., Ghuge,
S., P., & Agrawal, R. (2013). Assessment of an
accidental vapour cloud explosion : Lessons from the
Indian Oil Corporation Ltd . accident at Jaipur , India.
J. Loss Prev. Process Ind., 26(1), 82–90.
[5] Koshy, A., Mallikarjunan, M., M., & Raghavan, K.,
V. (1995). Causative factors for vapour cloud
explosions determined from past-accident analysis,
Journal of Loss Prevention in the Process Industries,
8(6), 355–358.
[6] MoPNG. (2010).
[7] Abdolhamidzadeh, B., Abbasi, T., Rashtchian, D. &
Abbasi, S. A. (2010). A new method for assessing
domino effect in chemical process industry. J.
Hazard. Mater. 182(1–3), 416–426.
[8] Kletz, T., A. (1986). Transportation of hazardous
substances: The UK scene. Plant/operations Prog.,
5(3), 160–164.
[9] Herbert, I. (2010). The UK Bunce field incident The
view from a UK risk assessment engineer. J. Loss
Prev. Process Ind. 23(6), 913–920.
[10] BMIIB, (2007). Explosion Mechanism Advisory
Group report, Marlowe Road, Rose Court.
[11] BMIIB, (2008). The Buncefield Investigation,
Www. Explosionsolutions.Co.Uk
49
50
PaKSoM 2022
The Simulation of Stabile Systems for
Fire Extinguishing as Advance Step in
Fire Protection
Radoje B. Jevtić1, Ivana D. Janković2, Momčilo B. Randjelović3
School for electrical engineering “Nikola Tesla”, Niš, Serbia
Serbia University Business Academy in Novi Sad, Faculty of Social Sciences Belgrade,
Belgrade, Serbia
1,2
3
1
milan.jvtc@gmail.com, 2Ivana.etstesla@gmail.com, 3mocaprof@gmail.com
Abstract—Fire presents current and always open
problem of every day’s human life and work.
Modern life demands modern end effective
solutions on every field, even in the field of fire
protection. One of the very effective solutions for
fire extinguishing are stabile systems for fire
extinguishing. Design and installation of these
systems can be very difficult, demanding and
expensive. So, it is very good way to use the
simulation software to simulate these systems and
to predict some eventual failure or lack and to have
insight in their efficiency. This paper was written
to present the use of FDS simulation software in
simulation of stabile systems for fire extinguishing.
Keywords – fire, extinguisher, simulation, FDS
I.
INTRODUCTION
Fire has always presented great danger for
human, animals and material properties since
man knows about himself. Through history,
many different systems for fire protection and
fire extinguishing have designed and realised.
No matter to constant technology development
and usage of modern systems for fire
extinguishing, fire presents always open
problem. Modern systems for fire extinguishing
present very complex systems consisted from
many different elements intended to detect and
extinguish fire as much effective as possible.
One of those systems are stabile systems for fire
extinguishing. Generally, stabile systems in fire
protection have great appliances: as sprinkler
stabile systems, as drencher stabile systems, as
stabile systems with inert gases, as smoke and
heat removal stabile systems, as stabile systems
ISBN: 978-86-82602-00-2
with aerosol, as stabile systems for detection of
steams and gases, as stabile systems for fire
detection,
as stabile
systems for fire
extinguishing with dust, as stabile systems for
fire extinguishing with foam, as stabile systems
for fire extinguishing with CO2 gas etc.
It is an interesting fact, statistically
determined, that number of fires in object with
stabile systems for fire protection is equal with
number of fires in objects that don’t possess that
system. But the time needed to detect fire and to
start its extinguishing is much shorter with much
better extinguishing results. Stabile systems for
fire extinguishing can be realised on different
ways and with different extinguisher. Fire
extinguisher in these systems can be water, CO2
gas, dust, foam, inergen, halon or some of the
“new fire extinguishers”.
The most important advantages of stabile
systems for fire extinguishing are fast reaction in
the sense of extinguishing activation and at the
same time fire detection. Because of these
systems complexity, very important things
related to stabile systems are precise designing
and installation so as detail maintenance and
servicing. These systems must be periodically
tested and examined in order to identify their
functioning and correctness.
Only professional and authorized persons
which possess necessary licenses and approvals
from appropriate inspections can handle the
design, installation and testing of stable
installations [1].
51
II.
FDS SIMULATION SOFTWARE
FDS (Fire Dynamic Simulator) software
presents very important engineering software
tool intended for solving of equations related to
many fire problems. This software was written in
Fortran language. FDS enables visual spreading
of fire and smoke with particles and lot of other
things related to fire (temperature, carbon
monoxide, influence of water on fire etc.).
Software FDS possesses its graphic integrated
environment known as PyroSim. PyroSim has
great advantages related to supply of input data,
input simulation model, designing of 2D or 3D
simulation model with powerful driving tools
etc. Very important characteristic is the
possibility to import simulation model from
some other software, such as Auto Cad or
similar. It enables designing very complex
geometrical objects.
There are many versions of FDS software on
the market. FDS versions used for purposes of
this paper were 6.6 and 6.7.6 [2,3].
III. SIMULATION OF STABILE SYSTEMS FOR
FIRE EXTINGUISHING - SPRINKLER TYPE
SYSTEMS
Stabile systems for fire extinguishingsprinkler type systems present stabile
installations for fire extinguishing with splashing
jet of water. They are used wherever is possible
to use water as fire extinguisher. Fire
extinguishing is realised by determined number
of nozzles, in dependence of fire spreading
speed. In normal, stand by regime, this type of
system has closed nozzles. Very important thing
is that when the nozzles are activated, at the same
time, fire detection occurs. This is because every
sprinkler nozzle present at the same time and
thermomaximal fire detector.
Sprinkler systems and installations present the
oldest and the most effective stabile installations
for fire extinguishing. As an example, in
America, in period from 1896 to 1970, those
installations were successfully extinguishing fire
in 96 % of cases, with very small number of
human victims. It is interesting that in those
occasions 70 % of fires were controlled with less
than five nozzles, while in residential buildings
only one activated nozzle extinguished fire.
The way of activation of these systems lies in
the fact that increase of temperature above some
specific level causes splashing or melting of
ampoule located at nozzle of sprinkler system.
52
This enables that nozzle gap becomes open and
pressure of water or air in pipe becomes low. As
a consequence of pressure drop, the sprinkle
valve located in sprinkler station becomes open
and water in water tank, which is under air
pressure, flows through sprinkler valve and
supplies sprinkler nozzles. Less quantity of water
flows through electrical signal device which
activates mechanical bell. In the case that the first
nozzle doesn’t extinguish fire, so fire became
spreading, the next nozzle opens in the direction
of fire spreading. In the case that whole volume
of water in water tank is consumed, the sprinkler
pump is activated and the system is supplied with
water from special water pool or water net.
In the dependence of local conditions
(temperature, way of functioning etc.) sprinkler
installations can be realized as dry sprinkler
installations, wet sprinkler installations,
combined sprinkler installations, dry fast
activated sprinkler installations and dry sprinkler
installations with previous management. The
examples of sprinkler installations are presented
on Fig. 1.
Figure 1. The example of sprinkler system installation
realization [1]
Simulation object with sprinkler installations
in FDS software was object with dimensions of
24.5 m x 24.5 m x 3.2 m. The object had six
separated rooms. The dimensions of one room
were 8 m x 3 m x 3.2 m. The whole object was
simulated as object from concrete. Simulation of
smoke and flame spreading and thermal
presentation of sprinkler extinguishing in FDS
are presented on Figs. 2,3,4 [1,4].
IV. SIMULATION OF STABILE SYSTEMS FOR
FIRE EXTINGUISHING - DRENCHER TYPE
SYSTEMS
Figure 2. Simulation of smoke and flame spreading with
sprinkler reaction after 2.7 seconds from fire start [4]
Stabile systems for fire extinguishingdrencher type systems present automatic stabile
installations for fire extinguishing with water,
similar as sprinkler systems, but with difference
that after fire is detected, all nozzles installed in
protected area take part in extinguishing. It is so
called group extinguishing. Very often,
statistically proved, occurred fires were very fast
in their spreading and installed sprinkler systems
couldn’t extinguished fire with limited number
of nozzles, although they reacted right in time. It
was noted that main reason for this was in too
long time needed for sprinkler systems
activation.
Related to sprinkler systems, drencher
systems also have long time of activation, but
their advantage is in the fact that when they are
activated, the whole area is being extinguishing
at the same time. Because of their efficiency in
extinguishing related to the sprinkler systems,
drencher systems are commonly used in objects
with high fire risk and in objects where high
speed of fire spreading exists. Object where
drencher systems must be installed are objects
such as refineries, paint factories, drying plants
and other similar objects that must be submerged
by water in the case of fire.
Figure 3. Simulation of smoke and flame spreading with
sprinkler reaction after 2.7 seconds from fire start [4]
Figure 4. Thermal presentation in FDS of sprinkler
reaction after 125.4 seconds from fire start [4]
Drencher installation has several technical
solutions, different related to way of installation
activation, way of water supply and system of
activation. Because of its own characteristics,
drencher installation has a special activation
system with lot of different elements. That
purports determined differences between this
and sprinkler system, especially in nozzles.
Drencher nozzles must possess nozzles with at
least 8 mm diameter gaps and between distance
not bigger than 3 m.
There are several ways that drencher
installation can be activated: mechanic way,
pneumatic way, hydraulic way, electric way and
combined way. Drencher systems are often used
to form so called “water curtain” in order to stop
fire spreading and as cooling systems as a
protection from high temperatures. In this case,
water supply must be provided for at least two
hours. An example of drencher installation for
fire extinguishing is present on Fig. 5.
53
Figure 5. An example of drencher installation for fire
extinguishing [1]
Figure 7. Activated drencher system in auto garage above
the cars [5]
Simulation object with drencher installations
was auto garage, with dimensions 50 m x 30 m x
3.5 m. Auto garage was built from concrete.
There were 53 cars in garage. Every car had
dimensions 4,2 m x 2 m x 1,5 m with the distance
between cars of 1 m. Simulation model in FDS
with the drencher nozzles arrangement at the
auto garage and burner`s position at the corner of
the garage are presented on Fig. 6, while
activated drencher system in auto garage above
the cars and thermal presentation after 65
seconds from the fire beginning are presented on
Figs. 7, 8 [1,5].
Figure 8. Thermal presentation of the auto garage after 65
seconds from activation of drencher system [5]
V. SIMULATION OF STABILE SYSTEMS FOR
FIRE EXTINGUISHING WITH CO2 EXTINGUISHER
Figure 6. Simulation model in FDS with the drencher
nozzles arrangement at the auto garage and burner`s
position at the corner of the garage [5]
54
Stabile systems for fire extinguishing with
CO2 use this gas as fire extinguisher. These
installations are intended for extinguishing over
whole volume-so-called three-dimensional
extinguishing. It is very important to note that
stabile systems for fire extinguishing with CO2 as
fire extinguished can be successfully used only
in objects where all potential gaps don’t exceed
more than 3 % of room`s volume. In other case,
the extinguish effect will not be enough.
Figure 9. An example of activated CO2 stabile system in
storage
Figure 11. Simulation of fire and smoke spreading on
electric transformer in FDS [6]
Figure 10. Simulation model of the room with electric
transformer in FDS [6]
Figure 12. Simulation of activated CO2 stabile system in
FDS [6]
Also, it is important to stop every potential
technological process and airflow before the
activation of stabile system with CO2 and to close
every potential door, windows, wholes or any
other kind of gaps.
equipped with no-return valves, scale, electromechanical trigger, bob with micro clutch, bar of
activation mechanism, battery frame with
protective net and manual activation box.
The protection with these systems can be
complete or partial. Complete protection
purports that whole volume must be closed,
while in other case protection is applied only on
some particular part of the room or object and in
the cases when the complete protection is not
possible because of some technical reason. Of
course, in the case when the partial protection is
used, much bigger quantity of CO2 gas is needed.
Generally, stabile systems for fire
extinguishing with CO2 gas have next elements:
bottles or tanks of CO2 gas, pneumatic and
mechanic valve for bottles, collection and
exhaust pipes, high pressure rubber hoses
The principle of activation is such that in the
case of fire electromechanical trigger opens two
bottles filled with CO2 gas. These bottles activate
pneumatic valve and open other bottles of CO2
gas which is brought to the fire location by pipes
and nozzles. Of course, before activation of the
electromechanical trigger, partition valve that
leads to the volume must is activated and opened.
The activation of these systems can be different,
in dependence of activation way, transfer
activation commands and CO2 gas guidance in
the protected volume. So, it can be used next
activation systems: manual systems, mechanical
systems, mechanical-pneumatical systems,
mechanical-electrical systems and electrical55
electrical systems. An example of activated CO2
stabile system in storage is presented on Fig. 9.
The most important thing related to this
system is to precise calculate enough amount of
CO2 gas. The smallest possible amount of CO2
gas, in dependence of different parameters and
conditions is defined by technical regulation.
Simulation object was room intended for
electric transformer. The room dimensions were
25 m x 25 m x 3 m, while the transformer`s
dimensions were 8 m x 8 m x 1,5 m. Room was
built from concrete while transformer was built
from steel and iron, with determinate quantity of
oil. Simulation model of the room with electric
transformer in FDS is presented on Fig. 10, while
fire and smoke spreading simulation on electric
transformer and activation of CO2 stabile system
are presented on Figs. 11 and 12.
VI.
CONCLUSION
Stabile systems for fire protection present
very powerful installation in fire protection.
These systems are designed for fast detection and
extinguishing of fire. Designing, installation and
testing of these systems are very complex,
demanding and expensive. Any kind of mistake
or inaccuracy could cause serious problems.
56
Noted examples showed the importance of
simulation software usage in designing and
testing of these systems with precise calculation
of spent extinguisher and its effects and, what is
also important, about potential mistakes that can
be corrected immediately. The usage of
simulation software in fire protection presents
advanced step in the sense of safety, precision
and economy. Correct designed, installed and
periodically tested stabile system is always
prepared to achieve full effect. Because of that,
simulation software must be obligated
engineering tool in designing, calculating and
testing of stabile systems for fire protection that
use water and CO2 gas as fire extinguisher.
REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
Jevtić, R. B. (2019). Material for the preparation of the
professional exam in the field of fire
protection. Gradski Vatrogasni Savez Niš, 502-507.
McGrattan, K., Hostikka, S., Floyd, J., McDermott, R.,
& Vanella, M. (2021). Fire Dinamic Simulator.
National Institute of Standards and Technology,.
Thunderengineering. (2020). Pyrosim User Manual,
version 20(2).
Jevtić, R. B. (2018). Stabile systems for fire protection:
Sprinkler type systems. Tehnika, 73(4), 581-586.
Jevtić, R. B. (2019). Stabile systems for fire protection:
Drencher type systems. Tehnika, 74(6), 903-909.
Jevtić, R. B. (2020). Stable fire extinguishing
installations with CO2 fire extinguishers. Tehnika,
75(4), 527-533.
PaKSoM 2022
Blockchain as a Methodology in the
Implementation of Sustainable
Tourism
Vladimir Živanović1, Marko Živanović2
1,2
Faculty of Business Studies, Megatrend University, Belgrade, Serbia
1
vzivanovic@megatrend.edu.rs, 2mzivanovic@megatrend.edu.rs
Abstract—The
implementation
of
new
technological solutions based on cryptocurrencies
and blockchain methodology should be presented
as a basic, and not as a disruptive factor in
development. Within the tourism industry, there is
an increasing evolution in the field of
informational and communicational technologies
that are introducing a revolution in travelling and
choosing tourist destinations. A wide range of new
services
can
be
offered
through
the
implementation
of
informational
and
communicational
technologies.
With
the
implementation of blockchain-based technologies,
the service of central tourism intermediaries
becomes redundant due to the transfer of these
intermediary functions to all participants in the
system which could be managed collectively
through transparent rules and participants'
computers. Precisely due to the decentralized
management system, which offers a blockchain
methodology, its popularity in the market is
growing as implementation by end-users of these
services. Blockchain helps in the creation of cyberattack-resistant digital data storage systems as
well as a data-sharing platform using linked data
verification block structures and a reliable enduser consensus mechanism for the data
synchronization process. This paper will analyze
the use of blockchain methodology in the
implementation of new services in the sector of
tourism.
Keywords - blockchain, cryptocurrencies,
informational technology, international financial
markets, sustainable tourism
I.
INTRODUCTION
The tourism sector has undergone a
transformation and improvement related to the
ISBN: 978-86-82602-00-2
scope of service provision during the last years
of the last century. Like all other industries, the
reason for the growth and improvement of
services lies in the implementation of new
technological solutions, which are primarily
based on new informational technology.
Tourism service providers have sought to
provide their services to as many users as
possible by making tourism services more
accessible, visible, simpler and ultimately
cheaper. In this sense, the aim was to simplify
the processes related to the realization of tourist
services, which should be as accessible as
possible to the widest possible number of endusers in all parts of the globe. One of the most
important activities of tourism service providers
was related to visibility. Visibility is linked to
the advertising and marketing process so that
information about service providers can reach
end-users as easily and at the lowest possible
cost. In this sense, the role of digital marketing
has a primary role, and digital marketing
services are available every day to an increasing
number of end-users through social networks.
All previous activities have led to the
improvement of services at the level of the
tourism industry, which has led to increased
productivity, and thus lower prices of services.
The accelerated development of the tourism
sector at the beginning of this century has a
significant decline in the value and total number
of trips and overnight stays of tourists during
2019-2022 due to extraordinary economic
circumstances caused by the COVID-19
pandemic. The rise in popularity of
cryptocurrencies has also led to improved
blockchain services to enable an increased
57
volume of exchange with these new virtual
currencies while raising the level of security and
security of transactions between end-users. To
enable the acceptance of cryptocurrencies at the
level of tourism service providers, it was
necessary to implement new informational
services based on the blockchain methodology.
II.
LITERATURE REVIEW
The phenomenon of blockchain technology
(BTC) has emerged in the last ten years as a
result of the implementation of decentralized
computer networking and security in the process
of communication between end-users of
services. Blockchain is seen as the key to
informational technology innovation that can
change many systems over the next decade [1].
Satoshi Nakamoto, a pseudonym for the
blockchain concept inventor, wrote a white
paper on bitcoin in 2008 and defined a
phenomenon based on a peer-to-peer version of
electronic cash without the use of financial
intermediaries such as commercial banks or
financial institutions [2]. In 2015, The
Economist called the blockchain “the next big
thing”, referring to technological advances and
innovations that the blockchain could bring in
several areas. [3]. In this sense, were primarily
meant the revolution of electronic payment and
the use of the latest forms of cryptographic
protection in data transmission, which is based
on the blockchain methodology.
Blockchain is based on the reproduction of
large amounts of data registers through virtual
contracts between end-users around the world,
thus avoiding the use of intermediaries. In this
way, smart contracts or digital identification
documents (IDs) are created to support many
business activities within the direct “peer-topeer” exchange. [4]. The implementation of the
blockchain methodology is different depending
on several sectors of the industry. According to
Kwok and Koh [5], blockchain can be applied in
six domains in the tourism industry, including
the exchange process, providing better processes
and lower costs, and as well as improving the
user experience. These activities are particularly
visible in areas such as booking, which can be
implemented at the hotel, car rental, insurance
and airline booking.
As the second activity of implementation of
blockchain methodology in the tourism industry,
it appears in the part of end-user identity
management, such as passenger identification,
personalization and luggage tracking. The third
58
activity of using the new methodology is in the
part of the loyalty program, such as the
realization of various discounts and incentives
for tourists or reward programs based on the
users’ service loyalty. Digital payment for
tourist services appears as the fourth activity
that, in addition to traditional forms of payment,
is enabled B2B model which is based on the use
of cryptocurrencies and settlement processes.
The fifth activity is related to the letters of credit
through the authenticity of review, ranking and
verification by tourism service providers. The
last sixth activity of the benefits of using the new
technology derives from inventory management
through the process of direct distribution and the
creation of a network of suppliers.
Blockchain is a decentralized database
system with a strong security data protection
system the series [6]. It can also be defined as a
public ledger that distributes and records all user
transactions online [7]. By using digital ID,
blockchain technology allows passengers to no
longer have to present physical ID cards, which
ultimately facilitates travel and reduces waiting
times when travelling. The use of blockchain
technology can help interested companies to
create secure digital records, and also enables
secure storage of data on end-users and all
related transactions. Application solutions that
enable the use of cryptocurrencies in the process
of paying for services can save significant funds
both from the end-users of tourist services and
from the position of tourism service providers.
Cost savings occur in the form of no transaction
costs when using payment services via the
blockchain platform. In this way, end-users of
services can book hotels and make reservations
and purchase an airplane and other tickets for
transportation without the use of intermediary
companies that charge brokerage fees [8]. Endusers can use blockchain technology to access
all the necessary information regarding travel
via peer-to-peer data transmission, which
eliminates the need to use central servers for
travel services. With the implementation of
application solutions based on blockchain
technology, it is possible to apply transparency
in transactions as well as the usage of all
activities that are visible to end-users without the
need for third parties to conduct final
transactions and activities related to tourism
services [8-11].
The impact of technology and the Internet on
the tourism industry is undeniable. The
implementation of the new technology began
with the use of reservation systems based on
networked computers. This first phase in the
development of tourism services based on new
technologies was followed by a phase based on
the global distribution system, while the last
phase of development is closely related to the
development of the Internet, which together with
the previously mentioned development phases
significantly changed supply and demand in the
sector of tourism [12]. The Internet has enabled
suppliers within the tourism industry to
distribute their products directly, and tourism
service providers to sell services based on online
services (OTA). An important advantage of
using the Internet in modern tourism is the use
of metadata of users who use search engines,
which facilitates the process of obtaining
information about the needs of end-users for the
most important providers of tourist services.
Blockchain is expected to become the fifth
disruptive
computing
paradigm
after
mainframes, computers, the Internet and
mobile/social networking [13].
Iansiti and Lakhani [14] see blockchain as a
core technology, not a disruptive one, as
potentially new economic and social systems
can be based on blockchain. They also believe
that the adoption of the blockchain will come
gradually. Therefore, understanding the
blockchain and considering its impact on the
tourism industry is essential. The introduction of
a blockchain in tourism raises several issues and
problems, such as disrupting established
business models, changing demand patterns,
managing data or adopting technology in small
and medium-sized enterprises.
III. IMPLEMENTATION OF BLOCKCHAINBASED METHODOLOGY IN THE TOURISM
INDUSTRY
The widest application of new technology
based on blockchain methodology at the level of
the tourism industry is in the form of new
application platforms for organizing and
scheduling travel and using services at the
hospitality level, which accept cryptocurrencies
as payment methods. Winding Tree is one
example of using new information solutions
based on blockchain technology. This is a
decentralized distribution platform, where
consumers can directly access suppliers' offers.
Based on the application solution, it is possible
to manage stocks in terms of displaying the
inventory of accommodation and prices in realtime
that
can
be
shared
between
stakeholders [15]. The second application takes
the form of loyalty programs based on
blockchain, which can be used by hotels, airlines
and any other tourist and catering facilities. By
creating a loyalty program based on the
blockchain, loyalty tokens are used, which are
issued as rewards to guests in the form of loyalty
points. The advantage of a loyalty program
based on the blockchain methodology is that the
collected tokens can be sold or exchanged
between other participants in the network [16].
Loyalty tokens from different companies can
have different values. As a result, the
implementation of blockchain-based loyalty
programs can have a positive impact on
increasing competition and service quality [16].
An example of a loyalty program based on
the blockchain methodology is Loyyal, which
was created for this purpose and which aims to
solve the problem of the accumulation of digital
tokens. All collected loyalty tokens of the user
are accumulated on his user account and thus
enable the collected tokens can be used to
achieve benefits in any organization that has
implemented a loyalty program based on
blockchain. Another example of the use of the
blockchain methodology can be observed at the
level of the airline sector. The methodology e.g.
can be used in tracking passengers' luggage.
Using blockchain, airlines can create their
blockchain and thus track the luggage of their
passengers within their internal system. Based
on the application of this new application
solution, it is easier to locate luggage wherever
it is during transit, and at the same time reduce
the number of lost luggage.
The third positive example of using the
blockchain methodology is the implementation
of smart contracts at the level of the tourism
industry as a whole. Smart contracts based on
the blockchain can be created between hotels
and travel agencies. This speed up the time and
volume of payments between partners as the
smart contract system helps increase sales of
travel arrangements by providing safer and
better real-time information [16]. On the other
hand, the application of smart contracts
facilitates the process of supply in restaurants, as
well as tracking ordered stocks. This allows you
to manage orders while tracking delivery times.
The implementation of blockchain-based
application solutions provides an opportunity for
management to monitor the entire food supply
chain. In the case of malfunctions in some foods,
the history of the supply chain can be easily
59
determined
through
the
blockchain
methodology. One of the largest tour operators,
such as the TUI group, has developed an internal
blockchain-based system called BedSwaps.
BedSwaps application solution uses internal
smart contracts that manage accommodation
offers in real-time [17].
In practice, there are other potential uses of
blockchain in various fields, which can be
applied to tourism and hospitality. This includes
the possession of digital personal documents
that can replace passports and all other
identification documents such as birth
certificates and/or the use of driving licenses.
This could reduce unauthorised usage of identity
and facilitate document verification [16,18].
Some other advantages of the blockchainbased system for travellers include the function
of re-booking when the price of the travel
arrangement falls, the possibility of realizing
transactions via cryptocurrencies [19], ticket
resale such as e.g., plane tickets [20] and the
availability of cheap package tours through the
integration of travel and hospitality portals [21].
In general, it is expected that information
technology using blockchain methodology can
replace centralized systems (such as OTA) by
introducing a decentralized system that would
also be reliable and secure [10]. Moreover,
blockchain can improve coordination between
stakeholders. For example, if a passenger does
not check in for a flight, blockchain-based
information technology automatically adjusts
and updates the inventory of car rental
companies and hotel availability at the location
where the non-boarding passenger should be
travelling, based on the networking of all
participants in the system [15].
A. Economic aspects of the blockchain
In economic terms, Catalini and Gans [22]
identify two central types of costs affected by the
blockchain such as verification costs and
networking costs. Blockchain-based digital
markets are characterized by low verification
costs, and the use of common network
infrastructure, without the use of an
intermediary to manage the platform such as the
case in traditional two-way markets. Other
economic advantages of the blockchain include
increased competition, low entry barriers and
low privacy risk. On the other hand, some
authors
point
out
blockchain-specific
inefficiencies such as the need to rely on
60
endogenous information and limitations within
the existing legal and regulatory system [22].
Abadi and Brunnermeier [23] conclude that
blockchain is not able to fulfil three qualities of
an ideal ledger book at the same time, such as
correctness,
decentralization
and
costeffectiveness. In practice, we can analyze the
four main economic challenges of blockchain
adoption [24]. These are the complexity of
technology, the technical aspects of new
technological solutions, the existence of
concerns about system scalability and the need
to implement supportive and effective policies.
Swan concludes that the overall economic
benefits of the blockchain (especially in the
areas of identity verification, fund transfers,
asset registers and smart contracts) will
outweigh all these challenges by remodelling
existing economic practices in the light of the
internet revolution [24]. Arruñada and Garicano
[25] state that due to the introduction of
decentralized management, the blockchain can
economically
outperform
centralized
intermediaries.
For
blockchain-based
cryptocurrencies such as Bitcoin, Ethereum,
KSRP and many others, it should be noted that
the term “currency” can be misleading in terms
of interpreting cryptocurrencies as “money”
because cryptocurrencies are not traditional
forms of money issued by central banks and
which are under the direct regulatory control of
the central monetary authorities. Böhme [26] has
previously argued that Bitcoin has the potential
to disrupt payment and monetary systems, but
cryptocurrencies still do not fully fulfil the
traditional functions of money [27] whether
used in tourism and hospitality and wider.
The functions of money as a “medium of
exchange” and/or as a “common measure of
value”
can
also
be
applied
using
cryptocurrencies. However, the use of
cryptocurrencies as a traditional “value
standard” or the use of value hoarding as in the
classical form of money is still not fully
achievable, primarily due to the lack of
regulatory control and consequent high volatility
of all cryptocurrencies in the financial market.
The use of cryptocurrency is not accepted as a
legal instrument of payment in the vast majority
of countries. Japan is a pioneer in the official
acceptance of cryptocurrencies such as bitcoin
in payment transactions [28].
The traditional function of money, which
refers to the hoarding of values, is currently
unfeasible in cryptocurrencies for two main
reasons. The first reason refers to the high
volatility of cryptocurrencies, i.e., the high
change in the nominal exchange rates of
cryptocurrencies due to the influence of most
often short-term speculative demand. For these
reasons, it can be said that cryptocurrencies do
not have external stability. Another reason for
the impossibility of using cryptocurrencies as an
instrument of payment and hoarding of values
lies in the fact that the supply of certain
cryptocurrencies such as bitcoin is limited,
which does not guarantee investors that its value
will not erode due to the falling supply of new
bitcoins when bitcoin-denominated prices
increase due to investor distrust in the future
sustainability of this cryptocurrency. All this
could affect the reduction of trust and
acceptance of cryptocurrencies in the future. The
lack of internal stability of cryptocurrencies can
also be defined as their basic shortcoming in
wider international implementation.
IV.
OPERATION OF THE BLOCKCHAIN-BASED
TECHNOLOGY
The blockchain methodology is based on a
combination of data and transactions that are
progressively registered and monitored through
a network of distributed books [29].
The advantage of blockchain technological
solutions is that they are based on the formation
of a decentralized network of users (peer-topeer), which is designed to operate without a
central authority in the control of data
transmission and transactions between endusers. The main ledgers book is synchronized
with the entire network and transactions take
place without the need for third-party
intervention [30,31]. The development of such a
structure ensures that the system is open to
anyone who wants to execute valid
transactions [32].
Fig. 1 shows the different architectures of the
end-user communication system, often called
nodes [32]. The left figure shows a distributed
system in which users communicate directly or
indirectly with each other without the need to
use a single centralized participant, as shown in
the right figure where we have one centralized
participant in communication through which
communication between individual users.
In Fig. 2, in contrast to the previously shown
figure, we can see two different architectures
that are based on the formation of hybrid
Figure 1. Arranged against the centralized system
architecture.
systems [32]. On the left, we have the
architecture characterized by the presence of a
centralized component within the distributed
system. With this system, all participants
communicate with an already centralized user in
the middle. It looks like this architecture of the
system is evenly distributed, but in reality, it is a
centralized system. The right side also shows a
seemingly centralized system, but in fact, it
shows a decentralized structure, as other users
communicate with a previously formed central
unit
formed
based
on
decentralized
communication within the central component.
The use of cryptographic algorithms means
that each node connected to the network
provides a high level of security when
performing
or
validating
transactions
[2,14,31,32]. This ensures safer, anonymous,
traceable and decentralized access to users [2].
The identification code, called the “hash”, is
contained in each appendix made in the further
chain of data transmission. The advantage of a
decentralized system based on blockchain
methodology is that the exchanged data can be
monitored with a higher level of accuracy [33],
which further strengthens the security of the
system itself.
At the lowest layer are signed transactions
that are grouped into blocks. The second layer,
the consensus layer, is responsible for ensuring
that all nodes agree on which transactions must
be stored in the blockchain, to ensure the
absence of corrupt branches and divergences.
Figure 2. Mixed deployment versus centralized
system architecture.
61
The third layer is the computer interface that is
responsible for executing smart contracts. The
last layer of management extends the
architecture of the blockchain so that data from
one process is permanently stored in the block
and none of the previous users can change the
structure of the information contained in it. In
this way, security is achieved at the level of
transactions between users and the possibility of
data misuse by other participants in the network
is prevented.
When the transaction is completed, a block
appears. The block is then broadcast to all nodes
in the network. One of the nodes validates the
block and broadcasts it back to the network. If a
block is verified, all nodes add it to their
blockchain. Each subsequent block correctly
points to the previous block. In this process, each
transaction receives a unique string and
timestamp, which guarantees greater accuracy in
tracking data. Once a transaction is confirmed, it
cannot be easily changed or deleted, and
transparency is enhanced because transactions
are shared across the network and everyone in
the network can have access to the data in the
future. At the same time, this helps to ensure
security and thus creates trust between endusers.
The current scientific literature on the
development of blockchain methodology claims
that there are three generations in the
development of blockchain technology.
The first generation is related to the
emergence and development of bitcoin, which
officially appears as the first digital currency.
The second generation represents the
introduction of smart contracts, which are based
on the application of code which is made based
on blockchain methodology and which
facilitates the self-execution of contracts
between end-users. The third generation is
related to the current technology characterized
by decentralized applications (DApps), which
allows users to interact with new application
solutions based on the blockchain methodology
by directly using application solutions via
smartphones or Internet browsers.
Various authors state that there are three
types of blockchains in use, public, private and
permitted. Public blockchains are stored in peerto-peer networks in a completely decentralized
and anonymous way, and anyone can join the
network. Private blockchains are characterized
by the fact that only certain private users can join
62
these networks. And finally, we have the
allowed blockchains that require a set of trusted
nodes responsible for creating blocks and only
authorized users can connect to this network.
Within the application solutions that can be
applied at the level of tourist services, all three
forms of chains can be used in the form of public
chains for all potential users of tourist services,
private chains that can be used at the level of tour
operators or individual tourist organizations, and
allowed chains that are implemented at the level
of the blockchain application solution of a
certain tourist organization, and which can be
accessed only by authorized users who have
authorizations from a specific tourist service
provider. Based on previous mention application
solutions, a network of users is created that
enables everyone a faster and simpler way to
communicate with the implementation of the
highest standards in encrypted protection of data
transmission or transactions, which are executed
in real-time.
A. Using a smart tourist destination within the
sustainable tourism
The phenomenon of smart tourism
represents a new approach to the provision of
tourism services through the application of new
informational
and
communicational
technologies (ICT) at the level of the tourism
sector. Previous research has conceptualized a
framework for smart tourist destinations based
on the development of smart cities, research on
the potential of smart tourist destinations to
improve the tourist experience through
personalization of services, developing a
conceptual model for the competitiveness of a
smart tourist destination and examining the
effects of smart destination strategies and
solutions on destination management processes
and improving the tourist experience of tourists.
The main goal of a smart tourist destination
is to improve the tourist experience based on the
service provided and/or the content provided, as
well as to improve efficiency in managing and
creating a competitive advantage of a particular
tourist destination and ensuring sustainability
over time. All authors agree on the fact that the
smart tourist destination service is based on the
application of new informational and
communicational technologies.
The conceptualization of ICT in the
implementation of smart tourist destinations
requires the interconnection of different interest
groups in the realization of the final tourist
service. Finally, we can conclude that the main
goal of using smart tourist destinations is to
focus on and take care of the needs of end-users
of tourist services through the application of
ICT, intending to improve the quality of services
and improve the management process in the
tourism sector.
Boes [34] defines smart tourism destinations
as places that use available technologies to
jointly create value, satisfaction and experience
for tourists, as well as provide benefits and
profits for tourism organizations and
destinations. On the other hand, we have the
opinion of authors who define smart tourist
destinations as destinations that intensively
collect and use data obtained through the
network to analyze and understand the needs of
tourists and their behaviour so that tourism
service providers can provide better services
based on analyzed user experience in realtime [35,36].
Another group of authors argues that the
development of smart tourism destinations
would benefit the tourism industry by providing
open access to data for both tourism
organizations and tourists as end-users of
services based on the implementation of a
common platform [37-39]. The information
found in the cloud service, a developed system
of high-speed internet services and capacity in
the information bandwidth, allows tourism
service providers to create services in real-time
for each potential user of the services of a
particular tourist destination. Applicational and
informational solutions based on blockchain
methodology can help solve the challenges of
real-time data processing through the use of
smart tourist destinations [40].
V.
CONCLUSIONS
It can be concluded that tourism is one of the
most promising sectors for the development of
blockchain technology. We conceptualized the
importance of blockchain technology in the
implementation of smart tourism with a special
focus on supporting the achievement of the
implementation of smart tourism destinations.
Given the highly competitive and innovative
trends at the level of tourist destinations,
blockchain technology can be a sustainable
solution to improve the tourist experience,
reward sustainable behaviour, provide benefits
to local communities, and reduce privacy
concerns. However, we must note that this paper
does not aim to diminish the role of other
innovative technologies but to argue that
combining blockchain technology with
technologies such as the Internet or artificial
intelligence can encourage the development of
smart tourist destinations and positively
contribute to achieving their goals. Blockchain
technology can change the way data is collected,
verified and used in the process of creating new
value. New information and communication
technology solutions based on the blockchain
methodology enable equal, open access to data
for small and medium enterprises as well as
enable tourists to own and control their data.
Knowing the risks associated with the adoption
of blockchain technology, smart travel
destination managers can help decide on the
investment and implementation of new
application solutions. This technology could
touch on several aspects of the tourism industry,
such as its business model, money transfer
system, security, performance and trust. The
positive impact of the blockchain methodology
also enables other economic participants in the
process to benefit from the adoption of this
technology. It should be noted that
cryptocurrencies based on blockchains such as
Bitcoin, Ethereum and others are currently not
generally accepted payment instruments
because their issuance is not under the
regulatory control of central monetary
authorities. Their use in the form of traditional
forms of money is not feasible due to the lack of
regulatory control and the high volatility of
cryptocurrencies in the international financial
market. The use of cryptocurrencies is currently
not accepted as a legal instrument of payment in
the vast majority of countries. Their popularity
is growing every day, especially among
individual users and individual investors. This
fact indicates that the goal of achieving
sustainable tourism is to enable the use of
cryptocurrencies as an instrument of payment.
The
development
of
payment
in
cryptocurrencies requires
the
use of
informational and communicational application
solutions based on blockchain methodology.
After the implementation of these solutions, the
tourism sector opens another additional space
for attracting new categories of tourists who are
supporting the usage of new technology and to
whom the use of cryptocurrencies is not new.
With the development of the system of tourist
services based on the implementation of smart
tourist destinations, the global tourism sector
gets the possibility of direct marketing based on
real-time information exchange with end
63
potential users of tourist services, which creates
preconditions for sustainable tourism in the
future.
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PaKSoM 2022
Transportation Problem with
Additional Bounded Capacity
Bratislav Lukić 1, Goran Petrović2
1
2
Ministry of Defense of the Republic of Serbia, Belgrade, Serbia
University of Niš, Faculty of Mechanical Engineering, Niš, Serbia
1
lukic.bratislav@yahoo.com, 2pgoran1102@gmail.com
Abstract—For the data and decision parameters
that are interconnected by the system of constraint
functions, which affect the optimal value of the set
goal, the size of the goal and the relevant factors
can be said to be interrelated with the goal
function. The optimal solution is the combination
of conditions that gives the desired extreme value
of the goal function, according to the adopted
optimization criteria. The aim of this paper is to
examine methods for solving a general
transportation problem (TP) on solving a TP with
additional capacity bounded. The definition of the
TP with additional restriction and possible
conditions was performed, as well as the
application of three modified methods. The
illustration of the numerical example represents a
closed TP with additional bounded capacity from
the top and bottom to determine the differences in
the obtained values of the target function and show
the rate of convergence of the initial base solution
to the optimal solution.
Keywords – TP, bounded, methods, initional
basic feasible solution
I.
INTRODUCTION
The main characteristic of operational
research is the development of a mathematical
model of the system or process being observed,
on the basis of which it will be possible to predict
and compare the consequences of different
variants in the decision-making process [1].
A typical TP is the problem of distribution of
goods from producers to consumers, provided
that transportation costs are minimal. Various
logistics problems in addition to the
transportation of goods can also be formulated
as TP. In addition, there are many tasks that are
solved as TP, such as tasks of optimal placement
of machines, plants, warehouses, energy
ISBN: 978-86-82602-00-2
facilities, etc. with the aim of achieving greater
economy of work and time [2].
As researchers have found a number of
methods in order to reach the initial and optimal
solution as easily and quickly as possible, so the
requirements of users have expanded, so that in
addition to quantities of materials - goods that
need to be transported from source to
destination, i.e. price transportation per unit of
measure, there are additional restrictions in the
form of capacity, time of transportation or a
combination of these restrictions. This type of
problem is called a TP with an additional
bounded and is a more complex model, but the
basis is to solve the TP with modifications of
methods to determine the initial and optimal
solution.
The TP is one of the problems of linear
programming. One of the most useful methods
by which the problem can be solved TP is the
simplex method. However, its application is not
rational due to a large number of bounded and
variables, which is why various methods have
been developed whose algorithms are simpler,
which allow determining the initial basic
solution, as well as finding the optimal solution
to the TP. The trend of development and
application of transportation methods has
constantly being upgraded, with the increasing
use of software programs with algorithms of the
most efficient methods [2].
II.
LITERATURE REVIEW
The study of the transport problem using
analytical methods dates back to the middle of
the 20th century, when a model of the transport
problem was formulated and solved, and when a
study was presented in which method was
65
developed to solve the transport problem, which
involves sending a single load from the source
to a specific destination [3-5]. Since there was a
need for more efficient methods, whose speed of
convergence towards the optimal solution is
higher than with the simplex method presented
by [6], various methods for obtaining the initial
basic solution are published [7-19].
and B j is prohibited for some reason, it is
assumed that the price of transportation on that
relation is cij M , where M is an arbitrarily
large constant. In that way, the transportation
between the source Ai and the destination B j
will have an arbitrarily high price, so that route
will not be the optimal solution.
The development of new methods for
obtaining an initial and optimal solution is
conditioned by increasing bounded in TPs. An
inverse method has been proposed where no
capacity bounded are known in advance, but
estimates or previous experience are used [20].
Methods have been proposed where additional
capacitive limitation from above is considered
[21], bilateral and unbalanced capacitive
bounded, bottleneck and flow bounded [22-24].
According to [25] transportation in addition to
availability and demand, may have another
bounded such as capacitive constraint. Then the
problem becomes generalized solid TP with
capacity, on the basis of which the solution
procedure for find the optimal solution. In [26],
modified methods for solving a TP with a
capacitive constraint for obtaining an initial
basic solution and simplex methods for a TP
with bounded are presented.
The objective function is expressed through
the total transportation costs that need to be
minimized within the bounded set by the road
network and available resources and can be
represented numerically by the (1):
III.
FORMULATION OF A TRANSPORTATION
PROBLEM
In the TP, the problem of minimizing the
total transportation costs is most often solved:
resources, passengers, energy, information, etc.,
which in real conditions can represent a large
expense for a certain economic system. Finding
the optimal, i.e. the most economical
transportation of a product in most cases
involves finding such a plan for the
transportation of one type of goods from the
place of source to certain destinations [2]. At the
same time, the criterion of minimizing the total
costs is set, so that the best execution of the
distribution of goods is achieved.
The task of the TP consists in determining
the quantity of goods xij which from any point
Ai , i 1, 2,, m should be transported to any
point B j , j 1, 2,, n provided that the total
transportation costs are minimal. It is assumed
that there is only one connection between the
source Ai , i 1, 2,, m and the destination
B j , j 1, 2,, n . If transportation between Ai
66
m
n
F cij xij min
i 1 j 1
The set of TP bounded has m n bounded,
i.e. as many as there are production and
consumption centers in total and can be
written (2):
n
xij ai
j 1
where is i 1, 2,, m and xij 0.
Solving the TP means setting the initial
program, i.e. determining the routes by which
the goods will be transported, in order to meet
the needs of the destination while using the
capacity of the source. The goal is to find a
combination of resource allocation in which
transportation costs will be minimal. In most
cases, solving the TP begins with determining
the basic solution, i.e. determining the initial
solution using one of the known algorithms.
Determining the initial solution is the first phase
of solving the TP. In case the optimal solution is
not obtained, we move to the second phase in
which a series of iterations move from the initial
solution to the basic solutions that are closer to
the optimal solution [2].
There are several methods for obtaining an
initial basic solution, such as the northwest angle
method, the minimum cost method, Vogel
approximate method, Vogel - Kordin procedure,
New proximative method, Maximum allocation
in demand method and other.
Obviously this is a linear programming task,
which can be written mathematically [20]:
IV. ON SOLVING CAPACITATED
TRANSPORTATION PROBLEM
The general transportation model consists of
the target function, supply bounded, demand
bounded and positive bounded. However, if the
variables xij representing the quantities of the
shipment have capacity limitations for various
reasons, such as the capacity of the means of
transportation, the capacity of the railway
network, the capacity of the warehouse, etc. Then
this is a specific case of a TP and it is called a TP
with additional restrictions. In practice, such
problems often occur, with unbalanced quantities
of supply and demand. The transition from the
open problem is the introduction of a fictitious
source (supply) or destination (demand) with
very high prices.
When solving the mentioned TP, the situation
in the transportation company for the
transportation of consumer goods can be
considered, where there is a need for a certain
amount of goods, which we call destinations and
sources that represent storage places for a certain
category of goods. However, the problem is also
the possibility of means of transportation, i.e. the
carrying capacity of goods from source and
destination, which is an additional limitation that
we call the limit from the top. Since the goal of
each logistics or transportation task is to save
human and material resources, it is necessary to
consider the cost-effectiveness of using a means
of transport on a particular line, i.e. it is necessary
to define the minimum amount of goods needed
to be transported to make use of means of
economic viability and we call this the lower
limit. If we look at Table I, we can see that it is a
TP with an additional restriction, where there is
only the upper restriction.
d1
d2
...
↑u11
c11
↑u12
c12
x11
x12
0
↑u21
c21
s2
x22
0
sm
...
↑um1
x1m1
0
...
↑u2n
c2n
x2n
cm2
0
...
↑um2
xm2
0
x1n
0
...
cm1
↑u1n
c1n
0
...
...
cmn
where is i 1, 2,, m ,
m
xij d j
i 1
where is j 1, 2,, n ,
0 xij uij
where is i 1, 2,, m ; j 1, 2,, n.
If is
m
n
i 1
j 1
si d j it is an open problem, so a
fictitious consumer is introduced Dn 1 with
m
n
i 1
j 1
d n 1 si d j
and very high prices ci , n 1 i 1,, m . In this
way, the closed transportation problem is
obtained, and is mathematically represented by
the following (8) and (9):
m n 1
min F cij xij
i 1 j 1
n 1
xij si
j 1
0
↑u22
c22
x21
...
...
j 1
Si
s1
n
xij si
dn
n
i 1 j 1
TABLE I. TRANSPORTАTION PROBLEM WITH ADDITIONAL
BOUNDED FROM ABOVE.
Dj
m
min F cij xij
↑umn
xmn
0
where is i 1, 2,, m and apply (5) and (6).
However, the TP can be given with
additional limitation from both the bottom and
the top. This problem can be written in (3), (4)
and (5), but in condition (10):
lij xij uij
where is i 1, 2,, m ; j 1, 2,, n.
67
Whereat lij 0 represents the bounded of
the variable xij from bottom, and uij 0
bounded from the top. It is assumed that this is a
closed TP, i.e.
i lij d j ,
m
j 1 uij si
n
m
n
i 1
j 1
si d j
that the TP given by (10) can be solved in the
following (8) with constraints (5), (6) and (9).
Lemma [21]: Equation (8) with constraints
(5), (6) and (9) is derived if and only if it holds:
and that they are
j 1 lij si ,
n
i 1 uij d j ,
m
TP (3), (4), (5) and (10) can be
si d j
uij
d
For (i 1,, m ; j 1,, n) , where is:
solved in following way:
m
n
min F cij xij A
m
n
i 1
j 1
d si d j
i 1 j 1
m
tij si
i 1
Transportation problem with additional
limitation from both the bottom and the top as
shown in Table II.
TABLE II.
TRANSPORTАTION PROBLEM WITH
ADDITIONAL BOUNDED FROM THE TOP AND BOTTOM.
where is i 1, 2,, m ,
Dj
n
tij d
j 1
`
j
c12
↑u12
x12
↓l12
↑u21
x21
↓l21
...
cm1
↑um1
x1m1
↓l1m
c22
↑u22
x22
↓l22
...
↑um2
xm2
↓lm2
c21
s2
0 tij uij lij
...
where is i 1,, m ; j 1,, n and where is:
m
n
A cij lij
sm
TABLE III.
i 1 j 1
Dj
n
si` si lij
m
d `j d j lij
36
51
i 1
Obviously, every derived value of tij from
(2) corresponds to a value xij tij lij from (1),
concerning, each value of
xij from (1)
corresponds to the derived value tij xij lij
from (11). Each derived value of the goal
function given by (1) is equal to the value of the
goal function given by (11), i.e. a
correspondence between the two specified
expressions for the goal functions. Which means
68
43
cm2
...
dn
...
c1n
↑u1n
x1n
↓l1n
...
c2n
↑u2n
x2n
↓l2n
...
↑umn
xmn
↓lmn
...
cmn
...
EXAMPLE TRANSPORTАTION PROBLEM
WITH ADDITIONAL BOUNDED.
41
Si
j 1
d2
↑u11
x11
↓l11
c11
s1
where is j 1, 2,, n ,
d1
Si
26
8
↑25
9
↑15
14
↑38
6
↑14
12
↑20
9
↑20
↓4
↑16
13
↑21
16
↑25
9
↑25
7
↑22
5
↑21
↓2
↓3
↓4
40
10
↓3
↓1
↓2
23
↓0
↓0
↓1
↓4
↓0
Taking into account the derived (8) under the
conditions defined in Lemma and since (8) is
defined with constraints (5), (6) and (9), it can
be concluded that there is at least one optimal
solution. The paper discusses only the closed TP
with additional capacity limitation in order to
simplify the display. As with the general model
of the TP, the starting point is the determination
of the initial basic solution, where several
modifications of the mentioned methods will be
presented on the example of the TP with an
additional limitation given in Table III.
Solving the problem begins by calculating
the following values uij lij , si, , d ,j , based on (8)
and (11). After the calculation, it can be seen that
some of the additional restrictions are
unnecessary, because they are already contained
in other restrictions and they are eliminated in
order to simplify Table IV.
TABLE IV.
EXAMPLE REDUCED TRANSPORTАTION
PROBLEM WITH ADDITIONAL BOUNDED.
Dj
34
Si
27
43
36
8
9
14
16
↑21
↑14
6
20
↑11
10
36
↑14
9
12
13
7
9
16
5
will be a non-basic variable with values of the
upper limit of the limit, which will reduce the
supply and demand for the value of the limit
xij , concerning sˆi sˆi xij , dˆ j dˆ j xij . After
that, the value for the newly acquired values of
supply and demand is changed in the existing
table and the procedure is repeated of Step 1.
Step 3: When one row or column remains at
the end, all other variables are basic. There can
be a total of m n 1 basic variables.
Step 4: Assume it is the last remaining cell
k , l , then xij min sˆi , dˆ j , sˆk dˆl
↑25
↑18
A. Modified Minimum Cost Method
This method is one of the most commonly
used due to its simplicity and closer initial
solution to the optimal one. However, the method
itself in solving the problem with an additional
constraint must be modified so that its algorithm
consists of two phases [26].
Step 1: Select the cell (𝑖, 𝑗) with the lowest
unit price value in the existing table. If the
selected price is not unique, then one is chosen
arbitrarily and the variable gets the value
xij min sˆi , dˆ j , uij
Step 2: It is established on the basis of which
constraint the value of the variable xij is
obtained on the basis of (12), due to which three
possible cases are distinguished:
I case: if it is xij sˆi dˆ j , uij , then 𝑖 - row
does not consider further, because the offer is
exhausted;
II case: if it is xij dˆ j sˆi , uij , then
j - column does not consider further, because
the demand is satisfied;
If in one iteration both the row and the
column are exhausted/ satisfied, then
sˆi dˆ j 0 , then one of them is no
longer considered. It would be good to
keep a row or column that has a lower
price cij .
In case III, the calculation with sˆi and
dˆ j is repeated until one of them reaches
the value zero.
↑21
Phase 1: The algorithm starts by defining the
following values sˆi si , dˆ j d j .
III case: if it is xij uij sˆi , dˆ j , then xij
Phase 2: Assume that xmn umn , which
causes unfeasibility and we should throw xmn
out of the database. Then there is a unique cycle
for the cell m, n , all angles of this cycle are
basic except one. The values of the variables in
this cycle are calculated for
xmn umn
according to the signs of the cells in the cycle (if
the sign of the cell m, n is negative; the sign
changes to positive for the neighboring cell and
so on).
After calculating the table, if (6) is valid, the
basic solution is reached, otherwise the
mentioned process should be repeated.
After the realized iterations, the initial basic
solution to the troubled TP, i.e. the value of the
target function is min F 909 , and can be
written in the form given in Table V.
69
TABLE V. THE INITIAL SOLUTION TO THE TP WAS
OBTAINED BY A MODIFIED MINIMUM COST METHOD.
Dj
34
16
20
36
Si
↑21
8
27
12
13
14
↑14
10
9
↑25
7
↑18
15
6
↑14
9
43
36
↑11
6
21
13
1
9
14
16
15
5
↑21
21
B. Modified New Approximate Method (NAM)
New approximation method is the method
for finding the initial basic solution, which was
first presented in 2013 in the journal Annals of
pure applied mathematics. The research results
have shown that this method provides
permissible basic solutions to the TP that are
very close to the optimal value [11]. The same
can be applied to the TP with additional
restrictions, with a slight change when
determining the amount of goods to be allocated
to the variable xij . Algorithm for modified
NAM.
Phase 1: The algorithm starts by defining the
following values sˆi si , dˆ j d j .
Step 1: The receiving station with the
maximum demand is selected, and then the
minimum price is found in the selected column
and the maximum possible value of demand is
assigned to it.
Step 2: A new table is formed, in the first
column of which the receiving stations Si are
entered, and in the second column the dispatch
stations D j , which were identified in the
previous step. A unique receiving station D j is
observed, which is assigned a minimum value of
the available quantity of goods in the dispatch
station si the required quantity in the receiving
station D j and the limit defined in the
considered cell (20). The new value for the
available quantity in the receiving station is
obtained when the value assigned to the variable
xij is subtracted from the existing value. If the
available quantity in the receiving station is
exhausted/satisfied,
the
corresponding
column/row is eliminated, and if there is no
70
single receiving station D j , proceed to the
next step.
Step 3: If there is no single receiving station
in the second column of the table B j , then the
sending stations that have the same receiving
stations are selected. The differences between
the two minimum prices cij for each row of
observed receiving stations B j in
transportation cost matrix are calculated.
the
Step 4: In this step, there is a dispatch station
with the biggest difference. The variable xij is
assigned the minimum value of the available
quantity of goods in the dispatch station Si, the
required quantity in the receiving station D j
and the limit defined in the considered cell (20).
If there are two or more stations with the same
difference, then the difference between the
minimum price and the next minimum price in
the price matrix is determined for those dispatch
stations. The dispatch station with the maximum
difference is selected and the available quantity
of goods (20) is assigned to the variable xij . If
the available quantity in the dispatch/receiving
station is exhausted/satisfied, the corresponding
column/row is eliminated.
Step 5: Steps 3 and 4 are repeated until all
quantities of goods from the dispatching stations
to the receiving stations have been distributed.
Phase 2: When phase 1 is completed, if the
condition xmn umn is satisfied, then it means
that the initial basic solution is obtained,
otherwise we move to phase 2 as with the
modified lowest price method.
To show the practical solution of the TP, this
method will use the example of the TP with an
TABLE VI.
THE INITIAL SOLUTION OF THE TP
OBTAINED BY THE MODIFIED NAM METHOD.
Dj
34
16
20
36
Si
↑21
8
27
12
13
14
14
36
9
7
14
9
4
↑14
10
↑25
11
↑14
9
43
↑11
6
16
16
5
5
6
↑18
15
↑21
21
additional constraint given in Table III. The
initial basic solution, i.e. the value of the target
function is min min F 901 and can be written
in the form given in Table VI.
C. Modified Method Of Maximum Allocation
In Demand
The method of maximum allocations was
created within the research at the Center for
Research in the Field of Defense Logistics of the
University of Defense in Belgrade in 2017. The
basic premise of this method is based on the
consideration of maximum values in demand
points and the allocation of resources that meet
this condition. One of the main advantages of
this method is its uniqueness and transportation
plan, which in many cases is close to optimal [2].
Since the method itself is more recent due to its
uniqueness in considering maximum values at
demand points and allocating resources that
meet this condition, a small modification will be
made by considering the bounded that define
individual variables, so that its algorithm
consists of two phases.
Phase 1: The algorithm starts by defining the
following values sˆi si , dˆ j d j .
Step 1: The receiving station with maximum
demand d j max d j is selected, then the
cij min cij for i 1,, m is found in the
selected column and assigned the maximum
possible demand value, i.e. (20).
Step 2: If there are two receiving stations
that require the same maximum value of goods,
the receiving station with the lower price is
selected. If even then there are two same
receiving stations with the same minimum
prices, the receiving station is selected where the
difference between the minimum and the next
minimum price is the largest. However, if the
previous one is not fulfilled, the receiving station
is selected where the sum of all prices in the
observed column is higher.
Step
3:
supply/demand
eliminated.
The
row/column
whose
is exhausted/satisfied is
Step 4: The previous steps are repeated until
all funds are allocated to the receiving stations.
Phase 2: If the condition xmn umn is
satisfied after the end of phase 1, then it means
that the initial basic solution is obtained,
otherwise we move to phase 2, which is identical
to the modified lowest price method.
As in the previous methods, an example of a TP
with an additional constraint given in Table II
will be used to apply this method, and the initial
basic solution is min F 884 and can be written
in the form given in Table VII.
TABLE VII.
THE INITIAL SOLUTION TO THE TP WAS
OBTAINED BY A MODIFIED METHOD OF MAXIMUM
ALLOCATION IN DEMAND.
Dj
34
16
20
36
Si
27
43
36
↑21
8
↑14
10
9
↑25
11
↑14
9
↑11
6
16
12
13
18
7
10
14
9
16
5
5
10
↑18
15
↑21
21
Using the simplex method for the example in
Table III, the optimal solution 𝑚𝑖𝑛 𝐹 = 879
was obtained, which is not quite far from the
obtained initial solutions presented by the
mentioned modified methods.
V.
CONCLUSION
A TP with additional bounded is a special
case of linear programming. There are a number
of methods used to arrive at an initial basic
solution. The proposed modified methods for
solving the TP with additional capacity
bounded, in the examples shown with bounded
from the top and bottom, provide an initial basic
solution, which facilitates obtaining an optimal
solution. However, the presented modification is
not applicable to methods for obtaining optimal
solutions in the TP, such as The potency method,
i.e. the MODI method, Jumping from stone to
stone, Ford Fulkerson methods, Methods of
conditionally optimal plans and similarly.
Considering that the simple solution of the
problem by the simplex method is extremely
demanding and complicated, especially if it is a
problem with several supply and demand
stations and several additional restrictions,
several different applications have been made to
easily reach the optimal solution (LINGO,
GAMS, SOLVER, WinQSB, etc.).
71
ACKNOWLEDGMENT
This research was financially supported by
the Ministry of Education, Science and
Technological Development of the Republic of
Serbia (Contract No. 451-03-68/2022-14/
200109).
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V. (2010). Application method for optimization in
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PaKSoM 2022
Using the MCDM Approach to
Evaluate Smart and Sustainable Cities
Ibrahim Badi1, Željko Stević2, Muhammad Lawan Jibril3
1
Libyan Academy, Mechanical Engineering Department, Libya
University of East Sarajevo, Faculty of Transport and Traffic Engineering, Doboj, Bosnia
and Herzegovina
3
Federal University of Kashere, Mathematics and Computer Science Department, Gombe,
Nigeria
2
1
i.badi@lam.edu.ly, 2zeljkostevic88yahoo.com,3mljtech@gmail.com
Abstract—Cities are undergoing significant
transformations to become smarter and more
sustainable. Therefore, utilizing evaluation
frameworks, it is necessary to compare these
efforts. Different criteria can be used to evaluate
smart cities. In this research, the weighting of
smart and sustainable city criteria is done using
the Full Consistency Method (FUCOM). The
findings show that while smart economy is the
most crucial quality with a priority of 35.4%,
smart governance comes in last with a priority
of 5.7%. MARCOS method is used to make
comparisons between five cities in North Africa.
Rabat and Cairo are the top two cities overall,
according to the analysis developed. The article's
findings are intended to assist cities in
understanding how they compare to other cities
and to identify areas where authorities need to
make improvements.
Keywords - Smart cities, MCDM, FUCOM,
MARCOS
I.
INTRODUCTION
Due to its scale and complexity, the idea of a
sustainable and smart city is one of the crucial
issues in today's public policy. Since the start of
the twenty-first century, the “smart and
sustainable city” movement, which first gained
popularity in the 1990s, has been slowly growing
in acceptance. Approximately 80% of the global
GDP is produced by the big cities. Additionally,
they use 80% of the energy produced worldwide
and are responsible for at least 70% of carbon
emissions [1].
ISBN: 978-86-82602-00-2
By 2050, the United Nations Population Fund
predicts that 70% of the world's population will
reside in urban areas. There are currently 828
million people living in substandard housing, and
this number is continuously rising. Cities'
development, planning, and management are
complicated by these issues. Therefore, when
creating their action plans, city and nation
managers need to think of clever ways to
improve their cities' economic activity, energy
consumption, environmental circumstances, and
quality of life. Because they offer services using
ICT infrastructure, many cities are referred to as
smart cities. Building sustainable and smart cities
also entails providing its citizens with satisfying
and adaptable job and business opportunities,
secure and cheap housing, a more democratic
society, open governance, and a successful
economy. Additionally, it entails funding public
transportation, expanding the amount of green
space, and undertaking urban planning and
governance using methods that encourage
participation from all citizens.
II.
METHODOLOGY
Multi-criteria decision-making techniques
are now being used more often. There have been
numerous approaches developed recently and
they are applied in numerous applications [2]. In
this study, a hybrid model that combines the
FUCOM- MARCOS methods will be applied.
The weights of the criteria will be determined
using the FUCOM approach, and the MARCOS
method will be used to rank the cities.
73
One of the most recent MCDM models was
developed by Pamuar et al. (2018) and is called
FUCOM. This method employs the pairwise
comparison strategy [3]. Compared to other
MCDM methods like the Best Worst Method
(BWM) and the Analytical Hierarchy Process
(AHP), it necessitates fewer pairwise
comparisons [4]. Additionally, it has the ability
to validate results by defining the comparison's
deviation from maximum consistency (DMC)
and locating transitivity in paired criteria
comparisons.
Assume that there are (n) criteria to be
analyzed. Each of these criteria must be given a
weight in order for the decision-maker to
establish its significance. The impact of each
criterion I on the other criterion (j) is identified in
pairwise comparison models. The steps listed
below can serve as an example of the FUCOM
approach:
Step 1: Expert ranking of criteria/sub-criteria.
Step 2: Determining the vectors of the
comparative significance of evaluation criteria.
Step 3: Establishing the constraints of a
model for nonlinear optimization.
Constraint 1: The relative relevance of the
specified criteria is indicated by the percentage
of weight coefficients.
Constraint 2: The number of weights must
satisfy the transitivity condition of mathematical
model.
Step 4: Calculating the final weights of
assessment criteria.
Step 5: Calculating the final weights of subcriteria for appraisal.
The MARCOS technique is built on
specifying how alternatives and reference values
relate to one another (ideal and anti-ideal
alternatives). Utility functions are used to define
decision-making preferences. The location of an
alternative in regard to the ideal and anti-ideal
solutions is referred to as its utility function. The
best solution is the one that is farthest from the
anti-ideal point and the ideal point. It was
developed by Stevic et al. in 2020 [5]. The
methods' steps can be summarized as follows [6]:
Step 1. Creating the initial decision matrix.
Step 2. The development of an extended
initial matrix. The ideal and anti-ideal solutions
are defined in this step. The ideal solution is an
74
alternative with the best alternative for certain
criteria, whereas the anti-ideal solution is the
worst alternative for certain criteria. This is based
on the following equations:
AAI min xij
i
if j C
max xij
i
AI max xij
i
min xij
i
if j B and
if j B and
if j C
where B represents the criterion that should be
maximized and C represents the criterion that
should be minimized.
Step 3: The initial matrix is normalized in
step three. The following equations are used for
normalization:
nij
nij
xai
xij
xij
xai
if j C
if j B
where the elements and represent the elements
from the initial decision matrix.
Step 4. The weighted matrix is determined in
this step. Weighting is performed by multiplying
normalized matrix values by corresponding
weights.
Step 5. This step involves the calculation of
the utility degree of the alternatives Ki. The utility
degree is determined by applying the following
equations:
Ki
Si
Saai
Ki
Si
Sai
where i 1, 2, m represents the sum of the
elements of a difficult matrix:
n
Si vij
i 1
Step 6. The formation of the utility function
of the alternatives f Ki . The utility function is
calculated by using the following equation:
i
i
K K
f Ki
1
i
1 f K
f K
f K
i
1 f K
i
i
where f Ki is the utility function versus the
anti-ideal solution, while f Ki
is the utility
function versus the ideal solution. The utility
functions are calculated by using the following
equations:
(C3), Smart living (C4), Flexibility of labor
market (C5), Innovative spirit (C6), and
Productivity (C7).
Step 1. The decision on the ranking of the
criteria
is
made
as
follows:
C1 C 4 C 2 C6 C5 C7 C3 .
Step 2. The decision-maker performs a
pairwise comparison of the rating parameters.
The comparison is done in comparison to the first
ranked criterion. Therefore, the priority of the
criteria CJ k
first-level criteria. (Table I).
TABLE I.
Criteria
K
i
Ki Ki
Ki
Ki Ki
f Ki
f Ki
Step 7. Ranking the alternatives. A rank is
formed based on the final value of the utility
function. It is desirable that the alternative should
have the greatest value of the utility function.
III.
CASE STUDY
The concept of smart cities is still weak in
most developing countries. However, there are
some indicators that can be measured in these
countries. In this study, the capitals of five North
African countries will be compared: Rabat,
Cairo, Tunisia, Tripoli, and Algeria. Seven
criteria were used for the purpose of comparing
these capitals, which are: Smart economy (C1),
Smart environment (C2), Smart governance
were determined for all of the
CJ k
CRITERIA PRIORITIES
C1
C4
C2
C6
C5
C7
C3
1
2
2.5
3
4.5
5
6
The comparative priorities of the criteria are
determined using the obtained priorities of the
criteria:
C
C4
2.0 /1.0 2.0 , C4
C2
2.5 / 2.0 1.25 ,
C
C6
3.0 / 2.25 1.33 , C6
C5
4.5 / 3.00 1.50 ,
C
C7
5.0 / 4.5 1.11 , C7
1
2
5
C3
6.0 / 5.0 1.20
The final values of the weight constants and
DFC of the results are established as = 0.0 after
solving the model using MS Excel's solver and
utilizing the values of the criteria marks
provided. Fig. 1 shows that the first criterion, the
smart economy, was the most important. The
fourth criterion, demonstrated by the smart
living, is also important. The aforementioned two
criteria account for approximately fifty percent
of the total weights of the criteria.
Figure 1. The value of decision criteria
75
of the experts, an initial decision matrix was
initiated (Table II).
After the weights of the criteria have been
calculated, the five cities will now be ranked
according to these criteria. Based on the opinions
TABLE II.
THE INITIAL DECISION MATRIX
Weights
0.354
0.142
Impact
C1
C2
A1
72
78
75
A2
68
77
A3
65
78
A4
45
A5
55
MAX
72
0.059
0.177
0.079
0.118
0.071
C4
C5
C6
C7
65
80
70
78
70
65
82
75
80
70
60
80
68
75
50
50
50
60
50
50
60
65
65
70
68
70
78
75
65
82
75
80
C3
Then, the data are normalized. Simple linear
normalization is used for the normalization.
TABLE III.
Since all criteria are of the benefit type, their
maximum value is computed (Table III).
THE NORMALIZED DECISION MATRIX
Cities
C1
C2
A1
1.000
1.000
A2
0.944
0.987
A3
0.903
A4
0.625
A5
0.764
C3
C4
C5
C6
C7
1.000
1.000
0.976
0.933
1.040
0.933
1.000
1.000
1.000
1.067
1.000
0.933
0.923
0.976
0.907
1.000
0.641
0.667
0.769
0.732
0.667
0.667
0.769
0.867
1.000
0.854
0.907
0.933
particular criterion, whereas the ideal solution
represents the maximum value. Then, the utility
degrees were computed by adding the values for
the individual alternatives, the ideal and antiideal solutions, and the anti-ideal solution
(Table IV).
The aggregated values are then calculated
using the weighting coefficients. The following
step involves calculating the utility degree. Prior
to carrying out this step, it was necessary to
identify the ideal and non-ideal solutions. Antiideal values represent the minimum value of a
TABLE IV.
THE WEIGHTED NORMALIZED DECISION MATRIX AND THE NEGATIVE-IDEAL SOLUTION
Cities
C1
C2
C4
C5
C6
C7
A1
0.354
0.142
0.059
0.177
0.077
0.110
0.074
A2
0.334
0.140
0.055
0.177
0.079
0.118
0.076
A3
0.320
0.142
0.055
0.163
0.077
0.107
0.071
A4
0.221
0.091
0.039
0.136
0.058
0.079
0.047
A5
0.270
0.109
0.051
0.177
0.067
0.107
0.066
Ideal
0.354
0.142
0.059
0.177
0.079
0.118
0.076
Anti ideal
0.221
0.091
0.039
0.136
0.058
0.079
0.047
Forming the utility function of the
alternatives was the sixth step of the MARCOS
methodology. The utility function has been
determined. To calculate the utility function of
the alternatives, the utility function in relation to
76
C3
the ideal and anti-ideal solutions had to be
calculated. Incorporating these values produced
the final value for the alternatives (Table V) and
determined the cities' ranking.
TABLE V.
THE RELATIVE ASSESSMENT MATRIX AND
THE ASSESSMENT SCORES OF ALTERNATIVES
𝐾𝑖−
1.479
1.458
1.392
1.000
1.263
Measure
A1
A2
A3
A4
A5
𝐾𝑖+
0.988
0.975
0.931
0.668
0.844
F(ki)
0.780
0.769
0.734
0.527
0.666
Rank
1
2
3
5
4
The results show that the city of Rabat ranks
first in terms of smart city evaluation, followed
by Cairo. In last place comes the Libyan city of
Tripoli.
IV.
CONCLUSION
To increase the sustainability, productivity,
and quality of life of their cities, governments
and politicians are looking for new investment
opportunities and policy areas. According to
diverse interpretations of the term “smart and
sustainable city,” numerous assessment
techniques and indexes have been created. City
managers and officials are showing a lot of
interest in evaluation systems using quantitative
data. They can choose where to spend their time
and money as a result. The methodology used in
this research resulted in a useful comparison of
the cities. Each assessment offers very valuable
data along with the outcomes that may be applied
to raise cities' performance.
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using a novel FUCOM-CODAS model: A case study
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Badi, I., Muhammad, L. J., Abubakar, M., & Bakır, M.
(2022). Measuring Sustainability Performance
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Stević, Ž., Pamučar, D., Puška, A., & Chatterjee, P.
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of alternatives and ranking according to COmpromise
solution (MARCOS). Computers & Industrial
Engineering, 140, 106231.
Badi, I., & Pamucar, D. (2020). Supplier selection for
steelmaking company by using combined GreyMARCOS methods. Decision Making: Applications in
Management and Engineering, 3(2), 37-48.
77
78
PaKSoM 2022
Multimedia Systems in Education
Marko Marković1, Neda Ilić1, Ana Kresović Kolundžić1, Maja Đurović-Petrović2, Jasmina
Lozanović3
1
Faculty of Applied Management, Economics and Finance – Belgrade, University Business
Academy in Novi Sad, Serbia
2
Innovation Center of the Faculty of Mechanical Engineering, University of Belgrade,
Belgrade, Serbia
3
Institute of Health Care Engineering with European Testing Center of Medical Devices,
Graz University of Technology, Graz, Austria
3
j.lozanovicsajic@tugraz.at; 3jasmina.lozanovic@gmail.com
Abstract— This paper provides an overview of
multimedia systems used in education. The
advantages and disadvantages of multimedia
systems for educational purposes are presented. In
addition, multimedia applications used in virtual
teaching and software for keeping pedagogical
records are shown. The paper also contains an
empirical study conducted among high school and
university students that shows their evaluations of
distance learning.
Keywords - multimedia systems, education,
distance learning
I.
INTRODUCTION
The influence of the current world situation
leaves a significant mark in the sphere of
education and fundamentally changes the
approach to learning and conceptualizing the
way and type of teaching itself. We are
witnessing sudden changes in the education
system at all levels, and we are trying every day
to overcome the steps to make the most of all
available resources. Today, multimedia systems
are used more and more in distance learning, and
this is not about the situation but about the very
way of global change in the education system,
which provides lecturers and students with a
range of additional opportunities, but also makes
it challenging to work in some environments.
The system is based on the exchange of
multimedia content that contains large amounts
of material for the adequate education of
students. Models vary depending on the ability of
the lecturer and the ability of the student. Since
the 21st century has still not managed to connect
ISBN: 978-86-82602-00-2
every inhabitant of this planet to the Internet, a
problem arises in communication, where
solutions are found in various ways. “Zapad” was
the first to start with these systems and, through
various studies, brought results that were more
than excellent for that time, but the educators
somehow did not like it, not because of the way
of teaching, but because of the inexperience of
the lecturers in new technologies. According to
Perraton, this type of learning is also called free
learning, using computers, the Internet, and other
multimedia accessories for learning at home.
Learning is organized as a dialogue process
in virtual classrooms, and this means the
separation of the mentor from the student in
space and (or) time [1].
As a whole in the education system,
electronic learning includes the following items
that distinguish it from the traditional way of
teaching:
distance between lecturer and student;
structure and goal of the program being
studied;
content required for teaching;
system of legal valuation prescribed by
the Rulebook.
As this type of learning becomes a problem
due to individuals who make a big difference
between this way of learning and the traditional
one and make bad comments, a specific rulebook
is prescribed that defines the classification,
79
division, method, and teaching model. As
multimedia is the future, experts rely on it and
use all resources to improve teaching methods.
The scope of learning levels, assessment
methods, evaluation, and teaching accreditation
are set. The professor's activity contributes to the
organization of the content, and the dedication to
making presentations, videos, tasks, and
multimedia supplements, awakens the student in
the knowledge that the lecturer cares that he
acquires that knowledge.
The solutions to this type of learning can be
divided and classified as follows:
electronic books;
educational programs;
online courses;
web platforms.
II.
ADVANTAGES AND DISADVANTAGES
The advantage is reflected in the flexibility of
professors and students, and through activity and
up-to-dateness, specific content can be viewed
more than once, which makes it easier for
students to master the material. The advantage is
reflected in the possibility that students can study
from their residence without going to another
city or country, which leads to lower costs and
the possibility that the student can work while
studying. One of the most important advantages
is the possibility that students who have a severe
illness or some form of disability can follow
lectures and exercises. A higher level of
organization of the time spent on responsibilities
related to lectures, choosing one's pace of
learning, and taking exams. Another great
advantage is that students can choose courses and
programs as they wish, choose lecturers and the
method of delivery, and the student can attend
some prestigious and high-quality courses that
are not from their country. The choice defines the
level of interaction, from which students can
choose classic written interaction, where students
extract notes from the text of the presentation,
interact with lecturers and colleagues via web
applications, or even learn through modern
multimedia systems that provide quality
information in addition to quality graphics and
sound. Through multimedia applications,
students can acquire practical skills and all
necessary
knowledge
through
various
simulations.
80
Disadvantages are considered to be that for
this type of teaching, each participant must have
basic knowledge of using computers and the
Internet for learning purposes. Without specific
knowledge, students will not be able to use the
material they receive acceptably. In addition to
all the knowledge, it is necessary to have better
equipment for learning, which implies better
computer specifications that will run various
multimedia content. In addition, a high-quality
Internet connection is required, which causes up
to 80% of technical problems due to classes and
inconvenience due to tests. Furthermore, an
Internet connection reduces the student's
concentration and creates additional pressure deciding more independently how and when
learning brings greater responsibility to students.
Sometimes the credibility of the student's work is
also a disadvantage because, without additional
applications, the professor has no insight into
whether the student has used the Izora when
preparing for exercises or exams.
III.
MULTIMEDIA APPLICATIONS FOR
LEARNING
For such a system to function, various
supports are needed in the form of various
applications, programs, and accessories that
facilitate communication in the quality of
teaching. The Internet is full of various systems,
applications, and services for transferring
knowledge, but a few fulfill all the technical
aspects of an educational application. The Senate
of the University of Serbia decided to conduct
classes with the help of distance learning systems
and with the help of web applications for
meetings. Each higher education unit has its own
platform solely due to work efficiency and the
number of students who access the content
simultaneously.
A multimedia system is a system capable of
processing multimedia data and applications.
The primary function of multimedia systems is
processing, storing, producing, manipulating,
and displaying multimedia information. A
multimedia system is a computer that combines
the application of telecommunications, image,
sound, and video sequences [2].
The most frequently used online learning
platforms are:
Moodle;
Zoom;
Google Classroom;
Google Meet;
Microsoft Teams.
Certain higher education institutions
independently develop platforms for distance
learning.
IV.
VIRTUAL TEACHING
In addition to traditional teaching, there is
also virtual teaching, which awakens the desire
for progress and knowledge acquisition in
students. It is often a combination of state-of-theart multimedia systems that give the impression
that students are dealing with a topic in real time
that students can only look at in books. American
studies have shown that the feeling of learning is
more awakened in young children through
interactive teaching. The level of student
knowledge is also based on the visual power of
observation, where through various simulations,
the student has the opportunity to, for example,
be present in rare situations such as the launch of
a rocket. A virtual classroom is a teaching
environment that resides in a computergenerated communication support system. It is
not built of steel and concrete but consists of a set
of communication groups and workspaces with
complex software.
Interactive whiteboards have been on our
market for many years and have found their place
in the educational system. Currently, not many
schools have them, but the trend of their use is
increasing. On the other hand, teachers
worldwide have different opinions about using
interactive whiteboards, and discussions about
their effectiveness have been going on for some
time. Then we mentioned the factors that affect
the effectiveness of interactive whiteboards and
accompanying teaching materials. We also
talked to several teachers and asked them to share
their skills and experience using interactive
whiteboards. Publishers quickly recognized the
potential of interactive whiteboards and created
interactive textbooks. Today on our market, as
additional textbooks, we can find interactive
textbooks for learning foreign languages from
foreign publishing houses. Teaching materials in
foreign languages usually contain many
exercises, so the accompanying software of the
interactive whiteboard also contains additional
video material that helps the teacher's work.
V.
learning platforms and to evaluate
effectiveness of online learning platforms.
the
High school students and students from
Belgrade, Valjevo, and Novi Sad participated in
the research.
The sample consists of 128 respondents, of
which 99 and 29 high school students were
randomly selected from all years of education
online via Google questionnaire.
This research had the following tasks:
Determine whether high school students
and students consider multimedia
educational platforms beneficial and to
what extent;
Determine which platforms we are
talking about;
Determine whether high school students
and students are for online or traditional
teaching methods;
Determine with what grade high school
students and students evaluate the online
teaching model.
VI.
RESULTS
Based on a sample of 128 students, we can
conclude that 85.9% consider platforms to
support distance practical learning. However,
analyzing the answers, 18 respondents expressed
that they were not satisfied with learning support
platforms: a group of first-year high school
students (12) and a group of first-year college
students (6). From this analysis, we conclude that
online platforms to support distance learning are
helpful to a large extent.
Utility platforms for online learning are given
in Fig.1. More than 85% of students consider
distance learning platforms beneficial.
EMPIRICAL RESEARCH
The research aims to examine high school
students and students about the use of online
Figure 1. Utility platforms for online learning
81
The next item was an examination of which
platforms we are talking about, and the results
show platforms that we have processed to a large
extent, and of course, there are other multimedia
sources. For example, the diagram shows that
Google Meet, Google Classroom, Zoom, and the
Moodle platform are used to a large extent. In
addition to them, there is also the Microsoft
Teams platform, and finally, to a minor extent,
there is the BigBlueButton platform, which
achieved its success when it offered its services
to the Moodle platform. This analysis concludes
that standard and well-known platforms are in
use.
Figure 4. Assessment of online classes (1 bad, 5
excellent)
lecturers are senior professors and are not well
versed in this work system, so there is a big
problem with the implementation of the teaching
itself. Great efforts are needed from both sides to
improve the quality of teaching itself.
VII. CONCLUSIONS
Figure 2. Usage of learning platforms in Serbia
The crucial part of the research was asking
the respondents about the teaching method, we
know that everyone wants to follow live
teaching, but this is less and less possible due to
the current situation. Of course, no platform can
replace the live words of the lecturer, but the
respondents' answers are different from our
expectations. In fact, 43% of them think that the
online form of teaching is good and that it is not
a problem for them. This part includes students
in the faculty's third and fourth year, for whom it
is a well-known concept, while the rest of 57% is
represented by high school students and first and
second-year students.
Figure 3. Teaching method: Traditional (57%) vs.
Online (43%)
The last and most crucial segment of the
research allows us to see how satisfied students
are with online teaching. The results are mixed,
but the highest percentage of responses ranges
between 3 and 5, which is extremely good.
The grade itself is based on the entire lesson,
where there are problems with the lecturer. The
problems with the lecturers are that most of the
82
Based on the given research, we can conclude
that despite all the circumstances, pupils and
students support this type of teaching. It is
expected that it is difficult for everyone in the
beginning because they come across something
utterly unknown until now. It takes a lot of
patience, effort, and work to achieve great
results.
The modern approach to teaching brings us
one step closer to the digital revolution, and if
nothing else, it encourages us that perhaps with
our changes, we can participate in improving this
type of teaching.
When compared to traditional teaching,
teaching in a multimedia setting has a much
greater positive impact on academic achievement
and makes the material to be learned much easier
to understand [11].
Nowadays, education has progressed in many
segments, but there are still problems that can be
solved by using new technologies. Education has
a more challenging time accepting new and
modern ways of education due to the high prices
of multimedia equipment. The prices of
computers and equipment prevent the teaching
staff from delivering the material in the best and
most efficient way possible. Although in our
country, there is progress in that sphere, on the
initiative of the Ministry of Education, Science
and Technological Development, numerous
projects of digitalization of schools have been
launched. Sustainability is reflected in the
implementation of dozens of digital classrooms
to improve educational content.
We can conclude that it is necessary to use
modern educational tools and technologies as
much as possible in the teaching process. Using
new modern technologies contributes to greater
motivation and engagement of students, which
achieves a better way of acquiring and acquiring
knowledge.
REFERENCES
[1]
[2]
[3]
[4]
Perraton, H (1988). Theory and Distance Education, .
Taylor & Francis Group.
Korać, M. (2014). Multimedija u obrazovanju, FTN
Čačak.
S. Ivanov, D. Stanujkić, & B. Đorđević. (2014).
Primena multimedije u savremenom obrazovanju,
Megatrend Univerzitet, Beograd.
Pedagoško društvo Srbije, (2022). Available at:
www.pedagog.rs
[5]
PC Press, (2022). Available at: pcpress.rs/zoom-zavelike-sastanke/
[6] SMART1LIFE,
(2002).
Available
at:
smartlife.mondo.rs/tech
[7] Digitalna NBS, (2022). Available at: digitalna.nb.rs
[8] Google for Education, (2022). Available at:
edu.google.com
[9] Virtuelna
ucionica,
(2022).
Available
at:
virtuelnaucionica.com
[10] E-Uprava, (2022). Available at: euprava.gov.rs
[11] Bulut, R. (2019). An Analysis of The Effects of
Multimedia Teaching on Student Achievement.
International Journal of Progressive Education, 15(1),
1-22. doi: 10.29329/ijpe.2019.184.1
83
84
PaKSoM 2022
Mitigating COVID-19 Crisis Effects in
SMEs by Knowledge Management
Ivana Marinović Matović1, Anđela Lazarević2
1
2
PUC Parking Service, Niš, Serbia
University of Niš, Faculty of Mechanical Engineering, Niš, Serbia
1
ivana.m.matovic@gmail.com, 2andjela.lazarevic@gmail.com
Abstract—The contemporary environment is
characterized by globalization, constant and
rapid changes, a high degree of automation and
digitization, innovation and creativity. In such
conditions, the crisis causes unpredictable threats
and dangers at the national, local and
organizational level. The outbreak of COVID-19
crisis presented an unpredictable threat with a
high degree of uncertainty. The implications of
COVID-19 crisis on SME companies were very
pronounced, especially considering that these
companies generally do not have crisis
management strategy. One of the characteristics
of SMEs, insufficient knowledge and skills of
entrepreneurs, further threatened their survival
and sustainable development in COVID-19
conditions. This paper analyzes some of the
possible measures to preserve the business
continuity of SMEs, which are reflected in
adequate knowledge management, especially
emphasized in COVID-19 crisis conditions.
Keywords – SME, knowledge management,
crisis management, COVID-19, entrepreneurship
I.
INTRODUCTION
Crises pose a social threat on a global,
national and local level, and affect people’s
lives, their property and society as a whole.
Crises are characterized by numerous features
and events that occur violently, complexly and
surprisingly, with high speed, and a lack of real
information, which causes confusion and
fear [1,2].
The frequency, nature and consequences of
crises at the global level are constantly
changing [3-5], which is a challenge for
political and administrative structures. Crises
pose a threat to human lives, the basic values of
ISBN: 978-86-82602-00-2
society or the functioning of the system, which
must be urgently addressed, in conditions of
great uncertainty [6]. Society, organizations
and individuals face a rapidly changing
environment, affected by complex problems
and difficulties [7].
Numerous theorists have tried to define the
concept of crisis [8-10]. There are various
definitions in the scientific literature, which are
determined on the basic features of the crisis
and their consequences. Reference [11] defines
the crisis as a great threat, without enough time
for response. Reference [12] emphasizes that
the basic features of the crisis are low
probability, high impact and threat to the basic
goals. Reference [13] considers the crisis to be
a sudden threat to priority objectives, with
limited response time. Reference [14] has
found that the crisis is an unexpected threat of
great uncertainty, which requires urgency in
decision-making. Reference [15] bases the
definition of a crisis on the low probability of
occurrence, ambiguous circumstances, which is
a surprise and requires a quick decision to
improve the situation. Reference [16] defines a
crisis as an unusual event of high level of
uncertainty that poses a threat.
Summarizing the above theoretical views
reveals a common definition of the concept of
crisis. The crisis is a sudden unpredictable
problem, which must be solved immediately; a
crisis is an event with great impact, which
requires making critical decisions in conditions
of uncertainty. Although the definitions may
differ, the crisis is seen as a potential serious
system threat, an unpredictable event, which
places non-standard demands on the
organization and the individual. In these
85
CRISIS TYPES AND CRISIS CAUSES
Numerous theorists categorize crises, some
divide them according to their character or
process of formation; others classify them
according to their cause or source; or crises are
sorted according to their impact or
consequences. There are different forms of
crises, but they are generally classified into two
types: industrial and natural [17]. Natural crises
are caused by natural actions, while industrial
(technological) crises include serious threats to
human life, society and natural environment
caused by industrial activities [18]. This is the
oldest typology of crises, where industrial
crises are caused by man and his actions, while
natural crises are provoked by various natural
phenomena [19]. Man-made crises are, for
example: a plane or train accident, an incident
at a factory plant, or a terrorist attack; while
natural crises are tsunamis, avalanches,
landslides, earthquakes, eruptions, typhoons,
floods, etc. [20].
The causes of crisis outbreaks are
numerous. Crises can be caused by various
natural disasters, intentional human actions,
unintentional human errors, errors in the
functioning of the system. With the
development of contemporary society, the
causes of crises multiplied, so in the period
before the industrial revolution, the main
causes of crises, along with natural disasters,
were international conflicts, while in modern
civilization, beside natural disasters, errors in
the functioning of the system become initial
crisis events.
Organizational crisis is caused by various
factors, which originate from internal or
external organizational events, or are of a
technical-economic nature, organizational-social
nature, or represent an event caused by human
action [21]. The different causes of each of
these types of crisis are shown in Table I.
86
CAUSES OF ORGANIZATIONAL CRISIS [22]
Internal
Technical/Economic
II.
TABLE I.
People/Social/Organizational
circumstances, critical decision making
requires adequate knowledge, and real
challenge is to identify knowledge necessary to
make the right decisions, followed by the
acquisition of this knowledge. This paper is
aimed to enhance critical decision making by
providing guidelines and measures to improve
the SMEs body of knowledge, which is
necessary for the establishment of the adequate
knowledge management in company.
External
Undetected,
unanalysed or
unsuspected
product or service
defect (in design,
manufacturing,
marketing, etc.)
Unanticipated and
unanalysed
environmental
conditions
(environmental
issues that affect
human life and
society)
Undetected plant
defects (faults in
machinery, etc.)
Faulty technical
monitoring systems
(monitoring
malfunctions,
disruptions etc.)
Improper detection
systems (faulty
process monitoring
techniques, etc.)
Improper strategic
planning (of
organizational
goals and
objectives)
Faulty primary and
backup design and
control techniques
Improper social
planning and global
monitoring
Improper
organizational
control
Improper design
and
implementation of
new social
institutions
Weak company
culture (weak
company values,
improper
communication,
low motivation,
etc.)
Improper social
monitoring of
criminal
stakeholders
(targeting and
preventing
incidents)
Inadequate
employee training
Improper
contingency
planning and crisis
management
Human
(unintentional)
errors
Internal sabotages
(with malicious
intent)
Improper employee
screening
(individual
suitability)
Before a crisis occurs, there are early
warning signs of a crisis, [23] sometimes very
weak or hidden, and difficult to detect. Early
warning signs of a crisis are not recognized in
time for several reasons, and they are
usually [24]:
weak or indistinguishable signals,
sources of crisis signals are not
considered credible,
signals are built into routine messages,
signals
are
systematically
misrepresented,
signals do not reach the adequate
persons.
Timely
recognition
and
better
understanding of early crisis signs is of
remarkable importance, in terms of timely
detection of impending crises, so that regulators
and other decision makers can plan effective
measures to defend and overcome crisis impact.
III.
COVID-19 IMPACT ON SMES
The crisis caused by COVID-19 pandemic
has a strong impact on organizations,
employees and the way they do business, which
requires radical measures by government
agencies to reduce business losses and ensure
the survival of companies [25]. Working from
home, almost completely canceling business
trips, holding virtual meetings using various
applications, high level of work engagement on
digital platforms, have become part of everyday
business life [26]. To manage the crisis, many
companies have digitized their business
processes, which at the same time has provided
a safe work environment for their employees
[26]. The COVID-19 crisis is characterized by
a high level of inaccuracy and uncertainty, with
the impossibility of organizational planning of
preventive activities, which jeopardizes the
survival and sustainable operation of
companies, jeopardizes their goals, and requires
rapid reactions [27].
Small and medium enterprises (SME) are
endangered by the COVID-19 pandemic for
several reasons, primarily due to limited
resources and weaker market position [28]. The
pandemic has altered the business conditions
and has led to demand sensitivity, in relation to
their products and services. The sectors most
affected by restraint measures are those in
which a large number of SMEs operate, and
these are the sectors characterized by human
contact and interaction, such as culture and the
arts, fashion, tourism, and the airline
industry [29].
A significant number of SMEs operated
with business losses due to the COVID-19
restrictive measures. According to the results of
41 studies conducted in several countries
around the world, which analyzed the pandemic
effect on SME, more than half of the observed
companies had worse business results, while
one third predicted business closures within a
month [30]. Research conducted in developing
countries in Africa has shown that 4/5 of SMEs
beared a considerable impact from the
COVID-19 pandemic, in the form of a capacity
TABLE II.
SME MEASURES IN RESPONSE TO
COVID-19 PANDEMIC [33]
Measures aimed at protecting the workforce
A portfolio of protective policies and actions, including
incident prevention
Multichannel communication; confidential reporting
mechanisms
Separation (e.g. work from home); setting up business
infrastructure (e.g. virtual private network VPN,
computer, laptop); wide availability of infrastructure
Introduction of shift work; preventing the spread of
infection (e.g. social distance); closing business
locations
Cooperation with local and national regulatory bodies
and public health officials
Measures aimed at stabilizing supply chains
Risk transparency; re-engagement of suppliers; order
management; checking the qualifications of new
suppliers
Identification of critical activities; rationalization of
activities; business location optimization
Assessing the impact of supply on business operations;
optimization of production capacities
Inventory needs assessment; harmonization of
production and procurement plans
Early reservation of logistics capacities; supply route
optimization
Measures aimed at improving communication with
customers
Electronic communication between companies (B2B);
Risk communications based on different scenarios
Interventions for preventing the spread of infection
among customers; customers’ training
Communication with customers about COVID-19
procedures;
fact-based
reports;
situation
communications
Measures aimed at defining financial needs
Testing of relevant scenarios, based on the latest
epidemiological and economic prospects
Assessment of financial needs, especially for working
capital, in different scenarios
Measures aimed at centralizing crisis management
activities
Centralized problem solving; Including additional
resources if needed
Portfolio of possible actions, depending on certain
drivers (in all business activities)
Determination of leaders for different scenarios; Crisis
situations simulations
87
utilization decline, up to 30-40% [31].
A survey conducted on a sample of
hundreds of companies around the world,
provided insight into the main measures taken
by SMEs, within the COVID-19 crisis
strategies [32]. The most important of the
applied measures are summarized in Table II.
SME support is an important part of the
support package in many countries. Some of
the measures apply to all business
organizations, while others are specifically
targeted at SMEs and their employees.
According to [34], the most common support
measures for SMEs during COVID-19
pandemic were credit financing and
employment incentives. Examples of fiscal
policy are given in various measures, in the
form of tax reliefs, targeted at reduction of
liquidity burden on SMEs and to help their
businesses.
SME business support measures need to be
reinforced in transition countries, especially
impoverished
economies.
Support
for
sustainable business of SMEs should include
measures to mitigate illiquidity; measures to
support safety of employees; as well as to
improve the efficiency of supply chains and the
continuity of regular operations.
IV.
THE IMPACTS OF KNOWLEDGE
MANAGEMENT IN SMES
Training and informal education represents
one of the most significant knowledge
management mechanisms that can be used to
mitigate the effects of various disturbances
caused by COVID-19 pandemic. SME needs to
assess its own body of knowledge and be aware
of the lacks in information or procedure that
can harm its business profit and endanger its
position at the market. On the other side, any
training and education activities represents
certain cost for the SME, in terms that trainers
should be paid, but also every absence of an
employee from his workplace represents an
expense. This is the reason why an
entrepreneurial training and education in crisis
business conditions, under the influence of the
COVID-19 pandemic, should include precise
knowledge and skills, in accordance with the
new needs of SMEs, and in order to adapt to
different
market
requirements
[35].
Entrepreneurship education programs should
also cover various crisis aspects of business and
legal norms that are governing business in the
88
conditions of COVID-19 pandemic. It would be
certainly useful to provide access to teaching
materials in the form of e-learning on the
internet platform, since this material can be
used multiple times with adjustments when it is
needed, employees can any time re-access to
the material and there are potential savings
since no face-to-face training is required [35].
An additional form of support for the
empowerment of SMEs is the mentoring
program, organized in Serbia by the
Development Agency of Serbia (RAS) and the
Japanese Agency for International Cooperation
and Mentoring Development (JICA). The
process of mentoring for SMEs includes the
analysis of current operations, identification of
the causes of existing obstacles for further
development, and identification of key
potentials for growth [36]. The areas in which
mentoring can be carried out include: diagnosis
of the current situation, assistance in the
preparation
and
implementation
of
development activities, plans and projects,
counseling and coordination in the process of
accessing funds, new technologies, assistance
in the preparation of loan applications,
assistance in finding business partners,
assistance in analytics and finding the
necessary information, connecting with
specialized consultants and other areas of
importance in crisis business conditions [36].
Market reality and expected economic
trends have been changed to a greater or lesser
extent under the influence of COVID-19 crisis.
The crisis also changed consumer habits,
affected the market position of SMEs on the
local market, but also on foreign trade, due to
imposed restrictions or extended deadlines.
Precisely in crisis conditions, one of the
measures that can enable the survival and
sustainable development of SMEs is mentoring.
Mentoring can be adapted to different needs
and realities: from defense strategy, to support
in significant growth and development or a new
investment cycle of SMEs. Mentoring implies
an adequate level of expertise, and the
application of the best business practices that
can be adapted to the specific situation of each
SME, and can be of great importance in the
conditions of COVID-19 crisis [35].
Mentoring, compared to entrepreneurial
training and education, has certain advantages
in the form of individualization, tailored
counseling regarding crisis business strategy,
business
adaptation
to
extraordinary
circumstances, interpretation and adaptation to
new legal regulations, or similar situations,
very specific for each SME. As in the case of
entrepreneurial education, the mentoring
process should be available on the internet
platform, or different “remote” communication
methods should be enabled, which would
ensure the availability of SME mentoring
advice during crisis circumstances, movement
restrictions, illness and similar situations [35].
A. The importance of innovation in the
COVID-19 crisis conditions
The crisis caused by COVID-19 pandemic
once again confirmed that only companies that
are flexible and capable of quickly adapting to
new macroeconomic conditions can continue to
grow and develop, and remain competitive on
the
market.
The
development
and
encouragement of innovation in SMEs is of
great importance for the continuation of their
successful business in accordance with the
changed market conditions. This way, the
sustainable business of SMEs and their further
growth is achieved.
Innovativeness has a significant impact on
the prosperity of the national economy and
plays a major role in times of crisis. Innovative
SMEs are considered drivers of economic
growth, which especially includes companies in
the high-tech sector. Reduced innovativeness in
the years preceding the Global Financial Crisis,
which broke out in 2008, contributed to the
outbreak of the crisis and deepened its effects
[37]. Innovativeness and recognition of
opportunities in crisis conditions are important
factors for the survival and sustainable business
of SMEs [38]. Innovation is one of the most
important factors for the recovery of SMEs
even in the conditions of COVID-19 crisis, as
well as an incentive for the recovery and
development of the entire national economy
[39]. SME innovativeness leads to long-term
benefits for SMEs and can significantly help
mitigate the impact of COVID-19 pandemic. It
represents a solution for the growth and
development of these companies in crisis
conditions.
In particular, the open innovation process is
of great importance for SMEs in periods of
crisis. If the open exchange of knowledge
between companies is encouraged in the
national economy, then SMEs can gain new
knowledge that will enable them to improve
their innovative processes. Knowledge sharing
includes their suppliers, customers and other
external sources of knowledge. The innovative
process is improved through cooperation with
complementary companies during which
knowledge is exchanged and creativity is
encouraged [40].
However, innovative activities imply the
availability of financial resources, and at the
same time carry with them risk and uncertainty.
SMEs face difficult access to financial
resources, which threatens innovative processes
in these companies and makes it difficult for
them to survive and operate profitably in the
conditions of COVID-19 crisis [39]. SMEs that
have available funds to enable investment in
innovation, and maintain a certain degree of
innovativeness, will have more significant
chances for survival, growth and profitability in
crisis conditions [41].
V.
CONCLUSIONS
Crisis circumstances are defined by a large
number of unpredictable risks, which are
interdependent, and have a strong impact on the
profitable business and corporate sustainability.
Crisis management in SMEs requires creative
business solutions, which are not needed during
regular operations.
Crisis management in SMEs requires
planning of sustainability and business
continuity, preparation for potential crisis
situations, as well as providing the necessary
resources to deal with unpredictable
circumstances. It is necessary to adjust the
organizational culture, structure and business
processes, in order to respond in a timely
manner to anticipated or sudden changes in the
environment. These adjustments ensure
profitable and sustainable business operations,
and should be part of the strategic management
process in SMEs.
Regardless of the threats faced by SMEs,
the COVID-19 pandemic has also created new
opportunities for profitable business. New
needs have emerged in the market for some
indispensable products and services, including
personal protective and preventive tools, and
other medical goods and resources. Pandemicaccelerated digitization has led to demand for
digital products and services, although the
digitization process is uneven across national
economies. In developed and upper-middle
economies, the digitalization process is more
89
intensive, although in these countries there is
already a developed digital infrastructure,
online commerce and distribution network.
Crisis management is a challenge for SMEs,
where managers need to make strategic
decisions in the most difficult circumstances, in
order to reduce the harmful crisis effects on
business and take advantage of new
opportunities. Crisis management is the
mechanism of identifying and anticipating a
potential crisis, and acting to mitigate its
negative effects on business. This process
shouldn’t be a defensive reaction to the crisis
effects, but also as a foresighted way of
management, which includes preventive action,
preparedness and recovery of the company.
Knowledge management should be support of
crisis management in SMEs. Entrepreneurship
education programs should cover various crisis
aspects of business and legal norms of
governing business in crisis conditions.
Educational material should be in the form of elearning, provided on the internet platform.
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
ACKNOWLEDGMENT
This paper is the result of research within
the project: eDLP4MSMe - Distance Learning
Platform for the MSMEs and Entrepreneurs
(2021-1-RS01-KA210-ADU-000027368)
financed by the EU.
[18]
[19]
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91
92
PaKSoM 2022
The Significance of Sustainability and
the Management of the Green
Economy using Modern Technology
Biljana Ilić1, Zorica Djurić2
1
Faculty of Management Zaječar, Zaječar, Serbia
Alfa BK University Belgrade, Belgrade, Serbia
2
1
biljana.ilic@fmz.edu.rs, 2zorica.djuric@alfa.edu.rs
Abstract—Global acknowledgment of the necessity
of the shift to a green economy has been sparked
by research into the negative impacts of past
behavioral patterns and business models on the
environment and human health. A green economy
must be built on aims that are vastly different from
the current, unsustainable ones. Understanding
the interdependence between human and
ecological well-being is the key because it inspires
efforts to promote a fair and environmentally
responsible economic system. The emphasis is
shifted to long-term sustainable economic
development with environmental protection as a
result of the new opportunities for sensible
decision-making at all levels, including those of the
state, the economy, and the individual. By
balancing contemporary accomplishments and
business with the objectives of the green economy,
the paper will modestly contribute to highlighting
the value of new technology in specific spheres of
human life.
Keywords – green economy, business models,
environment, new technologies, management.
I.
INTRODUCTION
This The global economic growth paradigm
in use today is, for the most part, unsustainable.
Natural resource depletion, environmental
degradation, the acceleration of climate change,
and social stratification result from this. If
sustainable policies are followed, the
government sector is globally accountable for
both the abolition of unproductive state policies
in the area of the green economy as well as the
creation of effective and sustainable policies,
such as the adoption of green public
procurement. The promotion of the shift to
ISBN: 978-86-82602-00-2
circular business models should be the
fundamental responsibility of every nation's
economic sector. This would include changing
company structures that focus primarily on
making a profit and fostering economic growth.
It would be required to curtail people's careless
hyperconsumption at the consumer level, or the
individual level.
By promoting economic growth while
lowering resource consumption, the shift to a
green economy moves society closer to
intelligent,
inclusive,
and
sustainable
development. It is vital to bring logistics
simplification, lessen reliance on suppliers,
increase product control, and eventually stop
future ecosystem harm. The green economy
comprises ethical business practices like
ecological agriculture, the advancement of green
technology, recycling, and waste management,
the digitization of services, water management,
and environmentally friendly architecture,
building, and design. The green economy is
connected to green social innovations, green
scientific-technological advancements, and
circular economies. The circular economy
prioritizes, among other things, waste recycling,
waste reuse as raw material, waste prevention,
waste reduction costs, and company
improvement. In this way, numerous
initiatives/processes have been started to create
a green and circular economy. However, aside
from trash management, no notable outcomes
were made due to the fragmented approach, lack
of preventative measures, and financial
assistance from local and national agencies. The
green and circular economies offer enormous
93
put before the green economy. In the following
years, the concept of green economy becomes
generally accepted through numerous initiatives,
international conferences and the inclusion of
new groups of actors (entrepreneurs, socially
responsible
corporations,
international
development institutions, financial institutions,
academic
institutions,
non-governmental
organizations,
incubators,
employment
agencies, etc.).
Figure 1. Figuratively – Green economy to greater
results
opportunities for small and medium-sized
businesses, the procurement sector, and an
opportunity to improve energy efficiency, but
there is very little knowledge of their
advantages. The conclusion is that a more
methodical, thorough, and long-term approach is
required. At that point, creative approaches and
the adoption of fresh technologies into business
are put to use.
In the period of the economic crisis of 2008,
the green economy asserts anew and tries to
offer answers to the increasingly numerous
challenges of the global financial crisis and the
entire concept of sustainable development. The
United Nations Environment Program (UNEP)
is launching the Green Economy Initiative to
create a framework and gain political support for
investments in the green economy and the
“greening” of environmentally harmful sectors
of the economy. In 2009, a report called the
Global Green New Deal4 (GGND) proposed a
series of measures and policies that would
contribute to economic recovery and at the same
time encourage a higher level of environmental
responsibility, sustainable economy and respect
for the principles of sustainable development.
This program intensively called on the member
governments of the UN, and primarily the
governments of the most developed countries of
the world (G20), to make greater efforts and
redirect at least 1% of the gross domestic
product (GDP) to start the green economy
sector. In this way, it contributes to the
simultaneous
achievement
of
mutually
complementary goals: economic recovery,
reduction of poverty and reduction of CO2
emissions and ecosystem degradation. The big
and important goals of the recovery of the world
economy, the creation of new, better quality and
cleaner jobs and finding a model of more
responsible management of human resources are
94
New publications are being created that
more closely define the key principles, benefits
and risks and highlight good practice examples
of green economy and green entrepreneurship.
The UN conference on sustainable development
RIO+20, held in 2012, devoted full attention to
the further improvement of the green economy
with greater emphasis on ways of supporting
developing countries in finding their own green
economy model. This comprehensive concept of
development, which simultaneously encourages
poverty reduction, development of rural areas,
while taking care of food security, providing
access to clean water and energy as well as a
whole range of issues of environmental
protection and biodiversity, is not easily
implemented due to its complexity. Therefore,
every country should have a long-term green
economy development plan with clearly defined
priority areas. The challenges for poor and
developing countries are even greater because,
due to a lack of resources (knowledge,
technology, financial resources and public
support), they cannot simultaneously initiate all
areas of development. The green economy
encourages development, it is inclusive - it
encourages social equality and cares for the
preservation of the environment [1].
Therefore, the green economy significantly
reduces the introduction of crisis management in
organizations that respect the principles of
sustainable business. Also, the green economy
encourages the development of new
technologies and innovations, so that the
operations of modern organizations meet the
requirements of sustainability.
II.
EXAMPLES OF GREEN AND CIRCULAR
ECONOMY
The Smart Collective is a pioneer in Serbia
when it comes to promoting socially responsible
companies because they believe that businesses
should and can play a beneficial role in social
development. The goal to create corporate social
responsibility (CSR) as a common company
practice through education, empowerment,
networking,
increasing
awareness,
and
launching numerous events and projects is what
drives Smart Collective's involvement in the
growth and advancement of CSR in Serbia [2].
Serbia is an example of a country in the region
that is rich in natural resources and dependent on
economic activities that contribute to their
destruction and the reduction of the capacity and
quality of the ecosystem, as stated in the study
of the Smart collective, supported by the
European Union, on the topic of a green future.
The reliance on the dirtiest fossil fuels for the
whole economic expansion of the GDP is a
result of the dependency on coal as the primary
resource in the production of electricity. In
addition, this method of energy production
results in 70% of all trash being produced. Clear
standards, incentive rules, and quality-directed
investments were highlighted as essential
preconditions for the development of the green
economy.
Numerous useful concepts and tools for
enhancing company operations are made
possible by green and circular economies. Many
businesses (H&M, Lenovo, Feydom Furniture,
Sony Group Corporation, Audible, etc.) were
urged to implement procedures for product
recycling and reuse as well as product
digitalization, which gave them a higher position
in the market among conscientious consumers.
So, for instance, the aforementioned brand
H&M created a take-back program that allows
customers to return used clothing in exchange
for a voucher that can be applied to their
subsequent purchases at H&M. The method
described allows for the reduction of waste
clothing and textiles that would otherwise end
up in landfills, the facilitation of material
circulation (through recycling or sale on the
second-hand market), and the stimulation of
consumer thought toward more sustainable
practices and consumption patterns. The
company Feydom Furniture doo, Skopje, is one
of the examples relating to the furniture industry
in the area. Its design, which is a fundamental
component of the concept, enables product
modularity, and application in multiple ways,
and encourages customers to take an innovative
approach to product use. Here are some
instances from the world of IT. Lenovo has set
up a device-as-a-service (DaaS) service that lets
customers rent items. The business offers device
management, configuration, servicing, support,
and other IT solutions in a customizable manner.
Extended producer responsibility (EPR) through
product life cycle management after use and
increased business efficiency and effectiveness
are the main outcomes of the aforementioned.
PS Plus is a paid PlayStation subscription
service offered by Sony Group Corporation.
Members have access to online multiplayer
gaming, special discounts from the PlayStation
Store, 100GB of game cloud storage, and bonus
content in addition to being able to download
two PS4 downloadable games each month. As a
result, the CDs were converted to digital format,
and the aforementioned advantages inspired
players to improve their practice while
preserving their gaming experience. Audible has
reinvented the media category and is the primary
driver behind the current audio entertainment
revolution thanks to access to cutting-edge
technological innovation and superior usercentric programming. Every day, Audible
enriches the lives of millions of listeners by
offering audiobook content, Audible originals,
and exclusive podcasts [3]. Audible is a market
leader in the creation and distribution of quality
audio storytelling.
III.
TECHNOLOGICAL INNOVATION –
MODERN TECHNOLOGY
Information technologies are a recent
development in technology that has impacted
every part of modern life. It is now impossible
to imagine how the information would flow
without the use of information technologies.
Informatics is one of the most recent and
difficult topics in today's world. The French
Academy of Sciences defines informatics as the
discipline of rational information processing,
primarily employing automatic machines, as
information is recognized as the bearer of human
knowledge and communications in the fields of
technology, economics, and other social
sciences [4]. As opposed to only being related to
electronic data organization systems (ELSOP),
French scientist Arsac (Arsac J.) said that this
developing field is far larger and involves
several topics [5]. The weightless economy, or
electronic commerce, depends on information
technologies, which are frequently referred to as
new technologies in today's society. Electronic
business plays a significant role in
organizational changes and opens the door for
new business models, requiring a review of the
guiding principles for its implementation and
raising doubts about the effectiveness of
conventional business practices and policies, the
majority of which were created based on
95
outdated
theories
in
comparison
to
contemporary realities. Electronic business is a
way of business that relies on technology and the
Internet. It includes all business transactions and
information exchanges enabled by information
and communication technology, such as those
that take place between corporations, between
corporations and consumers, and between
corporations and the government [6]. “The
purchasing and selling of information, goods,
and services over a computer network and
support for any type of economic transaction
using a digital infrastructure” are the definitions
of electronic business. No of the constraints of
time or space, it is all about business [7]. “The
more advanced the tools employed in business,
the more likely it is that a market will be close to
being realized by the laws governing it.
However, because the hazards of economic
misconduct of all kinds are increasing, there is
also a need for better social and governmental
scrutiny as well as commercial legal
regulation” [8]. E-commerce stands out as a
distinct category within the context of global
economic trends because of its exceptional
penetration and distribution, paving the way for
the “internet economy,” a brand-new economic
structure. Electronic data exchange, business
records built on EDI (an acronym for the English
word “Electronic Data Interchange”), and the
Internet allowed multinational firms to connect
with their affiliates, business partners, and
subcontractors throughout the country and
around the world. The “network economy”
strategy is the foundation of the new sustainable
economy. Customers can save money, time, and
space thanks to it. Network economies, digital
economies, and knowledge economies are all
examples of “post-industrial societies.” The idea
of the “new economy” initially surfaced, in
theory, a few years ago [9]. In this new scientific
paradigm that must account for all of the
economic, social, and cultural changes brought
about by ICT (Information Communication
Technologies), the Internet holds the position of
“honor” [10]. In the Internet economy, payment
methods and transactions are essential to
business relationships and operations (as well as
in traditional conceptions of economics). There
is a very strong and substantial relationship
between new technologies and the management
of the green economy. This is also demonstrated
in the cases in this paper, particularly those that
concern the businesses Lenovo, Sony Group,
and Audible. Information technologies,
however, take things a step further by integrating
96
cloud technology into numerous commercial
sectors. Utilizing the cloud as a novel method of
data processing and archival is one of the most
recent advancements in information technology.
Cloud accounting, sometimes referred to as
online accounting, web accounting, or virtual
accounting systems, is currently receiving more
and more attention. One of the most important
approaches to ensure the efficiency of the
accounting information system is to adopt these
technology solutions [11]. In this way, paper, a
fundamental tool for work in old, classical
accounting, is conserved along with time. The
environment is preserved since numbers are now
practically memorized rather than being written
down on paper. Of course, the whole process of
protecting the environment and fostering a
sustainable economy can be broken down in the
sense that if less paper is used in jobs that require
writing and calculation (like accounting
services), then the wood will not be used as the
primary raw material for paper production. As a
result, forests are protected, but there is no
technology involved in turning the wood into
paper. Therefore, if virtual data processing
technology is employed, the expenses of
procuring materials for work organization are
decreased because there is less need for paper.
The business runs sustainably and gets paid
extra for being socially conscious. By doing this,
the organization's goods will be easier to
recognize and more competitive in the market.
On the other hand, because it will be used less,
wood processing technology won't hurt the
environment. so forth. It is a circular or green
economy as a result.
IV.
CLOUD COMPUTING AND VIRTUAL
REALITY - GENERAL DETERMINANTS
The processing capacity of the computer
used in the cloud environment is currently the
issue, not the access technology, which is at a
reasonable level. It is common knowledge that
software capabilities currently far outpace what
our hardware is capable of. Quantum computing
consequently started to advance. With its
appearance, cloud computing technology has led
to a revolution in numerous spheres, among
others in the field of business software, i.e.
business information systems. A version of this
technology called Software as a Service (SaaS)
has provided the opportunity for numerous
companies to outsource part of their business
processes to independent providers, specialized
in various types of business information
systems, i.e. business functions of the
company [12]. Artificial intelligence is a
subfield of study that involves the artificial
reproduction of the cognitive abilities of human
intelligence to produce software or machines
capable of performing functions that are usually
inherent only to humans [13]. There are several
instances of artificial intelligence being used in
business. Since 2015, Google has used its Rank
Brain artificial intelligence platform for
marketing via chatbots, data analysis, product
recommendations, and dynamic pricing.
Robotics and rule-based systems are frequently
used in conjunction with artificial intelligence to
forecast outcomes and drive autonomous
procedures. Artificial intelligence is ultimately
something that internet entrepreneurs will
unintentionally employ as a key component of a
product or application, similar to huge data, and
the results of this reality are significantly more
significant than the technology that helps
achieve it [14]. Machines that have artificial
intelligence built into them can recognize faces,
speak, and even win chess games without human
intervention. They can also learn from
experience and adapt to new inputs. Despite
being around since the 1950s, artificial
intelligence is currently being used more
frequently than ever thanks to the growth in IoT
data volume, high-speed connectivity, and highperformance computation. Nowadays, artificial
intelligence employs a variety of computational
and statistical methods.
Virtual reality is increasingly being used for
business endeavors, and educational institutions
are starting to adopt it. Virtual reality, a field of
technology, promises to revolutionize the way
we view and interact with information, our
social networks, and the rest of the world.
Virtual reality, in genral, is a computergenerated simulation of a 3D environment that,
to the participant, appears to be reality. Virtual
reality aims to persuade the user that it is just as
real as the outside world. With today's VR
technology, virtually everyone may enjoy this
technology. Simply turning the head in the
appropriate direction and using control sticks or
motion sensors to walk, anybody can explore.
To make the experience as genuine to the user as
possible, virtual reality makes an effort to
engage all of the senses of the user.
It appears as though the user is in the virtual
world, which is an entirely different place and
time. Since all of the fundamental research has
already been completed, a considerably bigger
population than before can now access this
technology. There is a large developer
community with expertise in creating 3D mobile
app games. All online activities and user
experiences, including engineering, socializing,
purchasing, marketing, entertainment, and
business growth, can be enhanced by the level of
focus and presence that VR provides. Perhaps
soon, using VR to access 3D websites will
become as commonplace as using a screen to
access 2D websites is right now. The following
sorts of applications are currently being created
in the context of virtual reality, according to
Rankovic et al., and are utilized by various kinds
of businesses. [15] Tourism and travel With the
aid of virtual reality glasses, this kind of
application enables users to visit locations on the
other side of the world, museums in cities miles
away, attend festivals, and the like from their
homes within a short amount of time. Software
for mechanical engineering and industrial
design,
including
AutoCAD
and
SOLIDWORKS, aids in modeling, simulating,
and visualizing original solutions. Engineers and
designers can see the finished product in virtual
reality before it is produced. Additionally, since
the expenses are relatively modest at that point
in the process of developing a solution, this
allows for some experimentation and freedom
[16]. Construction and Architecture - To be able
to present the concept to customers, and
investors, or, more significantly, to be able to
test their design assumptions, architects and
engineers have continuously created mock-ups
of their design solutions. Software is currently
used to create virtual models of architectural
plans for modeling and rendering. Virtual reality
enables talks with stakeholders to be conducted
with a great deal more assurance and confidence
in the model itself. In addition to everything
mentioned above, having such a model would
make it possible to incorporate additional
project partners, such as interior designers,
electrical engineers, and others, far earlier [15].
To draw in as many customers as possible, real
estate companies were among the first to use the
Internet and various visualization technologies.
They generated as many sales as they could. It
has become standard practice for agencies to
provide an online panoramic video of the entire
property being sold. The buyer may fully
experience a house that may be thousands of
kilometers away from him thanks to virtual
reality [15] Medical: When discussing the use
of virtual reality in medicine, instances are given
that show just how far this technology may be
essential. Every day, hospitals make models of
97
bones and organs using MRI and other scanners.
These models will then be utilized for diagnosis
or potential pre-operative plans. The analysis
itself is improved by utilizing virtual reality to
produce more sophisticated visualization and
measurements. VR is employed in training for
students who intend to practice surgery in
addition to this application [17]. Mental health
Patients with post-traumatic stress disorder have
been demonstrated to benefit from and benefit
from therapy when using virtual reality (PTSD).
Similar to the example given above, VR has
been shown to help people overcome their fears
of flying and arachnophobia (the fear of spiders).
Education: Everyone can immediately see how
educationally beneficial virtual reality is. Virtual
reality can be considerably more profitable and
economical in the long term, in addition to being
a better method of teaching. To educate
youngsters about the risks and repercussions
associated with driving while distracted, Toyota
developed a simulation for drivers using virtual
reality as an example. Students had the chance
to operate cranes and other construction-related
machinery as part of another project. Police
officers and firefighters could benefit from a
similar type of training that would enhance their
performance in emergencies. Along with these
instances, the American National Football
League NFL and numerous colleges are seeking
VR training to benefit their athletes [17].
Entertainment: virtually attending rock concerts
and other events, as well as sporting events.
Better news experience, (from the scene), as if
you were in the field with the reporter. additional
360-degree video content [18]. One of the best
examples of virtual reality being used in
electronic commerce is the well-known website
eBay, which in 2016 established the first virtual
department store in collaboration with the
Australian corporation Mayer. The merchandise
at this department store can be viewed by
customers with the use of a mobile smartphone
and a VR case. Users have the power to move,
rotate, and magnify the products themselves, as
well as view real-time availability information
and, most importantly, make a purchase [19,20].
V.
CONCLUSION
A new crucial skill has emerged as a result
of the development of the Internet: online
research. This ability is the outcome of
technological advancements that have made it
necessary to prepare people for life in the digital
era. Today, pertinent information may be
quickly discovered online. Due to this reality,
98
everyone occasionally struggles with a lack of
abilities. These abilities, which people require in
a variety of circumstances, can be learned and
developed via experience. Many platforms exist
for people to learn new skills and to enhance the
ones they already possess, but before upgrading,
sometimes people require assistance identifying
knowledge gaps. In all spheres of human life, the
world today is undergoing significant and quick
changes. The preservation of a healthy
ecosystem and the natural world, however, is
essential. Getting the most output out of the
fewest resources invested is one of the
objectives of the economy. The green economy
is an improvement above the traditional
economy. It is an economy that balances
corporate
opportunities
and
regulatory
frameworks with those of the natural world. If
you don't consider the cost associated with such
a result, we can't talk about good business
results. These objectives and outcomes are
specifically addressed by the green economy on
a global scale. Since new technologies are a
crucial component of modern living, they must
be used to advance the green economy.
REFERENCES
[1]
Vukovic, S., Coric, G., Lisjak, D. (2020). Green
economy for regional development (Srbian:Zelena
ekkonomija za razvoj regiona). FORS:Montenegro.
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at: https://smartkolektiv.org/
[3] The green economy towards sustainable development
(Serbian: Zelenom ekonomijom ka održivom razvoju).
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ekonomija-izazovi i mogućnosti). Union of Ecologists
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23-32.
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Technologies and Eco-Innovation for Sustainable
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99
100
PaKSoM 2022
The Importance of Innovation and
Creativity of Employees in Modern
Organizations
Dragana Kovač1, Edit Terek Stojanović2, Mihalj Bakator3, Mila Kavalić4, Verica
Gluvakov5, Maja Gaborov6
University of Novi Sad, Technical Faculty “Mihajlo Pupin”, Zrenjanin, Serbia
1,2,3,4,5,6
1
4
milosavljevd@yahoo.com, 2terekedita@gmail.com, 3mihaljbakator@gmail.com,
milazakin@gmail.com, 5vekagluvakov@gmail.com, 6majagaborov26@gmail.com
Abstract – Modern business is characterized by
constant changes. These changes are mostly
related to changes in technology, organizational
structure, management models, consumer
demands, etc. Consumer demands have influenced
the fact that now, in addition to high-quality
products and services, they also need to be unique
and different. Precisely because of this, employees
are required to possess a wide range of knowledge
and skills, which they constantly improve, but also
to be creative and innovative, in order to be able to
respond to these demands. This paper will present
the characteristics of modern organizations, that
is, modern business, explain the concepts of
creativity and innovation, and explain the impact
these employee skills have on the success of
modern organizations.
Keywords – modern business, innovation,
creativity, knowledge
I.
INTRODUCTION
One of the basic prerequisites for business
success, in today's turbulent business, is the
ability for organizations to quickly respond to the
changes that affect them. The globalization of
business, the development of high technology,
changes in the wishes and demands of
consumers, are just some of the characteristics
that change the modern environment, which
significantly influence the change in business
activities [1]. The dominant factor influencing
the success of business is the knowledge that
employees have [2]. These days knowledge
should not be reduced to only general, that is,
formal knowledge, acquired through education.
ISBN: 978-86-82602-00-2
Business success demands constant learning,
improvement and acquisition of new knowledge
and skills. This implies informal education,
which is reflected in the improvement and
development of business competencies [3]. All
these changes have led to changes in the wishes
of consumers. Apart from products and services
that must be of extremely high quality, they now
demand something that is unique, interesting,
and innovative. Therefore, employees are
required to be innovative and creative. Creativity
represents the ability to create new ideas and new
ways of solving problems, and innovation means
turning those creative ideas into action.
Creativity and innovation are key skills for
employees and one of the best ways for an
organization to be far ahead of competitors [4].
Therefore, the success of a company in turbulent
business conditions requires a quick response to
changes. In order for this to be possible, it is
necessary to create a creative working
environment, in which employees will cultivate
their creative potential, be more innovative,
productive, more satisfied with their work and
where the probability of turnover will be reduced
to a minimum [5].
II.
CHARACTERISTICS OF MODERN
ORGANIZATIONS
The only thing certain in modern business is
change. Modern organizations operate in a
turbulent environment, they are influenced by
numerous internal and external factors, which
determine their business behavior and affect
business results [6]. To achieve business success,
101
organizations must be prepared to responses to
all changes. These changes refer to changes in
technology, production, use of modern business
models, employee abilities, etc. Responses to
these changes should be based on the application
of management techniques, which will entail the
constant improvement of employees' knowledge,
their creativity, innovation, and flexibility [7, 8].
Therefore, modern business is based on the
economy of knowledge. The performance of an
organization
represents
the
aggregate
performance of all the activities it undertakes.
Knowledge and knowledge management
therefore represent an integral part of the
continuous improvement of organizational
performance, as it ensures that the organization
identifies, examines and exploits market
opportunities, which ultimately ensures superior
performance [9].
Technological changes also have a major
impact on the success of organizations. Namely,
organizations must keep up with the
development of technologies in order to remain
competitive and achieve good business results. In
addition, the development of modern
technologies has led to changes in the needs and
demands of consumers. As the development of
technology led to greater consumer awareness,
their changes became more frequent [10]. Given
that we live in the time of Industry 4.0 and
consumers have become consumers of 4.0.
Organizations are forced to change their
strategies in order to respond to the demands of
consumers. In order to be able to respond to these
demands with certainty, organizations must:
constantly communicate with consumers,
establish themselves as a trustworthy
organization by saying what the consumer wants
to hear, constantly create new values for
consumers, be even faster in recognition their
wishes and needs [11].
The extremely high quality of products and
services that consumers want is stated as an
imperative. Those products must be ecological,
more and more attention is being paid to the use
of renewable energy sources, etc. In addition to
all that, consumers are looking for products and
services that will be unique, different, and more
original. In order to respond to these demands,
organizations require creativity and innovation
from their employees, in addition to the skills and
knowledge they possess. Through the creativity
and innovation of employees, organizations
improve their products and services, offer
102
consumers what they want and thus maintain a
competitive advantage [12,13].
III.
INNOVATIVENESS AND CREATIVITY OF
EMPLOYEES
People are very valuable in the organization
in which they work, because each individual
brings with them certain knowledge and
experience, which increases during work. Many
studies have shown that creativity and innovation
exist in every employee, it is only necessary to
encourage them [5]. Creativity can be defined as
the production of new and useful ideas related to
products, services, processes and work
procedures [14]. In order to encourage creativity
among employees, it is first of all necessary to
build a creative work environment. It is such a
working environment that most effectively
supports the generation of new ideas. The
creative work environment is influenced by
numerous factors, which can be grouped into
four areas [5,15,16]:
leadership behavior - leaders are the ones
who need to encourage creativity,
motivate and encourage employees;
team climate, social interactions and
norms - team climate is a reflection of
organizational culture and climate. As
such, it is manifested in the patterns of
behavior, attitudes, beliefs and values
that are cultivated in the organization;
communication
and
cooperation
processes - employees must have
excellent communication channels
between themselves, in order to share
ideas
with
each
other,
but
communication and cooperation with
people outside the organization is also
important;
work and job design - the importance of
“good work” plays a significant role in
motivating
employees'
creativity.
Therefore, it is necessary for the job to
be designed in such a way as to give the
employee the autonomy to make
decisions, to plan his work, as well as the
availability of the necessary resources.
Innovation depends on creativity, which
means that organizations should pay attention to
the creative potential of their employees and
support creativity at work [17]. Therefore,
innovation implies the implementation of
creative ideas into action. Innovations are a key
factor in the competitiveness of organizations, in
particular expressed now at the time of
shortening the life cycle of products and rapid
development of technologies. It is for this reason
that organizations are looking for employees
with innovative knowledge. Likewise, they are
obliged to organize regular trainings, so that this
knowledge does not become obsolete.
Employees with sufficient innovative knowledge
will more easily participate in the creative
process. When employees invest their efforts to
identify the problem, obtain as much information
as possible, and use their knowledge to engage in
the creative process, solutions that are new and
useful are more likely to emerge [18,19,20].
Another factor that influenced the need for
greater employee innovation was the outbreak of
the Covid 19 pandemic. In order for all work not
to be neglected, employees had to find innovative
ways to keep the business alive. Here too, instead
of earlier, reactive innovative action, the need for
proactive innovative action arose [21].
organizations a competitive advantage [24-26].
Creative thinking and innovative behavior are
exclusively human skills and no artificial
intelligence can replace them. The originality of
the idea and its implementation is the response of
creative and innovative employees to
increasingly demanding consumers for specific
products and services [27].
The task of organizations is to support
innovative and creative employees. A lack of
motivation can cause talented employees to
avoid job opportunities and not put enough effort
into what they do. Inefficient use of talent is a
practical waste of resources, which ultimately
leads to a lack of creativity, which further entails
a lack of innovation and new original ideas. The
most important forms of motivation are material
rewards, but also support, praise, giving freedom,
feedback, etc. [22,23].
One of the key success factors in the business
of organizations is to attract and retain people
Creativity and innovation within well-run
companies have always been recognized as a
sure path to success. Creative business ideas set
companies apart from each other. Without
creativity and innovation, every company would
follow
the
same
patterns
in
marketing/promotion, production technology,
business methods, and even the products and
services it sells [28]. Creativity and innovation
are very important to business (for all industries)
and the success of organizations. Five reasons
why they are important can be singled out and
they are shown in Fig. 1. [29].
IV. THE INFLUENCE OF INNOVATIVENESS
AND CREATIVITY OF THE EMPLOYEES ON THE
SUCCESS OF THE ORGANIZATION
Today's time is a time of rapid and frequent
changes. If the organization, as well as all its
employees, are not aware of this, not only will
the organization not develop further, but it is also
doomed to lose its existing market positions. We
live in the time of Industry 4.0, in which
completely new ways of production appear,
where robots become a key element and where
ordinary human activities and thinking are
trained to be overcome [22]. Increasing levels of
automation and the interconnectedness of the
digital and real worlds are creating an
environment that requires a range of
interdisciplinary skills. For the sustainability of
the company in this environment, human
creativity wins irreplaceable role. Innovation and
open and flexible thinking about necessary
changes (proactive introduction of changes) give
Figure 1. Reasons for the importance of creativity
and innovation
103
who possess creative and innovative abilities.
Also, these employees need to create an
appropriate working environment, which
stimulates creative and innovative behavior [15].
The ability of an organization to support
creativity and innovation, as non-repeatable
intangible resources, is a key element of
competitive advantage. Only organizations that
in the future will motivate their employees to be
innovative and creative through various types of
rewards will be able to survive in the turbulent
global market.
V.
REFERENCES
[2]
[3]
[4]
104
[6]
[7]
CONCLUSION
The tastes and wishes of consumers have
changed a lot in today's modern business. In
addition to quality, the uniqueness of the product
is sought. For this reason, it is very important for
employees in modern organizations to be
creative and innovative. Another problem that
occurs when preventing employees from
expressing their innovation and creativity is
employee turnover. Precisely because of this, it
is the task of leaders (managers) in organizations
to encourage and reward creativity and
innovation in their employees. In addition to
various types of material and non-material
motivation, numerous techniques, i.e. interesting
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and innovation of employees. Some of these
techniques are: brainstorming, different types of
case studies, cross training (getting to know the
work done by other colleagues), mind mapping
(displaying thoughts and operations using
drawings, which synthesizes knowledge and
stimulates imagination), scavenger hunt
(searching the literature , the Internet all the
information in order to arrive at a new solution to
the problem) etc.
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105
106
PaKSoM 2022
Education for Perception and
Interpretation of Reality in the Digital
Environment
Branko Marković1
1
Academy for National Security, Belgrade, Serbia
1
brankomarkovic010@gmail.com
Abstract—A contemporary man is not only
immersed into digital world of traditional and new
media, but also his perceptions and interpretations
are built by complex structure of information
communication technologies defining not only its
position both in digital and real world, but also the
capacities for cognition of these realities. Namely,
the possibilities of cognition are expanded, but
simultaneously the contemporary man becomes
more and more object of perception of
corporations, government and non-government
organizations, the media, and the result of that
process are the media and other contents adapted
to the needs and based on the prediction of
reactions. Education for perception and
interpretation of reality in the digital environment
is a broader term than education for the
interpretation of the media because it includes not
only media education, but also education about the
whole digital context of functioning media, as well
as the social consequences of development of the
information communication technologies, related
to both a reality and a man.
Keywords - education, the media, reality,
disinformation, digital
I.
DIGITAL – THE END IN THE DELUGE OR
NOAH’S ARK
We live in the biblical times of information
flood, Sodom and Gomorrah of media contents,
spreading of global disease, viruses and fake
news, a clash between good and evil, wizards,
heroes, traitors, crime, a blazing light of material
wealth from one part of the world and sorrow,
dark, sickness and suffering from the other part
of the world, global migrations between two
poles of happiness. Global digitalization has not
only upgraded the whole world, but also enabled
ISBN: 978-86-82602-00-2
creating new techno-social structure and its
hierarchy based on the convergence of social and
digital potential of reality perception that brought
us closer to those mystic times. Even in the
emergence of the digital world its Biblical
character can be discerned. Imitating his Creator
who created the world from words naming it and
giving it a meaning, a man has transformed that
world into digital print becoming preferential by
counter procedure thus depriving it of its
meaning.
If the digital is understood as an upgrade and
an extension of human senses, according to
McLuhan's theory, then managing that extension
would be imperative if one wants reality “not to
get away”. But there are many who want to
manage that process from economic, political,
cultural and maybe even the reasons that go
beyond normal and rational.
Newly created digital-social structure created
a hierarchy of impact potential on which the way
we see the world depends. In other words, it will
depend on where we are in this structure whether
digital extensions are part of our digital identity
or the extensions we think they’re ours, and in
fact they are the extensions through which an
intensive influence is exerted. When we surf the
Internet and download its content, the other
people are vigilantly searching our interests, as
well as requesting and obtaining permission to
access the devices in exchange for using the
applications they made. Swimming in the digital
waters became automatic, having in mind that we
are more and more consciously directed towards
warm waters of conformity while cold, sobering,
107
critical digital waters became unattractive and
compromised.
Moreover, the global pandemic of Covid-19
virus resulted in “the changing the paradigm of
how we function in the digital world”, that is,
imposing “the new digital normal” and the way
we work, learn, trade [1]. The restriction of
movement caused us to replace the physical
meetings, school classes and scientific
conferences with virtual ones, and socializing
with chatting on social networks. Being forced
by the curfew to such behaviour, we discipline
ourselves to be continuously exposed to digital
technologies.
In such conditions, an individual’s position
seems to be hopeless. Surrounded by the contents
he wants to see, trapped in information bubbles
of
political,
economic,
ideological
understandings of “naive realism” [2], he is being
boiled as a frog in the self-sufficiency of his
importance, because the goal has been achieved,
“I appeared online, my voice is heard.”
Swimming in the digital world means “to exist”,
where the place for existing is not so important at
all. The architecture of the digital environment
creates new rules and institutional concepts [3].
Voluntary accepting such situation completes
the process of power realization, individuals
become, not this time extensions of perception,
but of realizing the interests of others. A user
become taken advantage of, the subject of
information and communication almost
voluntarily turns into an object. Meaning arises
from the omnipresence of digitality, and not from
the contents dispatched almost for compromising
the idea of any kind of media education,
especially having in mind that a part of digital
extensions has been moved outside the media
frames.
This is why it is very important that education
for media or media education broadens from
media contents and everything following from it
into socially digital structures of perception
extensions. Because media education is mostly
related to the projected need to disable
misinformation or manipulation and propaganda,
that is the influence of the media regarding the
assumption that the media are dishonest and have
hidden agendas. On the other hand, expanded
understanding of media education leads to
creating capacity of the man of the future for
changing the individual's position in the digital
social structure, that is creating responsible
citizens who are motivated and competent
108
participants in socio-political life [4]. In that
respect media education would include education
about the choice and use of media technologies,
education about media industries and media
contents, as well as media education of the
media.
At the same time, it is necessary to respond
to numerous challenges of digital environment,
beginning with inequality in the progress of
digital education and inadequate opportunities
for acquiring adaptive skills tailored to the
digital world, as well as to overcome limitations
in interdisciplinary research [5].
II.
MEDIA LITERACY IN DEFENSE OF
REALITY
The process of media convergence is the
result of digitalization that is powerful
development and interaction of information
communication technologies with social
structures. The relationship between man and the
digital world realized through the technical
means is looked through the prism of so-called
pre-communication impact stage. Namely, the
way itself as well as the conditions or motives for
connection with its extensions significantly
determine one's perception of the world. Our
interests, education, emotional state and other
factors determine if we’ll see the world through
the prism of traditional or new media, Internet, or
which applications we’ll use and in what way to
a great extent.
On the other hand, the same interests and
needs are created and delivered on the other side
of the digital offering. This is the reason why
selecting the way we interact with the digital
world or digital means, staying outside the
traditional comprehension of media education is
so important. If the traditional understanding of
media education, among other things, justifiably
indicated caution and more careful use of media
content, here we raise the question of caution in
the use of technical means for connection with
the digital world of ideas. By automatically using
technical means, one enters a vicious circle and
digital reality is accepted as a priority and based
on the principle of satisfying needs, it sends one
to a long journey into the warm seas of
conformity. By using an internet application for
communication installed with the permission that
such application can access microphone, camera
and other parts of the phone, an individual
provides personal information that may be of
interest to Internet companies in profiling
customers of certain products. By downloading
certain contents from the Internet, using the
search
engines,
simultaneously
getting
information about the subject of their interest,
one sends information about oneself and one’s
needs and current mental and emotional state. In
return, Internet companies send, in relation to
one’s needs, media content and suggestions
compatible with the required needs, and so on.
Imposing the digital as a priority does not
take place through the content but through use.
Accordingly, the first step towards the digital
literacy in defense of reality should be education
for selective use of technical devices, about
circumstances and time of their use, that is,
should they be used and to which extent. This
emphasizes the exposure and attention, or as
Potter would define it, physical, perceptive and
psychological exposure as significant factors that
determine the process of coupling the senses with
digital extensions. Exposure means physical
presence of connection devices (smart phones,
TV, computer), sensory ability to perceive
signals and messages from that device, as well as
awareness or ability to place the messages into
cognitive maps of meaning and significance. It is
important here to emphasize two conditions of
the mentioned communicative situation defined
by Potter as a state of automatism and a state of
paying attention [6].
According to Potter, a state of automatism
implies we are in the environment where we are
exposed to messages but we are not aware of
them. However, we go one step further. There is
a state of automatism, that is, exposure and
physical contact with devices we are unaware of.
Good example of such automatism is video
surveillance of public spaces, then TV remote
control with voice command on the shelf, mobile
phone in the pocket, computer on the living room
table, TVs with cameras, etc. An awareness of
the technical possibilities of the creeping
domination of the digital is necessary in the
strategy of protecting the real. A state of
automatic exposure to connection devices and
messages leads to states of automaticity in giving
attention to the events we are surrounded by,
where there is a great probability that we would
give primacy to mediated or digitalized reality.
Although watching, for example, a match or
a sporting event on television is justified by the
fact that we cannot attend it due to physical
distance or excessive costs, it does not mean
there are no matches we can personally attend in
our environment.
Breaking the connection, in this case between
automated and generated interest and paying
attention to the sporting event (information about
the time of match, the existence of transfers,
betting odds, etc.) which in comparison with the
local sporting event around the corner is an event
par excellence, wishing to watch it even on
television is the first step towards separating an
individual from the interests of the football clubs,
the media owners, betting shops and its coming
back to realistic scope and potentials. Such trivial
(we can call it naive as well) example most
efficiently reflects the hopelessness of media
literacy within the purview of choosing between
digital and real world. And this is just the
beginning, the question is whether we will have
a choice in the future.
Would we prefer face-to-face or telephone
contact, would we look flowers, mountains, seas,
cultural monuments only through our digital eye,
would we inform ourselves only through
television, social networks and worry about
global problems, at the same time passing by
polluted rivers and baskets full of garbage in our
immediate environment, it is all matter of choice
when and how we use the means of digital
extensions. It has already become a question of
human identity and supreme decision making on
a personal level. When connected to social
networks, a man becomes someone else. This is
why the question of choice, method and duration
of exposure to information communication
means becomes a matter of choice between real
and projected self.
Of course, one should not draw conclusions
from the above statements that a digital
technology is an evil that should be avoided. On
the contrary, digital technology brings with it
numerous benefits, but the “invisible production”
must not be allowed the luxury of enslaving
preferential reality, according to the principle of
a circle enchanted by mystical influences of
digital conveniences. Our consent is necessary
for that but it should not be given to unlimited
exposure to technical devices.
Reticence
about
using
information
communication
technologies,
especially
concerning the duration and method of use,
considering the appropriate alternatives,
assessment of personal capabilities and
potentials related to the exposure, that is, the state
of automaticity and fiving attention are the main
messages of new media education in the defense
of the reality, although aware that media
109
education can be compromised only relating to a
false naivety of those messages and “the public
paralyzed by cynicism as regards them” [7].
III. EDUCATION FOR PERCIEVING THE
REALITY OF THE MEDIA AND MEDIA REALITY
Media education should not be perceived as
the answer to evil technologies and dishonest
media. It is primarily focused on the active,
critical attitude towards media and digital
technologies, digital technologies, media
industries and media contents. Perception that
the media and means of digital technologies are
part of the social construction, reflecting the
hierarchical structures of society, being profit
oriented, functioning in certain cultural
ideological political frameworks, additionally
increases the capacities for the mentioned
relation. The dynamism of changes in the media
industries imposes constant critical efforts for
their perception, because knowing how media
industries function and with what motives is a
part of media education. Ownership structure and
media financing, that is, their transparency is
significant fact from the aspect of assessing
media reliability, information accuracy and their
bias. The problem of ownership structure is seen
through their non-transparency, as well as
consolidation
and
creation
of
media
conglomerates.
Non-transparency of ownership is a sign that
these media are unreliable with extremely
questionable contents. On the other hand, the
consolidation of ownership and creation of media
conglomerates strengthens the clientelistic
relations of the media, the most important social
topics are created and narrowed down,
homogenization is accelerated in the interest of
profitability and finally, democratic political
processes are endangered [8]. It should not be
forgotten that an individual is a part of the
identified target group in one way or another, a
type of goods sold to advertisers. In this sense,
the choice of media and alternative media turns
into a choice, will we be a commodity or not.
Knowledge of how media industries
function, what their organizational structure is
like is also a significant segment of media
education. Knowledge of how news is produced,
distributed or financed is “consequential civic
resource” which increases capacities for
orientation in a complex digital environment.
Like knowledge about the news system it implies
information how important media organizations
function and which activities entail production of
110
the news and media reporting [9]. The
aforementioned knowledge also includes
knowledge of the cultural, socio-economic and
political context of how journalist function, that
is, their frame of reference.
Knowledge of media reality, i.e. the ways of
constructing symbolic and imaginary reality
produced and marketed by the media is the
primary subject of media education.
Investigation of the nature of mass
communications by applying the most various
theoretical directions has come a long way from
understanding it as the transmission of symbolic
contents whose goal is to create certain effect
until the construction of symbolic or media
reality which confirms or questions a certain
social order. Interpretative frameworks carried
by social institutions, organizations, interest
groups, political parties and individuals create
numerous definitions of reality reproduced by
symbolic action of the media in the processes of
legitimization
and
delegitimization.
Confrontation between different definitions of
reality always actualizes the issue of power, as
well as the media conditions in which they are
implemented. Therefore, the mass media appear
as an infrastructure for the objectification of
different representations through the process of
creating a symbolic construction. Besides
constructing reality, the media are also part of
that reality [10].
In this respect, the media education is
simultaneously education about order, power,
hierarchy and structure of the social system. By
paraphrasing
Berger
and
Luckmann,
understanding of the media is important for
understanding reality because they have a
capacity to “transcend reality” and thus construct
“buildings
of
symbolic
representation”
unavailable to everyday experience as “presence
from another world” [11].
Framing concept is significant for media
education, because it refers to both the coding,
that is, semantic structuring of media contents,
and the decoding and interpretation of these
contents by the audience. It relates not only in the
way journalists select the event to be or not to be
reported about, or selecting the aspects of these
events, but also how will media content
structured in this way influence the interpretation
and will it have an effect on the public. Media
production of meaning is a form of suggesting
limited interpretations of these meanings,
through
manipulative
and
propaganda
techniques of their construction. Semantic field
of recipient’s “freedom” is defined by markers
with high suggestive potential and the decoding
process is controlled in terms of generating and
suggesting a certain meaning [10].
Efforts to meet the needs of both the media
and the public is the main feature of the
mentioned process. Media education in this
context also includes knowledge of propaganda
techniques and manipulation, media partiality
and objectivity in constructing media contents.
Media education distinguishes between
education for the interpretation of content and
communicative situation of traditional and new
media. Although the digital convergence of
media reduced the possibility of distinguishing
them, education for the interpretation of new
media, social networks and the Internet has its
own specificities.
There are two categories of news indicators
on the basis of which its value can be determined,
basically original indications (for example, brand
news, heading, or accompanying image) and
both personal and aggregated signs of social
support (for example, a person who posted it and
a number of likes, comments and shares) [12].
Self-expression, self-affirmation and selfenhancement motivations are at the core of social
media use, as well as social belonging, social
learning and social management of impressions
and relations through selective self-presentation
provided by the technical capacities of social
networks [13]. Accordingly, media education of
social media cannot be realized without the
understanding of the individual and the
responsibility of the user.
Consequently, the social practice of creating,
distributing and interpreting meaning on social
networks through the constructions of authentic
realities is a subject of social media education.
The basis of social media literacy is
understanding individual motivations for
choosing content, social networks and different
media.
It should contain knowledge not only about
the stable and changing characteristics of various
forms of communication and social networks on
the Internet, but also about the fact that an
individual's interactions with them shape, change
and strengthen their perception of reality
(literacy).
IV.
MEDIA EDUCATION FOR THE MEDIA AND
SOCIETY
Media education implies creating public
capacity for orientation in a complex digital and
media environment. It also starts from the fact
that media content is not an explicit carrier of
meaning, as well as that the media is not always
at the service of its audience. However, the speed
of technological changes in the media industry is
so great that media education is incomplete
without the education of journalists and other
media professionals in the direction of protecting
the original principles of the profession. The
attractiveness of the power of the media and the
power of conformity in the media strengthens
clientelistic relations and turns journalism and
the media into weapons for creating antipublicity. Media education for the media is an
integral element of the struggle not only for the
media, but also for the meaning and defense of
the critical public.
It is a simultaneous effort to increase the
group capacity of the community, its values and
resistance to all media and other challenges of the
modern digital era. It is possible as well that
normality will be jeopardized otherwise.
Leaning on the opinions of Benkler, Faris and
Roberts and Humprecht, Esser and Van Aelst
supposed directions of media education for the
media can be defined for the purpose of
strengthening capacity of a society and the media
as well [14,15].
The media should reduce political
polarization in a society. Namely, in polarized
environments, citizens are confronted with
different deviant representations of reality and
therefore find it increasingly difficult to
distinguish between false and accurate
information [16].
Subsequently, it is necessary to reduce the
level of propaganda-populist communication.
Societies with a high level of communication are
susceptible to the spread of misinformation and
inaccurate perceptions of reality [17].
It is necessary to strengthen the trust in
professional media which reduces the use of
alternative unreliable media. Distrust of the
media increases the use of alternative sources,
such as online platforms distributing
disinformation [18]. Societies in which news
users are distributed across a large number of
media, some of which are peripheral, offer more
entry points for misinformation than societies
111
where universally recognized media can unify a
wide audience in their online and offline
offerings, for example because of their high
reputation and quality [19]. In this regard, it is
necessary to strengthen the capacities of public
services, which increases the information of the
audience, and promote the limited use of social
media in the information process.
V.
CONCLUSION
One should not expect that both the public
and the media will understand the significance of
media education and that it will be “profitable”
for them. Sometimes believing in the illusion
about oneself and the height of profit is above the
comprehension of the truth. In this sense, the
action of the state is necessary in the form of
providing the opportunity to educate the public
and the media in the common interest through the
educational system.
However, the state and media moguls in the
digital order become actors that cannot be easily
controlled, who have significant control and
management mechanisms as well. Gandhian
digital resistance in the form of “Cypherpunks”
creates the initial letters of the digital alphabet,
not only as strategies of resistance and
protection, but also creating capacities and
advantages of both tthe individual and the whole
society.
The impression is that exposure to the media,
media forms and contents are the basic directions
of media education of the audience. Research
programmes on how to use digital technologies,
its length of time of use and the types of these
technologies are imposed as preferential in
pereciving the influence of the digital exposure
on human health, as well as its role in a new
social-digital order.
On the other hand, reducing the polarization
of society, propaganda communication,
strengthening trust in professional media and
public service are the basic directions of media
education of the media and society. Defining the
criterion and exact measurement of the
polarization of a society and creating media and
other strategies for its reduction are expected
directions of future research programmes.
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PaKSoM 2022
Open Innovation Paradigm
Vanja Vukojević1, Milenko Tanović2
1,2
Innovation Centre, University of Niš, Niš, Serbia
1
vanja.d.vukojevic@gmail.com, 2milenkotanovic@gmail.com
Abstract—Innovation is mentioned even in
Schumpeter’s work from 1934, and it is studied
by different world famous scientists like Porter
and Drucker. Open innovation is new paradigm
that created a new chapter in academic literature,
but most important, gave new meaning to the
innovation process. The first author who came
with the name open innovation is Henry W.
Chesbrough, in in his book Open Innovation: The
New Imperative for Creating and Profiting from
Technology, from 2003. This new paradigm core
is including external ideas for innovation. Not all
innovation come from inside of the firm, some of
them are given by sources outbound, and later
commercialized. Nowadays, open innovation is
essential for companies that want to be
competitive at the market. This paper shows a
brief review of theoretical components of open
innovation paradigm, but also the importance of
online platforms in innovation process.
Keywords –
platform, Ideanote
I.
innovation, open innovation,
INTRODUCTION
Concept of innovation is present in scientific
literature since XX century. Term itself derives
from Latin verb for creation. Nowadays,
innovation isn't only about the creation, but also
about improvement [1]. According to various
authors,
innovation
is
“entrepreneur's
instrument to utilize changes in the
environment” [2], “the process of creating
something new” [3], or “key ingredient to
manage the global competitiveness and
companies have to deal with the creation of new
products and services [4]. Reference [5] gave
complex definition: “Innovation is the multistage process whereby organizations transform
ideas into new/improved products, service or
processes, in order to advance, compete and
differentiate themselves successfully in their
marketplace”. Other authors emphasized
different components of innovation, such as
ISBN: 978-86-82602-00-2
ideas and value, so “Innovation is the process by
which new ideas turn into practical value in the
world” [6]. So, we can conclude that innovation
is seen as something new, or improved, which
comes from ideas and entrepreneurial spirit, and
makes greater value in conducting business.
Innovation is essential for obtaining competitive
advantage, in these dynamic business
conditions. Companies need to have the best
product and services, to constantly improve
production and distribution process. All those
innovations earlier came from RD (closed
innovation). Research and development
department became one of the crucial parts of
every company that wants to be at the top of its
industry. However, getting to innovation was
complex and difficult. So, in the last twenty
years, companies started to search for
innovation outside its boundaries, and a new
paradigm has arisen.
II.
PARADIGM OF OPEN INNOVATION
The concept that firms should look
“outwards” for ideas and knowledge from a
broad range of outside sources instead of just
“inwards” is known as “open innovation” [7].
Prof. Chesbrough came with this term in his
book Open Innovation: The New Imperative for
Creating and Profiting from Technology. Open
innovation assumes that firms can and should
use external ideas as well as internal ideas, and
internal as well as external paths to market, as
they look to advance their innovations [8]. Open
innovation has been defined in 2014 by [8] as “a
distributed innovation process based on
purposively managed knowledge flows across
organizational boundaries” [8]. Open innovation
refers to how organizations use internal and
external sourcing and markets paths for
innovation, or share innovation processes [9].
Prior concept of creating innovation inside
companies is called “closed innovation”, as an
113
Not all the smart people work for us, so owe
must find and tap into the knowledge and
expertise of bright individuals outside
our company:
External R&D can create significant
value: internal R&D is needed to claim
some portion of that value;
We don’t have to originate the research
to profit from it;
Building a better business model is
better than getting to the market first;
If we make the best use of internal and
external ideas, we will win;
We should profit from others’ use of
our Intellectual Property, and we should
buy others’ IP whenever it advances our
business model [10].
Figure 1. Closed innovation model.
analogy. Figs. 1 and 2 show differences
between these two models.
As we can see, in first model, all research
projects with the goal of creating innovation are
exclusively inside the boundaries of the firm.
The main characteristic of the close innovation
model is vertically integrated research and
development
departments
that
develop
technology in-house for use in-house [10].
There are several factors that influenced using
open innovation model. First of them was
definitely mobility of employees. Workers
move from one firm to another, carrying their
knowledge
and
skills.
Besides
that,
collaboration between firms became improved
and joint projects became more often.
Open innovation model, on the other hand,
has great interaction with environment and
innovation cross boundaries of the firm. Firm
commercialize ideas given inside the firm
boundaries, and others ideas also. The focus for
gaining ideas is moved from RD to outside
determinants, such as startups, universities and
research centers. Nowadays, thanks to the
online platforms, firms can gain new ideas and
solution from individuals and institutions all
over the world. There are few basic principles of
open innovation model:
114
Reference [11] gave different collaboration
modes during innovation process, using
parameters,
type
of
governance
and
participation openness.
For traditional firms, dominant type of
collaboration is elite circle, characterized by
closed
participation
and
hierarchical
governance. The partner for collaboration is
chosen carefully and through this process, one
of the partners is authorized for decisionmaking. Completely opposite is innovation
community, as a network where anybody can
post problems, offer solutions, and decide which
solutions to use [10].
TABLE 1. TYPES OF COLLABORATION.
Governance
Participation
Figure 2. Open innovation model.
Open innovation model has various
advantages. This is great opportunity for firms
to access new sources of idea, more rapid and
with less cost. Innovation process is more
flexible, involving stakeholders such as
suppliers and customers. In that way, output of
innovation process, whether its improved
product or service, has better quality and it is
better fitted for the customers.
Hierarchical
Flat
Open
Innovation
Mall
Innovation
Community
Closed
Elite Circle
Consortium
Innovation Mall is type of collaboration
represented by using open innovation platforms.
III.
OPEN INNOVATION PLATFORMS
Open innovation is significant tool for
innovation process and it can help companies in
various different activities. Open innovation
platforms have emerged in various ways [12]. It
involves a shift towards more open and
distributed models of innovation, while
platformization refers to the increasing
importance of digital platforms as a venue for
value creation and delivery [12]. Large firms,
intermediaries, and non-profit organizations are
increasingly using online open innovation
platforms to leverage external sources [13]. In
essence, a platform provides a common
foundation and a venue for a wide range of
entities to converge in creating and delivering
value to their customers [14]. There is vast
number of open innovation platforms, according
to what problems they solve. Some of them help
in finding designers solutions, other help
companies to find suppliers or for
gathering ideas.
One of the platforms is Ideanote, world's
first Innovation-Led Growth platform was
founded in 2015 in Denmark, by Mehlsen
brothers Fig. 3. Their idea was “to help
businesses stay agile and competitive with
platform that makes innovation easy to get
started with and efficient for everyone” [15].
Since then, they have been cooperating with
more than 2000 innovative organizations, such
as Ikea and Stanford University, in more than
110 countries.
Founders of Ideanote wanted to facilitate
innovation process; this application allows all
kind of firms to collect and manage ideas,
implement innovation and measure their impact
to firm’s performances.
Figure 3. Logo of Ideanote Company.
measurable; it can be decrease in costs or
number of implemented ideas.
People dimension represents everyone
involved in this process, according to their roles.
First of them is initiator. It is someone inside the
company, someone senior enough to clear
roadblocks [16]. Contributor can be anyone who
is willing to cooperate, who is motivated and
understands purpose. Depending on purpose,
contributor can be internal, external, or both.
Diversified teams are the most successful.
Evaluators are experts in area connected to the
purpose of the process. Stakeholders are people
that make collected ideas into factual actions.
As we can see in Fig. 4, there are four
phases of this process. First of them is
collecting. Collecting ideas is most important
phase; it is structured as questions that are being
asked to the audacity. Questions have to be
formulated as “How might we” [17], for
example “How might we decrease transport
costs for our product” Number of questions
can vary. Also, audience can be wider or
narrower. Next phase is engaging more people,
by defining rewards and getting attention of
more people. Managing ideas, as the next step,
include evaluation of collected ideas and finding
the best one. Last step of this process is
measuring impacts of this process, by
implementing ideas or sharing good results.
That is the way for promoting innovation
process and making path for the next
innovation process.
For structuring innovation process, company
created the framework, called Innovation-Led
Growth Flywheel. Framework is consisted of
3P’s – purpose, in the center, process, in the
inner circle, and people, outer circle. All of this
is needed for innovation process to work.
The center of innovation process is purpose.
Defining purpose is critical for success of
innovation process. Purpose has to be in
accordance with the strategic goals of the
company. Output of this process has to be
Figure 4. Innovation-Led Growth Flywheel.
115
This platform has great success. However,
there are various other platforms, with different
approaches, but with the same goal, to make
innovation process more successful by
deleting boundaries.
IV.
CONCLUSION
Innovation is conditio sine qua non for
obtaining competitive advantage. They are
crucial for growth and development of every
organization. Companies are aware of
importance of innovating, as the form of
adjusting to dynamic business environment.
Current situation at the employment market has
significantly changed the way companies gain
ideas and commercialize innovation. Factors
such as mobility of highly educated and skilled
employees caused rising of the new paradigm.
Companies cannot hire every good and quailied
employee for their needs. So, they use outsource
innovatiors. Open innovation drastically
changed innovation process. Including people
outside of the companies in innovation process
is giving great results. New ways of collecting
ideas and their implementation are being created
at this moment. Open innovation platforms are
one of them. Further research should include
impact od hachatons on business solutions.
This paper has shown basic principles of this
new paradigm, with poiting out to open
innovation platforms. One of them, Ideanote,
has been represented, as a great example of
company that makes innovation process easier
and faster, by using framework for
standardizing innovation process.
ACKNOWLEDGMENT
This paper is a result of research based on
obligations from the Contract about realization
and financing Centre for Innovation, University
of Nis (ev.no.451-03-68-68/2020-14/200371),
as a part of the Project funded by Ministry of
Education,
Science
and
Technological
Development no. 179066.
116
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openness of open innovation in ecosystems:
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new imperative for creating and profiting from
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https://ideanote.io/
https://ideanote.io/chapter/initiators/
https://openinnovation.eu
PaKSoM 2022
The Role of Innovation Capital in
Developing Youth Entrepreneurship
Dragan Ćoćkalo1, Mihalj Bakator2, Sanja Stanisavljev3, Edit Terek Stojanović4, Miloš
Vorkapić5
University of Novi Sad, Technical faculty “Mihajlo Pupin”, Zrenjanin, Serbia
University of Belgrade, Institute of Chemistry, Technology and Metallurgy - Centre for
Microelectronic Technology and Mono-crystals, Belgrade, Serbia
1,2,3,4
5
1
dragan.cockalo@tfzr.rs, 2mihalj.bakator@uns.ac.rs, 3sanja.stanisavljev@tfzr.rs, 4edit.terek@tfzr.rs,
5
worcky@nanosys.ihtm.bg.ac.rs
Abstract—The current global economic climate
conditions brought challenges to enterprises and
entrepreneurs. Uncertainty, higher risk, and
intensified competition negatively affect the way
business is conducted. Enterprises and
entrepreneurs have to adapt to these changes. For
economic relief and economic growth, youth
entrepreneurship should be developed in a decisive
manner. In this paper, youth entrepreneurship
development through innovation capital is
analysed. The main goal was to identify and
discuss main factors that affect youth
entrepreneurship development. In addition,
entrepreneurship and innovation as two main
concepts are also addressed. The result is a
theoretical, circular model that provides a
significant and concise overview on how
innovation capital derives from entrepreneurship
and innovation. The paper provides a solid base
for future studies.
Keywords - youth entrepreneurship, innovation
capital, business innovaiton, development
I.
INTRODUCTION
In the new business environment that is
characterized by constant changes, enterprises
face difficult challenges when it comes to
achieving and maintaining a competitive position
on the market [1]. In addition, the economic
environment brought tremendous pressure to
these enterprises that led to decrease in
employment rates. Entrepreneurship can be
noted as an answer to economic turmoil and
unemployment [2]. Entrepreneurship can
significantly affect economic development and
economic growth. Entrepreneurship is mainly
ISBN: 978-86-82602-00-2
driven by innovation and risk taking. Further,
similarly to entrepreneurship as broader
construct, youth entrepreneurship also plays an
important role in reducing youth unemployment
rates and in creating new value [3,4]. The current
body of literature on entrepreneurship and youth
entrepreneurship address a wide array of
constructs
from
different
aspects
of
entrepreneurial activities. However, there are
fewer studies that address innovation capital in
youth entrepreneurship development. Innovation
capital can be viewed as past, current, and future
innovation potential that derive from intellectual
capital within the enterprise where the employees
are the main carriers of this intellectual capital.
Innovation in this paper includes multiple aspects
such as open innovation, business model
innovation, technology innovation, and social
innovation [5,6]. The main goal of the paper is to
present a theoretical model of innovation capital
that relies on entrepreneurship and innovation as
two main constructs. This way the above noted
knowledge gap is addressed. The paper analyzes
the complexity of youth entrepreneurship
development and the role of innovation capital in
this context. Innovation and the aspects of
innovation within an enterprise involve
processes from all sectors with the goal to create
new value. This approach to new value creation
coincides with the core concept of
entrepreneurial behavior. Therefore, it can be
argued that entrepreneurship and innovation
capital are complementary constructs for
analysis.
117
The following research questions are noted as
guidelines the study:
What are the main contributing factors
of youth entrepreneurship development?
How does innovation capital affect the
development of youth entrepreneurship?
The paper includes the following sections
(excluding the Introduction and Conclusion
sections).
First,
the
importance
of
entrepreneurship and youth entrepreneurship is
addressed. The socio-economic impact is noted
and the complexity of these social constructs are
analyzed. The second section discusses
innovation capital and the underlying
mechanisms from which innovation capital
derives. The third section presents the model for
youth entrepreneurship development with
innovation capital at the center of the circular
model. The fourth section discusses suggestions
and guidelines regarding actions and strategies
for
improving
youth
entrepreneurship
development in the context of innovation capital.
These suggestions are based on the analyzed
literature and developed model presented in the
previous section. Finally, conclusions are drawn
and ideas for future research are noted.
II.
IMPORTANCE OF ENTREPRENEURSHIP
AND YOUTH ENTREPRENEURSHIP
In the Introduction section it was noted that
entrepreneurship positively affects economic
growth and economic development [3,4,5].
Entrepreneurship ecosystems and platforms
include policies, markets, human capital,
government support, culture, and finance [7].
Digital entrepreneurship systems can provide the
necessary outreach to latent and potential
entrepreneurs. It can be argued that digital
entrepreneurship ecosystems can provide
adequate stimulation for the youth to start their
own business [8]. Further, entrepreneurship and
development in socio-economic and political
aspects contribute to youth entrepreneurship
development as well. Young entrepreneurs
should take into consideration the changes that
globalization has brought and the rising
importance of social aspects of business [9].
Form
here,
the
concept
of
social
entrepreneurship
gains
traction.
Social
entrepreneurship is in-sync with sustainability
goals. Its aim is to shape the process conducting
business in way that contributes to local
communities, to the saving of the environment,
reducing the negative impact of business
118
activities. Young entrepreneurs should nurture a
sense of social entrepreneurship even though
their business model is not mainly focused on
social issues [10,11]. Therefore, new
entrepreneurial endeavours should address
sustainability issues. Furthermore, as the
globalization of markets has brought dynamics
changes to the market, venture lifecycles vary
significantly forcing new entrepreneurs into
riskier than normal actions. Venture lifecycles
are a new strategic liability for existing and new
entrepreneurs [12]. Previous studies noted that
one of the main factors of reluctance to start own
business among the young are lack of financial
resources [4,5]. The issue of entrepreneurial
finance is present in the majority of economies
and it presents a systematic problem in the
domain of entrepreneurial activities [13].
Crowdfunding entrepreneurial ideas is a concept
of group investments based on ideas of projects
(products or services) where the risk of failure is
taken on by the whole community of investors
(participants in the crowdfunding) [14]. These
types of “democratization” of entrepreneurial
finance have to actively govern funds and
appropriately disclose how the funds are
managed [15].
From the aspect innovation and innovation
capital,
entrepreneurship
and
youth
entrepreneurship can be viewed as drivers of
innovative activities and creating new value
through the process of innovation. Innovation
ecosystems coincide with entrepreneurial
ecosystems. The current global business
environment focuses on sustainability, thus
entrepreneurial and innovation ecosystems
should also focus on sustainable development
and sustainable business strategies [16].
Innovation capital is a driver of youth
entrepreneurship, and larger integrated wholes of
innovation capital possess larger capacity and
potential for successful entrepreneurship
ventures.
Overall, entrepreneurship is an active part of
the new economy that is characterized by
innovation,
globalization,
intensified
competition, rapid technological advancement,
and the digitalization of business. In such
conditions, starting a new business requires
multiple approaches to evaluating the external
and internal business environment. Youth
entrepreneurship development is a complex
challenge both on a national and local level.
III.
INNOVATION CAPITAL
The framework of innovation management
and entrepreneurship development involves the
utilization of knowledge, experience, risk taking,
and preparedness to conduct business with high
levels of uncertainty. New start-ups face
challenges in the form of lack of optimal funding,
intense competition, and lack of adequate
support from third parties (government, suppliers
etc.). Established enterprises especially that with
multiple stakeholders, have to effectively
manage and balance between stakeholder
interests and risk taking through innovative
approaches to conducting business [17]. Modern
business models should focus on innovation
niches in evolving open innovation ecosystems
[18]. Open innovation can contribute to
economic growth, productivity, new products
and services, sustainable development, business
model innovation and overall new business
ventures [19,20]. Therefore, it is evident that
such
innovative
activities
support
entrepreneurship
and
that
they
are
complementary with entrepreneurial risk taking
and activities. Furthermore, the concept of social
entrepreneurship is synchronized with social
innovation [21] and as such provide important
driver point of youth entrepreneurship
development. Social innovation is taken on a new
form with the COVID-19 pandemic. More
precisely, the digitalization of social innovation
and social entrepreneurship have brought a new
dimension how business is conducted. In such
conditions, online business models are prevailing
compared to traditional business strategies [22].
Innovation capital also includes product
innovation and the entrepreneurial effect of
innovations disrupting industries and influence
existing and new enterprises [23]. With new
products and services, innovation within
entrepreneurship is present through the
mediating role of business model innovation
[24]. In other words, business model innovation
is a kind of a prerequisite for entrepreneurial
innovation to occur. Post-COVID-19 business
model innovation should consider re-evaluating
the lean concept approach. This new lean
approach has to be more resilient compared to the
previous setups that were present, in order to
reduce bottlenecks in crisis times [25].
Entrepreneurial ecosystems alongside with
innovation ecosystems can form an environment
where entrepreneurship, and especially youth
entrepreneurship can thrive [26]. Innovation in
technology can be a challenge and opportunity at
the same time, depending on what activities are
planned within an enterprise, and which industry
is the enterprise in.
In sum, innovation capital, as an integrated
whole that consists of multiple business and
socio-economic factors including, but not limited
to intellectual capital, human resources,
infrastructure, R&D activity intensity, proneness
to risk taking, and willingness to disrupt markets
with new value and new ideas.
IV.
MODEL FOR DEVELOPING YOUTH
ENTREPRENEURSHIP
Based on the analysed literature and the aim
of this paper, a model for developing youth
entrepreneurship within the framework of
innovation capital, is developed. The model is
circular and it has innovation capital at its centre
and two main concepts derive from it:
entrepreneurship and innovation. The model is
presented on Fig. 1. The concept of the model is
in accordance with models presented by the
World Economic Forum [5].
Based on the presented model on Fig. 1, it can
be seen that innovation capital, in this case,
derives from the concept of entrepreneurship and
concept of innovation. In this sense, innovation
capital is viewed as the result of entrepreneurial
behaviour and innovation-based constructs.
Entrepreneurial systems and infrastructure are
key factors for entrepreneurship development. In
addition, the concept of social entrepreneurship,
venture lifecycles, finances, and entrepreneurs
themselves are integral parts of the
entrepreneurship construct. On the other side,
innovation, as a part of innovation capital
includes business model innovation, open
innovation, social innovation (which is in-sync
with social entrepreneurship, technological
advancement and innovation, and the necessary
underlying infrastructure and ecosystem for
innovative behaviour.
V.
SUGGESTIONS AND GUIDELINES
Based on the analysed literature in the
domain
of
entrepreneurship,
youth
entrepreneurship, innovation capital, innovation
ecosystems, entrepreneurial finances, and social
entrepreneurship, the following suggestions and
guidelines for improving youth entrepreneurship
development are noted:
119
Figure 1. Youth entrepreneurship development model through innovation capital
New entrepreneurs should focus on
creating value and bring innovation into
their business model.
Innovation capital has to be addressed
when evaluating market position or
potential new market entrance.
Youth entrepreneurship should be based
on value creation in the digital
entrepreneurship ecosystem where startup costs are typically lower compared to
traditional business ecosystems.
Support via incentive programs should
be introduced on a national scale.
Innovation should be rewarded both in
newly established enterprises and in
existing enterprises. Rewards should be
in the form of favourable tax rates, credit
lines, infrastructure support and other
means of promoting and sustaining
120
innovation and innovative behaviour
among young entrepreneurs.
Open innovation environment along
with social innovation and social
entrepreneurship should be a considered
by the youth when starting their own
business.
Innovation capital has to be taken
seriously by individual entrepreneurs as
well
by
institutional
players
(entrepreneurship in organizations).
Overall, youth entrepreneurship development
requires a systematic approach on a national
level, but innovation has to be taken seriously as
a contributing factor to business success.
Innovation has the potential to win against wellestablished organizations that present an intense
competition on the globalized market.
VI.
CONCLUSION
In the Introduction section of the paper, two
research questions were noted:
What are the main contributing factors of
youth entrepreneurship development?
In accordance with the analyzed literature it
can be concluded that entrepreneurial finance,
entrepreneurship ecosystems, social innovation
and social entrepreneurship, technology
innovation, open innovation, and innovation
ecosystems contribute to youth entrepreneurship
development.
[4]
How does innovation capital affect the
development of youth entrepreneurship?
Innovation capital as an integrated whole of
multiple constructs, provides a driving force of
entrepreneurial activities and vice-versa. In
addition, innovation capital can increase the
potential of new youth entrepreneurship
endeavours. It can provide necessary support and
motivation for starting a new business.
The main limitation of this paper is the lack
of an empirical data and a robust data set
obtained
both
from
enterprises
and
entrepreneurs. However, as the study addresses
credible literature sources, this limitation is not
severe. The paper contributes to the existing
body of literature and provides an appropriate
basis for future research. Future studies could
include surveying existing entrepreneurs, new
entrepreneurs, and potential new entrepreneurs.
The datasets could be compared with previous
studies and thorough meta-analysis could be
accomplished.
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
ACKNOWLEDGMENT
[15]
This paper has been supported by the
Provincial Secretariat for Higher Education and
Scientific Research of the Autonomous Province
of Vojvodina, number: 142-451-2706/2021-01.
[16]
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PaKSoM 2022
Development through Social
Entrepreneurship: Perspectives and
Evidence from Croatia
Tihana Sudarić1, Ivana Hrg Matušin2, Jadranka Deže3
1,2,3
Faculty of Agrobiotechnical Sciences Osijek, University of J.J. Strossmayer in Osijek,
Osijek, Croatia
1
tsudaric@fazos.hr, 3jdeze@fazos.hr
Abstract—Social entrepreneurship is important
segment of corporate social responsibility (CSR)
and one of the strategic aims in Strategy of social
entrepreneurship development from 2015-2020.
This form of entrepreneurship contributes to the
local community development by creating new
jobs, more specifically those that improve the
quality of individual’s life. This is especially
important for people with disabilities. The aim of
this study is to research the presence, frequency
and application of social entrepreneurship concept
and its effects on local development. The empirical
part of the paper is based on a random selection
survey. The results confirm the presence of good
entrepreneurial practice in the form of integrative
workshops in Croatia, their business sustainability
and development orientation.
Keywords - social entrepreneurship, integrative
workshop, local development
I.
INTRODUCTION
The Republic of Croatia, as European Union
country is committed to achieve the common
goals of the Strategy Europe 2020 by combining
action on national and European level. One of
the five strategic goals of Europe 2020 is to
poverty reduction&social exclusion, and
increasingly important global and European
strategies are defining their economic goals in
relation to these guidelines. Croatia has done the
same, as adopted by the Social Entrepreneurship
Development Strategy, recognizing that social
entrepreneurship is precisely the change in the
society we want to achieve and contribute to
self-employment, employment and economic
growth and development.
ISBN: 978-86-82602-00-2
Sustainability development via responsible
innovation combines philanthropic and
economic aspects that refer to entrepreneurs
who lead to “social entrepreneurs”. Unlike
common innovations, the responsible innovation
is the result of various reasons or sources of
inspiration that influences the decisions of
creativity of entrepreneurs to conduct and
generate innovations to solve problems of the
society. Interestingly, entrepreneurs seeking to
create social ventures are found to have higher
levels of entrepreneurial self-efficacy and more
ambitious goals than their commercial
counterparts. In Europe the dominant discourse
about responsible innovation focuses on the
control of the risk of social rejection of the
advance of science and technology. Opposite, as
it is in Mexico, the phenomenon is configured as
the mechanism through which entrepreneurs
articulate its technological and scientific
capabilities to solve priority and specific
problems of the society, however, the social
impact does not crucially affect their business
initiatives [1].
According to [2] the research was conducted
in order to identify the factors that have the
greatest impact on the establishment of social
enterprises in the Republic of Serbia. It was
found that favorable financial resources are key
stimulants for the establishment of social
enterprises. Results also show that enthusiasm of
managers of social enterprises has the greatest
impact on their development. Also, legal
regulations
and
the
macroeconomic
environment, as well as difficulties in accessing
the market, are serious restrictions to the
123
establishment of social enterprises, while lack of
knowledge in the field of marketing and
management limit the development of social
enterprises. Measures have been proposed to
economic policymakers in the direction of
mitigating the negative effects of disincentive
factors and strengthening the effects of factors
that positively affect the development of
social entrepreneurship.
The scientific significance results [3] find
out that in social entrepreneurship’s
development critical role is financial risk. The
potential
of
social
entrepreneurship’s
development in emerging economies is
implemented (in 2021 only by 50% because of
the restraining influence of financial risks. In
case of the optimal management of financial
risks (minimalization), the level of social
entrepreneurship’s development in emerging
economies will approach a maximum, which
will reduce their underrun from developed
countries in the sphere of implementing
Sustainable Development Goals (SDGs) and
support global sustainable development.
This research and analysis show the manner
and structure of socially responsible
entrepreneurship. The example of socially
responsible companies Hedona Ltd. from
Križevci was investigated whether there is a
possibility of long-term sustainability, growth
and development of such an enterprise and what
is the contribution to the local community, local
development and recognition of local identity.
Sustainability by itself means harmony with
environmental, social and economic needs - the
three pillars of sustainability.
The aim of the paper is to define the way and
structure
of
socially
responsible
entrepreneurship, through scientific and
professional theories, but also in the applied
sense, on the example of Hedona Ltd. from
Križevci. The conceptual and research part will
highlight the purpose, advantages and current
challenges in practice as well as measures and
recommendations for further entrepreneurial
development in the function of sustainable
development.
II. MATERIAL AND METHODS
Five groups of research methods were used in
the paper:
a)
124
Studying the available literature on
sustainable development and integrative
workshops, and their specificities and
perspectives. Available data were
collected from scientific papers, books,
proceedings and internet sources. Those
methods of data collection, research and
study of available literature on a given
topic of collecting data describes
socially responsible entrepreneurship;
b) Case study method based on good
entrepreneurial practice at Hedon Ltd. chocolatiers, one of three integrative
workshops in Croatia, as well as
information on the
production,
processing, employees, the workplace
structure, and other documentation;
c)
Two surveys were formed: the first one
for analysing the internal structure:
interpersonal relationships, current
business
situation
and
future
expectations. The second survey was
conducted
to
research
public
perceptions via an internet survey, more
specifically - Facebook and E-mail was
used for the recognition and
sustainability of the hedonic’s integral
workshop;
d) Comparative method - comparison of
data on the characteristics of socially
responsible entrepreneurship between
the Koprivničko-križevačka County and
other counties in the Croatia, between
the case study of Hedona and similar
case studies examples in Croatia, based
on the data collected;
e)
SWOT analysis of the company Hedona
– as a method which is used for
identifying a internal origin: the
strengths and weaknesses, also a
external origin:
opportunities and
threats, important to the sustainable
development of the company.
III. RESULTES AND DISCUSSION
In the last twenty years, corporate social
responsibility, CSR - has been increasingly
applied in practice, which is still recognizable
only by the rare examples of good
entrepreneurial practice. According to the
reference [4] with the increasing number of
market competitors and the increasing customer
demands for better services and products, there
is a noticeable increase in awareness of the
necessary changes regarding access to nature
and the community. The original practice of
socially responsible entrepreneurship in Croatia
was mainly related to the protection of the
environment, while in the second, later phase,
interest included human resources and care for
the local community.
British Council. The aim of this conference was
to promote social entrepreneurship in the
Republic of Croatia by introducing public, nongovernmental, non-profit and business sector
organizations to the principles and models of
social entrepreneurship.
The application of social responsible
entrepreneurship in Croatia is still more an
exception than the rule of business behaviour.
There are two main reasons for the lack of
application
the
socially
responsible
entrepreneurship:
The following institutions are most active in
promoting social responsible entrepreneurship
in Croatia: the Croatian Chamber of Commerce,
the Croatian Employers' Association and the
Croatian Business Council for Sustainable
Development, together with their partner
organizations, who are constantly striving to
develop competencies for corporate social
responsibility and sustainable development by
organizing various trainings, seminars and
educational courses on the subject, and publish
quarterly newsletters and publications to inform
and educate the public on these topics.
a)
lack of definition of criteria that are
often interpreted superficially;
b) insufficient education of leadership and
professional services in business
organizations in order to carry out the
social responsible entrepreneurship
activities.
Social entrepreneurship based on decision
making, involves strategic planning and
investing in long-term prosperity. Social
responsible entrepreneurship is used to increase
the reputation, environmental preference of the
company, stakeholder motivation, to all
employees and consumers, which ultimately
results in a return on investment, but not always
in the short term [5].
For the first time corporate social
responsibility as practice is mentioned more
seriously in the Croatia, in December 2004,
when the first international conference on
corporate social responsibility was held in
Croatia, attended by more than 150
representatives
of companies,
business
associations,
government,
professional
organizations, academic community and nongovernmental organizations. Agenda 2005 was
adopted, defining the main areas of activity and
possible improvements in the socially
responsible practices of Croatian companies; the
proposal for establishing a Community for
Corporate Social Responsibility (CSR) within
the Croatian Chamber of Commerce was
highlighted, as well as the proposal to develop a
methodology for assessing and evaluating
corporate socially responsible and sustainable
practices CSR Index, explains [6].
Furthermore, in November 2009, according
to reference [7] a conference on social
entrepreneurship was held in the Croatia,
organized by the Office for Associations of the
Government of the Republic of Croatia and the
In addition, since 2007, My Business Portal
to the United Nations Development Program,
with the Fund for the Professional Rehabilitation
and Employment of Persons with Disabilities
and the Croatian Employment Service, have
been awarded the - Employer of the Year for
Persons with Disabilities [8].
According to the reference [9] this kind of
rewarding has a goal to increase the number of
available jobs for persons with disabilities by
providing professional support to employers and
promoting the employment model for persons
with disabilities according to their competences.
The form of integrative workshops is an
example of the active involvement of persons
with disabilities in various forms of economic
activity. An integrative workshop is an
institution or company that employs people with
disabilities based on the findings and opinions of
a professional rehabilitation center, which has
determined that, due to their disability, they can
achieve from 30% to 70% of expected work
efficiency (Ordinance on protective workshops
and integrative workshops for the employment
of persons with disabilities, Ministry of Labor
and Pension System Official Gazette 75/18)
[10]. Integrative workshop should have
employed at least 40% of persons with
disabilities in relation to the total number of
employees. These employees need to be
provided with the professional support,
supervision and guidance of the professionals
working. Because of that integrative workshop
has expert workers and instructors for work
activities. In relation to the previous, integrative
125
workshops are obliged to allocate at least 75%
of the realized profit to increase the share capital
of the company or to use it for investments in
fixed assets related to the work of the disabled
person, improvement of working conditions for
employed persons with disabilities, education,
training and other developmental purposes for
increase in employability of people with
disabilities. There are currently three integrative
workshops in Croatia:
a)
integrative workshop for the production
of linen, work wear and protective
clothing for catering, industry and
medicine - Labtex Ltd. from Zagreb;
b) integrative workshop for production of
chocolatier product - Hedona Ltd.
Križevci;
c)
integrative workshop for textile
production and delivery services,
professional cleaning and washing, and
machining of high quality textiles used
in industry, health, hospitality and
gastronomy - Krokoteks Ltd. from Sv.
Ivan Zelina.
The conditions for establishing an
integrative
workshop
are
complete
documentation prescribed by the Regulations.
The legal form is a limited liability company that
has employees with disabilities and an office
that is designed and equipped in accordance with
building standards. According to this
Regulations, it is necessary to provide persons
with disabilities and reduced mobility access to
the building. Special care is needed with regard
to health and safety at work. The work space
should be appropriately equipped and
technically adapted to the type of employed
persons disability in order to enable work
adequate to their abilities. According to the
Regulations, Article 24, a professional manager
should provide professional support, supervision
and guidance to persons with disabilities in the
performance of their duties. The task of a
professional manager is to monitor the work of
persons with disabilities and to recognize their
ability to doing business activities. In addition,
all employees with disabilities are registered
with the Croatian Pension Insurance Institute.
For the purposes of this research, with the
aim of introducing more detailed vision and
mission, one of the three integrative workshops
in Croatia was singled out - Hedona Ltd. –
chocolate. Two surveys were conducted: one
126
with employees in the company and another one
for search the public opinion.
The survey on employees conduct: business
structure,
interpersonal
relationships,
employees' attitudes about the company's
current status and their expectations for the
business future. The database was created by
collecting information from 14 out of 18
employees. In Hedona, more than half of the
total number of persons in employment are
persons with disabilities. The business status of
Hedona - as integrative workshop, enables it to
sale and purchase contracts with other business
partners. There is an obligation in the law that
every registered company must employ at least
one disabled person. In a situation where the
company has no employed person with
disabilities can instead of paying must have a
contract and buy products from companies such
as Hedona. Social entrepreneurship, more
specifically social entrepreneurs, are an
inspiration to many others in driving social
change. Through social entrepreneurship lots of
social changes are realized - such as business
entities that are equally market competitive as
well as more oriented to the development of the
social and local community. Such a business
entity is more focused on social effect rather
than profit that can be the accelerator of positive
change in society.
The second survey concerning public
opinion is conducted on a total of 110
respondents aged from 18 to 56. It was found out
that the public was mostly familiar with the
definition and main determinants of social
entrepreneurship, which they supported by their
answers defining the term.
At the same time, respondents are familiar
with the goals of sustainable development, and
most often they care about the future, the wellbeing of society, care for the environment, the
balance of social, environment and economic
factors, which confirms social awareness
(Fig.1.).
Regarding the recognition of Hedona in
public, the majority of respondents answered
that they had heard of the company, but a large
number of respondents did not know that
Hedona was one of the three integrative
workshops in the Republic of Croatia or did not
even know what the term represented (41.28%).
Based on the application of all research methods,
an analysis of the strengths, weaknesses,
opportunities and threats (SWOT) was made of
period of the business of Hedona, a chocolate
factory from Križevci.
During the research it was found that the
local government has motivated the founders of
the company to establish an integrative
workshop with continued support in the
founding process.
Figure 1. Attitudes and opinions of the integrative
workshops recognitions.
Hedona,
chocolate
Križevci (Table I).
factory
from
The results of the analysis determined the
strengths (S) that should be actively and used to
reduce the risks of potential threats (T). At the
same time, the realization of the opportunities
(O) creates a high probability that the
weaknesses (W) will be reduced in the future
External origin –
attributes of the environment
Internal origin –
attributes of the business
TABLE I.
SWOT ANALYSIS OF HEDONA LTD.
FROM KRIŽEVCI.
Helpful –
to achieving the
objective
Strengths (S)
Quality raw material,
Unique product - for
all ages,
Top quality products,
Satisfied and
motivated employees,
Second integrative
workshop in the
Croatia,
Social enterprise,
Cooperation with
local and state
government,
Reinvesting profits to
create new jobs,
Choco bar.
Opportunities (O)
More manifestations
in Croatia,
More manifestations
in other countries,
The entrepreneurial
spirit,
Education,
Hotel sectors,
Expansion of
production facilities,
Capacity building,
Innovations in the
product range – e.g.
chocolates for
diabetics.
Harmful –
to achieving the
objective
Weaknesses (W)
Too small
production
facilities,
Few places to sell,
Poor promotion,
Lack of a managermanagement,
New projects,
Research and
development,
Allergists and
diabetics person.
Threats (T)
Competition,
Similar products at
lower prices,
Lack of educated
and motivated
workforce Lack of
entrepreneurship
enthusiasm and
motivation.
Social focus is also recognized in the process
of reinvestment from the profit to improve the
production process and working conditions.
Based on the research, it is concluded that the
concept of social entrepreneurship is more
present in business Croatian practice. Local
communities are aware of the benefits that come
with the introduction and implementation of
social entrepreneurship, such as: company
reputation, better business efficiency, employee
motivation and satisfaction, competitiveness and
market recognition. In practice, businesses to
implement or add to their strategic business
plans is very rare. For more intensive
development, it is necessary to emphasize more
often the examples of good entrepreneurial
practice in the social entrepreneurship segment,
especially the form of integrative workshops.
Investing in human resources development,
additional training and workshops on human
resources,
technological
development,
consumer care and environmental protection are
guidelines that should contribute to more of
these businesses.
IV. CONCLUSION
Economic entities have the basic long-term
objective of realizing the sustainability, growth
and development of a business in a market
economy. With the development of the national
economy, there is a need for changes in the
business of the company. The way of thinking,
planning, leadership and managing a business is
changing. The business orientation towards
economic requirements is added by the concern
for environmental protection and social needs of
the community. It is necessary to achieve all the
goals of the business and the social community
in which the business is conducted - economic,
environmental and special social. The
sustainable business is no longer the main goal
of the entrepreneur, but rather the survival of the
local and the entire community. After that, we
can expect an increase in the number of such
economic entities, the development of the
quality of their products and the development of
competitiveness in general. Example of social
127
entrepreneurship and an integrative workshop,
Hedona contributes to the employment goals of
persons with disabilities, which is defined in
national legislation as well as in the Europe 2020
strategy document. It is important to emphasize
that in this integrative workshop persons with
disabilities work in the entire production process
with high technological and hygiene standards.
Employees with disabilities are involved in all
parts of the work process from preparation to
production, production of the full range of
chocolate products and preparation of finished
products for the market. Such integrative
workshops are an example of good social
entrepreneurial practice because they contribute
to the life needs, satisfaction and hedonism of
individuals but also to the community in the
local area in which they do business.
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PaKSoM 2022
The Impact of Blockchain Technology
on the Accounting Information Systems
Tanja Janaćković1, Marko Janaćković2
1,2
Academy of Vocational Studies Southern Serbia, Department of Higher Business School
Leskovac, Leskovac, Serbia
1
spasictanja7@gmail.com, 2janackovic.marko@gmail.com
Abstract—The aim of the paper is to analyze the
impact of blockchain technology on the accounting
information system (AIS), i.e. to assess the
advantages that can be achieved by applying this
technology. Blockchain as Distributed Ledger
Technology (DLT), offers new possibilities for
recording and creating backup copies of
confidential and sensitive AIS data. In order to
achieve the goal of the study, a descriptive
approach was adopted to research the basics of
blockchain technology, as well as an analysis of
examples of the introduction of this technology in
the practice of the big four accounting companies.
As a result, the positive effects of this technology
on AIS were reviewed, but possible obstacles and
limitations, during the implementation of
blockchain technology in accounting, were also
pointed out. The effort is to indicate the way in
which this technology would affect the change of
the accounting industry and profession over time.
certain rules and policies, in order to transform
data into financial information that is important
for business decision-making. AIS is also
defined as an organized set of components that
accumulates, classifies, processes and analyzes
financial information and provides it to interested
external and internal users in order to make
decisions [2]. As in [3] AIS represents “a
collection of data and processing procedures that
create the necessary information for users” and it
is located at the intersection of two disciplines:
accounting and IS [4]. The goal of AIS is to
process data and transactions, and supply users
with information for planning, controlling and
performing business activities [5]. The influence
and role of AIS in the accounting profession is
very important, and it can effectively improve the
management and economic benefits of the
company.
Keywords – blockchain, technology, accounting
information system
A distributed ledger is the essence of
blockchain technology, and it implies a
decentralized
distributed
database.
The
distributed blockchain ledger is consistent with
the AIS ledger, and can completely replace the
existing AIS model. Given the characteristics of
decentralization, restrictions on the installation
and application of AIS in the past may change.
The efficiency of the accounting processing of
the distributed ledger can be ensured by the use
of blockchain multi-party consensus mechanism
technology, in order to set standards and achieve
multi-party consensus in accordance with
accounting rules. The security and reliability of
data is achieved by using the blockchain
technology of the smart contract, which limits the
collection of data, its processing and the
processing of the ledger [6].
I.
INTRODUCTION
The
development
of
information
technologies (IT) leads to the computerization of
information systems (IS), i.e. the replacement of
manual bookkeeping systems with computer
systems. The progress of IT influenced the
improvement of the functions of the АIS and
enabled the efficient collection, processing and
retrieval of data [1]. Each stage in the
development of RIS has a significant role in
promoting
the
accounting
profession.
Accounting as IS is focused on providing
information to interested users in order to support
the
financial
decision-making
process.
Accounting as an IS is a set of methods,
processes and systems, with the aim of managing
ISBN: 978-86-82602-00-2
129
The paper will discuss the concept and
evolution of blockchain technology, and
especially the impact of this technology on AIS,
highlighting the positive effects of blockchain on
AIS, but also pointing out certain limitations
when applying this technology. In addition,
examples of the introduction of blockchain
technology in the practice of the largest
accounting companies, will be pointed out.
II.
BLOCKCHAIN CONCEPT
Blockchain technology was originally
developed to support the cryptocurrency Bitcoin
and to allow transactions to be carried out
without a third party [7, 8]. When performing
traditional transactions, money transfers were
managed by a third party, a bank or institution. In
this way, all transactions were controlled by
institutions that were centrally located [9]. The
development of blockchain technology has
imposed trust based on a decentralized network,
as opposed to the previous mechanism of trust in
a central authority. With this in mind, legal and
commercial transactions take place in a reliable,
accountable and distributed environment,
without the use of a central server on the
blockchain. A blockchain database consists of
nodes (computers), where records of transactions
are stored together through a network of
nodes/computers. Given the unreliable nature of
the network, a node verification process is
necessary in order to establish a consensus on
shared records [10]. Nodes are responsible for
adding new blocks to the blockchain, but only
after all nodes in the system reach consensus.
This means that there is an agreement between
all participants regarding the legitimacy of the
block, ie. block contains only valid transactions.
A new block is shared among all nodes in the
system, tracked by each node, but cannot be
changed by anyone directly [11]. In blockchain,
data (transactions) are divided into blocks, where
blocks consist of pieces of digital information.
There is a connection of each block with the
previous one, and the first block is the genesis
block [12]. Blocks represent structures where
data that contains values are stored [13].
Blockchain technology becomes a special
type of decentralized public record, that is, a
public ledger without localization on a central
server and is not subject to the monopoly of
administration or control. Transactions are
immediate, and participants act as equal peer-topeer (P2P). Once a transaction is undertaken, it
cannot be retroactively changed (a block) and is
130
Figure 1. P2P blockchain network [14]
recorded in the chain, in a database that is
continuously evolving and thus reflects the chain
of
transactions.
Technically
speaking,
blockchain implies a distributed database that
exists on a P2P network. This network is the
backbone of the mechanism, because every node
in the system is on the same level as the other
nodes. There is no central node that has control
and authority. Each node stores a local copy of
the blockchain, and if the contract of the node is
in agreement with the validation of the
transaction, it is considered valid (Fig. 1).
Blockchain is therefore a technology based
on a distributed ledger. A distributed ledger
consists of “chains” that are interconnected. The
content inside a block can be viewed by multiple
parties, but at the same time, everything inside
the block is protected [15,16]. Each transaction is
approved by the participants in the system, and
once the information is entered, it cannot be
deleted [17]. The ledger is distributed over a
network of connected computers, rather than
through a single centralized system, and records
are kept of all transactions from the first
transaction. The blockchain structure is copied
and shared by connected computers in the
system, and when a transaction occurs, a new
transaction is added to the existing ones as a
,,new block’’. As a rule, new transactions are
added within the front end of the blockchain, and
each time a new block is recognized by a
majority of computers, the blockchain is updated
to reflect the accepted chain [18]. Blocks are
encrypted and anonymous, while transaction
headers are public but not owned and cannot be
changed by anyone. Headers are publicly
available to those who require detailed
transaction information [19].
The immutability of the blockchain ensures
that in the chain, transactions cannot be changed
Figure 2. Blockchain immutability [20]
into each other. Each block has immutable
timestamps that refer to what happened before,
so each block references the previous block
(Fig.2). If the previous block information is
incorrect, a new block cannot be added.
Blockchain cannot generate new blocks in an
existing chain. Blockchain implies a stronger
system than traditional IT infrastructures, and it
is more reliable against malware and hacker
attacks [18,19].
Technology based on a distributed ledger, i.e.
a decentralized system provides significant
innovations compared to traditional centralized
record keeping. The three main features that
distinguish the new blockchain technology
include [21]: 1) trustworthiness - multiple copies
of historical records in the ledger, which is
approved by most computers, 2) transparency,
i.e. activity records that are publicly available to
all participants in the system and 3)
disintermediation - a distributed system
eliminates the need for intermediaries, i.e. there
is no need for a clearing agency.
III.
THE EVOLUTION OF BLOCKCHAIN
TECHNOLOGY
Due to rapid growth and development,
blockchain technology has evolved over time.
There are three different levels in the
development of blockchain technology, as well
as generation X, which will be possible with the
further progress of this technology [22,23]. As in
[15], blockchain is divided into three categories:
1) blockchain 1.0, 2) blockchain 2.0 and
3) blockchain 3.0.
Blockchain 1.0: blockchain logic is used only
for all cryptocurrencies including Bitcoin. All
applications that are related to cryptocurrencies
fall into this category. Blockchain 1.0 is therefore
a currency and implies the use of cryptocurrency
in applications related to cash (currency transfer,
remittances,
digital
payment
systems).
Blockchain 2.0 is used by financial services, and
smart contracts are introduced. Through smart
contracts, credible transactions are executed
without the involvement of a third party, which
implies various instruments (swaps, bonds,
options and derivatives). Blockchain 2.0 is
therefore a contract that includes the entire list of
blockchain applications in the economy, finance
and the market. Blockchain 3.0 represents the
application of blockchain beyond currency,
finance and markets to government, health,
science, literacy, culture and the arts. In the
generation X (blockchain X) variant, the public
blockchain is available to everyone, like the
Google search engine. This version provides
services to all layers of society, and it is a
publicly available distributed ledger where
rational agents make decisions and connect with
other agents for the common good.
IV.
THE IMPACT OF BLOCKCHAIN
TECHNOLOGY ON AIS
Considering the research about the use of
blockchain technology in accounting, it is
possible to categorize the advantages of the realtime blockchain accounting system as follows:
1) transparency and trust, 2) disintermediation,
3) smart contracts, 4) continuous audit [24]. A
smart contract is a part of the blockchain, that
provides greater security compared to traditional
contracts and reduces transaction costs. The
feature of a smart contract is that the content
cannot be manipulated, and the implementation
cannot be prevented. It is a transparent
agreement, without conflict, bypassing the
mediation services of banks, lawyers, and
notaries in its implementation. These contracts
can automate each transaction and quickly create
records in the blockchain, when the necessary
conditions are met [22].
Bearing in mind that accounting is
inseparable from the system of economic
relations in the state, as well as technical
achievements, the blockchain
technical
infrastructure, which is associated with
accounting terminology, can be the driving force
for changes in methodological standards of
control and accounting activities [25]. This
131
implies that accounting should strive for the
development of methods and procedures in
parallel with work in the IT environment, in
which blockchain technology is currently leading
the way.
Research results of this IT technology
highlight several areas where blockchain helps
and supports accounting and auditing [14]. These
areas include: 1) blockchain from an accounting
perspective including: the use of blockchain in
designing AIS; improving the efficiency of AIS
and increasing the importance of management
accounting; and 2) blockchain from an auditing
perspective:
blockchain
creates
new
opportunities and challenges for continuous
auditing and real-time accounting. These
processes are based on the development of
integrated AIS and real-time AIS, with the aim of
creating accessible and cheaper activities. The
stability of the system simplifies the exchange of
information and prevents fraud.
A. Blockchain from an Accounting Perspective
Blockchain from an accounting perspective
implies the following changes [24], relating to:
the use of blockchain in designing AIS and
increasing the efficiency of AIS.
The use of blockchain in designing AIS
includes the following: 1) adopting the zeroknowledge proof method, it is possible to create
a blockchain-based RIS as well as develop a
model that would illustrate the role of this system
in real-time accounting, continuous auditing and
monitoring, and detection of financial fraud [26];
2) a free open ledger is provided in order to
register the ownership of a wide range of assets,
i.e. the state is investigating the use of blockchain
in public records such as birth certificates,
driver's licenses, university degrees; 3)
represents an alternative technique for
bookkeeping (e.g. in the processes of mergers
and acquisitions, a common understanding
among key figures allows more time to be
directed to the areas of management and
consulting and makes the system faster [27]; 4)
smart contracts can be embedded or replaced
with operational and/or administrative functions
that affect internal and external reporting - in this
way, performance targets and budgets can be
translated to monitor smart performance
contracts against actual results. New blockchain
performance management systems can be linked
to
performance
contracts,
performance
appraisals and performance bonuses. In addition,
a segment of non-financial reporting such as
132
environmental reporting can be encouraged; 5) it
is possible to represent intangible assets
(intellectual property rights) as digital property
contracts, which can be designed to
automatically route assets; 6) it is possible to
report on financial capital on the blockchain,
whereby ownership can be easily transferred in a
similar way to the exchange of cryptocurrencies;
7) corporate loans can be viewed as “smart loan
contracts” - debt obligations can be simply
transferred, and the due date can be automatically
tracked.
The use of blockchain in increasing the
efficiency of AIS includes the following: 1)
integrating
blockchain
technology
and
accounting has contributed to the elimination of
unnecessary manual effort, speeding up payment
settlement and avoiding fraud in financial
reporting. In addition, the way in which
corporations are managed and operated has been
radically changed [26]; 2) the time difference
between the published financial reports of the
company has been eliminated - time delays will
be completely eliminated by the use of a realtime accounting system, which enables real-time
monitoring of payments by the general public or
key stakeholders [28]; 3) it provides the
possibility of quick application of accounting
processes [25]; 4) blockchain increases the
reliability of payment and resource accounting
and it is a mechanism for keeping detailed
accounts; 5) the use of blockchain provides
accountants with clarifications on the ownership
of assets, on the nature of liabilities and can
significantly improve results. Blockchain can
also advance the accounting profession by
reducing the cost of tracking, by providing
security in terms of identity, as well as the origin
of assets in the past [27]; 6) good blockchain
applications are focused on cost and time
savings, by removing central peripherals from
the system, thus increasing the safety and
security of the consensus system.
B. Effects of Blockchain Application in AIS
Some of the possible effects of blockchain
application in AIS based on the use of electronic
funds include: impact on accounting activity,
impact on AIS design, the possibility of reducing
the costs of protecting the integrity of
information and increasing the rate of settled
transactions, impact on the transparency of
management decision-making, challenges of
blockchain application in accounting [14].
The transition to a financial system based on
blockchain technology will provide a number of
incentives for the accounting profession. Given
that this is a new approach, accounting
professionals will be able to lead and influence
the implementation and application of this
approach in the future. In order to integrate the
technology as part of the financial system, it is
necessary to develop, standardize and strengthen
the blockchain, which takes time. A big
challenge is setting standards for blockchain
reporting, which requires leading accounting
firms to offer their skills and knowledge in this
domain. Accountants also play a significant role,
bearing in mind the need to assess the benefits
and costs of the new system.
and can be verified and confirmed in real time, 3)
programmability – certain strings used by the
blockchain allow the storage of ledger entries
and the creation of journal entries that are
automatically executed under the name of smart
contracts.
In terms of impact on AIS, the technology is
reliable, distributed and available as an open
system with minimal usage costs [29]. The
application of blockchain for accounting
purposes is a new challenge for the accounting
profession, as it can facilitate compliance with
regulatory requirements in order to improve the
current accounting system. Blockchain often
refers to different payment systems as well as
specific accounting standards. This technology
works as a shared, neutral database that keeps
records of transactions. In addition, the system
allows managers and auditors to compile
individual transactions and produce financial
statements at their discretion [30]. Real-time
accounting procedures are software solutions
that enable currency transfers, derivatives and
other electronic transfers between two or more
entities, while storing transaction data in
encrypted blocks. In order to add value to the
business as well as for stakeholders, it is
important that the blockchain accounting system
supports the following real-time features: 1)
transparency - availability of transactions in real
time (e.g. bitcoin), 2) stability - i.e. not assigning
programming capacity for modifying elements of
transactions and 3) accessibility - availability of
data to a wide range of users.
The application of blockchain in the field of
accounting bring advantages based on the use of
this technology in AIS, but also certain obstacles
may arise. Three limitations have been observed
that can hinder the application of blockchain in
accounting [31]: 1) data privacy - the effort to
preserve the confidentiality of data is justified,
bearing in mind that lists of customers and
suppliers, unit costs and tactical transactions in
the register can become profitable trade secrets.
In addition, blockchain authentication techniques
are not suitable for payment verification from an
accounting point of view, since these
technologies do not recognize the reality and
peculiarities of transactions. With this in mind,
accounting professionals know that checks are
necessary to prevent fraud and eliminate errors,
which will not be eliminated by the introduction
of blockchain.
In terms of reducing information protection
costs, blockchain technology should be
integrated into accounting procedures. The basic
characteristics are [14]: 1) high level of use preserving the accuracy of information in order
to fully monitor audit reports and ensure a fully
automated audit, 2) continuity - each client has
its own version of the registry, where reality is
universally accepted, while previous transactions
cannot be changed without the approval of the
majority, the entire registry is kept by all parties
Considering the transparency of decisionmaking, companies that use blockchain are more
transparent,
because
blockchain
allows
identifying a traceable database and allows the
creation of a full time frame for all management
activities and decisions. So, for example,
BoardRoom is a pioneering example of
blockchain software managing, created by
Ethereum.
V. APPLICATION OF BLOCKCHAIN IN THE
PRACTICE OF ACCOUNTING COMPANIES
Observing the application of blockchain in
large accounting companies belonging to the
group of big four (Deloitte, Ernst Young, KPMG,
and PwC) each of them found a definite interest
in the application of blockchain [32].
Deloitte was the first company to enter the
crypto space among these companies,
announcing the first blockchain lab in Dublin,
Ireland in 2016. In collaboration with the Bank
of Ireland, a joint proof of concept based on a
blockchain trial was carried out. Three of
Ireland's largest banks use Deloitte's blockchain
to verify the credentials of their employees [33].
In addition, in 2014, the business blockchain
Rubix, in Toronto, was launched, which offers
consulting services and creates decentralized
133
applications based on the blockchain platform for
clients from various industries.
Ernst Young in Switzerland is the first of the
“big four” accounting firms to accept bitcoin for
accounting and auditing services. In 2018, EY
introduced the EY Blockchain Analyzer, which
according to EY's press release “is a suite of
blockchain audit technologies that improve the
ability to perform an in-depth review of
cryptocurrency business transactions” [34]. EY
is continuously developing blockchain-based
solutions such as Nightfall, Dye Pack, Smart
Contract and Token Testing.
In 2016, KPMG launched a Digital Ledger
Services Program to help financial services
companies explore blockchain. Digital ledger
services allow financial institutions to realize the
potential of blockchain cloud capabilities, such
as faster and more secure transactions, reduced
costs, and automated and simplified back-office
operations. In addition, the company became a
partner with Microsoft Corp. for the launch of the
“blockchain Nodes” initiative, in order to create
and identify new applications and use cases of
blockchain technology.
PwC is the second largest accounting firm in
the world which has accepted bitcoin payments
for its services [35]. The company supports a
variety of blockchain projects and has introduced
blockchain auditing services to empower people
to use this technology. The audit service requires
independent validation, and the decentralized
digital ledger can also be used for online identity
verification, supply chain management and audit
financial transactions. This company views
blockchain as a software that will structurally
modify the common traditional practices
between customers, competitors and suppliers in
the next generation of business. In addition, PwC
believes that the pace of development of these
solutions will not be fast, given the regulatory
uncertainty [36].
VI. CONCLUSION
Blockchain technology has enabled new
business models, business and production
processes, where ownership is accessed and
shared, as well as innovative organizational
forms and real-time accounting systems. In this
way, blockchain technology offers advantages
for accounting practitioners and users of
information from various aspects. Blockchain
technology in accounting provides numerous
benefits such as simplifying operations,
134
minimizing the risk of fraud and corruption in
accounting transactions, bearing in mind that a
block added to the chain cannot be changed
unilaterally, without the consent of all parties in
the transaction. In addition, the efficiency and
productivity of the audit increases, and simplifies
business, given that the relevant transactions are
open to the supervision of all authorized parties
inside and outside the organization.
Possible effects of applying blockchain in
AIS include: impact on accounting activity,
impact on AIS design, possibility of reducing the
costs of protecting the integrity of information
and increasing the rate of settled transactions, as
well as impact on the transparency of
management decision-making. On the other
hand, there are challenges and limitations
regarding the application of blockchain in
accounting. They relate to data privacy, the
ability of companies to retroactively deal with
their own blockchains, and the limited ability of
blockchains to verify transactions. The
application of blockchain for accounting
purposes is a new challenge for the accounting
profession, as it can facilitate compliance with
regulatory requirements in order to improve the
current accounting system. In order to add value
to the business as well as for stakeholders, it is
important that the blockchain accounting system
supports real-time features related to
transparency, stability and accessibility, i.e. data
availability to a wide range of users. The
transition to a financial system based on
blockchain technology will provide a number of
incentives for the accounting profession. A big
challenge is setting standards for blockchain
reporting, which requires leading accounting
firms to offer their skills and knowledge in this
domain. The role of the accountant is also
significant, bearing in mind the need to assess the
benefits and costs of the new system.
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136
PaKSoM 2022
Family Business Management in the
Knowledge Era
Sandra Stojadinović Jovanović1, Bojan Krstić2, Violeta Domanović3
1
Western Serbia Academy of Applied Studies, Užice, Serbia
2
University of Niš, Faculty of Economics, Niš, Serbia
3
University of Kragujevac, Faculty of Economics, Kragujevac, Serbia
1
sandrassj28@gmail.com, 2bojan.krstic@eknfak.ni.ac.rs, 3vterzic@kg.ac.rs
Abstract—Family business represents the oldest
and the most common form of economic
organizations in the world. In many countries,
family firms represent a huge percentage of the
total number of firms. Family businesses face the
same challenges as other businesses. But, in
addition, they have to solve many issues that are
specific to them. Management of these companies
is often much more complex than management of
companies where family relationships do not
influence decision making. Because in these
companies, not only work is managed, but also
family. The aim of the paper is to point out the
features of family business and its management
and to snapshoot this business in the
contemporary knowledge economy.
Keywords - family business, management,
knowledge
I.
INTRODUCTION
There are many different definitions of
family businesses. A narrow definition would
mean only a company that is wholly owned by
one family and managed by its founders and/or
their family members. A somewhat broader
definition would also include companies in
which the founder's family has a controlling
stake and a leading role in top management. The
broadest definition of family firms also includes
firms in which the founder's family is only one
of the minority owners, but regardless, the
family continues to have a significant influence
on the company and this influence is not
proportional to the ownership share of the
family in the company [1]. Despite numerous
definitions, the term family business most often
means a company in which the majority of votes
are in the hands of the family that controls the
ISBN: 978-86-82602-00-2
company, including the founder(s) who intend
to pass the company on to their descendants [1].
Family businesses are those in which two or
more members of the same family control, are
directly involved in, and own a majority of the
business. What makes them different from
nonfamily businesses are two critical factors:
(1) the complex interrelationships of family
members interacting with one another and
interacting with the business, and (2) the
intricate succession planning needed [2].
Family businesses are of great importance in
the economies of a number of countries. They
represent the oldest and the most common form
of economic organizations in the world. In
many countries, family firms represent a huge
percentage of the total number of firms and
provide a key contribution to economic growth
and employment.
In Switzerland, 88% of all companies are
family business. This rate in the rest of Europe
varies between 70% and 80%, while in the USA
it is 90%. [3] Family companies make up more
than 60% of all companies in Europe. Family
businesses account for 80% of all businesses in
the United States and are responsible for nearly
50% of the U.S. gross domestic product (GDP).
In Great Britain, 75% of registered companies
are family businesses, while in India, the Far
and Middle East, that number reaches 95%. In
Latin America, as much as 60% of the gross
social product is generated by family firms [1].
There are family firms among small and
medium enterprises, but also among large,
global companies. Walmart, Volkswagen,
Berkshire Hathaway, Roche are just some of the
137
most famous and richest family businesses in
the world [4]. Some of the well-known family
businesses include Fiat Group and Benetton in
Italy, L'Oreal, LVMH and Michelin in France,
Samsung, Hyundai and LG Group in South
Korea, BMW and Siemens in Germany, C&A,
Heineken and Philips in the Netherlands. The
oldest family company is the Takenaka
Corporation from Japan, active in the real estate
sector, which has been operating since 1610 [3].
Walmart is the world's largest retailer. This
family business is considered one of the richest
in the world, and since 1945, when Sam Walton
opened the first store, three generations
have changed.
II.
FAMILY BUSINESS MANAGEMENT
FEATURES
Family businesses face the same challenges
as other businesses. But, in addition, they have
to solve many issues that are specific to them.
Management of these companies is often much
more complex than management of companies
where family relationships do not influence
decision-making. Because in these companies,
not only work is managed, but also family.
In the case of family businesses, the interests
of family, business and ownership overlap. The
founder is also the director and the head of the
family who feeds the family. The system of
three circles, which, at the beginning of the
formation of a family business, overlap, is very
centralized, because one person makes all
important decisions. As, over time, the business
develops, the system becomes more complex,
the circles are separated, and the interests of all
three fields still remain and become more
complicated. These are the interests that have:
(1) family, (2) business, and (3) property [5].
Family businesses have their advantages,
which allow them to ensure their survival and
growth, but also disadvantages, which can
determine their failure. The key positive aspects
that characterize a family business are: trust
among family members, loyalty to the family,
devotion, knowledge, far-reaching thinking and
close communication. The key positive aspects
that characterize a family business are: distrust
of employees who are not family members in
incompetent employees who are family
members, lack of loyalty to the company,
benefits, lack of knowledge, demands for quick
satisfaction, failure in communication [6].
138
Family businesses, in general, have a
number of advantages. They are characterized
by their commitment and desire to preserve the
company for future generations, which is why
they have a long-term focus on survival and
growth, rather than quarterly results. Many
families are therefore ready to work harder, to
sacrifice, and to reinvest profits in the company
in order to enable it to grow. In addition, as the
family runs the firm, the interests of the
majority owner and top managers are aligned.
Another advantage is the continuity of
knowledge. Families make it a priority to
transfer
their
accumulated
knowledge,
experience and skills to the next generation.
Many family members are involved in the
business from an early age. This ensures
commitment, but also the necessary transfer of
knowledge. The third important advantage of
family businesses is the reliability and
importance that the family attaches to the
company's reputation. As the name and
reputation of a family business is associated
with its products and services, it invests efforts
in raising the quality of its production and
maintaining good relations with its business
partners and clients. Additionally, these
companies tend to focus on core competencies,
but are also more flexible in their business
approaches. As a rule, family businesses have a
clear and recognizable identity. The human
dimension is an important aspect in family
businesses, so employees are often more loyal,
you know who works and for whom, so it is a
common phenomenon that generations of
employees work for generations of owners.
At the same time, family businesses are
burdened by significant disadvantages, which
make them difficult to sustain in the long term.
In general, there is a specific generational
dimension in family businesses that is not
present in non-family-owned firms. So the first
disadvantage of family businesses is
complexity, because family relationships are
added to business relationships. Another
disadvantage of family businesses is that
informality is resorted to, which occurs due to
little interest in establishing clearly defined
business practices and procedures. This further
leads to ambiguities, which increase as the
company grows. The third shortcoming of these
companies is related to not paying enough
attention to key strategic areas, such as family
business succession planning, hiring qualified
managers, etc. Postponing or ignoring such
important strategic decisions could affect the
survival of the family business. Fourth, in the
first and sometimes second generation, the
company is managed by the founder and family
members. However, at this stage it is important
to attract and retain quality professional
management staff. Over time, as they grow,
family businesses must, in addition to
successors, include professional managers in the
business, i.e., appoint both successors and
professional managers in the right place.
In family businesses, the issue of succession
is very important in the long term. On average,
four generations from the same family lead
these businesses. The success of a family
business depends on the successful transfer to
the next generations of the family.
In order to understand the succession of a
family business to the next generation, it is
important to understand the difference between
the management of the company's capital and
the management of the company. Owners
manage the capital and managers run the
business. Founders are both owners and
managers. That is why inheritance differs
between
ownership
inheritance,
i.e.
management of company capital, and
inheritance in business management of the
company. Practically, this means that four, most
common, cases are possible: a) the first, that
children inherit property and be managers; b)
others, to inherit property, but to do some
completely different things in life; c) the third
(which is less practical and more theoretical) not
to become owners, but to be managers; and d)
the fourth (slightly less theoretical and more
practical than the previous one) not to inherit
the ownership of the company (they will inherit
something else) and not to manage the
company [7].
Out of 100 family companies that survive
through the first generation, only about 30
survive to the end of the second generation. The
largest number of family firms has a very short
life span after the foundation phase and almost
95% of family firms do not survive the third
generation of ownership. About 2/3 to 3/4 of
family businesses fail or are sold by the
founders while still in their ownership.
The overlapping of two aspects, family and
business, makes the management of a family
business complex. When family roles and
business interests collide, significant conflicts
can arise. Anticipating these challenges and
preparing for them can really pay off.
The many possible family roles and
relationships add to the complexity of family
business management. They include the
following roles and relationships: a) founder
(mom or dad); b) husband-wife teams; c) sons
and daughters; d) cooperation, as well as rivalry,
of brothers and sisters; e) in-laws in business
and outside it; f) the entrepreneur's spouse [8].
III.
FAMILY BUSINESS IN THE
KNOWLEDGE ERA
Today, two economies exist in parallel, the
industrial economy and the knowledge
economy, both at the aggregate, national and
broader level, as well as within individual
sectors, i.e. companies and organizations. [9]
We witness a rapid transition from an industrial
society into a knowledge society. The
knowledge society is based on the growing
importance of knowledge as the so-called fourth
production factor [10]. The industrial economy
and the knowledge economy are not mutually
exclusive, but they are very different. In search
of answers to these differences, a knowledgebased view of the firm was developed as a set of
ideas about the existence and role of the firm in
which the emphasis is on the role of knowledge.
This approach is based on the following
assumptions: 1) knowledge is the most
important production resource; b) different
forms of knowledge vary in the degree of
transferability: explicit knowledge can be easily
transferred
between
individuals
and
organizations, while implicit knowledge is not
easy to transfer, because it is highly
personalized and manifests itself through
application; c) knowledge is the subject of
economies of scale and scope; d) knowledge is
created by individuals, and in order to be
effective in creating and preserving knowledge,
they must specialize; e) production of goods and
services usually requires the application of
different types of knowledge [11].
Different kind of knowledge flows can be
identified in the family business. The largest
family business and retailer in the world [12],
Walmart, is good example of various kinds of
knowledge flows in the family business. This
giant company has 2.3 million employees,
including nearly 1.6 million in the U.S. alone,
making it the largest private employer in the
world. It operates approximately 10,500 stores
in 24 different countries, achieving total retail
139
revenues of $538.15 billions. The first store
opened in 1962 was based on the principle of
low prices and the company quickly expanded.
Within less than a decade, Walmart reached
sales of 78 million USD, had gone public and
opened its first distribution centre. In 1980,
Walmart’s sales exceeded 1 billion USD.
Walmart took its internationalization in the
1990s.
Many
internationalization
steps
followed, using joint ventures, greenfield
investment and acquisitions [13].
Different kind of knowledge flows occurs in
this the largest family business including
knowledge flows between foreign subsidiaries
and the parent company and knowledge flows
among subsidiaries. Many Walmart subsidiaries
around the world rely on the knowledge and
competence of their parent company in
logistics, information technology and various
strategies and implement these in their host
countries. Therefore they can be categorized as
knowledge
users.
Some
subsidiaries
accumulated a high level of knowledge before
their acquisition by Walmart and they can be
categorized as a knowledge independent or local
innovator. There is also a subsidiary that
exchange knowledge in both directions and can
be categorized as a knowledge networker. It has
a high level of unique knowledge but it also
learns from the other Walmart subsidiaries and
the parent company. Finally transfer of a very
high level manager from subsidiary to a parent
company or to other subsidiary can be
categorized as knowledge transfer [14].
With increased labor mobility and
information transfer, knowledge and expertise
can be instantly transferred anywhere in the
world. In the knowledge era, people are the
company's most valuable and useful resource.
They are the storehouse of knowledge that the
company has at its disposal, the potential and
the basis of competitive advantage.
Family businesses must carefully observe
people, family members, who want a
managerial position in the company and
determine whether they are up to the task.
Complex relationships in family firms require
the supervision of competent and professional
management, either from within or outside
the family.
Good management is essential for the
success of any business, and a family business is
no exception. Significant deviations, due to
family reasons, from what would be considered
140
good management practice only lead to the
weakening of the company.
There are a number of family business best
practices suggested by family business experts
and practitioners. Every family and every family
business is different, so what is actually best
will depend on the individual situation.
However, best practices have helped many
family businesses to design effective
management systems and they include, among
other things: promoting learning to stimulate
new thinking and fresh strategic insights [8].
Knowledge
era requires knowledge
management – doing whatever it takes to get the
most out of knowledge as a resource [15]
including a systematic effort to discover,
organize and make available the company's
intellectual capital and to support a culture of
continuous learning and information sharing, so
that activities are based on what is already
known [16] as well as developing a culture of
learning in which employees systematically
acquire and share knowledge with others in
order for the organization to achieve the best
possible performance [17].
Effective knowledge management is
essential for achieving a competitive business
advantage. In the contemporary business
environment, the business value is based on the
intellectual property. Hence, the knowledge is a
power, which makes such changes and
improvements that lead to the long-term
sustainable
growth
and
development.
Knowledge mangement is focused on exploiting
the intellectual property in order to improve the
efficiency, generate new value and increase the
competetiveness [18]. A family business is a
business, a competitive business. Following
these and other good management practices will
help the business thrive and allow the family to
function as a family. Neglecting them will pose
a threat to work and put pressure on
family relationships.
IV.
CONCLUSION
Family businesses represent the oldest and
the most common form of economic
organizations in the world. There are family
firms among small and medium enterprises, but
also among large, global companies. Family
businesses have their advantages, which allow
them to ensure their survival and growth, but
also disadvantages, which can determine their
failure. In contemporary global economy family
businesses operate in conditions of rapid
transition from an industrial society into a
knowledge society. The knowledge society is
based on the growing importance of knowledge
as the fourth production factor. Different kind of
knowledge flows occurs in family businesses
including knowledge flows between foreign
subsidiaries and the parent company and
knowledge flows among subsidiaries. With
increased labor mobility and information
transfer, knowledge can be instantly transferred
anywhere in the world. Knowledge era requires
knowledge management – doing whatever it
takes to get the most out of knowledge as a
resource. Effective knowledge management is
essential for achieving a competitive business
advantage. In the contemporary business
environment, the knowledge is a power, which
makes changes and improvements that lead to
the
long-term
sustainable
growth
and development.
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141
142
PaKSoM 2022
Digital Transformation in the Field of
Education using an Innovative
Solution
Aleksandra Tašković1, Angela Fajsi2, Slobodan Morača3
1,2,3
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Serbia
1
aleksandra.taskovic98@gmail.com, 2angela.fajsi@uns.ac.rs, 3moraca@uns.ac.rs
Abstract—As users are the ones who have the most
impact on the market and as today's organization
is reorienting its business towards them, digital
transformation is one of the solutions that can
improve and advance the way organizations
deliver their value to end users. The research work
aims to show the importance of digital
transformation in the field of education and to
present conceptual solutions, through a business
proposal, that would improve the way of working
at faculties, increase and maintain student
satisfaction and develop interest on the part of
them.
Keywords - digital transformation, innovation,
education, application.
I.
INTRODUCTION
Digital transformation represents the process
of integrating digital technologies in all areas of
the organisation, in order to create new or
modifies existing processes, meet all business
and market requirements and improve the enduser experience. By digitizing the process in the
field of education, educational institutions have a
chance to better deliver their services, which
would improve the final experience of students,
as well as achieve the ability to attract and retain
students at their faculties. Considering the
current environment and the situation in the
world, faculty institutions should allow students
greater flexibility and provide choices in the way
they study. One of the main examples of digital
transformation occurred during the Covid-19
pandemic. Educational institutions were forced
to find a solution in which human contact would
be avoided, for classes to take place without
interruption. In that period, technology played a
key role in achieving the given goal, which
ISBN: 978-86-82602-00-2
showed the potential of digital transformation
and indicated the benefits it can contribute to
educational institutions. Further work will
present an innovative solution in the form of an
application, which would increase flexibility in
faculty institutions, improve the way of
monitoring and acquiring practical and
theoretical knowledge, and increase students'
interest and engagement.
II.
THE TERM OF DIGITAL
TRANSFORMATION
Digital transformation uses technology to
create new value, new services, innovation, and
the ability to quickly adapt to changing
circumstances. What characterizes digital
transformation are innovation and creativity in
finding solutions, the use of digital technologies
to create solutions, leadership and perseverance
in managing changes, as well as the risks that
these changes can contribute. Any digital
transformation, in order to be successful, must
first of all be initiated by a problem statement, a
clear opportunity, or a strategic goal of the
organization. It starts and ends with customers.
This means that in the modern way of
management, the customer/user/client is the first
and starting point that is reviewed and analyzed
to improve the experience and overall
satisfaction with the service/product. The main
goals as well as the drivers of digital
transformation are in optimizing the user
experience, starting innovation, achieving
operational flexibility, developing new revenue
streams and value systems based on information,
which leads to the transformation of business
models and new forms of digital processes.
However, in addition to the external view, the
143
transformation itself must also take into account
the internal environment of the organization,
which implies analysis at the level of legacy
systems and interruptions in processes, as well as
the IT infrastructure itself and human expertise
in the use of digital solutions. As human is the
one who has the main role in the final judgment
of the success of the innovation/change, the
psychological factor of the same must also be
taken into account, i.e. it is necessary to assess
the level of acceptance when introducing the
change. By understanding and identifying these
factors, innovators are provided with a view of
the market and the target group to which the
innovation would be marketed, to reduce barriers
when introducing new products to the industrial
market and accelerate the acceptance of the
change.
III.
THE PSYCHOLOGY OF CHANGE
Innovation continues to transform the global
marketplace and the modern workplace, offering
potential solutions to the challenges that
organizations face. As already mentioned, the
main example of mass digital transformation
followed during the period of the COVID-19
pandemic. People were forced to quickly adapt
and accept the change in the way of work and
business. However, the question arises as to how
people would react to innovation and change if
they had a choice of acceptance and what would
influence their decision.
Many innovators work tirelessly to develop
innovations in a rapidly changing and
competitive market, but no matter how good
those innovations are for society or industry,
their success depends solely on human
acceptance. Factors that influence innovation
diffusion and subsequent adoption can be
socioeconomic, cultural, technological, as well
as legal factors. Individual determinants such as
psychological variables and demographics may
also play a role. Barriers faced by the adopters of
innovations are based on the very background of
the innovation, on the values that the person
shares, on the lifestyle, perception, culture [1].
As a consequence of those barriers, innovation is
characterized as a threat that can change a certain
routine in life. One type of barrier may refer to
socio-culturally accepted norms of behavior that
the consumer segment considers “correct and
appropriate”. This type of barrier explains
traditional and moral values that reject
everything new and everything that does not
support the traditional form, so it’s considered
144
psychologically threatening. For example,
marketing clothing such as shorts and T-shirts in
the Middle East would be unsuccessful
considering the values that the region promotes.
Another type of barrier may be related to the
consumer's attitude and feelings about the
product/service offering, the brand, the seller, or
even the country of origin. It also refers to
personality and self-image. Consumers may
resist adopting new products/services if they are
patriotic and ethnocentric or if they don’t
perceive the innovation or the merchant/dealer to
be of their “class” in terms of socio-economic
status or even quality. In the field of information
technology, barriers often appear in the form of
fear and aversion to technology and working
with computers, which lead to automation. As
such, man is a social being that tends to socialize
with people, to make new contacts, and any form
of deprivation can lead to reluctance to accept
change. Acceptance also depends on the level of
education, as well as the field in which the users
work. It is considered that engineers will have a
better degree of acceptance of the innovation
than users who work, for example. in the
healthcare industry. Also, the level of
technological literacy and familiarity with the
innovation and its importance can play a big role
in the acceptance phase. One of the main
problems with the adoption of new technology is
associated with distrust in its security and risks
of violation of user privacy. According to the life
cycle of technology adoption, users can be
divided into the following groups [2]:
Innovators (2.5%) - The first to test the
product and are not afraid of risks when
they decide on acceptance of innovation;
Early adopters (13.5%) - Early adopters,
like innovators, adopt a new concept
product very early. However, unlike
innovators, they are not technologists;
Early Majority (34%) – This type of
consumer is more sceptical compared to
the previous two, however, under the
influence of early adopters accept the
innovation;
Late Majority (34%) - They accept only
when changes become widely accepted;
Sceptics (16%) - Suspicious of
everything new, they accept innovation
only if necessary, otherwise, they
reject it.
IV.
INITIATION AND NEED FOR DIGITAL
TRANSFORMATION
The need for digital transformation comes
with the needs of society. The first factor
influencing
the
initiation
of
digital
transformation is associated with the emergence
and increasing use of the Internet, with
accompanying technologies (smartphones, cloud
computing,
online
payment
systems,
cryptocurrencies, etc.). Another factor that
initiates transformation is the constantly
changing environment. For the organization to be
more flexible and respond quickly to any change
in demand, it often finds a solution in automation
and innovation in information systems, as well as
in the way processes are carried out, which in
most cases are supported by representatives of
Industry 4.0 technologies. The third factor that
can be cited as initiating the digital
transformation is the users themselves, as their
response to the digital revolution. The majority
of users massively switch to online shopping, due
to the faster obtaining of the desired product, as
well as the comfort from which they perform the
activity. It can be concluded that users are the
ones who set the pace for the market and who
demand ease and speed when getting
services/products.
Initiating digital transformation starts with [3]:
1. The question “What is happening in the world
that requires action?”
2. Examine the organisation’s industry by asking
the question, “What are the biggest forces
influencing industry challenges?”
3. Analysis of current technological trends, by
asking the question “What do we know
customers need and whether we can identify
what customers don't know they need is
required?”
4. Analysis of new offers on the market, by
asking the question “What offers are appearing
in response to changes in the market?”
5. Analysis of the current state of business and
the desire for change, asking questions “If
stakeholders question value and quality, what is
missing, what needs to be done differently?”
6. Establishing a vision of success implies
defining goals and success metrics for project
outcomes.
7. Analysis of the organisation’s internal
environment (availability of technical, financial
resources, human expertise).
8. Communication and exchange of ideas in the
collective.
A. Advantages of Introducing Digital
Transformation
Digital transformation can be applied in
every industry. Each type of industry operates in
a competitive environment that requires rapid
changes and listening to the needs of users.
Therefore, digital transformation can improve
and advance the way organizations deliver their
value to end users. Transformation implies an
ongoing process of introducing new business
models and changing the way of doing business,
rather than a one-time activity.
The benefits that can be realized from digital
transformation are as follows [4]:
improved efficiency,
increased transparency,
improved end-user experience,
increased user engagement,
increased productivity,
increased agility and innovation,
encourages collaboration and improves
the employee experience,
improves knowledge and skills of
employees,
increases competitive advantage in the
market,
cost reduction.
V.
DIGITAL TRANSFORMATION IN THE
FIELD OF EDUCATION
Digital
transformation
can
enable
educational institutions to provide a better
student experience, improve their ability to
attract and retain students, and support the
transition to distance learning [5]. In addition,
digital transformation has helped organizations
adapt to the period of the COVID-19 pandemic,
providing new and innovative distance learning
options.
All education systems rely on data collection
and processing. There is a strong need for big
data technologies and analytics to provide
personalized educational solutions, generate
deeper insights into student progress, and
facilitate better interactions between teachers and
145
students. Automation can ease the burden of
administrative and operational tasks for teachers
and school administrators.
Fields in which digital transformation can be
applied are:
reduction of paperwork related to
enrollment and admission to faculties,
use of technology to narrow the choice
of students who will be accepted for
studies,
using quick answers, to get rid of routine
questions,
online monitoring of study status,
without waiting for information from the
student service,
faster access to information,
teaching materials available online,
use of virtual reality during learning,
cooperative learning,
curricula focused on the future,
flexibility, time-saving,
better readiness of students for market
needs,
availability of necessary information at
any time when it is needed,
it promotes creativity and thinking
“outside the box” in students,
it increases the satisfaction and interest
of students.
VI.
RISK MANAGEMENT IN THE DIGITAL
ENVIRONMENT
The life cycle of digital transformation
represents a path of innovation that requires
continuous excellence, in order to respond
agilely to possible global economic changes,
business competitiveness, new regulations [6].
Digital transformation is not just the adoption of
new software, technologies and processes that
are more efficient and automated than traditional
business practices, it’s a completely new,
innovative way of doing something that is the
core of the business. This means that managers
who plan to introduce digital transformation into
their business, besides the benefits that
transformation will bring, must also analyze
146
potential challenges and problems associated
with the new change. Technology itself is a key
factor in the emergence of risk. Risks associated
with technology most often occur due to a lack
of understanding of it or due to inadequate
management. Establishing control over risks
implies that there is a function called Risk
Management within the organization or a project.
Within that function, the risk is viewed through
the possibility of its detection and recognition,
assessment of its probability of occurrence, as
well as assessment of the impact if it occurs. For
an effective digital environment that meets the
desired goal, it is crucial to consider risk areas
beyond traditional risks [7]. For example, social
networks are becoming integral to marketing,
which can create a risk to brand value and
reputation. Similarly, customer profiling is
highlighted for a better user experience,
however, the profiling process should be aligned
with the protection of user data privacy. Due to
the high dependence on technology, system
availability must always be at a high level.
Understanding risk areas is key to identifying
and managing all the risks an organization may
be exposed to in a digital environment.
According to the Deloitte framework, digital
risks are categorized into 10 areas [7]. Based on
the risk areas for digital initiatives, it is necessary
to design various controls as well as measures
according to leading standards and industry
practice. A critical aspect of defining controls is
in coming to a conclusion about the nature and
level of digitization of operations. So the
introduction of digital transformation must go
together with Risk Management in the
organization.
A. The Impact of a Digital Transformation on
Risk Management in the Educational
System
The impact and importance of technology in
the field of education are increasingly in the
spotlight, due to the achievements and
improvements that technology can contribute to
learning. However, its success will solely depend
on the participation and level of engagement of
stakeholders from all departments in the
educational center and out. Already existing risk
management plan at the university will have to
change in line with the new change. Also, any
decision to introduce a change must be made
according to the data from the Risk Management
Plan. This means that we cannot introduce a
certain digital change if the university cannot
support it infrastructurally, or if the new digital
change will contribute to an even greater increase
in risk in the organization. The digital
transformation will affect the risk management
plan so that it will have to be completed with new
parts that firstly involve the management of the
contract that the university has concluded with
the supplier of IT products [8]. This means that
the contract should specify all the points that the
supplier should fulfill according to the client and
the contrary for the client according to the
supplier. With this type of management, it will be
easier to assess potential risks and it will be easier
to establish adequate control based on the
fulfillment or non-fulfillment of contractual
obligations. The second thing is that third-party
IP rights must be controlled, which means that
before buying a software license, the institution
must check whether the licensing method
corresponds to the way of studying and accessing
that software for students, whether it is about
temporal or geographical access to the software.
As universities own and manage a huge amount
of personal data, concern for data privacy is one
of the main items in the risk management plan,
as they are one of the main targets of cyber
attacks. Universities will have to have plans in
place such as a Disaster recovery plan and
Business continuity plan. The fourth thing that
needs to be in plan is that IT systems in
educational institutions are mostly decentralized,
integration with the new system can be difficult,
because we have systems of different
infrastructures, and their integration itself can be
very expensive. The time required to acquire a
new system is to reduce the risk of expensive
failed investments by finding the right solution
and agreeing with the supplier on the level of
integration. Also, business procedures and
policies must be changed according to the new
environment.
The identification of risks in the plan itself
will also have to be changed in a timely manner
according to the introduction of new technology.
It is considered that the new potential risks of the
introduction of digital change in the educational
system may be the following [9]: transformation
of the already existing curriculum, loss of basic
cognitive competencies (writing, calculation,
reading, logic), moving away from fundamental
training, change in the model of the teacher (his
role becomes public), reduction in the number of
teaching staff, reduction in the quality of training.
B. The Impact of a Digital Transformation pn
Innovations in the Educational System
When it comes to the impact of digital
transformation on innovation, this segment offers
a wide range of innovations that can be achieved
by introducing and combining already existing
technologies. Digital transformation provides
innovators with a high level of creativity that
they can use to create a new business model in
the educational center itself. However, the only
obstacles for innovators will be the psychological
factors of students and teachers, as well as the
financial and infrastructural state of the
university. Therefore, research was initiated in
that field, which is presented in further work
through the obtained information on the
readiness to accept the innovation and the given
innovative proposal in the form of an application.
VII. THE RESULTS OF EMPIRICAL RESEARCH
ON STUDENT SATISFACTION WITH THE CURRENT
WORK SYSTEM AT FACULTIES
Because of the benefits as well as the needs
that state faculty institutions have, research work
presents the problem that students encounter
during their studies, and as a solution, a proposal
for the implementation of an innovative
application was given, which will represent the
beginning of the digital transformation in the
field of education.
A. Research Methodology
The research part of the work is based on the
analysis of student’s satisfaction with the current
method of studying and acquiring knowledge at
studies within the state faculties of Serbia. The
beginning of the research is presented through
the research methodology of getting information
about the current environment and students’
satisfaction at state faculties. Also included in the
research are questions about the psychological
impact of changes on students. That is, how
much students are willing to accept innovation
and how ready they are to adapt to changes in the
way of studying. The survey method was used as
a research channel. The first phase involved
creating a survey and getting in touch with
respondents. In the second phase, it was
necessary to analyze the collected data in order
to identify a potential problem in institutions and
proposed a solution.
B. The Task and Goal of the Research
The task of this research was to obtain
information about the current state of the state
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faculties of Serbia, in the form of students'
satisfaction with acquiring knowledge during
their studies, obtaining the necessary timely
information, as well as assessing how students
are ready to the changes.
The questions in the survey were formed so
they can answer the following objectives:
this problem is in e-learning, which will enable
distance learning.
The next conclusion was made about the bad
transfer of information. Students who have just
entered the university have a hard time finding
the desired information, which can lead to
anxiety and a drop in satisfaction. Also,
cognition about the work of the student service
leads us to the conclusion that it is necessary to
have one channel of communication and
information transfer, which will always be
available to students and which will provide
verified information.
get to know better and get information
about users,
get information about the satisfaction of
students at the faculty,
get
information about
students'
satisfaction with lectures and knowledge
transfer,
get information about the acquisition of
practical knowledge during studies,
obtain information about the type of
users adopting the technology,
get information on how to get to the
desired information,
For the expressed needs and problems stated
by the students in the annex, further work will
propose a solution to those problems through the
provision of a business proposal.
get information about the current faculty
system.
VIII. BUSINESS PROPOSAL
C. Sample Research
In the survey process, 34 respondents
participated, of which the respondents were
master's students of the state faculty. In the
questionnaire, 25 questions were asked, of which
the questions were in the form of choosing one
answer, writing down the desired attitude, or
rating the given question in the range of 1-5.
D. Research Result
Based on the completed survey and
summarized answers, the conclusion was made
that the majority of students, studying for
master's studies are employed, and coming to the
faculty premises to attend lectures is impossible
for them. As a consequence, there are difficulties
in following classes and doing pre-exam duties.
This initiates the problem that students who are
employed will not have the same approach to
accepting knowledge. Also, it was concluded that
many students do not live in the city where they
study for master's studies. With this information,
we conclude that master's students need to be
offered a more flexible way of studying, first
because of the fact that most of them are
employed and second because of the fact that
they live in remote locations. The proposal for
148
Based on the survey, students expressed the
need for a greater transfer of practical knowledge
in master's studies. In response to that need,
systems can be proposed, which are
representatives of the digital revolution in the
form of the use of Industry 4.0 technologies.
As a result of the research work, a business
proposal is given in the field of education with
the aim of improving student satisfaction with
learning at master's studies in Serbia.
The solution has a mission to improve and
advance the studies of master students,
developing an innovative application, which will
attract new students, as well as increase and
maintain the satisfaction of students during their
studies. The vision of the solution is to contribute
to constant progress and development in the field
of education, by providing and implementing
innovative solutions, which will provide both
social, in the form of improving studies and
increasing student satisfaction, as well as
industrial benefits in the form of pushing the
boundaries of current scientific achievements in
the field of education.
A. Defining the Business Problem
The problems that arise during studies,
according to the research, are mostly related to
the following facts:
unavailability of general information in
one place,
unavailability of information about
courses at the faculty,
social
anxiety,
resourcefulness),
inability to attend traditional lectures
reduced practical
knowledge,
decreased promptness, motivation and
engagement of students,
impossibility of obtaining the necessary
information at the moment when the
student needs it (limited work of the
student service).
(shyness,
application
of
B. The Proposal Solution
The application represents an innovative
solution in the field of education with the goal of
increasing student satisfaction. In the beginning,
the development of the application was intended
for a group of students who are studying for a
master's degree in Project Management. The
application form can be sent later for other study
engineering programs.
Based on the results of the survey, as well as
the identified problems, the business proposal
will be based on the solution to the problem of
acquiring the practical knowledge of master's
students. Other listed problems can be input for
starting the next project. The results of the
satisfaction of acquiring practical knowledge
during the studies were evaluated by the students
as follows grades:
grade 2 - 5.9%,
grade 3 - 55.9%,
grade 4 - 38.2%.
While the students unanimously stated that
they need more practical knowledge during their
studies. As a result of the mentioned problem, a
proposal was made for the development of the
application, which will have two integrated
modules, the Simulation Module and the ICoin
Module. The modules are explained below.
Simulation Module
According to the presented research results,
the students pointed out the need for greater
acquisition of practical knowledge, as well as
demonstrative situations that can be encountered
in a real business environment. Guided by this, a
module called Simulation is proposed to be
developed, which will represent a game in the
form of a simulation. The game will have certain
levels and tasks that will be based on the
principle of simulating the real environment of
the project manager. After a defined number of
days, the student will encounter new tasks and
new levels in the game. Each new task will be
defined so that the student feels the real
responsibility that the project manager has in the
team. Some of the tasks will be for the student to
form his team according to the characters in the
game and according to their skills in relation to
the assigned task. After that, it will be necessary
for the student to make an activity plan with
assigned roles. This will allow the student to see
if it has been determined to overloaded team
members or appointed the wrong employee for a
specific task. The game will have the role of a
true and realistic simulation of a project
manager’s role in a real project so students and
organizations do not bear the consequences of
their mistakes.
ICoin Module
Student satisfaction does not only have to be
closely related to the quality of the content of the
faculty. It is considered that the satisfaction of the
student can be achieved throw an indirect
approach by giving them benefits or challenges.
The ICoin module implies created currency of
the university, called ICoin, which will provide
students with benefits in the form of exemption
from regular financial expenses. The Simulation
module will have points, which the student will
be able to collect after each completed task in the
game. Based on the level of success of the
completed task within the aforementioned
module, students will receive points that will
encourage them to engage more in the
application. Those points will be further
converted into ICoins which can only be used
within the university. For example, if a student
collects a sufficient number of points, he will be
able to use ICoin to pay for an exam or a certain
item in a store or cafe at the university. With this
two goals are supported, namely increasing the
engagement and motivation of students at the
faculty, as well as satisfaction after successfully
completed activities.
C. The New Process of Acquisition of Practical
Knowledge
The process of acquiring practical knowledge
(Fig. 1) will not be changed but improved by the
presented application. The old model implies that
the student encounters practical knowledge only
after enrollment internship and a little during the
school year. The process is improved by the
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The process of acquiring practical knowledge
Student
App (Simulation Modul)
App (Modul ICoin)
Starting the
application
Entering data for
logging into the
application
Today's companies incorporate digital
transformation into their daily operations as a
competitive advantage they can achieve in the
market. As the need to turn business towards the
customer, digital transformation enables
organizations to better understand the needs and
desires of the market.
Starting the
Simulation Modul
Opening game levels
according to the week
of lecture attended
Solving the given
problems in the
game
Reaching the end of
the level
Total score
generation
The student did not
achieve the minimum
score to move to the next
level
when and to what extent they need. In order for
companies to continue to respond flexibly to all
market demands, a change is needed that would
speed up or completely automate certain
processes. Change means creative solutions,
which can be innovations that will solve a certain
problem in the organization with their effect.
Results of the
completed
level
The student has
achieved the minimum
score to move to the
next level
Return to the
beginning of the
level
The research work showed the importance of
digital transformation in the field of education.
Also, a proposal was mentioned that would
initiate digitization in educational institutions
and, by its effect, improve the way of working at
faculties, increase and maintain student
satisfaction and initiate greater engagement on
the part of them.
REFERENCES
Generating points in
ICoin
[1]
Figure 1. Process flow diagram of acquiring practical
knowledge
[2]
game, which represents a simulation of a real
environment of the project manager, the student
will acquire practical knowledge in the field of
project management. Through the levels of the
game, the student meets the real tasks that the
project manager has during the product life cycle.
The student will have the possibility of realistic
decision-making
without
bearing
the
consequences if the decision is wrong. The game
offers levels, realistic problems and the ability to
choose solutions. After each decision, the student
gets a percentage answer about the choice of
decision.
[3]
IX.
[5]
[6]
[7]
[8]
CONCLUSION
The rapid development of information
systems, as well as the increase in business
requirements, represent today's companies.
Users have greater options in choosing and a
stronger position, where they can dictate what,
150
[4]
[9]
Roberts R., Flin R., Millar D., Corradi L. (2021).
Psychological factors influencing technology
adoption: A case study from the oil and gas industry.
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Lalić B., Savković M. (2022). Teaching materials from
the subject “Digital transformation in industries”.
Faculty of Technical Sciences in Novi Sad
Delloite.com. Available at: https://www2.deloitte.com
/content/dam/DeloittD/za/Documents/digital/za-Deloi
tte-Digital-Digital-Transformation-v3.pdf
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Oz O., Balyer A. (2018). Academicians' views on
digital transformation in education. Hacettepe
University
Albatian.com. Available at: https://albatian.com/en/
blog-ingles/digital-transformation-life-cycle/
Deloitte.com. Available at: https://www2.deloitte.com
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nejacobson.com/insights/risk-management-in-digitaltransformation-for-universities
Yureva O. V., Burganova L. A., Kukushkina O. Y.,
Myagkov G. P.,. Syradoev D. V. (2020) Digital
Transformation and Its Risks in Higher Education:
Students' and Teachers' Attitude. Universal Journal of
Educational Research, 8.
PaKSoM 2022
Innovation Management in the
Concept of Smart Cities
Bojan Krstić1, Milica Jovanović Vujatović2, Marija Jovanović3
1,2,3
Faculty of Economics, University of Niš, Niš, Serbia
1
bojan.krstic@eknfak.ni.ac.rs, 2milica.jovanovic@eknfak.ni.ac.rs, 3marijamptrakic@gmail.com
Abstract—Smart cities are focused on the quality
of people who live and work in them, on the quality
of their lives, which is why they include smart
economy, smart environment, smart governance
and smart mobility. The main driving force behind
the
growth
and
preservation
of
the
competitiveness of smart cities are open
innovations and the knowledge on which these
innovations are based. In this sense, the goal of this
paper is to indicate the way of successful
management of intellectual capital (whose basis is
knowledge) and open innovation process in order
to determine the specifics of these management
practices in smart cities. The key actors in this
process and the key elements that must be
developed and maintained in order to preserve the
trait of smartness will be reviewed.
Keywords – innovation, management, smart
cities
I.
INTRODUCTION
The concept of smart cities has gained
importance in recent decades both in literature
and in public policies. For the first time, this term
was used in the 90s of the last century to indicate
cities that widely apply information and
communication technology in all spheres [1].
The smart city concept gains particular
importance after 2010 with technological
progress, the diffusion of smart devices,
environmental pressure and the political support
of institutions such as the United Nations,
European Union and the OECD [2]. Today, this
concept is increasingly focused on the quality of
people and the social community in which they
live and work [1]. “The smart city concept has
been deployed through city-wide sophisticated
ICT infrastructures capable of sensing what is
happening in a city - parked cars, traffic jams,
hospital beds available, energy consumption,
ISBN: 978-86-82602-00-2
water or air quality, temperature, noise, etc.” [3].
According to the UN, 2030 Agenda for
Sustainable Development and the New Urban
Agenda cities will be inclusive, safe, resilient and
sustainable [4].
A smart city is a technologically advanced
area with adequate intellectual competencies for
focusing on different social, economic and
technical problems including smart techniques
for developing superior infrastructure and
services for smart city citizens [5]. The concept
of smart cities includes three dimensions:
environmental (pollution, waste and recycling,
water and land uses), economic (GDP and labor
market) and social (health, safety, education,
culture) [6]. “Smart city is a community that is
efficient, liveable, sustainable, and which
increase a quality of life”, whose key source of
efficiency and development is human resources
[7]. The following are used as synonyms of this
term: intelligent city, information city,
knowledge city, digital/virtual city, learning city,
green/eco-city, and sustainable city [8]. Namely,
it is about an intelligent city that uses intelligent
technologies in order to better communicate and
provide better services in these cities [9].
Lombardi et al. [10] suggest that the concept of
smart city is based on the following segments:
smart economy, smart people, smart governance,
smart environment and smart living [7,9] – Fig.1.
Some authors emphasize the importance of
intangible assets as key characteristics of smart
cities. It requires management of human capital
(qualified labor force), infrastructural capital
(high-tech communication technology), social
capital (open networks) and entrepreneurial
capital (creative business activities) [11].
151
Smart people (21st century
education, inclusive society,
embrace creativity )
Elements of smart city
Smart economy (entrepreneurship
and innovation, productivity,
interconnectedness)
Smart environment (green
buildings, green energy, green
urban planning)
Smart government (e-government,
transparency and open data, suply
and demand-side policy)
Smart living (culturally vibrant
and happy, safe, healthy)
Smart mobility (mixed-modal
access, clean and non-motorised
options, integrated ICT)
Figure 1. The concept of smart city
II.
INNOVATION AS PART OF THE
INTELLECTUAL CAPITAL OF SMART CITIES
“The smart city is a smart collaborative and
innovative community where co-determination
and participation along with the intangible assets
support value creation processes. Technology
enables citizen and community participation and
engagement to promote continuous innovation
as a driver of urban sustainability” [4]. What the
concepts of intellectual capital and smart cities
have in common is based on preserving
competitiveness on the basis of value creation,
resilience, sustainability and quality of life [8].
The concepts of intellectual capital and smart
cities are also linked to the Sustainable
Development Goals, and in particular to the
following: SDG 9 Industry, Innovation and
Infrastructure, SDG 11 Sustainable Cities and
Communities, SDG 13 Climate Action and SDG
17 Partnerships for the Goals [12]. Managing
intellectual capital in smart cities enables future
urban sustainability, value creation, urban
competitiveness, and social and economic
growth of cities [13].
Intellectual capital of the city can be seen as
“the total intangible assets existing in the city
and
making
individuals,
communities,
enterprises and institutions of the city function,
create, update ideas, processes or products by
transferring them into results of sustainable
152
development of the city” [14]. Intellectual assets
of smart cities are based on human capital citizen empowerment (informed, educated and
participatory citizens), knowledge creation and
behavioral change; social capital - social
sustainability and digital inclusion; and
technology capital - technology responsive to
needs, skills and interests of smart city citizens,
respecting their diversity and individuality [15].
Intellectual capital of smart cities includes
four elements: 1) human capital – citizens’
competencies; 2) social (relational) capital relationships between citizens, organizations,
and networks; 3) process capital - smart
practices, procedures and software based on the
utilization of IT and high technologies; 4)
renewal capital - innovation portfolio; 5) market
capital - relates to institutional capital or
institutional smartness; 6) environmental capital
- the smartness hidden in the material heritage
around citizens [8]. This indicates that the
successful management of innovations in smart
cities requires the management of renewal
capital.
According to another understanding [16],
innovations represent a segment of the structural
intellectual capital of the city. According to this
classification, intellectual capital includes
human (individual and collective competencies,
social values), structural (resources, processes
and innovation) and relational capital
(networking, urban connections based on city
partnership and image).
Krušinskas and Bruneckienė [17] identify
smart city intellectual capital as: human capital university students, people using information
technologies, readers per library, population
with the highest education; process capital value added created by one industry employee,
enterprises within ICT activities, internet access;
market capital - direct foreign investment,
unemployed/working-age population ratio,
guests accommodated; renewal capital – number
of operating economic subjects, expenditure for
R&D. According to this approach, innovation
occurs as a result of investment in the
development of smart city renewal capital.
Innovation capital directly depends on R&D
expenditures, and this capital is directly related
to the quality of human capital and intellectual
property [18].
According to Lev [19] the process of
creation of intellectual capital/innovation is
divided into three phases: 1) Discovery and
learning - internal renewal, acquired
capabilities, networking; 2) Implementation –
intellectual property, technological feasibility,
Internet; 3) Commercialization – customers,
performance, growth prospects. This process
should enable the growth of the following
intangible assets of a smart city: institutional
assets (organization capital) - individual capital,
knowledge (function-specific), institutional
capital, professional technical knowledge and
experiences, management capacity, training,
learning capacity, relationship with external
stakeholders,
institutional
credibility,
reputation;
framework
and
systems
(organization capital) - policy, strategies, plan;
social assets (social capital) - social system,
community network, social norms, value;
intellectual
product
(information
and
knowledge-related capital), R&D, reports [20].
The framework for successful intellectual
capital/innovation management in smart cities
includes three perspectives: a) effective and
efficient service provisions to smart citizens
based on successful cost management; b)
value/benefit of services representing the quality
of services to be provided to citizens, which
requires the fair and transparent performance of
local authorities; and c) local authorities treating
citizens as beneficiaries - consuming services, as
well as stakeholders - taxpayers, which implies
that they have to satisfy the needs in order to
provide continuous citizen support. Such a
management framework will enable successful
resource management, improved accessibility
(mobility), health well-being, equal access to
services, smarter services, wider community
engagement, improved quality communication,
security and resilience [21].
III. KNOWLEDGE MANAGEMENT IN THE
FUNCTION OF SUCCESSFUL INNOVATION
MANAGEMENT IN SMART CITIES
Smart city can be seen as an arena where
people can exchange and consolidate knowledge
and information in a digital form at both the
individual and institutional level, as well as
which supports learning, schooling, education,
innovation, high-technology and collaborative
networking [8].
Knowledge management plays a key role in
creating
competitive
advantage,
value
proposition, reducing implementation costs and
enhancing organizational learning [12]. It
represents the first stage of intellectual capital
management,
followed
by
innovation
management and then the management of
legally protected innovations - intellectual
property management [22]. Knowledge
management in smart cities includes sociotechnical dimensions, the emergence of urban
infrastructure and technology-based services
and the creation of social learning skills. It
means that knowledge management in the smart
context includes three basic elements:
technology (data, information, urban data
platform), people (knowledge in order to
provide smart device applications that enable
citizens to participate in the decision-making
process) and institutions (such as public and
private companies, universities, agencies,
etc.) [23].
In order to build a smart city innovation
system, knowledge-intensive activities, as well
as institutions for cooperation and learning and
management of collective intelligence, play a
key role. Knowledge management strategies in
smart cities enhance the smartness and
innovative performance of the city. In order to
effectively manage knowledge, it is important to
create a favorable culture in such cities. People
will adopt the desired cultural values if they are
inspired and rewarded to behave in accordance
with the realization of the goals of the smart city
- constantly creation and exchanging of created
knowledge [24]. Digital platforms and social
media can help foster this culture in smart cities,
contributing to the creation of digital knowledge
that connects participants across hierarchies and
locations [25]. Knowledge management should
enable the creation of dynamic capabilities,
which is a prerequisite for the successful
development of innovations. These abilities
ensure the change of resource structure, learning
and acquisition and adequate understanding of
acquired knowledge [24].
Knowledge
management
mechanisms
enable the following: developing learning
capabilities, sociotechnical approach to problem
solving in smart cities, and integrating approach
to knowledge sharing [12].
Knowledge management in the context of
smart cities includes the management of three
types of knowledge:
Tacit knowledge – unstructured and
unofficial
personal
knowledge;
153
including individual’s experience and
beliefs (citizen needs, beliefs, values,
know-how and emotions);
Explicit knowledge - official and
structured
knowledge
(official
documents, procedures and patents for
advanced urban technologies and
services);
Strategic knowledge – knowledge with
restricted access
(R&D strategies,
financial analysis, program codes,
algorithms) [23].
Key stakeholders in smart cities whose
knowledge needs to be managed include:
private companies/enterprises;
local administration;
citizens, as the most frequent
customers/users and/or co-producers of
the smart services provided as well as
electors who use their democratic vote
to express their opinion on the priorities
of politicians regarding smart cities
projects;
financing entities through taxation, with
the request to be informed on the use of
financial resources taken from the
public sector [26].
Knowledge management practices in smart
cities involve knowledge management of
various entities: innovative enterprises,
incubators for entrepreneurship, municipal
agencies for the development of smart cities,
scientific institutes and universities, city
administration
and
government,
public
enterprises, citizens, the private sector and the
public sector [27].
IV.
THE ROLE OF OPEN INNOVATION IN
SMART CITIES
4I (Initiate, Innovate, Instate, Integrate)
Solutions Model for innovation management
implies four approaches in the context of smart
cities or four development stages in innovation
management. First stage: Initiate refers to
creating new innovation in the smart city field
internally, including significant ramp-up costs.
Second stage: Innovate includes pooling,
integration and extension of internal capacities
to create market-ready products and services
(the focus is on focus on improving existing
resources and capabilities). Third stage: Instate
154
Initiate
Innovate
Instate
Integrate
Figure 2. Model for innovation management in smart
cities.
is based on utilizing existing networks within
smart cities to complement products and
services with new value propositions, resulting
in reduction costs (associated with innovation
management) reduction. The highest level of
development of knowledge management
practices is related to integrating external
resources and skills as a superior
alternative [28].
Smart cities include “multidimensional
components such as ICT applications, citizen
engagement and governance” [12]. This concept
requires open innovation approach and involves
all stakeholders of the smart city in decisionmaking processes [29].
Unlike traditional marketplaces in which
only two types of stakeholders participate supply and demand, the smart city concept
includes collaborative platforms in which
citizens, industries, universities and research
centers can develop innovative products and
services [30]. It is about joint innovations that
require the role and contributions of different
actors of smart cities. This means creating close
linkages between citizens, public institutions,
the business sector and educational and
scientific institutions.
In smart cities, all actors participate in the
decision-making process, whereby knowledge
and information, which are the basis of
innovation, move freely between different
entities [31]. In addition, all stakeholders of
smart cities are expected to participate in the
innovation process in these cities within their
capabilities.
It can be determined five strategies for open
innovation process realization within smart
cities:
Cultivation strategy – networking
citizens at all levels to exchange
knowledge as well as to develop and test
ideas together;
services in smart cities. It requires
utilizing of intellectual and material
resources, especially knowledge. As a
result, it is created improved knowledge
by citizens and their communities for
supporting everyday life contexts;
Replication
strategy
supports
collaborative innovation with other
public actors;
Partnership strategy - enhances
collaborative innovation between public
actors and external partners, which
include private companies and nonprofit organizations based on bilateral
relationships;
Networking strategy - using of the
innovation
assets
of
different
organizations and individuals in order to
discover, develop, and implement
innovative ideas within and beyond
smart city boundaries; enables better
response to citizens' needs; supporting
learning organizations. It includes
multi-actor networks;
Open source strategy - utilizes the
Internet to attract and support external
and unknown actors to develop
solutions/innovations in accordance to
the public actors needs [32].
Depending on two dimensions: 1) sector
iniciative - whether cooperation in smart cities
in the innovation process is initiated by citizens
or by the business sector, and 2) novelty depending on the radicality of the innovation
(completely new idea or improvement of the
existing one) [33], it is possible to consider the
matrix as presented on Fig. 3.
This matrix explains the types of open
innovation in smart cities and the following are
possible:
Improvement of everyday life (lower
left quadrant) - initiated by citizens and
focused on improving of existing
• Sector
(initiator)
Consumer
experience
New
business
Everyday
life
Experim
entation
• Novelty
Figure 3. Open innovation matrix.
New citizens' experience (upper left
quadrant) – it is focused on creating
radical innovation in smart cities,
initiating by citizens and their
knowledge. It contains learning
processes/activities and collaborative
forms, resulting in new open
collaborative forms in order to enhance
citizens satisfaction;
Experimentation (lower left quadrant) –
the initiator is the private sector
(companies) aiming at improving
existing smart city conditions and
existing knowledge/tools. It includes the
implementation of new technologies in
smart city and experiments. The
intellectual results of these activities are
based on testing the prototypes of new
technologies;
Starting new businesses (upper right
quadrant) – aiming at new ideas
(creating new services) and initiated by
companies within smart cities which is
seen as a collaborative platform. It
connects different types of stakeholders
and different forms of knowledge and
ideas. The key contribution of this
innovation process is based on new
business
opportunities
through
collaboration [33].
The key benefits and risks of collaborative
innovation in smart cities include the following:
Generation,
implementation
and
commercialization of new ideas are
facilitated including cost savings;
Sustainable solutions are created
through long-term open cooperation;
Enhancing opportunities for startups
and small and medium-sized enterprises
in smart cities;
Favorable image and branding of cities;
Enhancing
collaboration;
private-public-citizens
155
More intensive use of private money for
R&D and innovation, but also of
government
money
for
private
investments;
Organizational, identity, institutional
and cultural barriers can be more
pronounced;
[2]
[3]
[4]
Barriers to necessary organizational
changes in the smart city;
Lack of sufficient intellectual capital in
the smart city;
[5]
Possible rivalry between partners;
[6]
Complexity
of
relationships
in
partnerships with a larger number of
participants [34].
[7]
V. CONCLUSION
In recent decades, the concept of smart cities
has gained importance both in theory and in
practice of modern countries, in which
intellectual resources play a central role, because
the smart economy is primarily based on
innovation. Innovation, which is the result of
R&D activities, represents an important segment
of the renewal capital. In order to develop an
efficient innovation system of smart cities,
effective practices of knowledge management
are necessary - management of implicit, explicit
and strategic knowledge. Application of certain
models and strategies (cultivation strategy,
replication strategy, partnership strategy,
networking strategy, open source strategy) can
help smart cities in successful innovation
management, which increasingly requires
collaborative innovation activities and an open
innovation approach. The approach to
innovation management in smart cities will
depend on the type of innovation being
managed.
[8]
[9]
[10]
[11]
[12]
[13]
ACKNOWLEDGMENT
[14]
This paper is part of the project that has
received funding from the European Union's
Horizon Europe research and innovation
programme under grant agreement No
101059994.
[15]
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157
158
PaKSoM 2022
Role of Artificial Intelligence for
Promoting Financial Inclusion
Reena Agrawal1
1
Jaipuria Institute of Management, Gomti Nagar, Lucknow, India
1
dr.agrawal.reena@gmail.com
Abstract—Artificial
intelligence
(AI)
has
penetrated services sectors around the world.
With 1.4 billion adults still without access to
formal banking and about 50% of population in
Middle and East Africa, approximately 38% in
Central and South America, about 33% in East
Europe and close to 24% people in Asia Pacific
region are financially excluded, the current
research is taken up to examine the role of
Artificial Intelligence in promoting financial
inclusion and investigate how the use of Artificial
Intelligence can help the financial service
providers to offer services at affordable rates to
low income group people. The findings of the study
demonstrated that adoption of artificial
intelligence technologies will not only help then to
tap the underserved and unserved but also help in
reducing the operating costing and enhance
operational efficiency use of AI algorithms can
also help them in avoiding fraud and credit risk.
Keywords - unbanked, financial technology,
artificial intelligence, financial inclusion
I.
INTRODUCTION
About 1.4 billion adults still do not have
access to formal banking, with about 50% of
unbanked people living in Middle and East
Africa, about 38% living in Central and South
America, roughly 33% people living in East
Europe and near about 24% people living in Asia
Pacific region are financially excluded [1-3].
Global Financial index reported that during 2017
almost 1.7 billion grown-ups were unbanked [4].
In South Sudan, merely 9% adults had bank
account, likewise, approximately 70% people in
Latin America were either under banked or
unbanked [5]. International Finance Corporation
reported that above 200 million small, micro, and
medium enterprises in emerging economies lack
right to use financial services [6]. These issues
ISBN: 978-86-82602-00-2
can be resolved by promoting financial inclusion.
The financial inclusion ensures that low income
individuals and micro enterprises have access to
financial services and products at reasonable
rates to meet their day to day requirements [7].
Financial Inclusion is fundamental in enhancing
general quality of live and general well-being of
underprivileged groups.
In spite of the speedy development of
Fintech, its effect on financial inclusion has been
restricted. This is largely due to the absence of
wide-ranging data on Fintech features. Fintech
novelties like peer-to-peer lending use of mobile
money have been quite effective, though it was
also found that across different regions
borrowing activity is far less prevalent than
account holding [8-10]. Artificial intelligence is
rapidly evolving and is bringing economic, social
and political, transformation in emerging
markets. Artificial intelligence -founded
solutions are expected to arise as game-changers
that have huge effects on escalating financial
access to underprivileged people. The traditional
banking organizations are usually reluctant and
unwilling to service low-income individual and
micro businesses due to inefficient processes and
high operation costs [11]. Artificial intelligence
has penetrated services sectors around the world.
Thus the current research is taken up to examine
the role of artificial intelligence in endorsing
financial inclusion and investigate how the
Artificial Intelligence can help the financial
service providers to offer services at reasonable
rates to under-privileged and unserved
people [12-15].
159
II.
MEDIA LITERATURE REVIEW
A. Financial Inclusion
Financial inclusion has crucial and pertinent
role in Sustainable Development Goals [16].
Financial inclusion has been major concern for
financial regulators across the world. In
emerging economies like Asia, South America,
and Africa, financial inclusion is especially
essential [17]. Financial Inclusion inspires access
to financial facilities at affordable rates, and thus
stimulates well-being and economic growth.
Those who need financial access the most have
no or little access to financial services [18]. As
per World Bank Financial inclusion means
“individuals and businesses have access to useful
and affordable financial products and services
that meet their needs-transactions, payments,
savings, credit and insurance delivered in a
responsible and sustainable way” [19]. The
European Commission defined financial
exclusion as the “situation where individuals are
faced with access challenges in the use of
financial services and products that can help
satisfy their needs and wants and to allow them
to live normal social life in their communities”
[20]. “Financial inclusion is the sustainable
provision of affordable financial services that
bring the poor into the formal economy” [21].
“Financial inclusion is the use of formal financial
services by the poor” [22,23]. Financial inclusion
is availability and usage of inexpensive basic
financial services to everyone [24-27].
B. Artificial Intelligence
Artificial intelligence was established as a
discipline approximately 70 years ago, but its
avid application has been noticed in recent times,
facilitated by developments in data storage,
computing power, and communications systems
and network [15].
“By ‘general intelligent action’ we wish to
indicate the same scope of intelligence as we see
in human action: that in any real situation
behavior appropriate to the ends of the system
and adaptive to the demands of the environment
can occur, within some limits of speed and
complexity” [28].
Intelligence usually means “the ability to
solve hard problems” [29].
“AI is concerned with methods of achieving
goals in situations in which the information
available has a certain complex character. The
methods that have to be used are related to the
160
problem presented by the situation and are
similar whether the problem solver is human, a
Martian, or a computer program” [30].
Artificial intelligence is the “simulation of
machines to imitate intelligent human behavior”
[31]. Artificial intelligence can thus be defined as
the imitation of human intellect by machines that
are trained to think and perform like humans.
C. Artificial Intelligence and Financial
Inclusion
Artificial intelligence technologies are
infiltrating financial sectors across the world.
The use of these AI in emerging economies
allows financial organizations to mechanize their
day to day operations and processes and to take
advantage of big data sources to resolve
problems and overcome obstacles— including
excessive cost of rendering services to lowincome and rural clients and creating customer
distinctiveness and soundness—that inhibits the
delivery of financial services to countless
consumers [12]. Benefits of financial inclusion
can only be realized responsible adoption
through of artificial intelligence technologies by
financial service providers, in competitive
market settings, and through increased
investment in required infrastructure. Artificial
intelligence technologies and big data can make
it possible for financial service providers offer
financial product and services at reduced cost
and thus promote financial inclusion [9].
If financial organizations combine telephony
data using artificial intelligence technologies
with traditional credit recording models they will
be able to considerably improves the daily
performance [32]. Use of artificial intelligence
technologies in banking can lead to an efficient
and economical ways to deliver financial
products to financially excluded people. They
also stated that big data-driven simulations can
be conducted for psychometric assessment to
capture necessary info that can facilitate
prediction of applicants' attitude, integrity, and
loan repayment behavior [33].
Scholars who examined the influence of
artificial intelligence technologies on financial
inclusion stated that financial service providers
can use artificial intelligence technologies and its
numerous applications to attain inclusion of the
poor having low-income and micro business
organizations [20]. The study disclosed that
artificial intelligence technologies has strong
impact on financial inclusion and it is especially
useful in risk measurement, risk detection, and
risk management. The study also stated that
artificial intelligence technologies resolved the
problem of asymmetry of information, and also
extended support to customers through artificial
intelligence aided bots. Deficiency of credit
history create obstacles for millennials, the
artificial intelligence technologies and big data
can assist in creating credit scores for
millennials [34].
Artificial intelligence technologies hold large
promise for people and society [35]. Artificial
intelligence technologies will reduce biases
against deprived groups [36,37]. Blockchain
disruptions would transform in big way the
financial sector in times to come [29]. By
leveraging artificial intelligence technologies
financial organizations can offer custom-made
products to consumers and that too at reasonable
cost [38,39]. Artificial intelligence technologies
had potential to promote financial inclusion and
benefit the deprived groups [40,41].
III.
OBJECTIVE OF STUDY
The current research is taken up to scrutinize
the role of Artificial Intelligence technologies in
stimulating financial inclusion and investigate
how the use of Artificial Intelligence can help the
financial service providers to offer services at
reasonable rates to low income group people.
The study attempts to comprehend the increasing
use and benefits of Artificial Intelligence
technologies in stimulating financial inclusion.
The study proposes to find answers to the
following research questions:
RQ1:
Does
Artificial
Intelligence
technologies can help in promoting financial
inclusion?
RQ2: What benefits can financial service
providers derive on adoption of Artificial
Intelligence technologies?
IV.
METHODOLOGY
The current study adopted a quantitative
analysis. This study reviewed research articles
published in web of science, google scholar,
academia, research gate, and Scopus. This step
resulted in 73 articles. The key words used in our
search were ‘artificial intelligence’, ‘financial
inclusion’, ‘use of artificial intelligence in
stimulating financial inclusion’, ‘and role of
artificial intelligence in enhancing financial
inclusion’. The search for articles’ sources
Step 1
Identification
73 records were selected after
duplications were removed
Step 2
Screening
61 records checked for
relevance
Step 3
Inclusion
58 full text articles identified
for final eligibility check
Inclusion criterion:
articles in English, time
period from 2010 to
2022.
Exclusion criterion: no
editorials, papers not fit
to answer research
questions excluded
Figure 1: Research Process Adopted in the Study
included business journals, management
journals, and economics journals.
The inclusion criterion were only the articles
written in English were screened, the time period
covered was from 2010 to 2022. The exclusion
criterion was no editorials were considered.
Papers that were not of use to answer research
questions were eliminated. The screening was
done in multiple stages: (i) duplicate papers were
removed, resulting in 73 articles that then used in
next stage; (ii) second stage produced 61 articles
which were used for further study; (iii) the third
stage included review of the full text of research
articles by the authors, during 2010-2022, of
which 58 articles were found very relevant for
final review. Fig. 1 demonstrates the steps used
in the creation of the database for this study.
V.
FINDINGS AND ANALYSIS
Artificial intelligence technologies can be
described as a sequence of techniques, systems,
and technology that exhibit intellectual conduct
by scrutinizing their situations and performing
actions—with some independence—toward
attaining pre-determined outcomes. Increased
penetration of mobiles, reduced cost of internet
connectivity, and improved computing power
have help in generating rich new and real-time
data through diverse digital devices. Advances in
storage of data, energy reliability, computation
power and analytical skills have made it possible
to examine the sea of instantaneous data. Thus it
is feasible for financial service providers in
161
emerging market to begin incorporating artificial
intelligence technologies into their day to day
business operations. There are numerous merits
in making use of artificial intelligence
technologies for promoting financial inclusion,
to mention some as follows:
•
•
Artificial intelligence technologies can
make simpler the process of account
opening for un-banked population.
Artificial intelligence algorithms can be
used to automate the account opening
procedure at banks, and eradicate the
troublesome paper work that often
dishearten un-banked people from
opening bank account [14].
As a result of frauds, approximately 20%
of bank loans in India result into bad
loans [42]. Loan frauds are projected at
USD 2 billion per annum, resulting in
high-interest rates and low trust [43].
Also, Artificial intelligence technologies
can do customer authentication and
assist in due diligence activities by
helping them to understand the purpose
and nature and of transaction. Artificial
intelligence technologies will raise redflags if there is suspicion of fraudulent
activities [44].
•
By automating operating processes, the
artificial intelligence technologies can
facilitate higher volumes of micro
transactions which are very low in value,
thus can help underserved people to
become part of financial markets.
Artificial intelligence technologies can
thus significantly diminish the operating
costs
for
financial
service
organizations [14].
•
Artificial intelligence technologies can
help world-based developing financial
organizations and clients to abide
innumerable regulatory time-consuming
necessities
and
religious
prescriptions [45].
•
Artificial intelligence technologies can
offer smart and customized financial
services and products to customers.
Artificial intelligence technologies can
analyze people’s financial behavior and
conduct, and can offer advice and
tailored services and thus enhance
financial inclusion [45].
162
•
Financial service providers can make use
of predictive analytics to mimic diverse
scenarios that can`t be attained in the real
world. This contains Financial service
providers generating trust by addressing
bias and error by using algorithmic,
lending responsibly, managing and
avoiding cyber risk, and taking
necessary consent for the use of
consumer data [46].
•
Artificial intelligence technologies help
in creating credit history. Artificial
intelligence applications allow to build a
credit history of unbanked people as
well. Artificial intelligence application
can make use of demographic and
behavioral traits of people for example
contact lists, location, social media
information, and can use machine
learning models to work on these data
and generate predictions about the
potential repayment by the person [14].
Artificial intelligence technologies have
prospective to augment financial inclusion.
Financial service providers should make use of
artificial intelligence technologies to build
relationship with their potential customers,
especially the one not yet served by conventional
financial service providers. The artificial
intelligence technologies-driven advances will
enhance productivity, improve living standard,
unlock entrepreneurial capability, and decrease
economic inequities. However, the main
challenge for the financial service providers is to
create the futuristic vision, mission, and
ideologies that have larger purpose. The extent
and pace and of adoption of artificial intelligence
technologies, and the degree of inclusion benefits
realized, also depends on intent and efforts of the
businesses, policy maker, financial regulators,
and investors to generate congenial environment
which ensure and facilitate accountable and
viable assimilation of artificial intelligence
technologies in financial product and services.
VI.
RESEARCH IMPLICATIONS
Financial inclusion is a major concern of
global financial policy makers and regulators
such as International Monetary Fund, European
Commission and World Bank. With countries
big or small straddling to achieve sustainable
development goals promoting financial inclusion
can directly and indirectly help in attainting eight
out of seventeen goals. The findings of the
current study will give food for thought to the
policy makers, financial regulators, investors,
and financial service providers. It will encourage
traditional players to gather courage and invest in
technology infrastructure to reap long term
benefits from adopting artificial intelligence.
Increased use of artificial intelligence
technologies will benefit to all the stakeholders,
it will fetch profits for financial service
providers, will help in financial inclusion a major
concern of national as well as global financial
regulators, will bring financial service offering to
people living at grass root level and this will
ensure their contribution in the economic
development of the region and the nation.
VII. LIMITATIONS AND FUTURE RESEARCH
Like any other study this study is also not free
from limitations. This research is only a
quantitative study and if qualitative aspects are
also added to such a study it would give deeper
insights. Future scholars can plan to conduct in
integrated study having quantitative as well as
qualitative aspects. Interviews and interactions
with policy makers, regulators and top decision
makers in the financial organizations would have
helped get their perspective as well. Cross
country studies would have helped in doing
assessment at ground zero.
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PaKSoM 2022
Modeling the Time-based Maintenance
Strategies with Petri Nets
Ilija Hristoski1, Tome Dimovski2
Faculty of Economics – Prilep/“St. Kliment Ohridski” University – Bitola,
Prilep, North Macedonia
2
Faculty of Information and Communication Technologies/“St. Kliment Ohridski”
University – Bitola, Bitola, North Macedonia
1
1
ilija.hristoski@uklo.edu.mk, 2tome.dimovski@uklo.edu.mk
Abstract—The appliance of any maintenance
strategy can considerably reduce the risks of
failures, which can significantly improve the
system’s performability, i.e. its ability to perform
in a given operational environment in the
presence of failures. The paper aims to elaborate
on the two most dominant time-based
maintenance strategies in use today, including the
preventive and the predetermined ones, by
proposing corresponding stochastic Petri Net
models. Such models can provide solid
frameworks for the evaluation of the efficiency of
both approaches vis-à-vis a variety of input
parameters. In addition, the proposed models can
provide valuable insights into the dynamics of the
two maintenance strategies by carrying out
various ‘what-if’ analyses regarding different
working scenarios.
Keywords - maintenance strategy, modeling,
stochastic Petri Nets, preventive maintenance,
predetermined maintenance
I.
INTRODUCTION
Web services today rely on critical Internet
infrastructure, comprised of data centers, server
farms, networking equipment, communication
facilities, transmission media, software, etc. that
are responsible for hosting, storing, processing,
and providing the information that comprises
websites, apps, and content. The Industry 4.0
paradigm encompasses the utilization of a
myriad of networked IoT devices, robots,
sensors, automated machines, and computers.
All of these hardware components, including
the software that gears it up, have to be
continuously and appropriately maintained to
keep them up and running. Since failures are
ISBN: 978-86-82602-00-2
inevitable phenomena in the tech world, risks
and threats of both hardware and software
failures are omnipresent, so they have to be
rationally accepted and dealt with, in terms that
they have to be properly identified/recognized,
analyzed/evaluated, and controlled/managed.
Denial and deliberate ignorance of thoughtful
planning and non-undertaking risk management
activities can cause damage and can incur
severe consequences not only to tangible assets
(hardware, software, data) but also to intangible
ones (company’s reputation and image,
customers’ trust and loyalty), leading towards
financial losses due to customer dissatisfaction
and dissipation. Therefore, risks cannot be
underestimated, but rather they have to be
treated proactively and efficiently.
In this regard, the paper focuses on timebased maintenance strategies that can be
thought of as risk management approaches that
can significantly help in mitigating the risks of
physical assets’ failures. These include three
variations of preventive maintenance strategies
as well as the predetermined maintenance, as a
special case of preventive maintenance.
The paper is structured as follows. Section II
briefly elaborates on the most prominent
research related to modeling various
maintenance strategies with Petri Nets. Section
III presents the proposed stochastic Petri Net
models that capture the essence of two major
time-based maintenance strategies: preventive
and predetermined maintenance. The last
section discusses the benefits and drawbacks of
the presented models and concludes.
165
II.
RELATED RESEARCH
Managing risks of failures through the
application of various maintenance strategies
has become a subject of extensive research in
recent years, fostered by the need to optimize
maintenance costs and increase systems’
availability and reliability. Much of this
research has been carried out using various
classes of Petri Nets (PNs), which have all
proven to provide powerful graphical and
mathematical
formalisms
suitable
for
algorithmic modeling and evaluation of
complex discrete-event dynamic systems and
processes exhibiting features such as
parallel/concurrent execution, blocking, mutual
exclusion, iterative repetition, and choice
making. In this context, PNs have been utilized
with the general aim to quantify the effects of
various maintenance strategies on particular
systems in practice.
The research based on the utilization of Petri
Nets for maintenance purposes stretches back to
1998 when they were used to assess early
failure detection and fault isolation, for district
heating and cooling system’s health monitoring
and improvement of preventive maintenance [1]
and in 1999 when they were used for building a
model and an algorithm to find the minimal cutsets of a coherent fault tree [2], as well as to
evaluate various maintenance strategies in
manufacturing systems [3]. Later on, in 2004,
Petri Nets were used to model and analyze
scheduled maintenance systems [4], and in
2009, they were used to carry out research on
maintenance processes’ modeling techniques
vis-à-vis the evaluation of specific maintenance
performance indexes [5].
During the last decade, the research on
maintenance modeling using PNs has
dramatically intensified, involving various
classes of PNs, including Generalized
Stochastic Petri Nets (GSPNs) [6-8], Colored
Petri Nets (CPNs) [9-12], and Deterministic and
Stochastic Petri Nets (DSPNs) [13].
Lately, Petri Nets were used to model and
evaluate the preventive maintenance processes
in technological facilities [11] and aircraft [12]
in 2021, to help improve the reliability and
availability of an electric power system’s
infrastructure [14] (2021), as well as to plan and
optimize maintenance logistics of small
hydroelectric power plants [15] in 2022.
Reference [16] proposed a methodology to
properly define the optimal structure and
166
properties of reduced complex Petri Net models
used in maintenance modeling (2022). An
overview of the major maintenance strategies,
including their corresponding generic stochastic
Petri Net models that can be utilized for
availability and reliability analysis of the
modeled systems vis-à-vis various input
parameters and working scenarios, can be found
in [17] (2022).
III.
PETRI NET MODELS OF T IME-BASED
MAINTENANCE STRATEGIES
Time-based maintenance strategies refer to
those preventive strategies where the scheduling
of the next planned maintenance operations is
based solely on time-lapse and not on other
factors. The subsequent four maintenance
strategies belong to this category. What follows
is a brief description of each one. All the models
utilize the class of Deterministic and Stochastic
Petri Nets (DSPNs) [18,19] and are developed
and validated using the TimeNET 4.5 software
tool.
A constituent part of all presented DSPN
models is the sub-model representing the
modeled system, which is subject to a certain
time-based maintenance strategy, as shown in
Figs. 1, 3, 5, and 7. The system is prone to
failures. As such, it may undergo a series of
consecutive failures and repairs, thus alternating
between two possible states/modes: operational
(a token in the place P_sys_WORK) and nonoperational (a token in the place P_sys_FAIL).
The failures occur with a rate of λsys = 1/MTTF
(MTTF stands for Mean Time to Failure),
denoted by the firing of the exponential
transition T_sys_MTTF, and repairs last, on
average, MTTR time units (MTTR stands for
Mean Time to Repair), meaning that the
exponential transition T_sys_MTTR fires with a
rate of μsys = 1/MTTR, the repair rate.
A. Preventive Maintenance without Time Shifts
This approach includes a routine
maintenance plan according to which
maintenance operations always occur at
predetermined, fixed time points to keep the
equipment and assets functioning, thus avoiding
costly unplanned downtimes and reducing or
eliminating their unavailability due to
unexpected equipment breakdowns. The time
points when preventive maintenance is
scheduled are fixed, no matter whether a system
failure occurred previously or not.
Figure 1. DSPN model depicting a preventive maintenance of a generic system without time shifts
(Source: Authors’ representation)
The DSPN model depicted in Fig. 1 portrays
the execution of a preventive maintenance plan
for a generic system without time shifts.
At time point t = 0, when the system starts
functioning, the deterministic transition
T_time_to_PM becomes enabled, and it fires
after a fixed amount of pre-set time τ (time to
preventive maintenance), which puts a token
into the place P_start_PM. The preventive
maintenance lasts, on average, 1/φ time units,
where φ is the firing rate of the exponential
transition T_PM. When preventive maintenance
ends, the firing of the immediate transition
T_restart_timer puts a single token into the
place P_sys_WORK (meaning that the system
reverts to the operational mode) and also puts a
single token into the place P_start_timer
(meaning that the next preventive maintenance
is scheduled to be carried out again in τ time
units).
The DSPN model allows for the system to
undergo a preventive maintenance session while
it is being repaired (a token in place
P_sys_FAIL). In this particular case, the
ongoing corrective maintenance is being
interrupted and replaced by the preventive
maintenance, since they both coincide, and it is
assumed that the system is being repaired
during the latter one.
Fig. 2 shows one possible evolution of the
dynamics of the modeled system. The points tFi
(i = 1, 2, ...) denote time points when a failure
occurred, ΔΤCi (i = 1, 2, ...) are the periods of
corrective maintenance, and tPi (i = 1, 2, ...) are
time points when next preventive maintenance
starts. Starting from t = 0, the time points tPi
(i = 1, 2, ...) are always scheduled in regular
time intervals with a duration of τ time units
after the termination of the previous
successfully executed preventive maintenance
session, no matter whether a failure has
occurred previously or how many failures have
happened up to the time point when a
Figure 2. Possible evolution of the preventive maintenance without time shifts
(Source: Authors’ representation)
167
preventive maintenance session is being
scheduled. Each preventive maintenance session
lasts, on average, ΔΤPi = 1/φ time units
(i = 1, 2, ...).
B. Preventive Maintenance with Time Shifts
Contrary to the previous approach, this one
allows for the period to the next scheduled
preventive maintenance to start immediately
after the finish of the last corrective
maintenance, if any. In such a case, the
beginning of the time to the next preventive
maintenance session shifts i.e. is postponed. If
no failure occurs, the maintenance plan is
completely identical to the one without time
shifts.
The DSPN model depicted in Fig. 3
describes the preventive maintenance of a
generic system with time shifts.
In a case of a failure (a token in the place
P_sys_FAIL), the ongoing time to preventive
maintenance is suspended (no token in the place
P_start_timer).
When
the
corrective
maintenance session ends (firing of the
exponential transition T_sys_MTTR), the system
becomes operational (a token in the place
P_sys_WORK) and, simultaneously, the time to
the next preventive maintenance session is
restarted (a token in the place P_start_timer).
If no failure occurs until the beginning of the
preventive maintenance session (a token in the
place P_start_PM after firing of the
deterministic transition T_time_to_PM), a
preventive maintenance session is being
conducted that lasts, on average, 1/φ time units,
where φ is the firing rate of the exponential
transition T_PM. After the successful
conclusion of the preventive maintenance
session (a token in the place P_end_PM after
firing of the exponential transition T_PM), the
firing of the enabled immediate transition
T_restart_timer puts a token in the place
P_sys_WORK (meaning that the system
becomes operational again) and also puts a
token in the place P_start_timer (denoting the
start of the period to the next preventive
maintenance that will last τ time units if not
canceled by a failure).
One possible evolution of the dynamics of
the modeled system is given in Fig. 4. After the
first failure that occurs at the time point tF1,
corrective maintenance took place, which lasts
for ΔTC1 time units. Its end restarts the time to
the first preventive maintenance session that
should now start at the time point tP1(2) instead
at the time point tP1(1). Meanwhile, at time
point tF2 the system suffers another failure,
which takes ΔTC2 time units to be resolved via a
corrective maintenance session. The end of the
second repairing session shifts the beginning of
the period to the first preventive maintenance
session again, which should now start at the
time point tP1(3). After τ time units, no failure
happens, so the first preventive maintenance
session can finally begin at the time point tP1(3).
After the time-lapse of ΔTP1 time units, it
successfully concludes, so the time to the next
Figure 3. DSPN model depicting a preventive maintenance of a generic system with time shifts
(Source: Authors’ representation)
168
Figure 4. Possible evolution of the preventive maintenance with time shifts
(Source: Authors’ representation)
(second) preventive maintenance session has
been set up. This way, the beginning of the first
preventive maintenance session is postponed
from time point tP1(1) to tP1(3).
C. Preventive Maintenance with Dynamic
Scheduling
Dynamic scheduling refers to the possibility
of either prolonging or shortening the time to
the next preventive maintenance session, based
on the information on whether previously a
failure has occurred or not. Starting from the
given initial value for the time to the next
preventive maintenance session, if a failure
occurs, the time until the next preventive
maintenance will be shortened, otherwise, it will
be prolonged. In the case of consecutive failures
and/or non-failures, the continuous shortening
and/or prolonging can include up to N steps
(N 1), starting from the initially specified time
to preventive maintenance.
Fig. 5 shows a DSPN model of a system that
undergoes a preventive maintenance plan with
dynamic scheduling of maintenance sessions.
The initial, yet default time to the first
preventive maintenance is set to τ2 time units (a
token in place P_start_timer2). If no failure
occurs during this period, preventive
maintenance is being carried out that lasts, on
average, 1/φ time units, given that φ is the firing
rate of the exponential transition T_PM. After
the successful completion of the preventive
maintenance session, the time to the next
preventive maintenance progressively increases
and is set to τ3 time units (a token in place
P_start_timer3), where τ2 τ3. The time to the
next preventive maintenance remains τ3, as soon
as there are no failures. Once a failure occurs,
the time to the next preventive maintenance will
be gradually reduced, first to τ2 time units (the
default one), and then to τ1 time units (τ1 τ2) in
the case of subsequent system failures. The time
to the next preventive maintenance remains τ1,
as soon as there is a series of consequent
failures. If no failure occurs, the time to the next
preventive maintenance session will be
prolonged first to τ2 time units, and then again
to τ3 time units. In this particular case, the
shortening/prolonging may include N = 1 step
from the initially specified time to preventive
maintenance, i.e. three different periods,
however, more steps can be involved.
One possible evolution of the system
dynamics,
intrinsic
to this particular
configuration, is shown in Fig. 6, where the
initial time to the first preventive maintenance
session is scheduled in τ2 time units. During this
period, a failure occurs at the time point tF1, and
the corrective maintenance session lasts for
ΔΤC1 time units. This, however, does not
exclude the first preventive maintenance session
starting at the time point tP1 and lasting for ΔTP1
time units. When it finishes, a new preventive
maintenance session is scheduled, but now in τ1
time units (τ1 τ2). The second preventive
maintenance session starts at the time point tP2
and lasts for ΔTP2 time units. Since no failure
occurred during this period, the beginning of the
third preventive maintenance session is
scheduled not in τ1, but in τ2 time units. For the
same reason, the fourth preventive maintenance
169
Figure 5. DSPN model depicting a preventive maintenance of a generic system with dynamic scheduling
(Source: Authors’ representation)
Figure 6. Possible evolution of the preventive maintenance with dynamic scheduling
(Source: Authors’ representation)
session is scheduled not in τ2, but now in τ3 time
units (τ2 τ3).
D. Predetermined Maintenance
Predetermined
maintenance
can
be
considered a special case of preventive
maintenance without time shifts. It refers to the
practice of simply following the system
manufacturer’s maintenance action plans and
guidelines, including when to do inspections
and maintenance operations, as opposed to a
preventive maintenance plan scheduled by the
maintenance team. This usually consists of a
finite (i.e. preset, predetermined) number of
maintenance sessions carried out in the first few
years of a new asset’s exploitation lifetime. The
170
periods between any two consecutive
maintenance sessions are usually irregular; in
most cases, they progressively increase.
The DSPN model portrayed in Fig. 7
resembles a system that is subject to a
predetermined maintenance plan that includes
three maintenance sessions, scheduled after τ1,
τ2, and τ3 time units (in general, τ1 τ2 τ3).
These are the firing times of the deterministic
transitions T_time_to_PMi (i = 1, 2, 3). The
firing of each of these transitions indicates the
beginning of a preventive maintenance
operation, that lasts, on average, 1/φi (i = 1, 2, 3)
time units, where φi (i = 1, 2, 3) are the firing
rates of exponentially distributed transitions
Figure 7. DSPN model depicting a predetermined maintenance of a generic system
(Source: Authors’ representation)
T_PMi (i = 1, 2, 3). Because of the different
activities that need to be carried out in each
preventive maintenance session, the duration of
each maintenance session is set to be different,
so that, in general, φ1 φ2 φ3.
The successful termination of the preventive
maintenance session, denoted by a token in the
places P_end_PMi (i = 1, 2, 3), enables the
immediate transition T_start_ai (i = 1, 2, 3),
which, after firing, not only restores the working
condition of the system (a token in the place
P_sys_WORK) but also initiates the time lapse
until the next predetermined maintenance
session (a token in the place P_start_timer_j,
j = 2, 3), that equals τ2 and τ3 time units,
respectively.
If the predetermined time τi (i = 1, 2, 3) to
the next preventive maintenance session expires
during the repairing phase of the system after a
failure occurs (a token in place P_sys_FAIL),
the preventive maintenance session will be
omitted because of the ongoing corrective
maintenance process. In this case, the
immediate transition T_no_PMi (i = 1, 2, 3)
becomes enabled and fires, so that a token goes
to the place P_no_PMi (i = 1, 2, 3). As soon as
the repair of the system concludes (by firing the
exponential transition T_sys_MTTR), the
immediate transition T_start_bi (i = 1, 2, 3)
becomes enabled and fires, which instantly
initiates the time-lapse until the next
predetermined maintenance session.
After the completion of the last scheduled
predetermined maintenance session, the system
continues to alternate between two states: the
operational one (a token in the place
P_sys_WORK) and the non-operational one (a
token in the place P_sys_FAIL).
the
Fig. 8 illustrates one possible evolution of
system’s
dynamics
undergoing
Figure 8.-Possible evolution of the predetermined maintenance with three pre-set sessions
(Source: Authors’ representation)
171
predetermined maintenance encompassing three
pre-set preventive maintenance sessions.
IV.
[7]
CONCLUSION
So far, various classes of stochastic PNs have
been successfully used to model complex
maintenance processes in a variety of
applications due to their semantic power, huge
versatility, and high applicability. The hereby
presented DSPN models comprise a small
subset demonstrating an efficient, powerful,
flexible, yet highly intuitive approach to
modeling the dynamic behavior intrinsic to
various time-based maintenance strategies,
applicable to a wide gamut of systems in
practice. Depending on the actual system being
modeled, all presented DSPN models, which
are generic by nature, can be further improved
and/or specialized by including additional
elements and features to capture a specific
behavior. However, this could increase the
model's complexity and the likelihood of its
computational intractability, which is an
obvious drawback. On the other hand, all these
models can be used for the evaluation of
specific measures vis-à-vis several input
parameters (λsys, μsys, φ, τ, τ1, τ2, etc.) to provide
significant insights regarding the reliability and
availability aspects of a system, as well as the
efficiency and cost-effectiveness of a particular
maintenance strategy.
[8]
[9]
[10]
[11]
[12]
[13]
[14]
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Bondavalli, A., & Filippini, R. (2004). Modeling and
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PaKSoM 2022
Basel 3.1 – New Regulatory
Framework for Banks
Vesna Martin1
Economists Association of Belgrade, Kneza Miloša 10, 11000 Belgrade, Serbia
1*
1
martinv0803@hotmail.com
Abstract—A stable, liquid, and profitable banking
system is required for any country to achieve
economic
growth
and
development.
Comprehensive regulation is required to achieve
and maintain the banking sector's stability and
resilience, which is especially important during
times of crisis. The Basel Committee on Banking
Supervision publishes recommendations for global
banking regulation and supervision in the form of
the Basel Accord. The development of the
aforementioned standards aims to strengthen the
banking system's resilience and increase its
capitalization. Basel I was adopted in 1988, and
Basel II was adopted in June 2006 to improve it.
The global economic crisis exposed flaws in
financial system regulation, prompting the Basel
Committee on Banking Supervision to present
Basel III in December 2010. The introduction of
Basel 3.1, which refers to the new standard for
operational, market and credit risk, as well as
credit valuation adjustment, was expected to
improve the regulation even further. Because of
the coronavirus, its implementation has been
pushed back to January 1, 2025.
Keywords - banking regulation, Basel
Committee, capital requirements, banking system
I.
INTRODUCTION
The Basel Accord is a set of
recommendations for banking regulation. The
Basel Accords are named after the Basel
Committee on Banking Supervision, which has
its secretariat at the Bank for International
Settlements in Basel, Switzerland, and where the
committee usually meets. Basel I was the first
international agreement on bank capital
published in 1988 in response to the reduction of
the capital bases of the world's largest banks.
Such movements are a result of the increasing
volatility in financial markets, current
globalization, and the deregulation that was
prevalent in the 1970s and 1980s. After
overcoming the shortcomings of Basel I, the
Basel Committee on Banking Supervision
actively worked on the publication of an
improved regulatory framework for improving
the stability of the international banking system,
publishing a revised framework in June 2004,
with additional guidelines included in the version
published in June 2006 (changes related to
market risks as well as the treatment of trading
activities). The Basel Committee on Banking
Supervision began the process of amending these
standards in response to the observed
shortcomings of Basel II, as well as the current
weakness of the financial system, which was
most visible during the global economic crisis.
The Committee published a set of documents
related to the presentation of the new standardBasel III-in December 2010, and the new
documents refer to capital adequacy and the
introduction of minimum requirements for banks'
liquidity issues for the first time. The Committee
published a preliminary assessment of the
effectiveness of the Basel Accord reforms during
the coronavirus pandemic in early July 2021.
Because of the pandemic, the final Basel 3.1
reforms have been delayed by a year, to
January 1, 2023. The European Commission
announced an additional postponement of
implementation (January 1, 2025), with the
implementation of transitional arrangements that
will apply for the next five years.
*
The views expressed in this paper are those of the author, and do not necessarily represent the official view of the Economists
Association of Belgrade.
ISBN: 978-86-82602-00-2
173
The paper is structured as follows. There are
four sections in addition to the introduction and
conclusion. The second section of this paper will
present the main innovations of Basel 3.1 as well
as the time frame for their implementation, while
the third section will provide an overview of
central banks' and regulators' activities related to
the implementation of Basel 3.1. The fourth
section of the paper focuses on the impact of
Basel 3.1 on risk management, while the fifth is
analyzing implementation of Basel agreements
in Serbia's banking system.
II.
IMPLEMENTATION DATES OF BASEL 3.1 [3].
Revision
Standardised approach
for credit risk
Internal ratings-based
framework
Credit valuation
adjustment framework
Operational risk
framework
Leverage ratio
MAIN INNOVATIONS OF BASEL 3.1
The Basel Committee on Banking
Supervision issued a report in July 2021 that
provided an overview of the impact of the Basel
reforms implemented in light of the coronavirus
pandemic. According to the report, the increase
in quality and higher levels of capital and
liquidity in the banking system contributed to
banks being able to cope more easily with the
impact of COVID-19 during the pandemic,
indicating that the Basel reforms have achieved
their main goal, which is to strengthen the
banking system's resilience [1]. Basel 3.1 (also
known as Basel 4 in some documents) represents
the process of finalizing the Basel 3 standard,
which began almost a decade ago.
The Group of Central Bank Governors and
Heads of Supervision (GHOS), the supervisory
body for the Basel Committee on Banking
Supervision, has endorsed Basel III's pending
post-crisis regulatory reforms. Mario Draghi,
then-Chairman of the Group of Central Bank
Governors and Heads of Supervision, stated in
December 2017 that the start of the Basel III
reform represents a major regulatory milestone
that will increase confidence in the banking
sector. The adoption of the Basel III reform
package will complete global regulatory reform,
which began following the global economic
crisis. The implementation of Basel 3.1
necessitates the following changes: (1) revision
of the standardized approach to credit risk, which
will contribute to improving the existing
approach's risk response; (2) a review of the
internal rating model approach to credit risk, with
a restriction on the use of advanced internal
model approaches for low default portfolios; (3)
revision of the credit value adjustment
framework, including the elimination of the
internal model approach and the implementation
of a revised standardized approach; (4) revision
of the standardized approach for operational risk,
174
TABLE I.
Output floor
Implementation date
1 January 2022
1 January 2022
1 January 2022
1 January 2022
Existing exposure
definition: 1 January 2018
Revised exposure
definition: 1 January 2022
G-SIB buffer: 1 January
2022
1 January 2022: 50%
1 January 2023: 55%
1 January 2024: 60%
1 January 2025: 65%
1 January 2026: 70%
1 January 2027: 72.5%
which will be replaced by the existing
standardized
approach
and
advanced
measurement approach; (5) revision of the
method of measuring leverage ratios and
leverage ratios for global systemically important
banks (G-SIBs); and (6) setting an aggregate
output floor that will allow risk-weighted assets
calculated on the basis of internal models to no
longer be less than 72.5% of risk-weighted
assets, which was calculated previously in
accordance with Basel III. Banks must also use a
standardized approach to disclose the value of
their risk-weighted assets. The initial
implementation of the aforementioned reforms
was planned for 2019, but due to the coronavirus
pandemic most changes are pushed back to
January 1, 2025. It is necessary to implement and
apply the regulatory reports for the revised Basel
agreement by the aforementioned deadline [2].
The Basel Committee on Banking Supervision
has planned a transition period for the
implementation of the aforementioned changes
to ensure timely implementation by competent
authorities and bank adaptation. Table I shows
the most important dates for Basel 3.1
implementation [3].
III. CENTRAL BANKS' AND REGULATORS'
ACTIVITIES RELATED TO THE IMPLEMENTATION
OF BASEL 3.1
To implement Basel 3.1, regulatory changes
were proposed in the European Union, the United
Kingdom, and the United States of America. The
European Commission adopted the Capital
Requirements Regulation (CRR) and the Capital
Requirements Directive (CRD IV) in the
European Union at the end of October 2021 [4].
The goal of the aforementioned regulation is to
make European Union banks even more resistant
to potential economic shocks, while also
contributing to the economic recovery from the
effects of the coronavirus pandemic, as well as
the banking sector's effort to achieve a green
transition. The adopted regulations amend
European Union Regulation 575/2013, which
relates to prudential requirements for credit
institutions and investment firms [5], as well as
the amendment Directive 2013/36/EU [6], which
relates to capital requirements. The European
Banking Authority (EBA) published at the end of
September 2022 a report on the impact of full
implementation of Basel 3.1 on European Union
banks in 2028. The report, which employs the
same methodology as the Basel Committee on
Banking Supervision in its assessment,
concludes that full implementation of Basel 3.1
will result in a 15% increase in the current Tier 1
minimum required capital for European Union
banks. Banks will require an additional 1.2
billion euros in Tier 1 capital to adapt their
operations to the new regulations [7].
The Prudential Regulation Authority (PRA)
is a division of the Bank of England that oversees
and regulates the activities of approximately
1,500 banks, credit unions, insurance companies,
and investment firms. The Prudential Regulation
Authority issued two announcements in July and
October 2021 regarding the implementation of
Basel 3.1 in the United Kingdom. The actual
implementation of Basel 3.1 in the United
Kingdom is uncertain for several reasons,
including an international agreement to postpone
implementation due to COVID-19, the need to
respond to other regulatory challenges, and the
implementation of new processes that the
Prudential Regulation Authority must develop in
order to incorporate the new Basel standard into
the United Kingdom's legislative framework. A
consultation paper on Basel 3.1 is expected to be
published in the fourth quarter of 2022, with
implementation beginning on January 1,
2025 [8].
A Notice of Proposed Rulemaking (NPR) is
an official document that announces and
publishes a specific plan to solve problems or
achieve goals within the United States of
America's regulatory authorities. All proposed
regulations must be published in the Federal
Register to inform the public and provide an
opportunity for them to submit comments. The
Federal Reserve System has yet to issue a Notice
of Proposed Rulemaking announcing Basel 3.1
implementation. According to Ernst & Young's
analysis, despite the lack of publication of the
regulation, well-informed participants anticipate
that the American version of Basel 3.1 will
completely abandon the use of internal capital
models, particularly those related to credit risk
and counterparty risk. This will exacerbate the
already significant differences in regulation
between the United States and other major
financial centers [9].
The implementation of Basel 3.1 and the
work of the Basel Committee on Banking
Supervision received significant support from
prudential regulators and the central banks of the
European Union and the United Kingdom. In
April 2020, His Majesty's Treasury (HM
Treasury) and the Prudential Regulation
Authority welcomed the postponement of Basel
3.1 implementation, which is critical for
providing banks and supervisors with the
operational capacity to respond to the pandemic's
challenges [10]. Jose Manuel Campa,
Chairperson of the European Banking Authority,
Luis de Guindos, Vice President of the European
Central Bank, and Andrea Enria, Chairperson of
the European Central Bank's Supervisory Board,
wrote to Mairead McGuinness, Commissioner
for Financial Stability, Financial Services, and
Capital Markets Union in the European
Commission, in early September 2021. The
letter's signatories stated that the European
Banking Authority and the European Central
Bank demonstrate their commitment to the
timely implementation of Basel agreement
reforms in the European Union's banking system.
Furthermore, it was stated that the European
Union's banking system demonstrated the ability
to contribute to economic resilience even during
the pandemic, owing to the high-quality
regulatory framework [11].
IV.
THE IMPACT OF BASEL 3.1 ON RISK
MANAGEMENT
The implementation of Basel 3.1 standards in
the banking sector means an increase in capital
requirements, as well as liquidity and leverage
requirements. The global economic crisis of
2007/2008 highlighted the need for a better
definition of risk-weighted capital ratios and
capital adequacy because a reduction in the
aforementioned indicators would call financial
stability into question. In the event of a crisis, the
banking system would be unable to make loans
175
to the corporates and households, increasing
rather than amortizing economic shocks. Basel
3.1 aimed to improve the credibility of riskweighted capital ratio calculations by applying
greater robustness to the calculation of risk
(primarily credit, market, and operational risk)
through the use of a standardized approach as
well as an internal model. Furthermore, the effort
of this banking standard is to ensure that banks
have greater capitalization in relation to the level
of business risk present, higher capital quality in
relation to the losses that it may need to cover,
and improved accuracy in the calculation and
measurement of bank business risk.
below the level obtained by calculating using the
standardized approach. This would avoid
excessive oscillation and cyclicality in riskweighted asset movement. Based on the
foregoing, we can conclude that full
implementation of the Basel 3.1 standard will
contribute to the complete utilization of the
benefits of the post-global economic crisis
reform package, which will further contribute to
the continued safe operation of banks while
ensuring a higher quality of their capital.
Basel 3.1, with its new method of calculating
risk-weighted assets, aims to make that
calculation more consistent and resilient across
all banks. This requirement was met by
introducing more detailed requirements that
better reflect the overall exposure risk and thus
represent an alternative method of risk
assessment using the standardized approach.
When it relates to evaluating risk using the
internal rating model, the Basel 3.1 proposal
refers to a reduction in modeling flexibility as
well as the introduction of restrictions on certain
model inputs. This improves the consistency of
the calculation when using the internal rating
model. In addition to the foregoing, Basel 3.1
introduces an output floor (see Table I), which
will be phased in from January 1, 2022 (when the
output floor is 50%) to January 1, 2027 (when the
output floor is 72.5%). This approach is based on
the goal of providing a straightforward and
consistent method for calculating risk weights
during the standard's phased implementation.
Basel I was published in 1988 by the Basel
Committee on Banking Supervision in order to
establish a unique method of calculating capital
and, overall, to strengthen the financial system's
stability. The basic and supplementary elements
of capital were defined with the introduction of
Basel I, followed by the weights (risk weights:
0%, 20%, 50%, and 100%) required to calculate
credit risk per balance sheet asset and credit
conversion factors for off-balance-sheet items, as
well as relationships between capital and total
balance and off-balance-sheet exposures of the
bank weighted by credit risk, with the goal of
calculating capital adequacy indicators.
According to the calculations presented (1), the
bank's capital adequacy indicator should be at
least 8%.
The primary advantages of introducing Basel
3.1 are related to the implementation of
regulations that seek to reduce the likelihood of
future financial crises by implementing: (1)
detailed requirements for measuring riskweighted assets, which promote consistency and
simplicity of calculation; and (2) increased
sensitivity to risk through the application of a
standardized approach to capital calculation.
This approach will result in risk-weighted assets
expressing banks' exposure to risk using a
standardized approach; (3) limiting the use of
internal models in risk assessment and in cases
where risk-weighted assets cannot be determined
in a prudent and adequate manner, preventing
oscillations in risk-weighted asset measurement;
and (4) the implementation of the output floor
ensures that the level of risk-weighted assets
calculated using the internal model does not fall
Basel I's introduction highlighted both its
strengths and weaknesses. In terms of benefits,
the implementation of Basel I contributed to an
increase in capital adequacy in the banking
sector. This standard was implemented in various
countries around the world, which contributed to
increased global banking competition and
discipline in the capital management process.
Among the shortcomings of Basel I, it is
frequently stated that only credit risk was
considered during the capital adequacy analysis,
while other risks (such as market and operational
risk) were not. As a result, when assessing credit
risk, no distinction was made between borrowers
of varying quality and rating. In addition to the
foregoing, Basel I has flaws in that the scope of
the regulation does not adequately account for
the risk and effect of using modern financial
instruments, and the emphasis is on the book
176
V. IMPLEMENTATION OF BASEL
AGREEMENTS IN SERBIA'S BANKING SYSTEM
Capital
8%
Credit risk weighted exp osure
value rather than the market value. The
shortcomings of Basel I concerning market risk
were eliminated on the basis of amendments
from 1993 and 1996, and then the capital
requirement for market risk and a new instrument
for assessing the bank's market risk, Value at
Risk (VAR) (2), were introduced. RWE stands
for Risk-weighted exposure [12].
Capital
8%
RWE credit and market risk
Based on the deficiencies and their
correction, the Basel Committee on Banking
Supervision published Basel II in June 2006,
which represents the continuation of
international efforts to improve the stability of
the banking system. Basel II is built on three
pillars. The first pillar is the establishment of
minimum capital requirements for credit, market,
and operational risk. The first pillar's most
significant innovations concern the treatment of
credit risk and the implementation of a capital
requirement for operational risk. Basel II allows
banks to use a more sophisticated approach to
calculating capital risk for credit risk that takes
into account the unique characteristics of each
individual bank. Then, in Basel II, a new capital
requirement for operational risk is introduced, as
a risk related to losses caused by employee
failures, the occurrence of unpredictable external
events, insufficient procedures in bank
operations, and insufficient management of
information and other systems in the bank. The
first pillar of Basel II in Serbia's banking system
is based on the Decision on Bank Capital
Adequacy. The second pillar of Basel II is based
on the implementation of a new approach to risk
management and bank capital adequacy
assessment. As a result, banks must assess the
adequacy of capital to cover all risks associated
with their operations. In doing so, the supervisor
should determine whether a specific bank has
sufficient capital in relation to its exposure to
business risks. The second pillar of Basel II is
based on four principles: (1) supervision; (2)
internal capital adequacy assessment; (3) capital
above the minimum level defined by the first
pillar; and (4) supervisor intervention to prevent
capital from falling below the minimum level.
The third pillar of Basel II refers to the
enhancement of market discipline, as evidenced
by the publication of relevant data. This provides
key information to other market participants
about capital, risk exposure, risk management
processes, and capital adequacy. The
implementation of this pillar increases the
security and stability of the banking sector as
well as the entire financial system. In Serbia, the
third pillar of Basel II is implemented based on
the Decision on data and information disclosure
by banks [13].
The global financial crisis 2007/2008
reaffirmed the importance of effective banking
supervision in ensuring full implementation of
prudential policies, avoiding moral hazard posed
by “too big to fail” institutions, and improving
risk management practices and appropriate
disclosure. The financial crisis exposed
numerous flaws in corporate governance, risk
management, delineation of duties and
responsibilities, and other areas. Basel III was
designed to strengthen and harmonize global
banking capital and liquidity standards. Capital
buffers are one of the key innovations of the
Basel III standard, representing an additional
Common Equity Tier 1 (CET 1) capital that
banks must maintain above the regulatory
minimum. Capital buffers should limit systemic
risks in the financial system, which can be
structural (systemic risk buffer and capital buffer
for a systemically important bank) or cyclical
(systemic risk buffer and capital buffer for a
systemically
important
bank)
(capital
conservation buffer and countercyclical capital
buffer) [14]. Since June 30, 2017, Serbian banks
have been required to maintain the following
capital buffers [15]:
(1) Capital conservation buffer - According
to the Decision on Capital Adequacy of
Banks of 15 December 2016, a bank is
required to maintain a capital
conservation buffer equal to 2.5% of its
risk-weighted assets on an individual
and consolidated basis. Only Common
Equity Tier 1 capital may be used in the
capital conservation buffer.
(2) Countercyclical capital buffer - The rate
is set at 0% in the Decision on the
Countercyclical Buffer Rate for the
Republic of Serbia of 8 June 2017, which
is effective as of 30 June 2017. The NBS
Executive Board decided on September
8, 2022, to keep the Republic of Serbia's
countercyclical capital buffer (CCyB)
rate at 0%, citing the following: CCyB
guideline: 0%; credit-to-GDP ratio:
83.5%; and credit-to-GDP ratio
deviation from long-term trend (credit177
to-GDP gap): -0.002 pp. The Executive
Board of the National Bank of Serbia
makes the quarterly decision to keep or
change the CCyB rate in the Republic of
Serbia [16].
(3) Capital buffer for a systemically
important bank - On June 16, 2022, the
Decision on Establishing a List of
Systemically Important Banks in the
Republic of Serbia and Capital Buffer
Rates for Those Banks establishes
systemically important banks, and the
capital buffer rates that those banks must
maintain as of June 30, 2022. Five banks
are required to maintain a 2% capital
buffer, while four banks must maintain
a 1% buffer.
(4) Systemic risk buffer - The systemic risk
buffer rate is 3% of total foreign
currency and foreign currency-indexed
placements of a bank in the Republic of
Serbia approved for corporates and
households. All banks must maintain the
systemic risk buffer if their share of
foreign currency and foreign currencyindexed placements approved to
corporates and households in the
Republic of Serbia exceeds 10% of total
placements approved to corporates and
households in the Republic of Serbia.
The implementation of Basel standards in the
Republic of Serbia's banking sector contributed
to increasing the stability and liquidity of their
operations, thereby contributing to the
preservation, and strengthening of financial
stability. Further improving the function of
financial stability, both in Serbia and globally,
necessitates a wide range of policies, including
prudential, macroeconomic, monetary, and fiscal
policies.
VI.
CONCLUSION
The Basel Accords represent the Basel
Committee
on
Banking
Supervision's
recommendations for banking regulations. Basel
I was established in 1988 with the goal of
establishing capital requirements that addressed
credit risk. Basel II was adopted in June 2006 as
a result of shortcomings in the implementation of
Basel I, and it is based on three pillars: minimum
capital requirements for credit, market, and
operational risk; implementation of a new
approach to risk management and bank capital
adequacy assessment; and market discipline.
178
Following that, in response to the global financial
crisis of 2007/2008, the Basel Committee on
Banking Supervision adopted a new standard,
Basel III, in December 2010 that refers to capital
adequacy, and with this standard, minimum
liquidity requirements for banks were
introduced.
The Basel Committee on Banking
Supervision is actively working on improving
Basel III, which refers to Basel 3.1 and represents
a new standard for operational and credit risk as
well as credit valuation adjustment. The goal of
implementing Basel 3.1 is to further improve
banking
sector regulation.
Basel 3.1
implementation has been delayed until January 1,
2025, due to the coronavirus pandemic. The
implementation of this standard entails revising
the standardized approach for credit risk, then
revising internal credit risk models, revising the
standardized approach for measuring operational
risk, and revising methods for measuring
leverage ratios. The European Union, the United
Kingdom, and the United States of America have
all proposed changes to Basel 3.1. The Capital
Requirements Regulation (CRR) and the Capital
Requirements Directive (CRD IV) were adopted
at the European Union level at the end of October
2021 with the goal of strengthening the resilience
of the banking system. Furthermore, the goal is
to contribute to the economic recovery from the
coronavirus pandemic, as well as the effort to
achieve a green transition. The European Central
Bank and the Bank of England, as well as other
regulators, support the implementation of Basel
3.1 (the European Banking Authority and the
European Commission). To preserve and
strengthen financial stability, the National Bank
of Serbia has actively worked and continues to
work on improving the regulatory framework for
the banking sector. The implementation of Basel
agreements into the domestic financial system
resulted in banking sector stability and adequate
capitalization.
The new capital standards represent an effort
to build a banking system that is highly resistant
to external and internal challenges in its
operations and that can rehabilitate potential
costs from exposure to numerous shocks on the
basis of adequate capitalization. In the event of
systemic risk, banks can release previously built
capital requirements and absorb losses while
continuing to provide critical financial services.
In this way, the Basel standards represent a
global financial reform that ensures long-term
financial stability and resistance to stress periods.
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Committee on Banking Supervision. December 2017.
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17.10.2022.)
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Council Amending Regulation (EU) No 575/2013 as
regards requirements for credit risk, credit valuation
adjustment risk, operational risk, market risk and the
output floor. October 2021. https://eur-lex.europa.eu/
legal-content/EN/TXT/?uri=celex%3A52021PC0664
(Accessed on: 18.10.2022.)
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Parliament and oftThe Council of 26 June 2013 on
prudential requirements for credit institutions and
investment firms and amending Regulation (EU) No
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(Accessed on: 18.10.2022.)
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of the Council of 26 June 2013 on access to the activity
of credit institutions and the prudential supervision of
credit institutions and investment firms, amending
Directive 2002/87/EC and repealing Directives
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exercise on Basel III full implementation impact,
[8]
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[12]
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rst-mandatory-exercise-basel-iii-full-implementationimpact (Accessed on: 18.10.2022.)
Implementation of Basel standards, https://www.bank
ofengland.co.uk/news/2022/march/implementation-of
-basel-standards (Accessed on: 18.10.2022.)
Why global regulatory standards are fragmenting as
Basel 4 is implemented. https://www.ey.com/en_sa/
banking-capital-markets-risk-regulatory-transformatio
n/why-global-regulatory-standards-are-fragmenting-a
s-basel-4-is-implemented (Accessed on: 18.10.2022.)
Joint PRA and HMT statement on the delay to
implementation of the Basel 3.1 standards.
https://www.bankofengland.co.uk/prudential-regulati
on/publication/2020/joint-pra-and-hmt-statement-onthe-delay-to-implementation-of-the-basel-3-1-standar
ds (Accessed on: 18.10.2022.)
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df/ssm.ECB-EBA_letter_on_B3_implementation~88
fdb33210.en.pdf (Accessed on: 18.10.2022.)
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bazelski-stendardi/bazel-I/index.html (Accessed on:
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179
180
PaKSoM 2022
Research and Development of Human
Resource Management in Serbian
Organizations
Tijana Krušković1, Biljana Ilić2, Slavica Anđelić3
1,2
3
1
Faculty of Management, Zaječar, Serbia
Modern Business School, Belgrade, Serbia
tijanakruskovic@gmail.com, 2biljana.ilic@fmz.edu.rs, 3slavicaandjel@gmail.com
Abstract—For the past few years, especially during
and after the COVID-19 pandemic, business
organizations were affected strongly, so they were
forced to adapt to market trends to survive
changes or even to excel in their results and
outcomes. Human resource’s function can have an
active role in achieving business results, and
companies should shape human resource
departments in that way. Depending on the
development stage of the HR function in the
organization, companies can win or fail in the
labor market. Companies that were able to become
flexible in unpredictable times, gained a lot of
benefits through retaining employees, selecting
talents, reducing costs, and shaping their
organizational culture in the desired direction.
There are still a lot of questions about what the
future of HR will look like, and this paper will
present the latest trends and predictions for years
to come.
Keywords - HR function, trends, predictions
I.
INTRODUCTION
The human resources management task is to
identify and use all the potential that the
employees in the organization possess, all with
the aim of achieving the desired results. As
human resources have several specificities in
relation to other resources in the organization,
their role in achieving organizational goals is
very specific and of particular importance. As
such, it is one of its key functions of it. It means
that the experience in personnel management is
mirrored in business success 1. The importance
of HR in the decision-making process has not
always been understood. Due to the pandemic,
ISBN: 978-86-82602-00-2
there have been numerous changes in the labor
market. What the pandemic has not changed is
that employees, wherever they work, want to feel
a sense of belonging to the organization and to
feel part of the team. Close cooperation with
colleagues is very important even if the work is
done remotely. Employees want prompt
feedback and to know that their work is adding
value.
II.
HR RESEARCH AND DEVELOPMENT
Human resource management is the process
of acquiring, training, appraising, and
compensating employees, and of attending to
their labor relations, health and safety, and
fairness concern 2. Human resource
management is more complex today than it was
in the past due to the changes in the external
environment that organizations face 3.
HR management is the effective management
of people at work. Also, it is the function
performed in organizations that facilitates the
most effective use of people (employees) to
achieve organizational and individual goals.
According to this definition, HRM is a function
that is performed in the organization, and it
facilitates the most effective use of employees.
The use of employees is done to achieve
organizational goals as well as individual
goals 4.
Mathis and Jackson (2011) in their textbook
titled Human Resource Management presents a
definition of HRM that is: HRM is designing
management systems to ensure that human talent
is used effectively and efficiently to accomplish
181
Figure 1. McKinsey [6].
organizational goals. In the definition
management systems mean HRM systems with
regard to HR functions. This definition stresses
that human talent is to be used in a way that is
effective and in the way that is efficient. Also,
here the word human talent means valuable
employees 4.
Human resource management is the process
of acquiring, training, appraising, and
compensating employees, and of attending to
labor relations, health and safety, and fairness
concern 2.
In terms of overall human resource
management, there is a shared opinion that
development is part of the strategic approach to
HRM, a recognition that HRM work is important
and should be embraced by all managers in the
organization 5.
Strategic human resource management
means formulating and executing human
resource policies and practices that produce the
employee competencies and behaviors the
company needs to achieve its strategic aims 2.
McKinsey [6] brings the study about
possibilities on how businesses can best organize
for the future and suggest that future-ready
companies share three characteristics. They
know what they are and what they stand for; they
operate with a fixation on speed and simplicity,
and they grow by scaling up their ability to learn
and innovate. The Human Resource department
182
can help propel this transformation by facilitating
positive change in these three key areas, as well
as with nine imperatives that radiate out from
them.
Organizational culture is the sum of all the
values and beliefs that are shared throughout the
entire organization. Managers should be aware of
the importance of organizational culture, as a
guiding set of behaviors, since affects everyone,
whether they're internal or external to the
organization. In terms of COVID-19, all
industries were affected strongly, as a society
also. People will feel safer and more secure if
they know that their organizations stand out in
comparison to other employers. The best way to
stand out is to have clear organizational culture,
purpose, and defined values.
In every business organization, HR function
has its own growth path and development stage.
In that sense, managers should identify the stage
in which their HR function is and the steps they
need to take to the next level.
Development
of
human
resources
management in small and middle-sized
enterprises can be recommended businesses need
to concentrate on a specialized selection of
employees, recruiting qualified and experienced
workers who will become a competitive
advantage. One more recommendation is that
more attention should be paid to mentoring
employees who can become highly qualified and
TABLE I.
HR FUNCTIONS DEVELOPMENT STAGES.
HR as a
business
function
HR as a
business
partner
HR in an
organization is
responsible for
managing
employee data,
payroll, time
and attendance,
and setting
company
policies
The role is
largely that of
personnel
administration
focused on
both internal &
external
compliance,
and on
management of
employee
records.
HR focus
shifts to
competencybased
recruitment,
total
compensation,
employee
development,
and
communication
and
organization
design
HR helps in
formalizing the
organization
structure
HR helps the
organization
attract and
retain skilled
employees by
becoming a
leader in
compensation
management
HR as a strategic
partner
Full maturity of
HR function
Aligning
employees to a
common set of
objectives
derived from the
mission and value
statements
Identifying topperformers and
non-performers
Continuously
measuring of the
effectiveness of
leadership and
employee
satisfaction
Increasing
employee
engagement
through
appropriate
measures
Aligning
compensation to
performance
Adjusting
recruitment and
training to
competency gaps
trained and loyal 1.
Among the literature, it can be found that
great people are an organization’s most valuable
asset. There is a belief that talent management
must be embedded in the foundations of
organizational culture, therefore different
organizations
require
different
talent
management processes. In particular, the issue of
social culture, to which a certain organization
belongs, must not be forgotten as a cornerstone
in defining terms. Different cultures have
different values about what talent is and what is
meant by talent management, i.e. what is the
practice of human resource management in
general. For example, in cultures that inherit the
collectivist spirit, the team way of working and
belonging to a certain group is emphasized. An
exclusivist definition of talent, which refers to
the individualization of the term, would be
problematic for application in such countries, as
it would individualize team members. Then the
question can be raised whether this is
appropriate, that is, whether it is the right
definition of the terms talent and talent
management.
On the other hand, individualistically
oriented cultures are strongly focused on selfesteem and personal achievement, in collectivist
cultures the focus is on harmoniously fitting into
the environment and personality does not stand
out 7.
Rapidly changing market dynamics and
global competitive pressures have caused
organizations to spend more time focusing on
their core business 8.
Due to the unprecedented disruptions caused
by the COVID-19 pandemic, companies are
introducing radically new ways of working and
doing business, which puts human resources
issues in focus 9.
The way people work and interact with
technology has changed dramatically following
the COVID-19 pandemic. According to the
website Empxtrack 10, in order to survive in
today’s digital world, organizations are looking
for ways to streamline operations and processes
and become more efficient, cost-effective, and
agile. These technological tools can have a
significant impact on the work environment and
employee experience if used correctly.
Implementing practices can lead to higher
business performance ensuring maximum
employee satisfaction and smooth collaboration.
More and more companies recognize the
importance of adapting to the market and new
trends. The employee is now in focus. It seems
like it's never been harder to keep an employee.
Deloitte conducted a survey called “Human
Capital Trends 2021” on a sample of 6,000
business and HR leaders from 99 countries. The
aim of the research was to determine how the
pandemic affected the ability of companies to
survive and achieve their goals. Key findings are
presented below.
Employee welfare - Companies that
manage to incorporate employee wellbeing into their daily work processes will
build a sustainable future for themselves
in which employees will perform their
jobs at a high level of enthusiasm and
productivity.
Integration of artificial intelligence and
employees - Integrating AI and
employees helps companies use
183
technology to enhance teams' ability to
learn, create and work in ways that
produce better results.
Unleash the full potential of employees Improving the level of competences.
HR analytics - An HR team that can
draw valid conclusions will keep the
company on the right track. Companies
need to start making better use of the
wealth of data they have at their disposal.
First of all, they need to deeply analyze
the data related to the potential and
competencies of each individual
employee.
III.
HR FUTURE TRENDS
The future of the HR function in
organizations is uncertain. On the one hand, if it
does not change, it could end up being largely an
administrative function that managers an
information technology–based HR system and
vendors who do most of the HR administrative
work. On the other hand, it could become a driver
of organizational effectiveness and business
strategy. In many organizations, one of the key
determinants of competitive advantage is
effective human capital management 11.
There are many predictions about how the
future of HR function may look. Many HR trends
will be embraced by employers. There is no
doubt that the hybrid work model is going to be
at the top of these trends. COVID-19 has forced
organizations into remote and hybrid work
models. After a few months of remote work,
many organizations realized that the physical
space, offices, and car parking are not needed
anymore if employees decide to work from
home 12.
A commonly present trend is also an
employee experience. Gartner`s survey on
employee career preferences shows that just 1 in
4 employees voiced confidence about their career
at their organization, and three out of four
looking for a new role are interested in external
positions 13.
Organizational
culture
and
change
management will stay the main priorities for HR
managers. Employees may feel overwhelmed
because of digital transformations, economic
uncertainty, political tensions, and many other
changes.
One of the most important predictions in HR
184
is the usage of data and artificial intelligence.
Many organizations plan to deploy technologies
to implement a large number of shared services
or transactional agreements 14.
Quality of human resource management
determined by the efficiency of the application of
information technology 15.
HR analytics is all about collecting,
organizing, and validating the data related to
hiring, training and development, employee
benefits, employee satisfaction, absenteeism, and
retention to help managers make better decisions
in all these areas. Data and analytics have
become one of the most important, if not the most
important, tools of HR, which are essential for
making any strategic decision in business. HR
data help organizations to improve the decisionmaking process related to employees, and thus to
achieve the company's strategic goals more
easily.
Today`s work environment expects leaders to
be more authentic, empathetic, and adaptive. The
importance of the relationship between
employees and managers is emphasized.
Employees prefer active communication with
their superiors and prompt feedback about their
performance. Relationship with superiors is an
important factor. A desire for good interpersonal
relations, i.e., a good work climate, was also
expressed to a large extent, as in 16.
The biggest challenges for HR after COVID19 will be restructuring the place of work and the
content of work, applying more advanced
technology to recruitment, selection, and
performance; more interest, appreciation, and
motivation from managers will be needed as well
as building trust, a sense of belonging among
team members.
The list of benefits will be revised towards
enhancing mental health and well-being. The
reality after the pandemic will require new
competencies from managers and employees so
re-skilling and re-training are the most expected
approaches 12.
IV.
HR PRACTICIES IN SERBIA
A Serbia follows modern business trends in
the field of human resources. The established
forms of previous activity are being overcome
and the importance and influence of human
resources on the entire operation of the
organization are recognized. Certainly, the
presence of an increasing number of
multinational companies in the labor market has
contributed to the increasing importance of the
human resources function. After the COVID-19
pandemic and the current political uncertainties
in the world, those companies that adapt to the
needs of their employees will have a competitive
advantage.
Every two years, the Infostud portal conducts
research on what makes an employer desirable in
the labor market, and for the second time in a
row, the respondents put stable financial
operations in the first place. In order for an
employer to be attractive and desirable in the
labor market, it is necessary first of all to have
stable financial operations, according to
Infostud's research. In second place are good
interpersonal relations, and then what kind of
attitude the employer has towards the employees.
Fortunately, there are companies in Serbia
that have caught up with modern business trends
and that, despite the multi-year transition process
and the current world economic crisis, are
successfully applying modern human resource
management methods. In many companies, these
trends came with a change in the ownership
structure, and other companies, adapting to
market requirements, gradually developed an
awareness of the principles of modern human
resource management, and in this sense, they
began to apply other very important activities in
human resource management in an organization
such as talent management, knowledge
management, change management and a modern
approach to motivation and rewarding 17.
In the government and public sector, the
selection of employees is made on a political
basis, not on an educational basis, and not based
on competencies and knowledge 18.
The importance of promoting good HR
practices is recognized also on a national level.
The Serbian Chamber of Commerce has been
awarding the Djordje Weifert National Award
for Socially Responsible Business since 2007.
There are three award categories. Category of
large companies, category of medium-sized
companies and category of small and micro
businesses [18].
Serbian Chamber of Human Resources
Managers organizes the competition for the
award “BEST IN SERBIA 2022” in human
resources management and talent management
with the aim of promoting and establishing the
principles and practices of responsible business
operations.
The development of the labor market of the
Republic of Serbia is evident, which is
conditioned by the appearance of a large number
of investments and companies, which are
increasingly becoming competitors in terms of
profit, but also a wide range of benefits, i.e.
attracting talents and experts 19.
To better understand the current changes in
the market, as well as the perception of future
candidates, the company Assert International
conducted a survey (October 2020) whose
purpose is to identify the attitudes of existing
talents in the territory of Serbia - precisely about
future employers. Young generations give us
answers to the question “Who do we want to
work for?” and they give us the opportunity to
make generational differences in expectations.
One of the most important results shows that the
so-called “Generation Z” expect from a future
employer, in addition to salary (which they don't
even rank as the most important), also: the
possibility of professional development
(72.58%), the possibility of advancement
(71.77%), good interpersonal relations in the
future company (68.55%) 19.
All the above indicates that human resources
practices in Serbia are developed. An exception
can be made and say that only in state
institutions, HR functions are still on the business
function level. Also, in small private companies,
this function is not developed. It seems that for
these two types of organizations employees in
HR department are responsible for managing
employee data, payroll, time and attendance, and
setting company policies.
V.
CONCLUSION
The purpose of human resource management
is to increase performance aimed at motivating,
engaging, and retaining employees so that they
perform better. When an organization has a clear
HR strategy and organizational culture done
right, companies can build a sustainable
competitive advantage and outperform their
competition through an integrated system of
talent management practices that are difficult to
copy and/or imitate. In other words, human
resource management is a process that aims to
achieve business plans through integrated people
management practices. In this way, human
resources have an active influence on the
business results themselves. The paper has
185
searched current trends in HR management,
especially in Serbia.
[10]
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PaKSoM 2022
Measurement of Innovation in
Economic Growth Research
Nataša Stanojević1, Slobodan Kotlica2, Katarina Zakić3
1,3
Institute of International Politics and Economics, Belgrade, Serbia
2
Faculty of Business and Law, MB University, Belgrade, Serbia
1
natasa.stanojevic@diplomacy.bg.ac.rs, 2kotlica@gmail.com 3katarina@diplomacy.bg.ac.rs
Abstract—Research belongs to the field of
methodology of economic sciences. The article
analyzes the causes of the inability of economic
models and indicators to measure the impact of
knowledge and innovation on economic growth,
despite the general agreement about their positive
effects. The article presents the evolution of the
inclusion of the knowledge variable and
technological achievements in models of economic
growth. Second, the quantitative innovation
indicators were classified, and their limitations
were assessed. Finally, two current processes that
present new challenges for measuring the
economic effects of innovations are analyzed: mass
digitalization and the increasingly frequent
occurrence of open instead of closed innovations.
The goal is to separate obstacles for evaluating
innovative effects that can be overcome from those
that cannot due to the fluid nature of innovation.
This distinction determines the optimal
relationship between the methods and framework
of economic growth research. The article results
showed that reliable economic growth research
must be primarily based on the measurement of
direct innovative output, while input criteria
(investment in R&D) and indirect outputs
(number of patents) can only be auxiliary criteria.
As data collection on the direct outputs of
innovations implies extensive work by researchers,
a lot of time and emphasized flexibility in data
collection, and a significant geographical or
sectoral narrowing of the research subject.
Keywords - innovation, knowledge, economic
growth models, digitization, open innovation.
I.
INTRODUCTION
There are few concepts in economic theory
about the meaning and role of which there is such
broad agreement as innovation. The term
innovation implies: the introduction of new
ISBN: 978-86-82602-00-2
products or services; improving the quality of
products or services; methods and processes by
which they are created; or methods and processes
of production organization. Beyond these basic
elements of the concept, the authors also add the
introduction of new raw materials and semiproducts, breakthrough to new markets [1];
changes in the context in which the product or
service is used, so called positional
innovation [2]; application of new marketing
methods including significant changes in design,
marketing and promotion of products–marketing
innovations, etc. Despite the large number of
elements that authors attach to the concept of
innovation, not one of them has been contested
by other authors. In addition, there is general
agreement about the positive role of innovation
in the modern economy. Knowledge,
technologies and innovations have an undeniably
important role in increasing productivity,
developing new products and services and
creating competitive advantages for companies,
which further contribute to accelerating the
growth of the entire economy.
Despite the seemingly clear idea of the role
of innovation in the growth and development of
modern economies, evaluation and even less
precise measurement of this impact have
remained beyond the reach of macroeconomic
research and models. The most commonly
observed sources of the “elusiveness” of these
effects differ to some extent. They often refer to
the incompleteness of the available data or the
fact that these data ‘represented only a proxy
measure reflecting some aspect of the process of
technological change’ [3]. As early as 1962,
Simon Kuznets observed that ‘the greatest
obstacle to understanding the economic role of
187
technological change was a clear inability of
scholars to measure it’ [4].
Innovation implies creation (invention) and
the use of new knowledge to offer products or
services with greater value for users. One of the
essential elements of innovation is its verification
on the market, i.e., commercialization.
Innovation is ‘invention plus commercialization’
[5]. The criteria for evaluating the success of
innovative activities and innovations are more
commercial than technical, and innovation is
considered successful if its commercialization
provides a return on invested funds and a
corresponding profit. However, the fluid nature
of innovation does not allow a complete insight
into all the manifestations of its application.
Knowledge and ideas are the essential
components of the innovation process, and the
commercialization process is a confirmation of
the success of R&D activities. The linearity of
the process from the idea, through scientific
discovery,
invention,
innovation,
and
technology, to the market is a one-way and
unambiguous process that leads to technological
and commercial success.
The goals of this research are to:
1) explain the results of previous research
on the statistically invisible effects of
knowledge and innovation in models of
economic growth;
2) identify the advantages, disadvantages
and scope of the set criteria for
measuring innovation effects; and
3) explain the new challenges for
establishing precise and reliable methods
for measuring their effects, which are set
by the action of two current processes –
digitization and the prevalence of open
innovations instead of closed ones at the
beginning of the 21st century.
These results will enable the separation of
obstacles for evaluating innovative effects that
can be overcome from those that cannot, and
based on that, to determine the optimal
relationship between the methods and framework
of economic growth research.
II. TECHNOLOGY, INNOVATION AND
MISSING VARIABLES IN ECONOMIC GROWTH
MODELS
For a long time, economic theory recognized
only the importance of new machines, that is,
188
technology, as a source of economic growth,
while knowledge and innovation were viewed as
default factors that did not need explanations.
Technological growth and development is
treated as an exogenous factor of economic
activity, which has its own laws of a noneconomic character and is beyond the subject and
interest of economic science. According to the
classic model, the product (output) is generated
using two factors of production, labor L (labor)
and capital K (capital). Any increase in
productivity, therefore, would have to be caused
by an increase in invested capital or the number
of workers:
Y F K , L; t
(1)
The sudden technological rise of the 1980s,
the growth of investments in IT and the evident
application of new technological solutions in the
economy did not show up in productivity
statistics. According to econometric models,
productivity growth in the world economy
lagged during the 1970s and 1980s, while at the
same time, the computer and technological
revolution was apparently making production
more and more efficient. An economist Robert
Solow famously said in 1987 that the computer
age was everywhere except in productivity
statistics. Similarly, Freeman [6] believes that
there is a paradoxical situation between the
general agreement that technological change is
the most crucial source of dynamism in capitalist
economies and the relative neglect of this issue
in large part of the significant literature in the
economic and social sciences.
At the same time, the model of economic
growth begins to show increasing values of
residuals, which means that significant causes of
economic growth remained outside the equation
and understanding of researchers.
Significant progress in the discovery of this
phenomenon was represented by the works of
Abramovitz [7], Denison [8,9], and Solow
[10,11], who put forward the neoclassical theory
of economic growth. In their empirical research
and theoretical elaborations based on it, they
pointed out that economic growth, apart from the
nature of labor and capital, is influenced by other,
unconventional factors, such as the role of
knowledge, technique and technology in
economic growth [12]. Knowledge and
innovation are also seen as exogenous factors,
but for the first time, they are included in models
of economic growth. However, more than a
decade passed before their inclusion in the
methodology of economic research, that is, until
it was possible to assess their impact. In 1988,
Lucas developed an alternative growth model
based on externalities arising from the process of
human capital accumulation, either through
formal education or ‘learning by doing’ [13].
Lucas’s model includes investments in human
capital that are transposed into raising the
technological
level
of
the
economy.
Technological progress and knowledge are
viewed at the level of overall knowledge of
science, that is, as an exogenous factor in relation
to the economy under investigation.
The most often cited model of exogenous
growth is the Solow-Swan model of long-term
economic growth, which, in addition to capital
accumulation, labor or population growth,
explains economic growth by increasing
productivity caused by technological progress.
The model has the following form:
Y t K t
A t L t
1
(2)
where t denotes time, Y(t) total production in a
certain period, while A is the exogenously
determined level of technical progress or total
factor productivity, so that A(t)L(t) represents the
effective workforce, instead of only the previous
L, which refers to the number of workers.
In parallel with this approach, an approach
was developed on technological changes and
technological progress as an endogenous,
cumulative and interactive process in relation to
the economy and society. This point of view,
which developed mainly within the NeoSchumpertian and evolutionary approach to
economic phenomena, prevailed in economic
science for a short time. The endogenous growth
theory and technological progress, based by
Arow [14], offers more radical explanations of
long-term growth. Like the previous model,
growth is attributed to technological progress,
with the critical difference being that it originates
from within the economic system – a state or a
company [14-16]. The model implies that the
long-run equilibrium growth rate is determined
by the level of accumulated human capital [17].
These authors assumed that investment in R&D
and intellectual improvement of labor, helped
foster endogenous innovation and fuel constant
economic growth.
One of the most frequently cited endogenous
growth models is Romer’s [16]. It can be
presented in the following way:
Y t K t
A t L t A t H y TL (3)
where K is capital; A – knowledge, ideas; L –
labor in production; H – human capital – which
includes activities such as formal education and
training of employees; TL – the index of
technology level.
The measure of internal innovation potential
is shown as the ratio between the number of
researchers in relation to the number of
employees in production. Romer emphasizes that
economic growth is more substantial with a more
favorable relative relationship between the
amount of human capital and ordinary labor.
These assumptions also cannot be accurately
measured. Not a single model has fully explained
the nature of modern economic growth because
each contains a smaller or larger value of
residuals (unexplained factors). This value
decreased during the evolution of the economic
growth model from the classic to the endogenous
growth model. Reducing the impact of unknown
factors can be attributed to difficult-to-measure
changes such as improved work quality, better
training and experience, and inventions
embodied in the construction and application of
new machines. However, in a large number of
cases of structural or dynamic analysis of the
growth of a particular economy, the residuals
remained very high; that is, the influence of
unknown factors was too often and remains
unacceptable.
In response to the missing variables of
knowledge, technology and innovation in models
of economic growth, several international
organizations have offered different variants of a
composite index for measuring innovation in the
past decade. As these are not econometric
models, statistical relevance cannot be assessed,
nor can the size of the residuals, i.e., the indices
themselves are not subject to evaluation. We will
mention only a few: EU with Innovation Union
Scoreboard (IUS), World Economic Forum
(WEF), Bloomberg, and World Intellectual
Property Organization – WIPO. The selection of
factors in very diverse combinations has no
theoretical basis and is left to the relatively
arbitrary judgment of the experts involved in
creating the index. The absence of a system is
189
attempted to be compensated by a large number
of variables, so these indices include several
dozen, even over 100 factors, although the
number of variables itself is not necessarily
related to a more precise measurement. Bearing
in mind the numerous specificities that occur in
economies and societies, composite indices can
hypothetically lead to moving away instead of
approaching
a
precise
evaluation
of
achievements in innovation. International
databases on national innovation achievements
have remained a source of tentative estimates,
finding their place more often in political rhetoric
than scientific research. To date, no simple
criteria and methods have been identified for
measuring the effects of innovations in the
conditions of the modern global economy.
III. QUANTITATIVE INDICATORS OF THE
INNOVATION EFFECT AND THEIR LIMITATIONS
At the heart of the challenge of measuring
innovation effects is the issue of selecting criteria
for their evaluation. In the broadest sense, all
indicators used to quantify innovations (either for
their use in economic models or indices) can be
classified into three groups:
1) direct input into the innovation process,
such as costs or funds allocated for
research and development (total,
domestic, foreign, state or company
level, etc.); the number of researchers in
absolute number or concerning the
number of employees in the company or
the national economy, the number of
highly educated workers employed; IT
inputs in the form of equipment or
number of qualified users, etc.;
2) an intermediate output of the innovation
process through the number of
innovations that have been patented, the
number of inventions that have been
registered in accordance with the norms
of copyright protection and intellectual
property rights;
3) a direct measure of the innovative output
of the innovation process, which
valorizes what is not only patented but
also applied. These can be new
technological procedures, processes,
means and methods that are effected in a
new technology, product or service [17].
In the conditions of the modern economy
based on knowledge, these factors show
190
increasing limitations and decreasing precision
due to the disrupted usual links between
consumption, production and investment.
Regarding the first group of quantitative
criteria – inputs, even in theory, there is no
convincing evidence that more significant
allocations to the R&D area result in higher
quality and economically applicable knowledge
production. A high level of allocation for R&D
purposes is neither a necessary nor a sufficient
assumption for the high effectiveness of the
innovation process. When there is no adequate
coordination and interaction with all other
essential elements of the inventive-innovative
chain, investment in R&D does not lead to
innovation. Even when research investment
leads to innovation, it does not mean that it will
contribute to economic growth because the
capacity to absorb inputs and generate outputs is
very different between countries.
The next problem of input criteria is the fact
that not all innovations are generated by R&D
expenditures. In fact, the largest number of
innovations are the so-called incremental
innovation. In contrast to radical innovations that
bring novelty on a global level, incremental ones
arise during the work process and refer to the
improvement of products, processes and
methods without significant investment in
research. Although they are not the result of
radically new technological knowledge and
scientific breakthroughs, they have significant
economic consequences over time. The effects of
incremental innovations cannot be precisely
measured. In contrast to operational innovations,
which make previous technical and conceptual
solutions uncompetitive and replace them
relatively quickly, incremental innovations are
implemented in parallel with previous solutions
in an undefined scope and duration.
The second group of quantitative criteria
refers to the quantification of intermediate
output, measured by the number of registered
patents and other forms of intellectual property
in relation to GDP or the number of SMEs with
new products concerning the total number of
companies, etc. The problem with this
quantification criterion is that patents measure
inventions rather than innovations, and secondly,
firms often use methods other than patents to
protect their innovations.
Due to the specificity of economies and
societies, these two groups of readily available
quantitatively measurable data can exhibit an
unlimited number of deviations. Although these
criteria cannot provide precise measures for
researching the economic effects of innovations
on a broader level (sector, national economy,
global level), they are essential for evaluating the
effects of innovations on a microeconomic level,
i.e., within the framework of companies. In
addition, the criteria of inputs and indirect results
are necessary at the level of a group of companies
located in a specific geographical area, that is, in
the same environment, which are homogeneous
in terms of the mentioned possible differences.
The third group of criteria – the direct
economic results of innovations – are
quantitatively measurable only at the lowest
aggregate level – insight into the results of
individual innovations. Research which is based
on these criteria provides the most appropriate
information on the impact of innovation on
economic growth and provides a basis for further
quantitative research on the relationship between
economic parameters and the innovation process.
The problem is collecting them. A common
problem of existing innovation statistics is the
lack of the ‘output’ side of the innovation
process. One of the more extensive examples is
the U.S. Small Business Administration
Innovation Data Base, which compiled the data
by examining over one hundred technology,
engineering, and trade journals, spanning every
industry in manufacturing. As such a database is
not helpful for researchers outside the US, direct
output innovations require field research and
often involve surveys of targeted groups of
businesses in a specific geographic area. Only
research based on these criteria can provide
meaningful and valuable assessments of the
effects of innovation on the economic growth of
a specific geographic area or a clearly defined
product group (by summarizing the effects of
individual innovations). Measuring the effects of
innovation at the macroeconomic level using
these criteria is possible but unlikely. It requires
forming a kind of interactive mass database with
the decisive participation of the companies
themselves or innovators – entrepreneurs, who
generally have no interest in this additional
expenditure of time.
It seems that the very fluid nature of
knowledge and innovation presents researchers
with the alternative of reliably measuring the
economic effects of innovations at a narrow level
– a sector, a group of companies or a
geographical area, or a rough assessment of the
effects at a national (or broader) level.
IV.
NEW CHALLENGES IN THE EVALUATION
OF INNOVATION EFFECTS
At the beginning of the 21st century,
economic research methodology is facing new
challenges and missing variables, even in
research limited to sectors, geographical areas or
a group of companies. Two current processes in
the field of innovation further relativize the
results of measuring innovation effects. The first
is the expansion of innovation in digital
technologies; the second is the expansion of open
versus closed innovation.
A. Digitization
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Newer digital technologies such as cloud
computing, e-commerce, mobile internet,
artificial intelligence, machine learning and the
internet of things, although apparent products of
the knowledge economy, have broader impacts
than can be assessed by quantitative criteria
related to their use. Digital technologies improve
production in a sense that goes far beyond the
optimization of economic processes in the
classical sense. Business models are being
fundamentally transformed, value chains are
changing, and the boundaries between economic
sectors are blurring.
Several models have emerged over the past
few years, designed to assess a company’s digital
status. Primarily developed and published by
practitioners, the academic value of these models
remains apparently unclear. Most existing
models are tested through actual data, but the
quality of the methods and approaches applied
broadly differs or cannot be evaluated at all. The
results of the extensive analysis of Thordsen,
Murawski and Bick of the existing models for
measuring companies’ digital maturity pointed
out several shortcomings [18]. The models were
evaluated on established academic criteria, such
as generalizability or theory-based interpretation,
and the results showed that these models could
not have a general character; that is, they do not
represent a universal method of measuring
digitalization.
The impossibility of measuring the effects
occurs in all evaluation phases, from defining the
shift in digitalization in a specific company or
sector through defining measurement procedures
191
and theoretical foundation of methods to the
problem of generalization [18].
B. Open Innovation
Another process is the growing influence of
open versus previously dominant closed
innovation, whether driven by digitalization or
strategically set as a goal by companies.
Until the end of the 20th century, models of
the innovation process were, more or less, closed
innovation models. The process of development
and commercialization of new products and
services took place within the framework of a
specific company or group of companies in the
internal R&D process. In a closed innovation
system, employees within the organization
develop innovative ideas internally without
exchanging
ideas
with
the
external
environment (Fig. 1).
Since there are many ideas at the beginning
of that process and significantly fewer at its end,
it is possible to visually represent the innovation
process as a funnel with numerous ideas that
enter at its wide end (on the left of the figure), are
transformed, with complex and extensive but
invisible work within the funnel itself in several
more significant innovations that appear on the
market through the narrower part (on the right
side of the figure). Although this direct effect of
innovation on economic growth is immeasurable
at the national level, the results were
satisfactorily measurable at the level of
companies and groups of companies.
At the beginning of the 21st century,
companies from various industries, especially
from the field of high technologies, are
significantly changing or have already changed
the dominant model of innovation activity. The
innovation process is increasingly complex and
involves an increasing number of participants to
realize the commercial potential of innovative
ideas as successfully as possible. Instead of
focusing on internal idea generation and
Figure 1. Model of closed innovation [21]
192
Figure 2. Model of open innovation [21]
development, it combines internal and external
ideas with internal and external paths to market
to advance the development of new
technologies [19].
One of the authors with the most significant
contribution to open innovation research, Henry
Chesbrough, explained them as follows: ‘Open
innovation is the use of purposive inflows and
outflows of knowledge to accelerate internal
innovation, and expand the markets for external
use of innovation, respectively. This paradigm
assumes that firms can and should use external
ideas as well as internal ideas, and internal and
external paths to market, as they look to advance
their technology’ [20].
The part of open innovation that is directed
from the environment to the firm opens the
company’s innovation process to numerous types
of external inputs and contributions (e.g.
consumers, suppliers, scientific institutes,
universities, and engagement of external
resources through an open call (crowdsourcing).
The opening of the innovation process from the
company to the environment implies that the
organization enables unused or little-used ideas
to leave the company and for other companies to
use them in their operations and business models
(commercialization of ideas and technologies by
paths beyond the borders of the company and its
business model). As the idea of the futility of
trying to protect intellectual property becomes
dominant, open innovation is equated with opensource software development.
The modern concept of open innovation is
characterized by very fluid interactions between
internal and external innovation activities. Ideas,
people and resources move in different
directions, and the boundaries between internal
and external activities and the essential business
environment of the firm are more porous (Fig. 2).
Inflow and outflow of innovation contribution
are possible at every point between innovation
inputs and market placement. This leads to the
fact that even previously functional quantitative
criteria related to inputs and intermediate outputs
are becoming less and less precise.
V.
CONCLUSION
Although innovation is considered one of the
most critical drivers of economic growth,
evaluating this impact seems to remain a constant
challenge for economic science. The
fundamental problem is the absence of adequate
measures which would enable a reliable
evaluation of innovation activities at the macro
level, such as the impact on economic growth,
comparison between economies, regions,
industries or different phases within one
economy.
In modern knowledge-based economies, the
usual links between consumption, production
and investment have been significantly altered so
that a certain amount of input produces very
different outputs. Although economic growth
models in a certain period of recent history
allowed for relatively precise analyzes of
economic structure and dynamics, in the
conditions of the knowledge economy, positive
economics faced the impossibility of achieving
the reliability of natural and technical sciences.
The decades-long efforts of positive economics
to establish economic relationships as causal,
instead of viewing them as stochastic, which is
the nature of all social phenomena; to set the
empirical model as a goal instead of as a means
to support the creation of economic policies; they
led to the separation of fundamental research
from the reality of concrete society. The
dynamics of real processes in the global
economy are increasingly disproving the
fundamental “laws” in the economy. The elusive
economic effects of innovations in digital
technologies, the porosity of innovation creation
channels and the incredible intertwining of
economic activities, subjects and states due to
intense economic globalization have only made
this fact more visible.
This does not mean that the economy should
not analyze the effects of innovations but that the
content, goals and methods should be adapted to
its social nature. In order to quantify innovations,
no matter how much their nature changes, the
following criteria are used: 1) input into the
innovation process (investment of money,
technique, experts and time); 2) indirect outputs
(patents); and 3) a direct innovative output
(economic results of applied inventions, whether
they are patented or not).
An objective analysis of the economic effects
of innovations must rely on the third group of
criteria – a direct innovative output (the financial
results of applied inventions, whether patented or
not). Criteria related to inputs and intermediate
outputs may or may not be analyzed according to
research objectives. Collecting data from this
group of criteria implies investing a lot of effort,
time, flexibility in data collection, and significant
geographic or sectoral narrowing of the research
subject, which explains a relatively small number
of the research involves this kind of
measurement.
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PaKSoM 2022
The Way to Understand the Use of
Technology for the Purpose of
Developing Gastronomic Tourism
Drago Cvijanović1, Tamara Gajić2, Dragan Vukolić3
1
Faculty of Hotel and Tourism Management, University of Kragujevac,
Vrnjačka Banja, Serbia
2
Geographical Institute “Jovan Cvijić’’ SASA, Belgrade, Serbia
3
Faculty of Tourism and Hotel Management, University of Business Studies,
Banja Luka, Bosnia and Herzegovina
1
dvcmmv@gmail.com, 2tamara.gajic.1977@gmail.com, 3vukolicd@yahoo.com
Abstract—People began to prefer gastronomic
tourism in order to learn and experience the
culture of eating and drinking through a
departure from the classic vacation concept.
Gastronomic tourism as a special type of tourism
in the Republic of Serbia is increasingly taking an
important place in the research of experts. The
goal of this research was to determine whether and
to what extent technology can predict the choice of
gastronomic offer in Serbia. The research was
conducted during 2022 on a total sample of 365
respondents. The results show that social networks
are of great importance when it comes to choosing
a gastronomic offer. Technologies have an impact
on the development of gastronomic destinations in
Serbia. This paper has a significant practical
contribution because the data can be used by the
owners of catering establishments and other actors
in Serbian gastronomic tourism.
Keywords – technology, gastronomy, tourism
I.
INTRODUCTION
Tourist demand has shifted dramatically over
the last two decades. Food is no longer just a
basic human need; it has also become one of the
primary motivators for tourists to travel [1].
Gastrotourism alters the attitude of the
environment in which it develops while also
bringing about certain changes. Maintaining
positive attitudes among all participants in
gastrotourism is important for several reasons,
one of which is visitor satisfaction [2,3].
ISBN: 978-86-82602-00-2
Gastronomy is an important segment in the
global development of tourism. Gastronomy in
the Balkan countries gained popularity after the
1990s, so as a relatively new topic in academic
literature, it is frequently critically monitored,
influencing future development [4]. Gastronomy
is a combination of experience, culture, and food
and beverage tasting [5].
Gastronomic tourism is defined as the study
and exploration of culture and history through
food, which influences the formation of
unforgettable experiences [6]. The significance
of certain food attributes and the impression that
food leaves on tourists is critical for the
development of tourist loyalty [7]. Marketing
experts emphasize the importance of destinations
ensuring that advertising or marketing
campaigns
effectively
attract
potential
tourists [8].
Various websites, such as Facebook, Twitter,
LinkedIn, Instargram, and various blogs that
allow interaction between people with similar
interests, have grown rapidly in recent years.
Younger generations of workers, as well as those
who have yet to enter the labor force, have
learned to use social networking tools to connect,
exchange ideas, information, or their attitudes
and emotions [9]. Given that Instagram has been
tested as a marketing tool [10,11], there are
implications for how gastronomic destinations
develop.
195
Because of Serbia's great gastronomic
potential, as well as the impact of gastronomic
tourism development on the overall development
of the economy, the authors approached the
research with the goal of determining whether,
and to what extent, social networks can predict
restaurant choice and gastronomic offer in
Serbia. Serbian gastronomy has a significant
impact on tourism development, so this research
has a broad scientific and practical contribution.
According to this fact, the paper's authors
conducted a survey to determine the extent to
which social networks influence consumer
awareness, specifically the choice of restaurant
and type of food.
II.
LITERATURE REVIEW
Culinary tourism, also known as gastronomy
tourism, is the most commonly used term to
describe a type of tourism that emphasizes a
relationship between the insider and outsider
created through food as culture. The term is used
throughout the relevant literature to suggest an
undeniable and intrinsic link between food and
culture, distinguishing it from other similar
terms. Culinary tourism is the experience of the
“other” through food-related activities that
facilitate cultural learning and knowledge
transfer about the destination and its people.
Food is viewed as a medium of cultural
experiences in culinary tourism; thus, 'culinary
tourism' is defined by the experience of food
activities and subsequent cultural consumption,
as well as the motivation behind the individual's
involvement [12]. Kaplan and Haenlein (2010)
[13] are in Concepts of Web 2.0 and UGC,
proposed that social media refers to “a group of
Internet-based apps that build on the ideological
and technological foundations of Web 2.0, and
that allow the creation and exchange of user
generated content”. Filo et al. (2015) [14]
defined social media as new media technologies
facilitating interactivity and co-creation that
allow development and sharing of user-generated
content among and between organizations and
individuals. Obar and Wildman (2015) [15]
further reviewed the literature on social media
and identified four unique dimensions, namely
Web 2.0, UGC, creation and interaction and
based on that definitions, social media can be
summarized as Web 2.0-based online platforms
that enable and promote the users’ independent
creation and sharing of UGC. However,
contemporary literature demonstrates lack of
unified classification systems for social media
[1,2,8,15,16]. Based on the theories in media
196
research and social process Kaplan and Haenlein
(2010) [13] categorized social media into six
types according to their usage characteristics.
The six types are collaborative projects, blogs,
content communities, social networking sites,
virtual game worlds and virtual social worlds.
This classification has two dimensions. The
second dimension describes social media as a
tool of self-presentation and self-disclosure,
which involves impression management and
public sharing of personal information [16]. With
the advancement of information and
communication technologies, tourists rely on upto-date and timely information obtained from
social networks, online reviews, blogs, and other
sources before traveling [17]. People nowadays
create their own content and update information
online via user content [18]. Companies can use
social media to interact with network users and
collaborate to create unique services and share
travel experiences [19]. Instagram is a new and
popular tool in digital tourism that has
successfully evolved into a platform for
advertising, promotion, and marketing [20,21].
Attention must be paid to the popularity of
the publication, which has a significant impact on
business success, in order to effectively attract
the interest and attention of people on social
networks [22]. According to the post popularity
model, the presentation, links, content,
frequency, and comments of the post are critical
factors related to the user's “liking” [23].
Academics have been debating destination
marketing, branding, and e-Tourism in recent
years. Despite its importance, the majority of the
literature has focused on Facebook and
TripAdvisor [24]. More and more destinations
are striving for branding, in order to build a
reputation through various media [25].
Destination branding has to do with local people
and local government [26]. Overall, visitor
preferences and attitudes towards the destination
are key factors that directly affect success and
then shaping the image of the destination that
may be related to gastronomy [27]. It has been
proven that the image of local gastronomy
influences the intentions of tourists to visit that
destination [28] ie, food consumption has
recently become one of the main motivations for
people to travel. Although the concept of
destination image through gastronomy is still
relatively new in the academic community [27]
researchers are becoming increasingly interested
in the motivations of gastronomic tourists. Food,
according to Fields (2002) [29], can be a different
motive. This relates to the fact that food can be
both a physical and cultural motivator, as well as
a status symbol. Kim et al. (2009) [30] looked
into how food can still be used to motivate
people. They were led by the belief that
A survey of 406 respondents was conducted
in mainland China (considered one of the fastest
growing and most influential markets for the use
of social networks by tourists) to demonstrate the
use and trust of Chinese social networks in the
travel planning process. The authors concluded
that destination marketing organizations should
keep in mind that Chinese tourists prefer to plan
trips using social media platforms such as
Instagram, Facebook, and others. The same
authors also state that social networks are a
powerful tool for tourism development, and that
in China, the use of these networks is encouraged
by the advancement of communication
technology and tourism [31]. Research by
Dossena et al. (2021) [32] suggests that the
theoretical framework of social media could be
strategically used for different goals by relying
on specific capabilities and competencies. The
authors tested it and found that, though?
nowadays restaurant managers mainly focus on a
narrow set of social media competencies linked
to relational and marketing capabilities, some
also rely on social media to promote
organizational change and innovation.
According to Jiménez Beltrán et al. (2016)
[33], overall satisfaction with the visit is related
to local gastronomy. According to Lai et al.
(2018) [27], food opinion as a whole can be
analyzed by demand (tourists) or supply (locals)
(service providers). More and more cities in
China are utilizing social media to market and
promote their products and services online [34].
Previous research indicates that such practices
provide significant benefits to societies through
community interaction in marketing campaigns.
According to Zhou and Wang (2014), [34] in
their research, social networks are a more
convenient and transparent platform for potential
tourists than the traditional approach.The term,
user-generated content, refers to any form such
as images, videos, or texts that users post via
social media. Authors Burgess et al. (2009) [35]
point out that people post reviews, comments and
feedback, as well as share information but also
communicate with each other online. In recent
years, social media posts have been increasingly
used as an online marketing tool by local
governments, travel organizations, and travel
agencies. It is important to note that tourism is
ranked as the largest industry in terms of the
volume of online transactions [36]. Chua &
Banerjee (2015) [37] indicate that the interaction
with consumers is significantly influenced by
posts (comments and other feedback) on social
networks, both during and after the trip, which
has a great impact on further business. Travel
experiences, as such, can be created together in a
group of multiple people, consumers or tourists.
The best examples of well-known social
networks are Instagram, Facebook, TripAdvisor
and the YouTube channel. Previous research has
analyzed travel reviews on TripAdvisor to
investigate how comments on that network affect
the travel planning process of travelers. Online
reviews have been found to influence
accommodation decisions more than the entire
travel route [38]. Another study looked at hotel
ratings and how tourists felt after reading online
reviews on TripAdvisor [39]. Mariani et al.
(2016) [40] conducted big data analysis and
semi-structured interviews to investigate how
Facebook can be strategically used in destination
marketing in the case of Italy, whereas Sabate et
al. (2014) investigated Facebook in terms of the
creation of effective branding strategies through
the use of social networks. According to the
findings, the richness of the content (the
inclusion of images and videos) increases the
post's impact in terms of likes. However, the use
of images and a proper publication time have a
significant influence on the number of
comments, whereas the use of links may reduce
this metric (Sabate et al., 2014). A newer
marketing tool in digital tourism is Instagram,
which is getting more and more attention from
researchers. This is a photo-sharing platform
created in 2010. It is interesting that the
Instagram of companies, catering facilities,
tourist organizations and agencies joined only a
few years ago [15,28,48].
Instagram has become an effective business
tool to reach consumers and tourists as soon as
possible. Through Instagram, service providers
can communicate with their consumers and get
their support through Instagram, in a very short
time. This network is gaining in popularity
because it has about 100 million active users per
month worldwide with 5 million posts shared
every day [15,28]. Some of the previous
literature has examined how Instagram helps
promote and brand a destination through
photography in the case of Indonesia [18].
Women who use Instagram between the ages of
18 and 30, in order to find out if it has anything
197
to do with buying products and services with
celebrities. They came to the result that women
of the mentioned age buy more if a certain
product is offered by a famous and famous
person, regardless of the brand of that product or
service [42-44]. In the case of social media, the
link or link inserted in the post is more interactive
with network users compared to content that
contains only texts [46]. The situation is similar
with posts that have geo-tags or hashtags. Their
function is the same as the links because URLs
cannot be clicked in posts or comments on
Instagram yet. The interactivity of posts must be
taken into account because consumers prefer to
interact with certain brands, often ask questions
through social networks and it is a key feature in
generating posts. Taylor et al. (2011) [41] have
shown that posts that are considered fun and
exciting have a positive impact on consumer
attitudes.
Moreover,
consumers
prefer
informative posts driven by the need to seek
information to motivate shopping. Posts also
necessitate the organization of the format by
marketing professional. Lin et al. (2017) [42]
demonstrated that the length of the post has a
direct impact on the interests of users. Long posts
on Facebook are more favorable, whereas Sabate
et al. (2014) claim that posts with less than 80
characters are more influential in interacting with
social media visitors. It is critical to note that the
time of publication of a particular post is
significant [40]. Mariani et al. (2016) [40] found
that publications published in the early morning
hours are less popular compared to publications
published during the largest number of consumer
activities in the evening [42]. In this regard, the
authors Mariani et al. (2016) [40] point out that
posting too often is inefficient and can negatively
affect sales or promotion. The usefulness of
comments on social networks refers to how
positive or negative the comments are. Previous
research has indicated that positive comments
lead to greater popularity due to the emergence
of positive emotions among social media users
[43]. The more comments, the more subsequent
comments will probably be generated and lead to
greater popularity of posts [44]. While likes
indicate users' interest in a particular post,
commenting suggests a big impact because users
are asked to dedicate their time, and implies
greater engagement of social media users [22].
Because consumers like to communicate with
other users through social networks, this can be
used to create experiences with potential
consumers together. Drummey (2017) [45]
warns that in addition to the quality content of the
198
campaign itself, it is equally important to choose
the right social network through which
organizations will reach the desired target group.
Although no quantitative results were provided,
study authors, Bartle et al. (2013) [47] found that
the process of information sharing among social
network members could play a functional role in
the diffusion of instrumental travel information.
It also could play a social role whereby perceived
in-group membership (i.e., those who cycle to
work) and high levels of trust reinforce positive
views of cycling.
While social networking can help strengthen
guest loyalty and satisfaction, it can also lead to
unfair negativity, inaccurate information and
unduecriticism [48,49].
Based on the given literature and similar
research, the authors started from the initial
hypothesis:
H1: Technology have a strong predictive
power to determine the score on a criterion
variable;
H2: Recommendation has strong predictive
power to determine score on criterion variable;
H3: The second type of marketing has a
strong predictive power to determine the score on
the criterion variable.
III.
METHODOLOGY
A. Participants and Procedure
The questionnaire was constructed, modified
and adapted so that the authors could use several
other scientific researches [3,7,9,50]. About
43.2% of men and 56.8% of women participated
in the research. The largest percentage of
research participants have a university degree
59.3% of them, while a total of 32.6% have a
high school diploma, and 8.1% have a PhD
degree. Looking at the monthly earnings of
survey participants, the data are as follows: a
total of 11.8% earns up to 200 euros per month;
42.7% of them from 200 to 500 euros per month,
and 45.5% of those who earn from 500 to 1,000
euros per month.
B. Measures and Statistical Analysis
Exploratory multivariate data analysis is the
unification of research data analysis and
multivariate data analysis. Reducing the number
of variables in the analysis when there are too
many, with some of them “overlapping” because
they have similar meaning and behavior. Factor
analysis is an interdependence technique because
it looks for a group of variables that are similar
in the sense that they “move together” and
therefore have great interdependence. When one
variable has a large value, then the other
variables in the group have a large value. Since
the factors are statistically separated, all factors
are initially unrelated (orthogonal). This
simplifies the understanding of a wide range of
variables that describe a category from the
service or manufacturing sector.
A framework for further data analysis is also
being created. Then, a higher order factor
analysis was performed to obtain the desired
number of factors, and the following analysis
was performed. After determining the number of
factors, the authors performed a multiple
regression analysis to determine whether the
relevant factors can have a strong predictive
power in determining the score on the criterion
variable restaurant selection and gastro offer in
Serbia. If the problem we are observing can be
treated as a problem of one dependent and
several independent variables, this is a suitable
situation for data analysis by multiple regression.
If the connection between them is linear, the case
boils down to a multiple linear model. Each
corporate site provides the opportunity for users
to check the content or offer. A ComScore report
shows that 45% of tourists download
photography or comment on social networks
after using the service : http://www.comscore.
com/FutureinFocus2013
IV.
RESULTS AND DISCUSSION
The parametric methodology was used,
because all values were normally distributed.
Skewness and Kurtosis values range from minus
1 to plus 1, which are values of normal data
distribution. The value of Cronbach's alpha is
0.967, which makes the questionnaire very
reliable.
Table I shows the descriptive values for the
given items, which concern the influence of
social networks on the gastronomic offer in
Serbia. It is noticed that social networks like
Instagram have a great influence on visiting
restaurants and choosing gastronomic products.
Facebook is rated slightly worse. A certain part
of the research participants thinks that it is the
best recommendation from a friend.
Respondents believe that Instagram gives the
best recommendations, for luxury restaurants
and offers, but also that it is reliable and
dedicated mainly to foreign visitors.
TABLE I.
DESCRIPTIVE STATISTICS FOR ITEMS
Items
m
sd
I prefer to accept recommendations for
2.48 .884
restaurants and food from friends
I check everything on Instagram
2.35 .648
I mostly follow advertisements about
2.12 .287
restaurants and gastronomic offer
I follow advertising emails
1.89 .852
I follow blogs
1.68 .764
I follow events and gastronomic events in
1.32 .821
the city
Social networks promote mostly foreign
1.37 .635
cuisine
Instagram gives the best
2.52 .817
recommendations
I’m looking forward to long posts on
1.88 .693
social media
Social networks only give expectations
1.94 .899
I get the best ads through the facebook
1.65 .924
network
I watch TV commercials mostly
1.11 .769
I collect flyers and follow the
1.44 .790
gastronomic offer
Social networks unrealistically present
1.69 .802
gastro products
Mostly luxury restaurants are presented
2.24 .830
Social networks are only good for foreign
2.26 .805
visitors
The price most influences the choice of
2.41 .736
gastronomic offer
Social networks show quality
1.90 .981
gastronomic offers
I follow influencers and their offer
2.87 .931
I follow the offer in the newspaper
1.98 .943
Source: authors research; *m = arithmetic means;
sd = standard deviation
Also, a large part of respondents point out
that price plays a role in choosing restaurants and
gastronomic offer. Losses were rated television
commercials, followed by newspaper offers, as
well as flyers distributed on city streets.
The KMO and Bartlett's Test is a test
conducted to examine the strength of a partial
correlation (as factors explain each other)
between variables. The factor structure matrix
contains factor loads that represent the
correlation coefficients between the selected
factors and variables. All items are classified into
seven factors. The first factor has the highest
saturation of 18.436%. The model explains a
total of 75.8% of the variance. Due to the
difficulty of adding names to factors due to
different items, the authors performed a higher
order factor analysis or hierarchical factor
analysis, in order to obtain only three desired
factors, whose predictor impact will be
determined by regression analysis.
199
Data from the hierarchical factor analysis
indicate that 61% of the variance was explained
with three obtained factors, which is more than
half of the explained variance and is very
acceptable. Three factors were obtained: The
impact of word of mouth advertising, The impact
of social networks, Other ways of marketing.
Then, the authors approached a multiple
regression analysis, to determine whether the
given factors can be strong predictors in
predicting the score on the criterion variable,
which was: restaurant selection and gastronomic
offer. It is noticed that this model fits and
explains 68% of the variance. Coefficient R, is
the coefficient of multiple correlation and
indicates how many predictors together correlate
with the criterion variable, in this case the
variable of the required innovation.
Furthermore, ANOVA test it can be noticed
that there is statistical significance in the
predictor power of the factors on the prediction
of the criterion variable. Given the statistical
significance, a model of multiple regression
analysis can be further developed to see the
partial contribution of each of the given items to
the criterion variable.
Multiple regression analysis shows the partial
contribution of each of the factors and the
statistical significance in predicting the choice of
restaurant and gastronomic offer. The choice of
restaurants and gastronomic offer significantly
predicts oral advertising: p = 0.34, B = 0.312,
ß = 0.188. However, other types of advertising
do not show statistical significance in predicting
the criterion variable. The first two hypotheses
have been confirmed, that social networks have a
predictor of power on consumer behavior in
choosing restaurants and agro offers, as well as
the fact that Instagram has an advantage in this.
While the third hypothesis H3 is denied.
The results undoubtedly show that social
networks are an important segment in the
promotion of gastronomy and thus can influence
the development of gastronomy and gastronomic
tourism. It is recommended that future
researchers see the extent to which each network
can individually contribute to the development of
gastronomy and tourism itself. Therefore, it is
concluded that the correct use of technologies for
the purpose of promoting gastronomy can lead to
the development of gastronomic tourism itself,
because it has been observed that one of the main
motives for guests to visit a destination is
precisely food and gastronomy. In this sense,
200
facilities that provide food and beverage services
should correctly use technologies, in this context
social networks, in order to market their product
as well as possible and manage their risks that
appear in the business.
V.
CONCLUSION
Gastronomic tourism is now a global trend
that is capturing the public's attention. In recent
years, social networks have grown in popularity.
Similar surveys have been conducted in the
Republic of Serbia, where it is claimed that more
than half of the respondents in the survey stated
that they get information from social networks,
and a large number of them get information from
online newspapers and portals.
Young people in Serbia mentioned
Instagram, Whatsapp, Youtube, and Facebook as
the social networks they use the most, with other
networks mentioned in a slightly lower
percentage, but they certainly visit and use their
content. The majority of social network users
have high trust in their content. When it comes to
social media, tourism and gastronomy are among
the most popular blogs.
More than 80% of all tourists begin their
journey online. According to statistics, 89% of
millennials use social media to research travel,
and the information they gather helps them
choose their preferred location.
This is difficult because everyone can express
their negative opinions on social media.
Organizations can benefit from successfully
managing their corporate profile/page by
resolving potential problems and turning
negative opinions into praiseworthy ones.
Quality content loses importance if it is
posted in the wrong place and causes a negative
reaction from social network users. In
accordance with the research and facts presented
above, the authors conducted a field study to
determine the extent to which and which social
networks have the greatest impact on the
awareness of gastronomic tourism consumers in
Serbia.
The goal of this type of factor analysis was to
reduce the number of factors to three so that the
impact of these factors on predicting consumer
behavior could be easily determined. In this case,
the three identified factors were: the impact of
word-of-mouth advertising, the impact of social
networks, and other marketing methods. The
findings revealed that the social network
Instagram, as well as word of mouth, have
significant predictive power in predicting
consumer behavior when it comes to selecting
restaurants and gastronomic offerings.
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PaKSoM 2022
Analysis of the Influence of Types of
Multimedia Content in Posts on Social
Networks on the Success of Posting
Đorđe Petrović1, Ivan Pantelić2, Dejan Beljić3
1,2,3
Valjevo Department, Western Serbia Academy of Applied Studies, Valjevo, Serbia
1
djordje.petrovic@vipos.edu.rs, 2ivan.pantelic@vipos.edu.rs, 3dejan.beljic@vipos.edu.rs
Abstract—This paper describes research and
analysis of the performance of the services used for
promotion, different types of published content, as
well as different types of promotional content, and
the impact of all of the above on the success of
social media posts. The goal of the research is to
determine whether it is possible to influence the
success of publishing content by managing these
values, as well as to obtain data for optimizing
content publishing. The research described in this
paper can be used for data on the success of posts
on social networks, for posts made and published
for the needs of any institution or individual.
Keywords - social network, multimedia content,
success, correlation
I.
INTRODUCTION
According to one of the definitions, the
Social Network is a communication over the
Internet, in which more than one user publish
information within a community of users [1].
Some of the authors go even further, claiming
that e.g. Facebook enables the most effective
communication on the Internet [2]. Essentially,
Social Networks are a modern and indispensable
tool for promotion and advertising of both
products and services, and perhaps even the best
tool for that purpose. In this research, the use of
social networks by the observed educational
institution will be analyzed, so the activities of
this institution on social networks will be treated
as promotion and advertising of services. By
their very nature, social networks represent the
application of web technologies in creating
virtual communities with users of posts and other
content, and provide useful data about the
activities of those users. In addition to providing
ISBN: 978-86-82602-00-2
useful data about users, they also enable the
analysis of that data in order to increase the
number of users and improve their interaction
with published content. Thus, the goal of this
research is to analyze the impact of different
types of posts, different types of published
content, as well as different types of promotional
content, on the reactions of users of social
networks, in order to determine whether the
management of these values can increase the
reach and number of users of published content.
The innovative approach of this research, in
relation to other analyzes of such data, is that the
posts are classified by the type of post and the
type of content of the post, and then is analyzed
the impact of certain types of posts and types of
post content on the reach of those posts. In
addition, this analysis can eventually provide
useful data for assessing threats to the effect that
is intended to be achieved by publishing content
on social networks.
II.
RELATED WORKS
Research on the effects of promotion on
social networks covers a wide range of topics and
applications of different methodological
disciplines. There are a number of works that
have dealt with the analysis of content published
on various social networks from the aspect of
content-related parameters. One such work is [3].
In the research of feedback received from social
networks, the authors [4] showed the effects of
the reactions of social network users on the
benefit that arose and was accumulated from the
relationship with those users. In a study that
analyzed data on the reactions of social network
users to the publication of educational content [5]
203
it was shown that such data offer a wealth of
opportunities for researchers interested in social
media analytics. In addition, we have witnessed
significant changes in the structure and way of
organizing global social networks in the past
year. In October 2021, social networks Facebook
and Instagram were merged into the company
brand “Meta” [6], and in 2022, Elon Musk
bought and took over Twitter, which heralded a
new era in functioning and the way of promotion
on social networks. All of the above just indicates
that it is necessary to conduct research, such as
the one described in the rest of this paper.
III.
DESCRIPTION OF THE DATA
In this research, in an innovative way data
were analyzed on the reactions of visitors to
social networks to posts that were made and
published for the needs of the Department in
Valjevo, Western Serbia Academy of Applied
Studies. The data, which were analyzed, were
collected for a period of one year. As the data
refer to an educational institution, they were
collected for the period of one academic year, so
they cover the period from October 1, 2021 to
September 30, 2022.Data on the reactions of
visitors to the social networks Facebook and
Instagram, and to different types and types of
posts, were analyzed. Specifically, after
downloading the data, it was determined that
during that period the observed educational
institution published 1094 announcements on
these social networks. For each of the
announcements, the following data were
analyzed that indicate the success of the observed
announcements:
Reach – Reach refers to the number of
unique users of social networks, who
saw some content on their screen;
Likes and reactions–user interactions on
posts, by clicking on one of the offered
options for likes and other reactions;
Sticker taps – the number of users who
clicked on the sticker;
Replies – the number of responses to a
post;
Link clicks – the number of users who
clicked on the offered link;
204
Comments – the number of users who
commented on the posts;
Shares – the number of users who shared
the post publicly on another location.
During the further analysis of the collected
data, the distribution of announcements was first
made in relation to different types of
announcements, to different types of published
content, as well as to different types of
promotional content. The distribution of services
and types of posts is given in Table I. The
distribution of the type of multimedia content
that was used for posts, for the observed set of
posts, is given in Table II. The distribution of the
method of publication of multimedia content,
whether or not they contain a textual explanation
in the publication, for the observed set of
publications is given in Table III. The
distribution of promotional and informational
content, which were used for announcements, for
the observed set of announcements is given
in Table IV.
TABLE I.
SOCIAL NETWORKS AND TYPES OF POSTS
Social network
Post type
Post participation
Instagram
Story
46.16%
Facebook
Post
26.42%
Instagram
Post
24.86%
Facebook
Story
2.56%
TABLE II.
TYPE OF CONTENT IN POSTS
Content type
Post
participation
A graphic visual, drawing or image
Photo
Link
Scanned material
Video
52.22%
33.61%
7.91%
5.93%
0,33%
TABLE III.
TEXT EXPLANATIONS IN POSTS
Post
participation
Content type
Multimedia content with
accompanying text
Multimedia content without
accompanying test
TABLE IV.
70.41%
29.59%
POST CONTENT
Post content
Events related to the institution and
promotion of the institution
Primary activity of the institution,
information about studies and students
General information, holiday
greetings, etc.
Information about external events,
events in other institutions, etc.
Post
participation
49,75%
44.50%
4.06%
1.69%
IV.
Table VI shows the results obtained for the
correlation coefficients of the type of multimedia
content and individual reactions of users of social
networks. Videos are excluded from the
displayed results, due to the small sample, that is,
due to the small number of these announcements
in the observed period.
DATA ANALYSIS
In this analysis, data on the interaction of
social network users on individual posts will be
observed, only for posts for which no promotion
has been paid. Calculated degrees of correlation,
observed parameters and their influence on
certain reactions of users of social networks are
given in the following tables.
Table VII shows the results obtained for the
correlation coefficients of the type of published
content and individual reactions of users of social
networks. “Information on external events” is
excluded from the displayed results, due to the
small sample, that is, due to the small number of
these announcements in the observed period.
The following table (Table V) shows the
results obtained for the correlation coefficients of
the services used and individual reactions of
users of social networks. “Stories on Facebook”
are excluded from the results shown, due to the
small sample, i.e. due to the small number of
these posts in the observed period.
TABLE V.
CORRELATION COEFFICIENTS OF THE SERVICE USED AND INDIVIDUAL REACTIONS OF USERS OF SOCIAL
NETWORKS
Facebook
Post
Facebook
Story
Instagram
Post
Instagram
Story
TABLE VI.
Reach
Likes and
reactions
Sticker
taps
Replies
Link
clicks
Comments
Shares
0.39
-0.07
-0.10
-0.09
0.27
0.19
-0.09
-
-
-
-
-
-
-
-0.21
0.29
-0.09
-0.08
-0.22
-0.14
0.18
-0.27
-0.33
0.30
0.27
-0.09
-0.07
-0.14
CORRELATION COEFFICIENTS OF CONTENT TYPE AND INDIVIDUAL REACTIONS OF USERS OF SOCIAL
NETWORKS
Reach
Likes and
reactions
Sticker
taps
Replies
Link
clicks
Comments
Shares
Photo
0.16
0.37
0.01
0.05
-0.07
0.09
0.12
Graphic
-0.12
-0.30
0.03
-0.01
-0.09
-0.08
-0.03
Scanned material
0.01
-0.03
-0.03
-0.03
-0.07
-0.02
-0.09
Link
-0.07
-0.08
-0.03
-0.03
0.35
0.00
-0.06
Video
-
-
-
-
-
-
-
Following text
0.18
0.19
-0.02
-0.03
-0.06
0.05
0.02
TABLE VII.
CORRELATION COEFFICIENTS OF THE TYPE OF CONTENT AND INDIVIDUAL REACTIONS OF USERS OF SOCIAL
NETWORKS
Reach
Likes and
reactions
Sticker
taps
Replies
Link
clicks
Comments
Shares
Events
-0.04
0.00
0.10
0.07
-0.04
-0.04
-0.05
General information
-0.07
-0.08
-0.02
-0.02
0.01
-0.03
-0.08
Studies and students
0.08
0.04
-0.09
-0.06
0.04
0.06
0.09
External events
-
-
-
-
-
-
-
205
V.
DISCUSSION
The interpretation of the obtained results is
often based on the interval in which the values
for the correlation coefficient are found, such as
e.g. shown in the paper [7]. Based on the results
obtained from the research of the observed data
set and in accordance with the interpretations
described in the previous work, it can be
concluded that in this data set there are no high
values for the degree of correlation of the
observed values with the reactions of social
network users.
Regarding the service used for promotion, the
highest value obtained is 39% for the impact of a
post on the social network Facebook on the reach
of those posts, and this value can be interpreted
as a weak correlation. Slightly lower values were
obtained for Instagram stories, which have a
positive correlation with user clicks on stickers,
then Instagram posts, which have a positive
correlation with user interactions on those
posts, etc.
On the other hand, negative values were
observed for the correlation of stories on the
social network Instagram to the user interactions
on posts and to the reach of those posts, as well
as for the correlation of posts on Instagram to the
number of users who clicked on the offered link
and to the reach of those posts. Although these
values show little correlation with user reactions,
this phenomenon may be the subject of some
special research and determining potential
threats from such posts, to the effect that is
intended to be achieved by publishing content on
social networks.
As for the obtained results for the correlation
of certain types of published content with the
reactions of social network users, the range of
obtained values is similar to the correlation
values for the types of published content. The
highest value is 37% for the influence of
published photos on the interaction of social
network users on posts. One of the expected
results refers to the correlation value between
links in posts and the activity of social network
users, which measures the number of clicks on
the offered link.
On the other hand, the subject of some further
research may be obtained negative values for the
correlation of graphic posts on user interaction
with such posts and determining the cause of this
phenomenon.
206
Apart from the previously described results,
all obtained values for the degree of correlation
of the influence of certain types of content on the
reactions of users of social networks are close to
zero, so it can be concluded that there is no
connection between the types of content and their
success on social networks.
VI.
CONCLUSION
The results obtained in this research do not
show a strong connection between the observed
data on services, types and types of content and
data that indicate the success of individual posts
on social networks. Based on the obtained
results, as well as on the basis of the observed
isolated set of data, it is not possible to make
general conclusions. The obtained results can
still be interpreted and used to improve the
effects of the promotion.
The use of certain services for promotion and
types of posts, which have positive values for
correlation, can be used to a greater extent for
communication with users of social networks.
On the other hand, you should pay attention to
the services and types of posts that have a
negative correlation with the interaction of users
of social networks and make changes in the use
of such posts.
The analysis described in this research can be
used to analyze data on the success of posts on
social networks, for posts made and published for
the needs of any institution or individual.
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207
208
PaKSoM 2022
Education and Knowledge about
Sustainable Development Goals
Milica Stanković1, Jovana Džoljić2, Tiana Anđelković3, Suzana Stojković4
1,2,3,4
Academy of Applied Technical and Preschool Studies, Vranje, Serbia
1
3
milica.stankovic@akademijanis.edu.rs, 2jovana.dzoljic@akademijanis.edu.rs,
tiana.andjelkovic-vr@akademijanis.edu.rs, 4suzana.stojanovic@akademijanis.edu.rs
Abstract—The concept of sustainable development
is an extremely popular topic. Sustainable
development was talked about even before 1992,
when UNESCO decided to promote education for
sustainable development. This program was
implemented from 2005 to 2014. In 2015, the
Agenda for Sustainable Development 2030 was
adopted. The goals of sustainable development
represent environmental, social, and economic
requirements that need to be met in the future. It
is necessary to influence people to focus on
learning and acquiring knowledge to broaden
their horizons and their awareness of the
importance of sustainable development goals.
Education and knowledge are included in goal 4,
according to which it is necessary to ensure quality
and inclusive education for all and lifelong
learning for all. The aim of this paper is to point
out the importance of lifelong learning in
accordance with the concept of sustainable
development. The work consists of six parts. The
first part will discuss the importance of sustainable
development in the 21st century. The importance
of intellectual capital will be discussed in the
second part of the paper. In the third part, the
reasons for improving the educational process will
be discussed. The fourth part will talk about the
carriers of changes in the educational process.
Through the fifth part of the paper, the urgency of
implementing the goals from the 2030 Agenda will
be pointed out, and through the sixth part, the
influence of knowledge and education on the goals
of sustainable development will be discussed.
Keywords – sustainable development goals,
knowledge, education
I.
INTRODUCTION
Quality education is the basic postulate of the
progress of society. With the possibility of
educating more people on the planet, their
ISBN: 978-86-82602-00-2
knowledge about phenomena in nature and
society began to spread. They became more
aware of the problems we face as a society and
began to think about sustainable development.
Sustainable development is not only the
development that is expressed by economic
indicators, such as growth in production, increase
in productivity, decrease in unemployment, gross
domestic product, but also integrates social and
environmental components. Therefore, in
addition to economic problems, it is necessary to
pay attention to social and environmental
problems as well. For us as a society to survive if
possible, it is necessary to pay attention to
environmental problems and to solve them
continuously, but also to continuously take care
of people’s living standards and economic
variables. To deal with these and other current
problems of sustainable development, it is
necessary to acquire new knowledge and skills,
to transform the educational system, so that after
the completion of formal education, graduates
will have the skills needed for a new era, the era
of sustainable development.
The 2030 Agenda for Sustainable
Development, which was adopted in 2015 at the
United Nations General Assembly, promotes
sustainable development goals that should be
achieved by 2030 [1]. This global framework of
sustainable goals was established after the United
Nations
Conference
on
Sustainable
Development, held in 2012 in Rio de Janeiro,
which was attended by the member countries of
the United Nations, as well as other interested
countries. At the heart of this Agenda are the 17
Sustainable Development Goals that describe the
main challenges for humanity - which is to
enable everyone to live a sustainable, peaceful,
209
prosperous, and just life now and in the future. It
is about global challenges that are crucial for the
survival of humanity. To realize them in the
planned period, we need to focus as much as
possible on education and knowledge.
Intellectual capital is the basic factor of economic
and economic growth, but obviously also the
driving force of sustainable development.
II. THE IMPORTANCE OF SUSTAINABLE
DEVELOPMENT IN THE XXI CENTURY
For the first time, sustainable development
was discussed almost 30 years ago, back in the
nineties of the 20th century, when Agenda 21
was adopted at the Earth Summit - the United
Nations conference on environment and
development, which spoke about it. In the
meantime, numerous scientific research has been
carried out and numerous publications have been
published, but the number of problems that must
be solved has also increased. The public has also
become more aware of the problems facing the
world. During 2012, a conference was held,
because the difficulty of certain countries to
implement the goals of sustainable development
from 1992 was recognized.
The reasons for this non-implementation of
the goals of sustainable development by certain
countries lie in the insufficient progress and even
backwardness of those countries regarding the
dimensions of sustainable development
(economic, ecological, social). The response of
the international community to this problem was
the establishment of the United Nations Forum
on Sustainable Development (High level
political forum - HLPF). The main task of this
body was to strengthen science for better
political influence to achieve the goals of
sustainable development even in the most
underdeveloped countries [2].
The 2014 Global Sustainable Development
Goals Report tells us about the founding of the
science of sustainable development [3]. The field
of research in the science of sustainable
development is defined as research into the
relationship between natural and social
phenomena and their impact on the survival and
development of humanity. One of the main
characteristics of the science of sustainable
development is its integration - that it
incorporates multiple natural and social sciences
and seeks a constant balance between multiple
conflicting goals. The idea is to bring together
experts from different fields related to
sustainable development, who will jointly define
210
the problems of sustainable development and
develop methodologies for solving those
problems [4]. In addition to hiring experts from
the fields of economics, ecology, biology,
psychology, sociology, it is often necessary to
hire engineers and mathematicians who would
use their technical and mathematical knowledge
to identify the main variables and limitations and
apply some of the optimization methods [5].
In September 2014, 17 sustainable
development goals were proposed, as well as 169
intermediate goals that should be achieved by
2030. They are defined as the goals of the
universal political aspiration to achieve
sustainable development in both developed and
underdeveloped countries. These goals set
ecological limits for the use of natural resources.
Ending poverty is also one of the main goals and
it should be achieved in parallel with economic
development. The goals of sustainable
development also include improving the
satisfaction of social needs through the
improvement of health, education, social
protection, and employment. They relate to both
climate change management and environmental
protection. Therefore, the goals of sustainable
development focus on solving problems such as
inequality, irrational use of natural resources,
environmental degradation, lack of economic
growth. In order to achieve these goals, each of
us should do our part - governments to establish
national frameworks, policies and measures for
the implementation of Agenda 2030, the private
sector to employ minorities, women, young
people, regularly pay taxes, fees, salaries and
other duties , to exploit natural resources and
pollute the environment as little as possible, and
all of us as members of society to behave
rationally and responsibly [6].
Now we are already at the end of 2022. The
world continues to face crises that threaten to
destroy humanity’s survival on Earth. The 2022
Sustainable Development Goals report shows
progress. However, due to the many crises that
have befallen our planet in the past and are still
ongoing, such as the pandemic caused by the
Covid-19 virus, war conflicts in Ukraine, climate
change and others, we come to a situation where
we wonder if we are on the right path to
achieving the goals of sustainable development.
For example, the pandemic caused by the Covid19 virus has pushed more than 93 million people
into extreme poverty [7]. The increase in the
number of extremely poor people has led to the
disruption of the provision of health services,
which has resulted in a decrease in the percentage
of people who are vaccinated not only against the
Covid-19 virus but also against other longeradicated diseases. Schools and universities
around the world were closed during 2020, and
during 2021 and partially during 2022, classes
were held online, so there were numerous
educational failures. The consequences of that
will be felt only in a few years. There is also
climate change, which has remained in the
shadow of these crises. Floods, droughts, heat
waves, unstoppable fires affect people all over
the world more and more every year and cause
enormous damage to the planet’s ecosystem. In
terms of conflict, it is believed that as much as a
quarter of the global population today lives in
countries where war conflicts prevail. War
conflicts in Ukraine caused a jump in the prices
of basic foodstuffs and oil, supply chains and the
financial market were disrupted. All these
developments also led to the growth of inflation,
especially in countries in transition that are
unsuccessfully trying to deal with the
consequences of these crises [7].
There are obviously many problems and
obstacles on the way to sustainable development.
That is why it is necessary to systematically solve
one problem at a time and gradually eliminate
obstacles to return to normal as soon as possible
and continue to achieve the goals of sustainable
development. An extremely important factor in
this process is knowledge, but also education.
This two-year intermezzo did cause the
degradation of knowledge and education systems
everywhere in the world. For humanity to
survive, we must deal with the issues of
spreading knowledge and creating such an
educational system that will produce experts who
will successfully deal with issues and problems
of sustainable development.
III. THE IMPORTANCE OF KNOWLEDGE AND
INTELLECTUAL CAPITAL IN MODERN SOCIETY
To deal with issues of sustainable
development, it is necessary to have appropriate
knowledge. Dealing with these issues means
possessing knowledge, skills, abilities, but also
attitudes that will further empower people to deal
with these important issues.
We are witnessing the rapid progress of
technology and its penetration into all spheres of
life and economy. All this trend of digitization
and globalization leads to the fact that we work
and live in increasingly uncertain circumstances,
where social diversities are manifested. This
results in an increase in people's economic and
cultural awareness on the one hand, but on the
other hand it also leads to greater vulnerability of
vulnerable categories of the population and
disruption of the ecological balance. The
problem arises because people find it
increasingly difficult to understand the world in
which they live and work. That is why it is
necessary to educate ourselves in accordance
with the problems we are facing, which are
certainly the growing social inequality, the
problem of using non-renewable natural
resources, but also other environmental
problems. People who can talk about these
problems of sustainable development today, to
solve them and to work towards achieving the
goals of the 2030 Agenda, we call “sustainability
citizens” [8]. You so called “Citizens of
sustainability” must have competences that will
enable them to behave responsibly and
competently for the purpose of sustainable
development.
Competences are all those characteristics of
individuals that enable them to deal with some
issues willingly, consciously, and qualitatively.
These are not the knowledge that is acquired in
the process of formal education, but the
knowledge that develops in the consciousness of
everyone. They are acquired experientially, but
also because of the thinking process [9]. Key
competences in terms of the concept of
sustainability represent the abilities of
“sustainable citizens” to cope with today's
complex challenges that coincide with the goals
of sustainable development. Such competences
enable the various goals of sustainable
development to be interconnected, so that
individuals dealing with these issues have a
broader view of the situation.
According to the results of the research
conducted in Malaysia on how students are
familiar with the concept of sustainable
development, we learned the following data. In
general, students show a low level of knowledge
about this concept [10]. Students have only basic
knowledge about the problems of sustainable
development that the whole world is facing, and
they cite structural deficiencies in the education
system as the reason for this. Lower education
and the highest tertiary level of education are
considered the best platform for promoting
awareness
of
sustainable
development
goals [11]. The knowledge that young people
acquire about sustainable development is mainly
from traditional mass and social media such as
211
newspapers, television, radio, and social
networks,
but
increasingly
modern
communication channels such as YouTube,
Tweeter and Instagram. These more modern
channels are increasingly in use, so authorities
dealing with sustainable development goals
should use them to spread knowledge about the
sustainable development problems we face.
IV. EDUCATION AS A FACTOR OF GROWTH
OF KNOWLEDGE AND INTELLECTUAL CAPITAL
New education programs should contribute to
the fact that graduates can bring the so-called
informed decisions and actions that will
contribute to achieving the goals of sustainable
development. The concept of sustainable
development must therefore be permeated
through all levels of education - from the
preschool educational program, all the way to the
highest level of education. Such a “new
education” that requires the concept of
sustainable development does not only mean that
during classes one learns about climate change,
about poverty, or about the use of non-renewable
resources, but it implies a new - higher level of
education and learning. This means that the
entire educational process needs to be
transformed, in order to avoid dry learning and
repetition of what has been written, and to enable
pupils and students to draw their own
conclusions based on given facts and
circumstances. In this way, it will not only lead
to the establishment of the concept and
realization of the goals of sustainable
development, but also to the development of
civilization itself in general.
Developing new teaching and educational
programs that support the development of
cognitive, socio-emotional, and behavioral
learning outcomes as well as key competencies
related to sustainable development will certainly
lead to the achievement of the goals of the 2030
Agenda and to general social well-being.
However, to achieve this easier and faster, it is
necessary to ensure the support of politics ministries in charge of education, science. They
have an important role in terms of adapting the
curriculum and processes to the new challenges
of sustainability. This process is still ongoing in
many countries, but it is still very uneven.
If we look at the education sector, we cannot
ignore the teaching staff, which is the key driver
of changes that can provide the opportunity to
achieve the goals of sustainable development.
The knowledge and competences of teachers are
212
essential for the restructuring of educational
processes and educational institutions towards
the concept of sustainability. Continuous
education of the teaching staff is necessary so
that they can convey appropriate knowledge to
pupils or students in the right way. Given that this
is an ongoing process, the results so far have
shown that the support of the teaching staff was
crucial for the successful inclusion of the concept
of sustainable development in the teaching
process. Unfortunately, it is still not enough. It is
necessary to work more on the implementation
of the concept of sustainable development, that
is, it is considered that the current teachers are
not sufficiently prepared for the restructuring of
the teaching process in this direction because
they themselves do not have sufficient and
necessary knowledge and experience. What they
certainly lack is the ability to help people develop
sustainability competencies through different
models of innovative learning.
In the literature, there are different
conceptual frameworks of teacher competencies
in the field of sustainable development, such as
the CSCT model [12], the UNECE model [13],
the KOM-BiNE model and other models.
Therefore, to implement the concept of
sustainable development in the curriculum itself,
it is necessary to deal with the initial and
professional education of teachers. In addition to
the theoretical concept of sustainable
development that they must know, teachers also
learn based on real social challenges in the local,
national, and global context, so this requires
cooperation with all parties involved in this
concept.
This
process
includes
the
internationalization of this problem to expand the
base of necessary knowledge and skills of both
teachers and students at international
conferences, but also through student exchanges.
V. THE MAIN CARRIERS OF CHANGES IN
DUCATION
It is necessary to start from the policy makers
in each country individually. The state, i.e. policy
holders in a state, are extremely important in
creating an environment for the successful
dissemination of knowledge and importance of
solving the problem of sustainable development.
The state is key in the process of making
decisions about changing curricula in accordance
with the goals of sustainable development.
Therefore, it is not just one person like the
president of the state or the prime minister who
is crucial for the implementation of these goals.
The ministry of education, at the local and
national level are also important. It is necessary
to point out the importance of employees in the
ministries for environmental protection and other
ministries dealing with issues of sustainable
development. As representatives of the state,
there are also academic communities that greatly
contribute to the achievement of the goals of
sustainable development in terms of education
and knowledge, as well as UNESCO and its
branches in various countries. Their main tasks
would be to define new learning goals that are
fully in line with the goals of sustainable
development; integrating the concept of
sustainable development into the education
system; to strengthen relations between formal,
non-formal and informal education with their
actions and measures [14].
Our future is certainly current students and
pupils, so it is necessary to talk about them as
agents of change in terms of education and
knowledge in terms of achieving the goals of
sustainable development. During their life and
education, pupils and students acquire
knowledge, competences, values, and attitudes
to undertake all initiatives and actions towards
the achievement of the goals of sustainable
development. They are guided on this path by
their teachers, teachers, parents, UNESCO and
its partners, the wider social and political
community [14].
Teachers are still the leading actors who
implement innovations in the education process
and thus create a new knowledge base to pass on
to their students. Teachers help students
understand the goals of sustainable development
and motivate them to transform themselves and
their attitudes to make a positive impact on
society. For this purpose, teachers must possess
Figure 1.
adequate knowledge, skills, values and attitudes
in order to make this transition process as easy
as possible. This also implies understanding the
key aspects of all 17 sustainable development
goals and their interrelationships [14].
Today’s youth, as well as future generations,
are the interest group that benefits the most from
the fight for sustainable development. That is
why they should become as active as possible,
but also louder in terms of achieving the goals of
Agenda 2030. They should advocate for solving
problems related to sustainable development,
but especially for climate change and reducing
the gap between the poor and the rich. In
addition, young people are a very important
consumer group, and the formation of their
consumer habits today can have a very positive
impact on the achievement of sustainable
development goals in the future [14].
As we can see in Fig. 1, teachers and other
staff employed in schools and universities have
a share of as much as 53% in the process of
implementing knowledge about sustainable
development. After them are the pupils
themselves - students and student organizations
with 20% participation, and then other
associations [15].
VI. SUSTAINABLE DEVELOPMENT – WHERE ARE
WE NOW?
The situation we are in now is a direct
consequence of human behavior. Reckless
human activity has led to climate change,
excessive consumption of non-renewable
natural resources, but also to stratification of
people into extremely rich or extremely poor.
Given that we face the consequences of
irresponsible human behavior every day, the
question arises whether people will ever be
Carriers of education process of the education process to implement the SDGs.
213
aware that their actions are destroying the
possibility of humanity’s long-term survival?
time is roughly given as the second half of the
XIX century.
Climate change represents an extraordinary
threat to the survival of humanity. The Paris
Agreement that was adopted in December 2015,
whose task is to make efforts to limit the global
temperature increase [16], speaks about this.
This agreement has been adopted by as many as
195 countries of the world. The International
Panel on Climate Change warns that the effect
of global warming is rapidly approaching the
1.50C level. Predictions are that the effect of
global warming of 20C is catastrophic, and
accordingly, rapid, far-reaching changes in all
aspects of society are necessary, to keep the
effect of global warming at the level of up to
1.50C (The International Panel on Climate
Change [17]. The situation becomes even more
dramatic if you consider that before 1975 the
effect of global warming was at the level of
about 0.50C, and in 2017 it was at the level of
about 0.870C (±0.120C) (Fig.2). It is thought that
the global increase in temperature from the preindustrial period to today is already 10C. If this
rate continues, it is thought that by 2040 the
world will reach a global warming effect of
1.50C. When it comes to the period of preindustrialization, it is not precisely defined in the
IPCC report, but it is the period before the
beginning of the industrial revolution.
Considering that the global temperature increase
is decreasing more and more as we go back in
time, it is necessary to roughly define the period
when the global temperature increase begins to
be observed. Therefore, in the IPCC report, that
Once we have defined the pre-industrial
period, the next step is to calculate the global
warming at any time relative to the base period.
Through this IPCC report, global warming is
defined as the increase in temperature over a
thirty-year period as the average of the
combined air temperature over land and water
temperature on the ocean surface. A period of 30
years is taken to account for the period of natural
variability that can cause different temperatures
in the current year compared to the previous
year.
In the period from 2006-2015. year, global
warming, as we can see on the graph, reached a
level of 0.870C, (±0.120C) in relation to the preindustrial period and that is due to human
activities. As the decade-long increase in
temperature is already around 0.20C (±0.10C),
the warming of the planet has already reached
10C around 2017 and if this continues, it will be
at the level of 1.50C in 2040 [17].
This is a global analysis, but it does not mean
that all corners of the world emit the same
amount of carbon into the atmosphere and that
everyone should apply drastic measures to
reduce the temperature. In fact, many regions
and countries have already exceeded 1.50C
compared to the pre-industrial period.
Therefore, special attention should be paid to
those regions, to keep the overall effect of global
warming at a sufficiently low level.
Figure 2. The effect of global warming.
214
It follows from this that it is necessary to
reorient ourselves to new concepts of education
in order to take control of this problem as soon
as possible, and to reduce the effect of global
warming, that is, to keep it under control. In this
sense, we need to develop knowledge, skills and
attitudes that will enable us all to make informed
decisions and to undertake both individual and
collective actions at the local, national, and
global level. Education for sustainable
development is therefore a well-designed
concept that empowers pupils and students to
make informed decisions about environmental
issues, economic prosperity, and social equality.
It is a lifelong learning process.
VII. THE INFLUENCE OF KNOWLEDGE AND
EDUCATION ON THE CONCEPT OF SUSTAINABLE
DEVELOPMENT
The aim of these interventions in education
is precisely to develop a critical awareness of the
complexity of global challenges such as poverty,
injustice, and unsustainability. They involve
pupils and students getting involved in
considering different perspectives, questioning
attitudes and prejudices, and thinking about their
own roles in maintaining an unbalanced world.
The central theme of these changes in education
is the development of solution-oriented skills
such as critical and creative thinking and
constant review of decisions in terms of
sustainable development for the survival of the
planet [18].
Education based on sustainable development
does not only mean that students acquire the
necessary knowledge related to sustainable
development. The emphasis is on schools and
universities, which should orient all their
processes
towards
the
principles
of
sustainability [6]. For the process of
implementing the concept of sustainable
development to be successfully implemented, it
is necessary to transform educational
institutions. It is a holistic approach that aims to
introduce sustainability in all aspects of the
educational institution’s operations. This
implies a review of the curriculum, campus
work,
organizational
culture,
student
participation [19]. Only in this way that
educational institution will serve as an example
for students. The creation of such eco-schools or
green campuses will enable students and
teachers to accept the goals of sustainable
development in their daily lives and thus
develop the required competencies in
accordance with the concept of sustainable
development.
Given that the transformation of the entire
educational institution is important, the Global
Action Plan calls on all schools and universities
to promote and implement the concept of
sustainable development in their work.
Considering the existing positive experiences, it
is necessary to include lower levels of education,
such as preschool institutions, in this
transformation program.
VIII. CONCLUSIONS
If we consider the growth rate of the effect of
global warming in the last 50 years, as well as
the increasing inequality between the extremely
rich and the extremely poor, it is clear to us that
urgent action is necessary in terms of
harmonizing the goals of economic and
economic growth of each country with
environmental and social goals. We treat these
three groups of mutually conflicting goals as
sustainable development goals defined by
Agenda 2030. To achieve these goals, it is
necessary to upgrade ourselves as conscious and
intellectual beings. Only then can we tackle the
problem of sustainable development.
Uncertainty is our everyday life and
accordingly, the intellectual capital, i.e. the
knowledge and skills we possess, becomes the
main resource of any organization. It was finally
realized that without people there is no profit or
economic growth, but at the same time people
are the main culprits for the environmental and
social problems we are facing. That’s why it is
necessary to activate everyone - from the state
and its organs, through teachers, all the way to
families, non-governmental organizations, local
communities, and international organizations to
face the problems of sustainable development
that we as humanity are already facing in time.
For this purpose, it is necessary to work on
redefining the education system in each country,
to work on the creation of those knowledge and
skills that are necessary in looking at the
problems of sustainable development. Only in
this way will people become more aware of the
problems the whole world is facing and will be
able to act to realize the goals of the 2030
Agenda. Precisely for this reason, it is vitally
important to include in the teaching process
contents related to the goals of sustainable
development, but also to use the so-called
action-oriented pedagogy. Teachers, politicians,
215
ministries of education and other persons
participating in this process are invited to rethink
education in order to contribute to achieving the
goals of sustainable development in the next
seven-year period - until 2030.
ACKNOWLEDGMENT
[10]
[11]
This paper is a result of teamwork.
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PaKSoM 2022
Naïve Bayes Classifier Model for
Predicting Admission in Master’s
Program Based on Academic Grades
Kavita Gupta1
1
Department of Mathematics, Kirori Mal College, University of Delhi, Delhi, India
1
gupta_kavita31@yahoo.com
Abstract—In this paper, a machine learning
algorithm Naive Bayes Classifier is applied to the
admission prediction dataset available on Kaggle.
The dataset consists of eight attributes: GRE
Score, TOEFL score, University rating, SOP,
LOR, CGPA, Research and Chance of admission.
The target variable is “chance of admission” which
can be predicted according to the input given in
terms of other seven attributes. The model
developed in this paper will assist the students in
predicting whether they have a chance to get
admission in post-graduate programs across
varsities based on their academic performance.
Computing software R is used for performing data
analysis and data interpretation.
Keywords - Naïve Bayes Classifier, machine
learning, predictive analytics, artificial intelligence,
supervised machine learning
I.
INTRODUCTION
Now a days, the students prefer to study
abroad for many reasons such as excellent career
opportunities, enhanced language skills,
exposure to new culture and educational system,
overall personality development and many
others. But the biggest problem is that they face
difficulty in choosing a proper institution for
pursuing masters based on their academic
performance. Parents face huge problem in
arranging funds for their wards’ admission in
overseas universities. One needs funds even to
apply in Universities of National and
International repute. A student is unaware of the
places where they might be admitted based on
their performance. A student can avoid wasting
money by applying to universities that are out of
his financial grasp if he can predict in advance
ISBN: 978-86-82602-00-2
where he would be admitted based on his GRE,
TOEFL, research, CGPA, etc. scores. This fact
motivated the author to study the students’
grades and the likelihood of admission to
programs so that a student can forecast the
probability of being accepted in the master's
program in any university across the globe and
can manage the necessary funding accordingly.
This study's objective is to evaluate a student’s
academic performance and university ranking in
order to determine the likelihood that student will
be admitted to that particular university.
The fields of data mining and machine
learning have evolved and attracted attention in
recent years to analyze acquired data. Data
mining is the best process of extracting data from
a dataset and using that data to find relevant
information. The evaluated data is then used to
improve the decision-making process. It employs
several algorithms in an effort to identify
particular patterns in the data. Moubayed et
al. [1] focused on the importance of machine
learning and data analytics to extract information
and finding valuable patterns within the collected
data. This ultimately helps in prediction based on
historical data. Essalmi et al. [2] provided
generalized criteria that assist teachers in
evaluating and contrasting personalization tactics
and selecting the best one to use for each course.
Experiments were used to test the approach's
viability and effectiveness when used with a
wide range of learning items and learner
characteristics. Wan and Niu [3] put emphasis on
e-learning recommender systems. Kaur and
Singh [4] predicted the class performance using
the WEKA tool, Naïve Bayes and J48 decision
tree classification approaches. Injadat et al. [5]
217
analyzed two different undergraduate datasets at
two different universities to predict the students’
performance at two stages of course delivery.
Acharya et al. [6] predicted the chances of
admission in different universities by comparing
the results obtained on applying different
machine learning algorithms such as Random
Forest, regression, support vector machine,
decision trees etc. Lykourentzou et al. [7]
predicted dropout rate in e-learning courses
through the combination of machine learning
techniques. Many researchers such as Luan [8],
Herbert [9] and Vandamme et al. [10] focussed
on the importance of data mining and its
applications in higher education. Batta [11] has
recently provided a review on machine learning
algorithms. Machine learning models are now a
days recently used by many researchers in the
field of medicine. For instance, Kar et al. [12]
presented a model on mortality risk prediction
into COVID clinical and laboratory parameters
at admission in hospitals. Gao, Y., Cai, GY.,
Fang, W. et al. [13] resented a model that
enables expeditious and accurate mortality risk
stratification of patients with COVID-19, and
potentially facilitates more responsive health
systems that are conducive to high risk COVID19 patients. Brajer N, Cozzi B, Gao M, et al. [14]
created a machine learning model that predicts
in-hospital mortality for all adult patients at the
time of hospital admission and prospectively and
externally validate it using data from widely
accessible electronic health records and easily
accessible computational techniques.
In this paper, we have used the machine
learning algorithm “Naïve Bayes algorithm” to
predict chances of admission in masters’
program based on students’ academic score. The
Naive Bayes algorithm is a supervised learning
technique that applies the Bayes theorem to
tackle classification issues. With a sizable
training dataset, text classification is its main use.
It is an easy-to-use and effective classification
technique that helps create quick machine
learning models that are capable of providing
prompt predictions. Being a probabilistic
classifier, it makes predictions based on the
likelihood that an object will occur. The Naive
Bayes classifier is supported by the Bayes
theorem. Due to its ease of use and linear runtime, the Naive Bayes classifier is still a common
learning method for data mining applications.
The categorical parameters are assumed to be
statistically independent given the class in this
method. As a result, the approach is
218
straightforward and has linear training times for
both the number of examples and the
characteristics.
II.
DATA COLLECTION AND DESCRIPTION
A. Data Description
The data set imported from Kaggle consists
of 400 rows and 9 columns. The various
attributes presented in nine columns are Serial
number, GRE score, TOEFL score, University
rating, SOP, LOR, CGPA, Research, Chance of
admission. The description of all the independent
and dependent variables are given below:
1.
GRE Score: It is Graduate Record Exam
score. The score will be out of 340
points. This exam is required for
admission to graduate programs
globally.
2.
TOEFL: It is Test of English as a
Foreign Language which will be out of
120 points. It is a standardised test used
to assess the English language
proficiency of non-native speakers
looking to enrol in universities that use
the English language.
3.
University Rating: It indicates the
ranking of the university from where the
student has graduated among the other
universities. The score will be out of 5.
4.
Statement of purpose (SOP): It is a
document written by the student
addressing the admission committee. It
includes career path, ambitions
interests, professional and academic
accomplishments, and the inspiration
for choosing a specific programme. The
score will be out of 5 points.
5.
LOR is the Letter of Recommendation
which
verifies
the
candidate
professional
experience,
builds
credibility, boosts confidence and
ensures competency. The score is out of
5 points.
6.
CGPA: It is the cumulative grade point
average which is actually the academic
score of the student at under-graduate
level. This score is out of 10.
7.
Research: It includes the research
experience of the student such as
publishing research papers in various
journals of National and international
repute. Further, it includes working as a
research assistant with a university
professor. It is a factor variable that
takes two values 0 or 1.
8.
Chances of admission: It is the only
dependent variable which can be
predicted based on the students’ score in
the other seven attributes discussed
above.
The admission data is collected from Kaggle.
Structure and first six rows of the dataset are
extracted using R software. Table I shows the
first six rows of the dataset.
TABLE I.
Un
i.R
ati
ng
S
O
P
L
O
R
C
G
P
A
337
324
316
322
314
330
118
107
104
110
103
115
4
4
3
3
2
5
4.5
4.0
3.0
3.5
2.0
4.5
4.5
4.5
3.5
2.5
3.0
3.0
9.65
8.87
8.00
8.67
8.21
9.34
R
e
s
e
a
r
c
h
1
1
1
1
0
1
SOLUTION METHODOLGY
The stepwise procedure to apply the Naïve
Bayes Classifier to the input data is explained in
the following steps.
A. Step 1: Pre-processing of the Dataset
The dataset is first examined for the presence
of any null values. If any text is null, it is
converted to empty string. In Naïve Bayes
classification, the target variable should be
categorical. So, the next step is to convert the
output variable “chance of admission” in to
factor type. Chances of admission (x) will have
four factors as shown in Table II.
ADMISSION PREDICTION DATA
T
O
E
F
L
G
R
E
III.
TABLE II.
Value of x
(Chances of admission)
0≤𝑥 ≤0⋅3
0.3 < 𝑥 ≤ 0 ⋅ 5
0.5 < 𝑥 ≤ 0 ⋅ 8
𝑥 >0⋅8
Cha
nce
of
adm
issio
n
0.92
0.76
0.72
0.80
0.65
0.90
TABLE III.
CHANCES OF ADMISSION
Factor
No chance
low
medium
High
B. Step 2: Data Visualization
It includes the determination of correlation
matrix between all the numerical variables which
is shown in Table III. In order to visualize the
correlation matrix, we may draw a heat map as
shown in Fig. 1. This heat map shows that the
chances of admission are highly related to
CGPA, GRE, TOEFL scores.
CORRELATION MATRIX
GRE
TOEFL
Uni.Rating
SOP
LOR
CGPA
Research
Chances of
admission
GRE
1.0000000
0.8359768
0.6689759
0.6128307
0.5575545
0.8330605
0.5803906
0.8026105
TOEFL
0.8359768
1.0000000
0.6955898
0.6579805
0.5677209
0.8284174
0.4898579
0.7915940
Uni.Rating
0.6689759
0.6955898
1.0000000
0.7345228
0.6601235
0.7464787
0.4477825
0.7112503
SOP
0.6128307
0.6579805
0.7345228
1.0000000
0.7295925
0.7181440
0.4440288
0.6757319
LOR
0.5575545
0.5677209
0.6601235
0.7295925
1.0000000
0.6702113
0.3968593
0.6698888
CGPA
0.8330605
0.8284174
0.7464787
0.7181440
0.6702113
1.0000000
0.5216542
0.8732891
Research
0.5803906
0.4898579
0.4477825
0.4440288
0.3968593
0.5216542
1.0000000
0.5532021
Chances of
admission
0.8026105
0.7915940
0.7112503
0.6757319
0.6698888
0.8732891
0.5532021
1.0000000
219
C. Step 3: Summary of Admission Data
Chances of admission are categorized as
high, low and medium. Proportion of chances of
admission in these three categories are shown in
Table IV. The summary of admission data
includes minimum, maximum, lower quartile,
upper quartile, mean values of each of the eight
attributes. This summary is shown in Table V.
TABLE IV.
Factor
Frequency
Proportion
Figure 1. Heat Map showing correlation between
variables
TABLE V.
Minimum
Lower
quartile
Median
Mean
Upper
Quartile
Maximum
High
117
0.2925
Low
35
0.0875
Medium
248
0.6200
SUMMARY OF ADMISSION DATA
GRE
TOEFL
Uni.Rating
SOP
LOR
CGPA
Research
290.0
92.0
1.000
1.0
1.000
6.800
0.0000
Chance of
admission
0.3400
308.0
103.0
2.000
2.5
3.000
8.170
0.0000
0.6400
317.0
316.8
107.0
107.4
3.000
3.087
3.5
3.4
3.500
3.453
8.610
8.599
1.0000
0.5475
0.7300
0.7244
325.0
112.0
4.000
4.0
4.000
9.062
1.0000
0.8300
340.0
120.0
5.000
5.0
5.000
9.920
1.0000
0.9700
D. Step 4: Fitting Naïve Bayes to the Training
Dataset and Prediction
Split the dataset in to two parts according to
thumb rule: 75% training data and 25% testing
data. Then we create training label and testing
labels. Labels are “chances of admission”
attribute i.e., the target variable in the original
data. Install package e1071 for Naive Bayes
classifier. Use the predict() function of NB
classifier for prediction. Code for prediction
using NB classifier is given in Table VI.
TABLE VI.
CHANCES OF ADMISSION
PREDICTION USING NB CLASSIFIER
matrix to find misclassification in prediction.
Code for generating cross tables and confusion
matrix are given in Table VII.
TABLE VII.
CODE FOR CROSS TABLES AND
CONFUSION MATRIX
R Code for Creation of Cross Tables and Confusion
Matrix
install.packages("gmodels")
library(gmodels)
CrossTable(test_label,classifier_predict,prop.r=T,prop.c
=F,prop.t=F,prop.chisq=F,dnn=c("Actual","predicted"))
confusionmatrix<-table(test_label,classifier_predict)
R-Code For Prediction Using NB Classifier
install.packages("e1071")
confusionmatrix
library(e1071)
prop.table(table(test_label,classifier_predict))
classifier<-naiveBayes(train_data,train_label)
conf_prop
classifier_predict<-predict(classifier,test_data)
1-sum(diag(conf_prop))/sum(conf_prop)
E. Step 5: Creation of Cross Tables and
Confusion Matrix
We prepare cross table by using CrossTable()
function of gmodels package to find the
accuracy in the prediction. Create confusion
220
conf_prop<-
IV.
DATA ANALYSIS AND INTERPRETATION
After predicting the output using Naïve
Bayes classifier, the following results are
obtained. Cross table (Table VIII) and confusion
matrix (Table IX) with Laplace Value = 0 shows
that out of total 305 observations, 205
observations are predicted correctly whereas 100
observations are misclassified. One can interpret
that chances of admission is high in 30 cases
actually which are predicted correctly 12 number
of times but are wrongly predicted as low 5 times
and medium 13 times. The values on the diagonal
of cross tables shows correct classification
whereas the other entries show misclassification.
The percentage of correct prediction is 67.21%.
One can improve the performance of the model
by changing the Laplace value from 0 to 1,2,3
and so on.
TABLE VIII.
Actual↓
Predicted→
High
Low
Medium
Column
total
High
Low
Medium
12
0.4
2
0.017
9
0.057
5
0.167
74
0.638
31
0.195
13
0.433
40
0.345
119
0.748
Row
total
30
0.098
116
0.380
159
0.521
23
110
172
305
TABLE IX.
predict→
test_label↓
High
Low
Medium
CROSS TABLE
The author is thankful to the reviewers for
their valuable comments and suggestions.
REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
CONFUSION MATRIX
High
Low
Medium
12
0.039
2
0.0065
9
0.0295
5
0.016
74
0.2426
31
0.1016
13
0.043
40
0.1311
119
0.3902
V.
ACKNOWLEDGMENT
CONCLUSION
In this paper, a machine learning algorithm
namely, Naïve Bayes Classifier is used with a
default Laplace value = 0 to predict the chances
of admission in master’s program overseas on the
basis of academic grades. The academic grades
include GRE score, TOEFL score, University
rating, SOP, LOR, CGPA, Research. The target
variable “Chances of admission” depends on
these seven attributes. By means of cross tables
and confusion matrix, it is observed that the
misclassification in chances of admission is
33.44%. One can improve the performance of the
model by increasing the Laplace value. As future
work is intended, one can study the same dataset
by applying other machine learning algorithms
such as Random Forest, Decision Trees, Linear
Regression,
Logistic
Regression,
KNN
algorithm, cluster analysis , support vector
machines etc.
[7]
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221
222
PaKSoM 2022
Knowledge Management Strategy,
Resources and Competences
Milovan Rogan1
1
University of Niš, Faculty of Economics, Niš, Serbia
1
milovanrogan@gmail.com
Abstract—Knowledge
management
is
an
increasingly topical subject in the field of
management. Knowledge represents a company's
resource on which the company's competitive
advantages are increasingly based. This paper will
deal with the problem of identifying knowledge as
a resource that exists in all organizational parts.
Knowledge management implies the application of
knowledge on a larger scale and in a better way, so
in this work special importance is given to the
problem of knowledge application from the aspect
of disposing of existing knowledge, but also
methods for improving knowledge. The mobility of
knowledge makes managing it difficult, but it also
gives the company the character of flexibility,
which is the basis for maintaining competitiveness
in modern conditions.
Keywords
knowledge
competitiveness, resources, learning
management,
I. INTRODUCTION
Companies, as the main business entity, have
various resources at their disposal in order to
perform their activities. The structure of
resources is different in all companies and it
changes with the passage of time on a global
level. In the past, natural resources were a
necessary resource for the functioning of
companies, that is, they were a source of
competitive advantage. Throughout history, it
was manpower, capital, means of work, and
today it is knowledge. In modern business
conditions, where information technology and
other types of modern achievements are very
prevalent, knowledge is a key resource for the
functioning of the company. It is precisely on this
resource that the highest level of competitive
advantage and value creation for consumers as
end users and verifiers of value creation is based.
Due to its importance and complexity of
ISBN: 978-86-82602-00-2
disposal, knowledge management is a significant
management process that must be applied in
almost all larger companies.
II. KNOWLEDGE AS A COMPANY RESOURCE
In order to function and survive on the
market, the company as a basic economic entity
must have various knowledge and skills, starting
from organizational through specialized
technical and technological knowledge related
directly to the company's activities, and up to
knowledge that is applied in the field of
marketing and sales. No company, no matter how
similar they are or perform a similar activity, has
even close to the same skills and competences. It
is one of the main reasons that appear in the
competitiveness of companies, but also in the
way of functioning or organization of each
company separately.
The knowledge resource in a company is
manifested through the knowledge and skills of
the employees, from the production workers
themselves to the management level, then
through the organizational hierarchy that defines
the way of management and communication
channels,
work
procedures,
technical
documentation on the basis of which a certain
product is made (this can be a recipe in the food,
pharmaceutical
or
chemical
industry),
technological documentation that describes in
detail the way in which production is carried out,
the procedures that are applied in the product
quality control process.
Above all, the knowledge that is closely
related to the production segment must certainly
be included in the knowledge possessed by
workers who work in the sectors of procurement,
logistics, sales, marketing, after-sales services,
etc. Procedures, ways of working as well as the
223
results of previous analyzes represent a great
source of knowledge in the mentioned areas. A
large database in every company is also an
accounting system that identifies and
systematically records all changes that take place
in the company. Based on the accounting data,
various reports are created which in the future
can serve as a basis for improving business
processes and carrying out activities in a better
way.
Based on the above, we can conclude that the
main subjects of knowledge in the company are:
1.
Human resources, professional skills of
employees at all levels;
2.
Experiential data that the company has at
its disposal from the production
segment, through logistics, finance to
sales, including all types of databases in
the framework of information systems;
3.
Work procedures and instructions
defining the implementation of each
activity that takes place in the company
(including written documents, audio and
video recordings);
4.
The organizational structure of the
company and the organizational
capabilities arising from it.
As we can see, the knowledge resource is widely
distributed in the company, the more of this
resource within the company, the competitive
ability of the company increases, but the
complexity of managing this resource also
increases. If these resources are not sufficiently
identified or if they are used inefficiently, the
company will miss numerous opportunities,
bearing in mind the intense competition that will
realize all its advantages in the areas of its
dominant knowledge, missing opportunities will
consequently lead to a weakening of
competitiveness
and
endangering
the
functionality of the company. Knowledge is an
intangible resource that is more difficult to
identify and more difficult to measure its
importance and contribution in financial terms,
but no doubt the irrational use of this resource
will produce the same negative effects as the
irrational use of any other material resource. The
same applies to the positive component of the
functioning of the enterprise, if it is used
correctly and efficiently, it is possible to make
serious strides in business [1].
224
III. KNOWLEDGE MANAGEMENT PROCESS
The process of knowledge management
within the company is a complex and dynamic
process that is relatively new in the management
system. In order to manage something, one must
first identify the subjects of management and
determine the importance of each of them [2]. As
already mentioned, the carriers of knowledge in
the company are people, documents, information
data that the company has, as well as the
organizational system. In fact, these are all
subjects of knowledge that can be used for the
purpose of business improvement, the use of
knowledge can only be carried out by people,
that is, employees of the company.
The identification of knowledge in the
company can mostly be carried out by managers
from the lowest to the highest levels. Especially
when it refers to the identification of knowledge
that exists within human resources, a great
contribution to the identification of knowledge
can also be made by persons who are in charge
of forming databases and archiving data,
especially if they are included in the processing
of relevant data appearing in the company. An
accounting system that is modern today with
information technology is also a respectable
source of information and knowledge that can be
used at a given moment. Significant
improvement and constant development of
information
technologies
enable
the
establishment of online programs that can serve
to test employees in terms of knowledge of the
job for which they are trained, collecting and
checking information about the knowledge they
have and which they have not previously
demonstrated in the jobs they perform. All of
these are procedures that contribute to the
complete identification of knowledge within the
company, which, along with further systematic
structuring, is the basis for effective knowledge
management.
Considering that the level of knowledge
possessed by the company is generally
considered very high and that it increases over
time, and that the importance of certain
knowledge changes over time, as well as the fact
that some knowledge becomes obsolete or
cannot make a significant contribution to the
functioning of the company, it is increasingly
being observed the need for centralized
coordination of knowledge management. The
knowledge management process itself, as well as
the management of other resources, is carried out
by management structures at all levels, but due to
its specificities and one could say insufficient
visibility of this resource, there is a need to define
roles such as the knowledge management
manager or even in larger companies the
management department knowledge. The
knowledge management manager should work
on the identification of knowledge, determining
the level of quality of that knowledge among all
employees and at all levels, to contribute to the
organization of education that would contribute
to the increase of knowledge among employees
on a continuous basis without jeopardizing their
ongoing operation [3]. It should also provide
relevant data to management structures on the
basis of which they can make correct decisions
about the application of knowledge in certain
areas, focusing on certain segments or turning the
business strategy, etc.
The process of knowledge management also
includes constant learning, i.e. education of
employees, in order for the company to maintain
its competitive position, bearing in mind that
other companies also apply new knowledge and
make improvements in this area. The quality of
education and the intensity with which it is
carried out depends on whether the company will
remain in the same position in relation to its
competitors or will improve its position. Of
course, there is no direct correlation between
these processes, because other business factors,
i.e. other resources available to companies, also
play a role in market positioning.
The improvement of knowledge is carried out
through the improvement of information bases,
by simplifying their access, by improving
communication between employees, by
establishing greater interaction between
organizational segments. The improvement of
knowledge is also carried out through connecting
and better familiarizing employees with the
vertical and horizontal structure of the company's
organization. Also, the establishment of
universal principles that represent the doctrine of
corporate functioning in the essential sense
contribute to a better application and
improvement of knowledge among employees.
In addition to identifying knowledge and
improving knowledge within the company, a
very important part of knowledge management is
the adequate application of knowledge that is,
maximizing knowledge in business areas in
which the company stands out compared to its
competitors. If management analyzes show that
it has specific knowledge in production that other
companies do not have to a sufficient extent,
certainly the focus of improving the application
of knowledge should be in that organizational
part. This implies the improvement of existing
products, the introduction of new ones or even
the expansion of activities to areas where the
available knowledge can be applied so that it will
create a dominant position in that new market
segment. Creating a competitive advantage
based on knowledge is a very suitable process
that creates a marked increase in the profitability
and competitiveness of the company.
The focus on a specific area prompted by
expressed competence must be timely and
dynamically coordinated with the availability of
other resources, this makes the process of
management and focusing even more complex,
which is why the entire process must be led by
the highest levels of the management structure. It
is very important to point out that creating a
competitive advantage based on knowledge can
be achieved in all segments of the company, but
also the process of identifying advantages in a
specific area and reacting to that possibility can
take time, which in a highly dynamic business
environment represents a significant risk of
changing the position and the existence of a
competitive advantage in general. When
analyzing knowledge and application potential,
attention must be paid to the nature of the
competitive advantage arising from this type of
resource. It should be evaluated whether the
advantage is short-term or permanent, and how
certain it is to maintain that advantage in a certain
period.
The advantage in knowledge that the
company has is most obviously manifested
through the application of innovations, which
can be in the area of product construction and
quality, within the means of production or in
other business segments that are also important
for the functioning of the company. Therefore,
we can apply knowledge through innovations or
by increasing the intensity of application within
the existing business processes, which will
therefore become better quality and more
efficient. Another type of manifestation of
knowledge in the company is the increase in
productivity, i.e. speeding up production
processes with the same number of workers and
the same means of work. We often say that more
experienced workers perform certain processes
better and faster, and this essentially means that
workers who have been performing the same or
225
similar jobs for many years acquire additional
practical knowledge in a certain area, as a result
of which they perform business processes
significantly more efficiently.
The most important source but also the bearer
of the application of knowledge are employees,
it depends on them how effectively the available
knowledge will be used. Given that most workers
have the freedom to leave the company at any
time without special compensation or
restrictions, the risk of knowledge fluctuation is
very pronounced. In this context, the strategy of
knowledge management and how it must be
connected with the strategy of human resources
management, in terms of education, training,
increasing the safety of employees, and all with
the aim of increasing the loyalty of employees to
the company [4]. In this way, a stable level of
knowledge can be ensured in the company,
which can later be a real economic potential.
Another problem that is also expressed in this
segment is the security of knowledge.
Knowledge as an intangible resource is not
easy to secure, starting from information systems
that are a kind of base or archive of available
knowledge, they are often the target of illegal
download of data, whether it is through
unauthorized use and distribution of data by
employees or intrusion into the system of third
parties. Also, it very often happens that
employees transfer their knowledge with
financial compensation to other companies that
represent competition, even if they should not do
so according to the employment contracts, but
due to the difficulty of controlling the flow of
knowledge and proving its origin, the mentioned
process is very present and represents a
significant danger to the functioning of the
company and especially to the competitive
advantage based on this resource.
A large number of companies have
employees with a pronounced character of
loyalty and a sense of belonging to the company.
Such companies can and should push for the
creation of a competitive advantage based on
knowledge in all business segments, starting with
the procurement process and ending with the
sales process. Those companies can carry out
their accelerated development without excessive
investments, but it is necessary that the personnel
potential, which is the greatest source of
knowledge, be developed with quality and filled
with new adequate personnel.
226
IV.KNOWLEDGE AS A SOURCE OF FLEXIBILITY
Modern companies are faced with very
strong competition, which is threatened by direct
competitors, but due to the accelerated process of
application of innovations, competition often
appears from an unexpected side through the
entry of new business players into a certain
market branch, or through the appearance of
substitutes for existing products from other
branches [5]. An increasing number of
companies appear on a global level, so it is not
even possible to completely determine who the
main and direct competitors are. The dynamic
business environment imposes the need for
constant and accelerated adjustments to market
conditions. The adjustment process is not at all
easy and can very often be extremely expensive,
and the effects extremely uncertain.
Companies that have a significant level of
knowledge are able to adapt to market conditions
much faster and easier. This is shown by
numerous researches, it is interesting that the
results are similar in less and more developed
economies. Companies that have built up this
resource, especially those that have a wellorganized management of it, are able to adapt
their product range much faster to the needs of
the market and not spend too much money. They
are also able to conquer the production of new
products that are sold in some other market
segments, relatively quickly and without
excessive additional investments. It has already
been mentioned that the complicating factor of
knowledge management is its mobility, which is
expressed through the easy transferability of
documented knowledge through information
systems, and the mobility of the workers
themselves who are the primary carriers of
knowledge, and who can easily and quickly
change their work location.
In terms of increasing flexibility and
adaptability, the deficiency just described is an
advantage, which the company must carefully
guard so that this feature of knowledge remains
an advantage and not a disadvantage for the
company. Companies with a high level of
knowledge as a resource, which is well managed
in conditions of pronounced globalization,
represent the safest and most resilient economic
subjects. This is not the case for joint ventures
that have large material resources, their
flexibility is expressed in the form of changing
the purpose of the wine, but exclusively at the
same location with significant additional
investments. Changing the location when the
production equipment is in question is possible,
but with extremely high costs of disassembly,
transport and re-installation. All of this makes
companies with valuable material resources
inflexible and vulnerable to market fluctuations.
Companies
with
highly
developed
knowledge-based management skills build
special business functions that should contribute
to the security of the company's functioning over
a longer period of time. In accordance with that,
risk
assessment
services,
knowledge
management services, asset management
services, human resources etc. are formed. All
these creations are based on knowledge that is
generally available in the environment, but also
on specific knowledge that the company has. All
these resource management procedures should
increase the flexibility of the company due to
market conditions that are uncertain and largely
unpredictable.
V. CONCLUSION
Knowledge as a company resource has
always been present and necessary for the
functioning of the company. With the
development of the market on a global level, it is
realized that knowledge is an increasingly
important and valuable resource that increasingly
becomes the basic source of competitive
advantage. In order to use its values and
eliminate the weaknesses it can produce in the
functioning of the company, a systematic system
of knowledge management was established. The
process of knowledge management manifests
itself in three basic forms, namely: identifying
knowledge, improving knowledge, and applying
knowledge within existing or new business
processes in the company.
Organizational hierarchy, communication
channels, databases, knowledge improvement
procedures, and employees themselves represent
constructive elements of knowledge as a resource
in a company. Each of these elements should be
analyzed and improved through the process of
knowledge management. The availability of
knowledge is not enough by itself, as with other
resources, it is only through its application that
new value begins to be created, which is
imperative for the functioning of the company.
Effective knowledge management implies that
certain competencies that are the company's
advantage are applied in the same way in other
segments of the company, that new activities are
formed on their basis or the company's activities
are expanded. A very important feature of
knowledge that companies should use is its
flexibility. If the highest management structure
in the company correctly values and respects this
feature, it is possible to significantly increase the
flexibility of the company and make it safer and
more resistant to the dangers that come from the
market environment, which is today of a global
character. Due to its characteristics, knowledge
in today's conditions represents the primary
source of competitive advantage and security of
companies.
Knowledge management is already one of the
key business processes, the intensity of
knowledge application will only increase, and
therefore the importance of managing this
resource will continue to increase. Better and
easier identification of knowledge as a resource
within the company should contribute to its
greater marketability through the improvement
of existing products or through the introduction
of new ones, but through the transfer of
knowledge itself as a resource that will be
adequately financially valued. Further research
should be focused on the evaluation of
knowledge and its balancing as a real economic
quantity that exists in the company and that
represents the basis for creating a competitive
advantage.
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Management, 8(1).
227
228
PaKSoM 2022
Funding Models in the European
Startup Ecosystem
Aleksandar Vekić1, Jelena Borocki2, Ana Ivanić3, Galina Žižakov4
1,2,3,4
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Serbia
1
vekic@uns.ac.rs, 2borocki@uns.ac.rs, 3ana.ivanic97@gmail.com, 4galina.zizakov@gmail.com
Abstract—The basic drivers and the “connective
tissue” of startup ecosystems are connections and
interactions that take place between members of
these ecosystems and contribute to their progress
and innovation. In addition to subjects and their
mutual interactions, it is important to note that
resources like knowledge, experience, skills and
money are vital components for survival, growth
and development of startup ecosystems. Resources
that flow through ecosystems are provided
primarily from people and organizations that are
an active part of these startup ecosystems. The
focus of the research is aimed at the process and
sources of funding within the European startup
ecosystem. Cash assets as a resource have a crucial
role in achieving the potential and setting the goals
of newly established business ventures. By
providing support and investing in Startup
companies, multiple benefits are achieved. The
success of a specific endeavor has an impact on the
entire regional startup ecosystem within which the
specific endeavor is located. The power of
ecosystem is reflected in the stability and success
of all its members. The aim of this research is to
compare startup ecosystems of selected European
Union countries for the period from 2019-2022,
including Serbia which is currently in amidst
entrance negotiations. The comparison was
performed according to the selected indicators of
selected startup ecosystems, which are as follows:
the total value of the startup ecosystem and
investment in the initial stages of the company
startup.
of these ecosystems. The main task of all
countries is to encourage entrepreneurship and
innovation and to provide conditions for the
accelerated growth of their economies, allow for
talent acquisition and their employment. It also
allows
the
creation
of
innovative
products/services or processes, which greatly
contributes to the competitiveness of the
economy. The startup companies are mainly
managed by their founders who are fighting for
the success of their business ventures.
Keywords - startup ecosystem, Europe, funding
models, growth encouragement
The term “entrepreneur” was first defined by
Jan Baptiste Say in 1803, and “the entrepreneur
shifts economic resources from the field of lower
to the field of higher productivity and larger
yield” [4]. Over the years, three authors were the
key to adopting the notion “Entrepreneur” and
“Entrepreneurship”, Joseph Schumpeter, Frank
Knight and Israel Kirzner. Schumpeter suggested
I.
INTRODUCTION
The question of ventures funding within the
startup ecosystem should be approached
methodically and thoroughly, in order to create
baselines for the sustainability and development
ISBN: 978-86-82602-00-2
Wennekers & Thurik agreed that
entrepreneurship affects the economy directly
and indirectly, at different levels, through
innovation, competition and restructuring [1].
Empirical research has shown that a higher
opening rate of new companies and higher
turbulence rate (the sum of opening and closing)
encourage economic growth and job creation [2].
Entrepreneurship is a way of thinking, i.e. the
process of creating and developing economic
activities by combining risks, creativity, and/or
innovation with a reliable management structure
within the new or existing organization [3].
Building on previous definitions, it can be
noticed that entrepreneurship as a sort of human
activity has a great importance for the economic
and social development of the community, which
is why the efforts of social communities are
designed by measures and activities to encourage
entrepreneurial activity in their territories.
229
that entrepreneurs - not only companies - are
responsible for innovating in the search for
profit. Knight focused on entrepreneurs as
carriers of uncertainty and believed that they
were responsible for risk premiums in financial
markets. Kirzner believed that entrepreneurship
was a process that leads to the discovery [5].
Innovation is of great importance for
business, and thus society as a whole, therefore it
is of great interest for economic entities and
governments. According to Peter Drucker
“Innovation represents a new product/service,
the process or improvement of technology,
which are incurred by applying their own or
otherwise scientific research, learning and
development, which is placed on the market” [6].
Innovation is primarily related to creating more
efficient and faster processes, products and ideas.
If business is coming from the point of view, it
means the implementation of new ideas,
improving services or creating dynamic
products. It can act as a catalyst that will improve
the task and help each individual adjust to the
market. Innovation can lead to a change in the
business model. Successful innovation should be
part of the business strategy of each entrepreneur.
It can also increase the probability that the
company creates more efficient processes, which
will result in better productivity and
performance. In general, the main purpose of
innovation through entrepreneurship is reflected
in improving people’s lives. When it comes to
company management, innovation is the key to
progress [7].
Based on innovation, new business ventures
are created, and they are called startups. Eric Ries
defines a startup as “an institution made of
people, designed to deliver a new product or
service in conditions where there is a high factor
of uncertainty” [8]. The startup is a business
venture that is not over 10 years of age or older,
based on new sale model and whose realization
has enabled the development of innovative
technology [9]. The startup can be defined as: “a
temporary organization that is looking for a
sustainable and scalable business model” [10].
Startup ecosystem can be seen as the
environment developing the startups, which are
made up of individuals, teams, different types of
organizations and institutions acting as a system
with the aim of creating and accelerating the
development of new startups [11]. The goal of
the ecosystem is to starting and developing
companies. The common resource fund usually
230
includes: policy makers, accelerators, incubators,
co-working spaces, educational institutions and
funding groups.
The startup ecosystem is affected by three
key factors [12]:
critical
mass
of
entrepreneurs,
companies and specialized institutions at
a specific location,
developed network of attitudes between
actors, and
cultural basis that connects all the
elements.
In order for the startup company to open its
doors and have them permanently opened it
needs capital until it reaches the business phase
in which it is profitable. The money, in addition
to allowing the life and growth of the company,
most often represents a competitive advantage
when it comes to hiring staff, publicity,
marketing and sales relationships. The amount of
money needed to make the startup lead to
profitability levels, most often exceeds the
possibilities of founders, their families and
friends. Although banks act as the next logical
option to turn, there are other sources of funding
that can be considered.
Investors are constantly searching for better
opportunities to invest their own resources in and
potentially increases them.
In order to provide the necessary capital, the
founders must be connected to investors,
determine where the money is located and who
owns it.
II.
RESEARCH METHODOLOGY
The methodology used when implementing
this research includes the analysis of secondary
data in four consecutive years 2019 - 2022. The
discussion was formed on the analysis of data on
startup ecosystems and financing values in the
initial stages of the company. What matters is the
fact that during the years, the Startup Genome
organization changed the methodology of
making reports, which resulted in changes in data
presentation when making this study. Within this
paper, the results obtained by the research and
analysis of the Startup Ecosystems in the
countries of the European Union, and the
Republic of Serbia, as the countries of the
candidate for membership, whose data is
complete in reports in the observed period. This
research therefore covering the following
countries: Denmark, Finland, France, Hungary,
Germany, Ireland, The Netherlands, Sweden and
Serbia. As the reports of the reasons for
improving the methodology through the years
have been a constant effort of organization in the
direction of improving the methods of measuring
startups and ecosystems that belong to, with the
achievement of objectivity and precision [13].
III.
TYPES OF FUNDING SOURCE FOR
STARTUPS
As the most common sources of funding for
startup companies appear:
Self-financing is one of the most common
ways to ensure the necessary funds to start a
startup company, especially in the earlier stages
of its development. Although there are new
companies that are funded by risk capital and
bank loans, most entrepreneurs and their startups,
which do not really require large investment, rely
on friends, family and own savings [14]. Judging
by the statistics, between 35 - 40% startup
ventures were funded by the family,
acquaintance or friend of the founder [15]. In
addition to FFF investor, a good source of
funding for startups can also be users, better
known under the term “early adopters”. They
provide evidence of sustainability of the concept
of business venture to future investors, but also
funds that are currently needed. Incentives are
commonly given for the early adopter purchase
of products or services before their official
placement on the market. Big discounts are
mainly offered, additional services, free
subscription, networking awards to new
customers and many others.
Commercial loans (lending) - The next
option offered to the founders as a source of
security for the necessary capital are commercial
institutions that offer money at a certain price,
and it is banks. About 40% of the startup capital
comes from loans that offered by banks [16]. The
loan represents the debtor - the credit relationship
in which the bank as the creditor provides the
right to dispose of his client - the debtor, for a
certain period of time and under certain
conditions.
Grants - A grant is a direct financial
participation, which is given in the form of a
donation, for financing [17]:
activities aimed at achieving a goal that
is a part of the European Union policy;
or,
work of a body of labor that strives to
achieve the goal of general European
interest or whose goal forms part of the
European Union's strategic commitment.
Grants or donations are a kind of funding
sources assigned by an entity, usually a
company, foundation, government, international
organization to an individual or company to
facilitate the achievement of the predicted goal or
encourage the effect. The grants represent a
perspective source of funding, both in the initial
phases of launching business venture, and in later
stages. The largest project financing program, i.e.
the public grant program in Europe is the
Horizon Europe Program. The Horizon Europe is
a key EU program for financing research and
innovation with a budget of 95.5 billion [18].
Incubators and accelerators - For startups in
the initial phases of business, sometimes things
like mentoring, access to resources and expertise
are much more needed and more valuable than
money itself. Most of the founders of the startup
companies have no experience in launching
business ventures and facing the first time all
obstacles that the market and business
environment brings. There is no culture in the
world in which communities do not play a key
role in the development of one society.
Community members who provide mutual
understanding
and
support,
exchange
experiences, receive advice from people more
experienced than themselves, associated with the
same aim in symbiosis enter further survival and
progress [19].
Business Incubators - Incubators represent
organizations created for founders in the earliest
phases of starting a startup venture, for those who
have an innovative idea, but they need assistance
to set up a business model, legal regulations or
market entry [20]. The goal of the incubator is to
support the founders in the process of taking
innovative ideas and developing them into the
Minimum Viable Product – MVP.
Accelerators
Unlike
incubators,
accelerators are primarily focused on
technological companies that have far surpassed
the initial idea phase, came to the initial product
(left the incubator) and have ambition to “speed
up” their development. Of course, there are
exceptions to this case, so accelerators that
accept companies that are only an innovative idea
in principle can be found. The accelerator
programs are intended to last a certain period of
time, commonly it is between three and twelve
231
months, so that startups pass a certain type of
preparation and thus improve their chances of
finding the appropriate investor and secured
cooperation with it [21].
Angel Investors - According to the definition
of “Angels investors” most often former
entrepreneurs, but this is not always a rule, which
have significant amounts of money and are ready
to invest in highly risky, but also highly costeffective ventures [22]. The capital they provide
can be a one-time injection of initial money or
constant support. In this way, entrepreneurs and
owners of small businesses provide missing
resources to start operations, and business angels
invest funds in these companies, expecting a high
annual yield from investing their property, as
well as a significant increase in that property in
the short term. Business Angels are the most
important connection between funding in
developing companies, from the very beginning
to the stage in which companies are ready to be
in the capital market [23]. Based on the reports
of national federations, local networks of
investors and national associations of risk capital,
there are about 34,500 active investors in the
form of business angels at the European
continent, which invest primarily through local
investments and funds [24].
Risk Capital (Venture Capital - VC) and
Private Investment Fund (Private Equity Funds PEF) - Venture Capital Funds are defined as
funds investing in companies in exchange for
proportion. These are companies that invest
money collected from private investors with the
expectation of achieving high annual returns to
their investment. Therefore, risk capital funds
invest in innovative companies that promise
successful business. The Private Equity Fund is
the greater term from the risk capital fund. The
risk capital fund, as a rule, refers to the financing
of companies at an early stage of development,
while Private Equity Fund includes risk capital
and additional takeover [25].
Venture Capital Firms - (VCF) and private
investment funds (Private Equity Funds - PEF)
provide private capital by private investors
(indicated by the notion - The Venture
Capitalists) for the SMEs, especially those in the
initial phases development. It is important to
point out that VCF and PEF do not invest its own
capital, but funds collected by institutional or
individual investors.
It is believed that in addition to the financing
role of VCF and PEF, they usually perform two
232
more roles - monitoring (control and assistance
to the organization to develop their business) and
exit [26].
Unlike traditional suppliers of capital, risk
capital prefers high-risk ventures with a
potentially high degree of investment returns, if
these innovative ventures successfully overcome
the “Death Valley” - the period from initial
funding for startup to commercially sustainable.
Many regulatory reforms were taken by
developed countries, including those on the
European continent to ensure the survival and
sustainability of market [27].
Crowdfunding - Innovative and alternative
model of financing new risky ventures, which
allows individuals to participate with individual
donations and payments in financing for profit,
cultural or social projects, often with the aim of
gaining future products or owned shares [28].
There are three main participants in the
crowdfunding campaign. The first participant is
the author of the campaign, so someone who
organizes a campaign and collects funds for the
realization of its project. The author of the
campaign addresses another process participant Backer or Backes (supporters). Backers are
people who support a particular project and
campaign authors with their money donations.
The whole process takes place on the Internet, via
a crowdfunding platform, which is a third
participant in the process and intermediary
between the campaign and Backer’s authors. We
distinguish four types of crowdfunding [29]:
Donation crowdfunding - is the simplest
form. Backer donate to particular
campaign and do not expect anything in
return.
Reward Crowdfunding - means that
Backer’s for financial support from
campaign authors will receive some kind
of award.
Investment crowdfunding or crowd
investing - is the investment of financial
resources in the campaign, while in turn
counts on interest profits.
Equity Crowdfunding – allows backers
to become part-owners of company by
buying shares.
The development of the crowdfunding platform
has facilitated the campaign by standardizing the
process and creating higher visibility of projects.
This in turn accelerated the development of
crowdfunding at the international level.
IV. EUROPEAN STARTUP ECOSYSTEM
SUCCESS FACTORS AND SUPPORT PROGRAMS
Startup companies represent the catalysts of
economic development, their innovation
encourage
market
competitiveness
to
satisfactorily the existing needs of consumers as
well as those who are just in their formation. The
development of these micro endeavors differs
from country to country. Strategic success
factors for startup development vary in highly
developed countries in relation to those countries
trying to compensate existing backlogs. In the
21st century, competitive advantage in the
company market generates mainly by possessing
and implementing resources and skills for faster
market needs in relation to competitors.
European startup ecosystems success factors
can be divided into eight categories [30]. In
accordance with internal growth, these categories
include knowledge, human capital, and
technological progress that largely depends on
the specific company and its commitment. The
exceptional importance of human capital is
especially emphasized, which manages the
process of formation, growth and sustainability
of startup companies. Among external
independent factors are economic policies of
European Union institutions, but also the
Member States who set economic, innovation
and social base for startup development. In this
regard, we come to a conclusion that only the
interaction of internal and external factors creates
an appropriate “climate” for the success of the
startup and the ecosystems they belong to.
A. Startup Support Programs in European
Union
The European Commission has most
contributed to the growth of European startup
ecosystems through their funding programs such
as Horizon 2020 and Horizon Europe as well as
many others.
Horizon 2020 had set aside almost 800
million euros for cascade funding calls. Cascade
funding, also known as the financial support to
third parties (FSTP), is the mechanism of the
European Commission for the Distribution of
Public Funds to help users, such as new
companies, growing companies, small and
medium enterprises in adoption or development
of digital innovation [31].
This method of financing aims to simplify
administrative procedures, creating a solid
application scheme that is suitable for small and
medium-sized enterprises. Also, this mechanism
allowing some EU-funded projects, in return,
open calls for further funding [32].
On the other hand, the European Startup
Network (ESN) unites the European National
Startup Association to create a joint association
for European startups.
European Startup Network helps strengthen
European Startup Ecosystem through [33]:
presentation of the Startup Ecosystem at
the level of the European Union
(European Commission);
sharing knowledge and exchange of best
European practices;
creating partnerships between startups,
corporations, accelerators, institutions
and investors.
New trends in European startup ecosystem
are [34]:
1.
the rapid increase in funding for the start
of business;
2.
increased technological expertise;
3.
more capital employees;
4.
initiatives to strengthen the startup
scene;
5.
EU policies that empower technological
startups.
B. Standard EU Startup Nation
New policy, EU Startup Nation Standard, is
set to solve the usual problems facing startups,
such as employee retention, attracting talents and
creating endeavors.
C. Innovative Radar Platform
In order to detect the results of its financing
innovation, the innovative radar platform aims to
identify innovators and innovations of high
potential in research and innovation projects.
D. Digital Innovation and Scaleup Initiative
(DISC)
This policy was set up to counter the
investment gap faced by digital startups in
central, eastern and southeast regions of Europe
by maximizing investment opportunities and
beefing up on technical assistance programs.
233
V.
RESULTS AND DISCUSSION
This research includes the most important
parameters of selected countries, and their
comparative analysis was performed. These
selected parameters indicate the characteristics
and financing of these startup ecosystems, in
order to obtain a picture of the European startup
ecosystem on the basis of this. Research covers
the period 2019-2022. and the observed
indicators are: value of startup ecosystems and
investments in the initial stages of startup
business.
By analyzing Fig.1. and the information
presented, it can be noticed that for observed
states, the value of the startup ecosystem was
recorded throughout the year, which in 2021
recorded a decline in this indicator. As a state
with the highest values throughout the years is
Sweden followed by France and Germany.
Although Finland, Ireland, Hungary and Serbia
stand out with lower values, there are also a
tendency for positive growth through them. The
total value of startup ecosystems in 2022 for
observed states amounts to over 389 billion
dollars, and that is an increase of 200 billion
dollars compared to 2021, which is so far the
biggest growth.
Fig.2. shows the comparative display of the
value of financing in the early stages of starting
startup company for the period 2019-2022. At the
displayed diagram, it can be noticed that in most
countries, funding in the early stages except
Hungary, Ireland and Serbia, where fluctuations
of this value during the observed period were
recorded. The average value of funding startup
companies in the initial phases for observed
countries in 2022 is over 1.6 billion dollars. The
highest amounts of financial assets in the early
Figure 1. Comparative representation of the Startup
Ecosystem value for the period 2019-2022. (Data
sources: Startup Genome Reports [13,35,36,37]).
234
Figure 2. Comparative representation of the value of
financing in the early stages of starting the startup
company for the period 2019-2022. (Data sources:
Startup Genome Reports [13,35,36,37])
stages of starting startup companies were
recorded in Germany and France, while the
lowest amount was recorded in Serbia and
Ireland.
VI.
CONCLUSIONS
The process of developing a new startup
company begins with the development and
implementation of innovative ideas. However, a
good idea is not a sure indicator of the future
survival and stability of the new venture. So in
addition to the already mentioned ideas, the
efforts and commitment of the founders, the
appropriate community support, developed
entrepreneurial culture of the area from which the
company will enter into size and phase in which
the startup is located.
While conducting the research, which was set
as a basis for this study, it was observed that the
European Union has been shown to improve the
conditions for the establishment of the startup
companies and improving the functioning of
ecosystems to catch up with the largest
competitors, and they are the United States and
China. Efforts can be noticed through numerous
legislation adopted in favor of entrepreneurs with
the aim of providing further progress and
development.
Analysis of data collected based on the
Startup Genome Organization for the period
from 2019 to 2022 has led to a conclusion that
countries have been recorded in significant
growth of the value of indicators through the
years: France, Germany, Netherlands and
Sweden. Considering the success factors of the
European startup ecosystem, the obtained results
give an even clearer image. The mentioned states
invest an intensive effort during years in
cultivating
and
developing
innovation,
intellectual capital, entrepreneurship, but also
sustainable development, which makes them
“fertile soil” for the development of the best
startup venture on the European continent.
During the research, certain obstacles in the
form of inconsistency of data took place in
consideration. Namely, in Startup Genome
reports for four observed years in 2019, 2020,
2021 and 2022 there was a change in the
methodology. It should also be noted that reports
did not cover a number of other European
countries, and they were not part of this research.
Therefore, in the future, other European
countries should be included in these reports,
which would lead to more complete and better
research. By including more European countries
in reports, it would be clearly insight into the
reasons for the success of certain startup
ecosystems and the prevention of negative
consequences caused by turbulences on the
market, and especially in the conditions of
current crises. Such research, also has practical
contributions, primarily in terms of guidelines
provided for starting startup companies in the
European startup ecosystem, as well as the
possibilities of their financing and development.
ACKNOWLEDGMENT
The results presented in this paper are part of
the research within the project “Improvement of
teaching processes at DIEM through the
implementation of the results of scientific
research in the field of Industrial engineering and
management”, Department of Industrial
Engineering and Management, Faculty of
Technical Sciences in Novi Sad, University of
Novi Sad, Republic of Serbia.
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PaKSoM 2022
Intellectual Capital and Emergencies
Jelena Malenović-Nikolić1, Uglješa Jovanović2
1,2
1
Faculty of Occupational Safety, Niš, Serbia
malenovicfznrr@gmail.com, 2ugljesa.jovanovic@znrfak.ni.ac.rs
Abstract—Intellectual capital, as a resource
ensuring competitive advantage and providing a
basis for proper knowledge management, can
greatly contribute to prevention of emergencies.
Modern economy is based on material and nonmaterial resources (knowledge). Possession of
information and individuals’ ability to efficiently
and timely utilize the information are essential for
the mitigation of negative environmental impacts.
The previous values of material economy (real
estate and money) are gradually being replaced by
new ones, such as gold and uranium. Prevention of
emergencies caused by exploitation of uranium
reserves and increased radioactivity can also be
based on the elements of modern economics. This
requires adequate use of intellectual capital in the
form of individual competencies and internal
capital, in order to efficiently use national uranium
resources and mitigate the effects of natural
radioactivity. This paper discusses the increased
concentrations of natural radioactivity in the area
covered by Mount Stara Planina. Additional
problems include the presence of an improperly
shut down uranium mine and the presence of
uranium tailings around the mine, in the vicinity
of the villages of Gabrovnica and Mezdreja. These
problems are considered as potential emergencies.
The foundation for creating added material value
together with the simultaneous solution of
accumulated environmental issues, is to utilize the
experience,
capabilities,
and
skills,
or
competences, as the elements of human capital,
and to collect the measured results in databases
(internal capital).
Keywords – intellectual capital, emergencies,
risk assessment
I.
INTRODUCTION
Intellectual capital management is directly
associated with knowledge development. The
importance of organizational-social capital is in
that it causes people to work together
successfully to accomplish tasks [1,2].
Intellectual capital is one of the relatively modern
ISBN: 978-86-82602-00-2
concepts that are increasingly relevant in terms
of concept and measurement [3]. Radioactivity,
the property of chemical elements or substances
to emit invisible high-energy particles or rays,
has a negative impact on the fundamental
elements of the environment – flora and fauna.
As a natural radioactive element, uranium is
present in high concentrations in minerals and in
lower concentrations in water, plants, animals,
humans, and rocks. In addition to uranium,
natural world also contains isotopes of
plutonium, the naturally occurring element with
the highest atomic mass. Natural radiation in the
form of Earth’s crust radiation originates from
naturally occurring radioactive elements in clay
substrates, rocks, and soil. Radioactive
substances accumulate in water, soil, and
sediments, and the radiation is characteristic of
different parts of the Earth and usually the most
prominent above uranium ore deposits.
Combination of such knowledge with the
possibility of adequately applying it facilitates
the analysis of the effects of natural and artificial
radioactivity.
The major radioactive materials in rocks
include potassium, rubidium, and the radioactive
elements formed by the decay of uranium and
thorium. Individual knowledge of these facts is
not considered intellectual capital [4], because
individuals who possess knowledge without
applying it do not contribute to development and
do not create material or non-material values.
Discovery theory refers to the systematic
scanning of the environment to discover
possibilities for creating new products and/or
services [5].
II.
KNOWLEDGE AND INFORMATION AS THE
BASIS OF INTELLECTUAL CAPITAL
With the entirety of their individual and
collective knowledge, individuals are considered
human capital only when they transform their
237
knowledge into specific activities aimed at
solving specific observed problems. The basic
information about uranium that an individual
possesses is only a portion of professional
competence, as the example below will
demonstrate.
Uranium, a radioactive chemical element
present on Earth since its formation, occurs as a
mixture of three uranium radionuclides: 238U –
99.2745%, 234U – 0.0055%, and 235U –
0.7200% [6]. It has been studied for over a
century by experts in the fields of radiation,
mining, geology, paedology, physics, chemistry,
biology, and technology, primarily because of its
physical (nuclear), chemical, geological
(radiochemical and geochemical), toxic, and
ecological properties [6]. Studies indicate that
scientists have gained knowledge, capabilities,
and experience, as the foundations of human
capital. The most frequent area of study
regarding uranium is the transformation of the
atomic nucleus and the occurrence of ionizing
radiation during the formation of new chemical
nuclei. It was discovered that uranium nuclear
transformations are accompanied by significant
energy transformations, which initiated the
period of nuclear energy exploitation.
Investigations of uranium application show that
professional competences of employees have
been converted to collective knowledge, which
remains company property.
Research has advanced over time and
collective knowledge has reached significant
heights, which is evident from the following
facts. Uranium is widespread and can be found in
the basic environmental elements. It is present in
small concentrations in foods for humans and
animals, whereas higher uranium concentrations,
i.e., larger uranium deposits in nature, depend on
redox processes in the presence of oxygen and
organic matter [6].
In nature, uranium forms chemical
compounds with other elements in the
environment, even though it is very inert and
poorly soluble in water. ‘Inert’ uranium, which
has around 97%-presence in nature [6], is not
typical of migration processes through
ecosystems and biological communities. The
problem of uranium oxidation and transition into
hexavalent uranium refers to the formation of
water-soluble compounds. The remaining
uranium, present in the range from 0.1 to 3% [6],
is categorized as the so-called ‘mobile’ uranium,
because it migrates easily and has an ecological
238
and biological significance. Its migration from
the soil into plants proceeds through ion
exchange [6] and results in complex compounds
that it forms with organic acids from the soil or
secreted from the plant roots. The stated facts
indicate that employee competences when
studying uranium transformations are not
negligible, since changes under specific
circumstances were monitored, accompanied by
socially acceptable behavior (team work).
The ability of employees to direct their
research toward creating value and shared results
is verified by the existence of professional
competences, as seen in the following example.
Prevention of uranium migration is possible if
the hexavalent uranium (U6) is reduced to
tetravalent (U4), weakly soluble ‘inert’ uranium
[6]. This process is an important destabilizer of
environmental systems, although a portion of
uranium is lost through oxidation. Hexavalent
uranium is easily drained by precipitation but it
reaches water courses and is scattered via
deposited sediment.
Reduced uranium concentrations in rocks and
increased concentrations in water sediment pose
even more serious environmental problems.
Uranium concentrations in sediments also
increase because of the physical and chemical
processes of erosion, which accelerate uranium
transport. Erosion processes are responsible for
significant uranium ore deposits over the
previous two to three billion years, and one of
those processes occurred in Mount Stara Planina
(lit. old mountain) nature park, the Serbian
portion of the Balkan mountain range.
Investigating a problem in a specific territory and
applying scientific knowledge is a confirmation
of concrete results, wherein rational capital
includes relations with the external environment.
Rational capital based on specific job
assignment and higher autonomy of lower
organizational structures leads to higher
individual values of a system. An investigation
of a single issue from different perspectives
suggests that the problems of defining uranium
reserves, analyzing chain reactions, and
determining the effects of mining are solved
using a systems approach. Nowadays, it is
estimated that the total uranium ore reserves
amount to appr. 5*106 tonnes, and that one tonne
of uranium in nature contains 992.9kg of 238U,
7.1kg of 235U, and 0.54kg of 234U, when the
isotopes in the mixture are balanced [6]. It is also
estimated that ocean waters contain considerably
more uranium (appr. 5*109 t), but the issue is the
complicated process of underwater extraction,
which poses substantial risk to marine life.
Four billion years ago, natural redox
processes created the ‘natural nuclear reactors’,
in which a chain reaction occurred. These
reactors contained several tonnes of uranium
oxides with 2% of 235U. The surrounding water
served as the neutron moderator and the coolant
for the reactor core. The content of fission
products was about 7%, while the ratio of 235U
and 238U in the reactors was 0.001–0.002. The
life span of these reactors is 100 years when they
are cooled. The leftover uranium fuel was found
to contain 0.2% 235U, which means that the fuel
was ‘depleted’ during the fission reaction [6].
The organization of studying natural
processes should be defined in such a way that
every aspect of observation is given sufficient
attention, from the moment a specific occurrence
has been registered. The first natural nuclear
reactor with leftover depleted uranium was found
in Gabon, where six reactor cores were
discovered. In addition, the water that washed the
mine shafts was found to contain amino acids and
hydrogen peroxide [7], which indicates that the
ionizing radiation from the shafts caused the
polymerization of C, H, N, and O atoms and
radiation-chemical processes, i.e., water
radiolysis [8]. In this case, it is necessary to base
intellectual capital on proper knowledge of
physical, chemical, radiation, and biochemical
processes. It is well known that the following
processes occur in nature as well as during
laboratory tests [6]:
physical processes (uranium nuclear
fission);
chemical processes (synthesis
compounds and polymerization
molecules);
radiation processes (water radiolysis);
and
biochemical processes (formation of
organic macromolecules).
important to include qualified and capable
personnel in the assessment team, because their
intellectual input is vital for proper assessment.
III.
STRUCTURAL CAPITAL AND URANIUM
DEPOSITS
Databases,
patents,
organizational
schematics, and projects form the basis of
structural capital, which also serves as support
for the development of human capital (Fig.1).
Structural capital implies the use of information
technology in logical processes, so in this case it
is based on the application of available data on
uranium deposits distribution and measured
concentrations. Uranium deposits were also
formed in the territory of present-day Serbia
several billion years ago due to various physical
and chemical processes. There are multiple
geological areas containing uranium in higher or
lower concentrations, with igneous, sedimentary,
carbonate, and granite rocks as the main sources.
Geological research of uranium uncovered
uranium deposits in and around the following
locations: villages of Gornjane, Brnjica, and
Neresnica; the Homolje Mountains; Prokuplje;
Stara Planina; Mount Bukulja; Cer and Iverak
mountains; the South, the West, and the Great
Morava basin; Mount Jastrebac, the Jablanica
River; the Pusta River; Vranje; Mount Besna
Kobila; and Bosilegrad [9]. Organizational
capital of the team that assesses the possibility of
an emergency is an important element of
structural capital. It involves the organizational
structure of the team, which is expected to
properly apply the existing databases and
intellectual documentation.
of
of
The
technological
procedures
for
transforming natural into depleted uranium were
discovered much later compared with the natural
processes. The knowledge of processes of natural
transformation
of
radioactive
elements
constitutes an individual collective value of a
system in the form of human capital. To
determine the probability of emergencies, it is
Figure 1. Structural capital and emergency
prevention scheme
239
IV.
ORGANIZATIONAL CAPITAL AND RISK
ASSESSMENT
Organizational capital, which is based on
innovation, process, and consumer capital, can
have a very important role in assessing the effects
of uranium radioactivity in specific areas.
Innovation capital, as the ability of a team to
respond constructively to when solving current
issues, implies flexibility when there is a need to
change the organizational structure, attitudes,
and work processes focusing on the
determination of real values of uranium
concentrations. The analysis of uranium
properties
(physical,
biochemical,
and
radioactive) revealed that uranium is a toxic and
radioactive chemical element. Uranium deposits
have high concentrations of radioactive matter,
so the high risk to the surrounding living
organisms has to be considered. The innovation
processes need to be based on applicable
knowledge
and
constant
improvement,
considering the seriousness of radioactivity
effects.
Sediments and rocks are the main sources of
uranium in nature. Uranium concentrations in
water depend on the concentrations in soil and
sediment as well as on the solubility of uranium
compounds. The data on the natural distribution
of uranium and the geochemical composition of
soil indicate ‘zero state’ values of a given area,
which is the basis for the newly-introduced
uranium risk assessment for the given area.
Transformation of uranium within the
technological processes that exploit its
radioactive components leads to even more
significant negative impacts on all environmental
elements. Indirectly, increase of uranium
concentrations in water and soil harms the health
of humans and reduces their quality of life.
Constant improvement is necessary, coupled
with the inclusion of professionals, in order to
improve not only intellectual capital but also the
reliability of assessing the level of environmental
quality degradation.
A monitoring system for water and soil can
determine uranium distribution and define its
migration
flows.
Intellectual
capital
management, which is based on a culture of
motivation,
innovation,
and
constant
improvement, is crucial for the organization of a
monitoring system. The results could also be
used to determine the following aspects:
240
uranium concentrations;
activities of uranium within the basic
environmental elements and the food
intended for human and animal use;
adequate bioindicators; and
radioecological ‘capacity’ of a given
area to withstand additional amounts of
uranium.
Among other things, the clearly set goals by
the emergency assessment team leader need to
include the consideration of the impact of
adequate technological processes, use of
artificial fertilizers, coal burning, and the impact
of tailings ponds and ash deposits. Mining is one
of the major causes of elevation of naturallyoccurring radionuclide material concentrations
on the Earth’s surface [7]. The aim of study [7]
was to evaluate the human risk associated with
exposure in soils from mine tailings around. The
RESidual RADioactivity (RESRAD) OFFSITE
modeling program (version 3.1) was then used to
estimate the radiation doses and the cancer
morbidity risk [7]. The study presented the
cancer morbidity risk from all radionuclides
(238U, 232Th, and 40K) and all pathways
summed during 100 years with sensitivity
analysis on cover depth [7,9].
Sources of uranium also include the
technological processes of mineral fertilizer
production, phosphoric acid production,
phosphogypsum generation, coal combustion,
and disposal of ashes containing radioactive
matter.
Uranium presence in coals depends on the
type and origin of coal and ranges from 15 to
50.8 g/kg [10], as shown in Table I.
Management is an important link between
human, organizational, and consumer capital,
which is why it is necessary for a real assessment
of the state of the environment. The data shown
in Table I indicate that uranium activity in coals
in Serbia is by no means negligible.
TABLE I.
AVERAGE URANIUM ACTIVITY [10]
Material
Activity [g/kg]
Coal
15-50.8
Coal in Serbia
40.8
Ash and slag
40-140.8
Fly ash
150.8
The biggest problem is the uranium activity
in slag and ash, because the ash deposit sites are
directly surrounded by agricultural land.
Scattering of ash and emissions of fly ash cause
air pollution. Considering the aforementioned
environmental issues, it is understandable that
ash deposits are classified as hazardous waste
dumps and potential radioactive sources.
The team assessing the possibility of an
emergency needs to consider all possible hazards
in order to give a proper assessment and provide
the expected service to information users.
Efficient value creation depends on the
possibility of prompt response and prevention of
serios consequences. If a team is satisfied with
the completed work without having provided a
proper assessment, it may be a strong indication
of oversights in strategic and operational
activities.
V. INDIVIDUAL COMPETENCES IN THE
ASSESSMENT OF ENVIRONMENTAL QUALITY
DEGRADATION
Individual work in an emergency assessment
team helps create visible and invisible values,
depending on the degree of individual
competences.
Environmental
degradation
assessment should be performed by persons with
adequate education and significant work
experience. Assessment results largely depend
on the individual competences of technical
personnel, experts, and team leader, especially
when protected areas are concerned. The area of
Mount Stara Planina was designated a nature
park in 1997, but it is also specific for its natural
occurrences and deposits of uranium [6], as
shown in Table II.
The area of Stara Planina is characterized by
two levels of radioactivity [6], with the limit of
500 cps (counts per second). Examinations of
radioactivity around entrances into the
abandoned mines revealed higher radioactivity
levels in Gabrovnica, Mezdreja, Novo Korito, as
well as in the watercourse of the Trgoviški
Timok.
The analysis of internal data based on the use
of
concepts,
computer
systems,
and
administrative processes indicates that team
members need to direct their activities toward
creating adequate internal structure in order to
identify key issues caused by natural and
anthropogenic events. The main sources of
radioactivity on Stara Planina are classified
as [6]:
TABLE II.
REGIONALIZATION OF URANIUM
OCCURRENCES AND DEPOSITS [10]
Uranium deposits
Janje granite orefield
Infiltration
/
Uranium occurrences
Janje granite orefield
Crni Vrh series orefield
Inovo series orefield
Colorful series orefield
Colorful series orefield
Granite endogenous –
occurrences and deposits;
Metamorphogenic – syngenetic; and
Sedimentary
originating
from
fluctuation of uranium deposits by water
in various types of sedimentary rocks
formed in the continental environment,
which could be classified as epigenetic
types.
syngenetic
The four analyzed samples from the
Mezdreja location are described below [11-13]:
A granite sample was taken near the pit.
The GR110 device registered 520 cps at
the sampling site and 420 cps and 0.322
µSv/h at the pit entrance. The pit has
been covered and can no longer be
entered. The rock is partially cracked.
Small offshoots of silicified material
were observed in the area from the pit
entrance to the tailings pond. The
registered radioactivity was 320 cps and
0.182 µSv/h.
Radioactivity at the tailings pond was up
to 1250 cps and 0.421 µSv/h.
A sample taken at the interface of granite
and gabbro showed the radioactivity
level of 120 cps and 0.192 µSv/h.
The Gabrovnica uranium deposit has a
similar genesis to that in Mezdreja, and the
uranium ore has developed in crushed granites.
The samples included fresh granite [6] near the
pit (240 cps and 0.210 µSv/h) and granite from
the tailings pond (360 cps and 0.248 µSv/h),
whereby lower values were registered for the
Grabovnica site.
At the Mezdreja mine, only test unearthing
was performed, whereas almost all of the ore was
unearthed at the Gabrovnica mine. The ore was
processed [11-13] at Mezdreja (capacity of
241
60 t/day) and Gabrovnica (capacity of 200 t/day)
mines.
The collected data, as elements of internal
structure, are predominantly based on a wellorganized monitoring system, but they should
also include the element of uncertainty [14],
owing to the influence of various factors at
measurement locations.
VI.
INTELLECTUAL CAPITAL IN EMERGENCY
PREVENTION
Emergencies are established through actions,
declarations, and management in the event of
threats to material and natural resources and the
environment from natural disasters, technical and
technological accidents, and other disasters
(Fig.2), as stipulated by the Law on Emergencies
[15]. The analysis of the impact of radioactivity
on Stara Planina indicated that there is increased
radioactivity specifically around the abandoned
Mezdreja and Gabrovnica mines, in the area of
Inovo schist, and in the area of Jelovica-Dojkinci
red sandstone. Solution of the observed problems
using databases and individual knowledge and
experience, but by ensuring material gains based
on uranium reserves, meets the need for utilizing
natural (uranium reserves) and intellectual
(qualified personnel) resources of the country by
relying on intellectual capital.
The Emergency Protection and Rescue Plan
is used to plan preventive and operating
measures for the prevention and mitigation of the
effects for the purpose of protection and rescue
of people and property and provision of basic
living conditions, all on the basis of threat
assessment. Modern economy necessitates the
use of knowledge, so that efficient knowledge
management may also generate profit, reduce the
level of environmental pollution, and prevent
emergencies.
Measurement results show that Serbia
possesses considerable uranium reserves, which
could lead to an increase of material value.
Natural concentrations of uranium in granite
range from 6.5 to 20.09 cpm, and the values are
increased by 1.5 to almost 5 times compared to
the natural uranium distribution in granite. The
measured maximum natural concentrations of
uranium in the offshoot of graphitic schist of the
Inovo series was 27.31 cpm, which is 18.2 times
higher than the average uranium concentration
(1.5 cpm). The gamma absorbed dose is 5.4 times
higher than the global average. Grey aleurolites
of the colorful series contain the measured
242
maximum of 54.43 cpm of uranium, which is
almost 22 times higher than the average uranium
content in sedimentary rocks. The gamma
absorbed dose is 3.3 times higher than the global
average [6,11].
Uranium concentrations also point to
environmental issues that require immediate
attention. According to the Law on Emergencies
[15], an emergency may be declared after the fact
if the immediate danger of its onset could not
have been predicted or if, owing to other
circumstances, it could not have been declared
Intellectual Capital
Knowledge management
Human capital
Support for the development of human capital
Use of information technologies in logical processes
Application of available data on uranium deposits
distribution and measured concentrations
Structural capital
Organizational capital of the team that assesses the
possibility of an emergency - an important element of
structural capital
Organizational capital
Organizational capital, which is based on innovation,
process, and consumer capital, can have a very
important role in assessing the effects of uranium
radioactivity in specific areas
Inclusion of professionals
Iinclusion of professionals, in order to improve not only
intellectual capital but also the reliability of assessing the
level of environmental quality degradation
Assessment results
Assessment results largely depend on the individual
competences of technical personnel, experts, and team
leader, especially when protected areas are concerned
Management of intellectual capital
Management of intellectual capital involves using the
knowledge and information at the very first moment, so
it is essential to use the knowledge as the foundation for
emergency prevention
Figure 2. Structural capital and emergency prevention
scheme
momentarily after learning about the immediate
danger of its onset. Accordingly, the actual
situation must always be considered. According
to the Law on Radiation and Nuclear Safety and
Security [18], systematic monitoring of
environmental radioactivity is conducted in order
to determine the presence of radionuclides in the
environment and to assess the level of human
exposure to ionizing radiation in normal
circumstances, in the event of a suspected
accident, and during an accident.
Radioactivity monitoring results for
environmental samples are published within the
annual reports on the population’s exposure to
ionizing radiation. In Serbia, the gamma ambient
dose equivalent rate is monitored in Belgrade,
Vinča, Golubac, Zaječar, Lazarevac, Kladovo,
Kragujevac, Novi Sad, Niš, Obrenovac, Palić,
Pirot, Prahovo, Sremska Mitrovica, Kraljevo,
and Užice. Air sampling for radionuclide content
examination is conducted in Belgrade, Vinča,
Subotica (Palić), Niš, Zlatibor, Zaječar, and
Vranje. Samples of solid and liquid precipitation
are collected daily and continuously over the 24
hours in Belgrade, Vinča, Subotica (Palić), Novi
Sad, Niš, Zaječar, Kragujevac, Zlatibor, and
Vranje. Samples of staple foods and dairy
products are collected in Belgrade, Subotica,
Novi Sad, Niš, Užice (Zlatibor), Zaječar, and
Vranje [16].
Surface water samples are collected daily
from the Danube in Bezdan, Zemun, Vinča, and
Prahovo; from the Sava in Sremska Mitrovica
and Belgrade; from the Nišava in Pirot; from the
Tisa in Kanjiža; from the Timok in Knjaževac;
and from the Drina in Loznica. Drinking water
samples are collected daily from water utilities
that supply water to settlements larger than
100,000 people. In 2021, drinking water samples
were collected in Belgrade, Nišl, Subotica,
Kragujevac, Čačak, Kraljevo, and Leskovac
[13]. Attention should also be given to the
leachate from the abandoned uranium mines
Mezdreja and Gabrovnica. The leachate form
graphitic schists is drained into the watercourses
of the Crnovrška, Gabrovnička, and Inovska
rivers, but also into the water of the Trgoviški
Timok, which flows through limestone, all of
which warrants the analysis of samples from the
said watercourses. It is also necessary to examine
the status of the watercourse at the confluence of
the Crnovrška into the Trgoviški Timok in the
village of Balta Berilovac.
The observed issues reveal the fact that much
is known about the issues but that little is being
done to minimize the effects. The aim of this
paper is to draw attention to the possibility of
deriving benefit from uranium reserves through
proper use of intellectual capital. The analyzed
data indicate that uranium and radium are usually
in equilibrium, which suggests that there is no
significant uranium migration. The problem is
that specific locations contain uranium
concentrations
that
exceed
radium
concentrations, indicating that the deposition
processes are still ongoing. Uranium
accumulation and formation of infiltration
uranium deposits are by no means completed
processes, so it is necessary to monitor the values
of radioactive materials on Stara Planina,
specifically in Gabrovnica, Mezdreja, Inova, and
in the Trgoviški Timok around the village of
Kalna.
Encouraging professionals to apply their
intellectual capital to creating values and solving
environmental issues will result in adherence to
the basic principles of sustainable development.
VII. CONCLUSION
It is necessary to base the solutions to
environmental issues on efficient knowledge
management as well as on recognition of
individual competences within the professional
community. The need to expand knowledge, to
adopt new technologies, and to share individual
experiences will lead to successful solution of
environmental issues by means of modern
economy. Prevention of emergencies based on
the analysis of radioactivity data indicates that
immediate action was not taken and that there is
a need to resolutely and promptly determine and
mitigate the serious effects of natural and
anthropogenic radioactivity on Mount Stara
Planina. Monitoring of radioactivity as a
regularly occurring phenomenon and the
presence of uranium deposits requires a reevaluation and definition of corrective measures
to reduce the negative impact. Anthropogenic
impact on radioactivity levels is evident, as
confirmed by the values of radioelements. The
problem also needs to be addressed by declaring
an emergency in order to allow the reclamation
of tailings ponds and block the transport of
radioactive materials into the environment of the
surrounding villages. Red sandstones also
contain uranium, which is transported further
through leachate and watercourses.
243
Management of intellectual capital involves
using the knowledge and information at the very
first moment, so it is essential to use the
knowledge as the foundation for emergency
prevention.
Recognition of individual potential and its
utilization within interdisciplinary teams leads
to the use of human capital in creating new
values when minimizing the effects of negative
anthropogenic activity.
[7]
[8]
[9]
ACKNOWLEDGMENT
[10]
The presented research is funded by the
Ministry
of
Education,
Science
and
Technological Development of the Republic of
Serbia.
[11]
REFERENCES
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[2]
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[5]
[6]
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Allameh, S. (2018). Antecedents and consequences of
intellectual capital. Journal of Intellectual Capital,
19(5), 858–874
Ali, S., Murtaza, G., Jiang, J., & Naeem, M. (2022).
Intellectual capital and financial performance: A
comparative study. Frontiers in Psychology, 4672.
Nishanthini, A., & Arthika, R. (2021). The Impact of
Intellectual Capital on Financial Performance: A Study
of Sri Lankan Financial Institution. International
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4(9), 1342-1348.
Sunać, D., & Ftur, I. (2004). Intellectual capital
[Intelektualni kapital]. Ekonomski pregled.
Ognjanović, J., & Slavković, M. (2022). Intellectual
capital and financial performance of entrepreneurs in
the hotel industry. Hotel and Tourism Management,
10(1).
Abdulqader, S. A. (2017). Characteristics of natural
and antrogenically developed radioactivity of the
Stara Planina mt. and its environmental impact
[Karakteristike prirodne i antropogeno izazvane
radioaktivnosti Stare planine i njen uticaj na životnu
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[13]
[14]
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sredinu]. Doctoral dissertation, Singidunum university,
Faculty of applied ecology Futura, Belgrade.
Mathuthu, M., Kamunda, C., & Madhuku, M. (2016).
Modelling of radiological health risks from gold mine
tailings in Wonderfonteinspruit catchment area, South
Africa. International Journal of Environmental
Research and Public Health, 13(6), 570.
Meija, J., et al. (2016). Atomic weights of the elements
2013. IUPAC Technical Report.
Momčilović, M., Kovačević, J., & Dragović, S. (2010).
Population doses from terrestrial exposure in the
vicinity of abandoned uranium mines in Serbia.
Radiation Measurements, 45(2), 225-230.
Muto, T., Hirono, S., & Kurata, H. (1965). Some
aspects of fixation of uranium from natural waters.
Mining Geology, 15(74), 287-298.
Nikić, Z., Letić, L., Kovačević, J., & Nikolić, V.
(2013). State of elements of the environment in the
broader area of former uranium mines in the catchment
of the Trgoviski Timok. Glasnik Šumarskog fakulteta,
(107), 163-174.
Nikic, Z., Kovacevic, J., & Papic, P. (2008). Uranium
in the groundwater of Permo-Triassic aquifers of the
Visok region, Stara Planina, eastern Serbia. Water, air,
and soil pollution, 192, 47-58.
Nikić, Z., Kovačević, J., & Radošević, B. (2002).
Uranium content in ground water in Stara Planina
Triassic sediments. In Proceedings of the International
Conference on Uranium Mining and Hydrogeology III
and the International Mine Water Association
Symposium, Freiberg (pp. 99-106).
Peng, X., Min, M., Qiao, H., Wang, J., & Fayek, M.
(2015). Uranium-series disequilibria in the
groundwater of the Shihongtan sandstone-hosted
uranium deposit, NW China. Minerals, 6(1), 3.
Law on Emergencies, Official Gazette of the RS, No.
111/2009, 92/2011, and 93/2012.
Republika Srbija, Ministarstvo zaštite životne sredine,
Sektor za nadzor i predostrožnost u životnoj sredini
(2019). Izveštaj o radu inspekcije za zaštitu od
jonizujućih zračenja za 2018. godinu.
Law on Radiation and Nuclear Safety and Security
(Official Gazette of the RS, No. 95/18 and 10/19)
PaKSoM 2022
Performance Quality: A Measure of
Organizational Complexity
Dragoljub Šarović1
1
Montenegrin Association for Risk Management, Malo brdo L1/37, Podgorica,
Montenegro
1
dragansarovic@mafrm.me
Abstract—The total production costs change
depending on the quantity of scrap and waste
reduction costs. As the quantity of scrap is
reduced, production costs are also reduced. When
that percentage starts to approach zero, costs
begin to rise. This implies that there is an optimal
percentage of scrap and an optimal organizational
complexity for which production costs are
minimal. An organization is able to maintain the
optimal quantity of scrap by using the PDCA
(Plan, Do, Control, Act) improvement cycle.
However, this will be of no help if in the meantime
the competition finds a way to manage costs more
efficiently and thus overtake the position of the
said organization on the market. This paper
therefore suggests that the organization, by
applying a creative approach - the PDCA cycle of
improvement and performance evaluation, should
aim to reach the ideal goal: the reduction of the
optimal quantity of scrap to zero without
additional costs, whereby the total production
costs are reduced to the basic production costs
only. It is likely that the organization can achieve
the ideal goal over time, by implementing many
different types of creative PDCA improvement
cycles. The corresponding level of organizational
complexity which is related to the complexity of
the external context approaches the ideal
organizational complexity. In order to face the
organization with the growing complexity of the
external context, this work uses the Luhmann’s
approach, according to which the system will
never be as complex as its environment.
Keywords - ideal goal, ideal complexity,
performance, creativity
I.
INTRODUCTION
Creativity is related to motivation and it is the
driving force for the improvement of the process.
The complementarity of creativity and work
ISBN: 978-86-82602-00-2
standardization holds enormous potential for
discovering greater methods of performing the
work. The most important indicators of the
successful operation of an organization are
quality, productivity and costs. When it comes to
the relationship between productivity and quality
we can use Edward Deming's statement:
“productivity grows in parallel with quality”.
The relationship between productivity or costs
and quality is observed through the process of
production, which means that the increase of
productivity makes no sense if the products are
of low quality [1].
The first important question which arises in
this work is whether the organization can achieve
what Kondo calls the “ideal” (“ultimate”)
goal [1]. In other words, can the percentage of
non-conforming products be reduced to zero,
whereby production costs would be reduced only
to basic costs? To reach the ideal goal, this paper
recommends the use of creative approach and the
PDCA (Plan, Do, Check, Act) improvement
cycle.
Schwandt states that the top management of
the organization tries to strike the balance
between reducing and increasing the
organizational complexity. Simultaneously, the
management tends to adapt the organization in
accordance with the influence of the growing
complexity of the external context [2]. This
means that the level of organizational complexity
can be too high and may lead to a decrease of
profit, flexibility and negative quality of product
performance. In addition, the organization can
become inflexible due to its simplicity, which
results in the incompetence to deal with the
complexity of the external context.
245
Therefore, this paper asks two more
questions: Is there an optimal level of
organizational complexity, and if there is, is it
sufficient to achieve a competitive advantage?
How does the level of organizational complexity
affect the quality of product performance?
In order to consider these issues this paper
uses both Luhmann's approach and the
hypothetical relationship between organizational
complexity and performance, graphically
presented in the form of an inverse letter “U” [2].
Moreover, a greatly important tool from the
ISO 9001:2015 standard, known as performance
evaluation, was used. At the same time, a relative
definition of complexity is given: System
complexity is a function of the number of
elements, the number of mutual interactions
between elements, the complexity of the
elements of the system and the complexity of
their interactions [3].
The purpose of this work is expressed though
two statements. The first one is that top
management can lead the organization towards
reaching the ideal goal by creating the conditions
for the “wasteful” expression of employees'
creativity in the process of production. Another
one is that top management can improve the
quality of performance by improving
organizational complexity (which creates value)
and its connection with the complexity of the
external context.
II.
METHODS
Here are presented the methods and tools
used to answer the questions posed in the
introduction of the paper. The ISO 9001:2015
standard requires the evaluation of system and
process performance in order to achieve strategic
goals. Internal checks and reviews conducted by
the top management improve the processes in the
organization.
There are always more methods to improve
quality of the product. In addition, there is always
a space to improve the method which is currently
been used, by practicing the creative approach.
The conclusion that follows from the
abovementioned is that the corresponding costs
are variable. It is on this variability that the
concept/idea of improvement is based.
In order that a creative approach gives the
best possible results, top management needs to
create the conditions for the full “release” of
employees' creativity, as follows: before
246
Figure 1. Spiral of the PDCA cycle [3].
performing the work, it is necessary to
communicate a clear and realistic goal of the
task, to work persistently on creating a sense of
responsibility of the employees towards the job,
to plan time which is necessary for expressing the
new ideas, to enable new ideas to become
reality [1].
By applying the PDCA methodology (Fig.1),
which is based on a repetitive cycle of activities
and monitoring, we create prerequisites for
constant
improvements
and
effective
management of processes. The purpose of using
these methods and tools is a quality assessment
of users’ satisfaction with the achieved
performance.
According to Ishikawa Kaoru, the quality is
divided into two categories: positive and
negative. The first category refers to the positive
characteristics that make it superior to the
competition. The second refers to defects,
omissions and deficiencies [1].
To consider the first question from the
introduction of this paper, we should analyze a
graphic representation of the relationship
between production costs and the quantity of
inappropriate products (Fig.2). It can be seen that
the costs of scrap (amounts of non-conforming
products and finishing) decrease almost
proportionally with the reduction of the quantity
of scrap. Simultaneously, the costs of reduction
of scrap are growing intensively. Therefore, the
total costs of production initially decrease with
the reduction of the quantity of scrap. However,
when that percentage starts to approach zero,
they start to grow. Therefore, there is an optimal
percentage of scrap for which costs of production
are minimal.
If the top management additionally reduces
the quantity of scrap by empowering the
creativity of employee and using PDCA cycle,
internal checks, review and evaluation of
performance, then the value of total costs of
If the employees express additional
creativity, it is possible that the total costs of
production equalize with the basic costs of
production. Simultaneously, the optimal quantity
of non-conforming products will be reduced to
zero. That is the ideal (ultimate) goal [1].
To consider the second and third questions
from the introduction of the paper, we use the
Luhmann's approach to simplicity (Fig.3), and
the
hypothetical
relationship
between
organizational complexity and performance
(Fig.4).
Due to the growing complexity of the
external context, the increased pressure of
selection results in simpler patterns of selectivity,
until they become mechanical (based on
simplified cause-and-effect relationships). As a
result of the pressure of selection and cause-andeffect (mechanical) decisions, the complexity of
the system is reduced to a level that ensures a
positive performance quality [2]. The pressure of
selection means the pressure of the external
context of the organization that guides its
evolution in a certain direction. Fig.4 shows the
hypothetical relationship between organizational
complexity and performance.
Production costs
production and the optimal amount of nonconforming products will decrease (as it is shown
by dashed lines in Fig.2).
Little
Quantity of nonconforming
products
Much
Figure 2. Costs of production and quantity of nonconforming products (scrap) [1].
Legend:
a)
basic costs of production;
b)
costs of scrap (defective
products, finishing);
c)
costs of reduction of scrap;
d)
total costs of production.
Figure 3. Luhmann's approach of coping with rising environmental complexity [3].
247
direction of reducing complexity and achieving
positive performance quality (Fig.5). This
moving continues as long as the appropriate level
of organizational complexity creates value.
Figure 4. Relationship between organizational
complexity and performance. [4].
By including more (new) PDCA cycles,
performance evaluation and full creativity, we
can expect that over time the moving of an
optimal organizational complexity, which is
directly related to the complexity of the external
context (e.g. customer satisfaction), will
correspond to positive performance quality and
the ideal goal. I named this level of
organizational complexity an ideal (final).
IV.
CONCLUSION
Reaching the minimum percentage of scrap
(quantity of non-conforming products and
finishing) for which the costs of production are
minimal does not imply a competitive advantage
on the market. The reason for this lies in a fact
that other manufacturers can find a more efficient
way to reduce both the costs of production and
the quantity of scrap at the same time. An
organization can achieve a competitive
advantage if it constantly strives to reach an ideal
goal that corresponds with positive performance
quality and ideal organizational complexity.
Figure 5. Moving of an optimal organizational
complexity towards the ideal organizational
complexity.
III.
RESULTS
The growing organizational complexity is a
result of the adaptation of the organization during
its confrontation with the complexity of the
external context. In order that the organization
operates successfully, it is necessary to have a
certain level of organizational complexity.
However, this growth of complexity is desirable
as long as it creates the value for the
organization, which is verified by evaluation of
the performance.
The graphic representations (Figs. 2 and 4)
show that there is an optimal percentage of scrap
for which total costs of production are minimal.
The level of complexity that enables the
realization of this “optimum” can be considered
“an optimal organizational complexity”.
By improving the organizational complexity,
the curve (Fig.4) will move to the left in the
248
For the dominant majority of management
theorists and practitioners, the ideal goal and
ideal organizational complexity is the utopia.
However, these assumptions have not been
disproved to date. Therefore, it represents a great
challenge for the future efforts of creative,
motivated and persistent people to either confirm
or reject these assumptions.
REFERENCES
[1]
[2]
[3]
Kondo, J. (1997). Motivation, creativity and quality
control: a Japanese perspective. ECPD, Beograd.
(pp. 57-69).
Schwandt, A. (2009). Measuring organizational
complexity and its impact on organizational
performance–A comprehensive conceptual model and
empirical study. Technische Universität Berlin,
Fakultät VII-Wirtschaft und Management: Technische
Universität Berlin.
Šarović. D., & Perović, J.M. (2022). Complexity of the
Concept of the Sustainability of Sustainable Success.
In X International Conference “Quality System
Condition
for
Successful
Business
and
Competitiveness”, Proceedings, Association for
Quality and Standardization of Serbia, Kopaonik.
PaKSoM 2022
Digital Transformation of the
Teaching Process using Mobile Devices
and Dedicated Software
Momčilo B. Ranđelović1, Radoje B. Jevtić 2, Ivana D. Janković3
1
University Business Academy in Novi Sad, Faculty of Social Sciences Belgrade, Serbia
2,3
School for Electrical Engineering “Nikola Tesla”, Niš, Serbia
1
momcilo.randjelovic@fdn.edu.rs, 2jevta@etstesla.ni.ac.rs, 3ivana.etstesla@gmail.com
Abstract—Digital transformation, as an ongoing
global process, has affected all business segments
in the world, including educational systems. With
the application of information technologies, direct
teaching in the classroom has been enriched with
multimedia elements, various applications for
presenting teaching content, but they have not
significantly contributed to greater interaction
between teachers and students in class. This paper
presents commercial software tools for that
purpose, as well as specialized applications. They
are classified according to the pedagogical
requirements for digital dialogue in the classroom.
The results showed that each of the tested
applications can be used relatively successfully,
but for the realization of a real digital dialogue in
the classroom and the realization of a functional
digital transformation, it is still necessary to
develop a comprehensive, specialized information
system.
Keywords
digital
dialogue,
digital
transformation, programming, Java, mobile devices.
I.
INTRODUCTION
The term digital transformation primarily
refers to the adoption of disruptive technologies
in order to increase productivity and create new
values. Most business entities, industrial
companies, banks, trade, transport, etc. have
largely changed their work environment,
integrating digital technology and business
activities into a new business model. The digital
transformation itself represents a kind of process
of integration of digital technologies, literally in
all areas of business, with radical changes in the
way technology and people are used with the aim
ISBN: 978-86-82602-00-2
of improving their own performance, in
accordance with new market requirements [1].
Digital transformation in education, using
digital technologies in teaching, should improve
the effectiveness of learning. The use of
information and communication technologies
(ICT) in education has led to the development of
numerous distance learning systems (Distance
Learning System, DLS), as well as complex
modern systems for systematic learning
management (Learning Management System,
LMS). Such systems, which contain software
applications for administration, documentation,
testing, monitoring, reporting and delivery of
electronic educational materials, are united under
the name of electronic learning (e-learning) [2].
Although LMS are a massive trend in the
world, practice has shown that due to the
imperfection in communication between
students and teachers within LMS, traditional
teaching still retains a significant place in
educational
processes
[3].
Information
technology products as modern digital learning
tools are modern to the extent that the needs of
the users require them and the capabilities of the
teachers enable them [4]. On the other hand,
despite the obvious influence on all segments of
the educational system, IT did not suppress, or
even significantly transform, direct teaching.
With the application of information technologies,
direct teaching in the classroom has been
enriched with multimedia elements, various
applications for presenting teaching content, but
they have not contributed much to greater
interaction between teachers and students during
the lesson itself [5]. A variety of techniques and
249
methods of electronic testing and surveying of
students are available, but mostly after lectures,
in different, specially designated times [6].
Among the activities of teaching subjects,
what stands out is what conditions every teaching
process, which is the organization of students'
work in class. By placing students at the center
of learning, new demands arise for both students
and teachers. Students must be as clear as
possible about their interests, their possibilities
and needs. They must also be able to
communicate with each other, with their teachers
and advisors. They must be self-directed towards
learning, i.e. they can organize their own learning
process relatively independently, and on the
other hand they can ask for the help of teachers,
superiors or experts when necessary and be able
to monitor their progress [7]. To this end,
teachers should be involved in ongoing
assessment to better understand the peculiarities
of each student, their needs and monitor their
progress, to provide them with resources and
guidelines, adequate to their interests, which
should involve them in projects, as well as to
meet the requirements of the curricula. I can get
most of that information first of all from the
students themselves, parents, educators.
Obviously, a constant active dialogue of all
teaching subjects is necessary. Technology can
help students and teachers meet these demands.
This paper discusses several popular
commercial applications intended for digital
interaction in the classroom. In the first part,
selected commercial software solutions are
presented, with their most significant features:
Socrative, Edmodo, Quizizz and Kahoot. The
second part of this paper describes the original
software package of specially developed
programs for digital dialogue: Information
System for Digital Dialogue in the Classroom
(SDDC). The development environment, used
technologies, client and server side and basic
communication flows are described. The third
part of this paper contains the results of testing in
practice of each of the mentioned applications.
The fourth part summarizes the results,
experiences and comments.
II.
APPLICATIONS FOR DIGITAL
INTERACTION BETWEEN TEACHERS AND
STUDENTS
As a starting point in this research, we used
previous results of examining the characteristics
of different student response systems [8]. There
250
are a number of models and techniques of
cooperative learning, which differ from each
other:
in terms of how students work together,
in terms of learning tasks,
regarding the degree of cooperation
between students,
in terms of creating a competitive
atmosphere in the classroom.
Some elements of the structure of the
conditions are always represented, regardless of
which variant of the teaching work it is about.
Digital systems for student responses
(Classroom Response Systems) - CRS, in this
case represent an adequate solution. Namely, the
use of CRS has been practiced at universities and
schools all over the world for two decades, so
they are already a proven didactic tool.
CRS are also called classroom response
technologies, voting systems, clickers, or student
response systems based on the BYOD (Bring
Your Own Device) concept. They consist of
individual remote controls that students use to
answer questions and a wireless transceiver on
the teacher's server that collects student data.
Other classroom technologies are online, and
students can use cell phones or other personal
mobile devices to answer questions. With this
technology, instructors can design multiplechoice questions for students, and students can
answer anonymously or log in using a personal
mobile device. In addition to multiple-choice
questions, some web-based classroom response
software, such as Poll Everywhere, allow
questions that require text responses, and
application Learning Catalytics allows even
more question types, such as those that require
text, sketch, and math type the answers,
expressions. CRS contains 4 temporally and
functionally divided segments that change
periodically during the lesson:
segment of the introductory presentation,
dialogue segment,
assessment segment,
segment of the closing presentation.
There are multiple solutions for user
software. Depending on the needs of the user
(school, faculty) and the type of teaching
process, the following are used:
general commercial software - software
of a wider range of application that is
more or less usable in different
institutions (Interwrite Response, MS
Interactive Classroom, ...);
dedicated user software – a specialized
program package, ordered and created
according to the specifics and special
requirements of the user;
free Web 2.0 solutions - simple programs
that can be downloaded from the Internet
and usually meet the needs of only a part
of the requirements. They are suitable for
the first phase of the introduction of
digital dialogue - the testing and testing
phase, until the final requirements are
precisely defined (TopHatMonocle,
SMSPoll, mQlicker, ClickerSchool,
PollEverywhere, FreeMobilePolls, ...);
special solutions for communication
within the existing LMS that is already
used in classes, as an extension or
addition to the existing software (if the
applied LMS has them).
The communication system for connecting
the student's device with the lecturer's computer
can be based on different technologies: infrared
(IR), radio-frequency (RF), SMS, Wi-Fi, LAN. It
is only necessary to ensure simultaneous
acceptance of a large number of responses from
students' mobile devices (PRD - Personal
Response Device) (Fig.1) [8].
The programs Socrative, Edmodo, Quizizz
and Kahoot were tested. Later tests, in practice,
confirmed the test results. Unlike previous
research, this paper also includes an examination
of the application's ability to be used in the digital
transformation process. Therefore, special
attention is paid to the possibilities of automatic
digitization and archiving of key activities during
classes, atomization of data and the possibility of
using saved data in other applications (Fig.2).
Figure 1. Users of digital dialogue
Figure 2. Student answers system technologies
Socrative is a web platform designed to
provide reliable digital communication between
students and teachers. It offers a system of
learning through questions and answers that
teachers prepare before class. It represents
another attempt to implement online testing,
distance learning and paperless learning.
Evaluation is almost instant and functional in
practice. Socrative is a partially free tool that
allows for two types of questions:
multiple choice,
short answer.
It is possible to change the order of questions,
delete and add questions, generate a random
order of questions and answers. The special
advantage of this tool is that students do not have
to log in to the system with their e-mail address,
but only type the code of the classroom (room)
that they receive from the teacher. It is possible
for a quiz that has already been created to be
recorded, copied and saved in the modified cloud
under a different name. Socrative also provides a
SOC code for sharing quizzes. Initiating
questions can be realized in two ways: students
answer each question successively in their own
rhythm (Student Passed Quiz - which is mostly
not practiced in digital dialogue) and the teacher
who initiates the question determines the time for
providing the answer - Teacher Passed Quiz.
After each answer, the students wait for a new
question, which is also initiated by the teacher.
At the end of the class, all questions and all
answers can be discussed and recorded in an
Excel file and sent to the teacher by email.
Kahoot is an application that can be used to
create interactive quizzes in the classroom. When
creating an account, it is necessary for the teacher
to report his position in education and the exact
name of the institution to which he belongs, in
addition to his e-mail address. Students are also
expected to log in with their email address and
even their date of birth. There is the possibility of
creating flash questions or forming a whole quiz.
A quiz, survey or discussion can be created as
251
types of questionnaires, although in fact they
differ only according to the number of answers
offered and the way they are collected. The
perceived shortcoming during testing refers to
the inability of students to see the questions and
alternative answers on their mobile phones,
instead they are directed to an image from a
projector or white board. As with the Socrative
application, reports are also generated in the form
of an Excel file. Specificity represents the
possibility for the student to evaluate the quiz at
the end of the lesson and recommend it to friends.
Quizizz is a software tool very similar to the
described Kahoot program. Students log in using
a pin number or a code (Game Code) that they
enter on the join.quizizz.com page. After that,
they enter their name, enter the game and
automatically get their avatar. The use of avatars
contributes to the visual attractiveness of the
quiz, but also indicates that it is intended for
students of lower grades. The teacher starts the
quiz by clicking Play. As with the previous
programs, the teacher's and student's screens are
different - the teacher first instructs the students
to start answering the questions on the screen
until the first answers start to arrive. After that,
the teacher monitors who answers, whether the
answers are correct and which question the
student is on. Therefore, the questions are not
displayed on the teacher's computer, because not
all students have to answer the same questions at
the same time. However, for the needs of digital
dialogue in the classroom, it is necessary that all
questions - all students answer at the same time,
especially since the questions are asked
asynchronously results in an Excel table.
Edmodo is a web tool for the realization of a
digital system for student answers. This internet
application first of all gained popularity as a
service for professional connection of teachers a social network of educators. However, some
segments of the application can be used very
successfully as a platform for learning, testing
and realizing digital dialogue in the classroom.
Use requires full teacher registration, joining an
existing community or group. This is also
expected from the students, however, their full
control is provided by the teacher. Without
teacher
supervision,
students
cannot
communicate with anyone outside the group, or
even with each other. Student profiles are
private, and teachers and parents can view them.
Work with students begins with the teacher
forming a study group and inviting the students
of the class he teaches to it, by sending them the
252
code they need to log in. To set a task, the
recruiter can use the option of the same name,
which allows him to specify the name of the task
and attach a description. The defined task
becomes available to the students when the
teacher places it on the profile wall, then the
students add comments and solutions to the task
(which only the teacher can open). For each
question asked, statistics are created on how
many students answered correctly and how many
answered incorrectly in order to see which
content they understand less well or where the
questions were asked unclearly. Practice has
shown that the dynamics of asking questions and
receiving answers is the weaker side of this
application, so fewer questions can be asked
during the lesson.
III. DEVELOPMENT OF DEDICATED
SOFTWARE FOR DIGITAL DIALOGUE – SYSTEM
FOR DIGITAL DIALOGUE IN THE CLASSROOM
(SDDC)
The
information
system
for
the
implementation of digital dialogue in the
classroom should ensure the connection of all
subjects of the teaching process, via the Internet
and wireless networks. The system for
connecting students' devices with the teacher's
computer can be based on different technologies:
infrared (IR), radio-frequency (RF), SMS, Wi-Fi,
and LAN. It is necessary to ensure that the
broadcast of a large number of responses from
students' mobile devices - PRS (Personal
Response System) in real time is accepted at the
same time [8].
The server application accepts client requests
and processes them through its interface. The
entire system functions using web service
technology (Fig.3). The application is threetiered. The upper layer consists of a Windowsform client application for teachers and a web
(Android) application for students. These two
client applications provide an interface through
Figure 3. Form of Java application for entering
questions
which data is forwarded to the components. On
the middle layer are the components, which
enable communication with the database,
perform all operations on databases and pass data
between layers. They contain most of the
system's logic. The bottom layer is the data layer.
Applications that make up SDDC can be divided
into client and server applications [9].
A. Java Applications on the Server
The server application was implemented in
the Eclipse EE (Java Enterprise Edition) IDE
4.24.0 environment in the Java programming
language (java.version-17.0.3).
Figure 4. Form of Java application for creating a
group of questions in a teaching unit
Such an environment already has built-in
functionality for handling REST services, which
means that there is no need to use an external one
or create your own. All persistent data is stored
in MySQL database. This approach enables the
installation of the entire system within a school
or college at the local level by creating a desktop
application. Of course, the principle is the same
in the case of setting up a web application on the
server side (Fig.3).
The desktop Windows application is intended
for administrators and teachers. It allows viewing
and updating data on system users, both students
and other teachers, tasks and tests, viewing
statistical data on the use of the application and
setting the parameters necessary for the correct
operation of the application.
The application itself on the server is
composed of two basic modules:
• Creator – a module that contains forms for
entering data about students, classes and
groups, for creating questions with answers,
for grouping questions according to teaching
units and forms for creating tests.
• StartDialog – a module that contains forms for
selecting a group of questions or a test and the
process of activating the digital dialog itself.
All data in this application is filled in by the
teacher. If he knows the curriculum and students
well, the teacher can enter most of the data at the
beginning of the school year (Fig.4).
A set of 5-10 standard questions is formed for
each class of processing new material. Tests are
created for refresher classes (Fig.5).
Figure 5. Information system for digital dialogue for
the classroom – architecture
The StartDialog module requires a
mandatory web connection and a MySQL
database connection.
B. Java Client-Side Android Application
On the client side in the digital dialog is an
application whose most important role is to
provide the user with a display of questions and
the possibility of the simplest possible answer.
Since the speed of response factor is also
significant, they are most often implemented
through the form of Multiple Choice Questions
(Fig.6). Unlike the Java application on the
server, which is entirely developed in Eclipse
IDE, the client application is implemented in the
Android Studio Arctic Fox development
environment based on REST services [9]. Each
client application functions independently, while
on the server, after logging in, a new program
thread is created for each individual user.
The Creator module in the desktop
application does not require a web connection,
but a MySQL database connection is required.
253
9.
10.
Figure 6. Client-side Android application
IV.
RESULTS OF TESTING THE POSSIBILITIES
OF THE DESCRIBED APPLICATIONS
The table (Table I) shows the summarized
results of the conducted research for all five
programs. The research focused on the most
important features that an information system for
digital dialogue in the classroom should have.
These are, first of all, communication properties,
the speed of accepting and processing client
responses, as well as saving data in relational
databases. Also, in order to achieve the digital
transformation of the teaching process, it is
necessary that the software used provides
systematically unified and digitized key
activities of both teachers and students during
lectures. All these features of the software are
defined in thirteen points and each of the tested
applications received a score for each of these
points.
Based on the test results, we can see that none
of the tested applications meets all 13 conditions.
Also, any of the tested applications can be used
as part of CRS in the process of digital dialogue,
only a purpose-built Java application (SDDC)
fully meets the requirements of digital
transformation.
Out of 13 tested conditions, SDDC fulfills 12.
The only question: “Unlimited number of correct
answers” did not receive a positive answer, but
254
11.
12.
13.
Writing reports in an
Excel table
Writing reports to the
database
The possibility of
repeating the
question after the
explanation
Graphical
presentation of
results in real time
Recording elapsed
time for response
Quizizz
Kahoot
SDDC
SOFTWARE CAPABILITIES
FOR
DIGITAL DIALOGUE IN
EDUCATION
1.
Questions with
suggested answers
2.
Unlimited number of
correct answers
3.
The possibility of
inserting images into
the question
4.
Time limit for
solving tasks
5.
The teacher controls
the time
6.
The possibility of
changing the order of
questions
7.
Ability to change the
order of answers
8.
Saving total results
Edmodo
REQUIREMENTS FOR DIGITAL DIALOGUE
Socrative
TABLE I.
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
for the purposes of digital dialogue it is not of key
importance. According to the table, right behind
him, in second place is Socrative, which fulfills 9
conditions.
V.
CONCLUSION
As the digital dialogue unequivocally
represents a complete redesign of the teaching
process, in order to improve the most important
properties, its application is rightly expected to
significantly raise the level of efficiency of direct
teaching. From the aspect of digital
transformation, the use of mobile devices,
according to the BYOD concept, with the support
of purpose-designed applications for digital
dialogue, represents a fundamental change in the
way of thinking, organizing, implementing and
analyzing activities in immediate teaching and
not just a mere technological innovation. Key
information, generated during the lecture, which
is digitized and stored in the database with this
procedure, can later be analyzed and crossreferenced with other data related to the activities
of teachers, students, parents, professional
councils and other subjects. In this sense, the
application of mobile devices and special
software, through the concept of digital dialogue,
in the most obvious way, provides strong support
for the general paradigm of digital
transformation of educational processes.
[6]
[7]
REFERENCES
[1]
[2]
[3]
[4]
[5]
Ebert, C., & Henrique C. Duarte, C. (2018). Digital
Transformation. IEEE Software, 35(4), 16-21.
Cavus, N. (2015). Distance Learning And Learning
Management Systems. Procedia - Social and
Behavioral Sciences, 191, 872-877.
Atiyah, ,. J., El Sherbiny, M. M., & Guirguis, S. K.
(2015). Evaluation of E-Learning Program versus
Traditional Education Instruction for Undergraduate.
International Journal of Advanced Research in
Science, Engineering and Technology, 2(7), 776-786.
Ranđelović, M., & Veljović, A. (2017). Reinženjering
neposredne nastave u hibridnom sistemu učenja.
Nacionalna konferencija sa međunarodnim učešćem Reinženjering poslovnih procesa u obrazovanju
RPPO17, Čačak (pp. 1-21).
Aslan, S. (2010). What are the factors that contribute
to ineffective and limited use of Learning Management
[8]
[9]
[10]
Systems in the Schools?. The Annual Convention of the
Association for Educational Communications and
Technology, Anaheim, CA, 2, (pp. 1-4).
Jamornmann, U. (2004). Techniques for Assessing
Students’ eLearning Achievement. International
Journal of The Computer, the Internet and
Management, 12(2), 26 -31.
Moeller, B., & Reitzes, T. (2011). Integrating
technology with student-centered learning. Quincy:
Nellie Mae Education Foundation (NMEF).
Ranđelović, M., & Veljović, A. (2018). Sistemi za
odgovore učenika u hibridnom učenju. Nacionalna
konferencija sa međunarodnim učešćem - ITOP18. 3,
Čačak. Fakultet tehničkih nauka u Čačku.
Ranđelović, M., Papić, M., Veljović, V., & Stanojević,
L. (2022). Development of information system for
digital dialogue in teaching using RESTful service. 9th
International scientific conference Technics and
informatics in education (pp. 49-55). University of
Kragujevac, Faculty of Technical Sciences Čačak,
Serbia.
Ei Ei Thu and Than Nwe Aung. (2015). Developing
Mobile Application Framework by Using RESTFul
Web Service with JSON Parser. In International
Conference on Genetic and Evolutionary Computing,
Mandalay, Myanmar, (pp. 177–184). University of
Computer Studies Mandalay (UCSM).
255
256
PaKSoM 2022
The Importance of the Evaluation of
Investment Projects in Local
Government Units
Dragan Dokić1, Vesna Gantner2
1
2
Erdut Municipality, Dalj, Croatia
Josip Juraj Strossmayer University of Osijek, Faculty of Agrobiotechnical Sciences
Osijek, Osijek, Croatia
1
dragan.dokic79@gmail.com, 2vgantner@fazos.hr
Abstract—The aim of this paper was to point out
the importance of learning about investment
projects in LGUs through a theoretical approach
using a range of methods for evaluating projects.
The choice of realization of the investment project
should be accompanied to a large extent by the
benefit that the project has for the social
community. In the paper, through theoretical
analysis, the methods for evaluating investment
projects will be considered, considering the
necessary variables that affect the justification of
the investment. Based on the considered
methodology, the paper will discuss methods and
calculations based on which the clearest
knowledge about the justification of choosing a
project investment is obtained.
Keywords - investment projects, methods for
evaluation of investment projects, social benefit,
local self-government units
I.
INTRODUCTION
The general term investment evaluation
refers to a set of actions aimed at determining
the justification and acceptability of the
investment [1]. In the operational sense,
evaluation could be defined as the phase of
investment project planning in which the
following activities take place [2]:
defining the development goals within
which the investment is planned;
defining criteria and choosing methods
for investment evaluation;
ISBN: 978-86-82602-00-2
creating
a
documentation
and
information base for the application of
evaluation methods;
application of criteria and methods;
making an investment decision (positive
or negative).
Considering to the effects it produces, the
investment project can be observed and
evaluated from the perspective of the local selfgovernment in which the investment is made
and from the perspective of the wider social
community or society. Therefore, the
consideration of the effects of the investment
project and the use of appropriate evaluation
criteria are different [3], depending on which
aspect is involved. The role of LGUs in national
economies has changed significantly in modern
times as a result of globalization and structural
adjustments. Understanding these changes is
important for creating an efficient investment
concept at the local level aimed at local
development programming. Municipalities are
basic
socioeconomic,
political
and
administrative units, responsible for the
development of the local economy and social
services in their territories. The functioning of
LGUs is an essential issue for their existence
and sustainability. Depending on the legislative
framework, LGUs operate according to the
territorial principle within which they perform
their work in accordance with the applicable
regulations. Each LGU contributes to building
257
its own competitiveness with individual
strategic documents. In general, LGUs regulate:
development of settlements and
housing, spatial and urban planning;
communal policy and management;
economic policy;
social policy and basic education;
culture and sports;
consumer protection;
environmental protection;
fire and civil protection, and
traffic connections.
Thus, for LGUs, the most significant is the
immediate economic effects that contribute to
the increase in budget revenues, while for
society as a whole, in addition to the economic
effects, the most important so-called noneconomic and indirect effects from investments.
Investments in LGUs should be observed
and evaluated from a broader social aspect,
which indicates the division of the investment
project into two parts [5]:
assessment of the financial and market
effects of the investment (financial
analysis);
evaluation of the socio-economic effects
of the investment (economic analysis).
TABLE I.
CRITERIA FOR SELECTING INVESTMENT
PROJECTS [4].
Evaluation
elements
Financialmarket effects
Criterion for
evaluating the
effects of the
investment
Effect of
investment on
profit
Comprehensiven
ess of investment
effects
Prices for
evaluating the
effects of the
investment
Time preferences
of investment
decision makers
Immediate
effects of the
investment
Social-economic
effects
The effect of the
investment on all
the goals of
socio-economic
development
Direct and
indirect effects of
the investment
Market prices of
investment inputs
and outputs
Correcting input
and output prices
Individual time
preferences
Social time
preferences
In the assessment of financial-market
effects, a part of the newly realized value of the
project that will be created and left in the JLS is
estimated, and the inputs and outputs of the
project are valued according to market
prices [6]. When evaluating the socioeconomic
effects, the analysis includes the effects of the
project on all the goals of socio-economic
development, namely the direct effects in the
investment itself, but also the indirect effects
that will appear outside of it. In addition, all
effects as well as investment and exploitation
costs are valued according to corrected prices
that reflect their value from the perspective of
society. According to Bendeković, this means
that customs duties, taxes, subsidies, etc. should
be excluded from the prices since the mentioned
costs mean a spillover of income from the
economy to the benefit of the social community.
II.
MATERIALS AND METHODS
Evaluation of investments is carried out to
gain knowledge about their justification and
profitability and is carried out in the preinvestment stages. The most well-known
internationally recognized methodologies for
evaluating investment projects are the
methodology of the International Bank for
Reconstruction and Development, the UNIDO
methodology and Cost-Benefit Analysis (CBA).
Investment projects financed by the
International Bank for Reconstruction and
Development can be realized following the rules
and procedures required by this bank, to use the
approved loan for the approved investment
project. Investment projects go through several
stages in the evaluation process before the loan
is approved and realized, and in each stage, this
bank plays an active role in a certain way. These
are the following stages [1]:
strategy and identification;
project preparation;
project assessment;
project approval;
implementation or realization of the
project;
end of a project;
project evaluation.
UNIDO (United Nations Industrial
Development Organization) methodology is
258
that
involve
rehabilitation
or
reconstruction of the existing condition.
used to assess the profitability of investment
projects in the following segments [2]:
financial analysis;
analysis of national profitability; and
assessment in conditions of uncertainty.
CBA (Cost-benefit analysis) is a project
evaluation technique and was developed as a
response to the shortcomings of financial
analysis of investment projects. CBA provides
an assessment of socio-economic impacts on the
investment itself. Compared to standard
financial analysis, CBA also includes a social
dimension in which society is a de facto
investor. In a broader sense, CBA includes [8]:
a description of project solutions that
solve the set goals of the project;
socio-economic context;
institutional analysis;
creditworthiness analysis;
demand analysis;
technical-structural analysis;
financial analysis;
economic analysis;
sensitivity and risk analysis.
The most common evaluations of
investment projects imply the omission of cash
flows (discount cash flow - DCF), that is, all
those calculations that do not consider
opportunity costs - benefits based on an
investment in an investment [9]:
The annual profit method is a method
that is determined for each year or only
for typical years in the case of a longterm investment. The calculation
elements that are used are income and
expenses increased by profit tax taken
from the income statement of the
specific year according to the formula:
This method includes calculations [10]:
average rate of return
accounting earnings in period t
100
initial investment
payback period
initial investment
annual receipts fromthe project
At
internal rate of return
0
t
(1 r)
where:
At - cash flow for period t,
r – the discount rate that equates the present
value of expected expenditures with the present
value of expected receipts.
net present value
The payback period is defined as the
period required to return the original
investment through net cash flow. This
method is used for smaller investments
k – required rate of return,
At
(1 r )t
profitability index
A0
A0 – Initial investment.
profit or loss income (expenses tax)
At
(1 k )t
The method of internal rate of
profitability (IRP) is a discounted rate at
which the present value of the expected
future cash inflow is equal to the
present value of expenses. It represents
the rate at which the present value of
the inflow is equal to the present value
of invested capital, that is, the net
present value is equal to zero [11].
Calculation formula:
A1
(1 IRR)1
At
A2
(1 IRR) 2 (1 IRR)t
IRP A0
259
IRP – internal rate of profitability,
annuity factor. It is calculated according
to the formula:
IRR – internal rate of return.
The benefit-cost ratio method is used
when making strategic decisions for an
investment in a project whose economic
profitability is not easy to evaluate
using standard conventional methods.
Cost-benefit analysis helps to calculate
returns on investments based on the
costs, resources and risks involved in
that investment [12]. It is a process by
which companies can analyse decisions,
systems or projects or determine value
for intangible assets. It is calculated by
the formula:
n
Bc
t 1
Pt
p
1
100
n
t
t 1
t
1
where:
BC - benefit and cost ratio,
Pt - income in year t,
Tt - costs in year t,
I - investment costs,
n - duration of the project,
p - required interest rate.
260
r n (r 1)
r n 1
n
Ft
t 1
p
1
100
Av a f
t
af – annuity factor,
Ft – net cash flow in year t,
Av – annuity amount of net present value,
Ai – annuity amount of investment costs,
Tt
p
1
100
af
the annuity method is a method of
examining the financial efficiency of
investment options by which all
amounts of inflows and outflows are
reduced to the average annual level via
the annuity factor, which is the
reciprocal of the discount factor of
equal periodic amounts. According to
this method, all amounts of monetary
receipts
and
current
monetary
expenditures, as well as initial
investment investments, are first
reduced to the time when a specific
investment option begins to take effect.
To achieve this, the discounting
technique is applied to the amounts of
cash receipts and expenses, and interest
is applied to the initial investments [13].
The amounts of discounted cash
receipts, cash expenses and accrued
initial investments are added together.
The obtained sum is reduced to the
average annual amount using the
n – duration of the project,
p – required interest rate,
r – decresive interest factor (1+p/100).
multi-criteria analysis is a multi-criteria
evaluation method that focuses on
investment goals from multiple points
of view, and scenarios, and assigns
weight to each criterion that can be
measured [14]. With this method, it is
possible during the investment analysis
to consider those factors that previous
financial analyses did not do so. In this
case, it is important to consider the
effects of the investments on the goals,
assign a weight to each goal and
calculate the final effect.
Each investment represents a certain
business risk that can be calculated with the
help of various models and projections.
Different indicators, such as cost-benefit
analysis, such as internal rate of return, net
present value, benefit-cost ratio, etc., can lead to
different results, so it is up to the investor to
evaluate which methods he has more confidence
in, that is, which analysis provides him more
information. From the point of view of LGUs,
investment evaluation methods used to
determine the effects of investments in LGUs
must also satisfy the social benefit.
III.
RESULTS AND DISCUSSION
In the previous part of the work, the focus of
the research was methodology and calculations
that can be used in the evaluation of investment
projects. When choosing a project idea,
decision-makers should be able to read and
interpret the obtained results, that is, understand
well what the individual indicators represent.
The correct interpretation of the results is very
important in order to choose the project that
provides the most benefits to the social
community. When choosing a project, those
responsible in LGUs must consider the
profitability of the project, but the impact on
decision-making also has a social benefit.
Furthermore, those responsible in LGUs must
consider the connection between project
investments. It is necessary to build on previous
investments with new investments in order to
create a system that is self-sustaining. The
correlation calculation between projects should
show a result greater than 1.00, which means
that there is a significant relationship between
project investments.
Annual profit method – The value obtained
by the calculation should be inviting, which can
be explained by the fact that revenues are
greater than expenses, that is, that a positive
result or profit is achieved. The variables that
are put into the relationship are taken from the
income statement, all income during the time
period of the investment as well as all expenses
during the same period. Furthermore, the total
income is then taxed at the applicable tax rate
and the resulting value is added to the total
expenses. If the difference is a positive number,
the project is profitable. Otherwise, if obtained
value is a negative number, the project is
unprofitable. This method considers only
bookkeeping quantities, and does not consider
other social aspects, does not consider the flow
of money over a certain period of time, which
represents its shortcomings, but also the reason
for the creation of other methods.
The return period includes the following
methods:
The average rate of return - It is expressed
as a fraction when accounting earnings in a
certain period are compared to the value of the
initial investment. The obtained result is
multiplied by 100. The result shows the average
percentage of investment return. If the
percentage amount is higher, the investment
will be returned sooner.
The main disadvantages of this method are
that it ignores the cash flow after the return of
the original deposit, and like the previous
method, it ignores the calculation of the value of
money over time.
Payback period - It is expressed as a fraction
when the initial investment and annual receipts
are put in relation. The obtained result
represents the investment return time period. If
the payback period is less than an acceptable
maximum specified period, the investment
proposal is accepted, while otherwise, if the
payback period is longer, the investment is
rejected. This method is most often used as a
supplement to other methods. The shorter the
payback period, the lower the risk of the project
and the higher its liquidity. It is very important
for LGUs to burden their budget with debt
repayment as soon as possible.
Internal rate of return – This method results
in a value that is discounted to the present value.
It considers the relationship of cash flow in a
certain period of time and the discount rate that
must equate the value of expected expenses
with the present value of expected receipts. The
criterion on the basis of which the project is
accepted or rejected is the comparison of the
internal rate of return with the requested
(marginal or minimum) rate of return. If the
obtained result is higher than the requested rate,
the project is accepted, and if the value is lower,
the project is rejected. The main disadvantage of
this method is that it makes it impossible to
determine the real profitability of the
investment. Before assessing the results of the
investment, it is necessary to define what is
profit, what is depreciation, and what is invested
capital, according to the different legislation of
a particular country.
Net present value - can be treated as a
representative evaluation method, and other
methods can be said to be inferior to the NSV
method [13]. This method shows the difference
between invested capital and the total
discounted difference between the inflow and
outflow of funds throughout the entire duration
of the investment project. The discount rate is
determined earlier. Net present value is
calculated by summing all discounted net
benefits. Net amounts can also be negative,
which indicates a loss. Net profit is the amount
that remains after all expenses have been
deducted from all receipts in a given year. In
practice, it is also called “pure cash flow”. If the
net present value is positive, that is, the
discounted value of the cash inflow is greater
than the invested capital, it means that the
profitability of the investment is greater than the
minimum required and the investment can be
accepted. A negative net present value means
261
that the investment is not profitable. The
disadvantages of this method are that it does not
show the real profitability of the project, and
therefore it is often supplemented with other
methods.
Profitability index - represents the ratio of
benefits and costs of the project, it is the
relationship between the present value of future
cash flows and the average cost [13]. The
calculated value must be greater than 1.00,
which indicates that the investment project is
acceptable. If the result is less than 1.00, the
project should be rejected. When calculating,
the net index is calculated, not the aggregate
index. The net index is calculated for the
purpose of understanding the difference
between the initial expenditure and the final
monetary expenditure. The main disadvantage
of this method is that it expresses quantities in
relative amounts.
The method of the internal rate of return on
capital is a discounted rate at which the present
value of the expected future cash inflow is equal
to the present value of expenses. It represents
the rate at which the present value of the inflow
is equal to the present value of invested capital,
that is, the net present value is equal to zero.
The advantage of this method is that it shows
the real profitability of the investment and in
this sense, the result is understandable and clear.
the value of the internal rate of return may
change during the investment. [14]. Investors
expect higher profits in the initial stages to
compensate for higher risk, and lower profits in
later years when conditions are known and risk
is lower. This is the reason why it is not always
correct to apply a single rate of return.
Benefit-cost ratio method - The benefit-cost
ratio is the ratio of the present value of receipts
to the present value of project costs plus
investment costs. Supplements the profitability
index. Between projects with equal or similar
profitability indexes, it chooses those with lower
current and investment expenses, that is, less
capital-intensive projects. The threshold of
acceptance of a project is when the benefit-cost
ratio is greater than 1.00.
The annuity method is a method of
examining the financial efficiency of investment
options by which all amounts of inflows and
outflows are reduced to the average annual level
via the annuity factor, which is the reciprocal of
the discount factor of equal periodic amounts.
According to this method, all amounts of
262
monetary receipts and current monetary
expenditures, as well as initial investment
investments, are first reduced to the time of the
beginning of the effects of a certain investment
option through discounting. The amounts of
discounted cash receipts, cash expenses and
accrued initial investments are added together.
The obtained sum is reduced to the average
annual amount using the annuity factor. The
annuity amount of net cash costs must be
greater than the annuity amount of investment
costs.
Multi-criteria analysis is one of the methods
where the results are expressed quantitatively
and qualitatively. It is important to note that the
results are completely comparable and through
the mentioned procedure it is possible to decide
which scenario is the most acceptable for
realization and which scenario will benefit the
LGU the most. Making decisions implies the
existence of choices. For a given set of
alternatives, a question naturally arises as to
which alternative is the best. The main task of
the analyst in the process of multi-criteria
analysis is to understand the preferences of the
decision maker and to adequately develop a
model that represents that preference. In every
model of multi-criteria decision-making, the
decision-makers preference is expressed using
the aggregation of function values associated
with individual criteria. In addition to economic
and financial analysis, this method also
considers the socio-economic context. The
selection of a suitable optimization method is in
itself a multi-criteria model that depends on the
type of problem under consideration, the
knowledge and experience of the decisionmaker in the field of multi-criteria analysis, as
well as the technical issues that are considered.
IV.
CONCLUSION
From the results in the paper, it can be seen
that the evaluation of investment projects is a
complex process that includes a number of
different methods and calculations. Given that
the focus of the research is the methodology
used to evaluate investment projects in LGUs.
The results of the paper showed that it is not
enough to evaluate with only one method, but it
is necessary to implement a combination of
methods that analyze profit, payback period,
profitability, cost-benefit ratio, presentation of
net present value and multi-criteria analysis.
Through the results of the mentioned methods, a
comprehensive picture of the justification of the
investment can be obtained because the results
are expressed quantitatively and qualitatively.
However, it is necessary to take care of the
connection between the projects, that is, that the
investment correlates with the economic
environment and is beneficial to the social
community.
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(2017). Chartered Financial Analyst Program
Level 1: Ethical and Professional Standards and
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Čulo, K. (2010). Ekonimika investicionih projekata.
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Građevinski Fakultet Osijek.
Morris, K., & Morris, V. (2006). Novac &
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Dixit, K. A., & Pindyck, S. R. (1994). Investment
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investicija. Data Status, Beograd.
James, C. (1993). Financijsko upravljanje i politika.
LeBaron, D., & Vaitilingam, R. (1999). The Ultimate
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263
264
PaKSoM 2022
Bankruptcy Proceeding as a Result of
Fraud: Characteristics and
Consequences
Zorica Jović1
1
Singidunum University, Belgrade, Serbia
1
zorica.jovic2007@gmail.com
Abstract—The aim of this work is to indicate the
types of criminal acts that can lead to the initiation
of bankruptcy proceedings of a business entity.
The many consequences caused by criminal acts in
the economy are multiple, from causing material
damage to causing damage to the overall economic
and economic flows and to the state itself.
According to available data from the website of the
Agency for Licensing Bankruptcy Administrators,
the number of bankruptcy proceedings opened in
the Republic of Serbia from 1995 to 01.08.2022 is
8.628, while in 2022 alone (until 01.08.2022.) 259
bankruptcy proceedings were opened and the
number of active bankruptcies on day 01.08.2022
is 1,734. The average duration of bankruptcy
proceedings for still active cases is 5 years, 6
months and 10 days (the average duration for the
bankruptcy of social property is longer than the
average duration for the bankruptcy of private
property). Considering the large number of
initiated and active bankruptcies over the past
years, the length of the proceedings, as well as the
numerous frauds, the paper presents criminal acts
that can lead to the opening of bankruptcy
proceedings, indicators of criminal acts as well as
penal provisions for criminal acts, all for the
purpose of raising awareness society about the
importance of the existing problem.
Keywords - bankruptcy proceedings, criminal
acts, penal provisions of the law, abuses, fraud.
I.
INTRODUCTION
The economic crises that occurred at the end
of the 20th and the beginning of the 21st century
led to a large number of bankruptcies. Socioeconomic and political relations have brought
numerous forms of economic crime. According
to the Law on Bankruptcy of the Republic of
ISBN: 978-86-82602-00-2
Serbia, the method of initiating and
implementing bankruptcy of legal entities is
regulated, and the same is implemented through
bankruptcy or reorganization. The reasons for
which the debtor ends up in an unfavorable
financial situation can be different, and one of
them can be the commission of criminal acts
from the so-called economic crime. Criminal
acts of causing bankruptcy can be particularly in
the following: irrational spending of funds,
disposal of assets for nothing, excessive
indebtedness, taking on irrational obligations,
recklessly concluding a contract with a person
unable to pay, failure to timely realize claims,
destruction or concealment of property, other
actions that are not in accordance with
conscientious business practices [1].
Insolvency is always a reason for initiating
bankruptcy proceedings, even if it was caused by
force majeure. The insolvency of a business
entity and bringing it into the bankruptcy
process can be influenced by numerous factors
as well as criminal acts. The experiences of most
developing countries show that there are sudden
changes in the economic structure, also in times
of great instability, and therefore an increase in
crime. The still very noticeable consequences of
the financial crisis further complicate the
business environment in the Republic of
Serbia [2].
One of the most frequently cited definitions
of economic crime comes from Edwin
Sutherland, president of the American
Sociological Association, who uses the term
“white collar” crime for economic crime. This
author defines this phenomenon as “criminality”
265
that occurs in the field of business operations
and points out that its basic forms are manifested
in machinations related to the purchase and sale
of various shares, false statements of the state
and operations of certain corporations , false
advertising of goods, bribing business partners
and state officials for the purpose of achieving
favorable
business
arrangements,
by
misappropriating funds, tax evasion, etc. [3].
II.
INITIATION OF BANKRUPTCY
PROCEEDINGS
In accordance with the Law, bankruptcy
proceedings are initiated at the proposal of
authorized entities (debtor, creditor or
liquidation administrator). The proposal initiates
the initiation of bankruptcy proceedings. The
bankruptcy judge is obliged to issue a decision
on the initiation of the previous bankruptcy
procedure, which is initiated in order to
determine the reasons for the initiation of the
bankruptcy procedure, within three days from
the submission of the proposal for the initiation
of the bankruptcy procedure.
Bankruptcy proceedings are the last chance
for creditors to try to settle or partially settle
their claims against a debtor who has become
insolvent. The creditor should make the
existence of his claim against the debtor
probable by submitting a proposal for the
initiation of bankruptcy proceedings through the
delivery of documentation, i.e. evidence from
which the existence and amount of the claim can
be determined (list of documents attached to the
proposal), as well as that the debtor has become
insolvent. The debtor has the right to submit a
proposal to initiate bankruptcy proceedings
against his assets in the event of one of the
bankruptcy grounds defined in Article 11
paragraph 2 of the Bankruptcy Law (permanent
inability to pay, threatened inability to pay, overindebtedness and failure to act according to the
adopted reorganization plan).
The debtor is obliged to justify his proposal
for initiation of bankruptcy proceedings and the
necessary documents and attachments with the
proposal for initiation of bankruptcy
proceedings related to the financial report,
documentation on the admissibility of the
proposal for initiation of bankruptcy
proceedings, if there is a bankruptcy reason.
Possible submission of falsified documents with
entered data of untrue content is sanctioned by
the criminal liability of the perpetrator of that
criminal offense (Article 204, ZOS) [1].
266
According to the authors of the book
“Bankruptcy and Bankruptcy Balance Sheets”
[2], there are 4 reasons why bankruptcies are
opened or must be opened:
1) The first and most common is that the
entity against which the bankruptcy proceedings
are initiated is incapable of successful business,
that is, it is unprofitable, and therefore there are
no reasons to commit capital to it and
permanently tie it to it.
2) Another reason is the situation in which
the business entity is profitable and successful,
but is financed from inadequate sources, so it has
come to a situation where it is unable to meet its
financial obligations to creditors due to
overindebtedness. The purpose of initiating such
bankruptcies is reduced to the collection of
creditors' claims, so in such situations things are
put in order due to the debts of the entity against
which bankruptcy is being instituted. In this
case, it is about solvency.According to that
logic, an unprofitable company should be shut
down, and a profitable and insolvent one should
be saved.
3) The third reason for the introduction of
bankruptcies is the fact that in such a way some
or someone's interests are concealed with the
aim of achieving a benefit in the bankruptcy
procedure for the proposer or subjects who are
interested in the process of opening and
conducting the bankruptcy procedure. In such
cases, speculative motives and actions that often
have hidden motives are at the fore, especially if
the bankruptcy proceedings result in damage to
creditors or third parties.
4) The fourth reason for the introduction
of bankruptcy consists in the release of excess
unnecessary resources and the use of bankruptcy
legislation for the purpose of the survival of the
business company over which the bankruptcy is
conducted.
According to the provisions of the
Bankruptcy Law, bankruptcy proceedings can
be carried out through bankruptcy or
reorganization. Bankruptcy is the settlement of
creditors from the entire assets of the bankrupt
debtor.
Reorganization is carried out with the aim of
satisfying creditors according to a pre-prepared
plan for reorganization by redefining debtorcreditor relations, status changes of debtors or in
some other way provided for in the
reorganization
plan.
Bankruptcy
and
reorganization of a business entity that is in
financial difficulties is carried out on it when it
is unable to pay, i.e. when insolvent. Insolvency
is a permanent inability to fulfill due obligations.
III. FRAUDULENT ACTIONS AS A CAUSE OF
INITIATION OF BANKRUPTCY PROCEEDINGS
Businesses often find themselves in a
situation where their bankruptcy is inevitable
due to financial frauds committed through the
presentation of false financial reports, which
result in a drop in their market value .
Bankruptcy abuses can occur before or after the
initiation
of
bankruptcy
proceedings.
Bankruptcy
abuses
before
bankruptcy
proceedings are initiated are carried out by the
owners and management of companies by
intentionally causing bankruptcy and falsely
presenting bankruptcy in order to benefit one of
the parties in the proceedings. As abuses of the
bankruptcy procedure, not only the activities of
management and company owners calculated to
harm creditors, but also the activities of creditors
whose goal is to obtain benefits at the expense
of the bankrupt debtor are designated [5].
payment period, but the business entity is
brought to bankruptcy and bankruptcy through
complex commodity-monetary and financial
transactions in which, over a long period of time,
usually by the owner or responsible persons, the
property owned by the company is intentionally
reduced and transferred to the founders or third
parties, all with the intention of its illegal
appropriation and at the same time damage to
creditors through reduction future bankruptcy
estates. Life juices are deliberately extracted
from a business entity, it “bleeds” and eventually
“dies”. The execution of this technique of
criminal activity is usually well planned in
advance with the use of abundant documentation
and numerous transactions, the main goal of
which is to conceal the actual illegal intent [4].
Abuses of bankruptcy of a business are most
often carried out in the form of [3]:
Deliberately induced bankruptcy - in the
Republic of Serbia, deliberately causing
the bankruptcy of a company by
individual owners of companies has
become a mass phenomenon, because in
this way they avoid obligations to the
state, other business entities and
employees, who most often remain not
only without wages, but also without
paid contributions for health and social
insurance. This usually works according
to the following principle: the owner
overindebts the company, so due to the
impossibility of paying off the
obligations (debts), he transfers the
property of that company (e.g.
machinery, equipment, vehicles...) to his
other company or to a company owned
by a related party. persons, whereby the
first company with all debts is left to
bankruptcy. All forms of abuse of the
bankruptcy of a business company, in
order to avoid payment of obligations to
the state, other business entities and
employees, are, as a rule, related to the
establishment of a business company by
related parties.
False bankruptcy - false bankruptcy, in
contrast to intentionally induced
bankruptcy, arises as a result of the
activity of the owner and the
management to create the impression
that the bankruptcy conditions have
been met, and that through the
bankruptcy process, the payment of all
In terms of bankruptcy malfeasance , that is,
criminal acts by which the perpetrators bring a
business entity into bankruptcy, i.e. bankruptcy,
it should be emphasized that contemporary
economic and criminological practice points to
two basic techniques of this phenomenon,
namely: the technique of planned collapse and
the technique of death bleeding [3].
The technique of planned collapse - involves
the illegal actions of responsible persons in
newly established or taken over business entities
who, with the intention of obtaining illegal
property benefits for themselves or others,
mislead the responsible persons in other
business entities that they will pay for the goods
they have taken over from them within the
agreed period, although they were aware of the
fact that this would not be possible, because they
kept the income generated from the sale of the
taken goods, usually on the “black” market
below market prices, for themselves. In the
described manner, the executors consciously
bring their companies into a state of insolvency
and threatened or actual bankruptcy.
The “death bleeding” technique - in contrast
to the planned breakdown, the “death bleeding”
technique is not based on misleading the
supplier that their obligations based on the goods
taken over will be settled within the agreed
267
entity immediately before filing for
bankruptcy;
obligations is avoided through the
apparent or real reduction of their assets
and the apparent indebtedness of the
company.
In addition to the above, there is also the
possibility of simulating bankruptcy through the
execution of the so-called criminal act. fake
bankruptcy.
dismissal of the workforce, leaving of
officers, directors or staff of the business
entity immediately before the opening
of bankruptcy;
concealment of assets;
failure to keep certain business records;
missing or incomplete
documentation;
frequent additions and corrections in
financial reports and reports on
operations;
impossibility of contacting owners and
responsible persons of blocked legal
entities;
impossibility of finding the location of
the debtor, that is, the blocked legal
entity;
sudden salary increases, bonuses or cash
withdrawals by officers, directors,
shareholders
or
other
insiders
immediately before the blocking of
current accounts and the formal
initiation of bankruptcy proceedings;
transfer of property to insiders,
shareholders and relatives immediately
before bankruptcy;
payment or repayment of loans to
officers,
directors,
shareholders,
relatives or other insiders immediately
before bankruptcy;
transactions with related legal entities
such
as
representative
offices,
subsidiaries, parent companies or
related corporations immediately before
bankruptcy;
management has a history of prior
claims or litigation involving breach of
contract, tort or misrepresentation;
occurrence of thefts, losses or fires
immediately before bankruptcy;
establishment of a new company in the
same business branch that precedes
bankruptcy, the company had a short
lifespan before bankruptcy;
Creative financial reporting implies
deliberate, premeditated manipulation of
information in financial reports in order to create
a false impression of the financial position and
success of the company, calculated to mislead
certain interest groups, primarily investors.
Creative accounting practice always implies
unprofessional and unethical, and often illegal
application of accounting rules, which distance
the displayed performance of the company from
real achievements [5].
The most common consequences of the
application of creative accounting in the
business practice of commercial companies are:
1. bankruptcy and large business losses of the
company; 2. reducing the reliability, quality,
transparency and integrity of the financial
reporting process; 3. violation of the integrity
and impartiality of the audit profession, auditors
and audit firms; 4. reduction of public credibility
and trust in the accounting and auditing
profession; 5. serious doubts about the
effectiveness of the audit of financial
statements; 6. loss of the company's reputation;
7. difficult acquisition of capital in the future,
8. loss of investor confidence and others [8].
In practice, numerous cases are known
where accountants, with their knowledge and
professional knowledge, helped to present a
wrong, rather than a realistic (real) image of the
company's operations, although the Code of
Ethics for Professional Accountants states that
an accountant must not knowingly participate in
any illegal or illegal activity, nor in activities
that damage the reputation of the accounting
profession. Also, in practice, it turned out that
the reports of large companies that were audited
and received a positive opinion from the auditors
were false [7].
IV.
RED FLAGS TO SIGNAL FRAUD
Below are the indicators (red flags) of
fraud [4]:
268
circumstances that indicate unusual
reductions in the assets of the business
business
a company with a good credit rating and
good market potential is taken over by a
new group of managers and owners who
try to hide changes in the ownership
structure;
falsified or “made up” credit references;
an apparent disproportion between
assets and liabilities;
the business entity employs labor force
for a certain period of time;
the business entity owns and operates
with leased equipment.
V.
PENAL PROVISIONS FOR CRIMINAL ACTS
The main goal of regulating economic crime
with positive legal regulations is the protection
of the economic system and all its participants,
and consequently the suppression of crime.
Also, the tightening of criminal liability of legal
entities should result in a reduction of criminal
acts and misdemeanors in the future [2].
Criminal Code of the Republic of Serbia, Sl.
glasnik RS, no. 85/2005, 88/2005 - corrected ,
107/2005 - corrected , 72/2009, 111/2009,
121/2012, 104/2013, 108/2014, 94/2016 and 35/
2019) the consequences due to the existence of
criminal acts against the economy and related to
bankruptcy are defined.
Causing bankruptcy is regulated by Article
232 of the Criminal Code and provides for
prison terms of six months to five years. The
mentioned article refers to a responsible person
who has the status of a legal entity, who by
irrational spending of funds or their disposal for
nothing, excessive borrowing, taking on
disproportionate obligations, destruction or
concealment of property, frivolous conclusion
of contracts with persons unable to pay, failure
to timely realize claims or other actions which
are not in accordance with conscientious
business practices, causes bankruptcy and
thereby damages the other.
Causing false bankruptcy is regulated by
Article 232a of the Criminal Code and provides
prison sentences from six months to ten years.
The mentioned article refers to a person who has
the status of a legal entity who, with the intention
of that entity avoiding payment of an obligation,
causes the bankruptcy of that legal entity by
apparent or real reduction of assets, in such a
way that:
1) Statutory prison sentence of six months to
five years
2) Cover up all or part of the property of the
business entity, sell it ostensibly, sell it below
the market value or give it away for free.
3) Enter into fictitious debt agreements or
acknowledge non-existent claims.
4) Business books that the subject of
business operations is obliged to keep by law are
concealed, destroyed or altered in such a way
that the business results or the state of assets or
liabilities cannot be seen from them, or this state
can be presented by creating false documents or
in some other way in such a way that, on the
basis of it, it can be open bankruptcy.
Provided for a statutory prison sentence of
two to ten years if severe consequences for the
creditor occurred as a result of the
aforementioned criminal acts.
Damage to the creditor is regulated by
Article 233 of the Criminal Code and provides
for prison sentences from three months to eight
years. The mentioned article of the law refers to
a responsible person who, in the subject of
business operations, knowing that that subject
has become unable to pay, by paying off the debt
or in another way puts the creditor in a more
favorable position and thereby significantly
damages another creditor (predicted prison
sentence from three months to three years); with
the intention of damaging or defrauding the
creditor, acknowledges a false claim, draws up a
false contract or damages the creditor by some
other fraudulent act (prison sentence from three
months to three years). A prison sentence of one
to eight years if, in part from the abovementioned points, the creditor has suffered
large-scale damage, or if, according to the
injured party, forced settlement or bankruptcy
proceedings have been initiated as a result.
Abuse of official position is regulated by
Article 359 of the Criminal Code and provides
prison sentences from six months to twelve
years. The mentioned article of the law refers to
an official who, by delivering his official
position or failing to perform his official duty,
obtains any benefit for himself or another natural
or legal person, causes any damage to another,
or severely violates the rights of another, a
prison sentence of six months to five years is
provided for; if a benefit in the amount of RSD
450,000.00 was obtained through the execution
of the act from the previous paragraph, a prison
269
sentence of one to eight years is provided, and if
the value of the acquired property benefit
exceeds the amount of RSD 1,500,000.00 , a
prison sentence of two to twelve years is
provided.
Law on Bankruptcy (“Official Gazette of
RS”, no. 104/2009, 99/2011 - other law, 71/2012
- decision of US, 83/2014, 113/2017, 44/2018
and 95/2018):
Reporting of a false claim is regulated by
Article 204 of the Law on Bankruptcy and
foresees a prison sentence of one to three years
and a fine in the amount of RSD 500,000.00 to
RSD 10,000,000.00 if a false report is made to
the court in bankruptcy proceedings conducted
according to the provisions of this law claim by
submitting false documents or otherwise.
Non-notification of claim settlement is
regulated by Article 204a of the Bankruptcy
Law and foresees a fine in the amount of RSD
500,000.00 to RSD 10,000,000.00 for a
responsible person who, during bankruptcy
proceedings, collects his claim from the
guarantor or principal debtor within eight days.
does not inform the court about the collection of
claims from the day of collection.
The disposal of the property of a bankrupt
debtor after the opening of bankruptcy
proceedings is regulated by Article 205 of the
Bankruptcy Law, which provides for a prison
sentence of one to five years and a fine of at least
RSD 500,000.00, and if the crime was
committed for profit, up to RSD 10,000,000.00
for the responsible a person who, after the
opening of the bankruptcy proceedings and
before assuming the duties of the bankruptcy
trustee, disposes of things and rights from the
bankruptcy estate without compensation or with
compensation corresponding to the market
value. A prison sentence of one to five years and
a fine of at least RSD 500,000.00, and if the
criminal offense was committed for self-interest,
up to RSD 10,000,000.00 for the responsible
person who, after the appointment of the
temporary bankruptcy administrator, until he
takes office, disposes of the property and rights
bankruptcy debtor without compensation or with
compensation that does not correspond to the
market value.
False representation and concealment of
facts in a pre-prepared reorganization plan is
regulated by Article 206 of the Bankruptcy Law,
which provides for a prison sentence of one to
270
five years and a fine of at least RSD 500,000.00
and if the criminal offense was committed from
self-interest up to RSD 10,000,000.00 for a
responsible person who, in a pre-prepared
reorganization plan, falsely presents or conceals
facts of importance for the court's decision or the
creditors' vote on the plan.
Failure to notify the settlement of claims
based on financial security contracts and other
financial contracts is regulated by Article 206a
of the Law on Bankruptcy, which provides for a
fine in the amount of RSD 100,000.00 to RSD
2,000,000.00 for a legal entity that does not
notify the competent court of the settlement of
its claim. on the basis of a contract on financial
security, that is, another financial contract
through netting . The responsible person in the
legal entity will also be fined from RSD
20,000.00 to RSD 150,000.00 for the said
offense. The National Bank of Serbia imposes
measures and fines on entities over whose
operations it exercises control, i.e. supervision,
according to special laws regulating its control,
i.e. supervisory powers.
VI.
CONCLUSION
Causing bankruptcy is a criminal offense
defined by the Rivija Law with the aim of
protecting the interests of creditors and other
interested parties. Irrational spending of funds or
their alienation for nothing, excessive
borrowing,
taking
on
disproportionate
obligations, destruction or concealment of
property or other actions that are not in
accordance with conscientious business and thus
cause bankruptcy and cause damage to other
persons, will be punished in accordance with the
defined provisions of the legal regulations that is
presented in this paper.
The responsibility of accountants, auditors
and state institutions in the financial reporting
process itself should be emphasized. Ethical
behavior on the part of the aforementioned
parties leads to accurate and high-quality
financial reports, while otherwise there are
inevitable consequences.
An important role in preventing the
occurrence of criminal acts is played by: internal
controls and company management, external
and internal audit and the state. The criminal
system of the Republic of Serbia, as defined by
the Criminal Code, includes categories of
criminal
acts:
causing
bankruptcy,
counterfeiting money, money laundering, tax
evasion, abuse of authority in the economy, etc.
and for which prison and fine penalties are
provided.
[6]
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271
272
PaKSoM 2022
Commercializing University
Knowledge in Serbia – An Empirical
Evidence
Viktorija Petrov1, Zoran Drašković2, Đorđe Ćelić3, Zorica Uzelac4
1
Faculty of Economics in Subotica, University of Novi Sad, Subotica, Serbia
Faculty of Technical Sciences, University of Novi Sad, Novi Sad, Serbia
2,3,4
1
petrov.viktorija@ef.uns.ac.rs, 2zoran.draskovic@uns.ac.rs
Abstract—Mutual relationship between the
university and industry through the exchange of
knowledge has become a global trend. Following
this trend, many universities have transformed
themselves from traditional research universities
to entrepreneurial universities with strong ties to
industry, thereby encouraging the entrepreneurial
activities of their academics. The paper presents
research of academic entrepreneurship activity
which included 5163 scholars in Serbia. The
instrument used in “Commercializing university
research in transition economies” was applied.
Based on analyzing scholars' survey responses at
all Serbian universities, our analysis aimed at
defining the profile of scholars who have achieved
the highest form of research commercialization founding of a spin-off company or patenting of
an invention.
Keywords - commercializing university research,
spin-off,
licencing
a
patent,
financing
commercialization
I.
INTRODUCTION
The role of modern universities is
multifaceted [1-5] and encompasses teaching,
research, and entrepreneurship function [6].
Universities are changing, implementing new
activities, and accepting practices that make
them more entrepreneurial [7,8]. Research
commercialization requires building a strong
external
partnerships
with
ecosystem
stakeholders, such as entrepreneurs, universities,
local and national governments and private
industries [9,10].
Mechanisms of university knowledge
transfer, as well as resulting financial
ISBN: 978-86-82602-00-2
compensation are subjects of research and attract
a lot of attention from both researchers and
policy makers in developed [11] and developing
economies [12].
This work is an expression of entrepreneurial
activity among scholars in Serbia. The research
was conducted on the basis of data collected in
2018 and 2019, and the analysis performed based
on the answers of 334 scholars/respondents. The
instrument used in the “Commercializing
university research in transition economies” [13]
was applied.
The main goal of this paper is understanding
the profiles of scholars who have achieved the
highest form of research commercialization founding of a spin-off company, or patenting of
an invention.
II.
ACADEMIC ENGAGEMENT
Universities are recognized as basic
generators of knowledge and as such occupy a
special place in modern society. Adding to them
a third mission in the form of technological
transfer, it becomes increasingly important to
measure the contribution of universities to
economic growth. The commercialization of
academic knowledge, including the patenting
and licensing of inventions, as well as academic
entrepreneurship [14,15] is becoming an
increasingly important research field, both for
the academic community and for policy makers.
Commercialization represents a basic
example of generating academic impact, as it
represents an immediate and measurable market
273
confirmation of acceptance of the results of
academic research [16]. Commercialization
represents the basic and most important form of
contribution of the academic community to
society and the economy. Academic engagement
represents broader term than commercialization,
and implies a way of transferring university
knowledge. It can be defined as scientifically
based cooperation between academic and nonacademic organizations [17]. Collaboration can
be formally defined as: joint research, contract
research, consulting, informal counseling, or
networking with collaborators.
Academic engagement is often called
informal technology transfer, and is nothing new.
On the contrary, it has a well-established
practice, especially at universities that specialize
in teaching technically oriented skills. The most
common types of academic engagement are:
securing internships for students in the
companies with which formal cooperation has
been established, educating profiles for a specific
profession for which market need has been
established, or developing profiles according to
the requirements of companies that rely on the
university. The basic prerequisite of academic
engagement is direct contact between
organizations. There is usually a quid-pro-quo
agreement of a purely financial nature between
the participants of the cooperation. Scholars
work for compensation, or for free access to
company databases which could allow them to
advance their careers by publishing scientific
papers, or for possibility to participate in
scientific projects. Non-academic partners have a
motive to improve their market position using
academic knowledge and skills by developing
new ideas/products/services or improving
existing ones.
After established cooperation and academic
engagement, commercialization in the form of
academic entrepreneurship could follow [18]
with the aim of commercializing a patent,
invention, or unprotected expertise in the form of
university spin-offs, spin-outs or start-up
companies. This definition of commercialization
emphasizes academic engagement with the sole
purpose of financial gain, and that is why
commercialization is a narrower, more precise
term [19].
Although they can be demarcated and clearly
defined, the terms used overlap and are often
used as synonyms. Perhaps it is good to underline
that in practice, the standard introduction of
274
scholars (academics) into the market space is
first through informal cooperation in the form of
projects and academic engagement, while
commercialization is always the next phase and
for scholars it represents a huge step out of their
comfort zone.
Academic engagement, with all its nuances
and aspects, is unfortunately driven solely by the
personal motives of scientists. Motivating
researchers
at
universities
for
the
commercialization of scientific research is a
particularly important issue, perhaps a key one,
for the establishment of entrepreneurially
oriented universities that would integrate much
easier into various types of partnerships with the
economy, i.e. innovation systems.
The most common barriers to the
commercialization of scientific research are: the
overload of teaching and administrative work
related to teaching in the case of teaching staff,
as well as the absence of the impact of
commercialization on the academic career, both
for researchers and teachers. Therefore,
commercialization is most often seen as a burden
and an unnecessary waste of time, with a
misunderstanding of the value of the potential
market application of research for society. On the
other hand, there is also a fear that active
engagement in commercialization will slow
scientists down in their academic work [20].
III.
THE IMPORTANCE OF MONITORING AND
MEASURING INNOVATIVE ACTIVITY
The degree of success of the development of
intellectual property as a result of creativity, and
applicability of that creation for useful and
commercial purposes, is reflected through
intellectual property rights applications [21].
Assessment and monitoring of the innovation
landscape of national economies is carried out by
World Intellectual Property Organization
(WIPO). With the simple goal of determining
how to find metrics and approaches that better
capture the richness of innovation in society and
go beyond such traditional measures of
innovation as the number of research articles and
the level of research and development (R&D)
expenditures, the Global Innovation Index (GII)
was introduced in 2007. The index includes three
sets of parameters for evaluating and comparing
the development of an economy's innovative
environment. The first set includes Science and
innovation investment, in the form of: scientific
publications, R&D expenditures both in business
and government institutions, international patent
filings, and venture capital deals. The next set of
indicators includes Technological progress
measured by: microchip transistor count, costs of
renewable energy (solar photovoltaic and
onshore wind) and drug approvals. The last set of
indicators includes socioeconomic impact as:
labor productivity, life expectancy, and carbon
dioxide emissions.
The Science and innovation investments part
is extremely important for this paper because it
contains the two highest forms of academic
engagement of scholars in the form of
entrepreneurial
activities
patenting
and spin-offs.
For Serbia, which belongs to the uppermiddle income group, the GII 2022 places it at
55th place [22], which is one position worse than
the rank in the previous year [23], i.e. two
positions worse compared to the period 2 years
ago. The rank considering only Innovation Input
is 55, and the rank for Innovation Output is worse
than overall - 58.
When analyzing patents in our country in the
pillar Knowledge and technology outputs,
section Knowledge creation, for Patents by
origin/bn PPP$ GDP, Serbia is ranked 61st, and
for PCT patents by origin/bn PPP$ GDP, Serbia
is ranked 57th. In that part, for Serbia, the
number of published works, i.e. Scientific and
technical articles/bn PPP$ GDP, is set aside as a
strength. And on the basis of this index, the
orientation of our scientists towards publication,
rather than commercialization of their research,
is confirmed. On the other hand, in the pillar
Market sophistication, in the section Investment,
data is unavailable for almost all parameters,
except for market capitalization, for which it is
available but outdated. For the parameters:
Venture capital investments, deals/bn PPP$
GDP; venture capital recipients, deals/bn PPP$
GDP; as well as venture capital received, value,
% GDP; there is no data for Serbia, and it ranks
94th. All of the above confirms that our market
isn’t sufficiently attractive for VC activities.
Comparing the performance of Serbia with
similar economies, primarily those in the same
income group, it is easiest to make comparisons
with Montenegro and Bosnia and Herzegovina.
Montenegro recorded a huge drop in 2022, as it
fell from 50th to 60th place, and thus lost its
advantage over Serbia. In 2022, Bosnia and
Herzegovina placed 70th, compared to 75th
in 2021, and thus, although it remained behind
Serbia and Montenegro, it still improved.
In order to provide more than a simple
ranking of intellectual property offices and to
show the activity of filing patent applications in
a wider geographical area [24] an insight into the
number of accepted patent applications in
selected middle-income countries in 2020 was
conducted. Countries were selected based on
geographic distribution and data availability. The
most patent applications were approved in the
designated office for the protection of intellectual
property in the OAPI (Organisation Africaine de
la Propriété Intellectuelle) as many as 490,
followed by 461 in Belarus, and 357 applications
in Morocco. In terms of the number of patent
applications, Serbia is at the bottom with 59
patent applications in 2020 [24].
Observing the trend in the number of
registered patent applications in Serbia over the
last decade, a slight fluctuation is noticeable and
the annual number of patent applications ranges
from 234 recorded in 2012 to a maximum of 333
in 2013 [24].
Human creativity, especially the one with
economic profitability, which is reflected in
applied for and registered intellectual property
rights, is something that should be encouraged in
Serbia. Registered intellectual property rights
have the greatest chance of achieving
utility value.
IV.
RESEARCH METHODOLOGY
For this research, we used a Survey
instrument that was carefully developed and
applied [13] in transition, i.e. post-socialist and
developing economies: Belarus, Kazakhstan
and Azerbaijan.
The instrument itself is made up of 4 parts.
The first part includes general information about
the respondents, such as: age, work experience,
title, position, research field, faculty, and
university. The second block of questions is
devoted to the academic progress in terms of
number of works published in Serbian or
international journals in the last 5 years.
The next part of the questionnaire is
dedicated to the academic engagement of
researchers, in the form of undertaking some of
the following activities:
honorarium for conferences, lectures,
etc.;
275
units as winning a grant;
consulting, mentoring, coaching;
selling products of your research without
establishing a firm;
licensing of patents;
establishing a spin-off (new business).
And the last part of the questionnaire referred
to the sources from which the researcher's
entrepreneurial activity was financed. The
answers offered were:
government grants;
foreign (EU) grants;
university resources;
own resources;
private capital market;
venture capital business.
The empirical analysis is based on a novel
dataset collected via online survey over the four
months from September 2018 to January 2019 in
Serbia. Academic entrepreneurship survey
required optional participation.
A. Sample
There are 18 universities in Serbia, 8 of
which have been founded and are financed by the
state, while 10 are privately owned. In our
analysis, we first devoted our efforts to obtaining
contact information of scholars. Email
information was collected for the 5,163
established scholars via the universities' webpages and a database was created. In total 2,106
questionnaires were opened, 408 showed some
activity, while 43 emails bounced.
With 5,163 emails sent, and 408 responses
received, we had response rate of 7.9%. After a
thorough examination of responses 74
questionnaires were excluded from further
analysis due to the high proportion of missing
data and 334 were regarded as valid.
Only a subsample of individual observations
were defined as academically entrepreneurial,
and provided information on commercialization
income as a share of total income, as well as other
commercialization activity characteristics. The
subsample of scholars with reported
commercialization activity consists of 260
respondents.
276
The Academic entrepreneurship survey was
conducted on the entire territory of Serbia and
included scholars from all universities. The
majority of valid answers came from the
University of Novi Sad (34.44%) and the
University of Belgrade (32.63%), while the
response from other universities was
significantly lower: University of Kragujevac
(9.9%), University of Nis (3.3%), University of
Novi Pazar (0.6%) and University of Pristina
temporarily headquartered in Kosovska
Mitrovica (0.6%), others (1%), while 55
respondents (16.5%) did not want to name their
university. Looking at university ownership, the
sample included 3 respondents from private, and
331 respondents from state universities. An
overview of the demographic characteristics of
the respondents is presented in Table I.
In relation to the age, the predominant
number of respondents, 115 of them (34.4%)
were from 30 to 39 years of age, while 78 of them
(23.4%) were from 50 to 59 years of age,
followed by 71 respondents (21.3%) that were
from 40 to 49 years of age. Age groups that are
presented by the youngest and oldest scholars are
TABLE I.
DEMOGRAPHICS OF THE SAMPLE.
Characteristics
up to 29
30-39
40-49
Age
50-59
60+
up to 5
6-10
Work
11-20
experience
21-30
31+
PhD
MSc
MPhil
Title
Graduate
Specialist
Full Professor
Assoc. Professor
Asst. Professor
Position
Lecturer
Vocational Prof.
Research fellow
Novi Sad
Belgrade
Kragujevac
Niš
University
Novi Pazar
Priština
Other
n/a
Total sample Size (n) = 334
frequency
%
45
115
71
78
24
42
85
91
68
47
257
65
10
1
1
81
98
59
11
2
83
115
109
33
11
2
2
5
55
13.5
34.4
21.3
23.4
7.2
12.6
25.4
27.2
20.4
14.1
76.9
19.5
3.0
0.3
0.3
24.3
29.3
17.7
3.3
0.6
24.9
34.4
32.6
9.90
3.30
0.60
0.60
1.00
16.5
much less represented
7.2% respectively.
with
13.5%,
and
A subsample of individual observations were
defined as academically entrepreneurial, and
provided information on commercialization
income as a share of total income as well as other
commercialization activity characteristics. The
subsample of scientists with reported
commercialization activity consists of 260
respondents,
with
reported
types
of
commercialization presented in Fig.1.
Regarding work experience, the distribution
was as follows: 91 of respondents (27.2%) were
employed between 11 and 20 years, 85 (25.4%)
between 6 and 10 years, 68 (20.4%) between 21
and 30 years, while the groups with 31+ and up
to 5 years of employment were much less
represented, with 14.1% and 12.6% respectively.
Respondents who were engaged in some of
the academic research activities were analyzed
separately, and those who achieved the highest
degree of scientific work commercialization
were singled out from that group.
The most represented academic title by far in
our sample was PhD with 257 (76.9%), followed
by MSc with 65 (19.5%) and MPhil 10 (3%) of
responses. One respondent each (0.3%) reported
a graduate and a specialist title.
After selecting respondents who founded
their own spin-off companies - 27 (10.38%), and
those who reported holding a patent - 16 (6.15%),
followed a detailed analysis of their basic
characteristics
Most of the respondents held teaching
positions - 238 (71.2%), research fellow - 83
(24.9%), lecturer - 11 (3.3%), and professor of
vocational studies - 2 (0.6%).
V.
ANALYSIS AND DISCUSSION
A. Comparison Between Scholars with SpinOffs and Patents
The respondents who founded their own
spin-off companies were predominantly from the
field of ICT, holding the title of full professor,
and employment ranging between 11 and 20
years at the University of Novi Sad.
Analyzing the demographic characteristics of
the respondents who reported some form of
research commercialization and those who
answered that they were not active in
commercialization, it was evident that among the
respondents who had no experience in
commercialization, the most numerous were
young people at lower positions and with the
least work experience.
On the other hand, the respondents who
registered their patents were mostly from the
field of engineering, holding titles of full or
assistant professor, with employment ranging
It was interesting to note that some form of
commercialization was reported at all
universities covered by the survey, as well as at
each position held.
Commercialization type
consulting, mentoring, coaching
146
honorarium for conferences,…
98
winning a grant
85
selling products of your research…
72
establishing a spin-off (new…
licensing of patents
27
16
0
20
40
60
80 100 120 140 160
Figure 1. Distribution of different academic engagement activities. Source: Authors’ research.
277
Financing commercialization
8
foreign (EU)grants
18
13
government grants
10
own resources
5
private market capital
2
venture capital
0
17
11
6
university resources
18
11
5
5
10
patents
spin offs
15
20
Figure 2. Distribution of different academic engagement activities. Source: Authors’ research.
between 6 and 10 years at the University of Novi
Sad, or University of Belgrade.
What is perhaps the most interesting result of
the research is an insight into the funding sources
of the entrepreneurial ventures of scholars, which
is shown in Fig.2.
Most of respondents who founded spin-off
companies reported that a large share funding
came from project financing, whether foreign or
domestic, as well as from their own funds. The
participation of private capital, university
resources,
and
venture
capital
was
considerably smaller.
Among respondents who registered patents,
the most common types of financing were: state
grants, own funds, foreign grants, and to a lesser
extent university resources, private capital,
and VC.
Since the questionnaire did not offer an
exclusive answer to the question of the type of
academic entrepreneurship, there was a
possibility for the respondents to opt for both a
spin-off and a patent at the same time, which 4
respondents did. Respondents were from the
fields of: engineering (2), bioscience and ICT,
from the University of Novi Sad (2), University
of Belgrade, and one n/a. The respondents held
titles of full professor (2) or assistant professor
(2), with work experience of 6 to 10 years (2), 11
to 20 (1) and 21 to 30 (1). All respondents
reported funding from project financing, both
foreign and domestic.
278
VI.
CONCLUSION
The role of modern universities encompasses
teaching, research and entrepreneurship
functions. Research commercialization requires
building strong external partnerships with
ecosystem stakeholders. Mechanisms of transfer
of university knowledge, as well as financial
compensation from the same, are subjects of
continued research. The paper presents results of
the research of academic entrepreneurship
activity among scholars in Serbia. Questionnaire
was sent to 5.163 scholars, and the analysis was
carried out on the answers of 334 respondents.
The
instrument
used in the paper
“Commercializing university research in
transition economies” was applied.
On the basis of the conducted analysis, the
profile of scholars who achieved the highest form
of research commercialization - establishment of
a spin-off company or patenting - was defined.
The respondents who founded their own spin-off
companies were predominantly from the field of
ICT, holding the title of full professor, with work
experience of between 11and 20 years at the
University of Novi Sad. On the other hand, the
respondents who registered patents were mostly
from the field of engineering, holding the title of
full professor or assistant professor with
employment ranging from 6 to 10 years at the
University of Novi Sad, or University of
Belgrade.
Further research could deepen the analysis
and determine the factors that can encourage a
greater number of scholars to commercialize
their research, and determine possible barriers
that are present at universities in Serbia. It should
focus on determining guidelines for the
promotion of entrepreneurial activities in the
academic community, while at the level of
university management it should determine
guidelines for the shift towards greater
commercialization of research.
ACKNOWLEDGMENT
The research was supported by the Faculty of
Technical Sciences, University of Novi Sad:
project “Application of general disciplines in
technical and information sciences” of the
Department of Fundamental Sciences.
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280
PaKSoM 2022
Understanding Employee Innovative
Behavior in Serbia: A Comparison
with EU Country
Bojana Milić1, Milan Lečić2, Jelena Spajić3, Dunja Bošković4, Danijela Lalić5
1,2,3,4,5
University of Novi Sad, Faculty of Technical Sciences, Novi Sad, Serbia
1
bojana.milic@uns.ac.rs, 2lecic.di16.2017@uns.ac.rs, 3stankovicj@uns.ac.rs,
4
dunja.vujicic@uns.ac.rs, 5danijelalalic@uns.ac.rs
Abstract—This paper investigates the differences
between Serbia and Slovenia in structural model
that examines the relationship between leadership
and innovative work behavior, observed through
several mediators: innovative climate, internal
trust and organizational commitment. The
quantitative research was conducted from May
through October 2021. After contacting companies
in Serbia and Slovenia, the questionnaire
consisting of 41 items was distributed through
Google Form platform. The final sample consisted
of 1114 employees working in Serbian and
Slovenian companies on managerial and nonmanagerial positions. The analysis was conducted
with SmartPLS multigroup analysis. Results
indicate that internal trust can have significant
role in initiating and directing innovative work
behavior. The practical implications are discussed.
Keywords - leadership, innovative behavior,
PLS-MGA
I.
INTRODUCTION
When investigating statistical models,
authors frequently use different samples, and
often overlook differences in path coefficients of
different groups. One can’t help but wonder: is
there a statistical difference between the path
coefficients of observed samples, and how they
can affect the generalization of model? In this
paper results of multi group analysis with PLS
structural equation modelling (MGA-PLS) are
presented. The proposed model aims to
investigate how leadership affects innovative
behavior of employees through following
mediators: innovative climate, internal trust and
organizational commitment.
The
group
ISBN: 978-86-82602-00-2
differences that could be identified can help
better understanding of proposed theoretical
framework for innovative work behavior.
II.
THEORETICAL BACKGROUND
A. Leadership
The leader-member-exchange theory (LMX)
argues that high-quality exchanges between
leaders and their followers are crucial for
successful leadership – when followers were
given greater responsibility, they tend to work
more innovatively in order to exceed their
leader’s expectations [1,2]. Leadership (L) is
identified as crucial factor that impact creativity
and innovative work behavior [3]. If leaders want
to boost and benefit from their follower’s
creativity, they need to put in the effort to build
trust and respect between team members [4].
B. Innovative Climate
While interacting with their followers,
leaders also influence a special type of
organizational climate – an innovative climate
(IC) [5]. This form of climate is considered
crucial for innovative organizations since it
supports and promotes change and innovation,
and encourages employees to develop, share and
work on their ideas [6,7]. Innovative climate has
motivational effect on employees, by providing
them a positive environment to pursue creative
and innovative ideas [8]. Employees can increase
their innovative work behavior, if they feel that
they have freedom in their work. These
281
employees will show initiative, present new
ideas, and will try to find a way to implement
them [9].
C. Internal Trust
Internal trust (IT) is expressed as climate of
trust between employees in organization, and
their positive expectations about their role,
relationships with other employees and their codependence. The organizations with strong
feeling of internal trust are considered more
successful, creative and innovative [10]. Leaders
can develop a feeling of trust among their
followers, by manifesting a trusting behavior
themselves by assigning important tasks or
entrusting confidential information [11]. The
different styles of leadership, leader’s actions
and their attitudes are found to be important
drivers of internal trust in organizations [12,13].
Internal trust is found to be an important factor
for innovation [14], but also it is found that lack
of trust may hinder the creation of an innovative
climate [15].
D. Organizational Commitment
Employees are psychologically connected to
their organization through organizational
commitment (OC). Committed employees will
adopt organizational values, mission and vision,
will work hard and put in a lot of effort to
achieve company’s goals [16]. The results of
previous studies indicate that leader’s behavior
has a strong impact on organizational
commitment [17]. Also, positive relationship
between innovative climate and organizational
commitment has been found [18].
E. Innovative Work Behavior
Innovative work behavior (IB) imply a wide
range of behaviors that aid: idea generation, idea
promotion and idea implementation [19]. Over
the years, different factors are found to have a
positive impact on innovative work behavior.
Innovative climate is found to have a mediating
effect on innovative work behavior [20]. On the
other hand, it is found that leaders through their
vision, expertise, mentoring bat also through
developing supportive culture and intellectual
stimulation, can motivate employees to develop
innovative work behavior [21].
Based on the theoretical background and the
results of previous research, the research model
was conceptualized (Fig.1) and hypotheses were
developed (Table I).
282
Figure 1.
The conceptual model.
TABLE I. RESEARCH HYPOTHESES.
Hypotheses
Relationship
H1
L IC
H2
IC IB
H3
L IC IB
H4
L IT
H5
IT IC
H6
L IT IC
H7
IT IB
H8
L IT IC IB
H9
L OC
H10
OC IC
H11
L OC IC
H12
IB IB
H13
L OC IC IB
III.
There is no
statistically
significant
difference
between
Serbian and
Slovenian
sample.
METHODOLOGY
A. Measurement
The total of 41 items were used to measure
five constructs: (1) LMX-7 scale was used to
measure LMX leadership – 7 items [22]; (2)
subscale of psychological climate measure was
used to measure innovative climate – 5 items
[23]; (3) items used in previous study were
adapted in order to measure internal trust – 4
items [24]; (4) the Organizational Commitment
Questionnaire (OCQ) was used to measure
organizational commitment -15 items [25]; (5)
Innovative Work Behavior Scale (IWBS) was
used to measure innovative behavior – 10 items
[26]. The selected measurements were applied
and validated in previous studies and showed
satisfactory levels of validity and reliability.
The questionnaire was translated following
double-translation method [27] from English to
Serbian and Slovenian language. Confirmatory
factor analysis provided similar values for
measures of internal consistency, validity and
reliability for both questionnaires.
B. Data Collection
The research was conducted from May to
October 2021. Some of leading Serbian and
Slovenian companies were contacted with
invitation to participate in this study. Online
questionnaire was sent to companies who
responded positively, via Google Form platform.
C. Sample Characteristics
The total of 1114 employees from Serbian
(54%) and Slovenian (46%) companies were
included in the final sample. There were 579
women respondents (52%) and 535 (48%) male
respondents. The total of 350 respondents were
working on managerial positions (31,4%), while
764 respondents were working on nonmanagerial positions (68,6%). The total of 413
respondents (37,1%) were working in public
sector, 694 respondents (62,3%) were working in
private sector, while 7 respondents (0,6%)
worked in other types of company ownership.
D. Statistical Analysis
Statistical analysis was performed using
SmartPLS 4 software [28]. The conceptual
model was analyzed with PLS-SEM algorithm
and bootstrapping. The analysis of measurement
model showed that convergent validity, internal
consistency reliability and discriminant validity
were established. The structural model was
tested for collinearity, and results of path
analysis, values of coefficient of determination
(R2) indicated a good model fit. Finally, the
group differences were examined with
Consistent Bootstrap multigroup analysis.
IV.
RESULTS
The Smart PLS multi-group analysis allows
testing the hypothesis that the path coefficients
between two groups are not significantly
different. PLS-MGA approach based on
bootstrap analysis allows the comparison of
structural model parameters between different
groups [29]. PLS-MGA analysis followed three
steps, suggested by Hair and colleagues [30]:
generating groups;
test for invariance;
permutation analysis.
A. Generating Groups
In the first step, the groups for two observed
countries were generated. It is important to
obtain the minimum group size to ensure the
predictive power of test. For a total of 5 variables
in the conceptual model, 45 observations must be
obtained in order to achieve the statistical power
of 80%, and R2 value of 0.25 at the statistical
significance level of 95% [31]. The final sample
exceeded the minimum sample size.
B. Test for Invariance
Testing for measurement invariance, ensures
that the differences between groups identified in
multigroup analysis originate from real
differences in structural relationship and are not
the result of different interpretation of specific
measures. Measurement invariance of composite
models (MICOM) follows three step
procedure [32]:
MICOM step 1: configural invariance;
MICOM
step
invariance;
MICOM step 3: equality of composite
mean values and variances.
2:
compositional
Configurable invariance was established by:
(1) using identical indicators in both Serbian and
Slovenian model; (2) identical data processing,
(3) identical PLS algorithm setting.
Compositional
invariance
examines
correlation of composite scores (c), and assumes
the value of 1. The results of second step in
MICOM analysis (Table II), suggest that c value
is not significantly lower than 1, concluding that
compositional invariance is established.
The complete invariance of measurement is
achieved when there is no significant difference
in mean value and variance between groups. The
results presented in Table III and IV, suggest that
partial measurement invariance is established.
Based on the results of MICOM analysis, as
well as recommendations found in literature [32],
a PLS-MGA analysis was carried out.
283
TABLE II.
MICOM STEP 2.
c
95% conf.
interval
Comp.
invariance?
L
0.999
(0.999-1)
YES
IC
1.000
(1.000-1)
YES
IT
1.000
(1.000-1)
YES
OC
1.000
(1.000-1)
YES
IB
1.000
(1.000-1)
YES
Composite
TABLE III.
Mean
95% conf.
interval
Equal
mean?
L
0.238
(-0.126-0.124)
NO
IC
0.122
(-0.116-0.117)
NO
IT
0.026
(-0.120-0.109)
YES
OC
0.138
(-0.123-0.106)
NO
IB
0.107
(-0.126-0.117)
YES
TABLE IV.
Structural model for Serbian sample.
MICOM STEP 3A.
Mean
diff.
Composite
Figure 2.
Figure 3.
MICOM STEP 3B.
Structural model for Slovenian sample.
Composite
Mean
diff.
Variance
95% conf.
interval
Equal
var.?
L
0.156
(-0.163-0.165)
YES
IC
0.020
(-0.166-0.160)
YES
IT
0.003
(-0.167-0.157)
YES
L IC
-0.0043
0.491
0.509
OC
-0.202
(-0.163-0.167)
NO
IC IB
-0.004
0.946
0.054
IB
0.000
(-0.161-0.177)
YES
L IC IB
-0.020
0.536
0.464
L IT
0.142
0.001
0.999
IT IC
0.165
0.016
0.984
L IT IC
0.136
0.002
0.998
IT IB
0.070
0.030
0.970
L IT IC IB
0.058
0.005
0.995
L OC
-0.038
0.396
0.604
OC IC
-0.097
0.164
0.836
L OC IC
-0.069
0.121
0.879
OC IB
-0.059
0.890
0.110
L OC IC IB
-0.030
0.192
0.808
C. Multigroup Analysis
Figs. 2 and 3 present the structural models
with path coefficients and R2 values for Serbian
(A) and Slovenian (B) samples. The differences
between the two groups are noticeable for both
path coefficients as well as R2 values.
Further analysis evaluated their statistical
significance. In the comparison of two group in
PLS-MGA analysis, Serbia group showed
statistically significant higher values of path
coefficients than Slovenia group in all
relationships containing construct internal trust.
No other path coefficients showed statistical
difference (Table V).
284
TABLE V. THE RESULTS OF MULTIGROUP ANALYSIS.
Relationship
Bootstrap MGA
Diff.
p
p
(A-B)
(A>B)
(B>A)
V.
VI.
DISCUSSION
SmartPLS software is often used for complex
structural models with many constructs,
indicators and relationship to test a theoretical
framework from a prediction perspective [33].
When arguing new theory, authors often fail to
report the possible group differences in their
sample. If reported, they usually use traditional
parametric and non-parametric tests that analyze
group differences for one construct at a time,
which is why there is no possibility to see how
group differences affect the functioning of the
model as a whole. SmartPLS multigroup analysis
allowed us to investigate the possible differences
between two countries in one research sample,
while proposing a new theoretical framework
aimed to further understand the origin,
development and directing of innovative work
behavior in organizational context. The results of
multigroup analysis (Tables V and VI) suggest
that internal trust is affected by group differences
in sample, since all relationships in model that
include this construct showed statistically higher
values for Serbian sample. This is an interesting
finding since Serbia and Slovenia are considered
to share similar profiles of cultural dimensions,
and the both countries are considered to have
collectivistic orientation [34]. However, the
found differences could be explained through
different historical circumstances that these two
countries have gone through.
TABLE VI. THE RESULTS OF HYPOTHESIS TESTING.
Hypotheses
Relationship
Decision
H1
L IC
Supported
H2
IC IB
Supported
H3
L IC IB
Supported
H4
L IT
Not supported
H5
IT IC
Not supported
H6
L IT IC
Not supported
H7
IT IB
Not supported
H8
L IT IC IB
Not supported
H9
L OC
Supported
H10
OC IC
Supported
H11
L OC IC
Supported
H12
IB IB
Supported
H13
L OC IC IB
Supported
CONCLUSION
The results of a study that investigated trust,
confidence and social environment in postcommunist societies, indicate that countries that
have experienced fewer economic and political
turbulences show higher levels of trust. These
results indicate that sudden and negatively
perceived change can completely destroy trust in
countries recovering from or going through
transition [35]. Other results suggest that
supporting and encouraging employees to
generate and implement new ideas, will help
internal trust to boost innovative behavior [36].
The results of this paper highlight the importance
of observing the broader context that goes
beyond the boundaries of the organization, which
could be of crucial importance for initiating
innovative behavior in multinational companies.
ACKNOWLEDGMENT
The results presented in this paper are part of
the research within the project “Improvement of
teaching processes at DIEM through the
implementation of the results of scientific
research in the field of Industrial engineering and
management”, Department of Industrial
Engineering and Management, Faculty of
Technical Sciences in Novi Sad, University of
Novi Sad, Republic of Serbia.
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PaKSoM 2022
Problems of Quantitative
Measurement Technological Level of
the Economy
Oleg Sukharev1
1
Institute of Economics of the Russian Academy of Sciences, Moscow, Russia
1
o_sukharev@list.ru
Abstract—The purpose of the research is to
identify the main problems of measuring the
technological level of the economy. The
methodology consists of the theory of
technological development and measurements,
statistical estimates. The result boils down to an
assessment of the manufacturability by types of
economic activity by gross value added, and the
ratio of innovative and non-innovative products,
which in general does not give a true idea of the
level of technological development of the
economy. A change in the method of technology
accounting by the method of technological maps
is proposed, an assessment of the sensitivity of the
level of manufacturability to investments in old
and new technologies, with reference to the
created classification of technology types by types
of economic activity.
Keywords - technologies, R&D costs,
innovative and non-innovative products, economic
growth, investment
I.
INTRODUCTION
The technological level of the economy is
determined by the existing structure of
technologies used at various levels [1-3].
The structural problem is expressed in the
fact that the professional structure of the
economy affects economic growth, that is, each
professional group makes its own contribution
to it. Various technologies also provide their
impact on economic growth. Old technologies,
contrary to the accepted opinion, can make a
very significant contribution to the growth rate
in some areas of development, but new
technologies can even slow it down. Of interest
is the assessment of the professional group that
ISBN: 978-86-82602-00-2
makes the greatest contribution to the growth
rate, as well as the type of technology that
provides the same result. The solution of such
structural tasks will allow us to approach the
justification of strategic decisions not only in
the field of science and education, or high
technologies and knowledge-intensive sectors,
personnel training, but also the management
model of economic growth [4-7].
The above makes it possible to formulate the
task of measuring the technological level of the
economy as a starting point in conducting the
necessary studies of the impact of technological
development on growth and reverse effects. The
purpose of the study is to analyze the problems
of measuring the technological level that have
accumulated in modern accounting and
measurement practice carried out by statistical
offices in different countries, in particular, in
Russia. The methodology consists of
approaches in the field of measurement theory
of technological development and growth [6,7].
To achieve this goal, we will consider what the
technological level of the economy is and in
what ways it can be measured.
II. CUMULATIVE EFFECT OF ECONOMIC
POLICY AND ITS REFLECTION IN THE CHANGE
OF TECHNOLOGICAL LEVEL
Controlling influences are very difficult to
investigate, since the study is subject to a period
of time already lived. Policy and management
can have a cumulative effect – negative or
positive, when, in the first case, the sensitivity
of the economy decreases to measures of
influence, in the second – it persists or
increases. It becomes a non-trivial task of
287
modern management and economic science to
determine which instruments have what
cumulative effect. It is impossible to change the
management methods already applied, as well
as to assume that their repeated application will
give the same effect after a certain time
(although there is a certain probability of this).
This circumstance dictates the need to have an
idea of the cumulative effect of the policy. The
technological level of the economy is also
differently sensitive to investments in new and
old (obsolete) technologies. Therefore, in this
area, in relation to investment policy, there may
also be a cumulative effect of its influence on
the technological structure.
The negative cumulative effect limits the
possibility of prolongation of the application of
certain policy measures. The degree of
sensitivity of the system elements and its overall
control tools can change quite quickly. From the
point of view of macro-management, it is
assumed that individual parameters and
connections will remain unchanged for some
next period of time. This allows us to consider
the identified reactions of the system for the
previous time interval, persisting in the near
future. As a result, the instruments of
macroeconomic policy (management) are
formed based on very erroneous economic
policy settings. The higher the uncertainty of a
system element, for example, technology, the
more mistakes can be made. They are caused by
the peculiarities of changing the impact of
technology on economic development, the
assessment of the technological level of the
system and the selection of methods for
managing technological changes. Let us
consider in detail the problem of measuring the
technological level, because it will largely
determine then the management.
III. TECHNOLOGICAL LEVEL OF THE
ECONOMY AND ITS MEASUREMENT
The technological level of the economy is a
characteristic of its manufacturability, that is,
how exactly this system uses all kinds of
resources to obtain a full set of benefits
(products and services), the performance of
necessary functions. In other words, it reflects
what kind of effectiveness the system provides
288
in some way, transforming resources into useful
benefits and functions, including management.
The assessment of this level can be carried out
in different ways, but it should provide
information on how effectively the method of
influence is applied to various objects. This
level is relative, but the criterion for its
assessment for an adequate comparison should
be equivalent and reflect the degree of
application of new technologies that reproduce
the effect of savings.
The impacts in the form of decisions taken
affect both the level of technology and the
dynamics of various economic structures, the
closeness of connections between them. The
need to measure the strength and causes of this
influence on the elements of the economy
represents the meaning and content of the task
of “structural management”. The level of
manufacturability can be measured by the ratio
of investments in new and old technologies.
With the dominance of the former, the process
of technological renewal is more intensive.
Investments in new technologies can be
considered as the costs of technological
innovations of organizations. Investments in old
technologies are defined as the difference
between the gross accumulation of fixed capital
and investments in new technologies, since
what does not go to new technologies serves the
old technological basis.
The structure of investments can change in
various ways:
1.
the value of total investments is
growing, but the ratio of investments in
new and old technologies does not
change;
2.
the amount of investments is growing,
but the ratio of investments is changing
towards either new or old technologies;
3.
the total amount of investments does not
change, but the ratio of investments
changes, either in favor of old or new
technologies, or does not change.
It is possible that the amount of investment
is reduced, and the ratio of investments in new
and old technologies does not change, or may
change in favor of a certain type of technology.
The technological level of the economy can
be measured in various ways.
Firstly, today in Russia, for example, the
assessment of manufacturability is applied by
the amount of R&D costs in the total amount of
added value created. Based on this, Rosstat
identifies high-tech activities, two subspecies of
medium-tech activities, as well as low-tech
activities. Moreover, the grouping of activities
according to OKVED related to one or another
type is carried out. This approach is very
inaccurate, since there is no direct correlation
between the amount of R&D costs as a
proportion of a certain amount, for example,
value added, and technological efficiency. Low
costs can be spent on those R&D that will give a
large contribution in the field of creating new
technologies, and large costs can be associated
with R&D that do not give a significant
‘technological result’ at all, but in the form of a
report are gathering dust on the shelves of the
organizations that carry them out.
Secondly, the technological level can be
assessed by the number of advanced
technologies used from their total number, or by
the amount of innovative products in the
volume of non-innovative, or by the amount of
gross value added created by new technologies
to the total value of this indicator.
However, this method of evaluation also has
inherent disadvantages, since it depends on how
technological innovations are taken into
account, or advanced technologies are relatively
not advanced. In addition, it is often not
possible to allocate the added value created
using the latest technologies, since both
advanced and outdated technologies are
involved in the creation of products. At the
same time, this method is direct, in contrast to
the indirect assessment of R&D, which are not
directly responsible for the emergence of
new technologies.
IV.
RESULTS DISCUSSION
Here is the definition of various types of
activities that create gross value added,
6,000
5,000
4,000
bln rub
The contribution to the growth rate of old
and new technologies can be estimated by
investments in these technologies, as one of the
ways. In addition, it can be done by the amount
of added value created on old and new
technologies, although it is often not possible to
separate the latter.
3,000
2,000
1,000
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
High-tech economic activities
Medium-tech high-level types of economic activity
Medium-technological low-level types of economic activity
Low-tech economic activities
Figure 1. Gross value added by types of economic
activity of Russia of various technological capabilities,
billion rubles, 2011-2021 (in 2016 prices).
according to the level of manufacturability,
based on the methodology of Rosstat. As it was
noted, the criterion for classifying high-tech
activities is the amount of R&D costs in the
total amount of value added, and the criterion
for knowledge-intensive activities is the share of
persons with a high level of professional
education in the number of employees. In
conditions of greater coverage of people with
higher education, the latter assessment is also
highly imperfect. This was clearly shown by the
author on the example of the Eurostat
methodology
of
accounting
for
the
“knowledge economy”.
Note that from the recession of 2014
onwards, Russia's technological level, measured
in relation to innovative to non-innovative
goods, works and services, has generally
declined (Fig.1). A slight increase was observed
only in 2016, and then in 2019-2020, which did
not bring the total value significantly higher
than 2011.
Thus, in order to ensure sound management
of technological development, it is necessary
not only to more accurately and adequately
measure the technological level of the economy,
including regions, but also to study the causes
and factors of a particular regime of its
dynamics. The rating approach is in many
senses very flawed and not suitable for
obtaining plausible estimates that are necessary
for building an economic policy that stimulates
technological development.
V.
CONCLUSION
In conclusion, we note the following
conclusions.
Firstly,
the
measurement
of
the
technological level of the economy today is
289
very imperfect. The reason is the presence of
objective difficulties in interpreting this level, as
well as a set of accounting and measurement
limitations.
Secondly, the applied estimates can greatly
affect management decision-making, the
implementation of mathematical models that
will lead away from reality, including, I mean,
assessments of the “knowledge economy”, the
activities of intellectual firms and etc.
Based on the identified limitations, it is
necessary to increase analytical efforts to
improve the criteria of manufacturability, their
measurement, statistical accounting and
interpretation of models and applied empirical
analysis. This report takes a step in that
direction. It will be necessary to assess the
sensitivity of various technologies and the
overall level of manufacturability to various
types of investments in technology, as well as
the compilation of technological maps as a way
to identify the technological level of this type of
activity.
290
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Center. Mathematical Institute of the Serbian
Academy of Sciences and Arts (pp. 139-145).
PaKSoM 2022
Competencies for the Knowledge
Economy and Reducing
Unemployment
Milica Stanković1, Tiana Anđelković2
1,2
1
The Academy of Applied Technical and Preschool Studies, Vranje, Serbia
milica.stankovic@akademijanis.edu.rs, 2tiana.andjelkovic-vr@akademijanis.edu.rs
Abstract—Unemployment is
an extremely
challenging topic that many economies face. The
fact that there are more than 200 million
unemployed today is devastating. At the same
time, the majority of the unemployed are young
people, women, minorities, and people with
disabilities. In this situation, they turnover to the
gray
economy,
and
“work
illegally”.
Unemployment is a huge cost for the state, but also
for the individual and his family, so the state
should fight against it with various measures and
policies. The fact that only a small variety of young
people possess the necessary knowledge and skills
necessary for modern business also speaks in favor
of unemployment. Young people do not have
enough IT knowledge, they don’t know how to
navigate, they work under pressure, they do not
have developed logical and communication skills.
That is why it is necessary to pay special attention
to both the reform of traditional school system and
the encouragement of non-formal and informal
education of young people. Only in that way there
will be an increase in the number of employed
people, and young people using the acquired
knowledge and skills will directly influence the
productivity and efficiency of the company, and
thus economic growth. The aim of this paper is to
point out the importance of knowledge, skills, as
intellectual capital in the modern economy.
Keywords
knowledge,
unemployment, youth, economy
I.
competences,
INTRODUCTION
The potential or real loss of a job is probably
even more difficult than the inability to employ
young people. It is a risk faced by all employees
who may lose their job for some reason. Losing
a job is not only disastrous for the individual
ISBN: 978-86-82602-00-2
because he is left without a regular income and
potentially falls into depression because of it [1].
The loss of a job also means an increase in the
state's costs because it must pay unemployment
insurance to the dismissed worker. The loss is for
various types of markets because the demand for
some products will decrease. It is also a loss for
the financial sector because they will be laid off
without the ability to pay loan installments or pay
insurance premiums. Therefore, the loss is not
only at the level of the individual but is
multiplied. It's the same with unemployment. An
unemployed young person costs not only his
parents, but also the state and other market
participants.
We live in the age of information and
communication technologies, where information
is the main resource, and the skills that are valued
in those conditions are the ability to analyze that
data, teamwork, and exceptional communication
skills. Manual work, which involves performing
the same operation, is no longer so prevalent
even in mass production. Employees are
increasingly expected to use logic, to be able to
use the knowledge and information they possess
as a resource to achieve the company's goals. We
live in an era of digital economy with a focus on
knowledge, it is necessary that individuals have
a constant desire to expand their knowledge and
skills. But considering that it is an expensive
process, they need to have the support of the state
and other institutions to reduce the burden that
the unemployed leave on the entire economy.
Skills and abilities are a very important
element that decides in which workplace
someone will be employed. Withdrawal,
291
resource lessness, walking the line of least
resistance and giving in to the situation are long
gone. A person needs to work on himself
continuously, to acquire new skills and new
knowledge so that he, as an individual, can be
competitive on the labor market. Unlike the
socialist period where people got a job after
finishing school and usually stayed in the same
company until retirement, today it is a real rarity.
Regardless of whether someone is employed or
not, he should work continuously on acquiring
new knowledge and skills, to maintain his current
position, possibly advance in the same company
or improve his position for a future engagement.
The aim of this paper is to point out the
importance of knowledge, skills and intellectual
capital in the modern economy. Extremely
important topics such as unemployment, but also
the possession of skills needed in modern
business will be covered. In the paper, the
methods of induction and deduction, as well as
the descriptive method, were used. The first part
of the paper will be devoted to the knowledgebased economy and the influence of the human
factor on economic variables such as
productivity and efficiency. The second part of
the paper will discuss the skills that individuals
should possess in order to be recognized on the
labor market and find a job in the shortest
possible time. The third part of the paper talks
about unemployment as a limiting factor of
economic growth. After a comprehensive
analysis,
relevant
conclusions
and
recommendations are given.
II.
KNOWLEDGE ECONOMY - IMPACT ON
ECONOMIC VARIABLES
The economy based on knowledge has its
own development path since the 70s of the last
century until today. It gradually developed and
was implemented in different economies in
parallel with the development of information and
communication technologies, and even then,
there was a division of employed and
unemployed individuals into those who follow
trends and improve and those who are afraid of
them. All this leads to the separation of business
ethics from ethics as a scientific discipline,
because in addition to other ethical issues, the
number of ethical problems that arise when firing
and hiring people is also increasing. It's true,
profit is not in every case ahead of ethical
principles, but for a company to survive from
period to period in turbulent and dynamic
business conditions, it is increasingly necessary
292
to monitor changes in the market and react to
them. And that was made possible only by
knowledge, that is, an economy based on
knowledge.
The term knowledge-based economy derives
from the understanding of the importance of
knowledge and technology for economic growth.
Knowledge is immanent to human beings and in
the literature, we find it as intellectual capital,
human capital, therefore, in technological
progress, knowledge has always been of
exceptional importance for economic growth [2].
In the last twenty years, the increasing
importance of the human factor has been noticed
both for developed economies and for
developing economies, especially in sectors such
as electronics, aviation, computing. The service
sector also shows an increasing dependence on
people's knowledge and skills, so that the
information and communication sector is
growing even faster. Back in the nineties of the
20th century, it was estimated that more than half
of the gross domestic product (GDP) of
developed countries comes from knowledge.
All this tells us that knowledge has become
the main source of innovation and growth [3].
Economic growth of any country is impossible
without innovation and entrepreneurial spirit.
Entrepreneurial spirit implies the knowledge of
many skills, knowledge, and abilities that
individuals must possess if they want to stand out
from the crowd and start working more
efficiently and be more competitive. People who
fit the criteria of the knowledge economy are not
born that way. They develop these skills
throughout their lives. At the end of their formal
education, they continue to learn and have a
constant desire for new knowledge, which they
could apply in practice and thus perform better
than the competition. That is why the importance
of learning and knowledge should be constantly
emphasized among young people, because only
in this way they will be an adequate staff that will
be desired in many organizations. However,
continuous work should also be done to improve
the educational process, where young people
would be introduced to the trends that exist in
various economic activities while still in school.
They should be able to do professional practice
in different companies, to see how things, work
in the economy and to work on the skills they
need to develop or improve in time. In Europe,
the dual education model has been increasingly
exploited in recent decades, which developing
countries are slowly starting to apply. The dual
model of education implies the practical
application of theoretical knowledge acquired in
the process of formal education.
One of the main reasons why companies are
increasingly dealing with employment policy is
that not everyone is able to influence the
productivity growth of that company in the same
way. Employees who have more developed
skills, who think logically, are flexible, can better
organize their working time, are communicative,
will produce a larger volume of products more
easily and quickly, unlike the average individual.
However, not all people are so adaptable, and
they cannot achieve the given goals, but they can
be placed in those positions that will correspond
to their abilities. Many studies mention the
connection between productivity growth and
information and communication trends [4]. In
those studies, interpretations were given for the
productivity trend. In the case of technicaltechnological progress, a drop in productivity is
usually noted first, and economists believe that
the reasons are different - from the situation that
the company had insufficient capital investments
to maintain that productivity growth, through the
drop in innovation, which consequently affected
the drop in productivity, increased prices of raw
materials and technologies, government
regulation, and even workers' skills and abilities
have deteriorated or workers may not want to
work as hard as before.
The conclusion is that productivity growth is
influenced by technological changes. However,
productivity is a broader term than technological
changes, because in addition to technological
changes, we must also consider the human factor
here. Better managerial skills in terms of
managing both production and workers can
affect the growth of production, i.e., the
reduction of costs, and all this together affects the
level of productivity. However, it is not always
feasible to separate technological factors from
sociological ones, so all options must be
carefully considered before a final decision is
made.
Today, the role of a manager cannot be
reduced only to reacting in case something
unforeseen happens. His role is to manage risk in
such a way that he can predict what will happen.
This means that the manager, based on his
previous experience and the experience of
similar companies, predicts what the company
can potentially expect in the future. For this
purpose, it is necessary to develop such
competences, which will enable the company to
deal with its uncertainty, which the market
carries by itself. They imply that company
managers as well as employees present a certain
minimum of technical knowledge and experience
in order to predict in time the trends that
innovations and crises bring.
III.
SKILLS AND ABILITIES ESSENTIAL FOR
THE EMPLOYMENT OF A MODERN MAN
Education and training of the individual is a
key element of the knowledge-based economy. It
is these variables that make it easier for people to
find work, while on the other hand, investing in
them brings long-term income, and therefore
peace and security for the individual [5].
People acquire knowledge and skills
throughout their lives. However, when they reach
a certain age, in addition to formal education,
they must acquire such knowledge, competences
and attitudes that will help them find a job and
keep it, which means that they will have
developed skills such as flexibility, adaptability,
communication, the ability to work in a team,
knowledge of information and communication
technologies and others, to deal with market
dynamics. At the end of formal education,
everyone expects to get a job right away, but this
is mostly not possible.
Given that these are mostly young people
looking for their first job, in addition to formal
education, it is very important to pay attention to
informal and non-formal education as well [6].
People acquire informal education every day - at
work, in the family or during their free time. This
education is experiential and as such does not
result in any certificates or diplomas [7]. Nonformal education is not provided by educational
institutions such as colleges and universities, and
it often does not award any degrees or
certificates. However, here we are talking about
the desired - deliberate learning of new
knowledge and skills, and this requires additional
time and effort from the participants, to acquire
the desired abilities. Non-formal education is a
term that describes a wide range of learning that
provides learners with the opportunity to acquire
new skills that will benefit them at work or in life.
The European Union has been implementing
an active employment policy for many years, and
thus supports the reintegration of the
unemployed into the labor market. The
importance of skills in successfully finding a job
293
Figure 1 – Adult education level
is increasingly being understood. As for the
unemployed, there are several ways to improve
their skills - learning on the job as part of
training, subsidizing temporary jobs [8]. Such a
way of acquiring skills is intended for all levels
of education of people - from low-educated to
highly educated. The European Union defines
the key competencies that should exist for
employees within the territory of the European
Union. However, not all member states use the
same terminology, so they call the same
competencies by similar names [9].
Given that basic skills such as reading,
writing, and knowledge of mathematics acquired
through formal education are no longer sufficient
for working in any position, the need to redefine
the model of formal education is increasingly
highlighted [10]. As it is a very difficult process,
more and more often individuals and companies
are turning to processes of retraining or retraining
Figure 2 – Prevalence in ICT skills
294
of workers. Those processes have a significant
impact on the structure of the employees as well
as the performance of the company. The greatest
impact of these changes is reflected in the OECD
countries, where there is an increasing supply
and demand for highly educated people on the
labor market.
This
concept
of
“knowledge-based
economy” is based on the fact that information
and knowledge are the main driver of economic
growth and development. This ability to obtain
and use information in a timely manner is a vital
source of skills for many [11]. Many changes in
information and communication technologies,
the innovations that followed, could not be
accompanied without adequate intellectual
capital. Industries whose growth is based on
knowledge - manufacturers of high-tech goods,
but also other sectors that make extensive use of
modern technologies (banking, insurance,
communications...) make up more than half of
the gross domestic product of OECD countries
and are growing rapidly. In the continuation of
the text, we will see a graph that shows the
educational structure of the population in various
world economies that were the subject of OECD
analysis [12]. This is a very significant piece of
information that indicates how far these
economies have progressed in understanding the
importance of intellectual capital for the
economic development of those countries.
As we can see in these graphs, the awareness
of the importance of intellectual capital and skills
exists in most countries, but in most of them, the
knowledge-based economy has not yet shone in
its full glory. The most common problem that is
observed is the lack of knowledge about
information and communication technologies
(ICT), therefore there is a general lack of
ICT skills.
This deficiency hinders the use of available
digital technologies and is not in accordance with
the goals of sustainable long-term development.
The research on the knowledge of information
and communication technologies, which was
conducted by the OECD according to the ITU
(International
Telecommunication
Union)
methodology, was conducted by having
employees in some companies answer questions
such as whether they use ICT in their work, the
availability of Internet access, whether use of
ICT skills the same if the job description
changes, how long it takes them to do a job using
ICT skills, have they used this skill recently.
Then, based on these answers, the respondents
were divided into three groups - possessing basic,
standard and advanced ICT skills. Basic ICT
skills would include working with files, files,
sending emails. Standard ICT skills would be
working with spreadsheets, presentations,
installing software, while advanced ICT skills
would be the ability to program or code. On
average, about 55% of respondents have
developed basic ICT skills. In Switzerland or
Korea, that percentage is around 70%, in contrast
to Brazil, where it is less than 30%. In contrast,
only 7% of respondents said they knew advanced
ICT skills in developed countries, compared to
less than 3% in underdeveloped economies.
The same survey showed that adults with
higher education have a higher rate of
participation in non-formal education and
training than those with less education. All this
speaks in favor of the enlightenment that people
with higher education possess and which they
acquire precisely through that higher formal
education.
IV.
REDUCING UNEMPLOYMENT - TREND OR
REALITY?
Unemployment is a serious problem of every
economy. If it occurs at the beginning of an
individual's working life, it can lead to serious
consequences. In a young person, this can be
manifested through a loss of self-confidence, a
loss of the opportunity to acquire experiential
skills that can only be acquired through work,
and then there is a whole series of negative
economic facts - lower income per member of
that family, decrease in demand due to decreased
income, decrease in sales , reducing the amount
of tax that sellers pay for sold goods, and in
addition to this negative effect on the state, there
is at least one more, which is an increase in social
benefits to encourage consumption.
Unemployment is not a phase that exists
between schooling and finally finding a job. It is
a very difficult and long-term process where
young people go from finishing school through
volunteering, low-paid unqualified employment
or illegal employment to employment that suits
the individual according to his knowledge and
competences. All elements of this process are
reflected through the large informality of the
labor market, the growing gap between skills and
earnings, and the decline in the income of
informal workers [13].
295
As for the problem of unemployment in the
last few years, large fluctuations have been
recorded, mostly due to the pandemic caused by
the COVID-19 virus. According to the ILO
report from 2020, which refers to the period up
to December 31, 2019. In 2018, we see that the
general decline in youth engagement in the labor
market continued because young people devoted
more time to their formal education [14]. On the
one hand, this may have indicated the possibility
for young people to better devote themselves to
the development of skills that are not acquired in
the workplace, but on the other hand, it led to
underutilization of the workforce. Other
problems associated with youth unemployment
are the dominance of informal employment, the
lack of gender equality, and the youth's lack of
work experience. The fact that millions of young
people would gladly emigrate if they had the
opportunity to work somewhere abroad for a job
for which they have the skills but for higher
earnings is also very important. 2019 was
followed by 2020, with the pandemic caused by
the COVID-19 virus and this led to an even
greater decrease in the demand for labor.
Worldwide, during 2020, the number of working
hours decreased by as much as 8.8%, and this
trend continued in 2021, by 4.8% in the first
quarter and 4.4% in the second quarter of 2021
[15]. Therefore, economic policy measures did
not allow people to lose their jobs during the
pandemic, so most of them kept their jobs but
worked with reduced hours or did not work at all,
while some still lost their jobs.
If, however, we only observe the period
before the emergence of the COVID-19 virus, we
will see a growing trend in the participation of
employees with secondary or higher education
compared to the period at the end of the 20th
century. All of this points to the fact that people
also understood the importance of knowledge, so
they completed school to a greater extent, in
order to have better qualifications [16]. The
unemployment curve was decreasing in
developed countries in this period thanks to the
reduction of the informality of the labor market,
reduced gender discrimination of the
unemployed, while in developing countries, the
informal labor market still functioned in addition
to the formal one, with pronounced
discrimination against women and minorities.
Even one of the sustainable development
goals (Sustainable Development Goal) under
number 8 states that it is necessary to promote
sustainable and inclusive economic growth, full
296
and productive employment, and decent work for
all [17]. Unfortunately, this goal requires GDP
growth of at least 7% per year, while the least
developed countries still have annual GDP
growth of 5% or less. Sustainable development
should be achieved through optimizing the
efficiency of resources in production and
consumption,
through
increasing
labor
productivity, through fostering innovation and
formalizing the labor market. The very fact that
in most countries many farmers still work
without applying for mandatory social insurance
tells us that we are still far from achieving this
goal globally. The global unemployment rate in
2022 is expected to be 5.7% with about 207
million unemployed people in the world [18], in
contrast to about 170 million people who were
unemployed in 2018 [16]. Among the
unemployed, women, young people, people with
disabilities, minorities who do not acquire skills
that are valued in the labor market are at the
forefront, and this all reduces their chances of
employment. As far as employees are concerned,
in most countries there is a difference in wages
between men and women ranging from 10 to
25%, which shows that we are still far from the
requirement for equal work to be paid equally.
Preparation for the future working life of
everyone implies that everyone is continuously
exposed to the situations they will encounter at
work, but also to the knowledge of how
knowledge and skills develop in those
positions [19]. The goal of governments should
be to rebalance the economy through strategies
to increase investment and through new
education and training policies. Therefore,
governments are trying to establish a balance
between the process and the outcome - it is
necessary to improve education, qualifications,
the system of professional training, industry,
entrepreneurship, implementation of various
campaigns in the field of gender equality, all in
order to establish a balance on the labor
market [20]. All these processes would be
improved with the help of the use of publicprivate partnership, the implementation of
internships and internships, all with the aim of
developing knowledge and skills and
employment of young people and advancement
in business.
V.
CONCLUSION
Considering everything that was discussed,
the conclusion is that we should work as much as
possible on the process of formalizing the labor
market, equalizing the rights of men and women
and including young people, people with
disabilities and minorities in companies so that
they can use their knowledge and skills and
contribute to the efficiency of business those
companies, and on the other hand acquired the
skills necessary to advance in life and work.
Unemployment is a huge problem facing the
whole world, but we all must be aware that it is a
phenomenon that is negative for the global
economy because it affects the reduction of
social welfare.
Today's problem is certainly the desire to
quickly find a job. In the short term this is fine,
however such a way of employment results in an
inadequate workplace for that individual in the
medium and long term because there is often no
matching of his skills with the job description.
That should be the task of the states in the future
- to deal with the issues of matching skills and
available jobs. In this way, people's skills and
abilities are put before other factors and everyone
should be assigned to a workplace according to
their competencies.
It is obvious that the knowledge-based
economy is changing the demands on the labor
market in terms of supply and demand. This is
also evidenced by the large number of highly
educated staff that exist on the labor market
around the world, because with the increase in
the level of formal education, people's awareness
of the importance of knowing the skills that are
necessary for successful business also grows.
This fact indicates a higher probability that these
people will be more open to new knowledge and
new skills during their life and work, so they will
be more flexible than workers who worked 10,
20 or more years ago.
Bearing in mind all the above, we must not
forget the impact of competences and the
knowledge-based economy on risk management.
We live and work in extremely uncertain
conditions and unpredictable things threaten us
from minute to minute. In this sense, we need to
work on skills such as flexibility and adaptability
to know how to manage in new conditions.
Innovations that occur in the companies, but also
in the global changing environment, bring a
number of advantages, but also the uncertainty
that we have to face and turn threats into
opportunities for the company. Therefore, it is of
utmost importance that managers develop
knowledge-based competencies in order to
effectively manage risk.
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PaKSoM 2022
The Legal Interpretation as a
Decision-Making Algorithm
Živorad Rašević1, Marko Ćitić2
1
2
Faculty of Business Economics and Entrepreneurship, Belgrade, Serbia
University of East Sarajevo, Faculty of Philosophy, Department of Mathematics, Pale,
Bosnia and Herzegovina
1
zivorad.rasevic@vspep.edu.rs, 2citicm@yahoo.com
Abstract—This essay explains the structure of legal
norms and the process of legal interpretation
through the lenses of decision-making theory. It
attempts to converge formalistic and realistic
theories of judicial decision-making, utilizing the
basic methodology developed in the risk
management theory. For this purpose, the “hard
case” of the justification of human rights
restrictions is used as a case study. The process of
the application of the law is presented as a
cognitive quest for an optimal solution to
complicated legal problems. This approach may be
useful for rational argumentation, education and
the development of artificial intelligence support
for the judiciary.
Keywords – legal interpretation, decisionmaking, algorithm, human rights restrictions
I.
INTRODUCTION
There is no doubt that the use of algorithms in
digitalized decision-making is a global trend.
Legal affairs seem less affected because the
hermeneutics of legal texts exceeds the
application of rules of logic that are prone to
mechanical processing. The legal interpretation
must belong to human beings because it involves
social prudence and moral intuition. Thus, using
pre-programmed algorithms, computerized
decision-making, artificial intelligence (AI) and
other concepts developed in digital technologies
seems to be a highly inappropriate and risky
endeavour.
However, the law cannot ignore the
contemporary scientific achievements and
challenges. To adapt the traditional purpose of
the law to the increasingly complicated world,
ISBN: 978-86-82602-00-2
lawyers should look for ways of exploiting the
advantages of new technologies, while being
aware of the shortcomings and risks of this
quest. In this vein, the algorithms can deliver a
logically consistent decision-making framework
that enables bias-free information processing.
However, this framework must also pay due
attention to human considerations of social,
philosophical and ethical concerns.
This essay hypothesises that the knowledge
gained in the risk management theory can be
used to explain the process of legal
interpretation
through
decision-making
algorithms that are suitable for computer
programing. It implies the crucial role of human
beings, and the support of artificial intelligence,
which should deliver consistent logic of legal
argumentation.
In the following part, the basic concepts of the
decision-making theory are explained and
applied in the legal context. After that, the
structure of legal norms is analysed and adapted
to an algorithmic expression. In the last part, the
value of algorithmic programming is exposed in
“hard cases” of human rights restrictions.
II.
ALGORITHMS, DECISION-MAKING AND
THE LAW
Although the concepts that are under
consideration hereto permeate, the hypothesis of
this essay is eclectic and goes beyond the
traditional understanding of law and
management. This part attempts to explain these
concepts and place them in a persuasive
theoretical framework.
299
Algorithms are sets of rules that describe a
process of problem-solving that can be
programmed into computers. This possibility
underpins the application of AI, which is more
than an algorithmic process; It is self-directed
and self-adaptive computer activity. Computers
enable human beings to solve problems at great
speed by processing a huge number of data [1].
Being steps in structural decision-making,
algorithms became indispensable heuristic tools
in dealing with uncertainties that follow many
societal problems and endeavours, such as
aircraft collision avoidance, automated driving,
breast cancer screening, financial consumption
and portfolio allocation, wildfire surveillance,
Mars exploration, etc. They are used as methods
in programming scenarios, specification of the
space of possible decision strategies,
maximization of performance measures,
planning and learning. “Current state-of-the-art
decision-making algorithms rely on a
convergence of concepts developed in multiple
disciplines, including economics, psychology,
neuroscience, computer science, engineering,
mathematics and operations research” [2].
Recent research in business shows that
algorithms deliver more-efficient and moreequitable outcomes than human beings, who
have proven to be inconsistent and biased
decision-makers [3,4].
The decision-making analysis utilizes
algorithms to facilitate the making of choices
between possible alternatives and to calculate
influence factors, aiming to develop techniques
that lead to better decisions in uncertainties. This
discipline defines decision-making as an iterative
process that consists of the following steps: (1)
identify the decision situation and understand
objectives, (2) identify alternatives; (3)
decompose and model the problem; (4) choose
the best alternative; (5) analyze the suitability of
the chosen alternative for the objective
(sensitivity analysis). These steps are suitable for
quantitative
research
and
computer
programming but include personal and
subjective judgments. In short, human beings are
considered to be imperfect information
processors because of cognitive limitations;
however, subjective personal judgments remain
to be treated as important ingredients of a good
decision [5].
The legal literature does not offer a profusion
of sources that converge law and decisionmaking. However, authors that deal with this
matter confirm that meanings of the pertinent
300
concepts permeate and overlap. Tapani Klami
explains their propinquity with their purposeful
nature: “Legal interpretation is either real or
hypothetical decision-making, although is often
understood in some other manner…The purpose
of the interpretation for the decision-making
process of citizens and officials is similar to the
purpose of the legislation – to steer decisionmaking … I do not see any reason why one could
not apply the general decision-making theory to
questions of fact as well as questions of law.
After all, in both cases, one is speaking about the
degree of certainty, i.e., of a more or less justified
belief as viewed by the fact finder or interpreter
of law.” Just like in the decision-making analysis
and contrary to the dogma that Iudex non
calculat, he suggested the use of mathematical
models for quantitative calculations in legal
interpretation to explain the structure of legal
reasoning. [6] In a similar vein, The Justice of the
UK Supreme Court Lord Sales stated recently
that decision/making algorithms are fundamental
to legal thought because the “law itself is a sort
of algorithmic discipline: if factors A, B and C
are present, then a process of logical steps
response Z should occur.” He believes that
algorithms and AI pose grave threats of
depersonalization, illegitimate or inappropriate
exercise of power and coded biases. However,
they offer huge opportunities in information
processing and thus must be used in ways that
enhance human capacities, agency and dignity,
and not remove them [1].
In the Study prepared by the Committee of
Experts on Internet intermediaries of the Council
of Europe, it was found that the use of algorithms
can potentially have positive and negative
impacts on the exercise and enjoyment of human
rights. However, algorithms themselves should
not be blamed, because the decision-making
process around them must be scrutinized. The
experts found sufficient reasons for replacing
human beings with automated computing
systems: “large scale data processing, speed
volume and scale of decision-making lower error
rates. Data analysis algorithms find correlations
within large amounts of data to replicate
functions previously performed by human beings
and self-learning algorithms generate new
decision-making rules through machine-learning
techniques.” However, the role of a human being
is inevitable, because discretion as an important
element of decision-making cannot be
automated [7].
Finally, there are good examples of the
practical application of algorithms in legal
proceedings in the USA. First, the bail
algorithms are used in the criminal procedure to
eliminate bias and improve consistency, utilizing
statistical data of the following factors: Age,
current charges, criminal history and the record
failing to appear of a defendant. But the human
agency remains crucial because algorithms do
not deliver a perfect solution. They do not cover
other important factors, such as his/her
employment status, information about substance
abuse in his/her past, distinctive facts, and the
risk of discrimination against minorities [8]. The
second example is the quantitative calculation of
the balance between costs of prospective
litigation and odds of success that is developed in
the economic analysis of legal disputes [9].
In sum, the application of algorithms as tools
of legal interpretation is possible only if we reject
or at least ignore the stance of legal formalism,
i.e. the use of deductive logic to derive a correct
decision from premises that are accepted as
authoritative. The theoretical ground for this
endeavour is underpinned by legal realism,
which defines the purpose of interpretation as an
outcome that best promotes the public welfare
[10]. In this vein, the congruent characteristic of
the decision-making and the legal interpretation
processes is their result-oriented, purposeful
approach to uncertainties in ways, means and
ends. This congruence offers sufficient
theoretical justification for the application of
algorithms as tools of legal interpretation. The
algorithmic expression of legal rules might
diminish bias, enhance the quality of legal
argumentation and be useful in legal education
and the prediction of future litigation outcomes.
But they lack social and ethical prudence and
thus can be only a supportive tool that does not
limit judicial powers and diminish judicial
discretion.
III.
premise under the major premise to draw a
conclusion.
In this vein, Kelsen believed that two
concepts are sufficient for the understanding of a
legal norm: a delict (D), i.e. a human behaviour
that violates the prescribed narrative in the norm,
and a sanction (S), .i.e. the reaction of a state to
such behaviour. These concepts are mutually
related into one conditional statement that if
somebody behaves in contravention of a legal
norm, he/she should be coerced not to do so, to
repair or compensate caused harm, etc. [11]. The
structure of this deductive discourse can be
concisely expressed in the statement:
If (D) then should (S)
This statement can be easily translated into
the language of decision-making algorithms with
flowchart symbols that are usual in computer
programming (Fig.1)
The further elaboration leads to the more
complicated structure of legal norms that
contains ten elements: a conditional situation or
primary hypothesis (CH1); passive person (PP);
duty (D); an object of duty (OD); active person
(AP); right to do/not to do something (R);
violation or secondary hypothesis (VH2); a
person that should be sanctioned (S); duty of the
person that should be sanctioned (DS); coercion
against the person that should be sanctioned
(CS). These elements are mutually related into
one disjunctive structure, consisting of the two
hypothesis tests that could be described in the
ALGORITHMS AND THE STRUCTURE OF
LEGAL NORMS
Before we investigate the possibility of the
application of decision-making algorithms in
legal interpretation, we should determine how
algorithms can depict the meaning of legal
norms. The approach of the traditional legal
theory is formal: the logical and semantical
structure of legal norms is explained using
deductive logic and expressed through
syllogism, i.e. the subsumption of the minor
Figure 1. The flowchart of the decision-making
algorithm of a legal norm.
301
following discourse. If the behaviour of a certain
person complies with the conditional situation
described in a legal norm, that means that this
norm recognizes or grants him/her certain legal
right and/or imposes a duty. And if this
behaviour does not comply with a legal norm, the
sanction that is prescribed in this norm should be
imposed against that person. This narrative can
be summed up in the following statement.
If (CH1) then should (PP) (D) (OD) and/or
(AP) should (A)
Or
If (VH2) then should (S) (DS) (CS) [12].
The algorithmic form of this statement is
given in Fig.2.
Conditional situation (Hypothesis 1)
The human
behaviour
The person behaves
in compliance with
the conditional
situation
NO
YES
The person poseses legal right and/or
legal duty
Violation (Hypothesis 2)
The person should be sanctioned by a
coercive means
Figure 2. The flowchart based on the hypotheticdisjunctive structure of a legal norm.
302
These examples prove that the structure of
legal norms can be clearly expressed as a set of
decision-making algorithms. The value of this
approach might be found in legal education and
practice because the words are less precise tools.
The other advantage of algorithms is their
suitability for computer processing of data to an
extent that is beyond human abilities and
cognizance. On the other hand, such processing
must be open to human agency because of the
inherent uncertainty in facts that follows every
application of the law. However, the main
objection to this approach is a deductive
formality that neglects the issue of the quality of
the outcome. The application of the law is not a
leap into the dark; as Ihering concluded a long
time ago, it should serve practical motives [13].
IV. ALGORITHMS AND THE LEGAL
INTERPRETATION OF “HARD CASES”
In the previous part, simple structures of
algorithms depicted the syllogistic structure of
legal norms. Their interpretation is a more
complex endeavour. Due to the vagueness and
ambiguity of legal texts, traditional methods of
interpretation (textual, logical, systemic and
teleological) cannot be sufficient to solve a
practically unlimited number of factual
combinations; thus their application produces
only random results [14]. And Wendell Holms Jr.
pointed out almost one and a half centuries ago
that the life of the law has not been just the logic,
but the experience that includes felt necessities of
the time, the prevalent moral and political
theories, intuitions and even prejudices [15].
In the positivistic legal tradition, hard cases
are those in which the applicable norms leave an
open door to more than one solution. Sometimes
the norms contradict each other in a way that the
usual tools of derogation (lex superior, lex
specialis, lex posterior, etc.) cannot solve this
conflict. The only way to solve them is the
judicial creation of a new norm after pondering
opposite interests [16]. Hard cases are not a rare
phenomenon; actually, the application of every
legal norm must comply with human rights
norms, which are situated at the top of the
pyramid of the legal order. In these cases,
Dworkin suggests that the competing
interpretations fall under judicial discretion to
derive the most suitable rule by appraising
possible outcomes of applicable means, i.e. legal
principles and policies [17,18].
In short, the uncertainties in hard cases
interpretation are not just of factual nature, but of
legal as well: the interpretation that delivers an
optimal result should be chosen among all
correct ones, although rules for making such
choice are not defined. The multiplicity in legal
means and ends is a consequence of uncertainties
in facts and law. These uncertainties can be
tackled only by the realist result-oriented
approach.
The case study for this theoretical finding is
the interpretation of human rights restrictions in
Articles 8.-11. of the European Convention of
Human Rights (ECHR). This is a good example
of a “hard case”, for two reasons. First, the
ECHR obliges states to reach the result of
interpretation that complies or at least optimally
corresponds with the enjoyment of pertinent
human rights recognized by the ECHR. Second,
the reasons for the restriction are prescribed by
norms that are not suitable for the application of
legal syllogism, because they are not sufficiently
structured and precise. They are lacking clear
instructions for application and contain several
wide and ambiguous notions, such as national
security, public safety, economic well-being,
public order, health, morals, etc.
The European Court of Human Rights
(ECtHR) jurisprudence fills this gap in clarity by
developing innovative and evolutionary
interpretations. Moreover, these interpretations
might be contrary to the intentions of a legislator
when legal means or ends are contradictory,
obsolete or ambiguous [19]. However, the logical
structure of this process always begs for further
clarification. In this case, the purpose of the
decision-making algorithms is to depict a
logically coherent structure that enables
computer quantitative data processing and that
saves the domain for the social and ethical
prudence of human beings.
In this case, McBride constructs the norm that
justifies human rights restrictions from the
wordings of ECHR, ECtHR jurisprudence and
scholars’ interpretations by defining several
tests: (1) of the legality of the means that restricts
human rights; (2) the pursuit of a legitimate aim;
(3) relevant and sufficient reasons for the
particular restriction; (4) the proportionality of
the means to the expected end, i.e. to the
legitimate aim [20]. The last step that should be
taken on this pathway is exceptionally complex;
the German theory of constitutional law explains
it by three consecutive sub-tests of suitability,
necessity and proper balance of the measure with
other measures. Alexy defines the last subtest by
the quantitative Weight formula for a calculation
of the weight of principle Pi in a concrete case.
That is, the concrete weight of Pi relative to a
colliding principle Pj(Wi,j), as the quotient, first,
of the product of the intensity of the interference
with Pi(Ii) and the abstract weight of Pi(Wi) and
the degree of reliability of the assumptions
concerning what the measure in question means
for the non-realization of Pi(Ri), and, second, the
product of the corresponding values with respect
to Pj, now related to the realization of Pj [21]:
Wi , j Ii Wi Ri I j W j R j
In sum, the whole structure consists of tests
that can be expressed in a syllogistic form. The
Weight formula introduces quantitative
methodology in the legal interpretation of
proportionality. This is not surprising because
multi-criteria decision-making theory developed
many mathematical models to determine the
numerical weights of incommensurable values
that should be input in such equations [22].
After careful consideration of systemic and
logical relations among these tests, the sketch of
the path that leads to the optimal choice between
applicable legal means that justifies a human
right’s restriction is given in Fig.3, and its
expression in the Python progranning language
in Fig.4. The presented flowchart is designed in
a way that the negative answer in every step
returns the whole discourse to the start, i.e. the
new choice of another legal means that are tested
again and again until an optimal interpretation is
found. In other words, the sum of affirmative
answers results in the justification of the human
rights restriction [23].
This flowchart is just a sketch that begs
completion and further refinement but still offers
useful insights. When we compare its content
with the description of the decision-making
process described in Part II, we can perceive four
staggering congruencies. First, as already
concluded in Part II, both processes are creative
and designed to look for an optimal result in
uncertainties. Second, the process of legal
interpretation proves to be as iterative and
consecutive as the decision-making process: it is
based on the sequences of decision-making
algorithms that repeat to identify a means that
delivers optimal end-state. Third, the sequence of
algorithms in both processes is quite similar:the
303
def run_def():
The consideration of the
interpretation results: the
choice of the optimal
applicable means
NO
first_message = "THE CONSIDERATION OF
THE INTERPRETATION RESULTS: " \
"THE CHOICE OF THE OPTIMAL
APPLICABLE MEANS. Answer Yes or No."
print(
The means restricts
"**************************************
******************************"
)
print(first_message)
print(
the human right
YES
The means is
lawful
NO
first_choice = input("1. The means restricts the
human right?").lower()
YES
The means pursues
the legitimate aim
NO
YES
Relevant and
suffcient reasons
for the restriction
NO
YES
The means is
proportional to the
legitmate aim
"**************************************
******************************"
)
NO
YES
The means is justified
if first_choice == "yes":
second_choice = input("2. The means is
lawful?").lower()
if second_choise == "yes":
third_choice = input("3. The means pursues
the legitimate aim?").lower()
if third_choice == "yes":
fourth_choice = input(
"4. Relevant and suffcient reasons for the
restriction?").lower()
if fourth_choice == "yes":
fifth_choice = input(
"5. The means is proportional to the
legitmate aim?").lower()
if fifth_choice == "yes":
print("The means is justified!")
else:
run_def()
else:
run_def()
else:
run_def()
else:
run_def()
else:
print("The means is justified!")
run_def()
Figure 3. The flowchart of the decision-making
algorithms in the interpretation of human righs
restricions
lgorithms is quite similarthprocesses start with
the identification o
304
Figure 4. The sketch of the interpretation of human
rights restrictions in Python
procecesses start with the identification of
alternative means and ends, continue with the
analysis of all alternative means and results of
their application, and finalise with their
comparison and the choice of an optimal one.
Fourth, both processes are designed to be suitable
for quantitative calculations and AI and to
include human prudence in the appraisal of facts
and applicable rules.
V.
REFERENCES
[1]
[2]
[3]
[4]
CONCLUSION
The findings of this essay prove that
decision-making algorithms can be used to
explain the structure of legal norms and the
process of legal interpretation. Furthermore,
algorithms are capable to establish a framework
for the use of AI technologies to support the quest
for the best solution for hard cases. Their
function should be the improvement of logical
reasoning and information processing, without
interfering with the judicial powers that include
subjective appraisals inherent to human intuition.
[5]
[6]
[7]
[8]
Algorithms are valuable tools in hard cases of
ambiguity or conflict of legal norms. Hard cases
beg hard decisions. Such decisions can easily be
disputed due to the existence of persuasive
alternatives. Logically coherent argumentation is
thus necessary for the justification of these
decisions and diminishing legal uncertainty. Just
like in the decision-making theory, this implies a
result-oriented approach, creative considerations
of alternatives, and painstaking iterative testing
of applicable legal means and goals in a clearly
defined sequence.
[9]
This endeavour combines objective and
quantitative calculations with subjective and
qualitative judgments. Thus the art of
interpretation cannot be learned from legal norms
only; this is a mastery that utilises scientific
knowledge, rules of logic and practical
experience. If we use Dworkin’s analogy of legal
interpretation and card playing, we can compare
the use of decision-making algorithms with card
playing. Just like a skilled card player, a legal
interpreter must be apt to take logical steps and
make choices between uncertain alternatives to
obtain an optimal result. This mastery can be
described by the following Sting’s verses:
[14]
“He deals the cards as a meditation
And those he plays never suspect...
He deals the cards to find the answer
The sacred geometry of chance
The hidden law of a probable outcome
The numbers lead a dance.”
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[22] Pamučar, D., Stević, Ž., & Sremac, S. (2018). A new
model for determining weight coefficients of criteria in
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mcdm models: Full consistency method (fucom).
Symmetry, 10(9), 393.
[23] Rašević, Ž. (2022). Konkretizacija ustavnog načela
srazmjernosti ograničavanja ljudskih prava. Glasnik
prava, 1(22), 17-37.
PaKSoM 2022
Remote Working in the Digital Age:
Benefits and Potential Negative Effects
Jelena Lukić Nikolić1
1
Modern Business School, Belgrade, Serbia
1
jelena.lukic@mbs.edu.rs
Abstract—The aim of this paper is to point out the
advantages and possible negative effects of remote
working which has become popular due to
advancement of modern digital technologies. For
this purpose, during 2022 were conducted semistructured interviews with employees from
different industries who worked hybrid or remote
in previous period. In the interviewing process
participated 30 employees which do not hold any
managerial position and 10 employees who hold
some managerial positions. All collected answers
were qualitatively analyzed and presented in this
paper. The key conclusion is that while some
employees prefer remote work, others prefer to go
to office or some hybrid ways of working which
means some days working remotely and rest from
the office. Human resource managers will be
confronted with new challenges how to organize
work and satisfy the needs and preferences of
employees who work remotely or hybrid.
Keywords – digital age, remote work, flexibility,
employees, loafing
I.
INTRODUCTION
The development of modern technologies has
led to numerous changes in the organization of
work of any company which operates in the
digital age. Certainly, the most noticeable change
is the transition to remote work, instead of going
to work in the company's premises.
Although the beginning of remote work was
quite challenging and accompanied by numerous
problems, such as: inadequate working
conditions, insufficient space at home for all
family
members,
unsuitable
desks,
uncomfortable chairs, small monitors, weak
Internet connection, problems with microphones,
cameras, adjustment to new collaboration tools
and systems, over time employees get used to the
new way of remote working and realized the
ISBN: 978-86-82602-00-2
numerous advantages. That is why employers are
confronted with pressing question: how to ensure
the return of employees to the offices, without
negative effects? The worrying fact is that many
employees, especially IT professionals, made
decisions to leave employers who insist on
returning to the office and sought new
employment within the company that allows
remote working. For this reason, with the strong
desire to retain talented employees, companies
have oriented toward various kind of hybrid
solutions in which a certain number of days
employees work from the office and the rest
remotely.
The aim of this paper is to point out the key
advantages of remote work, as well as the key
negative effects that can occur during remote
work.
II.
REMOTE WORKING: STATISTICAL DATA
AND KEY TRENDS
Results from various research showed
valuable findings regarding remote working and
key tendencies in the future. Some of them
are [1]:
Employees who work remotely save on
average 40 minutes daily from
commuting;
23% of surveyed employees would take
a 10% pay cut to work remotely
permanently;
People are saving on average almost 500
dollars per month being at home during
COVID-19;
59% of respondents said they rather
choose an employer who offer remote
work than those who do not;
307
The CEO of Facebook stated that he
expects 50% of their workforce to be
working remotely by 2030.
Another studies, also showed results in favor
of remote working [2]:
By the 2025, there will be 36.2 million
Americans who will work remotely;
Gartner revealed that 82% of executives
expected to offer the ability to work
remotely, at least some time postpandemic;
Gallup poll showed that 35% of US
workers would prefer to continue
working completely remote;
Company GoodHire found that 85% of
Americans prefer to apply to jobs with
remote work options;
Job postings on LinkedIn with the tag
remote work increased by 357% in May
2021 compared to the year before.
Around 50% of respondents reported
that they would resign if their employers
demanded returning to the office.
Gallup survey showed that employees who
prefer fully working from office feel more
productive, have better access to technologies
and other resources, collaborate more easily, and
feel more connected to the organization. Those
employees who prefer hybrid methods of work
stated as benefits that they avoid commute time,
have the flexibility to balance family and other
obligations, feel more productive, and have an
option to work in person with co-workers on the
days when they come to the office. Finally, those
employees who prefer fully remote work stated
as benefits that they avoid commute time, have
the flexibility to balance their private
obligations, feel more productive and have
fewer distractions [3].
Professor of management and organization,
Margaret Luciano pointed out four ways in
which managers can increase employee
flexibility without losing productivity. In the
digital age, managers will need to think
differently about employees who work together,
how they share information and with whom,
while being fully informed of any change in
organization [4]. In this way, productivity will
not decrease, and employees will have a greater
308
degree of flexibility and the ability to balance
between professional and private life.
III.
RESEARCH METHODOLOGY
In order to find out what are the benefits of
remote working, as well as to analyze potential
negative effects, there were conducted
interviews with employees who work hybrid or
remotely during COVID-19 pandemic.
The interviews were conducted with 30
employees who do not hold managerial
positions, as well as with 10 employees who are
on some managerial positions. Interviews were
semi-structured, with a list of prepared
questions. However, according to the flow of
conversation, there also appeared some new,
sudden questions related to the specific industry
and company. Interviews were conducted “one
on one” during 2022 year and encompassed
employees from four different industries:
banking, accounting, IT, and education.
The respondents were born from 1972 to
1997 year, so they have between 25 and 50
years. All of them have finished bachelor or
master studies in the field of information
technology,
economy,
finance,
and
management. All respondents were given the
opportunity for remote working in the period
from 2020 to 2022, due to COVID-19 pandemic.
The collected answers were qualitatively
analyzed and presented in the following titles of
this paper.
IV. THE KEY ADVANTAGES OF REMOTE
WORKING – WHY EMPLOYEES DO NOT WANT
TO RETURN TO OFFICES?
During interviews, respondents indicated the
following positive effects they experienced while
working remotely.
Savings in commute time. Employees who
work remotely can comfortably get up 5 to 10
minutes before the start of working hours and
start working immediately. They don't waste
time commuting from home to work and back.
Likewise, as soon as employees finish working
hours, they are already at home and can devote
themselves to other duties and activities. This is
especially important for employees who
commute to work more than 30 minutes, because
in this way they save an hour a day. They have
extra time to spend it in a much more efficient
and high-quality way. Furthermore, there are
regular traffic jams, and it is obvious that remote
work brings a dose of comfort and convenience
for employees.
Less stress because there are no more
problems with the parking space. The
insufficient number of parking spaces is wellknown problems to all drivers in Belgrade, but
also in other major cities. When an employee
returns to home tired from work, he often loses
an additional time (approximately quarter of an
hour) looking for a parking space, which is
sometimes quite away from his home. Likewise,
in the morning when employee comes to work, if
the company has not provided a parking space,
employees have already faced the first stress where to park the car.
No worries about the weather forecast and
what to wear. Every morning, getting ready for
work involves checking the weather forecast and
deciding what to wear. Clothing must be
prepared - clean, ironed and adapted to the needs
of work and appointments. When working
remotely, employees do not have those worries
and can devote themselves to other, more
useful activities.
Easier management and coordination of
family/other obligations. Many times, it happens
to employees that they cannot be sure when they
will return home from work due to traffic jams,
transportation, and parking, which makes it more
difficult for them to plan family obligations and
other activities. When they work remotely, they
can be sure that they will be available to their
family as soon as they finish work, and they can
manage their private time more easily and with
greater precision.
Doing some of the household chores. Modern
technology has penetrated in all areas and
segments of our life and work. For employees
who work remotely it only takes a few minutes
to turn on a washing machine, a dishwasher, a
smart-multi-cooker, and the like. Employees
who work remotely only need a few minutes (less
than five minutes) to turn on these devices and
during the day they are able to perform some
minor household tasks that would otherwise
await them in the evening when they come home
from work.
A healthier food and more proper nutrition.
Employees often want to sleep as long as
possible in the morning, so they have time to just
get dressed and go to work. Sometimes it
happens that they have an important meeting
right at the beginning of working hours. They
quickly buy some bakery products, sandwiches,
muffins, puff pastry, snacks, carbonated drinks,
coffee. When employees work remotely, they
can prepare a meal according to their own wishes
and eat much healthier food. There are also
significant savings in money spent on meals for
employees who work remotely, and the fact that
they can eat when they are hungry.
Another seemingly minor but significant
benefit of remote work that respondents stated is
the ability to easily pick up a shipment they
ordered online. Employees who work from
office have difficulties when they expect such
shipments because they never know when they
will arrive home and whether any of the family
members will be at home and able to receive the
shipment or they will have to look for it and go
to the nearby post office to pick it up.
All these advantages and benefits mean a lot
to employees and contribute to the overall quality
of their lives. These are primarily a lower degree
of stress, less tension, nervousness, frustration,
easier management and coordination of family
and private obligations, more free time, and a
greater degree of satisfaction. Many employees
stated that there is no money which can bring
them back to the office. On the other hand, many
companies that predominantly apply remote
working have noticed that certain employees are
loafing and working less. That is why they
became focused on strategies of returning
employees to offices.
V. THE POSITIVE FFECTS OF WORKING AT
THE OFFICE - WHY EMPLOYEES WANT TO
RETURN TO THE OFFICES?
In addition to the numerous advantages that
remote work brings, there are also certain
negative effects that make employees look
forward to returning to the office. During the
interviews, respondents stated the following
reasons why they want to return to the office.
Easier exchange of knowledge and
experience. Although modern technologies
enable various tools for employee collaboration,
it is difficult to exchange some specific
knowledge and experience in that way. When
employees are gathered in the office, the
opportunities for knowledge sharing are much
greater. Employees are happy to share their
experiences and help each other to complete their
work better and more efficiently.
309
Receiving better and precise information
about company. When employees are present in
the office, they are better informed about
organizational plans, goals, further development
directions and activities. On that way, employees
get all the necessary information, as well as
additional guidelines and explanations, in a faster
and simpler way.
The need for proposal of new ideas and
different approaches. Employees want to work
from the offices with the aim to have active
discussions and exchange of opinions with
colleagues, and other teams and departments.
They are aware of the opportunities that
teamworking brings - to jointly come up with a
better solution to a problem or to make a better
proposal for a project.
Desire for progress and career development.
When working remotely, employees often feel
isolated and that their work and efforts are not
properly monitored and appreciated. They
believe that they will make better impressions on
managers and co-workers while working at the
office. As a result, employees believe that this
will create a better chance for them to advance to
some better positions. Furthermore, employees
who work from the office have the opportunity to
receive real-time feedback from managers and
superiors on the achieved work results, as well as
possible directions for improvements.
Adequate infrastructure and space for work.
Comfortable chairs, suitable desks, adequate
infrastructure, and other means of work await
employees in the office. Many employees who
work remotely do not have ideal conditions and
want to return to the office as soon as possible to
enjoy the comfort and convenience. Also, many
employees who work remotely do not have ideal
lighting, internet connection, the ability to be
alone and concentrate to work. Furthermore, they
often encounter the attitudes of other family
members that “they are not so burdened with
work”, which is why they often receive requests
to do some activity while working, which may
lead to dissatisfaction, frustration and stress.
A sense of belonging. Employees who work
remotely for long periods of time are often said
to feel “out of sight, out of mind” which makes
them feel isolated and less important to the
organization. When they come to the office and
are surrounded by colleagues, they develop a
sense of belonging to the organization and an
increase in work ethic and morale. Employees
feel that they are part of the collective and that
the organization is their second home where they
spend one third of the day.
Wish to leave the house and surround with
other people. Employees who work remotely are
often deprived of many experiences and events,
they feel lonely, in the monotonous atmosphere
of their home, without contact and interaction
with others. That is why many employees need a
change of environment and leaving the house.
Many of them want to experience something new
and different. Employees who work remotely
stated that they have gained weight, became less
tidy, lazy, messy, haven't renewed their wardrobe
for a long time, and the like.
Socializing with colleagues. There is no
better feeling than seeing colleagues, drinking
the first morning coffee with them, sharing
TABLE I. ADVANTAGES OF REMOTE AND OFFICE WORKING.
Remote working
Savings in commute time
Less stress because there are no problems
with the parking space
No worries about the weather forecast and
what to wear
Easier management and coordination of
family/other obligations
Doing some of the household chores
A healthier food and more proper nutrition
Ability to easily pick up a shipment ordered
online
Source: Author interpretation based on conducted interviews
310
Office working
Easier exchange of knowledge and experience
Receiving better and precise information about
company
The need for proposal of new ideas and
different approaches
Desire for progress and career development
Adequate infrastructure and space for work
A sense of belonging
Wish to leave the house and surround with
other people
Socializing
important information, joking, and starting the
day with laughter.
All above mentioned answers of respondents,
fostered them to go to the office, or to use some
hybrid methods of working.
In Table I are presented all advantages of
remote work and work from the office.
VI. STRATEGIES OF LOAFING AND
SIMULATING HARD WORKING
Numerous studies have shown that there is
only a small number of dedicated and engaged
employees in companies. There is an increasing
number of employees who come to work to loaf
and procrastinate their tasks and impatiently wait
for the end of the month to receive a salary [5].
In the desire to work as little as possible,
employees developed numerous strategies and
tactics with the aim to create false impression to
colleagues and managers that they are
overloaded with work.
In literature and practice, the expression
“loafing effect” has become popular, especially
in the digital age. It describes the behavior of
individual employee which reduces the level of
work, commitment, effort, and contribution [6].
Cyber loafing is a special type of loafing in which
employees spend a certain (rather large) part of
their working time on private social networks
and various portals for their private reasons and
entertainment [7].
Employees who want to present themselves
as hard-working, dedicated, and engaged
developed a whole set of strategies, activities,
and techniques to create the illusion of being
overwhelmed with work. Managers who
participated in this research observed the
following employee strategies.
An open document on the computer employees always have some document opened
on the computer and they pretend to be working
when colleagues or superiors are present in the
office. Such employees purposefully open
document at the beginning of working hours and
occasionally move pages through time, in order
to create the impression that they are doing
something important.
A briefcase that they always take home and
bring to work – carrying a briefcase gives the
impression that employees have too much work
they need to bring home in order to meet the
deadlines. In this way, employees want to create
an impression on managers and colleagues that
they are dedicated and committed to work.
Furthermore, it is common situation in practice
that these employees took their briefcase and
hurriedly walk near managers and superiors in
order to be noticed by them.
Pseudo-commitment to work - employees
often come the first to the office and leave it last
with the aim to create the impression that they
have too much work and are highly dedicated,
conscientious, and responsible. At the end of the
working hours, these employees wait for
everyone to leave, pretending to work, and then
quickly gather their staff and go out
of the building.
Waiting for the deadline to submit the
completed work - employees often complete the
tasks they were given and then wait for the
agreed deadline to submit them. In this way,
employees have enough time to devote
themselves to some other interests. Some
employees go one step further, so if they finish
the tasks quickly (after only a few days), and plan
to send it the next month - they go into the files
and change the dates to make it look like they
managed to complete the task just that day or one
day before the deadline.
Giving unrealistically long deadlines for the
completion of tasks - employees purposefully
specify a longer period for the realization of tasks
in order to have enough time to devote
themselves to other interests. These situations are
especially common in jobs for which managers
cannot objectively assess how much time
employees need. When employees are aware that
their superiors are not knowledgeable in their
segment of work, they feel free to give
unrealistically long deadlines and thus magnify
their part of the work.
Pretending to be overloaded with work employees may pretend that they have too much
work and that they cannot accept a new task.
They often point out that they are tired, that they
cannot accept any new task because they have a
lot of unfinished work from the previous period.
Simulating that they are present, but they are
actually absent from work - one of the often
applied tactics of employees is to leave an open
document on the computer, papers scattered on
the desk, reading glasses, a spare coat or jacket
on the coat/jacket hanger, with the aim to create
the impression that he/she is somewhere in the
building, while in the fact he/she is already one,
311
two or even three hours absent (walks, solving
some private issues, etc.).
All above mentioned activities have negative
effect on efficiency, effectiveness, quality of
work, products, services, business processes and
productivity. The loafing effect is one of the most
pressing problems in remote work due to reduced
possibilities of insight into the work of
employees who are not physically present at the
office. Recommendations and suggestions that
can be used to reduce the loafing effect during
remote work are regular meetings via
videoconferences and more frequent reporting on
the activities carried out - for example reporting
on a weekly basis.
VII. CONCLUSION
Modern technologies that are used in
companies provide the opportunity for remote
work. More and more employees want to have
the possibility to work remotely. This is
especially noticed among younger generations
which are familiar with technologies and tools
and prefer flexibility.
The conducted interviews shown that
employees experience certain advantages when
working remotely, as well as some negative
effects. Furthermore, results shown that
managers are frequently surrounded with
employees who are prone to loafing effect, not
only when they work remotely, but also when
they are present in the office.
Every employee has different needs and
motivators when it comes to choosing a place of
work. For that reason, many companies
introduce hybrid methods of work by having
employees work from the office for a certain
number of days in a working week, while the rest
of the working week they can work remotely. In
this way are achieved all the advantages of both
type of working.
It is certain that newer generations of
employees will prefer remote or at least hybrid
methods of working. Development of modern
312
technological solution will be oriented toward
improved types of collaboration and
communication. That is why all companies need
to be prepared how to engage employees who
will work remotely or hybrid and how to prepare
adequate value proposition in order to make them
efficient, productive, motivated, committed and
engaged.
The limitation of conducted research is the
number of respondents (30 employees and 10
managers) and their structure (four type of
companies: finance, accounting, IT, education).
As a result, obtained results cannot be
generalized. Proposition for future research on
this topic is to encompass a larger number of
respondents and to make a special questionnaire
for gaining more objective results.
REFERENCES
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[4]
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ApolloTechnical Engineered Talent Solution (2022).
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com/statistics-on-remote-workers/#:~:text=Statistics
%20on%20remote%20workers%20reveal,to%20an%
20Owl%20labs%20study. (07. 11. 2022).
Robinson, A. (2022). Remote Work Statistics & Facts
for 2022. Available at: https://teambuilding.com/blog/
remote-work-statistics (08. 11. 2022).
Saad, L., & Wigert, B. (2021). Remote Work Persisting
and Trending Permanent. Available at: https://news.
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ing-permanent.aspx (06. 11. 2022).
Luciano, M. (2022). 4 Ways Managers Can Increase
Flexibility Without Losing Productivity. Available at:
https://hbr.org/2022/02/4-ways-managers-can-increas
e-flexibility-without-losing-productivity (06.11.2022).
Lukić Nikolić, J. (2021). Angažovanost zaposlenih sa
organizacionim ponašanjem i menadžmentom ljudskih
resursa. Beograd: Visoka škola modernog biznisa.
Byun, G., Lee, S., Karau S. J., & Dai, Y. (2020).
Sustaining Collaborative Effort in Work Teams:
Exchange Ideology and Employee Social Loafing.
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Ugrin, J. C., Pearson, J. M., & Odom, M. D. (2008).
Profiling cyber-slackers in the workplace:
Demographic, cultural, and workplace factors. Journal
of Internet Commerce, 6(3), 75-89.
PaKSoM 2022
The Role of Social Media in Coups
d’État
Tanja Milošević1, Nina Milošević2
1
2
1
Faculty of Political Sciences, Belgrade, Serbia
Faculty of Organizational Sciences, Belgrade, Serbia
tanja.z.milosevic@gmail.com, 2ninamilosevic1999@gmail.com
Abstract—Many have believed that coups d’état
represent phenomenon of the past, given the
widespread of democracy, rule of law, and free,
fair and credible elections. However, violent
changes in regimes, occurring in many countries of
Africa and Asia since the beginning 21st century,
as well as constant emergence of constitutional
crises and the fight for introduction of third term
in two-term presidencies has put the study of coups
d’état to the fore. Building on the previously
acquired knowledge on this phenomenon, we
albeit acknowledge the fact that globalization,
spread of technological advances, and especially
the use of Internet and social networks, has slightly
changed the methods of execution of coups, but
also the coup-proofing methods. Therefore, in this
paper, the authors will examine the changes
introduced by the rise of technology, with a special
emphasis on three focal points: the impact of social
media on the conduct of coups; the impact of social
media on information, disinformation and
misinformation dissemination; and the impact of
social
media,
Internet
and
encrypted
communication apps on coup success. The
presented research will be conducted with the use
of methods of data collection and content analysis,
as a response to research question constructed as
following: “To what extent have Internet, social
media and encrypted messaging apps changed
execution,
research
and
perception
of
contemporary coups d’état?”.
Keywords – social networks, coup d’état,
political violence, Twitter, Facebook.
I.
INTRODUCTION
For a long period of time, and especially
since the beginning of the 21st century, the
academic community has continuously reiterated
that coup d’état represents a phenomenon of the
ISBN: 978-86-82602-00-2
past. However, the past two decades have served
as a reminder that violent overtake of power by
the armed forces in many countries, albeit most
often in African and Asian climates, that is, in
countries that are best defined as semidemocracies, is a method often used for changing
political climates across the globe. Violent
takeover of power by the armed forces nowadays
is most often embodied in the form of a coup
d’état, emerging as a strong response to “the
failure of democracy” [1], as well as political
fragility [2] of “new democracies”, unable to
defend their Constitutions, as well as the true
meaning of democracy, when faced with the idea
of lifelong leaderships, constitutive crises and
introduction of unconstitutional third term in
two-term presidencies.
For the purpose of this research, coup d’état
will be defined as an action partaken by a military
branch or a group of officers directed towards
violent or bloodless deposition of the current
political leadership, and especially the president.
The main perpetrators are most often embodied
in the form of a military junta, a group of army
officers determined to take over the country. The
said takeover is often executed in the following
five phases: planning, organization, execution,
proclamation of coup, and legitimization of
power. Given the topic of this research, it must
be noted that globalization and spread of Internet,
and thus social media and encrypted
communication apps as well, has truly impacted
the method of execution of coups, but also
detection and coup proofing actions as well, thus
justifying the need for conducting this research.
Namely, the continents most affected by
coups d’état – Africa and Asia, have been
identified as sort of late boomers when speaking
313
of Internet, and therefore social media access.
Even though the World Wide Web was created in
1989, African and Asian population just started
discovering the perks of Internet in the first years
of the 21st century [3]. And as it can be noted
from examination of spread of Internet on these
continents, the intensified occurrence of coups
d’état accidentally coincides with the increase of
social media access, which demanded for the
previously mentioned changes in methods of
execution, monitoring, reporting and prevention
of coups.
When speaking of execution of coups d’état,
that is, preconditions for any monitoring,
reporting and prevention activities, it is obvious
that all phases of the coup have been touched by
technology, thus making the coup plotters adapt
to the new age of coup-making. As it was
previously stated, the biggest shift was recorded
within the fourth stage of the coup –
proclamation of seizure of power, given that, in
the past, the predominant medium for
presidential office takeover were television and
radio broadcasting, whilst nowadays the modern
junta live streams the execution and publish
statements via social media [4]. Given that we are
speaking of quite a complex shift in modus
operandi, which also affects other phases of
coup-making, as well as the aftermath, the
following occurrence will be closely examined in
the following chapter.
The shift in proclamation of a coup, as well
as the other phases of coup-making, also affect
the perception of the coup activity in the public
sphere, especially given the fact that live
streaming and public broadcasting on social
media prompts fast spread of news, thus creating
a fertile ground for dissemination of information,
but also misinformation and disinformation, both
intentionally and unintentionally. The quality
and quantity of (dis/mis)-information [5]
therefore impacts the outcome and response of
the public to the rise of the new military junta,
thus elevating the need for scientific examination
of the impact of Internet, media, social networks
and their products in the cyberspace on the
aftermath of the coup.
Finally, given that every action causes a
reaction, the success of a coup is most often
determined by the final phase – legitimization of
power, which occurs sometimes even several
years after the execution, with implementation of
free, fair and credible presidential elections.
However, it must be noted that the success of a
314
coup is also dictated by the public perception, but
also the perception of the international
community and main stakeholders, which have a
tendency to “nip the coup activities in the bud”,
that is, implement a certain set of measures as a
form of coup-proofing, with the goal of
preventing, thwarting and negating the coup
d’état. Having this in mind, we deem
examination of impact of Internet and social
media on logistical segment of coup execution
and coup-proofing as quite a significant
contribution to the academic perception of
practical
implementation
of
theoretical
knowledge. In this context, as most valuable to
be presented are the mere impact of massification
of coup execution through the use of social
media, such as Twitter [6], the importance of
maintaining secrecy in communication, which is
nowadays enabled through different encrypted
communication apps, as was the case in 2016
Turkey coup d’état and ByLock app [7], and
finally, the speed of spread of the news of the
coup not only in the country, but also worldwide.
Thus, the research before you is constructed
multidisciplinary – providing analyses from two
different standpoints – media analysis and
analysis of political processes, but is also
threefold, given that it researches the impact of
social media in the conduct of coups through
coup proclamation; information, disinformation
and misinformation surrounding the coup and the
final impact of media and internet, which serves
as a final decision-maker when speaking of the
success of the coup.
II.
GLOBALIZATION AS A GAME-CHANGER
As it was previously stated in this paper,
globalization has a great impact on the execution
and detection of coups, as well as on coupproofing actions. Therefore, for this research,
globalization will be defined as a process of
integration and interaction among various
subjects worldwide, such as companies, people,
and governments. In the age of globalization,
country borders are no longer considered barriers
when it comes to international trade, exchange of
ideas, and communication. This fact has made
this world a global village. Suffice it to say that
globalization has closed the gaps that existed
among states as they are constantly
interdependent in economic, socio-cultural, and
political terms [8].
Having all this in mind, we can conclude that
globalization is an ongoing, omnipresent process
that has been greatly accelerated and influenced
by advances in communications technology.
Advancement in technology is considered to be
one of the major drivers of globalization [9-11].
Thomas Friedman has described the three
stages of globalization:
Globalization 1.0, which refers to the
global expansion dominated by nations;
Globalization 2.0, which refers to the
rise of multinational companies; and
Globalization 3.0, which refers to
advances
in
global
electronic
interconnectivity
that
allowed
individuals to communicate as never
before [12].
One should have in mind that, even though
globalization is primarily viewed as an economic
process, it is important to point out that
international diplomacy and disputes have been
greatly influenced by globalization as well. The
thought behind globalization rests on fusing the
world into a single entity by developing every
area of modern society. However, this process
brought up challenges when it comes to
inequality and insecurity as it has created new,
modern weapons of resistance for individuals
who oppose certain political measures and
ideologies. Furthermore, there is an increase in
criminal activities across national borders as a
result of globalization [13].
According to the Global Digital Overview
published in the previous year, out of the 7.91
billion people in the world, the global number of
users of the internet had reached about 4.95
billion, of which 4.62 represent social media
users [14].
Between 2019 and 2021, Internet use in
Africa and the Asia-Pacific region jumped by 23
percent and 24 percent, respectively. Over the
same period, the number of Internet users in the
least developed countries increased by 20 percent
and now accounts for 27 percent of the
population [15].
Since the number of Internet and social media
users is increasing day by day in the
contemporary world, it has never been easier to
connect with people, and discuss common topics
and interests, but also spread misinformation and
cause panic. Social media accounts provide users
with a veil of anonymity and allow them to gain
great power and influence among their likeminded peers. Also, the numerous privacy
policies of the various applications that users can
use to communicate allow them to share their
opinions freely and honestly. Privacy policies are
very important to modern users who increasingly
strive for complete privacy and value the
importance of information, but these privacy
policies protect those users who do not aim to
protect their identity but strive to create unrest by
spreading important information, knowing that
their conversations are encrypted.
Having all previously stated in mind, the
following three sections will present the impact
of social media, information, disinformation and
misinformation dissemination, as well as
encrypted communication had on contemporary
coup execution and coup-proofing techniques.
A. Executing a coup d’état in the Era of Social
Media
As we have previously stated, all phases of
coup d’état execution have been, to a lesser or a
greater extent, impacted by globalization and the
rise of technology, in this case embodied in the
form of Internet and thus access to social media
and encrypted communication apps. Given that
the issue of encrypted communication apps will
be specifically examined in the final segment of
this chapter, the following lines will be dedicated
to defining impact of media and social media on
every single phase of coup d’état execution, with
an emphasis on the phase four – proclamation of
a coup, since the most significant impact of
technology on the second phase – i.e.,
organization – will be examined in detail in the
final segment.
Phase-zero, that is, the initial phase of
every coup activity, is defined as
planning, which implies inception of the
idea of changing the political geography
of a country through staging a full-scale
change in power. The said phase is
essentially defined by the notion of
conspiracy, given that keeping the idea
of an overthrow a secret is one of the
most significant variables that could
impact the success of the coup. In this
sense, maintaining “low profile” and
implementing “radio silence” technique
serve as good protection from being
detected even before the plan is being set
in motion. In this segment of the coup
planning, as well as in the organization
phase, the biggest contribution to coupproofing and maintenance of status quo
in the country is provided by
315
implementation
of
target-oriented
machine learning algorithms, given that
such actions have already proven
successful in counter-terrorism and
radicalization prevention actions[16-18].
316
The second phase of every coup-making
activity is centered around planning, that
is, organization of a coup [16]. The said
phase includes not only the mere
logistical planning of the physical
execution of a coup, but also recruitment
of the future putschists, formation of the
future junta, as well as maintaining
secretive communication and avoiding
detection of the subversive actions in
question. In this sense, social media can
play a significant role, especially when
speaking of recruitment of potential
plotters, having in mind that
contemporary mankind often uses social
media for expressing social discontent
and dissatisfaction with the livingconditions, political situation and finally
– the ruling elite. From this pool of
positive or negative comments, future
junta leader, with implementation of
basic psychology and psychobiography
tools, can pluck suitable collaborators.
Experts researching other political
violence phenomena, and especially
terrorism and extremism, have many
times stressed the fact that social
engineering plays quite a significant role
in recruitment of vulnerable and
marginalized individuals [19], and thus,
in this context, it must be noted that this
method might be implemented in the
case of coup-plotting recruitment as
well. Moreover, the success of
recruitment, when finalized, is yet to be
put to a test, given that a successful coup
can be executed only in complete
secrecy, that is, with avoidance of all
detection of subversive communication,
which will be further elaborated in
segment C of this chapter.
Phase three entails execution of a coup
d’état, whether it be violent or bloodless,
albeit the latter, having in mind the
contemporary promotion of human
rights, is preferable. In the olden times,
conducting a coup seemed quite easy –
namely, as depicted by [20], you only
have to “get the keys to the armory; turn
out the barracks; take the radio station,
the post office and the airport; [and]
arrest the person of the president and you
arrest the state...”. Nowadays, with the
omnipresence of Internet, and thus social
media and free access to livestreaming
actual ongoing events, the goals of the
putschists have slightly changed, as it
can be confirmed with execution of
Malian coups of 2020 and 2021.
Namely, in the morning of August 18,
2020, a party of army officers begun a
mutiny in a military base, which soon
culminated into deposition of the ruling
party, and the head of the state as well.
Soon enough, the video footage of army
officers storming the luxurious palace of
the son of the deposed President Ibrahim
Boubacar Keita inspired the masses to
storm the streets and demand deposition
of the president [21]. Albeit, this story
soon enough turned out to be a piece of
disinformation, given that the residence
in question was of a different individual,
but still, the news served the purpose and
drove people to the streets. On the other
hand, the 2021 coup d’état in Myanmar
serves as a good example of how social
media and Internet can also be misused
by the putschists, given that, in this case,
aware of the power of social media,
which positioned itself as the “Fifth
Estate” in this country, they decided to
block all Internet access in order to
“suppress the [negative] discourse and
public propaganda” [22] and ensure
success of their unconstitutional actions.
What should also be noted is the fact that
execution of the coup and its public
screening on social media is also a
suitable tool for conducting analyses on
the coup execution and general opinion,
which can be conducted with the use of
many
tools
nowadays
offered
online [23,24].
Phase four of coup execution refers to
proclamation of a coup, that is, public
addressing of the military junta leader to
the nation. This has always been deemed
as the most distinctive segment of coup
execution, given that, before the era of
Internet and fast access to news, the
general public was to be aware of the
coup only after the dust has settled and
the officers have taken the Presidential
Palace. The traditional coup-makers
usually had all the intentions of taking
over the Presidential Palace, making the
next stop at the most prominent and
widespread television or radio station,
depending on the population of the
former or the latter in the given region.
Nowadays, this issue is resolved by the
fact that public addressing and official
statements can be easily recorded via
cellphones or even livestreamed on
social media platforms. Even when
accessing video footage of official first
addressing of several coup leaders over
the last decade, a shift can be seen from
overtaking media houses to simply
organizing conferences, from where
many media representatives have the
opportunity to share their thoughts and
visions of the new leader with the public
instantly. To this sense, it can easily be
said that the PR service surrounding the
persona of the new leader of the state has
shown much improvement, and thus
leaves space for further examination of
the methods by which the ideas and
plans for the homeland are being
transmitted to the public as well.
Moreover, many public figures, and thus
junta leaders as well, nowadays have
official profiles on various social media
platforms, thus facilitating their outreach
to the general public.
The final, fifth phase, is achieved with
most difficulties, given that, in order to
legitimize power, a military junta must
first survive in power for seven days in
order for a coup to be proclaimed a
success. Afterwards, a Transitional
Government is usually being formed,
most often for the period of two years.
As stated by [25], Transitional
Governments are most often formed in
order to continue peace talks and
maintain status quo in the country.
However, the true purpose of (almost)
every Transitional Government is to
ensure enough time for the coup leader
to conduct complete overtake of the
country and ensure a sure win on the
subsequent
presidential
elections.
Namely, only through participation and
winning presidential elections can a
junta leader become a legitimate
president. In this sense, the impact of
Internet and social media has proven to
be twofold in this phase: as in the case of
Myanmar coup, the rule over the country
enables the junta leader to have a grasp
on Internet access and thus social media,
with the sole intention of controlling the
public discourse and directing it to the
junta’s advantage and, when speaking of
Presidential campaigns, social media can
be used as substantive platform for
spreading propaganda and reaching the
wider masses. Namely, “Platforms such
as Facebook, Twitter, or Reddit have
changed how political campaigns are
run; how politicians and the public
access and share political information;
and the way we learn about politics, form
opinions and attitudes, and ultimately
engage in or disengage from the political
process” [26].
Therefore, from the previously depicted
phases of coup-making, it is evident that every
segment of conducting a coup has witnessed a
significant influence that has shifted the methods
of execution of coups, but also the coup-proofing
methods.
B. Information, misinformation and
disinformation as servants/oponents of the
coup
As we have witnessed many times
throughout the history of the mankind, the
importance of access to information in the times
of grand political turmoil is of greatest
importance when speaking of maintaining peace
and tranquility. However, these times also
represent a fertile ground for conception of
numerous pieces of misinformation, but intended
disinformation as well.
For the purpose of this research, information
will be defined as a piece of news that provides
true facts about certain event, whilst
misinformation and disinformation refer to
untrue piece of news, with the difference
depicted in the fact that the former represents an
(accidentally) wrongly presented information,
while the latter refers to intentionally misleading
the public regarding a certain topic [27].
As it was explained on the example of 2020
Mali coup d’état, fast spread of information can
often serve as an advantage to the coup-plotters,
given that, in this example, this subversive
activity was greeted with positive attitude of the
majority of general public, and the people
stormed the streets as a sign of support to the new
317
military rule. However, such speed of spread of
news also invites a prompt response of the
international community and thus international
organizations, as was the case with the coup in
question, given that soon enough were sanctions
imposed on the new regime by the United
Nations, African Union and Economic
Community of West African States [28]. One
should have in mind the gravity and
consequences of imposing sanctions on any state,
and especially the new government, given the
fact that the main promise of every junta is
always that the future of the nation will be better,
and not sanctioned.
The same coup proved to be a good example
of spread of misinformation as well, given that
certain journalists reiterated that, in the first
hours of the Malian coup of 2020, there were
claims circulating the Internet that the deposed
president was arrested by the French army [29].
Such misinformation, to one extent, introduced
confusion among the general public, and to the
other, raised dissatisfaction with the local
population, who traditionally perceives the
French as colonizers.
Finally, disinformation and propaganda
campaigns are the mighty swords of the Modern
Times, often drawn at any occasion and directed
towards every type of opponents – from political
rivals to the disbelieving people. In this sense,
disinformation techniques and spread of such
news are most often applied in the close
aftermath of a coup, and are quite regularly
directed towards diminishing the claims of other
pretendents to the ‘throne’, as well as towards
calming the public. Albeit, this sword can turn
against the putschists as well, as history has
taught as well.
C. Encrypted communication and coupproofing
The rapid development of social networks
and application encryption has contributed to an
increasing convergence of users who use social
networks to join together to achieve common
goals related to several political disorders that are
not uncommon in today’s society. It is difficult
to predict the chaos that can potentially arise
within a nation or state, but what these threats
have in common is that they can often be
organized and coordinated using social networks
and the Internet.
Evidence indicates that activists and other
participants used social media during civil unrest
318
to express political opinions, communicate with
fellow citizens, and organize future events [30].
Research shows that social media played an
important role during the Arab Spring uprisings.
For example, active information flows related to
the revolution were detected between multiple
types of Twitter users, including activists,
bloggers, and journalists [31]. The same is the
case with the coup-making process.
Secrecy of communication was previously
deemed to be the feature of groups directed
towards conducting an illegal action, i.e.,
terrorist groups, organized crime groups, coupplotting groups, etc. However, these apps are
nowadays available to the general public, whilst
apps such as Signal, iMessage, Telegram, Wire,
Threema, WhatsApp, WickrMe, to name just a
few, are currently deemed as the most secure
ones [32]. As we have previously stated, the
perpetrators of the failed 2016 coup d’état in
Turkey used ByLock messaging app for their
communication, which was later detected by the
Turkish Intelligence Service MİT, whilst the
discovered communication was also used for the
arrest of some 75,000 people for even
downloading the said app [33].
Moreover, it is important to point out the
shifts that resulted from the change of ownership
of the Twitter company when it was transferred
to the hands of Elon Musk. Musk introduced the
“blue tick” subscription option, which has the
function of confirming the identity of the account
owner. The subscription option of only 8 USD
per month allowed any person to assume the
identity of anybody in the world and to spread
(dis)information from a “verified” account,
which is exactly what happened in several cases.
The biggest damage was suffered by certain
companies whose reputations were destroyed in
this way. Fortunately, this security threat was
identified very quickly and the subscription plan
was revised, whilst a new method of account
verification is currently being prepared that will
prevent misuse. The short-term possibility of
assuming someone else's identity for only 8 USD
a month is just one of the ways in which Internet
users can hide behind a fake name, and spread
propaganda and information to their followers.
Another popular application that offers the
possibility of anonymous communication is the
social network Telegram, previously listed as
one of the best encrypted communication apps,
which offers the option of creating a
conversation in which there can be up to 250,000
members who can freely connect under fictitious
names. Telegram groups have already been
recognized by researchers and policy makers as
fruitful pools for recruitment of individuals prone
to radicalization for terrorist and extremist
purposes, thus calling the international
community to find a suitable solution for
protection of these most vulnerable categories.
Moreover, what characterizes today’s social
networks is the so-called “vanish mode” that
applications offer to their users. Namely, this
mode works by deleting the conversation
between two users after they shut down the said
application, which ensures the participants that
their conversation will remain private. This is
especially the case with the Instagram and
Facebook apps.
III.
[2]
[3]
[4]
[5]
[6]
[7]
CONCLUDING REMARKS
The research before you was constructed as a
form of an interdisciplinary experiment and
exchange of thoughts regarding a phenomenon
of political violence that has witnessed an
awakening, especially in African and Asian
semi-democratic countries. The idea of
addressing such phenomena one-sidedly is
outdated, as was obviously our perception of
coups d’états as a thing of the past.
Approaching the issue of coups d’état, thus,
from the standpoint of researcher of political
violence, hand-in-hand with a researcher of
organizational sciences, proved to be quite
fruitful, given that, in this way, data collection
and content analysis was conducted and
reviewed twice, thus providing interesting
insight in the role of globalization, and therefore
the Internet, media and social media, in the coupmaking and coup-proofing processes. May this
small contribution to the understanding of this
phenomenon be only a first step towards constant
multidisciplinary approach and response to
political violence, and especially coups d’état.
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
ACKNOWLEDGMENT
We thank professor Dr Marija Đorić of the
Institute for Political Studies for stressing the
importance of multidisciplinary research and
joining efforts in finding pieces of a puzzle called
political violence.
[16]
[17]
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PaKSoM 2022
Nexus between Intellectual Capital and
Organizational Learning Capability
Matea Zlatković Radaković1
1
Faculty of Economics University of Banja Luka, Banja Luka, Bosnia and Herzegovina
1
matea.zlatkovic@ef.unibl.org
Abstract—Intellectual capital used to create and
improve organizations’ values and performance in
knowledge-based economy greatly depends on its
capability to successfully manage this scarce and
rare resource. One of the key characteristics of
organizations that enables knowledge creation and
sharing to provide them with competitive
advantage compared to others is the
organizational capability to learn. The purpose of
the study is to determine the significance and
intensity of simultaneous effects of intellectual
capital constructs as well as the significance of the
relationship between intellectual capital and
organizational learning capability. Research data
obtained via a survey questionnaire are gathered
from 224 organizations within different sectors
from transition economy. Prior to delivering the
questionnaire to organizations to collect data, pilot
study was conducted to obtain feedback on the
quality of the questionnaire items although
measurement scales were adopted from previous
studies. Latent constructs, proposed within
research model, were measured with items
measured on 7-point Likert-type scale ranging
from “7 =strongly agree” to “1=strongly disagree”.
Partial least squares structural equation modelling
(PLS-SEM) is employed to test the proposed model
and perform moderation analysis. These
econometric techniques are utilized through
SmartPLS software package, version 3.3.3. This
study revealed that intellectual capital, mainly
human and relational capital, have a positive and
significant direct effect on organizational learning
capability constructs.
Keywords – Intellectual capital, organizational
learning capability, PLS-SEM
I.
INTRODUCTION
Current environment characterized by
complexity, risks and growing stable and
intensive competitors, increasingly changing
ISBN: 978-86-82602-00-2
market and customers’ needs demands from
organizations
to
apply
contemporary
organization concepts and management
approaches. Environmental complexity and
dynamism force organizations to explore and
ensure organizational structures that support
two-way information and knowledge flows to
encourage learning processes [1]. Organizational
learning implies developing the most appropriate
learning approach taking into consideration
current organizational resources and capabilities
simultaneously allowing new abilities and
knowledge to be developed. Organizations need
to continually upgrade their knowledge base and
acquire new knowledge and information to
respond to rapidly changing customer needs and
nurture comprehensive approach to customers,
stakeholders,
suppliers,
employees
and
competitor tendencies [2]. Focus on intangibles
and knowledge sharing represents one dimension
related to learning activities that provides longterm
above-average
performance,
competitiveness and innovativeness [3]. As a key
strategic resource, intellectual capital helps
organizations to identify and quickly respond to
changing customer needs and market
opportunities. To support high-performance
organizational achievement greater attention
should be devoted to its cause-effect dynamics
and simultaneous relations of intellectual capital
and organizational learning. Organizations do
not own capability to learn but they can acquire
this capability based on the organizational
members to share knowledge among themselves
and to learn from other organizations and
stakeholders such as customers, suppliers, and
etc. [4]. Intellectual capital view and
organizational learning capability approach
could benefit from better understanding of
environmental conditions by becoming more
321
context sensitive and providing practitioners
directions for further development of the
intellectual capital components and learning
capabilities which have significant roles
according to context peculiarities [5].
The purpose of this paper is to investigate the
relationship between learning capabilities and
intellectual
capital
resources
of
the
organizations, and to identify significance and
intensity of interrelations among intellectual
capital constructs, using the partial least squares
structural equation modelling (PLS-SEM)
technique.
The paper is structures as follows. After
introduction of the research problem and
objective, following section contains literature
review and research hypotheses. The research
methodology comprised of sample structure,
data collection process and measurement of
variables is presented in Section 3. Section 4
contains performed data analysis and structural
model results. Discussion of the obtain research
findings is set out in Section 5. Implications for
theory and practice, some limitations and
recommendations for future research as well as
conclusion remarks are presented in last section.
II.
LITERATURE REVIEW AND RESEARCH
HYPOTHESES
A. Intellectul Capital - Definition and Structure
Intellectual capital as one type of intangible
resources have gain high attention in academic
research and management practice worldwide.
However, there is no consensus to its definition.
Intellectual capital research field is still
insufficient
developed
due
to
its
multidimensional nature [6]. As a multidimensional construct of assets of knowledge,
practical capabilities and experience, intellectual
capital improves organization’s value [7]. It has
some general dimensions such as human capital,
structural capital and relational (customer)
capital [8], widely used in the research field [9],
as originally proposed by Bontis [10,11].
Although previous studies indicate lack of clear
and precise intellectual capital conceptualization
and definition, and classification system,
majority of intellectual capital research followed
by Bontis’s intellectual capital classification
[3,12].
Bontis’s
intellectual
capital
conceptualization and classification principle
are also applied in this research.
322
Human capital represents a crucial
component of intellectual capital and the most
valuable source of sustainable competitiveness
and organizational growth [12]. It is a
knowledge base of each individual incorporated
into organizational ability to cooperate to get the
best possible solutions [10,11,13]. Human
capital represents an asset that cannot be
replaced by physical resources like machines or
equipment [14,15].
Human capital lacks the support of
infrastructure named structural capital [16]. It
can be determined as non-human knowledge
such as organizational charts, databases, process
manuals, routines, strategies, which value
exceeds any financial or material value.
According to Bontis [10,13], the structural
capital refers to mechanisms and organizational
structures that support employees’ pursuit
towards optimal intellectual performance and
thus overall performances. It includes strategies,
routines, databases and process manuals.
Structural capital contains efficiency elements,
transaction times, procedural innovativeness and
access to information for knowledge
codification [10]. Structural capital is a critical
link that allows the intellectual capital
measurement at organizational level. Relational
capital refers to intangible assets that help
organizations to construct, sustain and control
external relationships – those relationships
among customer, suppliers, stakeholders and
marketing channels. Relational capital contains
knowledge gathered from all relationships with
customers, stakeholders, partners in strategic
alliances and other parties of the environment
[17,18]. Based on these ties, organizations are
able to perceive and better understand customer
wants and needs and potential of target
market [15,18].
The most applied intellectual capital
interaction model is a diamond model where
human capital represents the source of relational
and structural capital [10]. This diamond model
was modified – tested and partially or
completely confirmed by many authors
[17,19-23].
Various authors confirmed that human
capital has a significant effect on structural
capital [10,17,19-23]. Organizational success
and ability to adapt to unpredictable market and
changing customer needs depends on
knowledge, competence and skills of their
employees, which they take with themselves
when they live the organization. The following
hypothesis is:
Hypothesis 1: Human capital is positively
related to structural capital.
Previous research identified a significant
effect of human on relational capital
[10,17,19,22,23]. Higher relational capital rises
cohesion among organizational members which
helps them to cooperate to develop new ideas
and obtain feedback information to enhance
their creativity implying that relational and
human capital are closely related Error!
Reference source not found.. The following
hypothesis is:
Hypothesis 2: Human capital is positively
related to relational capital.
Even though the human capital is the origin
of intellectual capital through its influence on
structural and relational capital, some authors
provide evidence that structural and relational
are mutual depended [17,21-23]. Many studies
highlight that organizational settings are
fundamental for creating and improving external
relations because they provide knowledge
sharing, identification and fulfilment of
customer needs Error! Reference source not
found.. Thus, the following hypothesis is:
Hypothesis 3: Relational capital is positively
related to structural capital.
B. Organizational Learning Capability
Organizational learning is important for
organizational development and a source for
competitiveness because it supports the arise of
new
and
improvement
of
existing
competencies [24]. Organizational learning
helps organizations to cope with a rapidly
changing environment. It represents the ability
of organizations to develop their capabilities to
obtain information and transform it into
knowledge.
Organizational
learning
development includes application of methods,
structures and procedures that lead to creation of
adequate
surrounding
for
effective
organizational learning [25].
Organizational learning is discussed in the
literature in two different domains – as an
outcome and/or as a process. Learning behavior,
as one dimension of organizational learning
reflects latter definition of the learning because
it attempts to articulate behaviors through which
outcomes could be achieved at organizational
level. Some authors believe that learning
behavior should be interpreted as a continuous
process in which theirs’ members ask questions,
discuss errors and unexpected results, seek for
information, opportunities, test and reflect on
the present assumptions and results and acquire
feedback in general and from parties in
cooperating networks [26]. However, learning
behavior can lead to time waste, consequently,
reducing organizational efficiency and overall
performance. Also, organizational learning can
be defined as set of values and beliefs that
induce development of awareness and
knowledge [27]. It can be described as
organizational activities close to knowledge
creation and exploitation [28]. Commitment to
learning represents set of values that
organizational learning is consisted of [29].
Commitment
to
learning
deals
with
organizational orientation and motivation to
learn [30]. This organizational value affects the
probability that organization would promote
learning culture. If organization assign very little
value to learning practice than very little
learning will happen [30]. Commitment to
learning can be described as prerequisite to
organizational capability to improve its
comprehension of its environment. The
cognitive framework of organizational learning
is applied in this research.
C. Intellectual Capital and Organizational
Learning Capability Relationship
Contemporary intellectual capital research
stream tries to develop dynamic side of
intellectual capital through its strong relations
with dynamic organizational capabilities such as
organizational
learning
perspectives.
Organizational
learning
approach adds
dynamics to organizational knowledge through
learning flows that lead to understanding of
intellectual capital as process of defining,
integration, transforming, storaging and
renewing knowledge [11]. Previous researches
indicated important role of intellectual capital in
learning enhancement [31]. Some authors
revealed the strongest connection between
human capital and organizational learning
capabilities, whereas others found that structural
capital has the strongest influence [32]. Previous
studies suggest that human and structural capital
have effect on organizational learning
capabilities with exception of third intellectual
capital component – relational capital [1,32].
Organizational learning depends on the
exchange and exploitation of the information,
323
knowledge and ideas used by employees. Highly
qualified and skilled employees lead to greater
generation of the knowledge which enhance
organizational capability to learn. Therefore, the
following hypothesis is:
Hypothesis 4: Human capital is positively
related to organizational learning capability.
Employees will be able to disseminate more
knowledge and information with other parties if
organizations have developed systems, manuals
and process for information communication and
distribution
[33].
Formalization
and
standardization of work and employees’
knowledge influence their knowledge searching
and sharing, learning modes and learning loops
they apply at work place [34]. Previous studies
have found that there was both significant and
non-significant relationships between structural
capital and organizational learning [32].
Therefore, the following hypothesis is:
Hypothesis 5: Structural capital is positively
related to organizational learning capability.
Employees with wider social network are
able to acquire and obtain more knowledge and
information that could enforce organizational
learning capabilities. The more relational capital
organizations develop, the more likely it is to
them to acquire knowledge from external parties
to gain potential strategic benefit and to enhance
further learning process [35]. Previous studies
have found that there was both significant and
non-significant relationships between relational
capital and organizational learning [36]. The
following hypothesis is:
Hypothesis 6: Relational capital is positively
related to organizational learning capability.
III.
RESEACH METHODLOGY
The objective of this research is to
investigate the significance of the influence of
the intellectual capital on the organizational
learning capability. Thus, to test above
mentioned hypotheses, the field research was
conducted. All data are gathered via wellstructured survey questionnaire delivered to
organizations within different sectors by email
or in person. At first, pilot study was performed
to obtain feedback on quality of the
questionnaire items and its content validity.
With minor modifications of the certain items
according to pilot group’s recommendations,
final version of the questionnaire was created.
Latent constructs were measured with items
324
used from existing measurement scales with
established content and convergent validity.
Measurement items were measured on 7-point
Likert-type scale ranging from “7 = strongly
agree” to “1 = strongly disagree”. Respondents
as representatives of the organization were
requested to indicate to what extent the agree or
disagree with the survey items.
A. Intellectual Capital
Intellectual capital (IC) was measured using
three latent constructs – human (HC) (20 items),
relational (RC) (17 items) and structural capital
(SC) (16 items). Measurement scales for these
constructs were adapted from questionnaire
developed and tested by Bontis [10,13]. Some
items of the latent constructs of intellectual
capital are reversed coded to improve scales
validity and to encourage the respondents to read
all items carefully rather than use a set pattern of
responding [37].
B. Organizational Learning Capablity
Organizational learning capability (OLC)
was measured by two latent constructs, namely
commitment to learning (CL) (4 items) and
learning behavior (LB) (4 items). These
measurement scales were adapted based on
development scales tested by Baker and Sinkula,
and Edmondson [26,38].
C. Sample and Data Collection Process
The final version of the questionnaire was
sent to organizations in different sectors from
Republic of Srpska, Bosnia and Herzegovina.
Additional to the questionnaire, cover letter
assuring complete anonymity of the respondents
involved in the research was delivered. Survey
questionnaire written in native language was
sent to randomly chosen 500 organizations out
of 3,838 organizations registered in the Business
Register of Chamber of Commerce of Republic
of Srpska, at the moment of accessing the
database. The number of the organizations who
actively participated in the survey by delivering
fulfilled questionnaires was 243. After data
cleansing to detect outliers, missing values and
pattern responses, certain questionnaires were
excluded to obtain quality input data for
structural modelling technique application. The
final sample size was 224 and these
questionnaires were used for data analysis. The
final sample consists of 84 product-oriented
(38%) and 140 (62%) service-oriented
organizations. Majority of the organizations are
SMEs (88.39%) older than 15 years (63.39%).
The rule of thumb, for sample size, suggests
that the number of observations should be 10
times more than there are arrows pointing into
construct in measurement and/or structural
model [39,40]. The measures of kurtosis and
skewness are in range ±2 suggesting indicating
that there is no severe violation of data
normality [41]. In line with the abovementioned condition, 30 observations represent
an acceptable sample size that is several times
smaller than the real sample size of 224
organizations selected.
IV.
DATA ANALYSIS AND RESUTLS
According to results of statistic power
analysis performed using G*Power software
package, version 3.1.9.2., using maximum 3
predictors of an endogenous construct in the
proposed structural model, the minimum sample
size of 55 observations is determined to achieve
80% statistical power, with probability error
of 5%. To estimate the research model, partial
least squares structural equation modelling
(PLS-SEM) is used through the SmartPLS
software package, version 3.3.3 [42]. Within
SEM, PLS path modelling is favored because
the investigation of the mutual dependence of
latent constructs and less rigorous assumptions.
PLS-SEM analysis entails two-stage approach
including measurement and structural model
assessment [40,43-45].
A. Assessment of measurement and structural
model
In the first stage of the PLS-SEM, indicators’
reliability, constructs’ internal consistency
reliability, convergent validity and discriminant
validity are examined and established. In the
second stage, structural model assessment is
conducted according to following criteria:
multicollinearity issues (VIF<1.715), magnitude
and significance of the path coefficients and
predictive relevance analysis as shown in Fig.1.
The relationships between all intellectual
capital constructs are significant. Results
indicate that nearly all total effects of IC on OLC
constructs are significant except SC on CL.
Results of the assessment of the structural model
are presented in Table I.
.
Figure 1. Direct effects and in-sample prediction results
325
TABLE I.
PATH COEFFICIENTS, BOOTSTRAPPING
PROCEDURE AND PREDICTIVE ACCURACY ANALYSIS
Panel c1: Direct effects and their significance at 5%
and 10% level
Hypothesis
Direct
p
BCa confidence
effects
values
intervals (95%)
HC -> CL
LB
UB
0.176**
0.021
0.028
0.325
HC -> LB
0.152*
0.063
-0.009
0.317
HC -> RC
0.557**
0.000
0.440
0.643
HC -> SC
0.428**
0.000
0.274
0.553
RC -> CL
0.378**
0.000
0.239
0.523
RC -> LB
0.302**
0.000
0.156
0.442
RC -> SC
0.193**
0.017
0.041
0.358
0.131
-0.038
0.281
SC -> CL
ns
0.123
SC -> LB
0.210**
0.008
0.053
0.360
Panel c2: Total effects and their significance at 5%
and 10% level
Hypothesis
Direct
p
BCa confidence
effects
values
intervals (95%)
LB
UB
HC -> CL
0.452**
0.000
0.342
0.546
HC -> LB
0.433**
0.000
0.302
0.533
HC -> RC
0.557**
0.000
0.440
0.643
HC -> SC
0.535**
0.000
0.427
0.623
RC -> CL
0.401**
0.000
0.259
0.547
RC -> LB
0.343**
0.000
0.190
0.488
RC -> SC
0.193**
0.017
0.041
0.358
SC -> CL
0.123ns
0.131
-0.038
0.281
SC -> LB
0.210**
0.008
0.053
0.360
Note: LB-lower bound; UB-upper bound; bootstrapping
procedure with 5,000 samples, two-tailed test, no sign
change - **p<0,05; *p<0,10; ns – non significant;
Source: author's calculations
V.
TESTING THE HYPOTHESES AND
DISCUSSION
According to results of structural model
evaluation presented in Table I, relationships
between IC constructs are significant which is in
line with results of previous studies
[10,17,19-23]. HC has the strongest effect on
RC meaning that managers need to fully exploit
HC capacities to obtain market orientation
toward customer wants, consequently, gaining
and retaining their loyalty. The significant direct
effect of HC on SC shows that organizations
have developed capability to transform
individual into organizational knowledge. Direct
positive effect of RC on SC suggests that all
organizations have significant investments in
enhancing market orientation and are capable to
successfully satisfy market needs. Thus, the
hypotheses H1, H2 and H3 are confirmed.
326
All path coefficients between IC and OLC
constructs are significant except SC on CL. All
IC constructs have significant direct effects on
the second OLC construct – LB. Obviously, RC
and HC are crucial for increase of CL while RC
and SC are important to enhance LB. Thus, the
hypotheses H4 and H6 are completely
confirmed while hypothesis H5 is partially
confirmed. HC has the strongest effects on both
OLC constructs – CL and LB mediated by RC,
which is consistent with previous findings
[32,33]. Greater HC indicates better cognitive
skills and greater level of motivation of
employees. Those organizations which invest
more in development of HC attract
knowledgeable and highly educated and skilled
employees which further support learning
practices improvement. Organizations support a
claim that individual knowledge, skills and
expertise together with well-developed quality
social ties with customers and mutual trust
provide effective knowledge transfer and value
sharing [46]. It is important to emphasize that
HC, through mediators such as RC and SC, has
stronger effect on OLC. To build and enhance
organizational learning practices it is not enough
just to employ skilled and educated employees.
Results showed that tacit knowledge embodied
in employees together with external knowledge
obtained from social relations and stored in
knowledge repositories has stronger effect on
development of organizational learning. RC has
the strongest direct effects on OLC constructs.
SC has a moderately significant effect on only
one OLC construct named LB. These results are
partially consistent with previous findings [32].
Without systems and procedures that provide
relevant information for employees, the
organization cannot learn [24].
VI.
CONCLUSION
A. Implications for Theory and Practice
This research provides a deeper insight into
the IC phenomenon by evaluating the
relationship between widely used IC dimensions
and OLC. Research findings are beneficial for
both academic and business practice. Firstly,
obtained results enrich existing OLC theories
and IC research stream by conceptualizing and
providing evidence on existence and magnitude
of mutual relationships between different
dimensions of IC and OLC. Second, the research
contributes to existing literature in IC practice
by providing empirical evidence on how
effective IC management can improve various
aspects of OLC to sharpen the competitive edge
and to enhance overall organizational value.
B. Research limitation and recommendation
Firstly, this empirical testing of the proposed
research is performed solely within one
economy - The Republic of Srpska, Bosnia and
Herzegovina. Thus, future cross-country
empirical research is recommended. Second,
research finding represent evidence at one point
in time so future studies should be longitudinal,
to capture growing OLC based on continuous IC
development. Third, the sectoral structure of the
selected sample together with a relatively small
sample size does not representatively reflect the
sector`s size in the studied population. Fourth,
solely perceptual measures to measure IC and
OLC constructs are used in this research, even
though, measurement scales were validated in
more developed countries. Future studies could
consider using combination of perceptual and
objective measures to gain deeper insights into
above-mentioned relationship. Further analysis
should examine the presence of mediators of the
IC - OLC relationship, such as environment or
knowledge management. OLC concepts that
include different types of learning skills and
processes of learning should be taken into
considered as well. Likewise, other concepts of
IC such as renewal capital could enrich obtained
findings. Moderation analysis using industry
type, size and etc. as moderate variables could
provide deeper insight into magnitude and
significance of relationships between constructs
of interest.
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PaKSoM 2022
Choice of Methodology for
Management IoT Project
Maja Gaborov1, Jelena Grujić2, Dragana Kovač3, Mila Kavalić4, Stefan Ugrinov5
Technical Faculty “Mihajlo Pupin”, Zrenjanin, Serbia
Faculty of Philosophy, University of Belgrade, Belgrade, Serbia
1,3,4,5
2
1
majagaborov26@gmail.com, 2grj0107@gmail.com, 3dragana.milosavljev@tfzr.rs,
4
milazakin@gmail.com, 5stefanugrinov1@gmail.com
Abstract—The reason for the failure of Internet of
Things (IoT) projects may be the lack of specific
project
management
methodologies
that
adequately address the complexity of IoT projects.
For the application of IoT solutions, there are
approaches to software development such as
Scrum and Kanban, and others are adapted to
large-scale Scrum, Scaled Agile Framework, etc.
This study compares the main characteristics of
different IoT methodologies. The comparison
presented in this paper would be useful in selecting
the appropriate methodology for IoT projects. In
addition, it identifies their strengths and
limitations in order to propose a new approved IoT
methodology. It is crucial that each methodology is
applied depending on the nature of the project.
Keywords
management
-
I.
IoT,
project,
methodology,
INTRODUCTION
The Internet of Things (IoT) is a new
computing paradigm [1,2], which describes
several technologies such as RFID, short-range
wireless communications, and research
disciplines that can connect real-world physical
objects to the Internet [2-4]. It has emerged as an
important technology with applications in many
areas. Most IoT devices are connected together
to form purpose-specific systems. They are
rarely used as general access devices on the
World Wide Web [5].
Approaches to software development for
implementing IoT solutions, such as Scrum and
Kanban, have encountered many problems due to
the nature of IoT projects that have led to the
emergence of custom methodologies such as the
Scaled Agile Framework (SAFe) [2,6]. Agile
methodologies are popular in the software
ISBN: 978-86-82602-00-2
industry [7]. Agile methodologies [7,8] have
revolutionized the software industry and
provided frameworks, such as Scrum and
extreme programming, etc., to enable fast
delivery of working software to clients [7,9,10].
The aim of this paper is to present the project
management methodology and to determine
which is the best to use.
II.
RESEARCH OF METHODOLOGY
A. Subject and problem of research
Like any project, an IoT project should have
an appropriate methodology to be applied in
management. However, it is necessary to know
which methodology should be applied, and that
will mostly depend on the type of work, the needs
of the clients and the like. It is necessary to notice
the characteristics of each methodology in order
to best choose the appropriate one.
B. Research Question
RQ: Which methodology is most applied in
IoT projects?
C. Research Goal
As already mentioned, the aim of this study
is to present an overview of the main
characteristics of all methodologies applied in
IoT project management and to identify which is
most applied in practice.
III.
THEORETICAL CONSIDERATION
The literature review provides a brief
description of IoT and IoT projects, as well as a
methodology for managing these projects.
329
A. Internet of Things
The Internet of Things is defined as “a
dynamic global network infrastructure with selfconfiguration capabilities based on standard and
interoperable communication protocols” [11].
The new paradigm is in the software and
hardware industry and imagines a global network
of devices interconnected using Internet
technology or a specific protocol such as User
Datagram Protocol (UDP) or Transmission
control protocol (TCP). The strength of IOT
technology lies in the ability to connect to
devices that are also integrated into business
processes such as vending machines, business
intelligence applications or customer supply
systems that facilitate business processes and the
like [12]. Such “things” can generally be defined
as smart objects and if supported by “anywhere,
anytime and anything” [3], they are the basic
building blocks for IoT [4,13].
B. IoT Projects
“IoT projects can be categorized as high
technology with an extremely dynamic product
development lifecycle” [14]. Due to the large
number of failed IoT projects, an appropriate
project management philosophy is needed, based
on which there would be greater flexibility,
agility, teamwork and the development of a
strong technical framework [15].
According to a 2017 Cisco survey,
about 75% of IoT projects have a negative
impact on several industries that feel less secure
in investing in IoT business because it is
considered a risky business [12,16]. Project
management is built around a system
development lifecycle, with waterfall or agile
methodologies playing an important role in
defining, designing, developing, testing, and then
applying the end product. Longer project
deadlines, comprehensive testing, strict
compliance, planning and security rules,
requiring a review of management planning can
be expected in IoT projects. Cisco research
highlighted one of the main causes of IoT project
failure, the “human factor”. and these include
poor technical or managerial skills, lack of
communication, or overall culture. The lack of
accepted and recognized technical and
management “jargon” causes interoperability
problems when it comes to managing IoT
projects [12,17]. IoT projects have longer project
deadlines, and testing time is longer than in other
ordinary technical projects [12,18]. New project
management styles are needed because risk is
330
involved in different stages of product
development, compliance and security risk is
different compared to other software and
hardware projects [12,18]. Projects should be
managed differently from traditional IT projects,
hardware or software. The five phases
(collection, transport, storage, analysis and
archiving of the IoT project) should be
harmonized with the current phases of the project
management project, i.e. with the launch,
planning, execution, monitoring and control and
closure [19]. The project manager should be
involved in the research and development phase
of the IoT project [20]. In Amazon’s drone
delivery (IoT) project, managers would be
involved from the research and development
phase, going through the entire process of
managing and developing the way drones
communicate with air traffic controllers, the
corporate office and end-customer product
delivery. “The need to involve IoT project
managers in technical issues would be the fact
that the number of jobs for managers will
decrease in the future, while jobs for qualified
people will increase” [21]. Sensory data will help
companies reduce downtime, save money,
increase productivity and help determine the
amount of manpower needed. Project managers
should expect longer on-site work [22]. To lead
a successful IoT project, the manager needs to
have a plan B to plan better risk management that
facilitates the replacement or updating of IoT
components and ultimately purchases from the
entire organization [12,23].
Some of the approaches in project
management are: Kanban, Agile, Disciplined
Agile Delivery, Scrum, Extreme Programming
and various Agile methodologies to adapt to
products based on Big Data, SOA (Service
Oriented Architecture) and IoT products [12].
The impact of these approaches on IoT projects
has been poorly studied due to lack of data over
time, so it remains uncertain which of these
strategies are better for IoT projects. According
to the Vikram Prasher study [12] in 2018,
managers in IoT firms prefer an agile
methodology and a hybrid of waterfalls and agile
functions in IoT-based projects [12,15,24]. In
IoT project organizations, workforce agility
plays a vital role in determining the agility of
organizations. Workforce agility is the ability of
employees to adapt and develop and to offer
innovative solutions and a quick turnaround and
to demonstrate sufficient skills of employees at
any stage of project/program execution as
needed. Employees need to show speed,
innovation, flexibility, cooperation, adaptability,
competence and a progressive attitude.
Management plays an important role by
providing appropriate training, empowerment,
promoting teamwork, better compensation and a
world-class information system [25].
IoT projects must be managed differently
from simple and traditional IT, production or
construction projects [48].
C. Methodologies of IoT Projects
The concept of agile methodology became
important in 2001 when the Manifesto for the
Development of Agile Software was published
[26]. One study reveals that agile methodologies
were completely new in the way they were
articulated and consolidated in a theoretical
context [27]. The agile methodology was created
with the aim of reducing the risks of previous
software development methods, such as
intensive documentation and inefficiency until
they appear on the market [28]. There has been a
general struggle against such inefficiencies in
software development methods [29]. Agile
methodologies emerged when efforts to meet
customer requirements for contracted products
and services underwent unexpected changes.
This phenomenon arose as a result of increased
business competitiveness [30].The introduction
of agile concepts has led customers to appreciate
the speed of products and services, as well as
efforts to reduce costs in software development
[31]. Suppliers intend to make higher profits at
lower costs, and the predictable deadline for
completion of the project was relative [32]. It is
estimated that 46% of small and medium
enterprises have applied a number of agile
methodologies.
The project team should always follow a
methodology that helps it satisfy the customer.
Based on the 13th annual report on the state of
agility [2,34] which shows that Scrum (54%) and
Kanban (5%) are the most common agile
methods used by organizations, in addition,
SAFe
(30%)
dominates
in
scaling
methodologies. Some authors choose Ignite|IoT
methodology and IoT methodology because the
first methods were created in IoT organizations
especially for IoT projects [2]. There are methods
for managing IoT projects that have emerged due
to the evolution of technology and the need for
methods to adapt to this type of project [35,36].
“IoT methodology is an iterative methodology
inspired by lean startup and design
thinking” [2,13,37]. IoT methodology is a
generic, lightweight method built on iterative
prototyping and lean startup approaches. There
are presented illustrates the steps of IoT-Meth,
eliminating its iterative nature for the sake of
simplicity. IoT-Meth involves the following
iterative steps [5]: Generate ideas, refine ideas,
conceptualize a project, design an architecture,
prototype a proof of concept, deploy IoT system.
Ignite is an open source methodology based on
real experience that covers all aspects of IoT
development. It includes two main parts. The
first part, entitled “Strategy Implementation”,
which defined the IoT strategy and prepared the
organization for the adoption of the IoT, then
created and managed a portfolio of IoT projects
to support the IoT strategy. The second is
“solution delivery”, which has implemented the
planning, construction and launch of IoT
solutions [2]. Ignite|IoT methodology is “Big
Method” invented in the industry based on the
best practices of industrial projects [35,36,38].
Ignite|The IoT methodology is intended for a
variety of IoT stakeholders, including product
managers, project managers, and solution
architects. It has two large groups of activities:
Execution of IoT strategy and Delivery of IoT
solution. The implementation of the IoT strategy
aims to define the IoT strategy and the portfolio
of projects that support this strategy. IoT
Solution Delivers supports IoT solution design
and IoT project management, along with some
artifacts, such as project templates, checklists,
and solution architecture designs. The
implementation of the IoT strategy refers to the
business perspective and includes the
identification of opportunities, the development
of a business model and decision-making on how
to manage those opportunities. IoT solution
delivery refers to the delivery of a solution,
which is conceptually defined during the
implementation phase of the IoT strategy and has
a life cycle consisting of planning, construction
and operation of the system. Planning begins
with the launch of the project, in which the initial
design of the solution and the scheme of the
project organization are submitted. It is
necessary to conduct an analysis of actors,
environment, requirements, risks and resources.
Once launched, tasks are managed in seven
workflows: project management, cross-cutting
tasks, infrastructure solutions and operations,
back-end services, communication services,
component assets, and property preparation.
Project management includes activities to
initiate, plan, execute, monitor, control, and close
331
a project. Multiple tasks solve dependencies
among future workflows, such as security and
testing. Infrastructure operations and solutions
include the installation and management of the
hardware and software infrastructure on which
the IoT system will be developed and operated.
Background services refer to IoT services that
are typically hosted on a private or public cloud
and
communicate
with
IoT
devices.
Communication services include the installation
and
management
of
communication
infrastructure. Asset components refer to the
development or procurement of software and the
production or procurement of hardware and
network components that need to be integrated
with things in the IoT system. Asset preparation
deals with the production and procurement of
items in the IoT system [5].
Scrum was developed to help team members
understand how to work on flexible system
manufacturing in an ever-changing environment.
This approach is easy to implement [2,39,40,41].
It is a good way to introduce an agile approach to
project management because it is simple and
easy to handle by the whole team involved in the
project. It is a management framework for the
gradual development of products using one or
more cross-functional, self-organizing teams of
seven people each. Short iterations are called
Sprints and have a fixed length that does not
exceed 30 days, but they are usually kept as short
as possible. The idea of Sprint is for teams to try
to increase the products that can be released at
the end of the Sprint. Scrum uses only three roles
in software management, namely Product
Owner, Scrum Master and Development Team.
The owner of the product has a leading role. He
is responsible for creating and downloading the
request by approving the final version. It
constantly reorganizes the remaining products to
adapt the software to customer requirements. It
can decide on the date of publication and
agreements or in the process of ongoing
development and is responsible for maximizing
returns to development efforts [42]. Scrum
Master allows you to monitor the SCRUM
process and follow all the steps accordingly.
Filters external messages / interventions so that
SCRUM flow is not interrupted or delayed. He is
responsible for resolving obstacles that arise in
the process. The development team is composed
of 6 to 9 members. He plans one Sprint at a time
with the product owner. In order to implement
SCRUM, the roles that manage the software
must communicate and collaborate throughout
332
the software development process, so that the
software is fully maintained and monitored until
it is released to the end user. A sprint planning
meeting is held at the beginning of each sprint.
At the meeting, the product owner and
development team negotiate which product
backlog items can fit in Sprint where the key is
to choose the scope of work that the development
team will try to complete in order to eventually
deliver something functional to Sprint. A daily
Scrum meeting is held every day and should not
exceed 15 minutes. The main purpose is for each
member to present the progress of the work and,
if possible, the work planned for that day.
Obstacles to completing the work will also be
presented during the meeting. The main purpose
of the meeting is for the team to collaborate,
communicate and create a strong and organized
team [42]. The customer can always request even
more software functions, new hardware, etc. One
of the first advantages that can be noticed is that
Agile has iterative developmental stages. The
main Agile artifacts are structured as can be seen
below in Fig.1 [33].
There is a product backlog written by the
product owner and multiple sprints. The
obligatory process is the Daily Scrum, which is
presented above in a small circle with “24 hours”
in it. At the end of each sprint, the end customer
is delivered as a result to confirm all completed
work items. This “demo session” is also a
mandatory artifact of the Agile process. Based on
this iterative process, even on a detailed level,
Daily Scrum helps to discern some obvious
advantages of choosing Agile for IoT projects.
Considering the periodic demo sessions during
the Agile implementation, it can be seen from an
early stage why the waterfall delivery may lack
useful exposure to the client [33].
Figure 1. Agile Scrum main artefacts used for
Software Development Life Cycle [33]
The term “Kanban” means “signboard”. It is
an extremely flexible method that required an
explicit definition of process policies. The key is
to the success of the software product by
applying six principles which are Visual
Workflow Display, Workflow Restriction,
Workflow
Management,
Explicit
Processes/Policies, Implementation of Feedback
Loops, Improving Collaboration. Kanban is
designed to help teams work together
effectively [2,39,43,44].
SAFe comes to solve problems related to the
development and delivery of software and
systems in the shortest time. It is based on agile
development, Systems thinking and Lean
product development [2,46,47]. It focuses on
nine Lean-Agile principles such as take an
economic view; apply systems thinking; assume
variability,
preserve
options;
build
incrementally, with fast integrated learning
cycles and so on [2,45,47].
IV.
RELATED WORK
In one paper, a case study was conducted
among four selected small and medium
enterprises that developed the Internet of Things
application as their business core. The results
revealed that all companies studied use extreme
programming
(KSP),
dynamic
system
development methodology (DSDM), featurebased development (FDD) and Lean as the
chosen development methodology. The most
used agile framework of the methodology are the
Scrum techniques. The study shows that
companies used Agile SDM. This is because
Agile SDM helps development teams to
efficiently organize their tasks and can deliver
them frequently to their stakeholders and
users [30].
Second paper has a structured case study
around a home automation project, which is
relevant when the authors try to highlight the
advantages of an agile approach compared to
other delivery methods such as waterfall, Vmodel and so on. The selected Agile
methodology presented in this paper is the most
popular (Agile Scrum) [33].
V.
DISCUSSION AND CONCLUSION
Several studies show that the scrum method
is still the most used because it delivers products
in short cycles, allows for quick feedback and
quick adaptation to change. It does not accept
more than one team and is not designed to
support large, highly distributed projects.
Kanban makes a profit earlier than Scrum and
accepts changes every time, not like Scrum
accepts changes after a sprint. Agile people are
developing new methodologies based on existing
ones, such as the Scaled Agile Framework
(SAFe), which supports small solutions that
employ 50-125 practitioners, as well as complex
systems that require thousands of people. It is
considered too difficult and complex. IoT
projects are divided into two parts, software and
hardware. However, Scrum and SAFe are for
software, not hardware, which makes it difficult
to use them in this type of project. IoT project
teams have proposed their own methodologies
based on their research and experience, such as
Ignite|IoT methodologies and IoT methodology.
These are the first two methods designed for the
IoT domain. Ignite Cover all aspects of the IoT
project and build on the real experience. Also, the
stronger side of the IoT methodology is the use
of IoT Canvas and IoT OSI references. Ignite is
limited to executing strategies and delivering
solutions and reuses various existing generic
practices, combining them with innovative
practices specifically for IoT, in a way that makes
it difficult to reuse and share new practices. They
are not a complete method that covers all the
important phases necessary for the development
of an IoT system. Due to the increased
expectations of end users from connected
devices, companies need to develop frequent
updates, upgrades and an efficient user
experience. Implementing any new function in
an IoT project may require customizing the
hardware and software behind the project and
this may affect the strategy behind the entire
project. Therefore, there is a need to adapt to the
project and select an appropriate management
methodology that is well equipped to deal with
the requirements of connected devices, where
frequent updates are essentially a requirement.
Some of the methodologies are Scrum,
Kanban, SAFe, IoT methodology, Ignite | The
IoT methodology etc. It is important to say that
each methodology has its pros and cons. The
answer to the research question would be that
each methodology has its advantages and
disadvantages and that the methodology depends
on the nature of the project. Based on the search
of various literature, scientific papers and
journals, it can be concluded that Scrum is the
most widely used. In the future, research could
be done on the territory of Serbia to see which
methodology is most applied and in which way.
333
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335
336
PaKSoM 2022
Consumer Behavior and its Influences
in 2022
Lenka Veselovská1
1
Matej Bel University, Faculty of Economics, Insitute of Managerial Systems,
Poprad, Slovak Republic
1
lenka.veselovska@umb.sk
Abstract—Consumer behavior is a complex
system that is influenced by various factors.
Many of such determinants are well-know,
however, other factors remain a mystery. This
research strives to uncover the factors that have
influenced consumers in first half of 2022.
Empirical study was selected as a main method of
research. Sample file consisted of consumers from
Slovak Republic. The findings of this study relate
to measuring the continuing influence of the
COVID-19 pandemic and also other external
influences such as extreme increase in inflation
and armed conflict in Ukraine. It was discovered
that the pandemic still had a major effect on
consumers, however, the impacts of inflation have
become to increase and it is likely that in near
future this will be the most important factor
influencing consumer behavior.
Keywords - consumer behavior, pandemic,
inflation, war
I.
INTRODUCTION
Consumer behavior is generally understood
as a response of a person to a set of external and
internal stimuli that results in interest shown to
product and which often also leads to its
purchase [1]. Researchers have dedicated a lot
of attention to discovering what these stimuli
are. It was discovered that it is necessary to
divide these factors into two main groups – the
internal and the external factors. There are
further divisions within these categories 2.
Many authors covered the options for measuring
the influence of such determinants of consumer
behavior that can provide a clear image at the
current state of affairs in society 3,4.
However, the influence of these factors
evolves dynamically. That presents an everISBN: 978-86-82602-00-2
lasting research gap that needs to be filled
continuously in order to correctly understand
the current business reality. Therefore, this
research strives to explore what factors had a
major influence on consumer behavior in the
first half of year 2022. Due to the short time
period there was a lack of publically available
data on this issue. Because of this reason the
empirical research was selected as the main
research method and the data was collected
directly from the consumers providing a
comprehensive image of consumers’ opinions.
II.
LITERATURE REVIEW
Reference [2] explored the set of factors that
influence all consumers. They can be divided
into four groups with subgroups existing in each
category. Cultural factors are commonly based
on consumer’s nationality, education, religion,
social status and so on. Group of social factors
includes the influences of family, friends,
colleagues and other close acquaintances.
Remarkable is also the influence of reference
groups the consumer either belongs to or strives
to a member of. Consumer behavior is often
influenced by an individual's personal
characteristics. By personality we understand a
set of different psychological traits that lead to
relatively consistent and permanent reactions to
environmental stimuli. Personality is often
described using such character traits as selfconfidence,
dominance,
independence,
compliance, sociability, caution or adaptability.
Personality can be a useful variable especially
when analyzing consumer behavior and its
potential changes 5. Human needs are
unlimited. If they are strong or urgent enough,
they can result in motives for action. These
motives represent psychological factors
337
influencing consumer behavior. A motivated
person is ready to act. How such a person will
actually act is influenced by his perception of a
particular situation. Perception is the process by
which a person selects, organizes, and interprets
incoming information to form a meaningful
picture of the world. Perception depends not
only on physical stimuli, but also on their
relationship to the surrounding environment and
on the inner state of the individual 2,6. People
can perceive the same object differently due to
three processes: selective attention, selective
distortion, and selective recall 4. This makes
psychological factors extremely difficult
to measure.
There have been many research studies
focused on discovering the factors influencing
consumer behavior and even measuring their
effects 7-9. References 10 and 11
researched specifically the influence of
COVID-19 pandemic on consumers’ purchasing
decisions. These authors concluded that
pandemic significantly changed how consumers
make their purchasing decisions. They also
described a newly formed trend related to
consumers’ preferred form of shopping and
newly emerged factors influencing their
behavior such feeling of safety in stores and
accessibility of shops. Reference 4 also
discovered a link between pandemic and
psychological factors. References 12 and 13
found out that there were significant changes in
levels of social responsibility presented by
specific groups of consumers during the
pandemic implying a newly forming trend
towards more responsible consumers who are
willing to take the time and effort to learn basic
information on products they consider buying
and decide accordingly. Reference 14 reached
a similar conclusion. Reference 15 proved that
systems approach can be quite valuable in terms
of exploring such a complex issue as consumer
behavior. This approach was applied during a
research related to discovering consumer
behavior changes during the COVID-19
pandemic 16,17 that served as a baseline for
this research.
III.
METHODOLOGY
This research relates to previous studies into
consumer behavior; however, it adopts a new
approach to explore the influences of specific
factors on consumer behavior in 2022.
Empirical research was selected as a main
method of data collection and evaluation.
338
Figure 1. Sample file – gender.
Questionnaire was prepared and distributed in
order to discover the influences of selected
factors. Consumers were selected randomly to
ensure anonymity of research and to increase
the return of completed questionnaires. Data
were collected during the period of May –
October 2022. Research sample file consisted of
consumers from Slovak republic. Fig.1 provides
information on gender structure of sample file.
This research was carried out on a sample that
consists of consumers that were the main buyer
of daily consumption goods in their households,
therefore, the data show that the vast majority of
them in 2022 were women.
Furthermore, the Fig.2 shows the age
structure of sample file represented by the year
of birth. The majority of consumers in sample
file were born after year 1995 (34.5%), which
makes them 27 years old or younger.
IV.
RESULTS
The main aim of this research was to
uncover the factors that have influenced
consumers in first half of 2022. It was
discovered that the majority of consumers was
still concerned by the pandemic, its impacts on
business environment and also the related risks
(93.7% of consumers). However, 73.5% of
Slovak consumers declared that they were less
Figure 2. Sample file – age.
focused on gathering information on pandemic
than they had been in 2021. This research
covers the continued influence of pandemic
since we assumed that this would be the major
factor influencing consumer behavior in 2022.
However, other external factors specifically
related to Slovak consumers were chosen for
this research.
The first explored issue was related to new
factors that influenced consumers in 2022.
Consumers were presented with a list of 10
factors including national and international
threats and opportunities related to current
situation in Slovak Republic. They were also
presented with an option to add additional
determinants if needed, however, no consumers
provided an answer. Therefore, we assume that
provided options were satisfactory and broad
enough to cover the main factors influencing
consumer behavior in the first half of year 2022.
Consequently, the research focused on factors
that at least 3% of interviewed consumers
TABLE I.
marked as important for them. Three factors
pass this minimal limit – COVID-19 pandemic,
inflation and war in Ukraine. The issue of
governmental disputes among the politicians
was near the borderline, however, it was still
selected only by 2.45% of consumers, and
therefore, this factor was used not in further
more detailed research. Only the first three
major determinants of consumer behavior were
evaluated in more detail.
The research focused on exploring how
consumers from different households perceive
the new or continuing external influences on
their consumer behavior. The data in Table I
show the differences in importance of three
main factors.
It was discovered that the armed conflict in
neighboring Ukraine had little influence on
consumers and their purchasing decisions.
However, the inflation has become the major
source of influence since more than half of
interviewed consumers had taken price rising
FACTORS INFLUENCING CONSUMER BEHAVIOR IN 2022 BASED ON HOUSEHOLD STRUCTURE
(IN % OF CONSUMERS).
Household situation
living alone
living with parents
living with partner without
children
living with partner with children
Total
Factors
pandemic of COVID-19
disease
53.33
price rise (inflation)
war in Ukraine
46.67
0.00
33.33
63.33
3.33
52.38
38.10
4.76
45.16
48.39
6.45
44.79
51.04
4.17
339
under consideration in first half of the year
2022. Since the true effects of inflation have
only started to show in the beginning of 2022, it
is safe to assume that its influence on consumer
behavior will only in second half of 2022 and in
increase in near future. The pandemic has
remained a major factor influencing consumers
even in 2022 when its effects on life in societies
have significantly diminished. However, nearly
half of consumers were still affected by fear of
the disease and related restrictions imposed by
Slovak government such as the obligation to
prove oneself with a test and/or vaccination or
the obligation to cover the upper respiratory
tract with face mask. Surprisingly, it was the
consumers who lived with their parents who
stated the pandemic as factor with the least
frequency. On the other hand, consumers who
either lived alone or with partner and children
marked the pandemic as the main factor
influencing their choices in 2022. The inflation
was mostly by consumers living with parents.
There were some interesting variances
observed in the measure of influence of these
factors on consumers of different gender as
shown in Fig.3. Women were more concerned
by the pandemic than men. On the other hand,
men showed more focus on war in Ukraine as a
major factor influencing their consumer
behavior. However, the increasing rate of
inflation was the main determinant of behavior
of consumers regardless of their gender.
All of the consumers who were influenced
by the war in Ukraine have completed
university education. On the other hand, the
majority of consumers affected by the inflation
as the main determinant of their consumer
behavior, finished only elementary school.
Level of education is always related to income;
therefore, it was expected that people with
Figure 3. Factors influencing consumers – gender.
340
lower income would be more impacted by rising
inflation rates. On the other hand, people who
attended university or college are more inclined
to pay attention to non-economic issues such as
social problems or health threats, even the issue
that do not concern them directly such as
situation in other countries. Furthermore, these
consumers are more socially sensitive, and they
expand their own ideas on social issues to their
shopping habits.
Data on major external factors influencing
consumer behavior in 2022 clearly indicate that
there are differences within consumer segments
based on their age, gender, household situation
and even level of education. The biggest
differences were observed when the findings on
factors were structured by gender. The only
exception was the rising rates of inflation. It
seems that this factor impact men and women
almost equally. On the other hand, the smallest
differences were observed in segments
structuring related to age of consumers. There
were almost no notable differences in
perception of analyzed external factors with the
exception being the COVID-19 pandemic. The
younger consumers were less concerned by its
prevailing influences than consumers born
before the year 1993.
V.
CONCLUSIONS
The aim of this research was to discover the
major factors influencing consumers in Slovak
Republic in 2022. The findings of empirical
research on a sample of Slovak consumers
indicate a prevailing influence of the pandemic
on consumer behavior, however, it was
discovered that the main determinant was the
rising rates of inflation which influenced
51.04% of consumers. However, the influence
of COVID-19 pandemic on decisions of
consumers remained almost equally important.
Even though the impacts of the pandemic on life
in societies declined significantly in 2022 in
comparison to previous two years, 44.79% of
consumers still remained influenced by this
factors. Therefore, it can be concluded that the
pandemic remains fresh in minds of consumers
and its influence will disappear gradually, but
progress will be slow. On the other hand, the
influence of inflation and war in neighboring
Ukraine will probably increase in second half of
year 2022 and even further in the future until
other major disruptions appear in society. This
research also proves that factors influencing
consumer behavior are a dynamically evolving
set of determinants whose influence can change
quickly, however, the effects of such factor
prevail often long after the initial shock that had
caused it. The findings of this research and other
research studies on this topic 17-21 prove that
the influence of COVID-19 pandemic is one of
such determinants with long lasting effects.
Therefore, more research on its influences is
still needed in order to understand the nature of
pandemic´s
consequences
in
business
environment.
Findings of this research can be useful for
companies in business practice that can create
their marketing activities according to the needs
and expectations of consumers. In the near past
a lot of activities were related to pandemic,
especially the marketing campaigns. However,
this trend seems to be on decline. Therefore,
companies should focus more on the inflation
that is currently the dominant factor influencing
consumer behavior. Furthermore, we aim to
stimulate the further research into topic,
therefore the findings can serve as a guideline
for other researchers.
[8]
[9]
[10]
[11]
[12]
[13]
[14]
ACKNOWLEDGMENT
This contribution was supported by the
project No. 1/0134/22, “Changes in consumer
behavior due to the COVID-19 pandemic with
intent to predict its development”.
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341
342
PaKSoM 2022
Investigating Digital Divide in
European Rural Areas as a Barrier to
Knowledge Sharing
Anđelka Stojanović1, Aleksandra Radić2, Sanela Arsić3, Isidora Milošević4
1,2,3,4
University of Belgrade, Technical Faculty in Bor, Bor, Serbia
1
anstojanovic@tfbor.bg.ac.rs, 2aradic@tfbor.bg.ac.rs, 3saarsic@tfbor.bg.ac.rs,
4
imilosevic@tfbor.bg.ac.rs
Abstract—The challenge of a digital society is to
be knowledge-intensive, based on information,
digitalization, a smart economy and knowledge
sharing. However, every society faces equalities
and inequalities in terms of education, skills and
knowledge about the acceptance of information
and communication technologies. The digital
divide is a phenomenon that arises precisely due
to differences in the approach and way of using
digital technologies. Especially the digital divide
occurs in the domain of rural and urban areas.
Therefore, the paper aims to examine the digital
divide in European countries and determine the
level of digital development in countries in rural
areas. The EDAS multi-criteria method was used
to classify European countries in relation to
elements of digitalization in rural areas. The
study's results indicate the degree of the digital
divide in European countries.
Keywords - digital divide, rural areas, EDAS
I.
INTRODUCTION
Acquiring and sharing knowledge and
information is the main power of the present
and future times. The ability of an individual or
group to become economically and socially
successful is based precisely on the ability to
acquire knowledge and the necessary
information. Digitization is a revolution that is
happening and bringing changes to all aspects
of life and business. Therefore, countries,
companies and individuals cannot win the
competitive race unless they embrace
information and communication technologies
(ICT). Sharma and associates state that the
challenge of a society that tends to be
ISBN: 978-86-82602-00-2
knowledge-intensive is multidimensional and
based on the information and knowledge
economy [1]. Also, they underlined ICT as one
of the pillars of a knowledge society [1]. In
every society, despite the continuous
development of information and communication
technologies, not everyone has the same
opportunity to access these technologies. Also,
differences can be observed regarding the level
of knowledge, skills and education, yet
resistance to accepting information and
communication technologies. The digital divide
is a term that describes differences in
approaches and ways of using digital
technologies. Certain countries or parts of
society show a superior ability to adapt to
changes, mainly based on knowledge as a
resource. On the other hand, some parts of
society are significantly behind in this race. The
discrepancy between countries caused the
lagging in terms of investments in ICTs, PC
users' skills and Internet users' skills [2].
Whether it is a lack of infrastructure, finances or
skills and competencies, individuals, groups,
and even entire countries fail to keep up with
the changes that are taking place. In this regard,
the rapid growth of the ICTs industry, the gap in
countries' economies and social inequality result
in the emergence of a digital divide [3,4].
Rural areas represent a large part of the
territory of Europe, but they also represent areas
with pronounced negative demographic
characteristics [5]. For example, there are more
fiber optic communication systems in the
European continent than in some other
continents. However, different ICT access and
343
acceptance levels can be noticed in different
areas in the same country [6].
Therefore, the paper aims to analyze levels
of digital development in rural areas and
estimate the digital divide in European
countries. For that purpose, several evaluation
criteria were used that are in line with different
authors who used various criteria for
considering the digital divide. According to
some authors, fixed and mobile broadband were
used as determinants of the digital divide in
rural and urban areas [7,8]. One of the digital
divide indicators is also an economic factor that
causes the inability to use computers or mobile
phones to access the Internet [9,10].
E-government represents a set of services that
enable interaction between citizens, companies
and public authorities based on modern ICTs
technologies [11]. It is an important tool for
enabling better access to health care, education
or other public services [9]. In addition, another
criterion which could be included implies
financial activities refer to individuals who have
made some financial transaction through online
services offered by banks [12].
In accordance with the above, it could be
stated that the digital divide is an important
topic with several dimensions. Therefore,
measuring the digital divide between countries
can be analyzed by the mean of a wide
range of criteria.
II.
THEORETICAL BACKGROUND
The digital divide was established as a term
in the 1990s [13] to describe the perceived
growing gap between those who have access
and those who have limited (or no access at all)
and skills for using ICTs [2]. The OECD
defines the digital divide as the gap between
individuals, households, businesses and
geographical areas at different socio-economic
levels with regard to both opportunities to
access ICT and use of the Internet for a wide
variety of activities [14]. According to Hsieh the
digital divide is defined as a digitally cognitive
difference between Internet users and
individuals who do not have the technical
abilities to access Internet technologies [3]. All
those definitions of the digital divide have the
same main components: (1) it is determined by
access to ICTs, (2) it refers to individuals,
households or different areas (rural or urban)
and (3) this term includes a gap between more
and less developed countries.
344
Digitization is seen as a potential to
overcome the gap between urban and rural
areas. Therefore, the United Nations emphasizes
that ICTs can be used as an excellent way for
knowledge sharing, skills improvement, and
providing electronic services in underdeveloped
areas [15,16]. However, the population in rural
areas is getting older, and the number of
inhabitants is constantly decreasing [17,18].
Moreover, many rural areas face a lack of
essential infrastructure elements (absence of
broadband coverage, poor roads, isolated
households, inaccessible terrain) [19,20]. Public
institutions, educational institutions and large
businesses mostly associate their functioning
with urban environments, even when the
purpose of their business is related to the rural
areas (faculties of agriculture, companies
engaged in food production and processing,
centers for innovation and development of
agriculture, etc.). Opportunities to start and
succeed in business are also limited in rural
areas due to the distance between buyers,
suppliers and market access. Morris and
associates especially emphasized the influence
of low connectivity in rural areas on business
activity [21]. Tiwasing and associates mention
connectivity, low level of digital skills of the
workforce and cyber vulnerabilities as the most
significant challenges for rural businesses in the
digital era [22]. As a result, companies are
unable to pursue diversified activities, which
limits their ability to grow and develop
resilience during economically challenging
times.
By adding digitalization to the problems of
rural areas mentioned earlier, the gap between
rural and urban areas has only deepened. As a
result, the population that remains in rural areas
is at greater risk of falling into the category of
marginalized social groups, while in urban
areas, the use of ICT among the population is
experiencing expansion. Consequently, the
success of digitization adoption in a society is
measured by the level of people's participation
in economic development through the use of
ICT. Therefore, the goal of every state
administration is to reach out to those social
groups that remain outside the current digital
changes and to make an influence in
diminishing existing gap constantly.
Digital technology transfer from urban to
rural environments should be implemented
through three phases. The first stage of the
integration of digital technologies is the
provision of adequate infrastructure. Digital
infrastructure means providing broadband
coverage and devices required for Internet
access [23]. This is a fundamental and necessary
prerequisite for overcoming digital inequality in
rural areas. The consequences of the rural
digital divide on the rural population's economy
and social status are significant [24]. Recently
the great attention of policymakers and
broadband suppliers has focused on overcoming
this gap. The next stage is the acceptance of ICT
by the rural population. The lack of broadband
access furthermore limits the acceptance of
digital technologies [25]. But, when the
problems of connectivity are overcome, as has
been done to a large extent in recent years, it is
necessary to work on the adoption of ICT by the
rural population, as well as on their training in
the use of ICT [26]. The resistance that occurs
may be a consequence of the demographic
characteristics of the rural population, such as
gender, ageing and migration. Another reason
for the profound resistance to the acceptance of
ICT is the lack of knowledge and skills for the
adequate use of ICT [27]. Studies found that
young people who used the Internet at school
and home developed higher computer and
Internet skills and showed better academic
performances later and more increased
preparedness for a knowledge society. Also,
research showed digital skill differences even in
the case of children living in rural areas
compared with urban ones [28]. The third phase
is the creation of appropriate content for the
rural population. The contents and services
offered via the Internet often do not meet the
needs of the rural population and are not
adapted to their level of understanding. Digital
financial inclusion presupposes a combination
of ICT and finance by providing a wide range of
digital services which are more efficient and
less costly [29]. Nevertheless, the authors Niu
and associates conclude that for the full
utilization of digital technologies for financial
inclusion, it is necessary to increase the
effective adoption of financial activities through
more targeted and adapted activities, especially
for residents of rural areas who have a lower
level of digital skills and financial experience
[29]. Also, e-government initiatives are largely
unexploited, especially in rural areas. Although
significant efforts and means are being made to
reduce the digital divide by enabling access to
public services through ICT, some of the main
challenges, according to Sharma and associates
are a lack of digital literacy in rural areas and
low awareness of e-government services [30].
Based on the literature review, it can be
concluded that the level of rural digital
development is assessed by achievements in all
three mentioned phases [25,29,30]. The
indicators of the digital level must contain
information about fixed and mobile broadband
and devices used for Internet access to evaluate
the success of the first phase of digitalization.
For the second phase, the intensity of Internet
use by individuals in rural areas, who have
access to the Internet, and the use of online
services, such as purchasing and searching for
necessary information, should be assessed.
Finally, as the highest level of digital
technologies implementation, the involvement
in activities that enable the realization of
economic and social rights, such as financial
activities and e-government services, must be
evaluated. In this sense, the adaptation of
Internet content to the rural population's needs
is assumed in order to achieve inclusion in
modern society.
III.
METHODOLOGY
According to the literature [2,3,31], there is
increasing interest in researching the digital
divide, especially in the domain of rural and
urban areas. For that purpose, a lot of Multiple
Criteria Decision Making (MCDM) methods
were used. Chang and associates generated five
dimensions (including ICTs infrastructure,
human resources, external environment, the
internals of the organization, and information)
and 42 measures for the digital divide using the
Analytic Hierarchy Process (AHP) [32].
Banihashemi and Rejaei used the Technique for
Order of Preference by Similarity to Ideal
Solution (TOPSIS) for ranking Asia countries in
domain of the digital divide through several
criteria [33]. Bahnamiri and associates applied
the Fuzzy TOPSIS technique for ranking
countries in terms of the ICT Development
Index (IDI) taking in consideration 69 countries
and 11 criteria [34]. According to this, it can be
said that there is possibility for applying
MCDM techniques in the domain of
investigating the digital divide among countries.
In this paper, the Evaluation Based on
Distance from Average Solution (EDAS)
method was used to compare the levels of
digital development in rural areas between
countries. The EDAS method was developed by
Keshavarz and associates [35,36]. It is based on
345
determining the distance alternatives have in
relation to the average solution, whereby
alternatives are finally ranked according to the
decreasing values of the appraisal scores. The
best-ranked alternatives should have the highest
PDA value and the lowest NDA value. The
EDAS method is a relatively new method that
researchers use, mainly when multicriteria
models consist of incompatible and conflicting
criteria [37,38]. The steps for applying EDAS
methods are presented in Fig.1.
there is no data on digital-level indicators
measured at the level of settlement type in the
EUROSTAT database [39].
In the model proposed in this research,
alternatives are represented by 32 European
countries for which data are available in the
Eurostat database. The study did not consider
certain countries of Eastern Europe because
It is possible to perform a ranking based on the
obtained AS values for each country. The rank
of countries and AS values are presented
in Table II.
The criteria are represented by previously
determined indicators of the digital level. These
criteria are linked to the digital level as
beneficial criteria in the model. The weights of
the criteria are equally distributed in order to
perform the ranking of the countries. Initial data
in the ranking process are presented in Table I.
Define alternatives and criteria and
construct a decision matrix
Determine the average solution AV
AV j
Calculate the positive distance from average (PDA) matrixes
PDAij
PDAij
max 0, X ij AV j
AV j
max 0, AV j X ij
AV j
, if j
, if j
n
i 1
X ij
n
Calculate the negative distance from average (NDA) matrixes
th
criterion is beneficial
NDAij
th
criterion is non-benefic ial
NDAij
max 0, AV j X ij
AV j
max 0, X ij AV j
AV j
, if j
criterion is beneficial
, if j
criterion is non-beneficial
th
th
Determine the weighted sum of PDA
Determine the weighted sum of NDA
SPi j 1 w j PDAij
SN i j 1 w j NDAij
Normalize the values of SP
Normalize the values of SN
m
m
NSPi
SPi
max i SPi
NSN i 1
SN i
max i SN i
Calculate the appraisal score (AS)
AS j
1
NSPi NSNi
2
Rank the alternatives
Figure 1. Flowchart of the EDAS method (based on [35]).
346
TABLE I.
INITIAL DATA FOR RANKING COUNTRIES USING EDAS.
Fixed
Mobile
Use desktop Use mobile Internet
broadband broadband computer
phone
use
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech
Denmark
Estonia
Finland
France
Germany
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
N. Macedonia
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
Switzerland
UK
68
80
42
65
79
68
84
80
48
62
87
61
74
92
69
54
50
57
90
59
98
61
88
55
61
51
67
77
62
85
87
94
TABLE II.
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
66
33
53
50
3
29
41
77
87
38
66
20
65
52
44
40
46
49
45
33
49
60
68
52
38
50
39
79
68
59
76
61
41
34
17
67
19
41
30
31
32
38
35
20
24
47
31
34
33
21
46
31
47
25
34
20
27
14
28
40
26
34
47
na
84
81
63
67
85
73
88
76
86
75
74
60
73
95
92
74
76
77
87
67
91
78
95
75
68
75
76
83
91
91
96
na
85
90
55
73
80
84
96
89
92
89
92
62
74
99
89
72
83
76
95
65
97
77
98
74
64
66
79
78
86
96
95
91
Internet Financial E-government
purchases activities
activities
51
57
9
33
24
37
70
53
50
57
71
27
31
62
54
26
27
32
64
50
68
18
64
33
21
12
42
41
42
69
72
76
7
11
5
4
2
12
19
52
34
10
18
3
8
46
33
6
28
14
12
7
37
1
43
2
7
1
8
7
7
40
17
51
70
59
25
33
50
54
92
80
87
75
59
52
53
89
61
23
70
55
60
50
81
25
87
40
41
12
59
53
58
86
75
63
THE RANK OF COUNTRIES BASED ON DIGITAL LEVEL IN RURAL AREAS.
Country
Iceland
Norway
Estonia
Netherlands
Sweden
Switzerland
Finland
Denmark
United Kingdom
Germany
Ireland
Luxembourg
Austria
Slovenia
Latvia
France
ASi
1.000
0.957
0.927
0.923
0.907
0.820
0.784
0.688
0.673
0.670
0.657
0.625
0.541
0.505
0.496
0.487
Rank
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Country
Belgium
Spain
Croatia
Czechia
Hungary
Slovakia
Lithuania
Malta
Poland
Italy
Portugal
North Macedonia
Cyprus
Greece
Bulgaria
Romania
ASi
0.475
0.430
0.385
0.382
0.349
0.345
0.327
0.281
0.191
0.181
0.171
0.166
0.124
0.088
0.017
0.000
347
Figure 2. Digital level in rural areas by countries.
IV.
DISCUSSION
In this research, the model which ranks 32
European countries according to digital-level
indicators is developed. For collecting the data
on digital-level indicators measured at the level
of settlement type, the EUROSTAT database
was used.
After completing the ranking, a Pareto
analysis was applied to further analyze the
digital level in rural areas in Europe. The
countries are grouped according to the level of
influence of the AS result, where the group of
countries with a high digital level in rural areas
includes those countries that have up to 80%
influence, the group of countries with a medium
digital level in rural areas includes countries
with 15% influence. Finally, the remaining
countries characterized by a low digital level are
classified in the third group. The results
obtained by Pareto analysis are presented
in Fig.2.
V.
CONCLUSION
Digitization provides new opportunities for
fulfilling economic and social goals because of
its broad influence. People who have access to
the Internet have access to various content that
supports learning and knowledge transfer.
348
Tiwasing and associates single out key areas of
digital technologies' impact, such as economic
development, information flow, knowledge
transfer, electronic services, education and
health services [22].
Rural areas need the same opportunities and
access to information as urban areas.
Nevertheless, the digital divide between urban
and rural areas evidently exists and tends to
deepen. In the competitive global environment,
communities, companies and individuals living
and operating in rural areas must embrace
modern information and communication
technologies in order to be competitive with
their urban counterparts.
The Eurostat database enables the
monitoring of digital level and digital
differences, both at the level of countries and
the level of the settlement type in which people
live. Therefore, the paper aimed to analyze
levels of digital development in rural areas and
estimate the digital divide in European
countries, based on which classification of
European countries was made. From the point
of view of the digital level in rural areas, the
existence of regional digital divisions, in
addition to the digital divide between urban and
rural areas, is analyzed. The results indicate
significant regional differences, where the
countries of Northern and Western Europe are
grouped as those with a high digital level in
rural areas, while the countries of Southern and
Eastern Europe are with a medium and low
level of digital development.
Releasing the potential of the rural
population in the direction of accepting and
using digital technologies plays an important
role in the future of rural communities as well as
the economy of regions and countries. This
research's theoretical and practical implications
indicate the necessity to develop specific
programs by policymakers in order to the rural
population accept and utilize digitization in
areas with a lower digital development rate.
[7]
[8]
[9]
[10]
[11]
ACKNOWLEDGMENT
The research presented in this paper was
done with the support of the Ministry of
Education,
Science
and
Technological
Development of the Republic of Serbia, within
the funding of the scientific research work at the
University of Belgrade, Technical Faculty in
Bor, according to the contract with registration
number 451-03-68/2022-14/200131.
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PaKSoM 2022
Quis custodiet ipsos custodes: Ethical
Dillemmas of the KM Governed by AI
Željko Bjelajac1, Aleksandar M. Filipović2, Lazar Stošić3
1
2
Faculty of Law for Commerce and Judiciary, Novi Sad, Serbia
Faculty of Economics and Engineering Management, Novi Sad, Serbia
3
Don State Technical University, Rostov-on-Don, Russia
1
zdjbjelajac@gmail.com, 2sasha.filipovic@gmail.com, 3lazarstosic@yahoo.com
Abstract—Knowledge Management (KM) has
become one of the most discussed issues both in the
academic community and among people directly
working in the field of information technology
(ICT). However, regardless of the academic level,
the engineering and technological aspects of the
phenomenon are mostly discussed. The essence of
knowledge, its sources and dissemination, the
questionable need to store all human knowledge in
one place, the motives of knowledge givers and
seekers, have received less attention in the
literature than their importance dictates, both in
terms of practical results and ethical issues. This
paper aims to try to identify some of the ethical
aspects of knowledge management, in order to
show that much of the current discussion ignores
or underestimates the well-known aspects of this
topic, especially the risk of the “dark side” of KM
and AI, which, if they were to develop, as before,
freely and without the broadest social control,
could threaten “life as we know it”, and especially
its greatest value, human freedom as the first in the
primary series of values of human life.
to his choice. In earlier works on similar topics,
we have already written about new technologies,
especially AI technology, which residentially
produce modern global superheroes, such as
Moore's Watchmen or, simply, “keepers” of
knowledge, all with the aim of unauthorized
creation and implementation of a new model of
institutional justice. This makes sense in the
light of the thesis of this work, because the
behavior of creators and apologists of feverish
and at times hysterical storage of their human
knowledge for the sake of later rational
distribution of its postulates, implies the attitude
that ordinary people are not capable of judicious
moral reasoning, so that's why they need
guardians with superhero powers: to protect
people from themselves. Everything as in the
Jesuit exclamation: Omnia ad maiorem Dei
gloriam, with the fact that here, instead of the
good Lord, profit corporations, new weapons
and the military power of the Governments
appear as beneficiaries of the glory.
Keywords – knowledge management, artificial
intelligence, Big Data, ethics, risks
Quis custodiet ipsos custodes is a Latin
interrogative phrase written by Juvenal in his
Satire. A phrase can have several similar
meanings, so it is translated according to the
desired meanings. In literature and dictionaries,
it is most often translated as the question: “Who
will guard (supervise) the guards themselves?”
This is because of the notorious attitude that no
one should be outside and above control and
supervision, especially not those who, by law or
some other rule, have power over other people.
This saying can also be interpreted as an
expression of ancient democracy's concern for
the possible arbitrariness of people exercising
power. The practice of public life shows that this
I.
INTRODUCTION
No matter how much it seems that the
phenomenon of KM is mystified and
epistemologically almost enchanted, there is a
man behind it. There are big corporations and
big governments with their interests, which are
believed to be not always aligned with the
interests of man. At the center of this work could
be found the question of who and how can or
must distribute justice, that is, to declare himself
the owner of the world's quantum of knowledge
and to give it or not to give it to others according
ISBN: 978-86-82602-00-2
351
concern throughout the history of the state and
government was always justified and necessary,
but never sufficient to prevent or limit the
abusive arbitrariness of any government.
Practice has also shown that the “guards” always
and easily build a system that allows them the
status of untouchability, impunity and
irreplaceability. That is why we consider it
necessary to use the phrase mentioned in this
paper as a question: Who will protect us from the
guards themselves?
Considering that we will be proverbially
methodical, logical and suspicious in our work,
we believe that we cannot, beyond any
reasonable doubt, assume that, regardless of all
the benefits of knowledge and the way in which
knowledge is interpreted, conceptualized or
experienced, KM processes managed by AI
always have a desirable outcome, and be useful,
if not for all of humanity, at least for a significant
number of the planet's inhabitants. We will start
from the fact that seems indisputable to us, that
there are shades of desirable and undesirable
KM experiences, processes that require
scientific doubt and critical discussion [1]. In
this paper, we will try to point out some ethical
risks of knowledge management, which,
packaged in ICT, has been given the name Big
Data, and which, due to its own cerebral limits,
cannot be managed by humans, so they entrusted
that work to machines, that is, to the
phenomenon we call software artificial
intelligence (AI). But software AI is just a series
of ones and zeros that were written out in the
necessary order and made operational by
humans. By controlling AI, these same people
will control Big Data and, perhaps, why not, at
the behest of states and corporations, ultimately
determine who, when and how, and above all,
with what intention, will have access to the
world's quantum of knowledge. These people
will necessarily become “guardians” not only of
knowledge, but also of all the consequences of
privileged possession and “knowledge” of
knowledge. Because of the power they could
have, these “guardians” could become
Nietzsche's supermen (Ger. Übermensch) [2],
where Nietzsche's concept of the superman is
not about some superior race of people. A
superman is just someone who is no longer
dependent on external and imposed influences
and goals of society. This is someone who is
ready to set clear, honest and realistic goals for
his own world. The superman therefore sees
happiness in the pursuit of higher goals of
352
being [3], goals that he determines himself,
necessarily alienating himself from the common
man, their benefits, and any empathy that the
superman is not interested in.
Will the powers (possibilities) that the
“guardians” can have been divine or diabolical?
Will that world of controlled sharing of
knowledge be a world with ethics or will St.
Augustine's privatio ethicae prevail. If there are
ethics, surprisingly, will the “keepers” prefer
Kant's deontological ethics of duty and
categorical imperative, or will they prefer the
utilitarian teleological ethics of benefits of
Bentham and Mill. The impact of the world of
privileged shared knowledge on the freedom of
man will also be important, who, even without
Big Data managed by AI, has already delegated
most of his freedom to the collective [4].
II.
FROM INFORMATION AGE TO AGE OF
KNOWLEDGE
In the times of digitalization, globalization
and the fourth industrial revolution, the total
knowledge registered by humanity increases
dramatically every day, and the amount of
information and data generated in every area of
life becomes unimaginably huge. We got the
term Big Data. The term refers to collected data
sets that are so large and complex that they must
be processed by artificial intelligence.
Extracting actionable knowledge from the
vast amount of digital information available is
the next step in the ongoing evolution from the
“Information Age” to the “Knowledge Age” [5].
On the other hand, the big data paradigm is an
understudied technological innovation for now.
The diffusion of technological innovations is
never instantaneous and uniform, but inevitably
creates divisions during the process of diffusion
through social networks [6]. As with all previous
examples of technology-based innovations for
development, the big data paradigm is
undergoing a slow and uneven diffusion process
that is hampered by a lack of infrastructure,
human capital, availability of economic
resources,
and,
often,
institutional
frameworks [5].
The size and number of available data sets
has grown exponentially since data is collected
by devices such as resident sensing mobile
devices, antennas (remote sensing), software
logs, cameras, microphones, radio frequency
identification (RFID) readers, and wireless
sensor networks [7]. Since the beginning of the
eighties, the world's technological capacity for
information storage per capita has doubled every
40 months [8]; as of 2012, 2.5 exabytes (2.5×260
bytes) of data are generated every day [9]. Based
on the IDC report, the global volume of data
between 2013 and 2020 grew exponentially
from 4.4 zettabytes to 44 zettabytes [10]. IDC
predicts that by 2025 there will be 163 zettabytes
of data. According to IDC, global spending on
big data and business analytics (BDA) solutions
is estimated to reach $215.7 billion by the end of
2022 [11], while Statista predicts that the global
big data market will grow to 103 billion of
dollars by 2027 [12]. McKinsey & Company
reported in 2011 that if US healthcare used big
data creatively and effectively to increase
efficiency and quality, the sector could create
more than $300 billion in value each year. In the
developed economies of Europe, government
administrators could save more than 100 billion
euros just by improving operational efficiency
by using big data, and users of services enabled
by personal location data could realize 600
billion dollars in consumer surplus [12].
Nowadays, large amounts of structured and
unstructured data are collected. Google
processes 24x1015 bytes (petabytes) of
information per day. Facebook collects 3 billion
likes and comments every day and downloads
around 10 million images every hour, while on
YouTube, every second, 800 million users store
videos lasting over an hour.
Big data has led to a fundamental change in
its definition, it has changed people's
consciousness, created additional dimensions of
understanding, and led to changes in the
organization of society. The definition of big
data was conditioned by at least three major
changes in a different understanding of data. The
first change refers to the great variety and
amount of data, the second to the renunciation of
accuracy in exchange for the bigger picture, and
the third to the need to replace causation
with correlation.
III.
DUAL ETHICS OF SYSTEMS
The ethics of KM can generally be viewed in
two ways, as the “internal ethics” of the inner
system in which there is a struggle between the
deontological and teleological understanding of
good and evil and benefit and risk, where both
sides insist on, in principle, coherent arguments
in their favor. According to some researchers
[13], KM traditionally implies, in flagrante, a
positive view of working with knowledge,
believing that corporations and governments
extract, accumulate, distribute, and, correctly,
with the best intention and for positive purposes,
they use basic knowledge to improve the
decision-making process, increase their
efficiency and competitiveness, increase
innovation, protect intellectual property [13].
But there is another, dark side of KM [14],
where knowledge and information are withheld,
dosed, emphasized, or distorted, where they are
controlled, manipulated, or artificial obstacles
are created for the dissemination of knowledge
based on the rational interests, or emotional state
of certain stakeholders. In the management of
KM, meaning Big Data, there is always a
conflict between two parties, a contradiction
between the common good and private, not
infrequently, evil interest, freedom of
information, and protection of privacy and
intellectual property of individuals and
organizations [15].
However, our topic is broader than the inner
space of Big Data and includes ethical dilemmas
that go beyond the framework of the system and
that correlate dramatically with the roots of life
as we know it. In an earlier paper [16], we noted
that the World Economic Forum (WEF)
formulated and published its view at the end of
2016 on the basic fields of social life in which
serious disruptions could occur if, before or
during the announced implementation of KM
technological solutions and AI does not solve
looming ethical questions [17]. WEF experts
started from the thesis that new technologies
change everyday life and raise ethical questions
that never existed before. “The changes in the
life of humanity that artificial intelligence can
and already brings are difficult to compare with
what appeared before. Optimizing logistics,
detecting fraud, conducting research, and
implementing translations, smart computer
systems are changing our lives for the better. In
many cases, this is a new frontier for ethics and
risk assessment as much as for new
technologies” [17]. Facial recognition, hidden
systems such as voice assistants, and systems for
assessing the reliability of the client's financial
ability, in addition to advantages, also carry
serious risks. Digital technologies increasingly
lead to the “democratization of our vulnerability,
that is, to its increase” [18].
The introduction of the latest technology into
almost all areas of modern society has led the
Vatican to define ethical standards for the use of
353
artificial intelligence (AI) in the interest of the
common good and social justice. Without
questioning the benefits brought by scientific
and technological progress in aviation, the space
industry,
medicine,
natural
sciences,
communications, etc., church bishops and the
Catholic media constantly repeat that the future
of humanity depends on the creators of new
technology, more precisely, on how correct their
idea of the public good, the nature of human
experience and social justice will be [19,20].
Agreeing that the conquests of civilization are a
fact without which today's life is unimaginable,
Catholic researchers evaluate the prospects for
the development and use of artificial intelligence
in different ways. Optimists believe it can be
controlled; pessimists tend to see AI as a
manifestation of the “new anti-humanism”. The
principle of utilitarianism, embedded in artificial
intelligence systems, can eventually nullify the
bright individuality of a person or the pluralism
of views [19,21].
IV.
THE COUPLING OF KM AND AI AS AN
EXISTENTIAL RISK
Although numerous studies indicate that the
risk of unauthorized use of AI, regardless of
whether it is interaction with KM or something
else, is more in the nature of humans than in the
nature of artificial intelligence, scientists have
long warned humanity that the “robot
awakening”, which at the current level of
development includes smart machines based on
software AI, would be especially destructive,
but not the impossible development of events
could mean, if not the disappearance of the
world, but its transformation into a world
immanent to man and his mental apparatus.
Without diminishing the benefits that new
technologies have brought to the world, the
scientific community, excluding a large group of
roboticists, electronics, and others, does not hide
its concern about the growing development of
artificial intelligence and its penetration into the
vital spheres of public and private life. Installing
systems based on neural networks of deep
learning and self-learning, using machines that
are many times ahead of humans in analyzing
data and speed of decision-making, according to
scientists, humanists, and futurists, over time
can not only displace the human person from
many areas of employment, but it can also
destroy her mental apparatus, determine or
change her inclinations, habits, communication,
even destiny, threaten the inviolability of
354
privacy and lead to the destruction of the
freedom of the human being.
Even
now,
without
the
massive
implementation of AI, Big Data, and KM, we
have the suspicion, or the fact, that the world's
life flows are ruled by a very small number of
people and that they rule in accordance with
their interests [22]. That number of people could
decrease in the future, which is less likely, or the
same number of oligarchs could increase their
power and the way to influence the daily life of
people, societies, and countries. It is hard to
believe that this will lead to a better and easier
life for billions of people on Earth. Those
billions of people will hardly benefit from KM,
AI, and technologies based on it, although it is
not disputed that it will be useful for someone.
Scientists claim that the concentration of
metadata, power, and wealth in the hands of a
few people can make the entire system fatally
non-transparent and “opaque”, which will
certainly lead to an increase in social
contradictions and lead to the deterioration and
drastic violation of the democratic rights and
freedoms of citizens and peoples.
Scientific papers only sporadically talk about
a kind of attack of AI-based technologies on the
ontological being of man, an attack that could, if
not, extinguish man as we know it, and that
could dampen his natural impulses. A superintelligent machine could dramatically change
the nature of human existence. Russell wrote
that “people who live outside a certain limit of
the natural will most likely be filled with envy,
malice, selfishness, anger. They can become
angry and cruel, or, on the other hand, they can
completely lose the joy of life, so much so that
they no longer have the strength for any
effort” [23]. At the same time, we are not talking
about one or a hundred or a thousand people. We
are talking about possible billions of people
displaced from the multi-millennium cradle of
their being. Eighty years ago, Fromm
prophetically wrote: “He (man) has freed
himself from external bonds that prevent him
from acting and thinking as he sees fit. He would
be free to act according to his own will if he
knew what he wanted, thought, and felt. But he
doesn't know that. He conforms to anonymous
authorities and adopts a personal self that is not
his own. And the more he does it, the more
powerless he feels, and the more he is forced to
consider himself. Despite external optimism and
initiative, modern man is overwhelmed by a
deep sense of powerlessness, which makes him
watch impending disasters unblinkingly as
if paralyzed” [4].
Recognizing that at the current stage of its
history, humanity does not want to think about
itself outside of KM and AI technology,
scientists, especially philosophers, sociologists,
and theologians, are still not ready to entrust the
development of the ethics of artificial
intelligence to engineers and technicians.
Distrust in new technologies, above all in
cognitive AI technology, is explained by the
prevailing social idea of the neutrality of
science, and the demarcation of the
competencies of the scientific and legal spheres.
We think that the world is facing an academic
conflict between the protagonists of power and
the protagonists of the security of the Planet and
“life as we know it”. It will not be the first
conflict of its kind, but it will be resolved as all
such conflicts have been - with an easy victory
for the power apologists. As usual, this initially
innocuous power will quickly and easily turn
into financial and military power. This does not
mean that the world has come to an end, but it
does mean that it is necessary to consider how
technology is used or misused.
The technology of collecting, storing,
processing and distributing knowledge has
already reached a stage where it cannot exist
without a machine that is many times smarter
and faster than a human and at the same time has
no ethical scruples, nor a selection of goals
acceptable to humanity. Scientific papers even
state the high level of “criminal potential” of AI
[24], claiming that it is a multi-faceted
“dangerous machine” and that it will become
more dangerous every day. History has taught us
that behind every dangerous machine or
dangerous invention is an equally dangerous
man who naively believes that he can control it
[25]. Here we quote Musk: “With artificial
intelligence, we are summoning the demon. In
all those stories where there’s the guy with the
pentagram and the holy water, it’s like yeah,
he’s sure he can control the demon. Didn’t
work out” [26].
V.
IGNORING ETHICS OF KM AS AN
EXISTENTIAL RISK
The combination of Big Data and AI could
give rise to a hitherto little-known civilizational
risk. Security experts claim that the nuclear arms
race can be expected to be replaced by a global
autonomous arms race. Russian President
Vladimir
Putin
announced:
“Artificial
intelligence is the future, not only for Russia, but
for all of humanity. It comes with enormous
opportunities but also threats that are difficult to
predict. Whoever becomes the leader in this
sphere will become the ruler of the world” [27].
The AI machine does not understand human
ethics, nor does it understand the human need for
ethics, because ethics only makes it more
difficult to achieve the goal set before the
machine. Let's remember how little John Connor
taught the Terminator that, fulfilling his goal, he
must not kill people unnecessarily. Part of what
people appreciate about AI machines is their
efficiency and effectiveness. But if we are not
clear about the goals we set for AI machines, it
could be dangerous if the machine has not
adopted the same goals and ethics that humans
have. Commanding an autonomous car to “Take
me to the airport as soon as possible” can have
dire consequences. Without specifying that
traffic safety rules must be followed because we
value human life and property, the machine
could quite effectively achieve its goal of getting
you to the airport as quickly as possible and
doing literally what you asked but leaving
behind a bunch of accidents [27].
We explain this ethical aporia with a
different understanding of the essence of the
ethics of artificial intelligence, which could also
be non-ethics. Engineers of all professions as
well as scientists of a naturalistic provenance are
engaged in translating existing and even
outdated ethical concepts into machine
language, not realizing that at the current level
of software AI, any internal ethics of the
machine is useless. The machine does not
understand ethics, has no emotions and does not
distinguish
between
good
and
evil.
Philosophers, sociologists, humanists, and
theologians - deal with the ethics of the
relationship between humans and intelligent
machines, and, especially, when the time comes,
the very ethics of the use of artificial
intelligence, which would have to evolve by
accepting into its ontological and even
metaphysical corpus the flagrant novum,
humans a hitherto unknown artificial entity with
its understanding of good and evil. It will be a
new ethic, an ethic of biomimetic sensibility that
people could “on the fly” adapt to new entities,
creating that new ethic - why not - together with
them. Of course, the future of “life as we know
it” does not have to be this pessimistic and
dystopian. But that means that today we need to
355
do something, and we need to prevent or at least
postpone something.
The general question that many try not only
to ask, but also to deliver to a competent place
is: how wise is it to persist in constructing a
machine that is many times smarter and more
capable than humans? At the same time, we are
not talking about the present time, but about the
time that is decades ahead of us, the time when
the machines that we admire today and raise to
the pedestal of deities will be many times better,
faster and smarter. A being with human
intelligence (man) only governs himself limited
by system limits, other people, morality and law.
An AI machine should be managed and
controlled by a human. But which man? A
human controlling an AI entity would have all
the power of the entity itself. Anything that an
AI entity can do, its controller could do as well.
Let's imagine what a challenge it would be and
how we would prevent the controller from
becoming “The Pied Piper of Hamelin”?
How can humans control a complex smart
system? Here we are not asking how one person
can do it, but how a human community
organized into a sustainable society can do it.
The reason humans are at the top of the food
chain is not because they have sharp teeth or
strong muscles. Humanity's dominance of the
planet is almost entirely built on human
intelligence and ethics. We can defend ourselves
from larger, faster and stronger animals or derive
benefits because we can create tools to control
them. This raises a serious question about
artificial intelligence: could one day AI have the
same advantage over us? We can't just rely on
pulling the plug out of the socket, because a
sufficiently advanced machine will be able to
anticipate this step and protect itself. Does
anyone give enough thought to the moment
when human beings cease to be the smartest
on Earth?
How can we protect ourselves from
unwanted consequences? What if artificial
intelligence itself turns against humans by
interpreting in its own way what is best for
humans? Let's recall the plot of the movie The
Emerald Forest. This does not mean that AI will
become “evil” in the way that humans perceive
evil, or in the way that Hollywood movies
portray it. On the contrary, we can think of an
advanced artificial intelligence system as a genie
in a bottle that fulfills our wishes, but with
possible dire, unintended consequences. In the
356
case of the machine, it will not be anger, but a
lack of understanding of the whole context in
which the desire is expressed.
There is no reason to believe that the goals of
AI-driven KM are a priori biblically just and
beneficial. If for no other reason than the fact
that people, even experts who deal with the very
essence of the phenomenon, do not know
enough about all aspects of what they are
working on. The scientific community needs
evidence that under no circumstances will the
machine turn against man, nor in any way
threaten the essence of his being. Engineers
believe that fear is unjustified, but one should
not rush to conclusions.
VI.
CONCLUSIONS
KM is emerging as a relatively new field of
study. Most of the works that try to describe
KM, especially the interaction of KM and AI,
offer an engineering, thus technical and
technological point of view. That is good, but it
is not enough, and that is why it is very
important not only to describe but also to review
the ethical aspects of using KM systems and
processes. Most of the published texts on KM
systems and practices are still based on the
unquestioned belief that such systems and
practices are naturally benign and that they are
necessarily designed, implemented and used to
improve the condition of humanity and human
well-being. However, this is only one side of the
phenomenon. On the other hand, we have
justified doubts that reveal that many other
aspects of AI-driven KM have bad goals or, at
the very least, are selfish and do not result in the
desired or planned improvements. Stanford
University believes that “AI systems are proving
increasingly useful in real-world applications.
But they have expanded their reach, causing the
risk of abuse, overuse, and explicit abuse to
spread. As the capabilities of AI systems
increase and are more fully integrated into
societal infrastructure, the implications of losing
significant control over them become
increasingly worrisome. New research efforts
aim to reconceptualize the fundamentals of the
field so that artificial intelligence systems are
less susceptible to explicit and misspecified
goals. A particularly visible danger is that AI
may facilitate the creation of machines that can
spy and even kill on a large scale. But now there
are many other more important and subtle
dangers” [28]. However, it seems that the
scientific community is late in competently
explaining the crucial ethical and existential
risks of using AI, in general, and especially for
controlling Big Data. One gets the impression
that the unexpected “intelligence explosion”
[29] surprised and caught the scientific
community unprepared, which is struggling very
hard with deeply embedded, fundamentally
wrong ethical stereotypes about the relationship
between good and evil in the world of AI.
That technological development is a priori
good is the first ethical characteristic associated
with AI technology. The idea of the moral
neutrality of technology is deeply embedded in
the common understanding of how the world
works. It is not the gun that kills, but the man.
The algorithm is not even alive and especially
not conscious, nor it has free will; so how then
can it be morally responsible? This, of course,
does not mean that it is impartial, which, again,
does not accuse the algorithms but their creators.
Sheila Jasanoff, a professor at Harvard, in the
book “The Ethics of Invention”, points out that
optimism is unquestionably associated with
technologies a priori. Everything that happens
negatively with technology falls under
unintended consequences [30]. It is almost never
suspected that anyone had bad intentions with
the technology. However, algorithms can very
well be developed with bad intentions, for
example, due to data theft or hacker intrusions
into systems. The second feature is even more
interesting, namely the various forms of
responsibility shifting when using AI
technology. Most often, the responsibility is
shifted to the profession and to the technology
itself. The use of technology requires a clear
definition of who assumes responsibility and
risk. Although the danger is most often noticed
by experts, they only assess the degree of risk
and report on it but do not make decisions.
Decisions are made by others, who refer to
experts [31]. In this way, responsibility is
avoided, and the action of the ethics of
algorithmization is minimized.
Key principles of algorithmization ethics and
new regulations in the field of AI must be
constantly improved to promote transparency
and respect for ethical principles, especially for
advanced technologies that have a greater risk of
impacting human rights, such as facial
recognition. To achieve these goals, we must
start from the very beginning of the development
of each algorithm with an “algorithmic-ethical”
vision, that is, a design approach to ethics.
Designing and planning an artificial intelligence
system that we can trust involves seeking
consensus among political decision-makers,
agencies
of
the
OUN
and
other
intergovernmental organizations, researchers,
academia, and representatives of nongovernmental organizations regarding the
ethical principles that should be embedded in
these technologies. For this reason, the scientific
community expresses its desire to work together,
in this context, at the national and international
level, to promote the “algorithm of ethics”,
meaning the ethical use of artificial intelligence,
defined by the principles of transparency,
inclusion,
responsibility,
impartiality,
reliability, and respect for user privacy [32].
Since machines can collect, track, and
analyze so much about people, it's very possible
for those machines to use that information
against a human. Any powerful technology can
be abused. Today, artificial intelligence is being
used for many good purposes, including helping
us make better medical diagnoses, finding new
ways to cure serious diseases, and making our
cars safer. Unfortunately, as the capabilities of
artificial intelligence expand, we will also see
them being used for dangerous or malicious
purposes. As AI technology advances rapidly, it
is vital that we begin to discuss the best ways to
develop AI-governed KM while minimizing its
destructive potential.
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PaKSoM 2022
Industrial Property Rights as Types of
Capital in Commercial Companies in
Turkish Law
Mustafa Yasan1
1
İzmir Democracy University Faculty of Law, İzmir, Türkiye
1
avmyasan@yahoo.com
Abstract—Industrial property rights are regarded
as a sub-type of intellectual property rights and
regulated in the Industrial Property Code, which
is a unique and specific codification. Industrial
property rights are among the assets that can be
brought to commercial companies as capital in
kind. However, there is a prerequisite that must be
fulfilled for this possibility. That is, the industrial
property right must be registered in the special
registry which will be kept by Türkiye Trademark
and Patent Organisation. For industrial property
rights to be brought as capital in kind, the
commitment related to industrial property rights
must also be registered in their special registers.
Otherwise, the registration request of the
commercial company will be rejected by the trade
registry officer. For this reason, if the industrial
property right is committed as capital, a result
such as not letting the company initiative be
established as a sanction for not fulfilling this
commitment arises.
Keywords - industrial property rights,
commercial companies, capital commitment, Turkish
company law, intellectual property rights
I.
INTRODUCTION
This study focuses on bringing industrial
property rights to commercial companies as
capital in terms of Turkish law. Industrial
property rights can be committed to commercial
companies as capital in kind. However, the
condition that must be fulfilled for this
commitment to be valid is that the industrial
property right is registered in the special registry.
Only registered industrial property rights can be
brought to commercial companies as capital. In
addition, other conditions have been regulated in
the scattered articles of the Turkish Code of
ISBN: 978-86-82602-00-2
Commerce No. 6102 (TCC) [1] regarding the
ability to bring industrial property rights as
capital to commercial companies and especially
joint-stock companies. All these conditions and
special requirements reflect the principle of
capital protection. For this reason, this approach
of the legislator is quite accurate. On the other
hand, it is seen that all problems and question
marks related to bringing industrial property
rights to commercial companies as capital still
need to be resolved in the 10-year
implementation of new (?) TCC. In this study,
these question marks will be emphasized and
evaluations and solution suggestions will also be
included.
II. INDUSTRIAL PROPERTY RIGHTS AND
CAPITAL QUALIFICATION IN TURKISH LAW
A. Industrial Property Rights in Turkish Law
In a broad sense, intellectual property rights
consist of copyright and industrial property
rights. These two categories of rights, which
constitute the scope of intellectual property law
in Turkish law, are regulated independently of
each other in two separate sources of
legislation [1]. Accordingly, while copyright is
regulated in the Code on Intellectual and Artistic
Works No. 5846 [2], which entered into force in
1951, industrial property rights are regulated in
the Code on Industrial Property No. 6769
(CIP) [3], which entered into force in 2017. In the
CIP, general provisions regarding industrial
property rights are included, and then each type
of industrial property right is specifically
regulated [4]. Finally, there are common
provisions applicable to all industrial property
rights in the Code. According to the census in the
359
CIP, trademark, geographical indication, design,
patent and utility model are listed as industrial
property rights. The scope of the legislation on
industrial property rights is also included in TCC
No. 6102, which entered into force in 2012,
because industrial property rights are both among
the natural assets of the commercial enterprise
(TCC art. 11/3) and considered one of the types
of capital in kind that can be brought to
commercial companies (TCC art. 127/1).
B. Capital Element in Commercial Companies
Capital is one of the conceptual elements of
commercial companies. In Turkish law,
commercial companies are listed by name in
TCC art.124/1. Accordingly,
collective
companies, limited partnerships (commandit
companies), joint-stock companies, limited
liability companies and cooperatives are listed as
commercial companies. General provisions
applicable to all commercial companies are
included in TCC art.124-210. Articles 127 and
128, among these provisions, regulate the types
of capital that can be brought to commercial
companies and how the debt of capital in kind
can be fulfilled in commercial companies [5].
The types of capital that can be brought to
commercial companies can be identified in three
categories. These are cash capital, capital in kind
and labour capital. Cash capital consists of
money and money receivables. Capital in kind
consists of all kinds of assets that have economic
value and that can be transferred legally. Labour
capital comprises workforce, commercial
reputation, professional experience and technical
knowledge (know-how) [6].
The subject of capital investment debt in
commercial companies is regulated in TCC
art.127. In this article, the values, assets that can
be brought to commercial companies as capital
are determined in a long list. According to this,
a)
Money,
receivables,
negotiable
instruments and shares of capital
companies,
b) Intellectual property rights,
c)
Movables and all kinds of immovables,
d) Benefiting and usage rights of movable
and immovables,
e)
Personal labour,
f)
Commercial reputation,
g) Commercial enterprises,
360
h) Legally used transferable electronic
media, domains, values such as names
and marks,
i)
Mining licenses and other rights with
economic value,
j)
All transferable and cash value can be
brought to commercial companies as
capital.
At first glance, this determination can be
considered a limited count (numerous-clausus).
However, it must first be stated that this count in
TCC art.127 is unlimited. Because, in the last
paragraph of Article 127/1 of the TCC, it is
regulated that all kinds of assets that can be
economically evaluated and transferred can be
brought to commercial companies as capital [5].
Therefore, we must accept that the census in
TCC art.127/1 is made only to give examples.
In the TCC, a legal regime that differs
according to the types of capital is regulated for
commercial companies. Accordingly, all capital
types are valid in collective companies. On the
other hand, in limited partnerships, while only
commandite partners can bring all types of
capital to the company, commanditer partners are
not able to bring labour capital to the company.
Joint-stock and limited liability companies are
commercial companies that are unsuitable for
labour capital due to their capital company
qualifications. In addition to this restriction,
some extra criteria regarding the assets that can
be brought as capital in kind in joint-stock and
limited liability companies have also been
validated [7]. Accordingly, in joint-stock and
limited liability companies, an asset with a lien
on it has been given an injunction and restricted
by a limited right in rem, cannot be brought as
capital in kind [6].
Industrial property rights can also be brought
as capital in commercial companies. As a matter
of fact, this acceptance is a result of the fact that
intellectual property rights are listed in TCC
art.127/1. In fact, even if it was not explicitly
regulated that intellectual property rights could
be brought as capital, we could still reach the
conclusion that industrial property rights could
be brought to commercial companies as the
capital since industrial property rights are assets
that can be transferred and evaluated in cash, just
like underlined in TCC [8].
III. FULFILMENT OF CAPITAL INVESTMENT
DEBT REGARDING INDUSTRIAL PROPERTY
RIGHTS
A. Fulfilling the Debt to Put Capital in Kind
There are special provisions in the special
part of the TCC regarding the fulfilment of the
debt to put in capital, to which each type of
commercial company is subject. On the other
hand, the legislator has regulated general
principles and provisions in the article 128 of the
TCC. Unless otherwise regulated by special
provisions, the legal regime regulated in TCC
art.128, which is valid, includes the principles
regarding the commitment of immovables,
movables and intellectual property rights and
other values as capital and the fulfilment of these
commitments in addition. As can be seen, the
subject of TCC art.128/2 is only capital in
kind [8]. Considering the nature of industrial
property rights as capital in kind, TCC art.128
should be taken into consideration for the legal
regime that can be brought to all commercial
companies [9].
B. Commitment of Industrial Property Rights
as Capital
When all intellectual property rights,
including industrial property rights and other
values and rights registered in their private
registers, are committed to commercial
companies as capital, they must be recorded in
their special registers in order for this
commitment to be considered valid, in other
words, for the said rights and values to be
accepted as capital in kind. (TCC art.128/2).
While there are requirements such as annotation
in the land registry in the commitment of the
immovables and the requirements such as
entrusting the movables to a reliable person in the
commitment, it is stipulated that the industrial
property rights are recorded in the relevant
registers when the commitment is made [10]. If
this condition is not fulfilled, the establishment
of the company is not allowed to be completed
by the officials.
This situation is a result of the understanding
and approach of the legislator as the priority for
protecting the capital. Considering that industrial
property rights are required to be registered in the
relevant registry in order to be accepted as capital
and the rights already registered in TCC art.128/2
are considered, it is indirectly understood that it
is impossible to bring an unregistered industrial
property right to a commercial company as
capital [8].
In TCC art.128/2, it has been accepted as an
obligation to determine the value of these
commitments by expert examination for the
capital commitments in kind to be valid. If
industrial property rights are also committed, it is
an obligation to write the value calculated by the
experts in the articles of association. The expert
is not required to be appointed by the court as
principle.
On the other hand, if the industrial property
right is committed to the joint-stock company as
capital, the expert who will evaluate the
industrial property right according to TCC
art.343 must be an official expert appointed by
the court, as a result of the application made by
founder commits for industrial property
right [10]. Anyone with interest may object to the
valuation carried out by the official expert. The
court that will examine the objection is the court
that appoints the expert too, and the court's
decision is final.
C. Bringing Industrial Property Rights to a
Commercial Company
In capital elements registered in special
registers, including industrial property rights, the
moment when these elements are transferred into
the ownership of the commercial company is the
moment for the commercial company to gain
legal personality [11]. In other words, when the
registration
process
required
for
the
establishment of the commercial company takes
place and the commercial company gains legal
personality, the industrial property rights
committed to the commercial companies as
capital are transferred to the newly established
commercial
company
automatically
(TCC art.128/4).
The
registration
required
for
the
establishment of commercial companies is of a
founding nature [11]. This founding
characteristic also applies to the transfer of
industrial property rights to a commercial
company. On the other hand, the transfer of other
rights registered in their private registers,
including industrial property rights, to
commercial companies should be registered in
the relevant registers later. For industrial
property rights, the registry kept in the Turkish
Patent and Trademark Office is sufficient to fulfil
this requirement [12]. However, this registration
is not founding; it is informative.
361
IV. EVALUATION OF THE LEGAL REGIME
REGARDING BRINGING INDUSTRIAL PROPERTY
RIGHTS AS CAPITAL
TCC, which accepts all kinds of assets that
can be transferred and economically evaluated as
capital, has also adopted industrial property
rights as an asset item that can be brought to all
commercial company types [12]. For industrial
property rights to be brought in as capital in kind,
according to the TCC, they must be registered in
the special registers kept at the Turkish Patent
and Trademark Office. Although it is not
explicitly stipulated in the TCC that an
unregistered industrial property right cannot be
brought as capital to commercial companies, this
conclusion can be reached through interpretation
of the regulation in TCC art.128/2. It is possible
to come across opinions suggesting that
industrial property rights that are not registered
can also be brought as capital in kind, albeit
exceptionally in Turkish doctrine, despite the
relevant text of the article [12]. This situation
should be corrected as it leads to uncertainty in
law practice.
In the case of the undertaking industrial
property rights to commercial companies as
capital in kind, it is a very appropriate provision
for the principle of protection of capital that a
valuation must be made first and experts must
make this valuation in order for this commitment
to be valid. However, the legislator has created a
difference between joint-stock companies and
other commercial companies regarding the
qualification of the expert. In joint-stock
companies, the appointment of experts by the
courts is an obligation, although experts can be
authorised by the partners committing the debt of
capital investment in other company types [13].
This difference results from the necessity of
protecting the capital since joint-stock
companies are capital companies and companies
where savings are converted into investments
[9]. However, the same requirement should be
applied at least to limited liability companies.
A constraint on bringing industrial property
rights to commercial companies as capital is that
the industrial property right is not limited to
precautionary injunctions, liens and limited real
rights. At this point, a question arises. If the
industrial property right has been the subject of a
license agreement, if another person has been
authorized to benefit and use the industrial
property right with the license agreement, is it
possible to undertake the industrial property right
362
as capital There is no clear answer to this
question in the Code. In conclusion, the
constraints enumerated in the TCC are limited
and cannot be subject to expansionary
interpretation [12]. For this reason, the fact that
the industrial property right is subject to the
license agreement does not prevent it from being
brought to commercial companies as capital in
kind. However, the ideal point is, of course, to
include a clear provision in this regard in
the TCC.
V.
CONCLUSION
Industrial property rights are among the
assets in kind, but only if they are registered, it is
possible to bring them as capital to commercial
companies. Being unregistered causes the
industrial property right to be subject to unfair
competition provisions. In addition, it leads to a
result such as not being brought to commercial
companies as capital in kind. In order to bring a
registered industrial property right to commercial
companies as capital in kind, it should be shown
in the articles of association specifically and with
its value determined by the expert. This
conclusion is a requirement of the principle of
protection of capital.
In joint-stock companies, the expert must be
appointed by the court. On the other hand, in
limited liability companies, the approach of
joint-stock companies should be adopted. For
industrial property rights to be brought in as
capital, an interim injunction, lien, or limited real
right should not be established on the industrial
property right. This necessity is another essential
prerequisite. These restrictions shown in the law
are limited in number. For this reason, although
the industrial property right is subject to the
license agreement and the authority to use and
benefit from the industrial property right is
transferred to others as a result of this agreement,
this case should not prevent the industrial
property right from being brought in as capital.
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363
364
PaKSoM 2022
Advantages and Limitations of the
Implementation of Intelligent
Inventory Management Systems in the
Supply Chain
Nebojša Zorić1, Vijoleta Vrhovac2, Stevan Milisavljević3, Dejan Ilić4, Stana Vasić5
1,2,3,4,5
Faculty of Technical Sciences, University of Novi Sad, Novi Sad, Serbia
1
nebojsa.zoric12@gmail.com, 2violeta.vrhovac@uns.ac.rs, ³steva@uns.ac.rs,
4
dejan.ilic@formula-transport.com, 5vasic.stana@uns.ac.rs
Abstract—Information makes the supply chain
visible and transparent which is necessary for
making appropriate business decisions. The
application of intelligent systems in inventory
management is essential to ensure maximum
protection and preservation of the use value of
products in the process of physical distribution,
storage and sale. The timely exchange of
information between participants enables the
principle of delivery, right product, right time,
right place, right quantity, right quality, right
price, and right consumer. In relation to this, the
subject of the research of this paper is the analysis
of the issue of introducing intelligent systems for
efficient inventory management in supply chains
and determining the connection between the
application of intelligent systems and the
profitability of the supply chain. It is also
necessary to identify limitations as well as factors
that positively influence the introduction and
accelerated application of intelligent systems in
transport,
storage,
physical-manipulative
operations, and display of products to the place of
their final purchase. The practical significance of
the research is reflected in the fact that based on
the results obtained, supply chain managers can
identify critical points and limitations that prevent
the application of intelligent systems in inventory
management. Based on this, they can define and
take concrete measures that impact the business
result (profitability) of the entire supply.
Keywords
supply
chain,
management, information technology
ISBN: 978-86-82602-00-2
inventory
I.
INTRODUCTION
Supply chain management is the process of
coordinating the management of production
operations and the management of integrated
logistics to ensure a continuous flow of products
and services. This implies the entire transfer of
physical goods, services, and information
necessary to produce and value goods, that is, to
reach the end consumer. At the same time,
information is a link that unites the previous
aspects.
Modern business and the increasing demands
regarding competition and the needs of end users
influence the further development of supply
chains. Logistics and supply chains need to
respond to challenges such as globalization,
demographic
changes,
technological
innovations, electronic commerce, and a lack of
logistics networks and storage capacities [1].
For companies to enter this type of market
game as soon as possible, both with users and
competition and with external influences,
threats, and opportunities, at least two critical
turns in business are necessary. First, companies
must create strong and unbreakable connections
with consumers, in terms of their needs, desires,
and expectations. The second step would have to
be a continuous investment in the development
of modern information technology, which
ensures a fast and secure flow of information
along the entire supply chain. Information
365
technologies influence the automation of supply
chain processes using artificial intelligence,
robots, unmanned vehicles, blockchain, and
other technologies [2]. Finally, but equally
important is a quality, motivated and trained
workforce, which should implement all
processes, that is, the need to create intellectual
capital within the supply chain [3].
The logistics information system is a
combination of information technologies and
organizational-functional
units
within
companies. An information system is a
computer-supported system that supports
integrated logistics activities to achieve the
desired results within the supply chain. A welldesigned information system should help
optimize the production process, affect
inventory reduction, eliminate activities that do
not create added value, improve the level of
service to customers, help management in the
decision-making process, and ensure the
coordination of activities in the organization [4].
The efficiency of the logistics system is
reflected, among other things, in the fulfilment
of two goals, the reduction of costs through
inventory management and the smooth
functioning of the physical logistics chain.
These goals are mutually conflicting, so
information systems should provide adequate
support for making the best decisions. This
support implies continuous processes of
collecting, memorizing, processing, and sending
information. The information must be of good
quality, which means timeliness, accuracy, and
effective communication. The functional
subsystems in which these processes occur to
make up the information system and the
decision-making
system.
Without
an
information system and a decision-making
system, the management of stocks and physical
processes of the business logistics system would
be almost impossible [5].
The electronic business aims to connect all
forms of information and communication
technology in business relations, starting with
trade, production, and service organizations,
through suppliers, consumers, and state
administration. The main drivers of change are
the achievement of operational efficiency,
increase in transparency, demand volatility, new
366
markets, growth in business performance, and
change in consumer habits [6].
The use of intelligent systems has facilitated
inventory monitoring and has contributed to
more efficient management. Together with the
timely exchange of information, the application
of packaging with RFID (Radio Frequency
Identification) tags, GPS (Global Positioning
System) tags, and other sensors enables more
accurate planning of operations and better
visibility of critical elements within the supply
chain. In addition, the implementation of
intelligent packaging in supply chains will make
them more flexible for the needs of the market
and sustainable in modern economic conditions,
while taking into account the fight against
counterfeiting as well as the protection of the
human environment, the safety, and health of
consumers [7]. This achieves optimal inventory
management, reducing the time of transportation
and delivery of products and improving the
efficiency of the entire chain.
In the Western Balkans region, the
application of intelligent systems and modern
technology in inventory management is at the
very beginning. A small number of
manufacturers, transport companies, and
retailers decide on this type of technology for
various reasons (high initial implementation
costs, lack of modern IT technology, lack of
trained personnel, etc.). Given that it is a market
of over 20 million inhabitants, it is necessary to
investigate the limitations as well as the
advantages that appear among supply chain
participants, regarding the possibility of
applying intelligent systems in inventory
management and their impact on business
results along the entire supply chain.
II.
THEORETICAL BACKGROUND
The modern business environment, the
development of technology, and numerous
market and economic challenges have
influenced companies to review, reorganize and
improve their supply chains. To remain
competitive, companies achieved a higher
degree of coordination with each other, which
over time resulted in a very strong integration of
all business entities in the supply chain.
The future of the supply chain is in the
application of the IoT (Internet of Things) as a
unique intelligent system that combines large
amounts of data on product quality, inventory
control and condition, storage and preservation
conditions, usage value, etc. [8]. In this context,
supply chains with an integrated ERP system
(Enterprise Resource Planning) ensure efficient
and effective communication between supply
chain participants and final consumers. ERP
systems as standard, complex, software
packages were developed to meet the business
requirements of companies as a whole, and as
such incorporated experience and skills are
taken from companies, as well as existing users
of ERP solutions. ERP systems enable efficient
and effective communication and cooperation of
companies both with suppliers and with clients
[9]. Furthermore, RFID wireless product
identification technology is redefining supply
chain processes. RFID provides significant
benefits such as improved speed, accuracy,
efficiency, and security of information sharing,
reduced storage, handling, and distribution
costs, reduced inventory, and improved cash
flow [10]. Of particular importance in the further
development of supply chains comes from the
application of artificial intelligence for
inventory management in supply chains.
Artificial intelligence reduces the error to a
minimum and reduces the involvement of the
human factor. It provides a better configuration
of supply chains (location of warehouses,
geographical distribution, etc.), automation of
warehouses through the development and
application of autonomous vehicles AGV
(Automated guided vehicles), and more precise
management of customer requests through the
continuous use of machine learning algorithms
[11]. The importance of Cloud Computing,
especially for small and medium-sized
enterprises as participants in the supply chain, is
increasing. Cloud Computing tends to increase
the flexibility and efficiency of service
deliveries and ensures a better alignment of IT
services with dynamic business requirements
without
investing
in
new
software,
infrastructure, training of new personnel, and
purchase of new licensed programs [12,13]. One
of the ways to effective inventory management
is the introduction of a warehouse management
system - WMS (Warehouse Management
System). WMS is a storage and transportation
system connected to an information system for
inventory management [14]. WMS works on the
principle of connecting computers, the Internet,
barcodes, mobile, and other technologies into
one closed system that provides automatic
monitoring of the entry, movement, and exit of
materials, semi-finished products, and finished
products in the warehouse. A well-implemented
WMS should have the possibility of integration
with other information technologies within the
supply chain, above all the possibility of further
upgrading and a good connection with the ERP
system [15].
III.
METHODOLOGY
A. Hypotheses and Research Objective
The empirical research aims to analyze the
limitations and advantages of the intelligent
system’s introduction in inventory management,
as well as to determine the connection between
the application of intelligent systems and the
business result (profitability) of the supply
chain. Thus, the defined research goal was
operationalized through the following three
research hypotheses, which read:
H1 - limitations to the implementation of
intelligent inventory management systems differ
statistically significantly depending on the
supply chain participants. The first research
hypothesis seeks to test whether constraints
differ across supply chain participants. The goal
of testing this research hypothesis is actually to
determine whether supply chain participants
face different problems when implementing
intelligent systems.
H2 - the benefits of implementing intelligent
inventory
management
systems
differ
statistically significantly depending on the
supply chain participants. This hypothesis seeks
to test the benefits of implementing intelligent
systems and whether these benefits differ among
different supply chain participants.
H3 - the application of intelligent inventory
management systems in the supply chain is
statistically significantly related to the business
result (profitability) of the supply chain. This
research hypothesis tests whether the intelligent
system’s introduction has a positive or negative
implication on the profitability and business
performance of the entire supply chain.
367
B. Measurement Variables
Following the set hypotheses, the research
included several independent and one dependent
variable. Independent variables within the
analysis are defined as characteristics of supply
chain participants - size, revenue, number of
employees, and activity.
As indicators of limitations, the respondents
ranked: 1) high initial costs of implementing
intelligent systems, 2) long period of
implementation, 3) problems of standardization,
certification, and permits of competent
authorities, 4) insufficient training of
employees, 5) lack of modern technology and 6)
high final the price of the product.
As indicators of advantages, the respondents
ranked: 1) more efficient synchronization of
production, transport, and distribution activities,
2) reduction of inventory costs, 3) full
application of the JIT delivery principle, 4)
timely replenishment of inventory, 5) more
efficient use of warehouse space, 6) inclusion of
warehouse- manipulative operations, 7)
monitoring the atmospheric conditions of
storage and stock keeping and 8) reducing the
rate of product returns due to expiry of the
shelf life.
The business result (profitability) of the
supply chain was chosen as the dependent
variable. The dependent variable business result
(profitability) is operationalized through three
items, which measure the importance of the
intelligent system’s introduction on the business
result (profitability) of the supply chain. These
items concern: the volume of business income,
inventory costs, and speed of response to
consumer needs.
C. Sample and Research Procedure
(Participants and Experiment Procedure)
Testing the set hypotheses and presentation
of the obtained results requires the application of
various statistical methods. The method of
descriptive statistics will be used to describe the
obtained results and analyze the respondents'
answers. Further, the one-way analysis of
variance (ANOVA) test with Scheffe's Post hoc
test and the application of the Multiple
Regression Analysis methods will be the most
appropriate for testing the set hypotheses.
368
The research was conducted on a sample of
127 managers (middle and senior level) of the
supply chain in the market of the Western
Balkans. In terms of sample structure, managers
from the production, physical distribution,
wholesale and retail sectors are equally
represented. The sample is structured from
business entities as participants in the supply
chain that differ according to their size,
profitability, and field of work.
The research was carried out electronically
based on a questionnaire consisting of 15
statements for the limitations and advantages of
the implementation of intelligent systems and 3
statements for the business result and
profitability of the supply chain. The respondents
were asked to rank their satisfaction with the
offered indicators, that is, how they evaluate the
impact of the given indicators on the application
of intelligent systems in the economic entities in
which they work. A standard Likert-type scale
was used to rank the offered indicators
(1 - unimportant, 5 - crucially important).
IV.
RESULTS AND DISCUSSION
The authors of this paper conducted more
extensive empirical research on a sample of 127
managers. Data from the research were
processed in the SPSS statistical program. For
this paper, we single out only a few results.
To examine the first and second research
hypotheses, a series of One-Way Analyses of
Variance (ANOVA) was applied. As an
independent grouping variable, the participants
of the supply chain were selected, namely:
according to the field of activity (manufacturers,
transport companies, wholesalers, and retailers),
which differ in terms of size (micro, small,
medium, and large), realized business income
(up to €100,000, €100,000-500,000, €500,0001,000,000, over €1,000,000) and the number of
employees (up to 10, 10-50, 50-250, over 250).
The independent variable in each of the applied
One-Way Analyses of Variance was the
respondent's answer on the scale of limitations
and advantages of the application of intelligent
inventory management systems.
H1 - limitations to the implementation of
intelligent inventory management systems differ
statistically significantly depending on the
supply chain participants.
Limitations are operationalized through seven
items. The surveyed representatives of the
supply chain participants gave the highest ranks
to the existence of limitations concerning the
lack of modern technology, followed by the high
final price of the product (final retail price) and
doubts about the absence of commercial interest
from
intelligent
system's
introduction.
Respondents rank the long installation time as
the least notable limitation. Respondents mostly
agree with each other about the limitation
regarding the long period of installation.
not differ statistically significantly depending on
the participants in the supply chain. In other
words, all supply chain participants have
identical expectations regarding the benefits of
implementing intelligent systems in inventory
management. The expectations are identical
regardless of the business sector, the number of
employees, and the company size. Minor
deviations are present in the volume of realized
business income, where individual participants
rank the expected advantages differently.
Based on the conducted tests, it follows that
the research hypothesis H1 is accepted.
Furthermore, it is concluded that the limitations
of the intelligent inventory management
system's
application
differ
statistically
significantly depending on the supply chain
participants. The obtained results showed that
these differences are large economic entities, 2)
between companies that generate up to €500,000
compared to companies that generate income up
to €100,000 and over €1,000,000, 3) between
companies with over 250 workers to other
participants in the supply chain and 4) between
the production and physical distribution sectors,
with differences also present in the wholesale
and retail sectors.
The research confirmed the initial
assumptions that the barriers and limitations to
the intelligent system's introduction in inventory
management are different, depending on the
participants in the supply chain. These limits
differ depending on the size of the business
entity, the number of employees, realized
business income, and the business area. On the
other hand, the research confirmed that, contrary
to expectations, the benefits of implementing
intelligent inventory management systems do
not differ among different supply chain
participants. All analyzed participants have
identical expectations from the intelligent
system's implementation, regardless of their
size, number of employees, and field of
business.
H2 - the benefits of implementing intelligent
inventory
management
systems
differ
statistically significantly depending on the
supply chain participants.
H3 - the application of intelligent inventory
management systems in the supply chain is
statistically significantly related to the business
result (profitability) of the supply chain.
The analyzed advantages during the
intelligent system's introduction are described
through eight items. The biggest advantage
when introducing intelligent systems is seen in
the more efficient synchronization of
production, transport, and distribution activities
and monitoring of atmospheric conditions of
storage and stock keeping. Respondents
assigned the lowest ranking of answers
according to the offered items (indicators) to
advantages that describe more efficient use of
storage spaces and reduction of inventory costs.
Respondents differed the most according to the
answer to the advantage - speeding up storagemanipulative operations.
To examine the third hypothesis, a series of
multiple regression analyzes was applied. The
purpose of these analyzes is to examine the
prediction of business results (profitability) of
the supply chain based on a set of variables, in
this case, the decision to implement intelligent
inventory management systems. In the first
multiple regression analysis, the independent
predictor variables (indicators) were: 1) the
intelligent system's application contributes to
the competitive advantage of the supply chain,
2) we are satisfied with the existing way of
inventory management, and 3) we are gradually
introducing intelligent systems into our business
activities. The Dependent, criterion variable is Lower inventory cost. The second multiple
regression analysis aimed to examine whether a
set of predictor variables describing the
introduction of intelligent systems can explain
The obtained results show that the research
hypothesis H2 is rejected, and the conclusion is
that the benefits from the application of
intelligent inventory management systems do
369
the dependent variable - Growth in
turnover/business income. The third multiple
regression analysis examined the extent to
which the predictor set of variables describes the
criterion variable - A more effective response to
market needs.
When looking at the individual contributions,
it is clear that the gradual introduction of
intelligent systems and competitiveness
contribute statistically significantly to the
explanation of profitability in the form of lower
inventory costs in a positive direction. With the
growth of these indicators, the criterion variable
grows, meaning greater savings in inventory
costs are achieved and thus directly affect the
business result of the entire chain.
Respondents give the greatest statistically
significant contribution to the growth of
business income to the competitive advantage
brought by the application of intelligent systems
on the market in a positive direction. This
implies that with the growth of competitiveness,
as a result of the application of innovations, the
supply chain can expect a higher volume of
traffic. The gradual introduction of intelligent
systems into supply chains is at the limit of
statistical significance.
The findings indicate that a more efficient
response, as a measure of profitability, can be
predicted based on the gradual introduction of
intelligent systems into business activities. The
correlation is positive and statistically
significant. With the gradual introduction of
intelligent systems in inventory management
and clear and precise training of employees at all
participants of the supply chain, it is possible to
achieve a faster response to the constantly
growing needs of the market and consumers.
Based on the conducted regression analysis, it
follows that the research hypothesis H3 is
accepted and that there is a direct connection
between the application of intelligent inventory
management systems in the supply chain and the
business result (profitability). This relationship
is dominantly expressed between 1) the gradual
introduction of intelligent systems and
competitive advantage with lower costs of
inventory management,
2)
competitive
advantage with growth in turnover (revenue),
and 3) the gradual introduction of intelligent
370
systems in inventory management with a more
efficient response to market needs.
V.
CONCLUSION
The need to research the introduction of
intelligent inventory management systems in
supply chains stems from the fact that it is a
growing concept of technology that has an
increasingly wide application in practice.
Regardless of whether it is global product
placement or working with local suppliers,
supply chain participants must ensure a high
level of quality and safety for their finished
products at all times. The greater the visibility in
the supply chain and the more effective the
communication between the participants, the
greater the possibility of more effective
management of it. The focus on intelligent
systems, fast response logistics, and modern
technologies will result in an efficient supply
chain with high-quality final products and loyal
consumers.
The originality of this research is reflected in
the fact that it was determined that the expected
benefits from the introduction of intelligent
inventory management systems are identical for
all participants in the supply chain.
Manufacturers,
transport
companies,
wholesalers, and retail companies, regardless of
their size, available resources, and the number of
employees, all point to the advantages that the
application of this business concept brings.
However, the differences between participants
impose different types of limitations and barriers
that they face when implementing intelligent
systems. Those barriers should be overcome and
a set of measures and incentives should be
proposed that the competent ministries,
authorities, and associations must define to
encourage the introduction of intelligent systems
by all participants. The measures should refer to
subsidies for the application of intelligent
packaging elements, tax reliefs, subsidies for
new jobs, free training for employees, subsidies
for the gradual digitization of business activities
(introduction of IoT, RFID technology), cofinancing in the introduction of smart
technologies (e.g. Blockchain smart technology
as a common, digital platform where supply
chain participants can store and share
information throughout the chain and review all
transactions simultaneously in real-time,
without the possibility of data alteration,
hacking or deletion), etc. The use of smart
solutions will facilitate inventory tracking and
contribute to a more efficient supply chain. In
this way, more optimal inventory management
is achieved, shortening the time of transportation
and delivery of products and improving the
efficiency of the entire chain.
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372
PaKSoM 2022
Crises and Innovations in Tourism Development of Creative Tourism
Snežana Štetić1, Igor Trišić2
1
2
Balkan Network of Tourism Experts, Belgrade, Serbia
Faculty of Geography, University of Belgrade, Belgrade, Serbia
1
snezana.stetic@gmail.com, 2trisici@hotmail.com
Abstract—Crises that arise on a global level affect
all activities, including tourism. The COVID-19
epidemic threatened the total collapse of the
tourist market. At the beginning of the epidemic,
tourist movements were slow, but fortunately,
such hints did not come true. Tourism has taken a
new direction and is starting a new phase of its
development. What is characteristic of that phase
are the innovations of tourist products with the
aim of strengthening tourist destinations. New
forms of tourism that influence the redistribution
of tourist movements and the creation of new
tourist destinations play a special role in this.
This is how new tourist products are created that
satisfy tourist demand on the foreign and
domestic tourist markets. This paper studies the
development of creative tourism, recognizing the
potential that exists for the demand for this type
of tourism. This is especially expressed through
the participation of tourists and their active
interaction with the local population, as well as
the connection with culture and nature. All this
affects the authenticity of the trip, which is
required by this segment of tourist demand.
Keywords - crises, innovations, creative
tourism, specific tourism forms, culture, tourism
development
I. INTRODUCTION
Tourism is most often motivated by the
desire to get to know new destinations, cultures,
gastronomy and other positive experiences
provided by tourist trips. Participating in foreign
or tourist trips leads to the interaction of
tourists, local residents and the local community
as a whole. In this way, the quality of life of all
participants increases. Also, it leads to both
innovation and the risks that arise. That is why
these paper deals with the positive and negative
ISBN: 978-86-82602-00-2
aspects of such interactions with an emphasis on
the positive impact on the local environment by
creating new types of tourism.
In 2019, tourism achieved exceptional
results in its development in terms of the
number of tourists, number of overnight stays
and foreign exchange inflow. In contrast,
COVID-19 almost completely stops tourist trips
during 2020. In 2021, in some countries, the
population ignores the risk of disease and starts
traveling. Tourists are turning to domestic
destinations and shorter trips. Domestic tourism
trends in Serbia had extremely positive effects
on the development of domestic tourism and
rural parts of the country. Already in February
2022, tourism is facing a new risk, which again
affects tourism and tourist trips. Both the
mentioned medical risk and the new war
conflict affect the world economy, the daily life
of the population as well as tourism. This is
precisely what shows us how vulnerable tourism
is to all negative events both globally and
locally. The beginning of the third decade of the
twenty-first century confirmed the need to think
about security and to respect it.
Precisely different risks very often affect a
number of innovations that take place in the
tourist markets. The reason for this is the
perception of risk, which differs among people
and which affects their desire to travel
differently. The tourist market is constantly
looking for something new and something
innovative. Also, the modern understanding of
innovation refers to all areas of human
creativity, including the non-economic area of
life where new solutions are discovered and
applied that in their own way improve the
quality of people's lives [1]. With innovations,
373
there is always the question of whether
something new has been done. In tourism, the
question is whether new forms of tourism
contribute to the development of the destination.
From a theoretical point of view, innovations
appear in three basic ways: as incremental
(small and gradual); as architectural (which
more significantly restore existing technology)
and discontinuous (bringing a completely new
approach).
Creative tourism as a concept is based on an
authentic experience, the manifestation of the
creative potential of an individual, and the
independent creation of experiences in tourism.
Modern tourism is characterized by a shift in
focus from material to immaterial resources,
especially those that make up the identity of a
tourist destination [2]. As a rare resource,
creativity can precisely contribute to profiling
that unique and recognizable identity, in which
case the serial reproduction of culture and the
appearance of unified, typical spaces for its
passive consumption is avoided.
Focusing on the non-traditional use of the
destination's cultural potential, creative tourism
tries to overcome the problems of
overdevelopment,
lack
of
investment,
overcrowding,
homogenization,
and
unrepeatability that cultural tourism has suffered
in recent years. From an economic point of
view, creative tourism is considered a
development weapon for improving the national
economy, regions, and cities, stimulating local
development, and preventing youth migration,
depopulation, and lack of economic resources
[3]. This form of tourism is a relatively new
term that denotes specific tourist trips with
activities that are not only closely related to
cultural tourism but also to nature tourism [4].
The objectives of this paper are: to
investigate and examine the concept and
importance of risks an innovation in tourism
and specially creative tourism in today's tourism
market. As part of the analysis, the significant
impacts of creative tourism on the development
of destinations will be examined. The main task
of this work should be to examine to what
extent creative tourism is present in the tourism
market and what the roles of tourists and local
residents are in these movements. The study has
used a qualitative method of analysis and
synthesis of published research results.
Tourists want to spend free time in a way to
satisfy some of his inner needs: to acquire new
374
knowledge, for creative work, hobbies, and to
get to know other people's traditions and ways
of life. For that reason, a special tourist offer is
being developed in destinations. The form of
cultural tourism that is realized in this kind of
supply and demand is called creative
tourism [5].
II. INNOVATION AND CREATIVITY
Creating the concept of innovation as the
driving force of economic and overall social
development affects the understanding of the
importance of innovation for the development
of the tourist market [1]. Ideas are the basis of
business, which is very important in tourism for
its creation and further development. The
modern development of tourism expects new
activities that influence the creation of different
tourist products. This is exactly why creativity
is extremely important for the creation of new
products in tourism and its growth and
development. Technological
and
social
innovations influence the creation of an
increasing number of special forms of tourism.
The traditional approach to creativity
research has referred to creativity as something
made by creative people. Unlike the traditional
ones, the modern approach assumes that
occasionally all people are able to produce at
least moderately creative work in some domain
and that the social environment can influence
both, its level and frequency [6]. Also, in fields
such as psychology or design, creativity is
viewed from the artist's perspective [7].
Connecting the concept of creativity with
today's tourism is a complex task [7].
The concept of creativity can be viewed
from several dimensions, such as: everyday
creativity, artistic creativity, and intellectual
creativity [8]. The convergence between
creativity and tourism lies in the dimension of
everyday creativity [9], since both terms are
related to everyday life. Tourists want to
participate in the acts of everyday creativity,
which are closer to the circumstances of their
real life [10].
Ivčević and Maier [11] categorized 121
items into the following five categories of
everyday creativity: craftsmanship, cultural
sophistication,
self-expressive
creativity,
interpersonal creativity, and sophisticated media
consumption. According to Hung et al. [12],
creative experience contains three factors: a
sense of achievement, unique learning, and
interaction with educators. However, Tan et al.
[7] specifically investigated creativity within the
creative experience and concluded that
creativity exists through novelty, utility,
controlled risk, experiential items, and
existential needs.
To be creative in the modern world means to
be specific, acceptable in a special way, and
most importantly, to be new and different, by
which one should distinguish oneself from the
competition [13]. The author singles out
different dimensions and qualities of creativity:
creativity generates images, ideas, and
solutions;
creativity is the process of developing
unique, new, and unusual ideas;
it involves the use of imagination and
experience of thinking;
creativity includes the ability to select,
and combine existing ideas, facts,
images, and skills in an original way.
Considering creativity and tourism from
another aspect, we can notice an increasing
number of creative companies that are looking
for new markets for their accessibility and
development.
III. CRISIS AND CREATIVITY IN TOURISM
Tourism is an extremely vulnerable activity.
It is subject to various influences, both positive
and negative [14]. The latest events (medical
risks, political turmoil and war actions,
economic crises, natural disasters) directly
affect tourism and redistribution of tourism at
the global level.
Understanding the characteristics of the
tourist market and the constant changes in
tourist demand is extremely important in
overcoming crises that can affect tourism
development. One of the ways to overcome the
weaknesses in the tourist offer is to consider
new ways of creating tourist products. In order
to achieve this, the creativity and innovation of
tourism employees is extremely important.
The term “creative tourism” was defined by
Richards and Raymond [15], who linked it to
promoting craft production in tourism. This
definition involves the key principles of creative
tourism: it provides opportunities for personal
creative development, increases engagement by
allowing visitors and their hosts to create
together, and connects creative activities with
the destination. Creativity could be expressed
most adequately through crafts as the economic
sector closely related to tourism. Domestic
handicrafts, local industry, folklore and culture
are the ideal places to encourage creativity in
tourism.
Creativity has become widely applied in
several industrial and artistic fields, especially
in the creative and cultural industries [16].
Creative tourism is arising as a key
development option for various reasons and can
serve specific purposes. First, it responds to the
need to reinvent tourism, as well as the need for
destinations to do something different in a
saturated market. It can also satisfy tourists'
desire for more fulfilling and meaningful
experiences, linking to an active tourist stay
[17]. Creativity is becoming an increasingly
popular career option for new businesses that
desperately need new markets. The popularity
of creative practices such as music, dance, and
photography are also on the rise. Up-to-date
trends in tourism needs explain and justify the
popularity of more and more creatively
developed tourist offers to some extent [18].
Creative tourism can be defined as a form of
cultural tourism that, gives a new dimension
that will satisfy the needs of the modern tourist
for creativity and stay in the destination to
experience the true atmosphere of the area.
Every destination can be creative, and develop
creative tourism and enable the development it
to attract tourists.
Cultural and creative tourism are similar.
The main difference between cultural and
creative tourism is that the former often
involves tour groups traveling with a guide who
interprets the culture for them, while the latter
involves tourists actively learning about the
environment and seeking more engagements of
their own [7].
According to UNESCO, creative tourism is
travel aimed at an engaged and authentic
experience with participatory learning about the
art, heritage, or special features of a place, and it
provides a connection with the local population
that participates in the creation of local
culture [19].
375
learning about the design of pottery,
paintings, art objects, and textiles [21];
IV. EXISTING MODELS OF CREATIVE TOURISM
DEVELOPMENT
Richards and Raymond [15] emphasize that
not only tourists should be involved in creative
activities, but that destinations must also offer
typical experiences. Creativity is an important
part of the destination. Each target destination
can offer a unique combination of knowledge,
skills, tangible heritage, social capital, and
atmosphere that creates the potential for an
extremely attractive creative person. This
uniqueness can be linked to local traditions.
According to the same source, there are two
forms of creative tourism:
a) Creative tourism related to a specific
target destination. If they follow this approach,
cities and municipalities are creative. Tourism
operators use the image of creative cities and
municipalities to increase the attractiveness of
their products.
b) Creative tourism based on creative
activities. This approach follows the assumption
that creative tourism products are spatially
diffuse and based on creative activities in which
tourists can participate in different places
independent of location.
The creative industry plays an increasingly
important role in tourism development with a
particular impact on the destination image. For
example, we can mention the places where the
films The Lord of the Rings (New Zealand) and
Harry Potter (Great Britain) were shouted.
Today, a form of music tourism that includes
trips to music festivals and concerts is also
widely popular. When creating a tourism offer,
the cooperation between producers and
consumers is in focus. The growth of creative
tourism marks a shift toward a more specific
approach to creativity in tourism, and it is found
both in rural and urban areas applying various
development strategies.
Creative tourism has the potential to utilize
local skills, professionalism, and traditions from
many fields [20]. For example, creative tourists
may want to learn about:
art - art exhibitions and workshops are
essential motives for tourists who prefer
active tourist vacations;
design - local workshops and craft
factories as part of the tourism offer are
closely related to getting to know and
376
gastronomy
learning
about
gastronomy and eating habits of certain
peoples is a significant tourist motive.
The desire to try authentic national
food, a local gastronomic brand or
product;
health and recreation;
languages and culture;
spirituality and customs;
nature; and
sports.
All these creatively based products represent
major growth areas in tourism at the moment
and probably in the future. The greatest
advantage of creative tourism for a destination
is that it provides a new means of differentiating
its cultural products from those of the
competition. The reason for this lies precisely in
the term through which creative tourism is
described in practice as tourism that offers
visitors the opportunity to develop their creative
potential through active participation in courses
and learning experiences that are characteristic
of the holiday destination they are in [22].
V. CREATING DIFFERENT PLACES
Creative resources are used as a “hallmark”
of certain cities and regions that distinguish
them from others. Today, there is an increasing
focus on intangible cultural heritage due to the
fact that cities have fewer and fewer resources
that should constitute tangible cultural heritage.
Cities must adapt to the global market and, for
this reason, use creative and cultural resources
to launch their own tourism brand.
If the potential learning opportunities are
analyzed as part of creative tourism, it can be
concluded that, in practice, creative tourism is
closely related to tourists’ specific interests.
Tourists’ different needs and interests have
resulted in the creation of various specific forms
of tourist movements. In addition to the fact that
creativity is closely related to culture, a deeper
analysis can confirm a connection between
nature and activities that use natural resources
for the development of specific tourism forms.
When conceiving the current offer of
creative tourism, the essential role is played by
tourist destinations. The way of planning the
development of creative tourism in practice
must be such that cultural and natural resources
and the life of the local community are not
damaged. According to Richard and Wilson
[23], an important implication for tourism
destination managers should be that creativity is
an attribute to both, a production process as well
as a consumption process. Creative tourism
must involve the creative use of resources to
provide creative experiences for tourists.
In the world tourism market, well-known
cultural destinations are increasingly developing
various forms of creative tourism, such as the
city of Santa Fe in New Mexico, in the areas of
art, culture, and heritage. Santa Fe Creative
Tourism is a program that offers a wide range of
creative tourism experiences, from traditional
sewing to landscape painting, pottery, and 3D
printing. Santa Fe's reputation as a creative
place helps to attract many visitors who desire
to be engaged in creative activities, which, in
turn, strengthens the city's cultural life and
branding [24].
New Zealand is a well-known creative
tourism destination that offers the development
of creative workshops and courses that focus on
tradition and heritage. The basic orientation of
many creative tourist programs here can be
summed up in Confucius' saying: “I hear and
forget. I see and remember. I do and
understand”. This was the underlying
philosophy of the Creative Tourism New
Zealand Programs. This approach emphasizes
creative activity as a means of engaging
participants and developing links between
producers and consumers [25].
Creative tourism is a social, cultural, and
ecological phenomenon. It includes creative
practices, experiences, and personal encounters
with local communities and individuals. This
means that the basic feature of mobile tourism is
the creation of different tourist places, which
distinguish in their content and function. Service
design directly affects the creation of a
destination's image [26].
The Emilia Region (Italy), with its 172,124
inhabitants, is one of the eight capital cities of
the Italian region Emilia-Romagna. This region
combines a rich rural landscape with densely
populated villages, and it offers a variety of sites
of natural, historical, and socio-cultural
importance for travelers who want to experience
the authentic Italian way of life. Creative
tourism is a symbol of this part of Italy. Similar
examples are noted in Obidos (Portugal), Cesky
Krumlov
(Czech
Republic),
Jyväskylä
(Finland), and York (Great Britain) [27]. A key
aspect of creative tourism is the opportunity,
which really allows the participation and
creation of something new. Similar examples
are noted all over the world: Barcelona (with the
conference on creative tourism), Creative
Austria (the program in Austria that offers a
variety of creative experiences), Paris (a
creative destination offering workshops and
courses in many fields).
Lesser-known cultural destinations also
direct their offer toward creative tourists and
offer a number of different activities to
contribute to a stronger interest of tourists in
order to strengthen the competitiveness of the
tourist destination with such development [28].
A. Perspectives of creative tourism
The importance of creative tourism in
practice can be significant for the following
reasons [29]:
through creative tourism, tourists get an
experience with a higher level of
satisfaction compared to tourist
movements that offer visits to
interesting places related to art or
culture;
creative tourism offers visitors the
opportunity to evaluate nature and the
life of the local population thoroughly;
vacation with creativity arouses a
feeling of contact with something new
and gives the opportunity to acquire
new skills;
visitors are increasingly looking for an
opportunity to draw a line between their
dynamic everyday life and the
satisfaction of another way of life; they
achieve emotional intensity by creating
their own memories.
Creative tourism has a number of potential
advantages over traditional forms of
tourism [20]:
it can be more sustainable than
traditional forms of cultural or heritage
tourism since it is based on intangible
resources;
377
the need for infrastructural investments
in creative tourism is often less since it
does not depend on physical structures;
creativity is a mobile resource also
present in all locations and social strata;
creative tourism promotes interaction
between local residents and visitors.
In addition to the fact that the tourist
expansion of creative tourism changes the habits
of tourist demand. The focus in the tourism
industry is shifting from sightseeing to learning
about life [20] which refers to tourists' desire to
immerse themselves in the diverse local cultures
on offer. Today's travelers want to move away
from the formal tourism industry [30], and
enjoy interacting with local community
representatives.
Among numerous perspectives of creative
tourism, we can single out the following [31]:
adequacy to the new demands of
tourists who want a unique experience;
achievement of the offer diversification
without investment;
the accomplishment of positive effects
and
profitability
of
cultural
infrastructures;
organization of quality tourism with
high added value and purchasing
power;
achievement
of
seasonality, which
distribution;
geographic outsourcing: less interest of
creative tourists in classic tourist
hotspots;
tourism
enables
nonbetter
the increase of the self-confidence of
the local population;
strengthening of communities and
accomplishment of professionalization;
achievement of social cohesion through
the co-creation of a products;
realization of sustainability, which
relies on authenticity and creativity as
the crucial resource;
restoration of intangible heritage;
378
the implementation of a destination
management tool.
For tourists, creative tourism can develop a
more active and long-lasting form of
experience, while for the destination, it
represents an opportunity to express the
experience in the local. It can include the
creative use of inherited and created resources,
whose combination will produce recognition
and a reason for tourists to choose an experience
exactly in that specific destination. The most
significant implication is to recognize the
creative potential of tourists.
The perspective of creative tourism is
closely related to creating a tourism offer that
implements various specific forms of tourism.
In the first place, the connection with cultural
forms of tourism. In rural destinations, the
importance of creative tourism is reflected in the
event, wine, gastronomic and ethnic tourism
[32]. These forms of tourism are based on
familiarization with local culture, language,
handicrafts, original folk melos, cultural
heritage, customs etc.
Creativity can be a strategy in creating a
tourism destination and brand, with cities and
regions looking to increase their attractiveness
to the creative tourism, support creative
industries, or become 'creative'. In carrying out
numerous strategies for tourism development,
we can notice a shift of concentration from
creative individuals to creative areas, places, or
regions. Numerous completed case studies on
creative development indicate that these
strategies must be sensitive to the local context
and follow some basic principles of design in
culture and art [33].
VI. CONCLUSION
Creative resources are used as a “hallmark”
of certain cities and regions that distinguish
them from others. Today, there is an increasing
focus on intangible cultural heritage due to the
fact that cities have fewer resources for cultural
heritage. Cities must adapt to the global market;
that is why they use creative and cultural
resources to build a brand. As a concept,
creative tourism is based on an authentic
experience, the manifestation of the creative
potential of an individual, and the independent
creation
of
experiences
in
tourism.
Contemporary tourism is characterized by a
shift in focus from material to immaterial
resources, especially those that make up the
identity of a tourist destination. Bearing in mind
the impact of risk on tourism as well as
innovation on its development, in this work we
have laid the basis for further research in this
area through creative tourism. As a scarce
resource, creativity can precisely contribute to
profiling that unique and recognizable identity
while avoiding the serial reproduction of culture
and the appearance of typical spaces for its
passive consumption. The concept of creative
tourism is suitable for both urban and rural
areas; the essence is in the use of “raw” material
and the creation of a unique experience.
Creative tourism arose as a reaction to cultural
tourism and refers primarily to creative
consumers who, unlike cultural tourists, are
increasingly looking for interactive experiences
that help them in personal development and
identity creation by increasing their own
creative capital. Creative tourism offers visitors
the opportunity to develop their creative
potential through active participation in
experiences taking place in vacation
destinations through which they can learn
something new. The offer of creative tourism is
closely related to different specific forms of
tourism. Firstly, the connection with cultural
forms of tourism points out, such as artistic,
theatrical, cultural-historical, religious, film,
fashion, and other forms. Secondly, in rural
destinations, the importance of creative tourism
is reflected in the event, wine, gastronomic and
ethnic tourism. These forms of tourism are
based on familiarization with the local culture,
language, handicrafts, original folk melos,
language, cultural heritage, customs, etc.
If the research results collected and
presented in this paper are analyzed, it can be
concluded that creative tourism has direct links
with cultural forms of tourist movements.
Unlike cultural tourism, in creative tourism as a
specific form, the role of the guest and host
differs in many ways. Tourists are more active;
they are not often passive observers and
listeners like classic visitors. In creative
tourism, the resident population plays an active
role as instructors and teachers about their
environment, culture, and lifestyle. Simply,
members of the local community have the task
of educating visitors in the best possible way
about all the ethnic-social and natural values of
the destination. Consumers of creative tourism
participate actively in learning about the life and
culture of the people of particular destinations,
and the style and way of life. They can take part
in home craftsmanship, and folklore; they can
also learn about eating habits, customs, and
artistic styles that characterize certain peoples,
the relationship of man to nature, and many
other factors that condition these tourist
movements. More and more sophisticated needs
of tourist demand characterize today's tourism
[34]. Tourists are increasingly departing from
classic vacations and turning to special interests
[35]. Creative tourism synthesizes various
specific forms of tourism, engages more active
participation of tourists and residents, and
stimulates mutual interaction. It also affects the
spread of culture, customs, and creativity and
encourages the protection of nature and its
values. We can conclude that creative tourism
can play a significant role in future tourist flows
worldwide.
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PaKSoM 2022
Web Scraping Analysis: Gender
Differences in Local Online Media
Mentions
Bojan Baškot1, Maja Barišić2
1
Faculty of Economics, University of Banja Luka, Banja Luka, Bosnia and Herzegovina
2
Sarajevo, Bosnia and Herzegovina
1
bojan.baskot@ef.unibl.org, 2maja.barisic@edu.uni-graz.at
Abstract—This paper focuses on the comparison of
media mentions of male and female candidates in
the electronic media in a selected sample of Local
Self-Government Units (LSGUs) in the Federation
of Bosnia and Herzegovina during the pre-election
campaign for the 2020 Local Elections. The idea
was to investigate the differences in the frequency
of appearance of female and male candidates in
local online media. Hence, the focus was on local
news portals and local public Facebook pages. For
this analysis, data were collected primarily using
software tools available in the R programming
environment and Python. The results of the web
scraping exercise are collated with data on
candidates from the Central Election Commission
(CEC). The analysis reflects on the candidates for
the mayor and for the city and municipality
council. Additionally, data are disaggregated
across gender
Keywords – web scraping, text analysis, gender
mainstreaming in politics
I.
INTRODUCTION
Media and electoral legislation in Bosnia and
Herzegovina prohibit discrimination and
stereotypical or offensive content during preelection campaigns. However, the existing legal
framework does not regulate the gender balanced
or proportional representation in pre-election
media content. Further, the BiH print and online
media self-regulatory acts do not address the
issue of equal or proportional representation of
male and female candidates either. Although
government non-interference in media content
creation and selection of interlocutors is crucial
for media freedom, pre-election campaign media
ISBN: 978-86-82602-00-2
content is regulated to secure basic equal
conditions for all candidates. Still, gender parity
or proportionality in pre-election media content
is not codified in BiH.
Gender mainstreaming in local selfgovernment requires integration of gender
perspectives in local decision making. Ensuring
that women’s (and other groups’) perspectives
are integrated leads to better quality local
policies. For example, taking into account the
problems of women handcrafters active in the
informal economy when developing a local
tourism strategy can, in ideal conditions, improve
the local tourism offer and provide better
conditions for paid pension contributions,
thereby preventing old age poverty. While
proportional representation of women in local
decision-making bodies may not be sufficient to
integrate women’s (and other groups’)
perspectives in decision making, it is still
necessary. The BiH Law on Gender Equality
(BiH OG 32/10) requires minimum 40 percent
representation of men and women in all decision
making bodies at all governance levels. The BiH
Election Law (BiH OG 31/16) applies the same
40 percent quota for electoral lists of candidates
and prescribes the ordering. Enforcement of
quotas in the electoral lists is satisfactory – the
Central Election Commission does not confirm
lists of candidates which do not meet the
requirement. Still, only around 19 percent of
local councillors and four percent of mayors
elected in the 2016 Local Elections in BiH were
women. Analysts and politicians often blame
voter prejudice.
381
Gender equality institutions in BiH have tried
to influence voter prejudice in earlier election
cycles to little avail. Public campaigns against
prejudice typically employ a direct-message
approach – “Vote for women!” or “We are
equal!” Such paid advertisements or videos are,
by rule, placed out-of-context – they are not aired
during political talk-shows or within journalist
content, but rather in air times and space reserved
for promotional messages. By default, such
content is less effective than subtle nudges and
incentives. The nudge theory suggests that social
attitudes and behaviours are more likely to
change if a normative approach is supplemented,
or in some cases, replaced by incentives and
subtle messages [1]. Another problem with
government-driven marketing campaigns against
voter prejudice in BiH is that they commonly rely
on the public broadcasting system and publicly
funded local media they have easier access to,
while ignoring most private media and nearly all
online media.
This paper considers an explanation
complementary to voter prejudice – women have
limited access to media in pre-election
campaigns because the media market is
prejudiced and prioritises candidates who are
already influential or controversial – women
candidates rarely belong to either of those
categories. The paper focuses specifically on
online media which are underregulated in BiH,
while being increasingly influential.
This study collected the online media content
produced by 46 online media portals and 5
Facebook pages during one month of preelection campaigning ahead of the 2020 Local
Elections in a sample of 42 LSGUs in FBiH. The
content was then analysed checking for online
media mentions of 1.222 candidates from those
LSGUs in the 2020 Local Elections.
The next section contains an explanation of
applied data-collecting methods and techniques
in the R programming environment, followed by
a brief literature review. The results section
presents quantitative indicators, followed by a
discussion, and concluding observations.
II.
DATA AND METHODOLOGY
A. Data
Initially, 41 out of 78 LSGUs from FBiH
which held local elections on 15 November 2020
were sampled. The City of Mostar held the
elections on 20 December 2020 and we added it
to the sample subsequently. We sampled the
382
LSGUs (except Mostar) randomly within three
groups formed depending on the size of local
councils, i.e., the number of mandates. In the
final sample of 42 LSGUs, 13 were from small
local councils with 11-19 councillors, 15 were
from medium-sized councils counting from 2125 councillors, and 14 (including Mostar) with
large councils with 27 mandates and higher.
Cantonal distribution was not taken into account
during sampling – the number of LSGUs varies
significantly by canton.
Due to the large number of candidates who
participated in the elections, we narrowed the
analysis down to 1,222 individuals from these 42
LSGUs, selecting them by the following criteria:
1.
the first and the second person in each
list of candidates for regular council
mandates, resulting in 1,046 individuals
(564 men and 482 women);
2.
all mayoral candidates (136 candidates:
129 men and 7 women);
3.
candidates for mandates reserved for
national minorities (40 persons: 33 men
and 7 women);
4.
all
independent
candidates
for
councillor, mayors, and minority
mandates (outside party, coalition, and
independent lists) (60 persons: 48 men
and 12 women).
Categories 3 and 4 overlap as minority
candidates can run independently or on party lists
(the sum of categories listed above is higher
than 1.222).
We included all online media reporting from
the 42 LSGUs in the online content database. In
some LSGUs, however, no such web portals
existed, while some of the media from larger
LSGUs covered a wider territory, and several
media web portals of country-wide influence
were included. Finally, we downloaded the
contents of 46 media web portals and five public
Facebook pages.
During the pre-election campaign period
from 14 October – 14 November 2020, 42,107
texts were collected from the media web portals,
while the selected Facebook pages proved
irrelevant in all areas except in Posavina Canton,
where Facebook was one of the rare local sources
of information about the elections. That specific
source mentioned exclusively male candidates.
For Mostar pre-election campaign from 19
November – 19 December 2020, the sample
included 5,993 articles from local media web
portals, and additional 1,000 articles from the
most influential web portal in the country.
B. Methodology
We used Feedly to collect and sort data from
the selected online media. Packages in the R
programming environment allowed us to sort and
analyse data. This approach enabled us to scrape
and analyse content retroactively, except for
portals that prevent web crawling. The content
was collected in HTML format, and then refined
and systematized with stringr, tydeverse and
other R packages. In addition, Python’s packages
Beautiful Soup and Selenium were used to
download content related to open Facebook
pages, as Facebook introduced significant
restrictions to data scraping from 2018.
First, the selected web portals were added in
Feedly, which has an API that allows R access to
web portals’ content. An OAuth Dance
Authentication is required for this process
(Fig.1).
All the populated content was analysed in R
utilizing the ndoc, ntoken, ntype, and nsentence
functions. This part of the analysis focused on the
candidates’ names, to narrow down the content
which mentions candidates.
While LSGUs were not sampled randomly
within cantons but within size groups, cantons
are still relevant for the overall media landscape
in each municipality. This is why candidate
mentions were screened within all content
produced inside each canton.
Next, a qualitative analysis was conducted by
defining candidate names as tokens (tokenization
refers to splitting of a text into sequences of
several words or N-grams).
III.
LITERATURE REVIEW
Symbolic politics theory suggests that
humans adopt certain latent political values
through socialisation, while these general
orientations get activated later in life as affect
and attitudes through political symbols [2].
These latent values influence also the voting
behaviours. How and which attitudes and
behaviours are activated, largely depends on the
political and media influences. Framing theory
suggests that framing of issues by politicians,
media, and the advertising industry influences
individual preferences at this unconscious level,
while the abundance of accessible personal data
about nearly every individual present online
today enables also for personalisation of political
messages, manipulation of voter attitudes and
behaviours [3], and stumps individual voter
autonomy, as the Cambridge Analytica case
shows [4].
The online media web portals and social
media platforms serve multiple functions in this
context. They provide space for political
stakeholders to frame political issues and convey
cues for activation of latent political values,
while at the same time collecting personal
information about audiences – traditional press,
radio, and television cannot provide the latter.
Still, online media have also expanded the
individual freedom of speech. Another function
of these online sources is to inform scholarly
analysis of political processes using statistical
and econometric methods.
R as a programming environment can make
an immeasurable contribution in terms of
efficiency
when
solving
seemingly
overwhelming problems related to political
science research (too extensive in terms of data
to be processed) [5-10].
Figure 1. OAuth Dance Authentication in R
In a broader context, we can understand this
specific exercise as part of the increasing use of
quantitative, statistical, and econometric
methods
in
the
study
of
political
processes [11-14].
383
Web scraping and content analysis, aligned,
give significant contributions to the existing
literature in political science [15-18].
Earlier studies focusing on descriptive and
substantive representation of women in online
sphere have applied similar approaches. A
Gender Gap Tracker in Canada presents results
of a continuous daily process of web scraping of
Canadian English language media and Natural
Language Processing to track quotations of men
and women in the scraped content, documenting
frequencies and patterns [19]. Women
candidates’ online web pages and biographies are
also analysed using a combination of web
scraping and content hand coding [20].
IV.
RESULTS
For each selected LSGU, we calculated the
average number of mentions for male and female
candidates in the sampled online media content
within that canton. Incidence of mentions was
further disaggregated to types of mandates
candidates competed for.
Each candidate’s name and surname were
searched in all the content scraped from the entire
canton
the
municipality
belongs
to.
Consequently, results are incomparable between
cantons, as well as between LSGUs from
different cantons, given that the size of the
sampled online media content differs in these
units. There are also significant variations
between LSGUs in the number of lists of
candidates, number of first-ranked and secondranked candidates, number of mayoral
candidates, and candidates for national minority
seats. All these constraints should be taken into
account when considering the incidence of
mentions in a broader context.
The Mostar City Council does not reserve
seats for minorities, the Mostar Mayor is elected
indirectly by the City Council, and the period of
pre-election campaign in Mostar did not match
the period in other LSGUs. For those reasons, we
present Mostar results separately.
Out of the 42,107 texts for 41 LSGUs, 323 in
the pre-election campaign mentioned election
candidates, and only 21 articles mentioned
female candidates. Online media often
mentioned male candidates already in the title –
this was never the case with female candidates.
384
TABLE I.
RESULTS.
Incidence
(men)
Incidence
(women)
Bihać
5.0
0.6
Bosanska Krupa
0.9
0.3
Bosanski Petrovac
0.1
0.0
Bužim
2.1
0.0
Cazin
0.9
0.2
Ključ
0.5
0.0
Velika Kladuša
3.7
0.0
Domaljevac - Šamac
1.8
0.0
Orašje
2.3
0.1
Gračanica
0.9
0.0
Kalesija
5.0
0.3
Tuzla
2.3
0.2
Doboj Istok
0.1
0.0
Visoko
8.9
1.9
Zenica
2.9
0.0
Goražde
2.5
0.0
Bugojno
7.0
1.3
Jajce
4.2
0.4
Kiseljak
0.6
0.1
Kreševo
0.1
0.0
Travnik
2.0
0.0
Jablanica
0.3
0.1
Prozor - Rama
1.5
0.1
Ravno
0.5
0.0
Stolac
0.3
0.0
Čitluk
10.5
1.7
Grude
0.9
0.0
Ljubuški
2.3
0.0
Neum
0.3
0.0
Posušje
3.8
0.2
Široki Brijeg
0.4
0.0
Centar Sarajevo
1.7
0.1
Novi Grad Sarajevo
0.1
0.1
Stari Grad Sarajevo
2.5
0.0
Vogošća
0.1
0.0
Drvar
0.1
0.2
Glamoč
0.0
0.0
Kupres
0.4
0.3
Livno
1.9
0.0
In the first instance, we explored the average
number of mentions overall for men and women.
In the next instance, we aggregated the number
of mentions for:
regular seats in local councils,
mayoral candidates,
independent candidates for regular seats
in local councils or mayoral positions,
candidates for national minorities, and
City of Mostar.
The 1,111 candidates from 41 LSGUs
(excluding Mostar), are mentioned, on average
1.4 times in the online content of the observed
media during the pre-election campaign. The 666
men in the sample were mentioned 2.2 times on
average, with some of them mentioned 90 times
(one candidate in Kalesija), and 480 of them
(72.1 percent) not being mentioned even once in
the observed content. Most of the men included
in the analysis are list leaders and only 57 of them
were second ranked on the list.
The 445 women candidates (350 of them in
the second position on the list) are mentioned on
average 0.2 times in the observed contents.
However, only 32 out of 445 (7.2 percent)
women were mentioned at all in the online media
content, and even that narrower group is, on
average, mentioned only 2.8 times. Among
women, the highest recorded incidence is 17
times (Visoko). As many as 93 percent of the
women in the sample were never mentioned in
the collected online media content. Table I
summarizes the average number of mentions for
all persons in the sample, classified by
municipality and gender.
V.
DISCUSSION
Incumbent mayors and councillors, as well as
persons holding important positions at higher
levels of government are overrepresented in
media content – they are outliers increasing the
average number of mentions of candidates
running within LSGUs. Among women
candidates, these outliers were Amra Babić, the
former Mayor of Visoko who was running for the
same post in 2020, and Vlatka Martinović, the
incumbent director of the FBiH Institute of
Health Insurance and Reinsurance who
competed for the Čitluk Municipal Council as
second on the list. Martinović and Babić are,
however, only rare examples of women in
prominent positions.
Most mayors, councillors, and directors of
public companies and institutions are male in
BiH, and their dominance affects the
significantly higher online presence of male
candidates than women in pre-election campaign
content online. For example, the average number
of mentions for men in Bugojno is significantly
affected by long-time Bugojno Mayor Hasan
Ajkunić. In Jajce, Edin Hozam, a Mayor over
several terms is mentioned 27 times. Similar are
cases of Mayors Sead Džafić in Kalesija (96
times), Šuhret Fazlić in Bihać (40 times), and
Marin Radišić in Čitluk (46 times). Mirza Ganić
(Visoko, 80 times) is the former Prime Minister
of the Zenica-Doboj Canton, and Ante Begić
(Posušje, 17 times) is the former Minister in the
government of the West-Herzegovina Canton.
The number of online mentions for the
candidates running for regular council seats
differs by gender, especially within Canton
Sarajevo, where male candidates are mentioned
once and female candidates zero times in online
content. In the Bosnia – Podrinje Canton, women
candidates are not mentioned in any of the
searched texts. In the Posavina Canton, where
there were only a few candidate lists and low
number of candidates in the sample, the gender
differences are also noticeable.
Of the 136 mayoral candidates, seven are
women and 129 men. Women were mentioned
on average 3.3 times, men 8 times. The highest
number of mentions related to the former female
Mayor of Visoko, who ran as an independent
candidate in the 2020 Local Elections. Online
media presence is near zero for independent
mayoral candidates if the former Mayor of
Visoko Amra Babić is excluded.
The 40 candidates competing for the reserved
seats for national minorities were mentioned in
observed content far fewer times than all other
studied categories on average. Viewed
individually, the only minority candidate from
the sample mentioned at all in online media
content is Nedžad Jusić in Tuzla, who is a longtime member of the FBiH Council of National
Minorities and already a minority councillor in
Tuzla. Of the seven women minority candidates,
neither one received space in the media content
of their LSGUs and cantons.
In Mostar, the sample included 115
candidates (55 female and 60 male) - 68 of them
385
were list leaders in the 2020 Local Elections, i.e.,
first on the list (50 men, 18 women). In Mostar,
online media from the Herzegovina Neretva
Canton and nationally relevant web portals
mentioned male candidates 0.7 times on average,
women only 0.2 times.
VI.
CONCLUSION
The analysis of the 2020 Local Elections was
carried out at the initiative of the FBiH Gender
Centre, but its main findings could be applied to
Bosnia and Herzegovina as a whole. We received
the data on candidates from the CEC of Bosnia
and Herzegovina, and supplemented it with data
from the CEC website Izbori.ba where necessary.
The research focused on the number of mentions
of male and female candidates in the online
media web portals reporting from or about
candidates from a selected sample of LSGUs in
FBiH. The intention was to document differences
in the frequency of mentions between male and
female candidates in online media. Online media
content was collected primarily using software
tools and combined with data on candidates
from CEC.
Policies that regulate media coverage, as well
as self-regulatory standards, should promote the
proportional representation of women in preelection content. The BiH Press Code for Press
and Online Media should be amended to
recommend proportional representation of
female candidates in pre-election content. A
more complex problem is the need to regulate the
proportional representation of women in the preelection content of the electronic media, which
should be pursued in future amendments to the
Election Law.
Media focus their pre-election content on
male (and rare female) candidates who have
already been prominent and present in the media,
either as mayors and councillors or as directors
in local, cantonal, entity, or state institutions or
companies. Journalists’ and editors’ inertia in
selecting interlocutors and sources also
influences the electorate in Local Elections people vote for continuity rather than change.
This continuity in almost all LSGUs also means
the dominance of men in political life.
For female candidates, online social media
and communication platforms can be
strategically harnessed and used to women’s
advantage, because even the political parties in
BiH still do not exploit these communication
potentials (Facebook is possibly an exception). A
386
minimum requirement for using such platforms
is the candidate's media and information literacy
or continuous support of a person or a team of
online political campaigners. In ideal conditions,
political parties would provide this infrastructure
to female candidates, but parties currently seem
uninterested in substantive gender equality and
will rarely make such resources available to
female candidates. To compensate, gender
equality institutions and non-governmental
organizations could finance or directly provide
such support in a targeted manner to bring female
candidates closer to younger voters.
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387
388
PaKSoM 2022
Improving Digital Competences of
Persons with Disabilities as a
Precondition for an Inclusive Digital
Economy: Evidence from Serbia
Milena Lazić1, Valentina Vukmirović2
1,2
1
Institute of Economic Sciences, Belgrade, Serbia
milena.lazic@ien.bg.ac.rs, 2valentina.vukmirovic@ien.bg.ac.rs
Abstract—In a digitally-driven world with a
constant need for digital workers, policymakers
and organizations are focusing on digital labor as
an employment strategy. Digital labor is
characterized by the production of value which
results from the interaction with ICTs, such as
digital entrepreneurship and digital platforms.
Entrepreneurship in digital platforms offers
flexible work arrangements in terms of timetable
and workplace. This employment opportunity is
especially beneficial for persons who face physical
barriers in the workplace or have to adapt the pace
of work to their needs, such as persons with
disabilities (PWDs). In Serbia, PWDs face high
and tenacious unemployment rates. They result
from workplace discrimination, unperformed
assessment of work-related functional abilities,
unfavorable socioeconomic background, and lack
of professional skills. Despite the fact that creators
of labor market policies in Serbia have introduced
initiatives which should help in developing digital
professional skills among PWDs, they are still very
few. Besides, these initiatives mostly offer basic
digital competences trainings for PWDs, which are
not sufficient for gaining employment in the digital
labor market. This paper shows that there is a
need to understand whether PWDs perceive digital
self-employment through digital entrepreneurship
and digital platforms as a viable solution for the
unemployment issue they face. This information
can help create new training initiatives that would
put the knowledge acquired to practical use.
Keywords – persons with disabilities, inclusive
digital economy, digital competences, digital
entrepreneurship, digital labor platforms
ISBN: 978-86-82602-00-2
I.
INTRODUCTION
With approximately 15% of the global
population, PWDs represent the world's largest
minority [1]. It is estimated that the total number
of PWDs living in the EU amounts to 87 million
[2]. On average, the share of PWDs in the total
population across the EU countries accounts for
24%. Most PWDs in the EU are over 65 (48.5%),
while only 17.9% belong to the working-age
population group. Of the total number of
working-aged PWDs, only 50% are employed
(compared to 75% of persons without disabilities
– PWoDs). According to [3], in 2019, 68% of the
EU population with disabilities would have been
directly exposed to the risk of poverty without
social benefits, allowances and/or pensions.
The number of PWDs in Serbia is estimated
to be more than 700,000, of which only 13% are
employed [4]. According to the latest available
official statistics [5], economic activity is the
highest among PWDs with vision (14.4%) and
hearing impairment (11.2%) and the lowest
among those unable to perform daily living
activities/personal self-care (2.3%), and those
facing
problems
in
communication/
understanding (4.7%). The largest proportion of
employed PWDs are qualified workers at the
third level (level 3) of the NQFS (46.3%),
followed by PWDs at the fourth level (level 4) of
the NQFS (20.4%) and semi-skilled workers at
the second level (level 2) of NQFS (12.6%).
PWDs with completed primary education have
the lowest share in the total number of employed
PWDs in Serbia (12.2%) [6]. Moreover, PWDs
389
in Serbia are paid less compared to their nondisabled counterparts, i.e. only 18% of PWDs, in
opposite to 64% of PWoDs, have monthly
incomes larger than 330 EUR [7]. The brief
overview of the key labor market indicators
implies that PWDs in Serbia face high rates of
inactivity and unemployment, which inevitably
contributes to their social exclusion,
discrimination
and
poverty
(material
deprivation).
In contrast to the traditional working
arrangements, the internet-based business
models provide almost equal opportunities for
PWDs and PWoDs to engage in the labor market,
contributing in that way to their inclusive
employment [8]. Moreover, some authors [9]
indicated that PWDs tend to be more selfemployed than PWoDs. However, to be able to
successfully perform their digital venture
activities or respond to their distant employer
requirements, PWDs must possess an adequate
level of digital competences, skills and
knowledge [10]. In that regard, digital
competences, skills and knowledge have long
been considered a basis for innovation,
competitiveness, boosting jobs and economic
growth [11]. Recent studies [12] also revealed
the linkage between adopting advanced ICT
solutions and risk mitigation. Moreover,
advancing digital skills and competences was
recognized as a precondition for European
growth and development in the Digital Agenda
for Europe [13].
The subject of this paper is the evaluation of
interest in starting a digital entrepreneurial
venture and the assessment of the current level of
knowledge of freelance platforms of PWDs in
Serbia. The paper aims to identify the room for
further improvement of the digital competences
of PWDs in Serbia as a precondition towards
more inclusive employment through digital labor
platforms. The paper's main contribution reflects
the fact that the potential of digital
entrepreneurship and platform work is
insufficiently recognized as a means of reducing
the long-term unemployment of PWDs in Serbia.
The paper consists of six parts. After the
introductory remarks, the potential of digital
platform work has been introduced. In the third,
fourth and fifth parts research methodology,
sample and research results have been presented,
respectively. The last, sixth part, concludes the
paper and provides recommendations for
policymakers in Serbia.
390
II.
THE POTENTIAL OF DIGITAL PLATFORM
WORK
Platform work is defined as matching the
demand and supply of paid work through an
online platform using the algorithm [14]. In this
process, the client offers work, the individual
provides it, while the platform manages the
process. Work on online platforms is realized as
mass work (crowdwork), which is paid work
from remote locations, whereby the employer
does not have to be registered in the country of
the workers he hires [15]. Crowdwork is the
work engagement of many people (crowd),
mainly divided into microwork and online
freelancing or macrowork [16]. The term
microwork is used to describe the practice of
mass work that involves breaking larger projects
into smaller work tasks, i.e. microtasks, which
are advertised on online labor platforms for
which individuals apply and perform them for
monetary compensation. Microtasks usually do
not require advanced digital competencies, can
be realized in a shorter period of time and can
thereby be repetitive. On the contrary,
macrotasks require more advanced digital
competences and are usually assigned to
individuals and possibly their collaborator(s).
Microtasks are typically monitored by
algorithms, while workers are mostly
anonymous. Platforms such as Clickworker and
Mechanical Turk are examples of micro labor
platforms. Macrotasks are substantially more
complex and take more time to be completed.
Clients monitor the quality of macrowork tasks,
and workers must make their profile pictures and
names visible on their profiles [17].
According to the International Labor
Organization, since 2010, the number of digital
labor platforms has increased fivefold [18].
Accordingly, the number of digital workers is
rising exponentially. In 2018, Serbia was ranked
among the leading countries in Europe and the
world by the ratio of digital workforce relative to
the country's population versus the total
workforce [16]. Also, based on the annual
income growth of online freelancers, Serbia
ranked in the top 10 countries in the world in
2019 [17]. Based on these data, it can be
considered that engagement on digital labor
platforms represents an accepted work practice in
Serbia.
In order to perform tasks on digital labor
platforms, individuals do not have to possess
work experience. This is of particular importance
for the long-term unemployed. PWDs represent
one of the categories among the less likely
individuals to obtain employment. The low
employment rates among PWDs are the result of
workplace bias and discrimination, unperformed
assessment of work-related functional abilities,
unfavorable socioeconomic background, and low
educational and skill levels. As PWDs do not
have to reveal their disability status to online
employers, it can be assumed that digital
technology advances can offer fairer work
opportunities for this traditionally excluded
group in the labor market. Therefore, the authors
of this paper aimed to investigate the attitude of
persons with disabilities towards work on digital
labor platforms and assess their knowledge about
the principles and requirements of online
platform work.
III.
METHODOLOGY
The research is a part of the project Digital
competences of persons with disabilities in
Serbia and their involvement in online platform
work – DigCompOSI, financed by the Institute of
Economic Sciences, Belgrade. In this paper, only
selected sections will be presented using
descriptive analysis. More information on the
issue may be found in [8] and [19].
The sample consists of 245 Serbian residents,
members of one of the twelve member
organizations of the National organization of
persons with disabilities of Serbia (NOOIS)
and/or the Sports association of persons with
disabilities Belgrade. The data were collected
during March and April 2022 via a questionnaire
in which the respondents assessed various
statements on a four-point Likert scale: (1) I have
no skills at all; (2) My skills are very poor; (3) I
have some skills, but not sufficient to operate on
my own; (4) I have sufficient skills to operate on
my own.
The questionnaire consists of four parts. The
first part includes the standard set of
socioeconomic questions. The second part was
designed to evaluate the general digital
competences of the respondents. It was
developed based on the methodology used in the
Digital Competences Development System –
Contents of the Self-Assessment Tool (2018),
which is essentially grounded on DigComp 2.1
framework. Even though the DigComp 2.1
framework contains both questions for selfassessment and a practical task (real-life
scenario), due to the specificity of the population
observed, the questionnaire used in this research
contains only questions for self-assessment. The
third part was designed to evaluate the digital
entrepreneurial competences of the respondents,
while the fourth part was designed to evaluate the
respondents' knowledge of freelance platforms.
The questions in the third and fourth parts were
also based on DigComp 2.1 framework.
For the purpose of this paper, only selected
questions included in the third and fourth parts of
the questionnaire will be analyzed.
IV.
SAMPLE DISTRIBUTION
The gender distribution of the sample
indicates an almost equal proportion of women
(46.9%) and men (53.1%). More than 75.0% of
the respondents are aged between 30 and 60. The
largest share of the respondents is located in
Vojvodina (38.4%) and Belgrade (29.0%).
Distribution of the sample by education level
reflects a higher proportion of PWDs graduated
from high school (67.3%) and the faculty
(20.0%). The dominant part of the respondents
have
difficulties
with
walking
or
climbing (71.4%).
V.
RESEARCH RESULTS
The research results indicate that 71.4% of
the respondents had never started a digital
entrepreneurial venture (Fig.1), while 68.6%
declared they did not intend to engage in digital
entrepreneurship (Fig.2).
28.60
%
71.40
%
Yes
No
Figure 1. Distribution of respondents according to
whether they have ever started a digital entrepreneurial
venture.
31.40
%
68.60
%
Yes
No
Figure 2. Distribution of respondents according to
their intentions to engage in digital entrepreneurship.
391
Concerning the freelance platforms, only
38.8% of the respondents stated that they are
familiar with what these platforms are and how
they work (Fig.3).
Out of the total number of respondents
familiar with the functioning of freelance
platforms, 52.7% are able to recognize the
various jobs available on these platforms. The
remaining 47.3% possess certain or very modest
abilities that are insufficient to independently
perform the activity (Fig.4).
Concerning the ability to find a job on the
freelance platform, 36.8% of the respondents
perceive that they can independently find a job
advertisement available on the freelance
platform. Nevertheless, 63.2% of the
respondents believe that they do not possess
enough skills that would allow them to recognize
an adequate opportunity for employment on
freelance platforms (Fig.5).
Regarding the ability to apply for a job on the
freelance platform, almost half of the
respondents (47.1%) would not be able to
independently apply for employment through
freelance work platforms (Fig.6).
38.80%
61.20%
Yes
Figure 5. Distribution of respondents according to the
possibility of finding a job on the freelance platform.
Figure 6. Distribution of respondents according to
their ability to apply for a job on the freelance
platform.
Concerning the ability to successfully
implement the job found through the freelance
work platform, more than half of the respondents
believe that they do not possess an adequate level
of ability to independently perform the task
(Fig. 7).
No
Figure 3. Distribution of respondents according to
their knowledge of freelance platforms and their
functionalities.
Figure 7. Distribution of respondents according to
their ability to successfully implement the job they
found on the freelance platform
Figure 4. Distribution of respondents according to
their ability to recognize the type of jobs they can
apply for through freelance platforms.
392
VI.
CONCLUSION AND POLICY
RECOMMENDATIONS
Although unfavorable, the respondents' low
level of interest in engaging in digital
entrepreneurship through online labor platforms
could indicate that digital entrepreneurship is an
insufficiently promoted and utilized strategy for
improving the employment chances and
economic position of PWDs in Serbia.
The results of this research lead to the
conclusion that most respondents are not familiar
with the functionalities and employment
potential of freelance platforms - slightly less
than 40.0% of respondents are aware of the
freelance platform concept and their work
mechanisms. Of that number, only about 50.0%
of respondents are familiar with different types
of jobs they can apply for on freelance platforms.
The lower levels of competences are also
noticeable in terms of the possibilities of
searching and applying for a job on a freelance
platform, as well as the ability to successfully
perform work tasks obtained on a freelance
platform.
The results of this research point to the need
for introducing tailor-made retraining programs
in advanced digital skills for work and digital
entrepreneurial competencies, which could
provide persons with disabilities with practical
knowledge and empower them for selfemployment through digital entrepreneurship on
digital labor platforms. The existing programs
are mostly created to provide training in the basic
digital competences, and very few of them
prepare the training participants for specific work
positions offered in the labor market, such as web
designer, IT administrator, or e-business
specialist. Therefore, the skills provided in the
retraining programs created by the labor
institutions in Serbia should be aligned with the
digital labor market needs. Accordingly, these
programs should empower participants to search
for employment on online labor platforms by
introducing them to the platforms' work
mechanisms and work terms and conditions.
Additionally, the programs should provide
trainings in soft skills, such as professional
communication and negotiation, portfolio
creation, and setting an adequate price for
one's work.
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ekonomija u Srbiji: ko su digitalni radnici i radnice iz
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394
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Economic Sciences.
PaKSoM 2022
Comparative Analysis of Human
Development at the Global Level
Suzana Stojković1, Milica Stanković2, Tiana Anđelković3
1,2,3
The Academy of Applied Technical and Preschool Studies – Vranje department,
Vranje, Serbia
1
suzana.stojanovic@akademijanis.edu.rs, 2milica.stankovic@akademijanis.edu.rs,
3
tiana.andjelkovic-vr@akademijanis.edu.rs
Abstract—Growth and development is an area of
great importance and attention in economic
science. Human resources are a factor without
which modern business cannot be imagined.
Human capital, i.e. employees, are drivers of the
economic growth of the every country national
economy, and therefore it is necessary to invest in
the education system, i.e. invest in the knowledge
of employees in order to achieve economic growth
and development. The standard of living has a
direct impact on human development, and it
depends on long-term economic growth. The aim
of the work is to describe the concept of human
development, the importance of human resources
in modern business conditions and the trends of
human development at the global level.
characteristics of modern human life and the best
way to overcome all problems is to double
human development.
Keywords - human development
education, human development
Investing in the education and knowledge of
employees in modern changing business
conditions, when changes need to be predicted, is
a necessary condition for the development of all
developing countries, and it is the economy
based on knowledge and innovation that can
reduce the difference that exists between
developed and developing countries. It is
necessary to constantly invest in the knowledge
of employees and in their retraining and
retraining in order to keep up with changes and
to achieve growth and development. The aim of
the work is to describe the concept of human
development, the importance of human resources
in modern business conditions and the trends of
human development at the global level.
I.
index,
INTRODUCTION
We all live in a world of change today. The
COVID-19 pandemic has led to upheavals in
human development throughout the world and
continues to unpredictably create new changes
and upheavals. War, in addition to the pandemic,
contributes to changes in the development of
human society and creates new problems for
humanity. There has been a changing
geopolitical order and a strained multilateral
system.
Record temperatures and storms, highly
variable human-caused weather conditions cause
every alarm bell to stop working and notify us of
all changes and dangers. Acute crises give way
to chronic, layered, interconnected uncertainties
on a global scale, creating a picture of uncertain
times. Uncertainty and changes are the
ISBN: 978-86-82602-00-2
There is a widening gap between developed
and developing countries, rich countries are
getting richer and developing countries are
struggling to close the gap that already exists.
Intellectual capital is the basis for further
development of both developed and developing
countries. Developed countries, in addition to
intellectual capital, constantly gain their position
with the help of material capital. Developing
countries continue to produce raw materials for
developed countries leading to the creation of the
extremely rich and the poor.
II.
THE CONCEPT OF HUMAN
DEVELOPMENT
The level of economic development of each
country affects the quality of its inhabitants life.
395
For people, in addition to the standard of living
and the ability to meet their needs, education,
security, freedom of speech are also very
important... The Human Development Index
(HDI) is one of the most important indicators of
the quality of life and has been used by the
United Nations in its assessments since 1990.
The human development index is influenced by
the well-being, choice and perspectives of the
population. Human development is measured
with the help of the aggregate HDI measure, and
it consists of three parameters: healthy life and
living environment, the possibility of acquiring
knowledge and education, and the level of the
standard of living. Therefore, in addition to
determining the current economic position of the
national economy, the human development index
also monitors the quality of human life through
health care and education. If we look back at
access to knowledge and education, we can see
that there are two indicators, namely the average
and expected number of years of schooling. The
movement of the gross social product shows the
possibility for unhindered satisfaction of needs
and the possibility of achieving a better standard
of living [1].
In step with the technical-technological
revolution and economic growth, it is necessary
to transform the concept of human development
and define a standard that determines the level of
human development in order to assess the level
of human development in a certain country. The
challenges of modern society, which are a
consequence of the COVID-19 pandemic and
war, are great and have led to changes in the
development of society. It is necessary to create
better conditions for life and work in order for the
human development index to be better and for it
to continue the upward trajectory it was on before
the crises facing human society. Investing in
human capital, through the process of education,
training and retraining, is the way to successfully
overcome every new crisis.
The key elements of the human development
concept are:
Humanity - the goal of development
represents a greater degree and
improvement of the human life quality;
Efficiency - optimal use of human
resources, through investment in
education, health and skills of people,
with efficient allocation of resources;
396
Empowerment - the concept of human
development implies an active role and
great involvement of people in creating
development;
Equality - implies equal access of all
people to opportunities and equal
distribution of income and property;
Sustainability - all resources should be
used so that people take care of future
generations;
Trust and solidarity - we need to develop
the value of society and raise awareness
of the understanding of vulnerable
groups;
Comprehensiveness - the concept of
human development includes all
dimensions of human development:
economic, health, educational, political,
social and cultural [2].
One of the basic questions in economic
theory and practice is whether countries should
invest more in education in order to ensure
economic growth, and there are opinions that
investments in education accelerate economic
growth [3].
III.
EDUCATION AS A FUNCTION OF HUMAN
DEVELOPMENT
According to Schulz, education is a driver of
development not only through raising the quality
of the human factor, but it is also a strong factor
in the quality of other factors of production.
Equipment and devices would not have been
developed at this level and would not have been
further developed if they had not been perfected
by highly educated workers. Human capital and
technology are linked and together influence
economic growth and development. The crisis
facing the whole world can be overcome with the
help of innovation and new technologies.
Innovations and new technologies lead to a new
type of development, i.e. lead to green business
and digital society. Green business and digital
society are topics that are very current in research
because we all have to think about future
generations and ensure their survival [4].
The Republic of Serbia adopted the
Education Development Strategy in the Republic
of Serbia and it is aimed at providing the
foundation for the development of every resident
of the country, society and the development of
the country as a whole. The strategy defines the
goals of long-term development of education and
they include:
improving the quality of the education
process and its outcome to the maximum
possible level based on the best
educational practices;
improvement of education at all
educational levels - from preschool
education to lifelong learning;
improvement and maintenance of
education that is fully or partially
financed from public sources;
greater efficiency in the use of all
educational resources and completion of
education within the period provided
for [5].
Investing in human capital, that is, in the
education of the population, is of great
importance for the efficient and effective use of
economic opportunities. In labor markets,
priority is given to cognitive skills (solving
complex problems), sociobehavioral skills
(teamwork) and combined skills based on logical
thinking. In order to build all the aforementioned
skills, it is important to invest in human capital,
in the development and improvement of
employees’ knowledge, as well as in lifelong
learning. It is necessary to acquire and improve
knowledge constantly in order for the economy
to be competitive in the market where changes
are the only constant. Human capital can create
great advantages for all who possess it and who
nurture it through continuous education, and for
this reason developed societies pay great
attention to education. Educated people and
developed human capital result in the
development of new ideas and technologies, that
is, innovations that directly affect economic
growth and development.
“Education contributes to the generation of
ideas and the spread of technology. The rates of
technological change and the increase in
productivity are directly related to the level of
human capital, hence the great impact of
education on economic growth” [6].
IV.
HUMAN DEVELOPMENT INDEX
The complex indicator, which is most widely
used throughout the world and which is used for
international comparisons and evaluations of the
achieved development of each country, is the
Human Development Index (HDI). The Human
Development Index was developed by the United
Nations and was first used in the 1990 in Human
Development Report [7]. Along with the
development of human society, there was a need
for a common measure of economic and social
development and a comparison of the human
development level of all countries in the world.
As a result of the search for such a measure, the
human development index was created, which
gives the overall picture of the country
development in a comprehensive and different
way compared to all other indicators. For this
reason, this indicator is most often used
throughout the world.
The United Nations Development Program
publishes an independent editorial publication,
the Human Development Report, every year. The
United Nations for Development published the
first report in 1990 under the title “People are the
real wealth of nations” and thus introduced a
different and new approach to the development
of human society [8].
The Human Development Index is a
combination of three different indicators that
represent the opportunities that people expect to
achieve, and are available in almost all
international statistical yearbooks (international
data provided by the UN Population Division, the
UN Institute for Education, Science and Culture
(UNESCO), and World Bank), namely:
general quality of life,
education, and
standard of living, i.e. economic wellbeing of people.
By reducing these three indicators to one
common measure, all countries of the world are
classified into one of four categories, which
indicate the level of human development
achieved:
0.000<HDI<0.550 - low level of human
development;
0.550<HDI<0.699 - medium level of
human development;
0.700<HDI<0.799 - high level of human
development;
0.800<HDI<1.0 – very high level of
human development.
The human development index is calculated
in order to rank world economies according to
397
the level of the human development index. When
comparing the human development index with
the ranking based on the gross domestic product
per capita, three situations are possible:
if the HDI rank is close to the rank of
gross domestic product per capita, it
means that there is harmony between
existing resources and development
results;
if the HDI rank is higher than the rank of
the gross domestic product per capita, it
means that the development policy is
conducted in the function of the entire
population;
if the HDI rank is lower than the rank of
the gross domestic product per capita, it
means that in the given area the
development policy is not in the function
of the entire population.
The Human Development Index charts
human progress and highlights large differences
in well-being and life chances between countries
by age. The value of the specified index for each
of the countries represents the range between the
maximum value and the value that country had in
a given year, which gives an opportunity for
comparison with other countries and their results.
Based on the value of the HDI index, each of the
countries can see what their shortcomings are
and, based on the identified shortcomings, find a
way to reduce them and get closer to the
maximum value. Regardless of all the
advantages of the HDI index, it will never
perfectly capture human development in its full
sense [9].
Fig.1 shows the values of the human
development index at the global level by year
starting from the first report in 1990 and ending
in 2021. It can be seen in the figure that the value
of the human development index at the global
level has been declining in the last two years due
to the consequences of the COVID-19 pandemic
and war. The COVID-19 pandemic and the
ongoing war have brought many changes to
people’s daily lives. Food and water shortages, as
well as price changes, are problems that all
people face. Due to the action of the
aforementioned changes, the constant growth of
the value of the human development index was
interrupted.
The difference between the planned and
realized movement of the human development
index curve is clearly visible. The value of the
human development index was projected to
increase, but the value of the same has declined
and continues to decline because the problems
faced by human society in recent years have not
been eliminated. It is necessary to improve
people’s quality of life so that the value of the
human development index continues to move
upward.
Fig.2 shows the share of countries by groups
of human development index values. There are
three groups of human development index values
and all the countries of the world occupy a value
in one of the groups, namely:
•
a group of countries with a low and
medium HDI index,
•
countries with a high HDI index, and
•
countries with a very high HDI index.
Figure 1. The value of the human development index at the global level by year [10].
398
Figure 2. The share of countries in each group of human development index values for which the HDI value was
calculated and which experienced a decline in the HDI value [10].
Figure 3. Widespread but uneven decline in human development index (HDI) values after the COVID-19 pandemic:
regional and group aggregates [10].
In all countries of the world for which the
HDI value was calculated, a drop in the HDI
value was noted, regardless of which group they
belong to. Most of the countries with a very high
HDI did not suffer a significant decline in HDI in
2021, but, in contrast, most of the countries with
a low and medium level of HDI suffered a large
decline. Developed countries and countries with
a high HDI index have developed methods to
prevent and overcome the problems they face
and invest continuously in innovation.
Fig.3 shows the decline in the value of the
human development index in 2021 compared to
2020. The decline in value is evident and
widespread, but is uneven when looking at
different levels of HDI values. The uneven
decline in the value of the human development
index after the COVID-19 pandemic is shown.
The COVID-19 pandemic is one of the main
reasons for the drop in the HDI value because the
world has undergone great changes, starting with
the closure of countries and the impossibility of
travel, through shortages of basic foodstuffs, a
large number of infected people... All this leads
to consequences of a large scale when looking at
the quality of human life and the economy of
every country in the world.
Table I shows the top 10 countries with the
highest value of the human development index
for 2021. The country with the highest value of
the development index is Switzerland, whose
HDI value is 0.962, followed by Norway, whose
HDI value is 0.961, and which was in first place
in 2020. In third place is Iceland, and the value
of the human development index is 0.959. In the
report for 2020, Iceland was in second place. All
countries, which belong to one of the first places
when we look at the human development index,
have a long life expectancy, highly developed
education and a large GNI per capita.
399
TABLE I.
TOP 10 COUNTRIES WITH THE HIGHEST HDI VALUE [10].
HDI
rank
Country
1
Switzerland
Human
Development
Index (HDI)
Value
2021
0.962
Life
expectancy
at birth
(years)
2021
84.0
Expected
years of
schooling
(years)
2021
16.5
Mean
years of
schooling
(years)
2021
13.9
Gross national
income (GNI)
per capita
(2017 PPP $)
2021
66.933
HDI
rank
2
Norway
0.961
83.2
18.2
13.0
64.660
1
3
Iceland
0.959
82.7
19.2
13.8
55.782
2
4
Hong Kong,
China (SAR)
0.952
85.5
17.3
12.2
62.607
4
5
Australia
0.951
84.5
21.1
12.7
49.238
5
6
Denmark
0.948
81.4
18.7
13.0
60.365
5
7
Sweden
0.947
83.0
19.4
12.6
54.489
9
8
Ireland
0.945
82.0
18.9
11.6
76.169
8
9
Germany
0.942
80.6
17.0
14.1
54.534
7
10
Netherlands
0.941
81.7
18.7
12.6
55.979
10
Each of the top 10 countries with the highest HDI
value also occupied one of the top 10 places in
the previous report for 2020.
Based on the data from the table, it can be
seen that each of the countries invests improving
people’s quality of life and living standards and
invests significant funds in education and
retraining of the population, which results in a
longer life expectancy of the population and a
higher degree of satisfaction for all people. The
longest life expectancy was recorded in Hong
Kong at 85.5 years.
TABLE II.
2020
3
Table II shows the human development index
of Serbia among other countries. The Republic of
Serbia is on the list of countries with a very high
value of the human development index and is in
63rd place together with Georgia and Mauritius.
The HDI value for Serbia is 0.802. Life
expectancy in our country is 74.2 years, which is
less than the leading countries. In the previous
year, the Republic of Serbia was in 62nd place.
This leads us to the conclusion that changes are
necessary in our country in order to find a better
position and to improve the quality of life of the
population of our country. The country that ranks
last when we look at countries with a very high
HUMAN DEVELOPMENT INDEX OF SERBIA AMONG OTHER COUNTIRES [10].
Human
Development
Index (HDI)
Life
expectancy
at birth
Expected
years of
schooling
Mean
years of
schooling
Gross national
income (GNI)
per capita
Value
(years)
(years)
(years)
(2017 PPP $)
2021
2021
2021
2021
HDI
rank
HDI
rank
Country
2021
2020
60
Belarus
0.808
72.4
15.2
12.1
18.849
60
61
Panama
0.805
76.2
13.1
10.5
26.957
67
62
Malaysia
0.803
74.9
13.3
10.6
26.658
61
63
Georgia
0.802
71.7
15.6
12.8
14.664
64
63
Mauritius
0.802
73.6
15.2
10.4
22.025
62
63
Serbia
0.802
74.2
14.4
11.4
19.123
62
66
Thailand
0.800
78.7
15.9
8.7
17.030
64
400
HDI value is Thailand and the HDI value
is 0.800.
overcoming obstacles such as the COVID-19
pandemic.
The basic premise of the further human
development of Serbia lies in the removal of
obstacles and all problems, first of all, by
reducing poverty, solving a number of
environmental issues, it is necessary to
modernize the health infrastructure, reduce the
percentage of households that are not connected
to water supply and sewerage, improve
educational conditions and make the illiterate
part of the population literate as well as a further
increase in the IT literacy rate. It is very
important that Serbia reaches a higher level of
equality between the sexes. In addition, the
growth of the gross domestic product and the
reduction of unemployment are needed. It is
necessary to continue with the construction of
adequate information systems in all segments of
human development in Serbia, to determine the
factual situation and the causes of negative
trends. All of this would significantly contribute
to the establishment of a healthy base for human
development in Serbia in the coming period.
Innovation is essential for strengthening
competitiveness,
and
modern
business
conditions and changes in the market, such as the
emergence of e-commerce, lead to the need for
companies to be innovative in order to survive
and develop in the market. [18] Many hopes
today are placed in positive transformational
changes, which rely on technological innovation.
Technological
change
affects
human
development in a number of ways - through
people’s broader ability to do more things and
affects the social context and everyday activities
of people. Innovation drives growth and helps
solve societal challenges, [19] contributing to
mitigating
climate
change,
promoting
sustainable development and promoting social
cohesion. It represents a broad process of
transformation in which people’s initiative and
creativity interact with social, economic and
political choices.
V. THE IMPACT OF HUMAN DEVELOPMENT
AT THE GLOBAL LEVEL ON RISK MANAGEMENT
AND INNOVATION
Human development is a topic that is the
focus of a large number of researchers. All
changes faced by human society should not be
seen as obstacles, but as new opportunities. New
technologies have enabled rapid progress in
human development, for example, in healthcare,
antibiotics and vaccines have significantly
extended life expectancy [12].
Global climate change is a serious threat to
people and natural ecosystems. They have a
significant impact on the daily life of people, as
well as on the environment, business and
economic development. [13]. In China, rapid
industrialization and economic expansion,
together with excessive use of energy and natural
resources, have resulted in significant
environmental degradation [14,15]. The ongoing
COVID-19 pandemic is having a significant
impact on global health, as well as on social,
economic and political institutions [16].
Resources, which are limited and dwindling,
require ever stronger efforts by people to create
and implement new ideas with the help of
innovative thinking. Innovations in health,
pharmaceuticals, energy, artificial intelligence
and quantum computing [17] are critical to
In the past two years, a number of authors
have addressed innovation as a state-of-the-art
survival strategy in crisis situations like the
COVID-19 pandemic [20]. In the event of a
pandemic, organizations must adapt to new
technology and all the changes they face. Human
development,
fueled
by
technological
revolutions, economic crises and new
regulations, creates new opportunities for the
production of materials, structures, processes and
capacities. Innovative technologies improve
business analysis and forecasting, new product
creation, order processing, logistics, automation,
quality control, and marketing [21]. Business
Model Innovation (BMI) is one way to overcome
all the obstacles faced by small and medium
enterprises [22,23]. Open innovation is one way
to minimize the impact of the COVID-19
pandemic on education, the economy and
people’s daily activities, which affects the
quality of life [24,25].
The role of education and knowledge in the
modern world is very important and leads to the
development of people’s creative potential and
the functioning of society. The increase in the
importance of scientific and technological
innovations and the application of new
information and communication technologies in
everyday life provides numerous opportunities.
The aspiration for the fastest possible human
development is in correspondence with the
accelerated adaptation to the requirements of
401
technical and technological progress and the
needs of the labor market. In addition to
improving creativity, entrepreneurship and
innovation, education contributes to job creation
and economic growth, which leads to human
development. Education is one of the greatest
values of society because it helps us understand
the world in which we live.
VI.
CONCLUSION
Where we go next depends on all of us. The
entire human society and our planet go through
and have gone through periods of change and
instability. It is necessary to find a way to solve
all problems as soon as possible and to continue
the development of human society. The key
characteristic of this era is the role of people with
their knowledge and therefore it is necessary to
invest in education and the level of social wealth
because it represents a way to overcome all
obstacles in order to build a better future.
Without human capital, there is no economic
growth and development, and knowledge-based
economies consistently achieve better results
than others. Only highly educated human capital
is the one that is economically desirable and of
high quality. All highly developed economies of
the world have noticed that education is a
condition for success and a greater value of
human capital, and they are the carriers of
technical and technological development. As
long as there is a disproportionate educational
structure of the population in the world, the gap
between developed and developing countries
will be pronounced because education is the
engine of economic growth.
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PaKSoM 2022
School Culture as a Predictor of
School Identity
Dinko Jukić1
1
Trade and Commercial School “Davor Milas”, Osijek, Croatia
1
dinkojukic.phd@gmail.com
Abstract—The paper research and analyse school
culture and school identity. It is based on Balmer’s
methodology of the AC2ID Test model, according
to which different identities of the school are
presented. The study uses a hermeneutic
perspective and content analysis. A research
question is asked, what constitutes school identity
and tries to connect the importance of school
culture and school identity. It is based on the
premise that school culture is a predictor of school
identity and that a positive image can be built
through building the school’s reputation, teacher
satisfaction and service quality. Teachers were
observed from two aspects: educational and
economic. The educational aspect emphasizes the
importance of teachers and their identity, while
the economic aspect observes teachers as carriers
of school promotion and service providers. It is
concluded that the construct of school culture
represents a crucial element of identity building
and that school identities important for school
management and marketing can be predicted
through school culture.
Keywords – identity, image, teacher, school
culture, service
I.
INTRODUCTION
A school is a living organism that depends on
teachers, students, and the environment. As a
non-profit organization and a socially
responsible institution, it is a specific educational
institution. The specificity of the school stems
from its existence as an educational and cultural
institution formed by the curriculum, teachers,
geographical area, and society.
Teachers are the fundamental bearers of
school and education [1]. They are
simultaneously its promoters and service
providers [2]. The issue of curriculum and
education is important for every government, so
ISBN: 978-86-82602-00-2
the very concept of schooling is viewed from
political,
economic,
sociological,
and
pedagogical aspects. Schools, regardless of
whether they are private or state, reflect two key
characteristics of society: the formation of
students and the formation of national identity.
High-quality universities and schools symbolize
cities, regions and countries, and high-quality
teachers represent faculties, schools [3], their
fields and departments.
The topic of this paper is school culture (SC)
and its influence on the creation of the school’s
reputation, that is, the analysis of school identity
(SI). Since schools in Europe are mostly nonprofit institutions, the issue of school identity and
image is not only a matter of school management
(SM) [1,2], but also a question of long-term
survival in the field of education.
This especially applies to high schools and
colleges, unlike elementary schools, which are
regionally oriented and have no competition.
Therefore, the paper tries to answer the question
in which context SC is a predictor of identity. In
this sense, the question of how to build a school
image was analysed.
II.
METHODOLOGY
The work uses qualitative methodology [4,5],
i.e., interpretive-constructivist paradigm [5]. It
starts from a hermeneutic perspective and
content analysis of relevant sources on corporate
identity [6,7]. The SI analysis methodology was
observed according to Balmer’s AC2ID Test
model to show different identities. According to
Keller [8], the brand image was analysed.
The aim of this study is the analysis of visible
and invisible SC in the context of SI construction.
It assumes that SC is a predictor of school
403
identity, i.e., that elements of brand identity can
be diagnosed and analysed through SC. Also, SC
was analysed in the context of building the
school’s identity and image, and emphasis was
placed on the importance of teachers.
The limitation of the work is the fact that it is
based on qualitative research. The paper presents
theoretical models that have not been empirically
evaluated. In further research, it is possible to
explore the perception of SC through three
different forms of secondary schools
(gymnasiums, art, and vocational schools) and
compare their common features. Also, different
forms of school identity can be researched and
compared with employee satisfaction.
III.
SCHOOL CULTURE
School culture (SC) is a complex concept
[9,10]. Every educational organization like
school, college and university has its own
specificity. The personality of the school as an
organization, its way of working, the behaviour
of employees and their attitudes make up the SC
construct. School culture can be strongly
oriented towards employees, organization,
students, service, image, and society. This way of
working, behaviour and life of the organization
forms the base of SC.
Each school has its own type of SC, which
depends on the school’s strategy, goals, and
leadership. There are no two identical schools,
just as there are no two SC’s that are the same.
SC consists of the dominant culture and different
subcultures (students, teachers, pedagogues,
parents, stakeholders). This relationship between
SC, society’s culture and teacher’s identity is
woven into school management (SM).
SC is a stable phenomenon that reflects the
mission of the school (see Table I). The common
values of an organization, i.e., the feeling of
belonging to the company, is most often called
organizational culture. Organizational cultures
differ from each other just as SCs differ from
each other according to teachers, type of school,
area of affiliation, way of leadership and
management methods.
TABLE I.
SCHOOL MISSIONS BY TYPE OF EDUCATION
Gymnasiums
Vocational school
Art school
General culture
Learning
Study
Labour market
Work
Specialization
Art
Creativity
Exhibitions
404
As can be seen from Table I, school missions
reveal the school’s cultural models and their SC.
In this way, school culture provides SI models
and employee action. It is about the school’s
corporate image [6] and reputation [7].
Analysing the types of secondary schools and
their characteristics, it is obvious that
gymnasiums have a different SC than vocational
and art schools. The reason for this stems from
the specificity of the gymnasium goals and
missions, which focus on lifelong learning,
general culture and preparing students for further
education.
Unlike gymnasiums, art schools encourage
creativity (music, painting, sculpture, dance),
and their goal is nurturing art and opening an
exhibition. Finally, vocational schools are
focused on the labour market, and they conduct
specialization to train students for work (see
Table I).
In this sense, SC depends on numerous
factors such as ownership (private and public
schools), teachers, school type and school size.
Some authors consider the SC concept too
general [11] because it connects concepts from
anthropology and sociology [12,13] such as
myth, symbol, ethos, and habitus [13,14]. School
culture can most simply be described as the
shared beliefs and values of the school. Strong
SC shapes employee behaviour. School culture
consists of frameworks, products, expressions,
and activities [15].
SC depends on the way of managing the
school [1,3,11], motivating employees and
building and maintaining the image [2]. Also, it
is important to emphasize that SM often includes
general management [9,11] because it is not in
accordance with the educational values of the
school, and thus the school is viewed in the
context of the market, not education. This is also
the biggest criticism of SM because it relies on
management, not school leadership.
A. School management and school climate
Despite the criticism of SM as focusing on
the service itself, employees and hierarchy, the
fact is that management in education is necessary
[10,13]. From the economic aspect, the school as
an educational institution that provides
systematic knowledge in certain areas
(depending on the type of school) has no
competition. The main goal of the school is
education, and, in this sense, schools are
necessary for the development of society.
However, the school represents a social,
cultural, and educational community of teachers,
students, parents, and all others who contribute
to the realization of educational goals. (see
Table II). In this sense, the school represents the
most organized form of all educational factors.
Its autonomy refers to teaching and adapting the
curriculum for its programs [10,16].
The social roles of schools refer to the
provision of professional qualifications,
nurturing tradition, and legal regulation of
education. The communicative role of the school
includes the interaction of teachers and students,
collaborative relationship, and community with
other stakeholders [17]. The pedagogical role
includes upbringing and an educational
dimension. From the above, it can be concluded
that SC depends on the role and type of school.
School climate, in contrast to SC, refers to the
perception of employees, i.e., to the school
“atmosphere”. Therefore, school climate
represents the perception of employees who
work in the same environment and their common
views, beliefs and value system affects the
behaviour of all employees. This means that the
school climate refers to teachers, describes their
behaviour, is based on the teachers’ routine
actions, and affects their attitudes.
Since there is a connection between
organizational climate [18,19], i.e., school
climate and other organizational variables, such
as the connection between job satisfaction, work
performance and SM, school climate is an
important psychological construct. The school
climate affects the motivation of employees and
the behaviour of teachers, but it also affects the
construction of the teacher’s identity.
The role of organizational culture and climate
is important because it depends on building the
reputation of the school that consequently leads
to the construction of the image [2]. Since the
school climate is strongly influenced by the
formal and informal organization, the way the
school is managed and led, we present the
characteristics of the school as an organization.
TABLE II.
SCHOOL ROLES AND THEIR RELATION TO
THE SOCIETY
Social
Communicative
Pedagogical
Qualification
Tradition
Institution
Interaction
Relationship
Cooperation
Upbringing
Education
Participation
B. School management and organization
SC occurs as a transmission between the
external environment and school activities. Since
cultural values can activate and motivate teachers
and direct their behaviour towards the common
goals of the school, it is important to balance
between internal and external integration of the
organization.
Exclusively
market-oriented
private schools have a problem with internal
integration.
This tells us that the connection of SC, the
productivity of teachers and the success of the
provided service requires certain characteristics
of culture: formal and informal elements. We
view the formal elements of SC as visible signs
that are easily recognizable, such as school
symbols, ceremonies, and teacher behaviour.
However, the invisible signs are the common
values of the school, attitudes, and beliefs of the
teachers [14,15].
Since SC is intertwined in all school
activities, it affects the way of organization, type
of management and degree of decentralization
[9]. Also, SC affects the type of school
management,
degree
of
formalization,
standardization, school climate and HR. In this
context, SC not only represents cause and effect,
but also shapes the strategy of SM. Furthermore,
SC shapes both the identity of the school and the
identity of the teacher.
Bureaucratic organization is characterized by
deep and detailed division of labour, high
specialization of jobs, standardized policy,
centralization, many rules, rewards based on
loyalty to superiors [20,21] and lack of
innovation (see Table III).
Bureaucratic culture is based on the logic of
diversity, which leads to greater obligations of
employees, and numerous rules and procedures.
SC belongs to the area of bureaucratic culture
because rules, curriculum and procedures are
more important than the employees themselves.
Employees are expected to work according to the
adopted curriculum.
TABLE III.
CHARACTERISTICS OF THE SCHOOL
ORGANIZATION
Characteristics
Teacher’s contribution
The flexibility of school
School hierarchy
Decision-making style
Communication
Impact
Indirectly
Small impact
Significant impact
Autocracy
Vertical
405
According to Handy [20], bureaucratic
culture is metaphorically shown as a Greek
temple, where the pillars are the elements on
which the power of the bureaucracy rests. Power
is based on the position held by the principal
(hierarchy). The main means of influence are
laws, regulations, processes, and procedures.
School management starts from the functions
of management in education, and we observe it
through four key functions: administration,
leadership, management of employees and the
school as an organization [22,23]. Since school
management depends on administrative
regulations, we can see it as an administrativelegal form that brings a centralized approach and
slows down development [24].
IV.
THE ROLE OF THE TEACHER
The teacher is the most valuable resource in
education. According to recent research, the job
of a teacher is very stressful [25,26]. There is a
common correlation between employee
behaviour and organizational culture [27,28].
The role of teachers in creating SC is huge
because the satisfaction, motivation and
perception of teachers create the reputation of the
company. Building the school’s identity and
image is crucial precisely in the context of
teachers.
The stability of the school is a consequence
of SC, which is characterized by setting rules and
procedures for all jobs. Managerial decisions
influenced by culture are planning, organizing,
leading, and controlling [29,30]. One of the key
indicators of SC are teachers and their
satisfaction with their work and the service
provided. From the aspect of service marketing,
corporate
culture
is
a
holistic
phenomenon [31,32].
The identity of the teacher can be most
simply presented as the teacher’s sense of selfworth and reflection on those values [33]. The
teacher professional identity construct is based
on the psychological-sociological aspect of the
teacher’s identity and job satisfaction. Some
researchers claim that teacher professional
identity refers to how teachers see themselves
[33,34]. However, the teacher’s identity can be
viewed from the aspect of motivation and
recognition in society [35], but also from the
aspect of the curriculum [36].
Teacher professional identity is associated
with a sense of job satisfaction, permanent
406
motivation, commitment to work and a sense of
self-reflection [37-39]. Beijrad [37] observes
teacher professional identity according to the
attitude towards students, the subject taught and
the role of the teacher in the school. The role of
the teacher in the school is crucial for the
construction of SC because it includes personal
norms, values and belonging to the school.
However, the teacher’s identity is not a onedimensional construct, the identity is multiple
[40]. It is also dependent, and it is formed within
different environments that bring numerous
social changes. Teacher identity is a changing
and unstable concept [37,41,42] that includes
constructions and reconstructions of SC [15].
Since there is no comprehensive definition of
teacher professional identity [36], this study
emphasizes the roles played by teachers in
providing services. In this sense, teacher
professional identity is crucial when creating SC
because the roles they assume are the result of a
harmonious relationship with others. Employeebased services, such as teaching, constitute a
service in themselves. Investment in employees
constitutes a direct investment in service (see
Table IV).
Service
providers
represent
their
organization. The teacher becomes part of the
service, but also part of the school’s identity. The
behaviour of teachers, their image, and identity
affects the user’s perception of that organization.
In other words, the teacher is the key builder of
SC and promoter of the school. In this sense, the
role of the teacher in the context of marketing is
seen as a service.
V.
SCHOOL IDENTITY
At the centre of SC are common values,
norms and customs that keep teachers together
[10,12,25]. The mission of the school consists of
purpose (the goal of the school’s existence) and
values (the core of the school’s beliefs). Since a
well-defined mission of the school motivates
employees, and satisfied employees build a
positive school climate and SC, the vision of the
school directs the school towards what it wants
to become.
However, SC is affected by some factors,
such as the mutual relations between teachers
and students, teachers and other stakeholders of
the school, the relationship of the principal and
the way the school is led and managed. Since
school leadership plays a key role in SM
TABLE IV.
TEACHER AND SCHOOL DIMENSIONS IN
SM
Teacher
Service
Collective
Identity
Promoter
School
Teaching
SC
Reputation
Brand
influencing SC, principals must have a strong
desire and ability to determine the school’s
cultural values. This is the reason the
collaborative and partnership approach of
principals and teachers has proven to be the most
successful when running a school [10,25].
The concept of corporate identity [43] is
essential for SM. To emphasize the importance
of corporate identity, Balmer [6,7,44,45] uses the
metaphor of fog [6] to highlight the isolation of
an organization’s identity. In this sense, the fog
represents the isolation of SM in the pedagogical
and economic world because the principals do
not see the importance of SI and a holistic
approach to corporate marketing.
Corporate identity communicates on a
symbolic level and is aimed at internal and
external factors of the school. Therefore, the
understanding of SI is like the understanding of
organizational culture because it starts from the
common beliefs, attitudes, and opinions of the
employees of an organization. The school’s
identity can be defined most simply as the
individual characteristics of the school that
differentiate it from other schools. The SI
construct itself is an expanded understanding of
brand identity [8] as a set of associations that are
in the minds of consumers.
Brand identity, according to Kapferer [46], is
presented in a hexagonal form where the internal
and external factors of self-concept and image
are covered in detail. What is important in the
context of corporate identity is that it refers to the
desired identity of a particular organization. In
the analysis of the teacher’s role [33] and the
AC2ID Test [47] in school management [28], a
model was presented that can serve as a method
of identifying different SI. In other words, the
identity stated by Balmer, i.e., actual identity,
communicated identity, conceived identity, ideal
identity, and desired identity, reflect on the image
of the school and the identity of the teacher.
This means that teachers create SI. Teachers
create a corporate identity with their work and
quality of service. The differences between
identities that can be analysed with the AC2ID
Test model [47] are designed to enable strategic
leadership and management of the school and to
set the possibilities of diagnosing existing
identities (see Table V).
A discrepancy between SI and other factors
can lead to potential risk. If the real identity
reflects the internal stakeholders, it is reflected in
the teachers and the teacher’s image. However,
there is dissonance in analysing SI because
according to the AC2ID Test [7,43] it is possible
that the communicated identity is not consistent
with the real identity or that the principal’s vision
of the school (desired identity) conflicts with the
school’s strategy (ideal identity). Therefore, we
can conclude that there are different SI within
one school.
Corporate reputation is an important part of
any organization [48]. Intangible assets such as a
school’s reputation and identity are a key factor
in achieving competitive advantage. However,
the reputation of an organization is built over
time and as a corporate structure is very fragile
[49]. The term “reputational risk” refers to the
probability of an organization losing corporate
reputation [50].
We understand enterprise risk management
(ERM) as the management and monitoring of the
organization’s risks, in this case, for the purpose
of increasing the short-term and long-term value
of the school. The goal of ERM in schools is to
create value and reduce the consequences of risk
and to ensure the realization of the company’s
latent value [51]. In order for ERM to be
effective in a school, it needs to be implemented
systematically. Risk is seen as an opportunity,
not just a threat.
ERM can reduce reputational risk and we can
observe it through two models: direct and
indirect [49]. The first model, with a direct effect,
reduces the probability of suffering a crisis in the
organization, and the second model, with an
indirect effect, results from a reduction in the
attribution of blame during a crisis [52].
In this sense, SI, as well as the image of the
TABLE V.
AC2ID TEST AND SCHOOL CULTURE
Identity
Actual
Communicated
Conceived
Ideal
Desired
School impact
Teacher’s identity
School climate
School image
Teacher’s loyalty
Principal expectations
407
school, represent an intangible asset that needs to
be protected and managed. ERM protects and
adds value to the organization by developing and
supporting employees, increasing the ability to
attract needed teachers, protecting the image of
the school and improving the decision-making
process during a crisis.
Examples of ERM in a school can be: longterm absence of a principal or class teacher, when
it is necessary to provide a substitute, giving
power of attorney to lower management (school
board), establishing an intervention team and
digitization. All this can reduce a potentially
negative school image and difficulties in the
functioning of the organization. If schools invest
in the strategy of building SI and perceive the
image of the school in a positive way, the quality
of the school increases and the risk of a bad
reputation decreases. SI is connected to the
reputation of the school because it is built
together by teachers through SC.
Many
organizations
accept
social
responsibility as a strategic position [48]. An
example of building corporate social
responsibility (CSR) for schools is the
establishment of associations that promote
lifelong education, the creation of alumni who
will cooperate with the school, participation in
sports activities, volunteering, humanitarian
actions and student scholarships. CSR is a major
factor in building corporate reputation
[49,53,54]. Also, the quality of ERM indirectly
affects corporate reputation and SI through CSR.
Ultimately, SM can influence the prevention
of risks to the school’s reputation, SI and image
perception by maintaining a high level of SC and
developing good collegial relations, monitoring
the quality of service, respecting teachers and
through CSR. All the mentioned factors are
strongly related to SC and form the basis of SI
construction in terms of marketing and
management.
Corporate image is the overall impression in
the user’s mind towards the school. It is a set of
impressions that the school creates towards the
public, but also the sum of associations by
external stakeholders. Therefore, we understand
the corporate image as the image of the school. It
is an expression of SI and is firmly grounded in
SC. However, the image of the school can also
be understood as part of the expected value that
students, parents and society expect.
408
Therefore, the creation of the school brand is
in the SI concept that creates and shapes the
image of the school. The advantages of building
an identity are creating strength, a recognizable
school brand, developing the identity of teachers,
establishing a positive SC, and creating a
competitive advantage. SM based on the creation
of SI must start from the control and management
of the identity to build a desirable identity and
thereby diversify the brand.
SC is key in creating SI because teachers’
satisfaction and their positive self-concept that
builds elements of culture (formal and informal)
is a key predictor in creating community, beliefs,
attitudes, and behaviour. Principals should lead
the school and manage the SC because they are
the ones who determine the central values, goals,
and strategy of the school. They should also
ensure a stimulating environment, provide
systems that strengthen SC through models of
ceremonies, behaviour, and services [12,14].
Since SC is a set of values, attitudes, and
behaviours of teachers, it is an important
predictor of SI identification, and the creation of
a school as a brand. SC is viewed as a system of
common meanings and this construct allows us
to view SC as a homogeneous group of teachers
who make up the connective tissue of each
school. It is a psychological construct of the
workplace environment that is formed from
mutual interaction. And it is precisely such a
community and its members that make up the
promoters of the brand, as well as the main
service providers. Their satisfaction, identity and
self-image form a social system of economic and
pedagogical aspects.
VI.
CONCLUSION
The role of the principal needs to change. The
quality of the school and its changes depend on
him, but the quality of the service provided, and
the identity of the school strongly depends on the
teachers. Successful school principals should
have a holistic view of the school where
interpersonal relationships are in the first place
because positive SC [25] is created from the
satisfaction and identity of teachers. In this sense,
principals in SM should support the school as an
institution that learns and better understands
teachers and students.
The teacher is the most important resource in
the school. The role of the teacher is huge
because he, as the bearer of the entire education
of the school, is key in the development of a
positive school climate [12], but also key in the
development of SC construction. The special
quality of the teacher’s work stems from the
pedagogical approach, job satisfaction and selfimage. The teacher’s identity is a complex
construct that supports the overall construction
of SC.
[9]
Since the roles of teachers are changing, new
roles of the school are also needed. The identity
of the teacher, as well as the identity of the
school, are not permanent categories [7,10,25]
and they can change very often. It is necessary to
establish new forms of cooperation and
communication to harmonize the school
leadership with the teachers [55]. The school is
an institution that requires teamwork.
[12]
The actual identity of the school does not
have to agree with the identity of the school as
desired by the principal. The principal should be
able to change the way of thinking and behaviour
in accordance with the current situation. In this
sense, the principal’s role in the creation of SC is
advisory and supportive. Preference should be
given to a cooperative and partnership approach.
However, as long as the principal’s role is based
on hierarchical power and administration
[23,33], in the form of a semi-professional
manager [56], and not on true leadership, schools
cannot develop.
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PaKSoM 2022
Data Protection in Innovation under
the European Union Legislation
Iris Bjelica Vlajić1
1
Ministry of Defense, Belgrade, Serbia
1
iris_bjelica_vlajic@yahoo.com
Abstract—Technology
development
impacts
natural person’s life and privacy obliging states
to set data protection standards. Data protection
is granted by both international and national
regulations. Inevitably, these data protection
regulations influence the innovation process. The
European Union (EU) legal framework is
regulating different aspects of the data protection
providing certain rights and obligation for all
participants of the innovation process. The aim of
this paper is to provide an answer to a question
what are data protection requirements to
innovation and are they restraining or
stimulating innovation process. In answering this
question, historic methods and method of the
content analyses were used. The paper is divided
into chapters in order to provide coherent
analyses of sub topics starting with the EU
requests and harmonized national rules.
Keywords – data protection, innovation, EU
legislation
I.
INTRODUCTION
Personal data mean any information or
piece of it which, directly or indirectly, could
identify a living person. Traditionally it refers
to a name, phone number and address. Hence,
some other information is also considered
personal data as it could identify a person.
Those are interests, information about past
purchases, person’s health and online behavior.
Personal data belong to the individual who is
known as a personal data subject. Use of
personal data is acceptable when it is based on
legal obligation (when necessary or requested
by legal act or in the public interest) or if it is
consensual. Consent is a voluntary, specific,
informed and unambiguous expression of the
will of a person, by which that person in a form
of statement or clear affirmative action, gives
ISBN: 978-86-82602-00-2
consent to the processing of personal data
relating to him/her. Given consent may be
withdrawn by the subject at any time during
processing. Processing data means different
activities and it refers to collecting, structuring,
organizing, using, storing, sharing, disclosing,
erasing and destruction of data. Data should be
erased or, destroyed in other way, when no
longer needed. Personal data should not be
storage for future needs.
Innovation is a way of expanding or
improving human knowledge. It may be result
of the research although it is not mandatory.
Innovation is possible in all fields of human
existence by improving certain processes,
methods or products and services. The need for
use of personal data during innovation is
inevitable. Data helps developing business
models, gaining an understanding of customers,
conducting effective marketing campaigns or
developing improved products and services. In
medicine and other related fields huge amounts
of personal data are necessary in order to
compare results and extract scientific
conclusions. During all these activities it is
obligatory to provide legal grounds for
collection and protection of the data. With the
fourth industrial revolution and extended use of
information technologies, exchange of various
information multiplied. At the same time,
privacy became an important issue [1]. “The
technological development necessitated the
implementation of further measures in order to
keep up with legal requirements” [2].
One of the results of that revolution is the
growing possibility of misuse of data or
violation of privacy which is more and more
challenged
by
increasingly
intruding
technologies [3].
411
Each personal data carries huge amounts of
information that reveals their subject. States
and international organizations are providing
legal framework under which processing of
personal data is done. According to the Article
8 of the Charter of Fundamental Rights of the
European Union (the Charter) and Article 16 of
the Treaty on the Functioning of the European
Union (TFEU) protection of natural persons in
relation to the processing of personal data is a
fundamental right that everyone has. There are,
also, internal rules in the majority of research
institutions or enterprises that are covering data
protection. This legal framework is being
periodically changed providing adequate
protection that runs parallel with new technical
achievements.
Protection of data and privacy involves
broader scope of stakeholders since ethical
implications of data use affect society both
socially and financially [4].
II.
DATA PROTECTION IN INNOVATION
The innovation is seen as the creation of
new knowledge and so it has social dimension
[5]. Mostly, innovation is linked to start-up
companies which by definition bring some
improvements and innovative approaches, or
innovation of non-compliant products/services.
It is the flexibility and strong innovationorientation of start-ups that is particularly likely
to identify and exploit regulation-induced
opportunities for innovation [6].
In this way, innovation is possible in
marketing or economy as well in technological
processes and medicine. Different data are
necessary to explore impacts that products and
services have on consumers. “In as far as
regulation imposes constrains on some
companies, however it also creates a positional
market opportunity for others, and thus a fourth
possible response: innovating solutions to help
companies achieve compliance without
damaging their regular production and valuecreation activities [7]. In that sense, new
product design or new suppliers are needed in
order to protect data and privacy becomes
market opportunity. Modern societies rely on
research and innovation to solve their
problems [8]. Research represents extension of
human knowledge that has certain process and
final product or outcome. It includes collection,
use and protection of data as well as the ways
of linking them. Protection of privacy affects
development of new methodologies hence it
412
incorporates ethical values into technology. Not
all of them are visible to publicity. Problem
lays in the chosen methodology for particular
field that has to use the best solution of
maximum data with minimum intrusion. Data
protection during preparation for research and
innovation is known as “responsible research
and innovation (RRI)” and it has to use the
technologies in socially acceptable, desirable,
and sustainable way [9].
The use of legal means only in assuring data
protection is not sufficient yet it is necessary to
include new ways and instruments of protection.
Having in mind wide scope of human activities
that may be innovated as well as scopes of
scientific research, the EU adopted two different
legal documents regulating the matter. The first
is dealing with general rules and principles of
the data protection including all market oriented
innovation while the other deals exclusively
with the data protection in clinical trials.
A. General Rules and Principles
The EU adopted a General Data Protecting
Regulation (GDPR) replacing the 1995 EU
Data Protection Directive (DPD) and
introduced severs fines for braches and new
restrictions [10]. The main goal was to provide
equal treatment of all at the EU market as well
as to keep the trust into electronic trade. In
achieving their goals of equalization of
standards in all member states, the EU uses
different instruments. The most common are
regulations and directives. A regulation is a
legal act of the EU that becomes immediately
enforceable as law in all member states
simultaneously unlike directives which need to
be transposed into national law, according to
that national law hence preserving main goals
and the ratio for which they were adopted.
However, the EU depends on its member states
in order to execute these provisions. In that
sense, European legal framework consists of
the European laws, such as the GDPR, the
following Directives and national laws that
need to be harmonized with them in order to
provide equal and uniform protection in the
entire territory of the EU in order to protect
people from two threats: irregular attacks on
people’s data by criminal outsiders (“hackers”)
or insiders acting in contravention of their
organization’s rules; and from people’s data
being processed illegally by organizations
acting in accordance with their international
(but illegal) rules and objectives as stated
in [7]. It is worth saying that “yet it is unlikely
that the effects of data protection regulation are
uniform, since the types of data firms employ,
the ways they use it and their relations to end
users vary substantially” [11]. Other authors
find the new European legislation positive as it
provides a number of different voices to be
heard by its pluralist approach [12].
Crossing needs of research and innovation
for new and multiple data with the EU
legislative standards of data protection creates a
theoretical situation on which present European
legal requirements might be obstacles for
innovative products or processes. Finally, we
end up with two possible outcomes. The first
“the main potential negative, innovationconstraining response that our theoretical
framework
identified
was
product
abandonment, that data protection regulation
might prompt firms to respond by abandoning
products or products ideas that were judged
fundamentally
incompatible
with
the
regulation”, while the second would be
adjustment to those requirements through
reorganization [11]. Notable examples are
privacy, data protection and surveillance as
well as issues of property, ownership and
digital divides. While these problems will not
disappear, they have been well recognized and
there are institutions, norms and regulations
that aim to address them [12].
In the preamble GPDR states that the
processing of personal data should be designed
to serve mankind hence the proper functioning
of the internal market and free movement of
people influenced data protection provisions.
The EU need to protect micro, small and
medium-sized enterprises is apparent in the
document where the right to the protection of
personal data is not an absolute right; it must be
considered in relation to its function in society
and be balanced against other fundamental
rights, in accordance with the principle of
proportionality. So, the Regulation does not
therefore concern the processing of anonymous
information, including ones gathered for
statistical or research purposes.
Special attention is paid to consent as one of
the basis for data processing. GPDR allows any
form of statement regardless if it is written
statement or an oral statement, including
statement given by electronic means, which
includes ticking a box when visiting an internet
website, choosing technical settings for
information society services or another
statement or conduct which clearly indicates in
this context the data subject's acceptance of the
proposed processing of his/her personal data.
Consent should cover all carried out processing
activities. Exceptions are set for the case where
processing is carried out for archiving purposes
in the public interest, scientific or historical
research purposes or statistical purposes,
although in these cases appropriate safeguards
for the rights and freedoms of the data subject
should be granted. Those safeguards should
ensure that technical and organizational
measures are in place in order to ensure, in
particular, the principle of data minimization.
Any processing of personal data revealing
racial or ethnic origin, political opinions,
religious or philosophical beliefs, or trade
union membership, and the processing of
genetic data, biometric data for the purpose of
uniquely identifying a natural person, data
concerning health or data concerning a natural
person's sex life or sexual orientation is
forbidden except if necessary for archiving
purposes in the public interest, scientific or
historical research purposes or statistical
purposes as long as proportionate to the aim
pursued, respect the essence of the right to data
protection and provide for suitable and specific
measures to safeguard the fundamental rights
and the interests of the data subject.
Where personal data are processed for
scientific research purposes, the Regulation
should apply to that processing and the
processing of personal data for scientific
research purposes should be interpreted in a
broad
manner:
including technological
development and demonstration; fundamental
research, applied research and privately funded
research. Scientific research purposes should
also include studies conducted in the public
interest in the area of public health.
Statistical results may further be used for
different purposes, including a scientific
research purpose. Special attention was given
to research results obtained through registries.
These results provide solid, high-quality
knowledge which can provide the basis for the
formulation and implementation of knowledgebased policy or improve the quality of life or
the efficiency of social services. By coupling
information from registries, researchers can
obtain new knowledge of great value and
research results can be enhanced, as they draw
on a larger population. Within social science,
413
research on the basis of registries enables
researchers to obtain essential knowledge about
the long-term correlation of a number of social
conditions such as unemployment and
education with other life conditions. In order to
facilitate scientific research, personal data can
be processed for scientific research purposes,
subject to appropriate conditions and
safeguards set out in the EU or Member State
law.
The document strongly advises that a data
protection officer should be designated where
the data processing includes data subjects on a
large scale. GPDR encourages the drawing up
of codes of conduct as a specific mechanism
intended to contribute to the proper application
of the Regulation, taking account of the specific
features of the various sectors and the specific
needs of the enterprises processing data. The
codes approved and validated by relevant
national authorities might be published for
general information. The Article 47 provides
possibility of adopting internally binding
corporate rules that would include all relevant
provisions dealing with data processing.
B. Clinical Trials
The Clinical Trials Regulation (CTR) is the
second very important piece of legislation to
which
the
GDPR
makes
express
references [13].
According to its Article 47, the purpose of a
clinical trial is to gather reliable and robust data
on an investigational medicinal product, while
following the approved protocol and the good
clinical practice principles by investigator. The
accent in clinical trials is on accuracy of data as
well as their confidentiality so the CTR in
Article 56 provides certain measures requiring
the investigator to record, process, store and
handle data in such a way that it can be
accurately reported, interpreted and verified,
while requiring appropriate technical and
organizational measures to protect information
and personal data. Additionally, the clinical
trial protocol, authorized under the CTR,
defines the purposes and conditions for which
the data of clinical trial subjects will be
processed. Subjects should be properly
informed on the processing of his/her personal
data. Every investigator is a subject to national
inspections in order to establish abidance to
those principles. This means that every
institution conducting such trials is hold
accountable to implement the appropriate
414
technical and organizational measures to ensure
and be able to demonstrate that the personal
data are processed in accordance with the data
protection rules. This requests that any
institution performing clinical trial has to obey
GDPR, CTR and national rules regarding data
protection.
Processing operations purely related to
research activities in the context of a clinical
trial cannot, however, be derived from a legal
obligation that falls under one of the three legal
bases, depending on the whole circumstances
attached to a specific clinical trial: scientific
research, public interest and subject’s consent.
Scientific research means a research project set
up in accordance with relevant sector-related
methodological and ethical standards, in
conformity with good practice. The CTR
defines certain processing activities, which are
necessary for the performance of a task carried
out in the public interest or in legitimate
interest or with the subjects consent. The
pursue the general public interest of the Union
in safeguarding public health exists for
purposes outlined in the approved clinical trial
protocol or when the conduct of clinical trials
directly falls within the mandate, missions and
tasks vested in a public or private body by
Union or national law. The legitimate interests
which is not a public interest is pursued by the
controller or by a third party, except where
such interests are overridden by the interests or
fundamental rights and freedoms of the data
subject, according to the definitions provided
by GDPR. The same act describes consent as
freely given, specific, informed, unambiguous,
and where consent is used as a justification for
processing special categories of data, such as
health data, such consent must be explicit and it
is procedural obligation, a condition sine qua
non for person’s participation in the trial.
However, withdrawal of the informed consent
to participate in a clinical trial shall not affect
activities already carried out or the use of data
obtained on the basis of the informed consent
before that withdrawal if it was done in
accordance with the protocol and legal
requirements. In a situation where consent may
be sought from the clinical trial subject for the
use of personal data concerning that subject
outside that clinical trial protocol for future
scientific purposes the CTR in Article 28
allows secondary use of data provided it is
anonymised, there is a valid legal basis and
data protection principles are being obeyed.
The CTR expressly addresses risk of power
imbalance between investigator and subjects
and requires the investigator to take into
account all relevant circumstances that could
inappropriately influence her or his decision to
participate.
III.
SERBIAN NATIONAL LEGISLATION
According to the Law on Innovation
Activity an innovation is the successful market
application of an invention, such as application
new or significantly improved product, process
or service or marketing methods or new
organizational
methods
in
business,
organization of work or relations of a legal
entity with the environment [14]. Yet, the Law
has no provisions dealing with duty to protect
data during innovative activities.
Republic of Serbia enacted a new Data
Protection Law in 2018 [15]. The Law’s
effective date was postponed while all other
laws regulating partially data protection have to
be harmonized with it. Updated data protection
law better aligns with the EU General Data
Protection Regulation.
The law deals with any automated
processing of data as well as non-automated
processing if it is done in order to provide
personal data information collections, as well
as in case of marketing oriented goods offers or
activity tracking.
Definitions given by the Law are more
detailed and updated so personal data according
to the Article 3 “is any data relating to a natural
person whose identity is determined or
determinable, directly or indirectly, in
particular on the basis of an identity marker,
such as name and identification number,
location data, identifiers in electronic
communication networks or one, that is, more
features of his physical, physiological, genetic,
mental, economic, cultural and social identity”
while personal data processing is any action or
set of actions performed automatically or nonautomated with personal data or their sets, such
as collecting, recording, sorting, grouping, i.e.
structuring, storing, matching or changing,
revealing, viewing, use, disclosure by
transmission, i.e. delivery, duplication,
dissemination or otherwise making available,
comparison, restriction, deletion or destruction
(hereinafter: processing). Besides, the law
defines personal data breach, genetic and
biometric data. Legal processing is processing
that is carried out in accordance with the law
and according to the main principles of the
purpose of processing, data minimization,
accuracy, storage limitation and integrity and
confidentiality. Processing that differs from the
original purpose to which data is collected is
forbidden with one exception. Namely, the Law
acknowledges possibility of further processing
if it is carried out for the purposes of archiving
in the public interest, for the purposes of
scientific or historical research, as well as for
statistical purposes, in accordance with this
law, it is considered that the data on individuals
do not process in a way that is not in
accordance with the original purpose. In
accordance with the level of technological
achievements, the nature, scope, circumstances
and purpose of the processing, as well as the
probability of the occurrence of risks and the
level of risk for the rights and freedoms of
persons
implementation
of appropriate
technical, organizational and personnel
measures in obligatory. The Law also provides
possibility of associations and other subjects
representing groups of handlers or processors to
develop their codes of conduct for the purpose
of more efficient application of the law, while
the enterprises may adopt legally binding
business rules that determine structure and
contact information of the multinational
company or group of economic entities, as well
as each of its members and transfer or groups
of transfers of personal data, including types of
personal data, types of processing actions and
their purpose, types of persons to whom the
data refer and the name of the country to which
the data is transferred and the manner in which
the person to whom the data refer is provided
with information about binding business rules.
IV.
CONCLUSION
The main value and importance of the
personal data is that they reveal a lot about their
holder’s choices and behavior. Row data is
used to create information and the information
has its market value. Today, privacy varies
between human right and costly privilege that
requests need to include privacy-friendly
approach into technology and innovation. Use
of information technologies is putting data
protection in risk, not only in a sense of
unlawful acquisition but also danger of
intellectual property theft. This has double
negative impact hence without intellectual
property protection, individuals and firms
would not gain the full advantages of their
415
creations. Perspective of what protected data
include changes because it is social category.
Today one can see regulation by the states or
other entities and self-regulation of data
protection when some research institutions
provide ethical guidelines or standards
obligatory for their researchers and other
participants or codes of conducts for staff. The
main principles of the data processing remain
the right to choice and the right to information
while different fields of research (IT,
biotechnology, and medicine) differ in
preferences. “Data collection, use, and storage
should contribute to ethical and sustainable
development” [16]. Any research involving the
collection, use and storage of data should be
meaningful and purposeful, the data used for
research purposes should be accurate and
integral and depersonalized as much as
possible, with a restrains in access to acquired
data.
In order to keep internal market functional,
the EU has a need for available and transferable
data. The EU personal data definition is not
applicable to encrypted data nor collection,
analyses and storage of data which is not
centralized, since the GDPR was fashioned for
a world where data is centrally collected, stored
and processed [17]. For all other types of data
the GDPR is obligatory.
Crises request rapid innovation but they
rarely comply with all requests regarding data
protection. The Article 179 TFEU puts as one of
Union's objective of achieving a European
Research Area. That is why the overall
objective of the CTR is to achieve a harmonized
internal market as regards clinical trials and
medicinal products for human use. A starting
point for such objective is a high level of
protection of health, high standards of quality
and safety for medicinal products. At the same
time, the overall objective of the GDPR is to
protect fundamental rights and freedoms of
natural persons and the protection of their
personal data. The EU General Data Protection
Regulation and the general data protection
principles provided are the key to the successful
deployment and adoption of new technologies.
These principles require developers of new or
existing technologies to implement privacyfriendly in their work even in case of crises. To
sum up, some objectives of data protection may
be achieved even in innovations and their
mutual link has more positive than negative
aspects.
416
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417
418
PaKSoM 2022
Metaverse and its Impact in
Healthcare
Sayani Ghatak1, Sayan Chakraborty2, Radha Debal Goswami3, Hrithik Paul4
1,4
Dept. of CSE, JIS University, Kolkata, West Bengal, India
Dept. of CSE, Swami Vivekananda University, Kolkata, West Bengal, India
3
Department of Sensors and Biomedical Technology, School of Electronics Engineering,
Vellore Institute of Technology, Vellore, India
2
1
sgsayanighatak@gmail.com, 2sayanc@svu.ac.in, 3hrithikpaul2001@gmail.com,
4
debal.goswami00@gmail.com
Abstract—Healthcare has experienced rapid
growth due to the huge development of
digitalization and automation, which has created
new channels for serving patients at a lower cost.
There are a variety of emerging technologies in the
digital world, but metaverse technology is one of
the most promising as it can facilitate real-time
communication between patients and medical
professionals. As a result of a combination of
technologies, the Metaverse has been enabled, such
as artificial intelligence, virtual reality, augmented
reality, the internet of medical devices, robotics,
quantum computing, and others. Providing
quality healthcare services and treatments can be
explored in new directions through this initiative.
By combining these technologies, patients receive
immersive, intimate, and personalized care. As
well as removing barriers between healthcare
providers and recipients, it provides adaptive
intelligent solutions. Described in the article are
the enabling technologies and potential
applications of the Metaverse for healthcare.
Keywords - metaverse, healthcare, virtual reality,
blockchain, augmented reality, extended reality
I.
INTRODUCTION
Recent trends in industries are forcing the
organizations to dive into digital space to
enhance the technologies to make it more
efficient and compact. The metaverse [1,2]
provides a digital performs that enables users to
simulate reality in a multi user environment. In
many industries, the metaverse is being used to
carry out business agendas [3-5] and reduce costs
while focusing on what really matters. Remote
ISBN: 978-86-82602-00-2
work is also bringing greater attention to the use
of metaverse platforms in order to give remote
workers a sense of normalcy and a morale
boost. Healthcare [6-8] is actively looking at
metaverse to expand its future with it. This will
open a window for the healthcare industry to put
forward a feasible and accessible medical care to
the most remote of places in the world. In Smart
Health metaverse [9,10] can play an integral role
by combining concept of telemedicine with smart
healthcare. There can be several frameworks
through which these can be done. Among such
technologies, augmented reality and virtual
reality are two most popular and advanced
technology which is very much involved in the
Metaverse as well.
Medical professionals can view a virtual model
of a patient without physically being there. A
body sensor network [11-14] can provide a way
to enhance the range of motion as well as provide
details of a patient’s physiology to support
decision-making. Machine learning [15,16] and
artificial intelligence [17,18] have contributed to
the rapid growth of virtual reality. As a virtual
reality or augmented reality simulated
environment, the metaverse [19] was developed
to give machines their own version of thought. Its
development has now evolved into facial
recognition, natural language processing, 3D
object scanning, blockchain [20-22], and digital
twinning. Using machine learning, computers
can be taught and trained to learn to perform
tasks automatically. Research and engineers are
using adaptable methods for usage within the
metaverse to enhance the capabilities of new and
419
existing technologies. Cloud platforms and
Internet of Things [23,24] advancements make
the metaverse seem attainable. However, these
spaces also present new threats and challenges.
The healthcare industry, for instance, faces many
unknown factors. The shared platform
experience of a simulated [25], interoperable
virtual environment can introduce vulnerabilities
due to its ability to view pertinent, sensitive
information remotely. The healthcare system can
also be exposed to a wide range of risks from
outside influences, such as body sensor networks
[26-28] and smart devices [29,30]. An
understanding of the possible risks and
vulnerabilities can lead to the creation of
potential hardening measures to increase trust
and utilization.
The paper is organized with Section 2
discussing about existing technologies in
Metaverse, while Section 3 describes challenges
of Metaverse. Section 4 describes Metaverse
based Smart Healthcare technologies and
Section 5 tries to investigate applications of
metaverse in healthcare. Paper concludes in
Section 6.
II.
EXISTING TECHNOLOGIES IN METAVERSE
There is a variety of services that can be
offered by a medical domain metaverse,
including behavioral health, patient education,
pain management, disease awareness, real-time
E-surgery learning, and medical consultation [1].
It is impossible for the metaverse to adapt some
services that require touch or percussion, such as
surgical
procedures
and
percussive
examinations. The existing technologies of
Metaverse are shown in Fig.1 and discussed in
the current section.
A. Blockchain
Blockchains are commonly misunderstood as
the technology behind cryptocurrencies such as
Bitcoin, but they are actually just distributed and
encrypted databases that provide a way to
securely store and transfer data that no one else
can access. Many organizations share data
inefficiently and in an opaque manner that is both
inefficient and inefficient from the owner’s
perspective. A single health record is worth
between $70 and $100 on the dark web since it is
typically stored on centralized servers. Even for
those who legitimately need it and accessing it
can be lengthy and laborious.
420
B. Extended Reality (XR)
Extended reality (XR) will be used in the
metaverse to engage users with 3D content. A
revolution in health communication can be
stimulated by such XR platforms, which allow
information-based content to move from a
knowledge base to an experience base. As a
result of manipulating users’ threat and coping
appraisals, XR affordances (presence, agency,
and embodiment) can be used to improve healthy
behavior across three major application domains.
VR, in particular, can create realistic experiences
that produce genuine emotional, cognitive,
social, and behavioral responses based on
abundant evidence
C. Network and Communications
A network is made up of two or more
computers and the links that connect them. A
physical network is made up of the network’s
hardware (i.e., telephone lines, cables, and
adapters). The logical network is composed of
the software and the conceptual model. Different
network and emulator types serve various
purposes. There are several conceptual models
for describing how networks function as a result
of the complexity of modern computer networks.
The Open Systems Interconnection (OSI)
Reference Model from the International
Standards Organization, generally known as the
OSI seven-layer model, is one of these models
that is used the most frequently.
D. Layers of Computing
In fog computing, the measured data is
processed on sensors or devices close to sensors
rather than on cloud servers or remote healthcare
centers. Fog computing and cloud computing are
on the rise due to the increasing amount of patient
data. In 2021, Sodhro and Zahid [28] proposed
the creation of a pathology location framework
using deep learning algorithms to create a smart
healthcare system. It is possible to recognize
pathology based on electroencephalogram
signals.
A single layer infrastructure cannot handle
huge computation needs in the metaverse.
Rendering of images and videos is a core
component of metaverse. Hence 3 layers of
computing in the metaverse is proposed as shown
in the figure below. The layers are listed below.
a) Cloud Computing Layer,
b) Fog Computing Layer,
c) Edge Computing Layer.
Blockchain
-Shared
Database
-Crypto
Extended Reality
- AR
-VR
Cloud
-Big Data
-EHR
Network &
Communications
-IoT Protocols
Figure 1. Block Diagram of the major components of Metaverse.
The metaverse is resource and computing
hungry. It needs a huge amount of computation
power, storage space and fast and advanced
communication technology. Moreover, with the
increase of user base cloud computing is must
and essential for any metaverse application.
Cloud gaming is one the use case of cloud
computing for metaverse as discussed below.
Fog computing is the 2nd layer of computing
in the metaverse. It is sandwiched between the
cloud computing layer of metaverse and edge
computing layer of metaverse. In layman’s world
the work of fog computing for metaverse is to
lessen or minimize the burden of cloud
computing.
Edge computing is computing that is done at
or near or edge of the source of the data being
generated. Edge computing basically connects
edge devices such input devices, sensors, IoT
devices, etc. It is the most essential layer among
the 3 layers of computing in the metaverse.
Data is transferred from edge devices to the
cloud computing layer. If unnecessary data is
transferred anytime, it will burden the cloud
computing layer. Here fog computing layers
come to play to lessen the burden of cloud layer.
Cloud computing [31,32] servers process the
data and transmit it to the fog node. The results
of the analysis confirm that the proposed system
is suitable. Sensors and IoT devices generate
large volumes of data that must be overcome. As
well as the priority of usage and the required
bandwidth for transmission [33]. By offloading
data processing and storage to edge servers,
network overhead and energy consumption are
reduced. Based on simulation results, the
proposed framework provides lower latency and
reduces overall energy consumption.
III.
CHALLENGES IN METAVERSE
In immersive technology, the physical world
is merged with a digital or simulated reality to
create distinct experiences based on the
neuroscience of the human brain. In addition to
augmented reality (AR) and virtual reality (VR)
[25], immersive technologies are also commonly
used in extended reality (XR), mixed reality
(MR), holography, telepresence, digital twins,
and drone flight from a first-person perspective
(FPV). As a consequence of the high cost and
high demand for medical machinery, training and
education it is expensive for students, trainees,
and engineers, which in turn increases diagnosis
fees for patients. The root cause behind creation
421
of a digital twin of a medical module, device, or
even a whole diagnosis system is an innovative,
low-cost way to train.
Through the use of virtual reality or
immersive web, some specific scenarios can be
recreated in which a patient’s clinical condition
deteriorates over time. Symptoms can be
described with clinical data and treatment plans
can be requested based on the diagnosis. This
technology can also be used for learning
procedures, performing surgery, simulating
emergency scenarios, managing pain, and
performing physical therapy.
IV.
METAVERSE TECHNOLOGIES IN SMART
HEALTHCARE
Smart Healthcare refers to the technology of
enabling innovators to create platforms that can
seamlessly and securely run across the healthcare
system. Introduction of metaverse in smart
healthcare system can lead to solve multiple
problems. For instance, patients will be
benefitted from the advanced surgical procedures
and enhanced health care through the Metaverse.
Such complex surgeries are already been tested
and implemented through advanced technologies
such as Augmented Reality (AR) and robotics.
This section provides a brief overview of the
technologies that are currently being considered
for implementing medical domain metaverses.
techniques in software and hardware. Using
these technologies in Metaverse, patients’
medical issues and medical data can be shared
with their doctors to facilitate immersive
learning, understanding, and sharing. In the
Metaverse, doctors can obtain high-quality 3D
images and scans of their patients through the use
of artificial intelligence (AI). The use of artificial
intelligence in metaverse can assist doctors in
prioritizing critical patients, minimizing
potential errors associated with the analysis of
electronic health records (EHR), and creating
more accurate diagnoses. It’s quite difficult for
doctors to remain updated on medical advances
and provide patients with high-quality, patientcentered care. A collaboration between the
Metaverse and Artificial Intelligence [3, 4] can
solve this problem by facilitating the discovery
of new drugs, the prediction of diseases, and the
response to emergencies. In addition to privacy
and ethical concerns, creating an AI-enabled
Metaverse may result in medical errors that
caused doctors to mislead patients.
Due to the rise of artificial intelligence (AI),
the industry has been able to innovate and create
new opportunities. A variety of medical fields
have been benefited from the use of artificial
intelligence [21,22] techniques, including
neurology,
cardiology,
nephrology
etc.
Metaverse coexists with Artificial Intelligence
[34], as the major technologies used in Metaverse
has been generated with the help of AI. Although
combining artificial intelligence with the
Metaverse, the current framework will be
strengthened further. The 3D immersive
experience as well as the built-in services of the
virtual worlds [35] will be enhanced. As a result,
the metaverse ecosystem and its services will
also improve.
B. Internet of Things (IoT) based
Currently, billions of devices are connected
to the Internet and exchange data [15,16] through
the Internet of Things (IoT). Sensors, actuators
[18] and communication capabilities enable
these devices to share data in real-time without
requiring human supervision [5]. The IoTenabled metaverse is most commonly used in the
healthcare industry for remote patient
monitoring. Even if patients are not physically
present in a hospital or clinic, the Internet of
Things can collect vital health metrics and
display them in the Metaverse’s 3D environment.
Therefore, health professionals and vital health
information will no longer need to travel for
patient’s care [6]. It also gets rid of the complex
procedures that would be impossible with human
hands alone. IoT and Metaverse collaboration
helps to manage chronic diseases, improving
sleep patterns, replenishing medications, alerting
patients etc. during health emergencies. In realtime, non-compliance with data protocols and
standards will threaten data security and privacy
in IoT-enabled Metaverses. Big Data in
Metaverse and Healthcare
Medical devices, healthcare operations, and
big data are being used to improve efficacy,
reduce costs, and improve quality by using XR,
big data, and artificial intelligence. These
technologies also help in expanding access to
medical care by applying revolutionary
Big data refers to data with a high volume,
velocity, and variety must be viewed as an asset
capable of transforming into value. Analyzing
big data often poses various challenges [15-17].
Healthcare, industry, education, agriculture, and
so on all use big data in a variety of ways. In AI
A. Artificial Intelligence (AI) Based
422
and machine learning big data is used for
different purposes such as sentiment and
behavioral analysis [18], predictive support [19],
and fraud detection [20,21] etc.
Through the Metaverse, people can interact
and explore virtual worlds in a persistent, realtime, and interoperable manner. Big data is
gaining rapid momentum and is becoming an
increasingly important technology in the
Metaverse. Traditional data analytics tools
cannot handle the Metaverse’s structured, semistructured, and unstructured data formats. The
Metaverse requires real-time decisions and
foresight to make accurate predictions. Big data
helps to fulfill all these needs. Metaverse and its
underlying mechanisms generate enormous
amounts of data which are handled by big data
tools.
By using big data tools, healthcare can create
digital simulations of patients through the
metaverse. It will allow interesting patterns to be
discovered by creating digital simulations of
patients [22]. Metaverse driven Healthcare can
predict accurately the outcome or effect of any
medicine or treatment. There are various
applications in different domains where big data
technologies are combined with the Metaverse.
Despite the fact that big data-enabled Metaverse
research remains in its infancy, such research
will become increasingly crucial as big data
allows the Metaverse to generate enormous
amounts of A variety of formats for real-time
data in an efficient manner.
V.
APPLICATION OF METAVERSE IN
HEALTHCARE
Various enabling technologies of the
Metaverse will be utilized in a comprehensive
healthcare scenario to generate results and make
decisions. From research to physical
examinations to diagnoses to insurance, the
Metaverse has numerous applications in
medicine (as shown in Fig.2). By guiding
patients through movement and exercises, virtual
physiotherapy could assist rehabilitation
patients. A comprehensive healthcare application
of the Metaverse is graphically represented in
Fig.2 and discussed in this section.
A. Diagnosis
Symptoms are used to diagnose a patient’s
medical condition. By utilizing advanced
technologies such as AR and VR-enabled MIoT
models, extended digital twins, blockchain, 5G,
etc., the Metaverse contributes significantly to
the efficient diagnosis of medical conditions.
Furthermore, the Metaverse has the potential to
replace the existing medical IoT by improving
human-computer interaction, integrating the real
world and virtual world, and interconnecting
them. Internet of Things can facilitate
holographic construction, emulation, the
interaction between the real and virtual worlds,
and integration in healthcare, simplifying
complex problems encountered there. In the
Metaverse, medical professionals can make
intelligent diagnoses based on the expertise of
Virtual and real-world experts. This allows them
to provide quality healthcare and diagnosis.
Medical professionals can deliver quality
healthcare and diagnose patients virtually in any
location by communicating with them in a virtual
world. Blockchain technology and distributed
ledger technology are being integrated into the
Metaverse, health-related digital assets can be
stored, exchanged, and programmed efficiently
across multiple platforms, allowing for a more
precise diagnosis of health conditions with the
assistance of data. Utilizing the Metaverse for
diagnosis will greatly assist in improving the
overall quality of all other phases of care. This is
because diagnosis determines the type of
treatment and medications to be administered.
B. Patient Monitoring
Metaverse technology, particularly in the
area of patient monitoring, will reap amazing
benefits due to the convergence of telepresence,
digital twinning, and blockchain technology. In
the event of a critical situation, these test
dummies of patients can be utilized in order to
determine the response to surgery or medicine
well ahead of its administration to the patient. In
order to store and transfer medical data securely
and to ensure that it is not compromised or put at
danger, blockchain technologies are used
because it is the most sensitive and significant
type of data. By combining these technologies
into one, the Metaverse offers a solution. By
offering medical advice followed by a voice
conversation or video contact with the patient,
COVID-19 has forced medical professionals to
consider providing high-quality healthcare even
when it is provided remotely [9, 10]. However,
with the scientific development of the Metaverse,
the healthcare industry will greatly profit from
the ability to create virtual worlds wherever is
necessary and deliver treatments to the poor even
when they are thousands of miles far. This
applies to interactions between patients and
423
Cloud
Patient
Doctor
Yellow stars
represent
sensors attached
to the boy
Healthcare in
Metaverse
Text
Text
Figure 2. Block Diagram of Healthcare in Metaverse
family members as well as interactions between
healthcare professionals and patients.
C. Surgeries
A crucial piece of medical technology,
particularly in surgery, is the metaverse.
Currently, surgeons simulate actual surgical
procedures using instruments like VR headsets
and haptic gloves, which improves readiness and
Optimal performance in the operating room.
is supported by 3D hologram viewing
technologies with advanced spatial imagination.
IoMT wearable sensors are used to collect patient
data and make patient monitoring easier. The
patients, doctors, and students will profit from
the use of these Metaverse enabling technologies
in the field of healthcare systems. The Immersive
Touch Aneurysm Clipping Simulator is a
simulation of aneurysm clipping that the creators
of [14] have created (ITACS).
Surgeon can perform operations more easily
by using augmented reality to provide them with
easy access to data. By projecting 3D virtual
representations onto the patient’s body,
augmented reality can give surgeons quick,
simple, hands-free access to patient data. The
authors of [12] offer a design for an AR-based
solution intended for maxillofacial bone surgery.
The AR system consists of a head-mounted
wearable gadget that records a person’s facial
features and makes maxillofacial bone surgery
easier. By overlaying the patient details, the
product design enables practitioners to create a
virtual plan. The authors of [13] explain how
spine surgery is accelerated by Metaverse
technologies. Minimally invasive spine surgery
(MISS) has been adapted by spine surgeons for
the past 20 year, which has a high radiation
exposure rate. The digital change in spine
surgery is being accelerated by a lack of
navigational cues and indirect visualization.
Only 2D flat monitors are capable of displaying
the 3D reconstructed pictures used in spine
surgery. Digital transformation in spine surgery
D. Therapy
Medical therapeutics is the branch of
medicine that deals with treating diseases. A
digital therapeutic is a class of digital medicine
that provides evidence-based therapeutic
interventions. A review of past trends and
prospects in digital therapeutics is presented
in [24]. Medical Theranostics combines
therapeutics and diagnostics. The Metaverse has
the potential to make a significant impact on
therapeutics and theranostics because of its
underlying technologies. Patients can perform
physical exercises in the Metaverse to improve
their physical well-being. The use of digital
therapeutics eliminates the need to administer
drugs to patients, making it extremely useful as
medically speaking. Computer vision systems
are one example of such technologies that is
capable of processing, analyzing, visualizing,
and interpreting images and videos. Through the
integration of technologies such as augmented
reality, virtual reality, emergency room,
blockchain, artificial intelligence, and computer
vision, the Metaverse represents the future of
424
medicine. An electronic health record [21]
(EHR) can be used to create a digital twin of a
patient, from which a 3D simulation can be
created. As a result, EHRs play an important role
in the field of healthcare.
VI.
CONCLUSIONS
Over the years, the healthcare sector has
introduced a number of technological
advancements. Healthcare organizations should
consider promoting the provision of a safer and
more secure environment for outpatient
treatment. Although Metaverse in healthcare will
have risk as there can be deepfakes spoofing
attacks, data injection attacks etc. Since
COVID-19
has
exceeded
expectations,
telemedicine has been used more than expected,
so optimizing the experience in a virtual
environment makes sense. In order to maintain
privacy and security, of health data in a virtual
platform is important, its implementation also
poses concerns. This paper provides a brief
overview of how metaverse will have an impact
on smart healthcare. Through this paper, we tried
to present various artificial intelligence
approaches within healthcare. In future, with the
inclusion of extended reality, metaverse will
improve the smart healthcare industries.
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PaKSoM 2022
The Influence of Mobile Phones on
Children and Youth - General
Overview
Nenad Perić1, Olja Arsenijević2
1,2
Institute for Serbian Culture Priština-Leposavić, Leposavić, Serbia
1
nesaperic777@gmail.com, 2arsenijevicolja@gmail.com
Abstract—The impact of technology on society and
the individuals has increased rapidly in the last
thirty years and has reached the stage to shape
both society and the individual. The paper studies
the impact that mobile phones exert as mobile
phone devices and all the technological extensions
it has gained. It focuses on the impact it has on
children and young people as groups that, unlike
previous generations, grew up or were born with
this technology. The impact is produced in the
social sense and at the level of the individual, in
social, cultural, educational and all other impacts
that arise from the above.
Keywords – mobile phones, children, youth,
education, violence
I.
INTRODUCTION
In the last two decades, the digital revolution
has unstoppably conquered the world, creating
new generations that are significantly different
from the previous ones. Young people and
children, born at the end of the last century
towards present, consider a mobile (smart) phone
as part of their living space. The mobile phone
has become an indisputable source of
entertainment and information in terms of
individual and collective games, a medium for
music, movies, for creating photos and videos
(and also uploading them to social networks),
video chats, surfing the Internet and more in
addition to its basic functions-conversations and
text messages. That is why they spend a large
part of their time with a mobile phone in hand.
These are the generations to whom the Internet,
computers and mobile phones were given at
birth, and they grow up with them, almost
unaware of the world in which these gadgets did
ISBN: 978-86-82602-00-2
not exist. Their habits are different and structured
in terms of information technology. Dependence
on these gadgets is increasing, and as this drastic
change happened in a short period of time, part
of the older users (i.e. parents of children and
youth) remained insufficiently informed about
the advanced capabilities of mobile phones or it
is difficult for them to follow the rhythm and
content of the novelties.
The issue of the consequences of using
mobile phones has become a new and very
dynamic area of research, so more and more is
being written about the consequences of using
these innovations on the intellectual, emotional
and social development of children and youth.
However, the opinions that can be found in the
professional literature are often polarized. Many
believe that mobile phones can lead to significant
successes in the education of children, as well as
being a useful tool to establish communication
between young people from different cultural
and linguistic backgrounds. Contrary to them are
those who express the fear that the use of mobile
phones can lead to a weaker mastery of basic
operations (reading, writing and calculation), and
there is also a fear that children and young people
who spend too much time with a mobile phone
can become isolated and end up in a situation
where the mobile phone is their “best friend”;
therefore, they might be deprived of the social
relations that are necessary for their normal
development in the social sense. “Namely, the
media can have both positive and negative
impact on different areas of children’s
development. Whether the negative effects will
occur, depends on numerous factors and the way
427
the media are used” [1]. The same goes for the
mobile phones.
II. PSYCHO-PHYSICAL DEVELOPMENT OF
CHILDREN AND YOUTH AND MOBILE PHONES
“In developed and moderately developed
countries (such as Serbia) a great deal less
children spend the dominant part of their free
time outside, playing with peers, while an
increasing number of children spends hours with
their mobile phones, in the so-called virtual
world, with contents and programs that are not
usually adapted to their age and needs” [1]. This
is also related to a growing concern of the public
(especially professional one) about possible
harmful effects of electromagnetic radiation that
the mobile users are exposed to, with children
being the most vulnerable since they are in the
stage of physical development [2,3].
Just like a television program, the mobile
phone has the power to hold the user's attention
often much longer than he would really like, and
that is useful for him. This is true for adults, but
even more so for children. Because, if adults,
despite their greater level of development and
experience, are not immune to the “charm” of
mobile-smartphones, why should we assume that
children are able to resist it and focus on the
advantages of using them... Children mostly
choose to communicate with their peers, watch
short video content and play video games. In this
way, the media and their channels increasingly
become the main agent of socialization, from
which they displace school, family, and even
peers from school, thus influencing the entire
formation of values and behavioral styles of the
young generation. With the Internet (which
children and young people primarily follow
using mobile phones), concern for others “dies”
- the quality of dialogue between peers is
drastically reduced, the boundaries of time are
lost because the Internet is available (almost)
everywhere and is present non-stop. With
Internet one has no limits regarding the amount
of information and manipulations. Practice and
experience show that socially and emotionally
insecure children are more prone to media
addiction.
In
contrast,
communicative
youngsters put the media on the back burner and
spend more time interacting with people [4].
Thus, this condition produces Internet addicts,
which modern medicine has long recognized as a
disease... This gradually leads to “digital
narcissism” [5].
428
The study of one Internet company, which
included 2,200 mothers of children aged two to
five, namely from the United States, Canada,
Japan, Australia, New Zealand and some
European countries, has provided interesting but
also disturbing results, although one cannot
regard these as being too surprising. Almost 19%
of these children know how to use the
applications on smart phones, while only 9% of
them can tie shoelaces, and only 20% can swim.
Thus, tested children cope better with computer
games and managing smartphones than
independently tying shoelaces or entering the
pool without any swimming aids [6].
Despite concerns about the health effects of
long-term exposure to RF radiation, the
popularity of the use of wireless devices among
young children is growing rapidly, even in case
of very young children. Nineteen per cent of
children aged two to five would be more likely to
use a smartphone than to spend time doing some
other activities. Almost the same number of
children aged two to three (17%) use smart
applications, as well as children aged four to five
(21%). One quarter of all children aged two to
five know how to make a call using mobile
phones. Many phones are specially designed for
small children, some even with applications for
pre-school children [2].
Define abbreviations and acronyms the first
time they are used in the text, even after they
have been defined in the abstract. Do not use
abbreviations in the title or heads unless they are
unavoidable.
Many researches and studies emphasize that
children should not use mobile phones at all,
because the thin bones of the skull, skin and
subcutaneous tissue do not present any obstacle
to the penetration of electromagnetic radiation
[7]. But smart phones have become an integral
part of school activities. A concern about the
health risks for children from mobile phone
radiation has led to the prohibition of the use of
mobile phones in schools. For instance, the
Israeli Ministry of Education decided to ban
mobile phones during the school day in 2016. In
France, the policy came into effect during the
beginning of the 2018–2019 school year and
impacted students over 15. In 2019, four states in
Australia banned smartphones for students up to
18 years. Also, mobile phones in schools are
banned in Greece, Iran, Turkmenistan and
Malaysia. Governments pursue two main goals
with this type of policy intervention: improving
academic performance and reducing bullying,
which are precisely the impacts that we address
in this paper [8]. According to the current Law
on the Basics of the Education System, in Serbia,
the use of a mobile phone in class is considered a
serious violation of the student's obligations. The
same Law prescribes the autonomy of the
institution, which includes autonomy in adopting
the statute, development plan, program, annual
work plan, rules of conduct in the institution, the
use of mobile and other electronic devices for
educational purposes. In practice, a trend can be
observed that Serbian schools are beginning to
ban the use of mobile phones during classes.
III.
USING MOBILE PHONES FOR
EDUCATIONAL PURPOSES
“Increased interest in mobile devices and
their use for teaching and research can be
attributed to a number of factors: rapid expansion
and advancement of wireless broadband
networks, exceptional growth in of power and
capacity of each next generation of mobile and
PDA devices, but also the fact that these
appliances are deeply embedded into daily
life” [1].
The design of educational applications for
mobile phones and PDA devices has led to the
fact that they are increasingly being used among
children of all ages and at all levels of education.
Due to this, the term m-learning-mobile learning
originated. Teachers and administrators use these
devices and applications to record class
attendance, send pupils and students teaching
material, homework, exams and a great deal of
information related to school and extracurricular
activities. Mobile learning connects formal
practice (e.g. class attendance, participation in
workshops and etc.) with the informal or socalled situational learning (e.g. while the student
rides the bus, subway or train or while queuing
for healthy, control) and mobile devices are used
as translators, encyclopedias and digital libraries.
It is very important to note that this model does
not necessarily imply Internet connection in
order to learn because downloaded materials or
information can be used in off-line mode [1].
One of the commonly used options of mlearning are language courses. For example, the
Ectaco Company in the USA offers linguistic
games for mobile phones, as well as software for
dictionaries and books with certain phrases in
order to improve the language skills of the users.
The company has released seven generations of
dictionaries so far, as well as solutions for
learning languages and translation applications
for forty-five languages, including Serbian [9].
“On the other hand, an important lack of mlearning lies in the way it is used, which is mostly
spontaneously organized, and thus this kind of
learning profile usually takes place in a shorter
period of time and with frequent interruptions.
Furthermore, interruptions are caused by one
inescapable, but very important factor. This is the
basic function of mobile phones and the way they
are used-the use them to a great extent for
different forms of communication (in addition to
traditional calls and messages there are
extremely widespread services such as Viber,
WhatsApp, and the social networks Tic-Toc,
Instagram, YouTube, etc.), and plenty of notice
and information by which all of these overload
their customers and this interferes with the work
because it requires a kind of self-control which is
not peculiar to most young people” [1].
The options and technical possibilities for
using mobile phones in teaching and education
are expanding rapidly and educational systems
would have to use the medium and tool-mobile
phone intensively and in creative ways, so that
the overall effectiveness of learning could be
increased. Also, society that is based on
knowledge and at the same time regarded as the
society of lifelong learning, implies that
education in general should be viewed in a
broader context, i.e., through different
educational policy, methods and techniques, with
e-learning and m-learning being those that stand
out today [10].
IV.
VIOLENCE AND MOBILE PHONES
More and more often, we are witnessing
films recorded with mobile phones by children or
young people whose goals are to ridicule or
blackmail their peers. Furthermore, one can
freely talk about an epidemic of the above,
although schools and the school system often try
to cover it up, among other things because it is
difficult to find a solution for this because it is a
sociological phenomenon. Considering that
every child has his own mobile phone, and only
a small number are in controlled conditions, the
danger of violence that uses a mobile phone as a
technical tool is increasing [11]. The element of
abuse includes harm as an outcome of violent
behavior, which is often more difficult to
recognize in the virtual world [12]. Namely,
young people who behave violently do not see
the person they are harming, nor the
consequences of such behavior, thus maintaining
429
an emotional distance and showing a lack of
empathy [13]. The fact that millions of videos
made by children aged 12 to 16 are removed
from the Internet every year is worrying. The
results showed that sending instant messages is
associated with participation in electronic
violence, while greater use of social networks is
associated with more frequent experiences of
violence. In Serbia, for instance, every third pupil
has experienced some sort of violence through
Internet in last twelve months, while
cyberbullying has experienced 16% of them [14].
Since cruelty on the Internet can be
intensified by the distance between the
perpetrator and the victim, the concept of
violence is changing. Nowadays, it is easier to
become a target of peer violence. It cannot be
said that it is because of mobile phones, but
because of the radical changes in society that
have been registered since the end of the last
century. Nevertheless, the fact is that mobile
phones have significantly facilitated the
aforementioned. Children have access to each
other twenty-four hours a day and can commit
violence at any time of the day or night. The
effect is further enhanced by the fact that children
use mobile phones to surf the Internet much more
than they use standard and laptop computers, so
it is more difficult for parents to monitor and
control them in this regard. Continuous
professional development of teachers is
necessary, which would provide them with an
insight into the nature of the so-called
cyberbullying and ways to prevent and curb it,
because the role of the school has proven to be
successful in dealing with school violence.
Therefore, every school must have its own plan
of action that is adapted to the specific conditions
of that school, and it cannot be completely
adopted from another school. The process or path
of creating your own way of fighting violence is
as important as the result itself. “The school must
set clear rules that do not allow violence and
define the consequences if such behavior
occurs.” It is necessary that these rules are
applied daily, because that is the only way
violence will stop or at least be limited [15].
Also, parents should be introduced to the
methods of cyberbullying and how to properly
position themselves in case of the same.
V. CONCLUSION
Since the beginning of the new millennium,
digital (r)evolution has created new generations,
the generations whose life is considerably
430
different from the previous ones from the very
start. These generations are distinguished by
knowledge and widespread use of media, digital
technology and information. It is quite natural to
them to receive much more data than previous
generations, to learn what they choose by
themselves, to communicate simultaneously in a
number of ways [15].
Today's children perform better in the virtual
world than in the real world. On the other hand,
they know little or nothing about some ordinary,
everyday things, because they spend a whole lot
of time with a mobile phone or in front of a
screen (computer or television), with much less
physical activity than is recommended. All of
this happens in the period of life when it is
especially important to be physically active as
much as possible. Today’s children are adept at
understanding technological achievements, but
have increasingly poor social relationships with
their peers. However, schools and school systems
that do not adapt to the fact that a mobile phone
is an “extension” of the average student will not
be able to progress as much as those that adopt
the use of mobile phones in their teaching
processes. The former is more likely to be
condemned to declination.
Furthermore, the risks of excessive Internet
surfing or playing video games on a mobile
phone begin when selectivity in the choice of
content is lost. It goes without saying that it is not
possible, nor would it be desirable, to isolate
children from mobile phones, but it should not be
allowed to be their dominant way of spending
time. We live in an imperfect world where
children are in greater danger than ever before,
because in addition to the dangers in the real
world, there are also dangers in the virtual world.
Furthermore, as young people with a higher
degree of internet addiction are more likely to
participate in electronic violence (whether they
experience it or commit it), it is important to
emphasize the education of both young people
and their parents, because mobile phone
addiction and electronic violence are the result of
a lack of control in the virtual world.
Certainly, the media literacy is one of the best
ways to prevent misuse of the mass media and to
improve the efficiency of their strengths in order
of educate and up bring youth and the youngest.
To make someone media literacy would mean to
enable one to understand and use popular as well
as educational and scientific contents, to be able
to express his or her ideas in the form of media,
to be able to communicate through channels of
mass media in order to acquire knowledge and
notify his or her own attitudes [16].
“Education for the media, i.e. the media
literacy is a prerequisite for critical reading and
media use. It is necessary to be media literate in
order to use the media and global information
networks, while on the other hand the media and
networks provide the opportunity to gain media
literacy” [1]. According to the European
Framework of Key Competences, digital
competence has the status of one of the eight key
competences in education. It is defined as the
ability to use technology critically and safely at
work, in leisure and communication. “The
government primarily has the responsibility for
this by conducting certain educational and
cultural policy which, among other things,
increases the level of digital literacy of all
involved participants in the analysis of this study:
the school, parents and children, as well as the
society in its broadest sense. Finally, all relevant
documents of educational policies in the world
emphasize the importance of the development of
media and technological literacy” [1].
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432
PaKSoM 2022
Knowledge Management in the Hotel
Industry as a Relevant Contribution to
the Development of the Tourism Sector
Borislav Kolarić1, Jelena Ignjatović2, Goran Stojićević3, Aleksandra Đorđević4
1,2,3,4
1
Academy of Applied Studies Šabac, Šabac, Serbia
2
kayak@mts.rs, jignjatovic985@mail.com, 3csugoran@mail.com, 4aleksandradj993@mail.com
Abstract—Knowledge is one of important
resource in the modern organizational business.
By using new knowledge, organizations become
more competitive in the context of reducing costs,
increasing speed and meeting customer needs.
Since the satisfaction of tourism employees
depends
on
many
factors,
knowledge
management (KM) is one of them. Namely, the
role of knowledge management in the hotel
industry is to provide employees with easy access
to modern, specialized knowledge. The success of
an establishment depends on providing great
experience for guests. With the proper knowledge
management framework, employees gain the
ability to respond to guests’ questions and
concerns with quick, accurate information and
action. The purpose of the paper is to present the
importance of knowledge management in the
modern challenges of hospitality business as well
as the conditions required for successful
implementation. The aim of this paper is to point
out the importance of knowledge management in
the hotel industry, which will make a relevant
contribution to the development of the tourism
sector. In addition to the introduction, the paper
consists of three parts. The first part of the paper
indicates the importance
of
knowledge
management in the hotel industry as a
contribution to the development of tourism, the
second part of the paper analyzes the
characteristics of knowledge management in the
hotel industry, while the third presents categories
and factors for effective knowledge management
in the hotel industry. At the end, the concluding
considerations of the author are given.
Keywords – knowledge management, hotel
insustry, development, tourism.
ISBN: 978-86-82602-00-2
I.
INTRODUCTION
Progress and development of the tourism
sector [1,2] rely on its adaptation capacity in
terms of responding to economic, social, and
technological challenges. The major task of
hotels is to promote customer satisfaction, while
the major factor on customer satisfaction is
quality [3]. Given the intense competition
throughout the industry, where customers are
constantly looking for the best deals, hotel
management and employees face major
challenges. Knowledge and understanding of all
elements of business, including continuous
change in accordance with social changes and
changes in customer preferences, is of key
importance.
Competitiveness in the global market
depends on the organizations ability to
capitalize on its intellectual and knowledgebased assets. In this sense, knowledge is
recognized as a powerful means of supporting
organizations in the tourism industry, in creating
an efficient model for achieving competitive
advantage and achieving the desired business
performance.
Hospitality
and
tourism
knowledge is heavily labor dependent, as
employees use their knowledge in providing the
best experience for customers. Customer
satisfaction and loyalty are the most important
factors to the success of a hotel. Knowledge
management (KM) in hospitality and tourism
organizations is imperative, as most employees
have direct contact with customers, so
organizations want to ensure that employees
provide a service that will attract new clients
and retain returnees [4]. Therefore, it is
433
important for employees to have the knowledge
about customer preferences and how to provide
the best service [5].
Therefore, the aim of this paper is to present
the importance of KM in the hotel industry,
which has a contribution to the development of
the tourism sector. In addition to the
introductory considerations, the first part of the
paper draws attention to the importance of KM
in the hotel industry. The second part of the
paper examines the characteristics of knowledge
management in the hotel industry, while the
third presents categories and factors for
effective KM in the hotel industry. At the end, a
conclusion is given.
II. THE IMPORTANCE OF KNOWLEDGE
MANAGEMENT IN HOTEL INDUSTRY
In light of the dynamic changes in the global
scenario, individual companies and the entire
hospitality sector are facing serious problems,
related to increasing uncertainty in business,
changing customer preferences and shorter life
cycle of service products [6]. Tourism is an
intensive activity and highly people oriented
service, experiencing increasing powerful
worldwide competition. Therefore, to improve
their performance and ensure a high level of
competitiveness, adoption of knowledge
management concepts and models is must for
organizations in tourism and hospitality sector
[7]. Knowledge as a business perspective is
much more than information and knowledge
sharing in terms of sharing experiences,
practices, and procedures is beyond information
sharing [8]. An organization’s knowledge
strategy, in the tourism industry, must link the
generation of business value and the
development of competitive advantage,
assessing knowledge resources, competencies
and capacity for successful execution of
business processes [7]. Medlik (1990) observed
that improving an employee’s knowledge about
customers preferences and the corresponding
service procedures is becoming increasingly
important in hotels. When hospitality businesses
identify and exploit their organizational
knowledge, they should observe enhanced
dynamic capabilities and improved business
performance [10].
Transformation of knowledge into key
competencies and competitive advantage in the
tourism and hospitality organizations primarily
is influenced with transferring and sharing
knowledge within the organization and with
434
cooperating enterprises [9]. Challenges in the
adoption and use of KM approaches in the
tourism industry relate to [11]:
how to identify and collect important,
appropriate, accurate and authentic
information;
how to organize and process
information;
how to access, share and use resources,
and
how to recognize knowledge and prior
experience to prepare them to assist
current decision-making processes.
Development of effective KM system in
tourist organization requires an incremental
approach in two-step approach to develop and
adopt KM. The first step can be used in building
awareness of KM throughout the organization,
to instruct employees about KM, developing at
the same time the technology infrastructure to
support KM adoption [12]. During the next
step, the establishing of the organisational
infrastructure is required to implant KM
processes into the organisation’s business
operations.The
technology
will
enable
knowledge sharing, and assist in integrating KM
practice into organisation’s strategy of human
resource management. Knowledge projects are
likely to succeed when a sophisticated
technology infrastructure is adopted.
IT is used as a medium for knowledge flow,
supporting communication and collaborative
knowledge seeking, enabling collaborative
learning [13]. IT infrastructure includes E-mail,
document management, data warehousing,
workflow software, decision support system etc.
A KM system must be open, distributed,
customizable and secure to effectively meet the
needs of the organization. After successful
fulfilment of these two steps, implemented KM
system allows the tourist destination and its
related service sector transition into learning
destination, where organizational learning is
recognized as knowledge acquisition, retention,
and retrieval [8].
III.
CHARACTERISTICS OF KM IN THE HOTEL
INDUSTRY
Hotels are currently increasingly dependent
on their competence to possess internal and
external knowledge, making knowledge a
critical resource for competitiveness and
obtaining competitive advantages for innovation
and differentiation of its competitors [14]. The
fundamental knowledge for the provision of the
hotel service is based on the internal knowledge
of its employees, the cooperation between them
and the synergistic complementarity of
knowledge [15]. The strategies of management
of internal knowledge in the hotel industry are
based on the creation, transfer and distribution
of intra-organizational knowledge (Fig.1). They
have an emphasis on the accumulation and
preservation of organizational knowledge, as
well as on encouraging the exchange of
knowledge between employees [16].
relations of managers and hotel staff, contacts
with different communities outside the
company, exposure to different information and
perspectives, develop creativity contributing to
innovation [19]. In addition, the management of
external
knowledge,
acquired
through
cooperative networks of companies in this
industry, should mitigate the uncertainty of
completely uncontrollable events. It must also
adapt to external changes, diversifying
opportunities, anticipating trends and above all,
encouraging the transfer of knowledge through
the organizational structure [20].
The internal KM, together with the creative
processes of the employees have a decisive role
in the incremental innovations of the sector,
namely in creating experiences beyond the
expectations of the clients, trying to anticipate
their needs [18]. Hotel managers and staff, due
to proximity and direct contact with customers,
are more likely to acquire knowledge about
them, as knowledge flows are more direct and
faster, allowing for more detailed information
about their wishes, needs, preferences and
market trends [14]. These knowledge flows are
a potentiator of the generation of ideas and
incremental innovations, since the knowledge
and suggestions provided by clients are related
to the hotel’s current services, practices, tasks or
activities [20].
For an effective transfer of external
knowledge, it is necessary for the hotel to have
internal structures that allow the dissemination
and sharing of this knowledge [20]. Tacit and
explicit knowledge also has the dominant role in
hospitality service operations . The implicit
orientation to the processes illustrates the
relevance of tacit knowledge in the hotel
industry, which is a dynamic and constantly
changing environment [21]. For an effective
creation, sharing and use of tacit knowledge,
proximity is essential for the development of
strong levels of trust and common values, since
they require direct and reciprocal interaction
[22]. In the hospitality sector, this flow of
personal knowledge is carried out through direct
communication,
meetings
between
the
management team and the rest of the workforce,
sharing of emails, training and practical
experiences in the work context. This gives
trainees the possibility to observe, imitate and
test skills and to incorporate routines [23].
When employees have a high level of
experience and skills, they tend to increase the
efficiency and productivity of other colleagues.
On the other hand, hotels can manage their tacit
knowledge through the creation of employee
profiles or the creation of corporate lists of
employees with specifications according to a
certain knowledge area [21].
Some of the customer-oriented knowledge
acquisition processes are obtained through
central information and reservation systems
[16]. The systematic inclusion of hotels in
strategic cooperation networks, in order to
create and transfer knowledge within the
tourism sector, is a key factor in the
diversification of business and the generation of
radical innovative ideas [19]. External social
IV.
Figure 1. Knowledge sharing [17]
RELATIONSHIP KM AND INOVATIONS IN
HOTEL INDUSTRY
Through capabilities and the experiences of
the individuals of an organization, it increases
the capacity to retrieve and promote
organizational
capitals
and
innovation
performance. Gamble and Blackwell [24]
emphasize the organizational management of
KM toward continuous knowledge-based
innovation, with an emphasis on workgroup
and knowledge dissemination. Chiu and
435
Fogel [25] argue that organizational and
managerial practices can have a positive effect
on the implementation of an innovative
knowledge-driven system and the obtained
results might lead to the outstanding results and
meeting the interests of the organization. Since
application of knowledge would lead to
innovation and performance improvement in an
organization, then organizations always benefit
from KM techniques for development and
greater profitability [26]. The KM literature
considers innovation as a critical factor for
companies in creating value and maintaining a
competitive advantage in today’s highly
complex and dynamic environment [27].
Innovative inventions are highly related to
knowledge, expertise, and commitment of
employees as key inputs in the value creation
process. Therefore, researchers emphasize the
central role of KM, especially in creating an
internal work environment that supports
creativity and innovation [28].
An effective tacit KM strategy is essential
for hotels to create innovative products and
successfully develop in the ever-changing
tourism market [29].
The ability to motivate employees, with a
high level of skills, to turn their tacit
knowledge about specific tasks into explicit,
leads to an increase in knowledge about the
hotel organization [29]. Likewise, the
possibility of intensive communication with the
client, in the hotel industry, strengthens the
relevance of the existence of explicit KM for
business [21]. A hybrid strategy is
recommended for hotels. Some tacit
knowledge, i.e. routines embedded in services,
can only be transferred through direct personal
relationships, while innovation also results
from the simultaneity of explicit and tacit
КМ [21].
to guests’ questions and issues with prompt,
accurate information. Furthermore, insights into
customer data and trends can be gained so that
fact-based organizational decisions can be
made to give the institution an advantage in a
highly competitive environment.
Understanding different types of knowledge
can help to determine the best KM strategy for
your organization. Hospitality industry
knowledge generally falls into the following
categories [30]:
Task-specific
knowledge:
This
encompasses any knowledge that is
required to complete a particular task,
including specific procedures, actions,
or strategies. For example, a staff
member uses task-specific knowledge
when following the steps to check in a
guest, make a reservation, or answer
the phone with a standardized greeting.
Generally, this information is included
in training materials, like videos or
handbooks.
Tacit knowledge is less by-the-book.
Rather, it is knowledge that’s gained
over time through personal experience
and usually difficult to articulate. This
could include understanding the
phrases and mannerisms to use to deescalate a frustrated guest. While you
may have a documented protocol for
this type of situation, it’s usually only
through experience that staff members
can expertly finesse these difficult
interactions.
Customer-related knowledge: Thanks
to technology, hotels and other
hospitality-related businesses today
have a wealth of insight into customer
data. Customer-related knowledge
could include historical data (such as
frequency and length of stays),
demographic data (such as socioeconomic status, age, occupation, etc.),
and even preferences and behaviors.
Network-related
knowledge:
In
addition to customer data, your
company can also gather knowledge
about others in your network, such as
competitors, vendors, and partners.
Market-related knowledge: Marketrelated knowledge goes one step
V. CATEGORIES AND FACTOR FOR
EFFECTIVE KM IN HOTEL INDUSTRY
The role of KM in the service industry
(which includes hotels) is to provide employees
with easy access to up-to-date, specialized
knowledge. This is especially important in the
hospitality industry, because the success of the
establishment depends on the satisfaction of the
guests. If employees are slow to provide
accurate information or solutions, the guest is
less likely to return. A negative online review
can also show guest dissatisfaction. Solid KM
framework can empower workforce to respond
436
broader
than
network-related
knowledge. Equipped with marketrelated knowledge, organizations can
better understand the market that it is
operating within—such as size,
population, culture, and habits. This
can inform decisions about what
products, services, and experiences to
offer.
Knowledge in tourism and hospitality
industry is substantially labor dependent and
employees, knowing guests’ preferences, use
that knowledge in providing the best service for
customers, because guests satisfaction and their
loyalty are among key success factors in the
tourism business [31]. The successful and
effective use of KM in the hotel industry is
influenced by many factors such as:
Strategy - In a hotels organization, in
creating added value, employees can
use their competencies on two ways:
externally trough relationships with
customers, and suppliers, or internally
trough management, administrative
systems, models, and attitudes.
Knowledge strategy has to be
connected with business strategy [32].
The organisational culture Developing
an organisational culture that values
knowledge sharing and knowledge
creation can assist in the process of
transforming individual or tacit
knowledge
into
collective
knowledge [7].
Knowledge creation - The effective
creation of new knowledge, with a
focus on tacit knowledge, depends on
strong relationships among the
employees in an organization. KM
approach has to pay attention especially
to tacit knowledge and explore new
organizational forms, cultures and
incentive
packages
to
advance
interpersonal interaction and social
relationships [7].
Learning
and
Participation
Employees can learn participating in
communities of knowledge sharing
their
specific
perspectives
and
practices. Basic instruments of
knowledge
creation
are
communication, consideration, debate
and negotiation. In that sense, the
organisational culture is expected to
provide a climate where learning and
knowledge are highly respected [33].
Аccessible knowledge across the
organization With a modern
knowledge
management
system,
employees will always know where to
find
information.
Knowledge
management
systems
give
organizational leaders access to a
centralized source of customer insights.
Equipped with that knowledge, they
can make more informed decisions
about how to improve the customer
experience.
Leadership - Knowledge can be
managed when leaders understand,
cultivate and assist in the knowledge
creation. Senior management has to
enable and support knowledge creation,
nurturing, growth and sharing, ensuring
the creation platforms and cultures
where
knowledge
can
freely
emerge [33].
VI.
CONCLUSION
Knowledge can be considered one of the
most important tools for effective business in
the hotel industry, precisely because KM
practices can help develop dynamic capabilities
and create competitive advantage. The main
goal of KM is to improve organizational
capabilities, solve problems and enable
innovation. In this way, the business can
develop unique dynamic capabilities, so that
the company can implement the overall strategy
and achieve its goals. Therefore, hotel
organizations should take advantage of the
unique knowledge they possess. This implies
that they should see themselves as knowledge
processing companies and their employees and
managers as knowledge workers. Hotel
management should build an organizational
design that enables the creation of new
knowledge, knowledge exchange and transfer
across functional boundaries. At the same time,
knowledge should be frequently checked for
errors. Hotel organizations should support the
role of knowledge in the success of their
departments, ensure that employees understand
KM and encourage them to participate in
training and learning, as well as to collect and
transfer knowledge.
437
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440
PaKSoM 2022
Legal Issues in Managing and Sharing
Research Data
Jelena Banović1, Aleksandra Bradić-Martinović2
1,2
Institute of Economic Sciences-Data Centre Serbia for Social Sciences, Belgrade, Serbia
1
jelena.banovic@ien.bg.ac.rs, 2abmartinovic@ien.bg.ac.rs
Abstract—Scientific research is directly related to
the collected and processed data. Data
manipulated within the natural and technical
sciences are not subject to the same restrictions as
data in the social sciences. Domestic researchers
who collect data from individuals must be aware
of the limits imposed by the Law on Personal Data
Protection of the Republic of Serbia. This topic is
particularly relevant to the Open Science and
Open Access principle movement, for which the
Ministry of Education, Science and Technological
Development of the Republic of Serbia has
dedicated itself through the adoption of the Open
Science Platform in 2018. The paper aims to
analyse and brings closer to researchers the
restrictions within the two most important laws
that are directly or indirectly implemented in our
country - the Law on Personal Data Protection of
the RS and GDPR, which is applied in the EU.
Domestic researchers also must respect them in
projects funded by EC or other EU financiers. The
topic is covered through the presentation of the
Data Center of Serbia for Social Sciences case
study, a national infrastructure that deals with
collecting, archiving, and sharing research data in
the social sciences.
Keywords - data, open science, open access, legal
framework, data centre serbia for social sciences
I.
INTRODUCTION
Data has always been a valuable resource,
and efforts have been made to systematise and
preserve it appropriately. With the development
of digitalisation, they have become an integral
part of all areas of human existence. Data sources
can be different, and they also include personal
data about one’s identity, property, social and
health status, but also data on business subjects,
their balance sheets, clients, data on national and
ISBN: 978-86-82602-00-2
supranational levels, open or protected, as well as
data on our environment and much more.
However, a particular dimension is research
data in science. As part of scientific exploration,
researchers collect various scales and types of
data. Some sciences, especially those which use
measuring instruments, generate a massive
amount of data, classified as Big Data. Based on
the various data, science draws significant
conclusions and achieves excellent discoveries,
and very often, cooperation is the key to
progress. A movement that advocated open
communication among scientists appeared to
open the possibility of the broadest scientific
cooperation. OECD observes Open Science as a
process that “encompasses unhindered access to
scientific articles, access to data from public
research, and collaborative research enabled by
ICT tools and incentives” [1]. Despite the
benefits that this movement has already brought
to science and scientists, many issues still exist
that prevent its spread and strengthening.
Bearing in mind that this paper focuses on open
research data, our goal is to point out a significant
dimension of this problem - legal issues and
considerations in the process of data
management and sharing, with a focus on social
science. Many researchers, especially in Serbia,
are unaware of data’s determinants - they are not
informed about rights or obligations toward data,
legally and ethically. A unique dimension of the
problem can be seen in the social sciences that
collect, process, deposit and share data on
individuals. This field is subject to additional
laws that do not affect data management and
sharing within the natural and technical sciences.
Serbian researchers should realize that the
future situation can only be more complicated.
The Ministry of Education, Science and
441
Technological Development of the Republic of
Serbia is increasingly putting pressure on
implementing Open Science following the Open
Science Platform adopted in 2018. In the first
phase, it is insisted on implementing digital
repositories in which all scientific publications
will be stored and publicly available. In the next
step, the same treatment is expected for
research data.
With an aim to bring researchers as close as
possible to the limitations in data management
and sharing, together with their rights and
possibilities, we will present elements upon the
main document of Serbian national research
infrastructure Data Center Serbia for Social
Sciences - Policy and Procedures document
is based.
II.
DATA CENTRE SERBIA FOR SOCIAL
SCIENCES
Data Center Serbia for Social Sciences
(DCS) [2] is the national data centre of the
Republic of Serbia established in 2014 as an
organisational unit of the Institute of Economic
Sciences in Belgrade to identify significant data
sources within a wide range of disciplines of
social sciences, collect and prepare data for the
long-term preservation and enable dissemination
for scientific research and academic education
[3]. The Center has been developed since 2012
with the support of the European Research
Community and international projects funded by
the European Commission [4] and the
HORIZON2020 project - CESSDA SaW
(Strengthening and Widening) [5], as well as by
the Swiss National Science Foundation,
SCOPES project - SEEDS (South-Eastern
European Data Services) [6] DCS became a
national research infrastructure in 2019 when the
Ministry joined the Consortium of European
Social Science Digital Archives – CESSDA
ERIC [7] and assigned the service provider’s role
to the Institute of Economic Sciences. CESSDA
is a leader in data curation and sharing with great
expertise. CESSDA ERIC supported DCS from
the first day until the present time.
Today, DCS is available to all Serbian
researchers in the field of social sciences and
fulfils its mission through activities of collecting,
depositing, and sharing research data,
representing Serbia in the European Research
Area (ERA), training researchers in this field,
and participating in the Open Science Team of
the Republic of Serbia.
442
III. LEGAL ISSUES IN DEALING WITH
RESEARCH DATA IN SOCIAL SCIENCES
A. Data Protection Laws
Legal restrictions are, in essence, highly
formal and include penalties in case of noncompliance. Therefore, researchers must have
clear guidelines regarding the data generated
during the research process, sharing them among
themselves or in Open Access data repositories
such as Harward Dataverse, Figshare, Zenodo,
etc. However, the situation is very complex due
to several problems. The first one is the lack of a
unique definition of the term - “research data”.
According to the website Law insider [8], there
are over 50 different definitions, and the three
central covers research data as “information or
data which is not Personal Data that is collected
or generated in the performance of the Research
and includes (but is not limited to) information
that is collated or stored in the searchable form”.
Other consider it as “the result of observations or
experimentation that validate research findings
and that are published separately to the Article,
which can include but are not limited to raw data,
processed data, software, algorithms, protocols,
and methods.” and the third explains it as
“documents in a digital form, other than
scientific publications, which are collected or
produced in the course of scientific research
activities and are used as evidence in the research
process, or are commonly accepted in the
research community as necessary to validate
research findings and results”. Based on only
three definitions, it is clear to what extent the
approach and the way of observing this vital
research category differ. The ignorance and
imprecise determinants of the basic concept are
confusing and put researchers at risk.
Case study example. DCS collects, without a
precise definition, quantitative and qualitative
data in a wide range of social sciences and
humanities (economics, education, employment
and labour, ecology, conservation and land use,
health, history, industry and management, law,
criminology and legal systems, media,
communication and languages, political science,
psychology, sociology, society and culture,
social welfare policy and systems). The data
should be harmonised with one of the listed
formats: spreadsheet and similar formats as the
quantitative data and text and audio images/
photos and videos as the qualitative data.
Many projects implemented in Serbia are
funded by the European Commission or other
European Union funds. Within these projects,
personal data protection is predominantly based
on the principles of the General Data Protection
Regulation – GDPR, introduced in May 2018. It
was not the first law on personal data in the EU,
and the GDPR replaced the previous one – the
Directive on the use of personal data in the EU,
which was in charge for almost 20 years. The
main reason for changes was technological
development and adjusting regulations to a
contemporary, digitised economy and society.
Reference [9] offered the systematisation of the
main GDPR principles regarding scientific
research data:
the processing of personal data must
follow the law and be entirely
transparent for the person(s) who made
the data available to researchers. All
respondents involved in scientific
research have the right to know exactly
how their data will be handled during
and after the study. In cases where the
survey is not anonymous (e.g. focus
group or interview), researchers are
obliged to obtain Consent from
respondents. Respondents have the right
to withdraw their Consent at any time
without explanation.
if there is the respondents’ Consent, the
researchers must not go beyond the
respondents’
agreement.
Without
Consent, researchers are obliged to use
them only for scientific analysis. There
are exceptions when data are taken over
by the state archives, national
statistics, etc.).
to reduce the probability of misuse of the
amount of data collected from the
respondents, it should be minimal and
fully harmonised with the goals of
scientific research.
Special attention to the place and time of data
storage is also necessary. Data must be stored
safely (protected from malicious attacks or
negligence) and must not be kept longer than the
period required for research. However, archiving
or long-term data storage is also desirable under
the GDPR, and it requires protected
infrastructures, such as trustworthy digital
repositories.
Following the example of the European
Union, Serbia has also improved its legislation
and, in November 2018, adopted the Law on
Personal Data Protection of the Republic of
Serbia [10]. The law is basically in line with the
GDPR and has been in force since August 2019.
Unlike the legal delimitation of the broad term
“research data”, the domestic Law on Personal
Data Protection very unambiguously defines the
term “personal data” as “any data relating to a
natural person whose identity is determined or
identifiable, directly or indirectly, mainly based
on an identity mark, such as name and
identification number, location data, identifiers
in electronic communications networks or one or
more features of his physical, physiological,
genetic, mental, economic, cultural and social
identity” [10]. In addition to being aware of the
definition, researchers also must be informed of
the differences between direct and indirect
identifiers. In case they overlook the indirect
identifiers, revealing a private person’s identity
is possible, which carries additional risks (more
on this topic [11]. Personal data protection is
critical when sensitive data is involved.
According to the law, this category includes
racial or ethnic origin, religious affiliation,
political and philosophical beliefs, health status,
trade union membership and sexual orientation
and sexual life. Researchers who manage and
share data on their respondents must be familiar
with these elements of the Law, as well as with
the numerous restrictions it imposes. Article 92
of the Law stipulates that restrictive measures
regarding the collection of personal data shall not
be applied if data processing is performed for
scientific or historical research or statistical
purposes. In addition, related to the deposit and
storage of data from scientific research in the
social sciences, it envisages deviation from the
set guidelines for archiving in the public interest.
Anonymisation is the primary technique
available to researchers that allow data to be
securely manipulated in an international
environment. Anonymised data are not subject to
legal restrictions, but only if the process is
performed
professionally
and
reliably.
Anonymisation is the process of wholly and
permanently removing identification from data
by converting personal information into
aggregate data. Anonymised data can no longer
be linked to individual data [11].
Case study example. DCS operates under the
following laws:
Law on Personal Data Protection of the
Republic of Serbia (“Official Gazette of
the RS”, No. 87 of November 13, 2018);
443
General Data Protection Regulation
Directive - GDPR, 95/46/EC;
Law on Copyright and Related Rights
(Official Gazette of RS No. 104/2009);
EU Copyright Directive in the Digital
Single Market, EU, 2016/0280(COD);
Law on Science and Research (“Official
Gazette of RS”, No. 49 of July 8, 2019)
and
Law on the Science Fund of the Republic
of Serbia (“Official Gazette of the RS”,
No. 95/2018).
In many cases, research funders understand
the position of individual researchers and seek a
professional assessment of the vulnerability of
respondents within the research. To ensure
compliance with laws and regulations, they
require the decision of the Ethics Commission or
at least a person qualified to assess the risk of
manipulating specific data (Data Protection
Officer – DPO). Decisions are mainly based on a
clearly defined procedure - Data Protection
Impact Assessment (DPIA), covered by Serbian
Law in Article 54).
Case study example. DCS decide on data
compliance based on a Questionnaire for
assessing the impact on the protection of
personal data, which covers several topics:
Basic information about the project or
study within which the personal data will
be processed (name, client, duration)
and describe the life cycle of the data to
be processed;
Data anonymisation level (original
form, partially or entirely anonymised);
Data collection method
interview, focus group);
The level of compliance of the data
management process with certain
principles set out in the Law;
Is the data in the sensitive data category;
Will the data leave (physically or
virtually) the borders of our country and
Whether the data will be archived
following Article 6 of the Law.
(survey,
Bearing in mind that institutions (universities
and scientific institutes) in the social sciences do
444
not formally appoint Ethics Commissions, such
as in medical research institutions, domestic
researchers can address DCS for assessment.
These assessments are internationally accepted.
Consent is one essential element that enables
researchers in the social sciences to share their
data as Open Access. It is required throughout
the entire data lifecycle (collecting, analysing,
archiving, sharing, re-using). “Informed
Consent” for personal data is a voluntary,
determined, informed and unambiguous
expression by which that person, by a statement
or explicit affirmative action, gives consent to the
processing of personal data relating to him.
Consent needs to fulfil several requests. It needs
to be:
Voluntary: the person giving it must not
be influenced, have the right to refuse or
revoke the decision without any
consequences and must not be in a
dependent relationship;
Certain: it must have clear information
about the scope and consequences;
Informed: the content and requirements
of consent should be easy to understand,
easily accessible, transparent and written
in simple language, especially when
information is given to children;
Active: “silence as a sign of approval” is
not taken into account, and
Revoking consent must be as simple as
providing it.
Adding a clause on data sharing and
archiving allows the respondent to decide on a
specific notice of purpose. This empowers them
and allows them to choose whether or not to
contribute to a research project and make their
data available for future research projects. The
best way to obtain the informed person’s consent
to data sharing is to identify and explain all
possible future manipulation of their data and
offer the participant the opportunity to consent
or refuse.
Formally speaking, Consent can be oral and
written, but also one-time and permanent.
Written Consent is in accordance with the law
and is usually a request of the Ethics Committee
or similar body and provides better protection to
the researcher. However, in some cases, it is
impossible to obtain it when the respondents are,
for example, helpless people or felons. Also,
seeking this type of written consent may frighten
the respondent. Verbal Consent is only valid if
recorded on audio or video recording. Its
disadvantage is that it is often difficult to cover
all activity elements in video/audio format,
which causes distrust among respondents. Onetime Consent is simple and non-threaten
respondents but restricts data usage to specific
research and prevents archiving and sharing.
Permanent Consent is most appropriate for
covering the whole data life cycle. Researchers
should keep in mind the advantages and
limitations of each category to avoid turning to
their respondents (again) if they have not
received their permission to deposit and share
data in Open Access.
Case study example. DCS provides several
levels of access to data in order to protect
researchers and respondents (regardless of
whether the data is anonymous or not):
Public-Use-Files (PUF) are data and
documents that can be accessed through
the dissemination portal without
any restrictions;
Free-Use-Files (FUF) are data and
documents that can be used exclusively
for the purposes of scientific analysis in
academic research and teaching and
which can be accessed without the
permission of the depositor. Through the
ordering system, either by e-mail or
online form, the user can gain access
and free download files from this
category. Prior user registration is
required, and
Scientific-Use-Files (SUFs) are data and
documents that can only be accessed
with the written approval of the
depositor. The user must familiarise
DCS with the details and specify their
research objectives. DCS sends a
request for approval to the depositor and
allows the user access only if the
depositor submits written approval. In
order to access these files, the user must
sign an agreement on the terms of use.
Depending on the specific research, the data
collected, and the accompanying documentation,
researchers in the social sciences in Serbia, when
depositing data sets, can choose one of the
offered levels of protection. However, it should
be noted that the goal of DCS is to make the data
“Open as Possible and Protected as Necessary”
to get as close as possible to full Open Access.
B. Data as Intellectual Property
Technological progress has enabled the
opening of scientific papers and data collected
within research. Retaining copyright in
researchers’ work in the new environment has
become challenging. There are many examples
of abuse and appropriation. The situation is
further complicated when it comes to published
data sets. Researchers should be familiar with
licensing, ownership, copyright, and intellectual
property to protect their work and avoid
threatening other people’s rights. Many
academic institutions offer their researcher
advice to protect intellectual property and
copyright, but data on this topic are still
insufficiently clear. However [12] drew attention
to this very complex issue, noting that copyright
protection regarding data (regardless of form quantitative or qualitative) depends on the local
regulations of each country.
One of the most common ways to protect
intellectual property concerning data is licensing.
A license is a legal instrument for a copyright
holder or content producer to enable a second
party to use their content and apply certain
conditions and restrictions to those uses. When it
comes to the UK, researchers can use one of three
groups of licenses. In the case of public-funded
research, researchers have a formal obligation to
make their data open after a period of the
embargo (if needed). OGL (Open Government
License for Public Sector Information) [12] is
typically used in this case. If the research project
is funded by a third party, e.g. business sector,
usually a full license applies, at least for a while.
Finally, researchers mainly use Creative
Common licenses in the case of other funders.
Creative Commons is an international
organisation [12] that provides free licensing
through public copyright licenses. Trademark is
CC completed with main additional terms: BY
for attribution - implies the recognition of
intellectual property rights of data creators in the
process of copying, distribution, presentation,
performing, doing derivative work, or remixing;
SA for share alike derivative work - those who
use data and publish the results of research
obtained based on other people’s data must
ensure that their research results have the same
or higher level of restriction as to the original, not
less; NC – non-commercial is used to exclude the
possibility of commercial use and ND – non445
derivative work, since 4.0 version that allows
derivative work, but without the possibility of
sharing it.
Case study example. When it comes to
intellectual properties, DCS advises its
depositors to:
Decide, at the beginning of the research
project, the person who will own the
copyright on data. It is not always
straightforward, especially in large
teams from different institutions or, even,
countries. In most cases, Principal
Investigator (PI) or the project leader is
the copyright owner, but in multinational studies, local team leaders can
obtain copyright on country-specific
data. It is very important to make a clear
decision about this subject to avoid
possible conflict after the project.
Suppose the data is at a higher level of
protection than Open Access (restricted
use or embargo). In that case,
researchers can use depositing options
listed in Illustration 4, and in other
cases, use Creative Commons licenses
unless the contract with funders provides
otherwise. DCS uses CC 4.0 version for
publically available data.
DCS provides guidelines and examples
for data citation. Citation ideally needs
to contain author(s) of the data set (in
accordance with the agreement with the
funder or within the research team, as
explained), publication date, title,
edition, version, feature name, resource
type (for example database or data set),
Unique numeric fingerprint (UNF),
identifier (in most cases DOI or Handle)
and location. An example of data set
citation in APA style is:
Smith, T.W., Marsden, P.V., & Hout, M.
(2011). General social survey, 1972-2010
cumulative file (ICPSR31521-v1) [data file
and codebook]. Chicago, IL: National
Opinion Research Center [producer]. Ann
Arbor, MI: Inter-university Consortium for
Political and Social Research [distributor].
doi: 10.3886/ICPSR31521.v1.
446
CESSDA ERIC put an additional effort to
provide learning materials for researcher in
social sciences – Data Management Expert
Guide – DMEG [13]. The main purpose of
DMEG is to support researchers with knowledge
of how to make their data FAIR which basically
meat to be findable, understandable, sustainably
accessible and reusable. Experts from all over
Europe join the effort to provide easy-to-use
guide with numerous examples and country
specific approaches.
IV.
CONCLUSION
Researchers in science must have a clear
vision of their rights and obligations. The
introduction of the concept of Open Science and
Open Access to scientific publications and data
collected within the research further complicates
the situation. In some research areas, reliance on
codes of ethics is sufficient. However, when it
concerns data in the social sciences, which are
collected from private individuals, researchers
must be familiar with the laws related to this area.
Endangering privacy can have catastrophic
consequences for an individual, especially if a
person belongs to a vulnerable group.
ACKNOWLEDGEMENT
The authors acknowledge support from the
Ministry
of
Education,
Science
and
Technological Development of the Republic of
Serbia and CESSDA ERIC.
REFERENCES
[1]
[2]
[3]
[4]
[5]
[6]
[7]
Organisation for Economic Co-operation and
Development (OECD). (January 2022). Accessed:
15.February 2022 https://www.oecd.org/sti/inno/openscience.htm#:~:text=Open%20science%20encompass
es%20unhindered%20access,by%20ICT%20tools%2
0and%20incentives
Data Centre Serbia for Social Sciences (DCS) (2022).
Accessed: 2.3.2022 https://datacentarserbia.com/sr/
Data Centre Serbia for Social Sciences (DCS). (2022).
Accessed: 1.3.2022. https://datacentarserbia.com/en/
basic-information
FP7 SERSCIDA project - Support for the
Establishment of National/Regional Social Science
Data Archives. Accessed: 1.3.2022. http://www.sers
cida.eu/en/.
HORIZON2020 project CESSDA SaW (Strengthening
and Widening). Accessed: 1.3.2022. https://cess
dasaw.eu/
SCOPES project - SEEDS (South-Eastern European
Data Services). Accessed: 1.3.2022. https://seed
sproject.ch/
CESSDA ERIC. Accessed: 1.3.2022. https://www.cess
da.eu/
[8]
Law Insider. (2022). Accessed: 16.2.2022.
https://www.lawinsider.com/dictionary/research-data
[9] Greene, T., Shmueli, G., Ray, S., & Fell,
J. (2019). Adjusting to the GDPR: The Impact on Data
Scientists and Behavioral Researchers. Big Data, 7(3),
140-162.
[10] Zakon o zaštiti podataka o ličnosti Republike Srbije,
"Službeni glasnik RS", 87/13/2018.
[11] Bradić-Martinović, A., & Zdravković, A. (2013).
Zaštita privatnosti – anonimizacija podataka. In: V
naučni skup USPON – Preduzetništvo kao šansa:
zbornik radova. Valjevo: Univerzitet Singidunum
(pp. 206-213).
[12] Hrynaszkiewicz, I., Cockerill, M.J. (2012). Open by
default: a proposed copyright license and waiver
agreement for open access research and data in peerreviewed journals. BMC Research Note, 5(494),
1-12.
[13] CESSDA ERIC. Data Management Expert Guide –
DMEG, Accessed: 20. February 2022. https://www.
cessda.eu/Training/DMEG
447
448
PaKSoM 2022
Simulation of Evacuation of Immobile
Persons as a Modern Evacuation
Problem
Radoje B. Jevtić1, Ivana D. Janković2, Momčilo B. Randjelović3
School for Electrical Engineering “Nikola Tesla”, Niš, Serbia
University Business Academy in Novi Sad, Faculty of Social Sciences Belgrade, Serbia
1,2
3
1
milan.jvtc@gmail.com, 2ivana.etstesla@gmail.com, 3mocaprof@gmail.com
Abstract—Evacuation of people, animals and
material properties from an endangered object or
from endangered location presents always actual,
complex and open problem. Even with careful
preparation, unexpected events can occur and
endanger the safety and lives of people. The risks
and possibilities of such events are significantly
increased and complicated if immobile persons
participate in the evacuation. The prediction of
evacuation in these cases can be very complex and
difficult because of many different factors
important for evacuation. One of potentially good,
safe and economically proofed way for this
problem is the usage of simulation software. This
paper was written to present the use of Pathfinder
simulation software in simulation of evacuation
objects with presence of immobile persons and
advantages of this approach in solving of this
complex and very often present problem.
Keywords - evacuation, immobile, simulation,
Pathfinder
I. INTRODUCTION
One of the most important tasks related to
human, animal and material properties safety is
an evacuation. Evacuation generally presents the
safest, the shortest and the fastest form of
relocation and sheltering of people, animals and
material properties from endanger object or
location to the secure place or location.
Evacuation must be well organised, planed,
conceived and realised. The causes that lead to
an evacuation could be different: fire, natural
disasters (earthquake, flood, powerful winds,
thunder strike or else), terrorism etc. Many
different events in past showed that evacuation
ISBN: 978-86-82602-00-2
can always go wrong and that consequences
could be catastrophic. The main reasons for this
are the presence of fear and panic, enough level
of proper education and presence of injured,
hard mobile or immobile persons.
In the dependence where the critical event
has happened, evacuation can be realised from
the height, from the surface and from the depth.
Radiological,
chemical
and
biological
contamination depend special evacuation
regimes. Every evacuation, no matter how good
and precise was planed can be endangered by
several factors, such as: direct fire spreading,
explosion occurrence, object`s construction
elements destruction, fear, panic, the occurrence
of unconscious and injured persons etc. These
factors were impossible to be predicted
completely, so it is from crucial importance to as
much as possible analyse and predict these
factors and potential situations.
Injured, hard mobile or immobile persons
may already be present in object or at the
location, or they can be the consequence of the
evacuation reason. These persons mostly
demand help of other people for their movement
and move significantly slower than other
persons. In the case that these persons are
located in high objects with stairs or elevators,
the time needed for complete evacuation can be
much longer and evacuation by itself can be
much more complex.
Designing of evacuation times and scenarios
with presence of immobile or hard mobile
persons presents very complex and demanding
task. This task purports prediction of all
449
potential situations and scenarios with presence
and influence of several very hard predictable
factors and their consequences. One of very
good way for evacuation prediction and
calculation of evacuation times, routes and other
important factors for evacuation is the usage of
simulation software.
So, the main reason for writing of this paper
is the use of simulation software on analyse and
presumption of potential scenarios of immobile
or hard mobile persons evacuation as very
precise, sure, safe and economic way for
evacuation prediction [1-4].
II.
Fig. 1. Pathfinder simulation model presentation [6].
PATHFINDER SIMULATION SOFTWARE
Pathfinder presents an agent-based egress
and human movement simulator, designed by
Thunderhead engineering company and it is
intended to provide a graphical user interface for
simulation design and execution with
possibilities of 2D and 3D visualization of
results. The simulation object can be drawn
directly in Pathfinder, or it can be imported from
another software (such as Auto Cad, for
example). It is possible to draw walls, doors,
elevators, stairs and include them into
calculation. Pathfinder software is able to
support two different simulation modes: steering
mode and SFPE mode. The first mode purports
that occupants use so called steering way for
moving and interacting. The main characteristic
for this mode is to present human movement and
behavior as mush as possible. The second mode
purports that occupants are able to penetrate
each other without avoiding, but there are
limitations in the presentations of doors, flow
limit and density. Pathfinder, such as similar
software demands very strong hardware
configuration for comfortable work, what
purports 64-bit Windows 8 Pro with an Intel
Core i7 2.60 GHz processor or stronger, 8 GB of
RAM or more, NVIDIA NVS 5200M graphics
card or similar etc.
Fig. 2. Evacuation moment for the first scenario [6].
Fig. 3. Evacuation moment for the third scenario [6].
There are many versions of Pathfinder
software on the market. The current version of
this software is Pathfinder 2022.02.0383, while
Pathfinder versions used for purposes of this
paper were 2019 and 2020 [5].
Fig. 4. An example of simulation results for the fourth
scenario [6].
450
III.
EXAMPLE OF SIMULATION OF
EVACUATION OF IMMOBILE PERSONS FROM
SANITARY OBJECT-HOSPITAL
Hospitals present very important objects for
every society. These objects often purport
several floor objects with presence of lot of
humans-doctors, medical staff, patients,
ordinary people etc. The evacuation of these
objects presents very hard and complex task, no
matter what was the evacuation reason. Patients
can be mobile, hard mobile or immobile and
they are usually located in patient rooms.
Immobile patients are usually sited in medical
beds or wheelchairs. Patients in wheelchairs
mostly can push their wheelchairs without
assistance of other people although there are
cases that they demand assistance of other
people. On the other hand, patients in medical
beds always need assistance of other people.
Their movement is hard and slow in ordinary
conditions, while under evacuation it can be
serious problem in the view of crowds and jams.
Simulation object for this example presents
hospital with patients. The hospital object had
dimensions 47 m x 11 m in base, while the
height of every floor was 3 m. Hospital had five
floors, so the complete height of hospital was 16
m. Every floor was connected to other with
ordinary stairs, elevators and emergency stairs.
The width dimension of ordinary stairs was 120
cm and these stairs were realized as double
stairs. There were 100 rooms at each floor, 20
per floor for patients. The rest of rooms located
at the first floor were for medical personal. The
dimensions of every room were 4 m x 4 m x 3
m. The connections between floors also were
five elevators. Two elevators were with
dimensions 2,5 m x 1,8 m, while the rest three
were with dimensions 1,5 m x 1 m. The maximal
speed for bigger elevators was 0.7 m/s while the
maximal speed for smaller elevators
was 1,1 m/s.
The complete number of humans in hospital
was 285. From that number, 125 were doctors,
medical staff and patients with ability to move,
while 160 were immobile patients. Immobile
patients were in wheelchairs, and they were
located on every floor, 32 per floor. Also, at
every floor were located 35 doctors, medical
staff and non-medical personnel. All of the
occupants were uniformly arranged around
hospital. These occupants had two possibilities
to leave the object. One possibility was the main
exit, while the second possibility was emergency
exit. The width of both exit`s doors was 2 m.
There were four different simulation
scenarios analyzed. The first scenario was the
evacuation of the object but only with ordinary
stairs usage. This scenario purported that all of
occupants had to use the same evacuation route,
with big possibilities for jams. The second
scenario was the evacuation of the object but
only with emergency stairs usage. This scenario
also purported that all of occupants had to use
the same evacuation route, with big possibilities
for jams. The third scenario was the evacuation
of the object but only with elevators and
ordinary stairs usage. This scenario purported
that all of occupants could use different
evacuation routes. The fourth scenario was the
evacuation of the object but only with ordinary
and emergency stairs usage. This scenario also
purported that all of occupants could use
different evacuation routes. Occupants speeds
(doctor, medical staff, mobile patients) for every
of four scenarios were 1,2 m/s, 1,5 m/s, 2 m/s
and 2,5 m/s. Wheelchair speed (immobile
patients) was 0,69 m/s.
Simulation analyze showed that the fastest
evacuation times were for the third scenario,
while the slowest evacuation times were for the
second scenario.
Simulation object of the hospital in
Pathfinder software, some simulation moments
from the first and from the third scenario and
simulation results for the fourth scenario as an
example are presented on Figs.1-4 [6].
IV.
EXAMPLE OF SIMULATION OF
EVACUATION OF IMMOBILE PERSONS FROM
RESIDENTIAL OBJECT-HIGH BUILDING
High residential buildings today present very
often locations for life and work. Technology
and construction advancement resulted that
modern residential buildings have several
hundred meters height with lot of humans inside.
These buildings possess modern construction
solutions with fast elevators, ordinary stairs,
emergency stair etc. Evacuation of these objects
presents very demand and complex task.
Simulation model of residential building
present object with base of 17m x 17m and
twelve floors. The height of every floor was
2.54 m.
451
Scenario
Elevators
usage
Ordinary
stairs usage
Emergency
stairs usage
TABLE I. SIMULATED SCENARIOS FOR RESIDENTIAL
BUILDING WITH OR WITHOUT ELEVATORS, ORDINARY
STAIRS AND EMERGENCY STAIRS.
I
yes
yes
yes
II
yes
yes
no
III
yes
no
yes
IV
no
yes
yes
V
yes
no
no
VI
no
yes
no
VII
no
no
yes
There were four flats at every floor. The
connections between floors were two elevators,
ordinary stairs and emergency stairs. There were
seven different scenarios. Simulated scenarios
are presented in Тable I.
Simulation speeds of occupants for every of
seven scenarios were 1.2 m/s, 1.5 m/s, 1.8 m/s,
2.1 m/s and 2.5 m/s. Immobile occupants were
in medical beds and wheelchairs. Their speeds
were limited, from 0.4 m/s to 1.3 m/s for
wheelchairs and from 0.2 m/s to 1.2 m/s for
medical beds. For wheelchairs, there were one
or two persons for assistance, while for medical
beds there were four persons for assistance.
There were three different cases for every
scenario: the case without immobile occupants,
the case with 5 % of immobile occupants
randomly arranged (10 immobile occupants, 5
with wheelchairs and 5 with medical beds) and
the case with 10 % of immobile occupants
randomly arranged (20 immobile occupants, 10
with wheelchairs and 10 with medical beds).
Figure 5. Simulation model of residential building in
Pathfinder [7].
Figure 6. Simulation moment for the first scenario [7].
Figure 7. Simulation moment for the second
scenario [7].
Simulation model of residential buildings,
some simulation moments and example of
simulation results for the first scenario as
scenario with the fastest times for evacuation, as
an example, are presented on Figs.5-8 [7].
Wheelchair`s dimensions were 0.78 m x 0.5
m x 0.5 m, while the medical bed`s dimensions
were 2 m x 0.9 m x 0.75 m. It was very important
because the width of ordinary stairs was 1.25 m
while the width of emergency stairs was 0.9 m.
452
Figure 8. Simulation moment of the evacuation of
immobile person in medical bed [7].
The limitation of this paper doesn’t allow to
show the simulation results for all of seven
scenarios. Because of that, only the first scenario
where elevators, ordinary stairs and emergency
stairs were enabled is presented on Fig.9 where
marks: “−−” present the first case, “ ▬ ▬ ▬”
preent the second case and “••••••” present the
third case.
V.
EXAMPLE OF SIMULATION OF
EVACUATION OF IMMOBILE PERSONS FROM
SANITARY OBJECT-GERONTOLOGY
INSTITUTIONS
One of the special sanitary objects present
sanitary institutions. These objects are intended
for life and accommodation old persons. In the
most of cases, these persons are immobile or
hard mobile and they often demand permanent
medical treatment and monitoring of their
condition. In sanitary objects, patients can be
stationed in ordinary beds and medical mobile
beds. For their movement, they can use also
wheelchairs, they can walk with different types
of apparatus, they can walk with assistance of
other people or they can walk alone (statistically
the rarest case). Generally, evacuation of every
sanitary object presents complex and demanded
task, but in this case, it is particularly complex
and particularly demanded.
Simulation object for this example was the
gerontology institutions with ground floor and
four additional floors. The object`s base
dimensions were 80 m x 20 m, while the height
of every floor was 3.15 m. The whole object was
divided related to different purposes. Ground
floor was the floor for personal only, with
several rooms. The first floor was the floor for
patients in medical beds. They were located in
16 rooms, two patients in every room. The
second floor was the floor for patients that
needed wheelchairs. They were also located in
16 rooms, two patients in every room. The third
and the fourth floor were the floors where
mobile patients were located. They were also
located in 16 rooms per floor, two patients in
every room. Every room at the first, the second,
the third and the fourth floor had approximately
area of 16 m2. Medical beds and wheelchairs had
standard dimensions, 200 cm x 90 cm x 75 cm
for medical beds and 110 cm x 65 cm x 92 cm
for wheelchairs. The complete number of
patients was 144, 32 per every of four floors.
Medical personal was located uniformly at every
floor, including ground floor. The complete
number of medical and administrative personal
was 44, so the complete number of all occupants
in object was 172.
The connection between floors were ordinary
stairs, emergency stairs and four elevators (two
cargo elevators and two passenger elevators).
The width of ordinary stairs was 1.5 m while the
width of emergency stairs was 1.2 m. The width
of the main doors of the object was 2 m while
the width of the door for emergency stairs was
1.3m. Simulation model of gerontology
institution in Pathfinder is presented on Fig.10.
There were four different simulation
scenarios for this object. The first scenario
purported that all elevators were enabled and all
available stairs (ordinary and emergency) were
enabled. The second scenario purported that all
elevators were disabled but all available stairs
were enabled. The third scenario purported that
all elevators were disabled and ordinary stairs
were disabled, but emergency stairs were
Figure 9. An example of simulation results for the first
scenario [7].
Figure 10. Simulation model of gerontology institution
in Pathfinder [8].
453
enabled. The fourth scenario purported that all
elevators were disabled and emergency stairs
were disabled, but ordinary stairs were enabled.
Every of four scenarios were simulated for four
different cases. Patients in wheelchairs
demanded assistance of one person, while the
patients in medical beds demanded assistance of
two persons. The characteristics for every of
four cases are presented in Table II.
Speed of patients in
medical beds [m/s]
I
0.5
0.5-1.3
0.2-0.9
1
II
0.6
0.5-1.3
0.2-0.9
1
III
0.7
0.5-1.3
0.2-0.9
1
IV
0.8
0.5-1.3
0.2-0.9
1
Case
Speed of patients in
wheelchair [m/s]
Speed of medical and
administrative personal
[m/s]
SIMULATION CHARACTERISTICS FOR
EVERY OF FOUR CASES.
Speed of mobile patients
[m/s]
TABLE II.
Figure 11. Simulation moment for the first
scenario [8].
Figure 12. Simulation moment for the second
scenario [8].
Because of limitation of this paper, only the
simulation moments for the first, the second and
the third scenarios are presented on Figs.11-13
while an example for simulation results for the
first scenario is presented on Fig.14 [8].
VI.
CONCLUSION
Evacuation of people, animals and material
properties generally can be very difficult,
complex and demanding task. Although many
objects have clear and signalized evacuation
plan with precise determined evacuation routes
and evacuation directions, many different
factors can cause that in the moment things and
occurrences proceed at the wrong way. Some of
these factors are panic and fear. Evacuation
becomes significantly more complex and
demanding in the presence of hard mobile or
immobile persons.
The usage of simulation software has great
value in the evacuation prediction-it is possible
without human victims, material damage or
spending lot of time to simulate different
scenarios with different conditions and predict
the optimal option-the most secure evacuation
454
Figure 13. Simulation moment for the third
scenario [8].
Figure 14. An example of simulation results for the
first scenario [8].
route and the shortest and the safest evacuation
time. Noted examples in simulation software
Pathfinder directly prove that simulation
software must be obligation tool for engineers in
their work and design.
REFERENCES
[1]
[2]
[3]
Jevtić, B. R., & Ničković, T. J. (2013). Simulation of
residential object evacuation. In 57th ETRAN
CONFERENCE, Zlatibor, ISNB (pp. 978-86).
Jevtić, R. (2016). Simulation of evacuation situations
in order to protect human lives and material
property. NBP. Nauka, bezbednost, policija, 21(2),
35-48.
Jevtić, R. B. (2019). Material for the preparation of the
professional exam in the field of fire
protection. Gradski Vatrogasni Savez Niš, 502-507.
[4]
[5]
[6]
[7]
[8]
Jevtic, R. (2020). Simulation of fire as a form of safety
and protection of human lives and material
assets. Facta Universitatis, Series: Working and living
environmental protection, 171-184.
Thunderengineering (2020). Pathfinder user manual,
(pp. 6-12, 84, 92).
Jevtić, R. (2019). Sanitary objects evacuation with
presence of immobile occupants. Zdravstvena
zaštita, 48(1), 61-68.
Jevtić, R. B. (2020). Residential building evacuation:
Simulation of potential evacuation scenarios with
presence of immobile persons. Tehnika, 75(6),
814-822.
Jevtić, R. (2021). Safety in health-the evacuation of
immobile persons from gerontology institution.
Zdravstvena zaštita, 50(1).
455
456
PaKSoM 2022
A Multiple-Criteria Approach to RFID
Solution Provider Selection
Gabrijela Popović1, Goran Milovanović2, Đorđe Pucar3
1,3
Faculty of Applied Management, Economics and Finance, Belgrade, University Business
Academy in Novi Sad, Belgrade, Serbia
2
Faculty of Economics, University of Niš, Niš, Serbia
1
gabrijela.popovic@mef.edu.rs, 2goran.milovanovic@eknfak.ni.ac.rs, 3djordje@mef.edu.rs
Abstract—Nowadays, many organizations use the
RFID technology for tracking and tracing the
flows of materials, goods and other contents. It is
very important to select adequate provider of the
RFID technology that offers solutions aligned with
the needs of the particular business. This paper
proposes subjective-objective approach based on
the Multiple-Criteria Decision-Making (MCDM)
methods that could contribute to the facilitation of
decision process and selection of the adequate
solution provider. The weights of the criteria are
defined by using the subjective Simplified PIvot
Pairwise
RElative
Criteria
Importance
Assessment (PIPRECIA-S) and the objective
Preference Selection Index (PSI) methods, while
the final ranking of the alternatives is performed
with the help of the COmprehensive Distance
Based RAnking (COBRA) method.
Four
alternative RFID solution providers are assessed
against ten evaluation criteria. The obtained
results proved the applicability and reliability of
the proposed approach.
Keywords – COBRA, PIPRECIA-S, PSI, RFID
solution provider
I.
INTRODUCTION
The optimization of operating in the logistics
field requires monitoring of all flows of goods
and other resources to detect possible bottlenecks
or issues [1]. Today is impossible to secure the
flawless realization of activities in logistics
without timely information about mentioned
flows [2]. The efficiency of the organization
increases through the employment of so-called
Smart Logistics [3]. Smart Logistics is
characterized by the intention to enable the
implementation of intelligent and lean supply
chains where the exchange of information is
ISBN: 978-86-82602-00-2
based on the application of new information and
communication technologies (ICT), automatic
identification technologies, and sensors [4].
According to Uckelmann [5], leading
technologies of that kind include:
Identification – Radio Frequency
Identification Technology (RFID),
Locating – Real Time Location System
(RTLS) like GPS and others,
Sensing – like temperature and humidity
sensors.
RFID technology is often used in logistics for
the automatic identification of goods and other
resources' movement over radio waves [6]. These
small electronic devices called RFID tags have a
chip and antenna, and they are used similarly as
a product barcode, for example. This is a wireless
technology that allows identification and
automated tracking of a tag placed on a particular
item [7]. Until now, RFID technology is used in
various business fields which proves the
following research studies [8-15].
Adoption of RFID technology in an
organization is a very complex task that requires
qualified professional assistance. RFID solution
providers help in conducting and realizing the
projects regarding the introduction of the
appropriate RFID technology. Besides, the
providers, also, care about maintaining and
upgrading the installed systems [16]. It is
necessary to select and engage an adequate RFID
solution provider, which is not an easy
assignment for the management of the
organization. The selection process should
include various types of evaluation criteria which
457
ensure finding the optimal alternative. All
mentioned indicate the Multiple-Criteria
Decision-Making (MCDM) methods as a helpful
tool that simplified and accelerates decision
process.
The main direction of the MCDM methods
and models is supporting decision-making
processes in various business fields. So far, many
different MCDM methods have been proposed
[17-21]. The selection of an MCDM method for
application does not depend only on the problem
type; it depends on the opinion and judgment of
the decision-maker as well. Each of these
methods has a goal to give an optimal solution
regarding the present conditions, and every one
of them is suitable for application for resolving
different types of problems [22-28].
II.
A PROPOSED MODEL
A. The PIPRECIA-S Method
The PIPRECIA-S method represents the
improved version of the earlier introduced
PIPRECIA method [38]. Difference between
them is illustrated by the fact that computation
procedure of the PIPRECIA-S method requires
the comparison of all criteria only with the first
criterion. This a lot facilitates the application and
decision process. The potential of this method is
not examined much giving the fact that it has
been relatively recently proposed [39]. The
computation procedure presented here relies on
that one shown in the paper by Stanujkic et
al. [35].
Step 1. Forming a set of evaluation criteria.
The MCDM methods have been used in
finding the optimal solutions in the logistic field,
as well. The authors have proposed the
application of the MCDM methods and models
for the selection of a logistic center location [29],
in reverse logistics [30], for estimation of the
logistics’ performance [31], in the case of the
third-party logistics provider selection [32], in
the area of RFID technologies [33-34], etc.
Step 2. Determining the relative significance
sj of each criterion, apart from the first, in the
following way:
This article is directed to a proposal of an
MCDM-based model that will help in the
assessment and selection of the optimal RFID
solution provider. To achieve the set goal, the
subjective-objective approach is introduced.
Namely, for defining the criteria weights the
combination of the subjective Simplified PIvot
Pairwise
RElative
Criteria
Importance
Assessment (PIPRECIA-S) [35] and the
objective Preference Selection Index (PSI) [36]
methods are used. It is expected that, in this way,
the gained results would be more reliable and
representative. For the assessment and ranking of
the considered alternative RFID solution
providers, the COmprehensive Distance Based
RAnking (COBRA) method [37] is applied. The
COBRA method has recently been introduced
and its capacity is not fully observed. The four
RFID solution providers from Serbia are
submitted under estimation against ten
evaluation criteria. The conducted research and
gained results are presented through the
following sections: Section II contains a
proposed model: in Section III the numerical
example is demonstrated; and finally, the
conclusion is given.
where j 1 . As in the PIPRECIA method, the
value of s1 is set to 1. Values of sj belong to the
interval (1, 1.9] when c1 c j that is to the
458
1 if
s j 1 if
1 if
interval [0.1, 1) when
c j c1
c j 1
cj 1
c1 c j .
Step 3. Computing the value of coefficient kj
in the following manner:
1
kj
1 s j
if
j 1
if
j 1
Step 4. Computing the recalculated weight qj
as it is shown:
1
qj 1
k
j
if
j 1
if
j 1
Step 5. Defining the relative weights of the
criteria in the following way:
qj
qj
k 1 qk
n
j 1 j
B. The PSI Method
Maniya and Bhatt [36] introduced the PCI
method which belongs to the group of objective
MCDM methods. Besides it enables defining the
criteria weights on the base of the input data, it
allows assessing the involved alternative
solutions and their final ranking. Until now, the
PSI method has been used for the solvation of
various kinds of problems which proves the
following research studies [40-42]. The
computing procedure could be precisely
illustrated by following a series of steps [36].
Step 1. As with PIPRECIA-S, here is also
necessary to define the evaluation criteria.
Step 2. Creating the initial decision matrix D
as follows:
Step 8. Ranking the alternatives in decreasing
order. The alternative with the highest Si is the
best option.
D xij
mxn
where xij is the ratings of the alternative i
regarding the criterion j, m represents the number
of alternatives, and n is the number of criteria.
Step 3. Forming the normalized decision
matrix in the following manner:
rij
xij
max xij
if j B
i
rij
min xij
i
xij
Step 6. Determining the criteria weights as
follows:
wj
j
j 1 j
n
Step 7. Computing the preference selection
index of alternatives by using Equation (12):
Si j 1 rij w j
n
C. The COBRA Method
The COBRA method is introduced by Krstić
et al. [37]. This method represents a distancebased MCDM method. Given the fact that it has
been relatively recently proposed, its possibilities
have not been fully examined yet. The
application of the COBRA method contains the
following steps.
Step 1. Defining a decision matrix that
involves the alternatives and evaluation criteria.
Step 2. Forming the normalized decision
matrix as it is presented:
if j C
where B designates the benefit criteria, and C
indicates the cost criteria.
where:
Step 4. Computing the preference variation
value related to each criterion as follows:
rij
rij
mn
aij
max aij
i
2
j i 1 (rij rj )
m
where rj designates the mean value of normalized
ratings of criterion j computed in the following
way:
rj
1 m
rij
m i 1
Step 5. Computing deviation in the
preference variation value in the following
manner:
Step 3. Generating the weighted normalized
decision matrix w as follows:
w w j rj
mn
where w j designates the relative weight of
criterion j.
Step 4. Determining the positive ideal (PISj),
negative ideal (NISj), and average solution (ASj)
459
regarding each criterion function in the following
way:
PIS j max( w j rij ) ,
i
j 1,..., n for j B,
PIS j min( w j rij ) ,
i
j 1,..., n for j C ,
NIS j min( w j rij ) ,
i
j 1,..., n for j B,
NIS j max( w j rij ) ,
i
j 1,..., n for j C ,
(w j rij ) ,
i 1
n
d (Si ) dE(S j ) dE(S j ) dT(S j ) ,
j 1,..., n ,
n
i
where 𝑑𝐸(𝑆𝑗 )𝑖 and 𝑑𝑇(𝑆𝑗 )𝑖 are the Euclidian
and Taxicab distances, respectively, which are
computed for the positive ideal solution in the
following way:
j 1 PIS j w j rij ,
i 1,..., m, j 1,..., n ,
460
(26)
max dE(S j )i min dE(S j )i
n
i 1,..., m, j 1,..., n ,
The Euclidian and Taxicab distances are
calculated for the positive distance from the
average solution as follows:
where Sj denotes any solution (PISj, NISj or ASj),
is the correction coefficient defined in the
following way:
dE (PIS j )i
n
Step 5. Now, the distance from the positive
ideal (d(PISj)), the negative ideal (d(NISj)), the
positive (d(ASj+)) distance from the average
solution, and the negative distances (d(ASj-))
from the average solutions should be determined.
This procedure is performed as follows:
i
j 1 ( NIS j w j rij )2 ,
dE ( NIS j )i
dT (NIS j )i j 1 NIS j w j rij ,
where 𝐵 represents the set of benefit, and C is the
set of cost criteria.
i 1,..., m, j 1,..., n .
n
j 1,..., n for j B, C ,
i 1,..., m, j 1,..., n .
The Euclidian and Taxicab distances are
calculated in the following way for the negative
ideal solution:
m
AS j
dT (PIS j )i j 1 PIS j w j rij ,
2
dE ( AS j )i
j 1 (AS j w j rij )2 ,
n
i 1,..., m, j 1,..., n ,
dT ( AS j )i j 1 AS j w j rij ,
n
i 1,..., m, j 1,..., n ,
1 if AS j w j rij
0 if AS j w j rij
, (28)
Finally, mentioned distances for the negative
distance from the average solution is computed
as follows:
dE ( AS j )i
j 1 (AS j w j rij )2 ,
n
i 1,..., m, j 1,..., n ,
dT ( AS j )i j 1 AS j w j rij ,
n
i 1,..., m, j 1,..., n ,
1 if AS j w j rij
0 if AS j w j rij
Step 6. The alternatives involved in the
procedure are ranked in ascending order. The
ranking order is determined by using the
following Equation (33):
dCi
C7 – Financial security. Possessing enough
financial strength to support the
customers when it is necessary.
comprehensive
C8 – Total cost of ownership. These costs
involve the costs of acquisition and
operating, as well as the costs of upgrade
and replacement.
4
i 1,..., m .
where
d(Ci)
distances.
III.
,
d ( PIS j )i d ( NIS j )i d ( AS j )i d ( AS j )i
represents
THE NUMERICAL EXAMPLE
C9 – Flexibility of a platform. An RFID
system should not require switching
operating systems, platforms, and
application software.
This section presents the numerical example
to illustrate the possibilities of the proposed
model in evaluating and selecting an adequate
RFID solution provider. Four providers from
Serbia are submitted under evaluation, but the
names of the organizations are not revealed to
avoid their advertising.
These providers are evaluated according to
the criteria proposed in the paper of Sari [16].
The evaluation criteria and their explanations are
as follows:
C1 – RFID implementation proficiency.
Experience in managing RFID projects.
C2 – Specialization in the application. Level
of experience in the particular industry.
C3 – Customer references. The names of
organizations that used services of the
considered RFID provider and their
number.
C4 – Technical capacity. Satisfactory level of
technical and engineering ability for
system creation and utilization.
C5 – Capacity for innovation. The ability for
developing and implementing new ideas
and technology solutions.
C6 – Capacity for service and support.
Obtaining the customer with all needed
assistance and support.
TABLE I.
C10 – Scalability. The RFID system should be
flexible. Also, it should acknowledge the
appropriate set of standards which
ensures that it will not require additional
costs for replacement or upgrades in the
future.
On the base of the presented criteria the initial
decision matrix is formed. An expert from the
considered field estimated the alternative RFID
providers regarding the given criteria. It should
be mentioned that all criteria are treated as
benefit. The alternatives are assessed by using
the grades 1 to 5 (1 – the worst grade, 5 – the best
grade). The initial decision matrix is presented
in Table I.
Any multiple-criteria assessment requires the
determination of the criteria weights. The
appropriate specification of the criteria weights
leads to a more adequate and reliable ranking of
the alternatives. In the present case, the criteria
weights are defined by applying a subjectiveobjective approach.
The subjective approach relies on the
PIPRECIA-S method. For the need of using the
mentioned method, three decision-makers were
involved in the decision procedure. The main
reason for that is to minimize the subjectivity of
decision-makers and gain reliable results.
INITIAL DECISION MATRIX.
Criteria
Alternatives
A1
A2
A3
A4
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
4
4
3
3
5
4
4
3
5
4
5
5
4
4
3
4
5
5
3
4
5
3
4
3
4
4
3
4
5
3
5
3
4
3
3
4
4
4
4
3
461
The significance obtained by using the PSI
method varies between 0.091 and 0.105. This
leads to the conclusion that the PSI method
resulted in much more uniform criteria weights
than the PIPRECIA-S method.
0.14
0.12
0.10
0.08
0.06
The geometric mean of the obtained criteria
significances is calculated to gain a final weight
of the considered criteria. The results are
presented in Table II.
0.04
0.02
0.00
C1 C2 C3 C4 C5 C6 C7 C8 C9 C10
First decision-maker
Second decision-maker
Third decision-maker
Figure 1. Criteria weights obtained by using the
PIPRECIA-S method.
The weights are obtained for each decisionmaker separately by using Equations (1)-(4), and
they are presented in Fig.1.
Fig.1 clearly shows that decision-makers had
different perspective about the significance of
considered criteria.
The objective approach in defining the
criteria weights implies the application of the PSI
method. Based on the input data and Equations
(5)-(12) the objective criteria significance is
determined. Fig. 2 illustrates the criteria weights
determined by using the PSI method.
The final results show that the criteria
weights, mainly, have nearly equal importance.
For example, criteria C1 – RFID implementation
proficiency, C3 – Customer references, and C5 –
Capacity for innovation share the first position.
Additionally, the rest of the criteria are second or
third-ranked although there are seven more. This
leads to the conclusion that all the considered
criteria should be carefully observed during the
selection of an adequate RFID solution provider.
Finally, for obtaining the results regarding
the optimal selection of RFID solution provider,
the COBRA method is applied. By using
Equations (13)-(33) the ranking order of
alternatives is defined and presented in Table III.
TABLE II.
THE FINAL CRITERIA WEIGHTS.
Criteria
Weight
C1
RFID implementation proficiency
0.11
0.110
C2
Specialization in the application
0.10
0.105
C3
Customer references
0.11
0.100
C4
Technical capacity
0.09
0.095
C5
Capacity for innovation
0.11
0.090
C6
Capacity for service and support
0.10
0.085
C7
Financial security
0.09
C8
Total cost of ownership
0.10
C9
Flexibility of a platform
0.10
C10
Scalability
0.10
0.080
C1 C2 C3 C4 C5 C6 C7 C8 C9 C10
Figure 2. Criteria weights obtained by using the PSI
method.
TABLE III.
0.0000
𝒅(𝑵𝑰𝑺)
0.1016
𝒅(𝑨𝑺+ )
0.0462
𝒅(𝑨𝑺− )
0.0000
𝒅𝑪
Rank
A1
𝒅(𝑷𝑰𝑺)
-0.0369
1
A2
0.0691
0.0682
0.0232
0.0325
0.0026
2
A3
0.0714
0.0599
0.0227
0.0405
0.0073
3
A4
0.0820
0.0511
0.0159
0.0399
0.0137
4
Alternatives
462
THE RANK OF THE ALTERNATIVE RFID SOLUTION PROVIDERS.
According to the obtained results, the bestpositioned RFID solution provider is A1. This
signifies that this provider best meets the given
set of criteria. The worst choice, in this case, is
the provider marked as A4. The initial decisionmatrix shows that the estimations of the
characteristics of this provider were not very
good.
IV.
Additionally, its potential should be verified by
observing, analyzing, and solving the issues in
other business fields.
REFERENCES
[1]
[2]
CONCLUSION
The performing of the activities in the
logistics implies the application of the
appropriate technologies. In recent years, RFID
technologies have become very popular and used
for the automatic identification of goods and
articles. Depending on the business type it is
important to select and implement appropriate
RFID technology. The main objective of this
paper was to introduce the applicable MCDMbased approach intended for the facilitation of the
decision-making process in the case of the
selection of the appropriate RFID solution
provider. The introduced approach is based on
the PIPRECIA-S, PSI, and COBRA methods.
The first two methods were used for defining the
criteria' importance, while the third one was
applied for the final assessment and ranking of
the considered providers regarding the involved
criteria. The final results marked RFID solution
provider A1 as the most acceptable. Considering
the input data, the obtained results are fully
justified and relevant.
Although the approach proved its
applicability, it has limitations, too. First, the
COBRA method is relatively complex and
involves an extensive computation procedure, so
it could be difficult for the application to persons
unfamiliar with the MCDM field. Besides, the
estimation of the involved alternatives presented
in Table I is performed by one expert from the
field. The input data would be more realistic if
more experts from the field were engaged in
obtaining estimations needed for further
procedure. All computations were performed by
using crisp numbers, although it is obvious that
many estimations could not be precisely
expressed by a single value. So, it is highly
recommended to introduce and use appropriate
extensions of the applied methods here proposed.
These limitations together represent the
propositions for future research studies.
Nevertheless, the proposed approach enabled
obtaining relevant scientific results. These
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PaKSoM 2022
The Moderating Role of Employee
Commitment and its Impact on
Employee Involvement and
Organizational Productivity
Soumi Majumder1
1
Business Administration Department, Future Institute of Engineering and Management,
Kolkata, India
1
soumi.majumder@teamfuture.in
Abstract—The concepts and approaches that
managers use now a day have changed due to
deregulation, changing values of workers,
international competition, and the growth of
advanced information technology. Organizational
Development interventions make productivity
improvement
through
training
activities,
compensation management, decision-making
techniques, and participative activity in
management. This helps to cultivate and sustain a
culture in the organization that gives value
addition to employee participation and
involvement. Engaged employees are productive
employees, they have emotions and obligations to
their organization. They are true performers and
contribute to accomplishing the goals of the
business. Therefore, a moderating role of
organizational commitment has an influence on
employee involvement practices and the field
productivity and this is the major concern of this
study.
Keywords
organization,
employee,
performance, moderating, commitment, involvement
I.
INTRODUCTION
In the modern era of management in business,
organizational development and change
management are inevitable. Organizations must
succeed and must remain competitive, advanced,
and progress with time. The concepts and
approaches that managers use now a day have
changed due to deregulation, changing values of
workers, international competition, and the
growth of advanced information technology [1].
ISBN: 978-86-82602-00-2
Organizational development is a set of
interventions that improve the organizational
effectiveness and the well-being of employees.
These interventions are applied at the individual,
technological and structural levels. This is
basically planned change efforts. It is well
established that organizational development and
change are interrelated concepts that may include
different components of the organizational
systems. It has the potential to make positive
outcomes for the organization. To enact new
behaviors and encourage individuals’ successful
implementation of change in the workplace is
very much required. In this way, desired changes
are achieved. A positive change must occur while
active participation, attitudes, behavior, and
practices of individuals are involved.
Human resource management practices like
selection, training and development programs,
performance
appraisal,
compensation
management, internalization commitment,
compliance
commitment,
identification
commitment, etc. help to bring changes.
The culture includes behaviors, practices,
processes, and attitudes that the organization
espouses. In these phenomena, culture plays a
vital role when organizational change is a key
concern. Over time, change is measured in terms
of
quality,
productivity,
profitability,
effectiveness, efficiency, and many more [2,3].
465
II.
ORGANIZATIONAL COMMITMENT AND
PRODUCTIVITY
According to Burke and Litwin in the year
1992, a working climate of participation and
adequate pay for performance generate positive
results of the outcome. Earlier Rosenberg and
Rosenstein in 1980 had proposed the model
where they said that increase in participative
activity leads to an increase in productivity. OD
interventions make productivity improvement
through training activities, compensation
management, decision-making techniques, and
participative activity in management. This helps
to cultivate and sustain a culture in the
organization that gives value addition to
employee participation and involvement. The
major concern of every organization is
organizational
productivity;
in
general,
productivity is a standard measure which
assesses organizational performance and its
effectiveness. Productivity has been expressed in
many terms i.e. quality and quantity of output,
sales and profitability, completion of scheduled
processes, and many more way. Another major
indicator of organizational productivity is
absenteeism. The measurement technique of
productivity varies on the organization’s policy.
Productivity may define as the enhancement of
values over time. The success formula of an
organization is based on productivity; thus,
productivity becomes a crucial factor.
Organizational development occurs through
productivity and based on productivity, OD
interventions are introduced and implemented
gradually [4,5].
Another
important
factor
named
organizational commitment is associated with
organizational productivity. It is an explosion of
interest in the concept of high-performance-high
commitment work culture. This includes
advanced and superior technology, effective task
design, adequate planning, congruent structure,
and methodologies [6]. Many researchers
asserted the framework where they defined
individuals and teams should be highly
committed to technology, structure, work design,
and strategy. Several reviews had been revealed
that employee participation in management has a
positive influence on productivity that leads to
high commitment levels in business. The
summation of employee involvement and
employee commitment is the result of
organizational
qualitative
productivity.
Employee engagement and organizational
efficiency are interrelated. It is necessary for all
466
organizations; employee engagement practices
must be attractive under human resource
systems. If it is found that organizational
commitment is the moderator, HR practices must
encourage and motivate people to create a culture
of employee involvement and commitment.
Under Section 2, the relationship between
organizational commitment and productivity has
been discussed, the Conceptual model of
Employee involvement and organizational
productivity is reported in Section 3, in Section 4
Discussion is reported and finally, the
Conclusion is under Section 5.
The organizational commitment has been
defined as it is an employee involvement process
toward the organization; commitment is
basically individual’s emotional attachment for
their workplace. Commitment has three
components, such as i) it is a strong belief of
individuals for organizational objectives, goals
and values, ii) on behalf of the organization
willful effort to work always and iii) a strong
relationship and membership between employee
and organization. Therefore, it is said that
employee commitment to the organization is the
bond and responsibility of workforce for
accomplishment of organizational mission and
vision. The three types of commitments exist
named as affective commitment, continuance
commitment and normative commitment. When
employee has emotional attachment for his/ her
organization, knows the goals and enjoys
membership fully then it is termed as affective
commitment [7]. There is a consideration where
costs associated with discontinuing the
relationship with employees and it reflects with a
readiness on sustainability in the workplace, it is
called continuance commitment. Normative
commitment includes a sense of obligation
where employee thinks his/her duty should
remain loyal to the organization.
High production is possible when there is a
high participation and involvement of the
members exists. They should be highly
committed to their organization for generating
qualitative and quantitative output. Thus,
organizational operational efficiencies will be
automatically increased. It is stated that
organizations that give encouragement to their
workforce for making high commitment would
get better profit from efficiency benefits [8,9].
Moreover, it is seen a positive climate of
workplace affects productivity. Commitment has
positive impact on output level. High
participation, engagement, collaboration are
essential particulars to tackle human systems.
HR practices can be enhanced by commitment of
employees; it helps to achieve desired
organizational outcomes. Sometimes the concept
high performance- high commitment work
system is also known as high involvement plants
and productive workplaces. It is revealed by
several researches’ that there is a relationship
among
engagement,
commitment
and
productivity. Employee participation could make
a better-quality decision-making process [10].
Employee autonomy has a positive impact on
attitudes and behaviour and it fulfils their
psychological needs for competence. It makes
proper understanding for the people about the
desire of high production and leading to the
outcomes. The organizations that believe in
employee autonomy and authority, have
promoted employee involvement. Employee
participation in management creates an attractive
decision making programme. As the employees
have the authority to share their inputs, i.e. ideas,
suggestions, thoughts, opinions, so that
productivity level of the organizations are highly
affected. This paradigm shifts are reflected to
their behaviours as they are continuously
motivated to high standard performance for
accomplishment of goals [11].
There is a relation between power and
commitment as it is well stated that success of
human resource practices requires employee
authority and autonomy that will lead to
committed employees [12]. Research has shown
that organizations should set up appropriate
policies for high performance and productivity.
One of the most striking factors of high performance high –commitment system is
empowerment that must provide opportunities to
workforce and make value addition to their
contribution. To get the job done in a proper
managed way the organizational management is
always expecting from employees a high level of
performance. More the employees engage more
the organization earns productivity, therefore
there is no such limitation if commitment is high.
The linking pin among power, organizational
commitment and organizational productivity has
given the birth of efficient and effective
workplace.
III. CONCEPTUAL MODEL OF EMPLOYEE
INVOLVEMENT AND ORGANIZATIONAL
PRODUCTIVITY
Fig.1. is the representation of the model,
where organization commitment has played a
moderating role between employee involvement
and organization productivity. In this conceptual
framework employee involvement has been
explained by four major factors, such as: i)
power, ii) reward, iii) knowledge/skills, and v)
information. These factors have a positive impact
on employee engagement levels or employee
involvement levels. It means if the employees of
the organization enjoy all of these four factors
enthusiastically, their level of commitment
automatically will enhance and it will show
qualitative and quantitative impact on the level of
productivity. A higher level of productivity is the
significance of a high-performance organization.
In this section, the four factors of employee
involvement are very important as these
influence EI much [13]. Power is the authority of
employees. When employees have the right or
permission to do something in their organization
they feel autonomy. They have the right to
decision-making regarding any issues in their
work and workplace.
An employee who enjoys autonomy must be
performed well. They are allowed to access
various resources of the organization so that a
feeling of authority makes them have higher
involvement, when employees are highly
engaged it leads to a high level of commitment.
Employees’ performance should be recognized
by management, they need appreciation,
recognition, and reputation for contributing their
best [14]. They should be motivated in their job
duties and workplace too. Therefore, it is seen
that if employees are rewarded periodically for
the outstanding performance, they have a high
involvement level. Similarly, the skills and
knowledge of employees are also playing a key
role in this juncture. Employees should possess’
appropriate skills and knowledge regarding their
job. The job duties and responsibilities must be
clear to them. They can utilize their expertise in
such a way that should match their skills with
their job description. Employees should know
clearly what is expected from them, and on the
basis of that, they can show their performance
with ease. Their level of involvement will also
get high.
467
Figure 1. Conceptual Model of Employee Involvement and Organizational Productivity
Finally, the fourth-factor information is
contributing to EI accordingly. The right kind of
information makes the organization function
efficiently [15,16]. Employee involvement must
occur effectively toward the job and
organization. It is based on proper and authentic
data and information. When data availability and
accessibility are high employees feel a high level
of job satisfaction. They do not face any kind of
obstacles
while
working.
Effective
communication and cooperation among
employees also generate easy accessibility of
information. The level of employee involvement
gets high due to greater job satisfaction. Here it
has been revealed that all four factors of EI have
a positive impact on the productivity of the
business. The moderator employee commitment
is getting high significance due to the joint effect
of four factors of EI. If the four factors work
properly then the commitment level of
employees will be enhanced. The positive feeling
of job satisfaction generates a high level of
organizational commitment. Moreover, it is very
obvious of generating high productivity in order
to establish the moderating effect of
organizational commitment [17]. A committed
employee produces huge in terms of quality and
quantity. They might be loyal and have a positive
obligation to their organization. In this way, an
organization can earn reputation, recognition,
and revenue in the market and able to create a
striking image in front of the rest of the world.
468
IV.
DISCUSSIONS
In this study, the moderating effect of
organizational commitment has been discussed
effectively. Productivity is the performance
evaluation component of every organization. The
organizational objective is based on its
achievement of output. Business organizations
have the intention to grow and develop their
functions over time. If we consider individuallevel performance and group-level performance
and sum up both criteria, we will have the exact
picture of organizational performance and its
effectiveness. At this juncture, the key ingredient
of organizational commitment has played an
active role between employee involvement and
productivity. Technological gradation, work
design, the structure of the business, adequate
planning, appropriate career development
opportunities, training and development
facilities, methods of doing work, etc. have made
employee engagement high. The individual and
group of employees should enjoy these
mentioned particulars while they work [18,19].
Employers have the responsibility to provide all
the necessary facilities and services to their
workforce to make them happy at their job.
Human capital is the most effective resource. The
proper allocation and utilization of human capital
will help to achieve the goal of the entire system
[20]. With the help of productivity activity firms
become competitive in the market and emerge of
sustainability becomes long-term. To manage
human-oriented systems enlarged participation,
collaboration, cooperation, etc. are fragmented
ingredients. When employee commitment
[21,22] is playing the moderating role, it gives a
high influence on employee engagement [23,24]
and an increased level of productivity [25,26].
Fig. 1. in this study has clearly depicted the
relationship between employee involvement and
organizational productivity.
V.
[7]
[8]
[9]
CONCLUSIONS
Engaged
employees
are
productive
employees, they have emotions and obligations
to their organization. They are true performers
and contribute to accomplishing the goals of the
business. There are many factors that make
employee engagement levels high, i.e.
management support, effective recruitment and
selection policy, opportunities for training and
development, attractive succession planning,
appropriate performance appraisal system,
interpersonal relationship with colleagues,
acceptable policy making for all levels of
management, and so on [27,28]. Research has
revealed that employees’ job satisfaction creates
a higher level of employee commitment. The
parameter of job satisfaction is measured by the
applicability of different factors of employee
involvement. Therefore, satisfied employees are
committed
employees.
Organizational
commitment is the sequel of organizational
productivity.
[10]
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[13]
[14]
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Rashid, H.O., 2022. Leadership styles, psychological
factors, and employee commitment to service quality
in the hotel industry. Journal of Quality Assurance in
Hospitality & Tourism, 23(4), 853-881.
470
[24] Babo, R., Dey, N. and Ashour, A.S. eds., 2021.
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[25] Majumder, S., Chowdhury, S., Dey, N. and Santosh,
K.C., 2022. Balance Your Work-Life: Personal
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[26] Majumder, S. and Dey, N., 2022. Knowledge
Management in Various Sectors. In AI-empowered
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PaKSoM 2022
Importance of Reverse Logistics on
Green Supply Chain Performance: An
Empirical Study
Saniye Yıldırım Özmutlu1, Korhan Arun2
1
Vocational School of Social Sciences, Tekirdag Namik Kemal University, Tekirdag,
Turkey
2
Faculty of Economics and Administrative Sciences, Tekirdag Namik Kemal University,
Tekirdag, Turkey
1
saniyeyildirim@nku.edu.tr, 2karun@nku.edu.tr
Abstract—This study aims to determine the
impacts of reverse logistics on green supply chain
performance. Reverse logistics is an indispensable
part of green supply chains. However, the
direction and quantity of the effects of reverse
logistics on green supply chain performance have
not been researched. Our population universe is
packaging companies in Turkey. Data is collected
through online survey software from each senior
manager of the 437 packaging companies. The
data is analyzed by path analysis, formed to test
the hypothesis, depending on the variance-based
structural equation model. The results show that
reverse logistics significantly affects green supply
chain performance. Moreover and interestingly,
despite the common belief in the logistics
literature, the productivity dimension is found to
be more effective than the cost concerns of the
packaging firms in Turkey.
Keywords - reverse logistics, green supply chain,
packaging companies, performance
I.
INTRODUCTION
The General Union Environment Action
Programme of 2020 tackles waste management
for recycling, remanufacturing, and reuse [1].
These activities are integral to reverse logistics
and product returns management [2]. However,
the environmental dimensions of sustainable
logistics must be performed with explicit
recognition of the economic objects of the firm
[3]. Sustainable business needs reverse logistics,
even though this logistic function has been
present within a few businesses for longer than
ISBN: 978-86-82602-00-2
we would expect. So, companies should
constantly follow their green supply chain
performance. Thus, this paper will research the
relationship between reverse logistics and green
supply chain performance.
Reverse logistics can be described as “the
process of planning, implementing and
controlling backward flows of raw materials, in
process inventory, packaging, and finished
goods, from a manufacturing, distribution or use
point to the point of recovery or proper disposal”
[4,5]. In the literature, simultaneously forward
and reverse supply chains are also known as
closed-loop supply chains (CLSC) [6]. Reverse
logistics has two critical duties for the general
supply chain. First is covering customers’
demands for creating value-added processes;
second, reverse logistics tries to collect the waste
products (called return products) from customers
and determine the best ways to account for
them [7].
Corporate environmental programs can
source competitive advantage [8]. Moreover,
reverse logistics is facilitated by the drivers such
as green logistics and manufacturing systems.
So, they are strictly bounded together. Thus, in
the case of green supply chains, improvements in
controlling customer returns and reducing waste
flows improve the performance indexes
significantly [9]. However, environmental issues
in logistics are minor but expanding [10]. So,
studying the effects of reverse logistics on green
471
logistics performance
importance.
II.
has
gained
more
HYPOTHESES DEVELOPMENT
Reliability is crucial for supply chain systems
since their complexity level makes them
susceptible to various possible fault sources [9].
However, reverse logistics forecasting is more
complicated. So, difficult forecasting decreases
the reliability and, thus, the performance of the
whole/green supply chains. Furthermore, other
differences between reverse logistics from the
forward logistics are Many to one transportation,
Product quality not uniform, Product packaging
often damaged, Destination/routing unclear,
Exception driven, Disposition not clear, Pricing
dependent on many factors, Speed often not
considered a priority, Reverse costs less directly
visible, Inventory management not consistent,
Product lifecycle issues more complex,
Negotiation
complicated
by
additional
considerations, Marketing complicated by
several factors, Visibility of process less
transparent [11]. These differences are directly
affecting the green supply chain.
Most important factors in reverse logistics are
communications, costs; customer support;
environmental, formalization; timing of
operations; and top-management support [12].
Depending on these factors, Lambert et al. [13]
proposed organizing reverse logistics as seven
steps: Coordinating system; Gatekeeping;
Collection; Sorting; Processing or Treatment;
Information System; and Disposal or Expedition
System.
A green supply chain is a form of a supply
chain that is environmentally sustainable, created
through environmentally sustainable practices,
and complies with governmental environmental
regulations [14]. Moreover, green supply chains
ensure pollution reduction and minimize waste
from resources along the supply chains. Green
supply chains also involve marketing view that
highlight “green” image of the companies [15].
H1: Reverse logistics significantly and
positively affects Green Supply Chain
Performance
In order to test hypotheses, the structural
equation model was used in this study (Fig.1).
Fig.1 illustrates the relationship between reverse
logistics and the performance of the green supply
chain.
III.
METHODOLOGY
The data is analyzed using IBM AMOS
Structural Equation Modeling (SEM). SEM is
one of the statistical tools widely used in social
science research. The primary advantage of SEM
is that it allows assessment of fit between model
and data [16,17]. In the study performed
(χ2: 81.053, df: 30, χ2/df: 2, 702, GFI: 0.973,
NFI: 0.966, CFI: 0.978, RMR: 0.013,
RMSEA: 0.054) it was observed that there was a
concordance between the model and the data.
The secondary advantage of SEM is its ability to
model relationships between multiple dependent
and independent variables. Also, this method
allows calculations by recognizing the existence
of a causal relationship between latent
variables [18]
A. Data and Sample
The research universe comprises senior
managers of approximately 1400 packaging
companies operating in the Thrace region of
Turkey between 2021 and 2022. The research
sample comprises randomly selected senior
managers of 985 packaging business firms in the
Thrace region. The study’s sample size was
created using calculations based on the sample
table developed by Israel in 2013.
Figure 1. Reverse logistics and green supply chain performance relationship SEM model.
472
The assumption of normal size supports our
required sample size according to the calculation
tool for the sample size with a 95% confidence
interval and ±5% margin of error [19]. Of the 985
questionnaires distributed, 437 were returned and
the sample size was supported for normal
distribution and found suitable for analysis with
a response rate of 44.5%. Questionnaires were
collected by online application from the
managers of packaging companies operating in
the Thrace region of Turkey between April 2021
and June 2022. One senior manager from each
company was reached. The first part of the
research
questionnaire
contains
the
administrator’s basic information like age,
gender, and educational status. The second part
of the study questionnaire contains ten questions
about variable items. Data were collected by
using a 5-point Likert-type scale.
B. Descriptive Analysis
According to the descriptive analysis, it was
seen that 206 managers were between the ages of
26-35 (47.1%), and 155 managers were between
the ages of 36-45 (35.5%) among the top
managers in the companies covered by the
research. It was noted that the majority (300
people, 68.6%) of those in senior management
positions in the companies targeted by the
research were men. It is seen that 283 (66.8%) of
the managers included in the research have
undergraduate education.
C. Measures
We used costs, asset management, customer
service, and productivity items to measure
reverse logistics performance [20].
We used green-focused sales and business
volume, cost, profit/net revenue, customer
satisfaction, on-time delivery, and product and
service quality to measure green supply chain
performance [21].
Variance based structural equation modeling
is used to test the hypothesis. The model’s
standardized regression coefficient is displayed
in Table I. The reverse logistics performance has
a large and favorable impact on the green supply
chain (0.686), as shown in Table I. More clearly,
every one-point increase in the reverse logistics
performance increases the green supply chain
performance by 0.686 points.
Squared Multiple Correlation analysis shows
that reverse logistics explains nearly 50% (0.470)
of the green supply chain performance.
IV.
DISCUSSION
Reverse logistics is an indispensable aspect
of sustainable, thus green supply chains [22,23].
However, the literature is unclear to what extent
reverse logistics and various recovery operations
are efficient and effective [22]. Our results show
that reverse logistics can explain nearly fifty
percent of firms’ green supply chain
performance. Moreover, the standardized
regression coefficients in the structural path
model show that the effect of reverse logistics is
0.686. More clearly, every one-point increase in
reverse logistics can increase the green supply
chain performance by 0.686. This number is
significant because it implies a significant effect
of reverse logistics.
This result is supported by much other
research [24–26]. However, their research did
not include direct vectorial effects of reverse
logistics on the performance of green supply
chains. Moreover, many topics used
interchangeably with reverse logistics have not
been adequately investigated, like reuse,
remanufacturing and reuse, disassembly and
design, recycling, and waste management
[27,28]. As a result, our measurement for reverse
logistics also brings a holistic approach.
Our measurement for reverse logistics has
costs, asset management, customer service, and
productivity dimensions. As can be seen from
Fig.1, the less effective dimension for the reverse
logistics costs (0.66); on the other hand, the most
effective dimension is productivity (0.78). The
asset management dimension impacts reverse
logistics by 0.71 and customer service impacts by
0.74. These results also show that cost is a least
effective factor in reverse logistics, contrary to
the common thought in the logistics literature.
This is an important conclusion of our study that
firms should think about productivity, customer
needs, and asset management (in order) to have
effective reverse logistics. So, despite some
authors’ findings, our research shows essential
factors rather than economic order quantitybased systems [29,30].
473
TABLE I.
STANDARDIZED REGRESSION WEIGHTS: (GROUP NUMBER 1 - DEFAULT MODEL).
Variables
GreenSupply_ChainPerformance
V.
<---
Reverse_Logistics
CONCLUSION
This study investigates the effect of reverse
logistics on the green supply chain performance
in packaging companies in Turkey. The result
shows that reverse logistics explains fifty percent
of the green supply chain performance by 0.686.
Moreover, it is found that the most important
dimension on reverse logistics is productivity in
the packaging sector despite the common
thought of the cost-based approaches. Therefore,
firms should aim more productive by the
effective reverse logistics. As a result, our
hypothesis is supported that reverse logistics play
very important role in the green supply chain
performance.
This paper also has some limitations. First,
the data is collected as cross-sectional. Thus, the
causality relationships should be repeated as
longitudinal study. Second, data is collected from
packaging companies. For other sectors, reverse
logistics and end-life products may have
different significance. Third, antecedents of
reverse logistics can be different in other sectors
and countries.
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
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474
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475
476
PaKSoM 2022
Nature Prefers Sustainable Structures:
Implications for Large-Scale Political
Self-Organization
Jacob C.W. Billings1
1
Independent Researcher, USA
1
billings.jacob@gmail.com
Abstract—At this moment in history, humanity has
the unique capability to hold a conversation, with
all of her members, in real time. While we
(currently)
tend
to
utilize
global
telecommunications technologies to affect directed
information exchange between a “rich-club”
minority and a lay majority; it is within our
capability to establish an equitable “global publicsphere”, wherein we might decide, collectively,
what constitutes an intersubjective version of “the
good”. The following paper formalizes the
assertion that analyzing the semantic content of
public-sphere conversation can reveal existing, as
well
as
improvements
to,
humanity’s
organizational norms.
Keywords - Managing Knowledge for Global
and Collaborative Innovations, Big data and
knowledge extraction, Cognitive knowledge, Global
Public Sphere
I.
INTRODUCTION
“Action, the only activity that goes on
directly between men without the intermediary of
things or matter, corresponds to the human
condition of plurality” - Arendt [1].
“Since all knowledge and every choice is
directed toward some good, let us discuss what is
in our view the aim of politics, i.e., the highest
good attainable by action” - Aristotle [2].
Several global issues face humanity. The
increasing trend towards global pandemics,
including COVID-19, forces us to restructure our
societal norms. Anthropogenic climate change
compels us to reconfigure our economies. While
chronic poverty, war, and famine serve as
ongoing reminders that, “until we are all free, we
ISBN: 978-86-82602-00-2
are none of us free,” in the face of these global
issues, how can humanity move towards more
sustainable ways of life? My approach to this
humanistic question provides a democratic
answer, one rooted in the biology of complex
self-assembly.
II.
NATURE SEEKING ALPHA
According to the Second law of
Thermodynamics:
the
configuration
of
mass/energy in the universe tends towards
disorder. The fact of the eventual entropic death
of the universe begs the question: “How did
complex systems, like people and politics, get
here in the first place?” The omni-directional
expansion of the universe requires that complex
systems emerged through a bit of circumstantial
luck: entropy was at a minimum at the time of the
“Big Bang.” But, even while the dawn of time
was unexpectedly information-rich (lowentropy), the total energy of the universe,
crammed together into a singularity, made things
too hot to sustain much patterned differentiation.
Large scale systems, like galaxies, and fragile
complexes like ecosystems and politics, were
unable to stabilize until the universe expanded
and cooled. Furthermore, because the
distribution of matter and energy in the universe
was never homogeneous everywhere, inclusions
of thermodynamic disequilibria allowed systems
to locally self-assemble along the energy
gradient of free expansion in space-time.
Formally, Prigogine defines the process of
natural self-assembly as the minimization of the
local rate of entropy production [3,4]. Put
another way: at any point in time, natural systems
may either thermally randomize, or self477
assemble, into patterned structures that channel
thermodynamic gradients into useful work, like
internal homeostasis, and population growth.
Aristotle reminds us that the self-assembly of
societies into disorder-minimizing structures is
called “politics” [2]. It is convenient to refer to
“the good” - that goal for which all selfassembled systems perform work - using the
variable .
III.
POLITICS IN THE ABSTRACT
Arendt [1] characterizes politics as the
essential definition of a people. To better address
the pluralistic aspects of politics, I specify
populations P as composed of individuals, p.
Moreover, I refer to groups of people of size n
as Pn .
Of course, all politics is local. Furthermore,
every person in the population, p P , performs
work to gain a subjectively defined | p . To
better conceptualize the individualistic aspect of
politics, I define the equation:
x( p ) p .
(1)
where x p is work performed by an p, and
where indicates the generation of entropy. To
define a group-level “good” | Pn , we have the
union:
x( Pn )
pPn
x( p) Pn .
(2)
Focusing on work as a means to understand
politics offers a useful frame of reference. For
instance, the upper limit on any group size Pn
is established by the physical limits on x Pn to
connect people. As an example, for any Pn
utilizing exclusively oral communication, Pn is
generally limited to the few hundred persons of a
tribe [5]. Inscribed communication enabled Pn
to expand to the size of city-states. Meanwhile,
the capitalization of printing presses is believed
to have ushered in the age of the modern nationstate [6].
IV.
OF POLITICAL NETWORKS
If politics is described in terms of a graph, G,
where the p are nodes and the x p constitute
directed edges, then the are the apparent
structures that emerge among the set of P0 n N
478
nodes via the set of x Pn edges. By way of
example, consider Locke’s “state of nature”. In
this condition, people seek α through x Pn that
are uniformly accessible to all people, i.e.,
through spoken language [7,8]. Quantitatively,
this state corresponds to a G, in which there
exists a relatively uniform count of the number
and the type of x p edges stemming from any
node, p. By contrast, some novel x, like printing
presses, possess a high utility, yet low
availability. Such technologies encourage P to
organize around hubs in which, otherwise
separate, Pn communicate with one another via
those few p, who have access to the novel x.
Quantitatively, these kinds of networks are
termed “small-world” networks. Hubs of smallworld networks are defined as having many more
x p edges than expected from the average [9].
While the modern constitutional republic
emerged around the constraints of highutility/low-availability forms of x [10], this style
of politics is problematic because information is
always
lost
when
filtered
through
communication bottlenecks. Furthermore, wellconnected hubs in P may form what’s known as
a “rich club” network, wherein the hubs
preferentially connect to one another [11].
Consolidation of political power within a rich
club tends to widen differences in | p between
richly and poorly connected p Pn [12].
V.
EVOLVING POLITICAL DYNAMICS
Fortunately, many of humanity’s current
communications technologies boast high-utility
and
high-availability.
For
instance,
approximately half of the global population has
regular access to the internet [13]. And that
number is only set to increase, as cellular and
satellite relays eventually connect all of us into a
global public sphere [14]. This infrastructure
provides the necessary backbone through which
we might finally just ask one another to define a
mutually beneficial | P towards which we all
might work.
One of the key tools used to handle massive
quantities of unstructured data is the “knowledge
database” K B , composed of elementary “subject
predicate object” statements [15]. This
technology supports popular services, such as
search, recommendation, and text completion.
Computationally, statements are saved as triples,
containing an emitter, ke , a receiver, kr , as well
as a directed predicate, y ke , kr . Given this
conception, ensembles of triples form a
“knowledge graph”, KG , in which nodes are an
k K , and edges are an y Y . The set K , Y
is termed an “ontology”.
Much as the conception of politics in terms of
G presents the observation of political realities,
| G ; the conception of knowledge (about G) in
terms of K permits the elucidation of political
ideals, | K . Interestingly, for the proper subset
P K , there is the relationship | P | K
[16]. Put another way, a thorough-going
transcription of human knowledge contains,
within it, a population-level sense of “the good”.
Moreover, machine-learning applied to an
accessible (and complete) digital public sphere
can drive the discovery of optimal political
assemblies.
A facile example of optimizing political
assemblies simply observes latent political
groups, Pn P , who emerge as clusters in K, as
connected via shared edges, y . A slightly more
complicated clustering follows from the methods
of [17], wherein Pn are derived from the
principal components of an adjacency matrix
formed by the many y of K.
Furthermore, a clustering over the nodes in
(graphs such as) K can be seen as an analysis of
topological objects in dimension zero [18].
Higher order topological features describe, for
example, directed paths - chains of logical
syllogisms - in dimension 1. It is also possible to
reformulate K in a way that is amenable to
Topological Data Analysis (TDA). Typically,
TDA imposes a filtration over weighted edges to
detect stable topological features. One way to
reformulate K into a weighted single-layer graph
is by assigning a single number to the multiple
edges of y that connect pairs of emitter and
receiver nodes. Then, filtering out weaker and
weaker links, it is possible to visualize, for
instance, the most stable link(s) connecting two
Pn groups who hold opposing views on a topic.
By tuning how K is collapsed into a single layer
network
through,
e.g.,
selectively
adding/ablating y w.r.t. semantic objects of
interest, one may actively discern how
contingent are structures in K w.r.t. select
semantic objects.
A wide range of such machine-learning
approaches are available to elucidate the intrinsic
structure of social networks, | K , so-as-to
elucidate more optimal political unions, | G .
Such approaches constitute a ripe domain wherein we might encourage the evolution of our
political dynamics.
VI.
DISCUSSION AND FUTURE DIRECTIONS
It is clear that, possessed of a will to do
thusly, humanity could - in mere weeks - recruit
off-the-shelf technologies to connect nearly
every man woman and child into a global
conversation. From a systems-level perspective,
provisioning more efficient methods of internal
communications improves the capacity for
bodies to maintain homeodynamic stability over
large scales. From a sociological perspective,
provisioning a global public sphere to discuss
intersubjective values lays the foundation for
political decisions that recruit our collective
capabilities to meet and exceed our needs.
However, the will to act as a well-functioning
global civil society currently eludes us. This
impasse imposes upon the research community
an obligation to better organize extant (digital)
conversations to reify, for any lay observer, the
existence of a nescient collective will.
The present manuscript details how the
format of the knowledge database may be
recruited to organize free-form semantic text in a
way that visualizes likely collective sentiments.
In the immediate future, researchers could work
along two paths that: 1) assemble and share an
expanding
knowledge
database
of
intersubjective values; and 2) analyze the
associated knowledge graph to visualize
potential areas of collective accord. It would be
very interesting to see the emergence of an
interdisciplinary empirical political science that
directly queries humanity towards the
elucidation of political norms.
VII. CONCLUSIONS
Being itself a natural system, humanity will
naturally prefer to evolve towards greater and
greater homeodynamic stability. But while the
physical process of spontaneous structural selfassembly is relatively slow and uncertain, we can
actively take part in humanity’s ongoing efforts
to establish healthy, sustainable, and productive
civil-society by building infrastructure in support
of a vibrant global public sphere. Indeed,
humanity is in a unique position to sustain, in real
479
time, a dialogue that equally includes all of her
members. Certainly “perfection” and “eutopia”
are mythical goals – no system holds the
knowledge of, and the capacity to negotiate all
potential issues. None-the-less, humanity
maximizes her knowledge about the issues that
might exist, and she increases her wellspring of
creative solutions for those issues, by assembling
a union of perspectives from all persons.
Drawing political decisions from a more
complete space of global perspectives should
afford many improvements to each individual’s
quality of life.
[6]
[7]
[8]
[9]
[10]
[11]
ACKNOWLEDGMENT
The author would like to acknowledge
Emory’s Mind, Brain, and Culture Institute
(Atlanta, USA) for their assistance framing
cross-disciplinary examinations of natural
emergent systems.
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PaKSoM 2022
Mediating Role of Knowledge
Management Process in Turning
Intellectual Capital and Social Capital
into Innovation Capability and
Sustainable Performance of SMEs
Anh Tuan Pham1, Quoc Trung Pham2
1
Ho Chi Minh City University of Food Industry, Vietnam, Ho Chi Minh City, Vietnam
2
Ho Chi Minh City University of Technology (VNU-HCM), HCMC, Vietnam
1
tuanpanh@hufi.edu.vn, 2pqtrung@hcmut.edu.vn
Abstract—Research on knowledge management
(KM) has created the perception that the most
basic and important thing for enterprises is the
exploitation of external knowledge sources to be
able to fill the knowledge gap in enterprise.
However, this understanding has not been
adequately researched both theory and
experiment in the context of SMEs. Therefore, this
study aims to analyze the mediating role of the KM
process in turning intellectual capital (IC) and
social capital (SOC) into innovation capability
(INC) and sustainable performance (SUP) in
SMEs. The contribution of this study is, first of all,
to outline this gap on the basis of a review of
previous studies. Then, the study proposes a model
that focuses on the mediating role of the KM
process in turning IC and SOC into INC and SUP
to fill this theoretical gap. Finally, based on the
proposed model, three specific issues of significant
importance toward SMEs are discussed: (1) the
role of open innovation in the relationship between
IC and SOC for KM; (2) the relationship between
KM, INC, and SUP; (3) the relationship between
INC and SUP, and the mediating role of INC in the
relationship between KM and SUP.
Keywords - intellectual capital, social capital,
knowledge management and sustainable performance
I.
INTRODUCTION
KM is considered a systematic foundation for
storing, measuring, and optimizing an
organization’s knowledge economy [1]. In
which, IC is a collection of intangible assets that
ISBN: 978-86-82602-00-2
create value for businesses [2]. In the context of
SMEs, internal knowledge prevails to focus on
developing
innovative
activities,
while
knowledge resources and the most valuable
resources may be outside the organization [1].
Therefore, in addition to handling inside
developed intellectual assets, enterprises also
need to pay attention to acquiring and exploiting
knowledge from the outside. This is an
opportunity for an organization to develop new
value through value co-creation between the
enterprise and its stakeholders. This is a new
trend to help integrate internal and external
inputs to develop new products and make the KM
process more efficient, which is open innovation
[3]. Due to limited resources, SMEs are also
more vulnerable to global crises, with COVID19 having a particularly harmful impact on them,
Post-COVID-19, they face many challenges to
sustainability in this fragile new environment. In
this situation, research by Tran & Huynh [4] has
shown that SOC has a significant impact on the
resilience of SMEs in the context of the COVID19 pandemic. However, while extensive research
has often focused on the three-component
framework of IC (human capital, structured
capital, and relational capital), SOC has received
little attention [5].
Management of SMEs based on knowledge,
innovation, and OP perspectives is an emerging
research topic. Studies simultaneously consider
relationships between KM, innovation, and OP
481
are very rare, mostly done in developed
countries, and there are very few studies that
focus on different type of SMEs [6]. Besides, as
part of their social responsibility, organizations
need to adopt environmentally friendly
approaches and advanced technology to achieve
SUP [7]. However, there is little research on the
relationship between KM and SUP [8].
Regarding corporate social responsibility,
previous studies hardly explored the businessrelated aspect of SMEs [9]. On the other hand,
the combination of approaches between IC and
KM for OP is expected to be more successful for
future studies [10]. Therefore, to fill this gap, this
study aims to identify the mediating role of the
KM process in turning IC and SOC into INC and
SUP in SMEs in Vietnam.
The structure of the article is organized as
follows: (1) Introduction; (2) Literature review
and research model; (3) Research methods; (4)
Research results; and finally, (5) Discussion and
conclusions.
II.
LITERATURE REVIEW AND RESEARCH
MODEL
A. Literature review
1) Intellectual capital
IC also known as knowledge assets, is an
important intangible resource for businesses to
create knowledge [11]. The most common and
standard classification of IC consists of three
main components: human capital (HC),
structured capital (SC), and relational capital
(RC) that have become the foundation for the
development and measurement of IC [12]. In
which, the knowledge asset of an organization
consists of two main components: HC and SC,
which is the soul of innovation [13]. Specifically,
HC refers to members of an organization and
their knowledge, skills, motivations, attitudes,
and educational level; and SC includes “all the
repositories of non-human knowledge” within
the organization [14]. In addition, RC refers to
the value of an organization’s relationships with
other members of its business community [15].
From here, this study divides IC into two parts:
internal IC (IIC) includes HC and SC; and
external IC (EIC) is RC.
2) Social capital
Regarding the SOC of enterprise, it is defined
as the aggregate of enterprise resources, existing
in relationships including leadership network,
external network of enterprise, and internal
network of enterprise [16]. Through social
482
relationships, it is possible to stimulate and
facilitate knowledge activities of both the giver
and the recipient [17]. In the post-COVID-19
context, SMEs are facing many difficulties to
survive and develop sustainably. In this context,
by exploring enterprise SOC as a resource to
enhance post-pandemic resilience [18].
3) KM process
KM is the systematic and organized use of an
organization’s intellectual power to achieve
efficiency, secure competitive advantage, and
encourage innovation [19]. KM process is a
systematic approach to acquire, share, and apply
knowledge in processes to improve OP [20].
4) Innovation capability
INC is defined as “an enterprise’s ability to
apply collective knowledge, skills, and resources
to innovative activities related to new products,
services, processes or management systems,
marketing or work organization, in order to
create added value for enterprises or
stakeholders” [21].
5) Open innovation
Open innovation is “the intentional use of
knowledge flows inside and outside the
enterprise to promote internal innovation and
open markets for external innovation use
respectively. The open innovation model
assumes that enterprises can and should use
external ideas, as well as internal ideas to
approach the market, as well as when enterprises
want to improve their technology” [22].
6) Sustainable performance
OP is the ability of an organization to access
and process its various resources to achieve its
stated objectives [23]. OP is considered based on
two aspects: financial performance and nonfinancial performance [24]. In addition, [25]
highlighted the role and importance of
organizations having to behave responsibly
towards society rather than being responsible for
the environment in order to satisfy their
economic goals. Therefore, SUP in this study is
considered from the following three aspects:
financial performance (FP), non-financial
performance (NFP), and environmental
performance (EP).
7) Small and medium enterprise
There is no universal definition of SME
across countries. Besides, SMEs can be
identified by different measurement criteria such
as number of employees, revenue, asset value,
etc. However, this study used staff numbers in
the study design to facilitate data collection.
In Vietnam, SME is an abbreviation for
micro, small, and medium-sized enterprises. In
which, micro enterprises have no more than 10
employees, small enterprises with no more than
50 employees (trade, services) or not more than
100 employees (other fields), and medium
enterprises with no more than 100 employees
(trade and services) or not more than 200
employees (other fields).
B. Research hypothesis
1) Impact of IIC on KAC
In the SME context, the capability,
qualifications, and experience of HC reflect their
knowledge base and contribute greatly to their
absorptive capability [26]. Besides, SC also
affects the acquisition and exploitation of
knowledge in the organization. These are
knowledge resources within the organization and
owned by the organization [25]. Through the KM
process, HC provides input for the creation,
application, and transfer of newly acquired
knowledge and support the renewal of a dynamic
resource base [27]. Thence, hypothesis H1 is
stated as follows:
H1: IIC has a positive effect on KAC
2) Impact of IIC on KSH
Starting from the employees in the enterprise,
using hands-on skills, experience, and know-how
as an object, it builds an internal KM framework
including knowledge problems, IT, and
knowledge community based on the
transformation of tacit knowledge in the
enterprise, as well as related incentive
mechanisms and control mechanisms. Such a
system makes the tacit knowledge of individuals
in the enterprise shared with each other, makes
shared knowledge into explicit knowledge,
makes explicit knowledge an asset, and turn
knowledge of assets into income [28]. Thence,
hypothesis H2 is stated as follows:
H2: IIC has a positive effect on KSH
3) Impact of IIC on KAP
KM aims to create, code, and share
knowledge within the organization and shift the
focus from process to practice [29], facilitating
effective internal knowledge flows within
established communication networks can
positively affect an organization’s ability to
absorb, share, and then apply knowledge for
commercial purposes. Therefore, if an
organization increases KAC and application it in
practice, the organization will be more successful
[30]. Thence, hypothesis H3 is stated as follows:
H3: IIC has a positive effect on KAP
4) Impact of EIC on KAC
The more organizations interact with each
other, the more likely to generate new knowledge
and to help enhance INC. Collaboration with
external partners such as customers can help
enterprises deploy existing knowledge and
thereby, create value [31]. Co-creation
emphasizes the customer’s role in both value
creation and the development process of new or
existing services. The proximity of SMEs to
customers enables them to acquire knowledge
more directly and faster than large enterprises
[32]. Thence, hypothesis H4 is stated as follows:
H4: EIC has a positive effect on KAC
5) Impact of EIC on KSH
Externally-oriented enterprises often have
many opportunities to obtain information related
to the business environment and promote
innovation activities. Business outcomes are
related to knowledge exchange with inside or
outside the organization and KSH definitely
makes a difference in the performance of an
organization [33]. Therefore, if employees have
a culture of sharing and conveying valuable
information within the organization, the goals of
the enterprise will be realized and organizations
can solve problems through creative solutions
based on knowledge shared among individuals
[34]. Thence, hypothesis H5 is stated as follows:
H5: EIC has a positive effect on KSH
6) Impact of EIC on KAP
Enterprises obtain a significant portion of
their knowledge from external sources
(customers, suppliers, …) [35]. The strength of
these relationships play an important role in RC
for a enterprise’s competitive advantage, that is,
after collecting knowledge to fill the knowledge
gap in enterprises, the new knowledge will be
applied in the organization. KAP means making
knowledge more active and relevant for the
organization in creating value [35]. Thence,
hypothesis H6 is stated as follows:
H6: EIC has a positive effect on KAP
7) The impact of SOC on KAC
SOC improves the cooperation process and
the learning capability of the parties, the ability
to adapt, absorb, and integrate resources, creating
483
the basis for the collaborative advantage needed
to co-create value [36]. Different social
relationships can generate new ideas and
mobilize enterprise resources [37]. SOC benefits
sales centers by providing them with access to
knowledge [37]. Thence, hypothesis H7 is stated
as follows:
H7: SOC has a positive effect on KAC
8) The impact of SOC on KSH
SOC helps to enhance an organization’s
capability to disseminate knowledge resources
within the organization by facilitating knowledge
processes to take place [38]. KSH related to the
social needs of individuals. An important
element of the cognitive dimension of SOC is the
shared goals among team members. Through
common goals can motivate team members to
share knowledge and cooperate together [39].
Thence, hypothesis H8 is stated as follows:
H8: SOC has a positive effect on KSH
9) The impact of SOC on KAP
Knowledge transfer is an important benefit of
SOC [39], and knowledge is only useful if it is
transferred through the organization, integrated
with other knowledge, and applied in practice
[37]. KAP can be achieved through sharing
among colleagues. This is a particularly relevant
process, since the foundation of an
organization’s competitive advantage lies not in
the knowledge itself but in its application [40].
Thence, hypothesis H9 is stated as follows:
H9: SOC has a positive effect on KAP
10) The impact of KAC on INC
The participation of enterprises in innovation
cooperation with various external parties
enriches their knowledge base and develops a
better ability to assimilate and exploit external
knowledge, thereby, enabling them to integrate
dynamic capabilities [41]. These external
knowledge sources are integrated with tacit and
explicit knowledge inside the organization,
which will be useful for improving INC [13].
Thence, hypothesis H10 is stated as follows:
H10: KAC has a positive effect on INC
11) The impact of KAC on SUP
KAC has yielded significant results such as:
leading to competitive advantage, increased
sales, new product development, and
adjustments and improvements in innovation
processes. Indeed, the acquisition of technology
from outside has a positive effect on the
484
efficiency of firms in Taiwan [42]. The resourcebased view (RBV) emphasizes that such
resources can help shape strategies to achieve
sustainability goals [43]. Thence, hypothesis
H11 is stated as follows:
H11: KAC has a positive effect on SUP
12) Impact of KSH on INC
One of the important issues of organizational
learning is KSH [33]. Through appropriate
knowledge
distribution
and
sharing,
organizations can improve INC [13]. In addition,
previous studies have shown that IC and KSH
can stimulate both innovative and creative
activities [44]. Thence, hypothesis H12 is stated
as follows:
H12: KSH has a positive effect on INC
13) Impact of KSH on SUP
KSH positively affects OP and the quality of
decisions made within the organization [33]. By
disseminating knowledge among stakeholders,
organizational capabilities can be improved and
essential processes such as problem solving,
decision making, leadership, effectiveness, and
innovation can be improved. KSH facilitates the
achievement of a knowledge strategy and
increase the organization’s SUP [45]. Thence,
hypothesis H13 is stated as follows:
H13: KSH has a positive effect on SUP
14) Impact of KAP on INC
Knowledge stored only in the head of each
individual, it is only when shared and used
externally, new acquired knowledge can be
successfully converted into into new products,
technologies, and services to meet customer
needs and improve the innovation performance.
This is because in the process of KAP, new
knowledge will be created and thereby, helping
to improve innovation capability [17]. Thence,
hypothesis H14 is stated as follows:
H14: KAP has a positive effect on INC
15) Impact of KAP on SUP
KAP can be understood as the
implementation of the necessary knowledge in
the processes and activities of the organization to
achieve the organization’s knowledge strategy
and SUP [45]. From a knowledge-based view
(KBV), [31] argued that KAP is the basis for
achieving competitive advantage and is
associated with OP. The RBV believes that the
existing resources of enterprises are the basis for
enterprises to develop and strengthen their
capabilities through continuous collaborative
learning. These resources can be used to
implement value creation strategies which can
lead to a sustainable competitive advantage [46].
Thence, hypothesis H15 is stated as follows:
H15: KAP has a positive effect on SUP
16) Impact of INC on SUP
SUP is at the heart of the innovation strategy
[47]. According to RBV, businesses possess an
innovative strategy, a flexible organizational
structure, a culture of innovation, technological
capabilities, effective customer and supplier
relationships, and innovative products that the
non-owned enterprises will achieve higher.
Thence, hypothesis H16 is stated as follows:
H16: INC has a positive effect on SUP
C. Proposed research model
The above hypotheses can be summarized in
the following research model (Fig.1).
B. Data collection
The questionnaires were sent to selected
SMEs on the basis of convenience. This survey
was conducted in September 2022, 454
questionnaires were collected back, after
removing 131 invalid questionnaires, remaining
323 valid questionnaires, so the valid response
rate reaches 71.15%. Data were analyzed by
SPSS v20 and AMOS v22 software to evaluate
the reliability of the scale, exploratory factor
analysis (EFA), confirmatory factor analysis
(CFA) and structural equation modeling analysis
(SEM) to test the hypotheses.
IV.
DATA ANALYSIS AND RESULTS
A. Evaluate the reliability of the scale
The Cronbach's Alpha test is evaluated based
on Cronbach’s Alpha if Item Deleted, along
with the Corrected Item-Total Correlation. If a
measure has Corrected Item-Total Correlation ≥
0.3 then that variable is qualified [52].
TABLE I. RELIABILITY ANALYSIS RESULTS
Figure 1. Proposed research model
III.
RESEARCH METHODS
A. Measures
The formation of the scales is inherited from
previous studies, specifically, (1) the IC scale is
inherited from [48]. In there: IIC includes HC (4
variables) and SC (6 variables), and EIC is RC (4
variables); (2) the SOC scale (4 variables) is
inherited from [16] [36]; (3) the KM process
scale includes: KAC (3 variables), KSH (3
variables), and KAP (4 variables) are inherited
from [49]; (4) the INC scale (6 variables) is
inherited from [50]; and (5) SUP scale includes:
FP (4 variables) and NFP (4 variables) inherited
from [12], and EP (5 variables) inherited from
[51]. To ensure the content validity of the scale,
a qualitative study through face-to-face
discussion with 11 managers at SMEs in
Vietnam. Then, edit the wording to suit the
research context. The scale used in the study is a
5-point Likert scale.
Scales
Observed variables
HC
SC
RC
SOC
KAC
KSH
KAP
INC
FP
NFP
EP
HC1, HC2
SC1, SC2, SC4
RC1, RC2, RC3, RC4
SOC1, SOC2, SOC3, SOC4
KAC1, KAC2, KAC3
KSH1, KSH2, KSH3
KAP1, KAP2, KAP3
INC1, INC2, INC3, INC4, INC5
FP1, FP2, FP3, FP4
NFP1, NFP2, NFP3
EP1, EP2, EP3, EP4, EP5
Cronbach’s
alpha
0.989
0.983
0.872
0.887
0.809
0.865
0.897
0.918
0.820
0.808
0.913
The results show that the scales all have
Cronbach’s Alpha coefficient > 0.6 and corrected
item-total correlation coefficients are all greater
than 0.3, so the scales of the factor groups are
reliable and continue to be used for factor
analysis.
B. Exploratory factor analysis for independent
and dependent variables
Using Principal axis factoring method and
Promax angle rotation to find out representative
factors for the scales. KMO coefficient is used to
test the suitability of factor analysis [52]. EFA
analysis results show that the remaining 39
observed variables all have factor loading
coefficients greater than 0.5 and grouped into 11
factors ready for CFA and SEM analysis.
485
C. Confirmatory factor analysis (CFA)
To increase the relevance of the research
data, based on the Modification Indices (MI) of
the variables to adjust the fit of the model. The
results after adjustment shows that the current
model is consistent with the research data
(CMIN/df=1.557; GFI=0.884; TLI=0.960;
CFI=0.965; RMSEA=0.042; P=0.000).
The convergence and discrimination analysis
results of the variables in the overall model show
that the CR values of the variables are all higher
than 0.7. and the AVE values of the
unidirectional scales are all greater than 0.5, thus
the scales of the variables all ensure convergence
[52]. Besides, the square root of AVE is larger
than the correlations between latent variables and
the MSV value is smaller than AVE, thus
distinctiveness is guaranteed. The next step,
convert the scale model to a research model to
conduct SEM testing.
Standardized Regression Weights are
summarized in Table II. This study also
examines the mediating role of INC in the
relationship between KM and SUP. Bootstrap
test results with 95% reliability show that the Sig.
value of KAP is 0.007 < 0.05, so there exists an
indirect relationship from KAP to SUP.
Therefore, there is a mediating relationship from
KAP to SUP.
TABLE II. STANDARDIZED REGRESSION WEIGHTS
KSH
KAP
KSH
KAP
KAC
KSH
KAC
KAC
KAP
INC
INC
INC
SUP
SUP
SUP
SUP
Parameter
<-EIC
<-EIC
<-SOC
<-SOC
<-IIC
<-IIC
<-EIC
<-SOC
<-IIC
<-KSH
<-KAP
<-KAC
<-KAP
<-KSH
<-KAC
<-INC
Estimate
.436
.010
.577
-.129
-.099
.081
.518
.242
.032
.022
.656
-.051
-.056
.141
.316
.220
Lower
.214
-.216
.412
-.354
-.218
-.017
.361
.076
-.091
-.101
.537
-.212
-.187
.027
.173
.091
Upper
.646
.274
.789
.067
-.017
.184
.732
.401
.167
.122
.773
.104
.080
.260
.484
.366
P
.007
Result
Accepted
.884
.002
.222
.006
.092
.003
.006
Rejected
Accepted
Rejected
Accepted
Rejected
Accepted
Accepted
.489
.690
.005
.525
.403
.014
.004
.004
Rejected
Rejected
Accepted
Rejected
Rejected
Accepted
Accepted
Accepted
E. Results discussion
This study is concerned with both theoretical
and practical aspects. Theoretically, this study
proposes a research model for empirical studies
to link IC and SOC with INC, as well as SUP of
SMEs through the KM process. Following are
the results from the SEM approach.
Figure 2. Scale model
D. Structural equation modeling (SEM)
The SEM analysis results show that the
analytical model is consistent with the research
data (CMIN/df=1.546; GFI=0.883; TLI=0.961;
CFI=0.965; RMSEA=0.041, p=0.000)
The results show that IC and SOC have a
positive effect on KM, thereby leading to
improved INC and SUP. Besides, the results also
show that INC plays a full mediator role in the
relationship between KM and SUP. From a
practical perspective, the relationship between
IC, SOC, KM, INC, and SUP can provide clues
as to how SMEs can promote KAC, KSH, and
KAP to Integrating knowledge inside and outside
the enterprise to improve the INC and maintain
the SUP of the enterprise.
The results also show that INC plays a full
mediating role in the relationship between KM,
specifically KAP and SUP. This result is
consistent with the study of [64] said that KM has
no direct effect on business performance of
SMEs except through innovation. This implies
that without innovation, SMEs may not be able
to achieve better business performance.
Figure 3. Standardized SEM model
486
V. CONCLUSIONS
This study concludes that, IC (internal and
external) and SOC contribute to improving the
INC and SUP of SMEs through the KM process
(KAC, KSH, and KAP). This is attributed to the
organization’s ability to conceptualize the
strategic importance of intellectual resources, as
it provides a comprehensive understanding of
both the internal and external intellectual
resources
present
in
the
workforce,
organizational structure or network relationships.
Future research directions may consider these
variables in developing countries like Vietnam or
consider the direct impact of IC and SOC on
INC, as well as SUP, or focus on a particular
industry or sector of the SMEs.
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PaKSoM 2022
How Did the Slovak Labour Market
Change during the Coronavirus
Crisis?
Lucia Bartková1
1
Institute of managerial systems, Faculty of Economics, Marej Bel University,
Poprad, Slovak Republic
1
lucia.bartkova@umb.sk
Abstract—The COVID-19 pandemic caused the
unprecedent disruption in our lives. Due to high
infection of the novel coronavirus, many people
had to stay at home, governments set lockdowns
and employees were not able to go to work. Many
companies rearranged their way of work and
employees, when it was possible, shifted to the
home office. It involves purchase of working
equipment, mostly information technologies.
These changes provoked also changes in the values
of both – employees and employers. Employees
require to be rewarded for the performance, not
for the time spent in the work, and employers
require results regardless the place where an
employee is working. To study these changes will
be very useful also in connection with current
increase of inflation and rising costs of energy.
Keywords – COVID-19, remote work, home
office, telework
I.
INTRODUCTION
The disease COVID-19 is a respiratory
disease caused by the virus SARS-CoV-2
(Severe
Acute
Respiratory
Syndrome
Coronavirus 2) originally discovered in
December 2019 [1]. The first case of infection
caused by the novel coronavirus was discovered
in Wuhan City, Hubei Province, China [2]. The
virus is primarily spread from person to person
through droplets from infected people by
coughing, sneezing or during conversation [3].
At the end of February 2020, the disease
COVID-19 spread rapidly throughout the world
[4]. The World Health Organization declared a
global pandemic of COVID-19 on March 11,
2020 [5]. In an effort to slow the spread of the
ISBN: 978-86-82602-00-2
COVID-19 disease, the World Health
Organization and the Red Cross have advised
people to follow strict measures for their own
safety, which under normal circumstances slow
the spread of other viral diseases [6]. The basic
recommendations were extending the time for
washing hands, wearing masks, covering the
cough, and sneezing, frequent disinfection of
surfaces, and limiting hand and face contact [7].
In addition to these measures at the level of
individuals, several measures were taken at the
level of companies and states. Within the
lockdown, businesses were closed, mobility of
people was limited, employees worked from
home as much as possible, curfews were
introduced, mass events were cancelled. Due to
the spread of the virus, employees of many
companies in Slovakia were forced to work from
home and banned from personal meetings, what
had a huge impact on the entire society, the
economy and also the labour market. We
analysed the situation and changes in the Slovak
labour market through secondary research of
information published on the largest Slovak job
portal Profesia.sk.
II.
THE CORONAVIRUS PANDEMIC IN
SLOVAKIA
Slovakia took the first measures connected
with COVID-19 already on January 27, 2020. At
that time, the disease was not yet found in
Slovakia, but in Europe e.g., France had already
started reporting the first cases of infection [8].
On March 6, the first case of COVID-19 was
confirmed in the Slovak Republic [9]. After the
confirmation of the occurrence of the disease
489
COVID-19 in Slovakia, the adoption of measures
gained speed. Sport, cultural and public events
were banned, schools and airports began to be
closed [10,11].
Effective from March 16, retail sales and the
sale of services were prohibited for 14 days, with
some exceptions (food stores, medical devices,
drugstores, fuel stores, newsstands, stores of feed
and supplies for animals, including veterinary
clinics, telecommunications operators, postal,
banking and insurance services and operations of
online shops and delivery services). Public
catering establishments and fast-food stalls
remained open, but it was forbidden to eat in their
premises, it was possible only outside their
establishments [12]. Another measure was the
restriction of the use of taxi services only for the
transport of goods, not people. The Crisis Team
of the Slovak Republic recommended covering
the breading ways with protective masks [13].
At the end of March 2020, several stores that
had been closed until then (optician(‘s), garden
centres, haberdasher(‘s), ironmonger(‘s) and
others) opened, but the hygienic conditions in the
shops were tightened. It became mandatory to
wear protective masks in store, to use
disinfection or protective gloves, which the
businesses themselves were obliged to provide.
It was mandatory to ensure two-meter distances
between people waiting in lines. The number of
people in the store was also limited: one person
per 25 square meters. Also, the time in shops was
defined preferentially for people over 65 years
old as a result of the fact that they represent the
most endangered group [14].
At the end of April 2020, other stores were
opened: shops and service operations up to
300 m2, public catering operations with food
delivery through a window, outdoor sports fields
without changing rooms, toilets, and the public;
long-term accommodation facilities without
shared meals, outdoor markets, car dealerships
and bazaars [15].
As the first wave of the COVID-19 disease
was successfully managed, other establishments
(short-term accommodation, hairdressers and
barbershops, manicures and pedicures, cosmetics
and solariums, outdoor tourist attractions, taxi
services with separated space for clients and
without air conditioning, religious services and
weddings, all commercial establishments
regardless of size except shopping centers, public
catering with eating on outdoor terraces,
rehabilitation facilities providing only dry
490
procedures, museums, galleries, libraries and
exhibition halls). However, strict hygiene
measures remained in force (face masks, hand
disinfection, two-meter distances between
customers, 25 square meters per customer [16].
During the summer of 2020, the situation
looked promising, but the onset of the second
wave at the end of 2020 and the beginning of
2021 delayed all plans. Many employees have
thus returned to a full or partial home office.
Already during September 2021, the number of
positive cases increased, and the virus also
appeared in several companies. But it was
positive that during the summer companies had
the opportunity to develop pandemic plans and
prepare for various scenarios. Many of them
were thus able to adapt to the current situation
and function. They later used the experience to
manage the third wave, the immigration of
Ukrainians fleeing the military conflict, and price
increases due to inflation in the second half
of 2022.
III. CHANGES IN THE SLOVAK LABOUR
MARKET AS A RESULT OF THE CORONAVIRUS
CRISIS
The first changes in the Slovak labour market
occurred already in March 2020. Due to the
spread of the virus, employees of many
companies in Slovakia were forced to home
office (also called “remote work”). It is a type of
work that is not tied to the employer’s workplace,
but to another agreed place of work, most often
the residence (household) of the employee,
throughout the working hours. The Labour Code
of Slovak Republic defines and distinguishes
work from home (home office) and domestic
work or telework. Home office work is work
performed occasionally or under extraordinary
circumstances with the consent of the employers
or by agreement with them at home or at a place
other than the usual place of work, provided that
the type of work performed by the employee in
accordance with the employment contract and
the job description allows it (§ 52, Section 5 of
Act no. 311/2001 Coll. The Labour Code in its
current version – hereinafter “the Labour Code”).
Domestic work and telework in accordance
with § 52 Section 1 of the Labour Code is work
performed by an employee for the employer
under the conditions agreed in the employment
contract at home or at another agreed place
(domestic work) or work according to the
conditions agreed in the employment contract at
home or at another agreed place using
information technology (teleworking) during
working hours, which the employee most often
schedules themselves.
The mandatory transition to work from home
brought several necessary requirements,
especially in connection with the purchase of
information technology. Employees either
brought computers and laptops home from work,
or it was necessary to purchase them. It was also
necessary to equip a workplace at home with a
camera, headphones, etc. and to acquire a
software or application for electronic
communication or conference calls.
However, the coronavirus crisis did not only
affect businesses and existing employees, but
also the applicants themselves. Those who were
currently in the notice period, for example, could
have feared that they would end up completely
without work and income for a certain period
when the interviews were postponed. Here,
information technology and video interviews
helped, too. These also helped the companies
themselves, as they have eliminated the risk that
candidates whose interviews have been
postponed will find work elsewhere in the
meantime [17].
At the end of March 2020, over 200 Slovak
employers asked the government to change the
Labour Code. The change was supposed to
enable the simultaneous work from home and at
the same time receiving the benefit in case of
treatment of a family member. An employee with
children working from home could officially
divide his time between work and caring for
family members [18]. Until then, such a scenario
was not possible under the law. The parents of
the children thus only had the option of the
benefit in case of treatment of a family member,
but as a result, companies lost the necessary
people. When the parents wanted to avoid this,
but because of their children they could not work
continuously for 8 hours a day, they had to help
themselves by taking half a day of leave. In
Slovakia, the so-called pandemic benefit in case
of treatment of a family member was established,
which enabled parents to stay at home for a long
time with school-age children.
Working from home was the most common
measure chosen by employers in Slovakia at the
beginning of 2020. The highest share of
employees with a home office was in information
technology, the lowest in the hospitality and
tourism [19]. The possibility to work from home
also appeared more often in job offers. However,
it was rather a work bonus, the opportunity to
work from home a few days a month, not a job
offers in which the employee does not have to
come to work at all [20].
In addition to the possibility to work from
home, as part of other measures, companies have
stopped business trips or modified the rules for
the performance of work at the workplace. Job
reduction or cancelling working hours were the
last options. Some companies also adopted other,
specific measures, such as testing employees for
COVID-19 as a benefit, transferring employees
to other projects, and increasing the level of
management communication and employee
awareness. Even though, for many employers the
coronavirus crisis brought a reduction in sales,
companies tried everything to avoid reducing
salaries, rewards, or benefits. However, several
were ready to proceed with reducing salaries or
rewards at the management level, or for people
who earn above a certain level. A frequent
measure that also concerned ordinary employees
was the recommendation or order to take a
leave [21].
Meanwhile, the most companies have
prepared a plan for employees to return to work
if the pandemic situation improves. Among the
basic measures was the provision of a higher
hygiene standard as the use of masks in the
interior, the use of gloves, and regular
disinfection of the premises. Several employers
planned to measure temperature or require
testing for COVID-19. Employees were
supposed to return to the office in groups, or
according to schedules. However, some
businesses continued to work from home and the
return to the workplace was voluntary. At that
time, companies stated that labour productivity
with home office remained unchanged, or even
increased [22].
Most employers started a gradual return to
workplaces from June 2020. However, some
employees continued to request to work from
home and come to the workplace only
exceptionally for meetings. Some of them were
very satisfied with working at home, some were
worried about their health. Workers of customer
support worked more effectively from home
because no one disturbed them. The situation was
worse for merchants who lacked sales. Problems
with working at home were also experienced by
employees who had children and did not have
good conditions for peaceful work at home. That
491
is why most employers have begun to think
intensively about extending the benefit, when
employees can also work from home a few days
a month [23].
To cope with the first wave of the COVID-19
disease in Slovakia were prepared mainly
companies that have parent or sister companies
abroad, where the disease appeared earlier.
Internal communication proved to be the most
important factor in managing the crisis in
companies - by intensifying top management
communication, creating a central crisis team, or
increasing support for managers, also through
videos, podcasts, and various online
communication tools [24].
The coronavirus first reduced the number of
job opportunities on the Slovak labour market.
The employers quickly adapted to the situation
and in the summer of 2020, when the number of
people infected with the coronavirus decreased,
the situation improved. However, based on the
analysis of the profesia.sk portal, it turned out
that the average salary that employers state in
offers fell by up to 6.7%. The drop in offered
salaries was related to entire territory of Slovakia
and was not affected by the required education
either. Offered wages grew only in the IT and
services industries. On the contrary, offers fell
most significantly in the sectors of top
management, trade, and telecommunications,
especially for positions such as director of
logistics, head of transport, operations manager,
designer of communication networks or
cashier [25].
Also, the second wave of the COVID-19
disease at the end of 2020 caused changes in the
labour market. The number of job offers fell,
especially in the travel, gastronomy and hotel
sectors, but also customer support and
administration. The job offer grew only in
production [26].
The second wave was also associated with
the start of home offices. As research has shown,
43% of companies said their employees are
happier and more satisfied if they work from
home. Many employees felt more secure, as they
eliminated the inevitable meeting with strangers
on the way to work or in offices. On the other
hand, a quarter of the companies experienced
more discomfort of employees. The biggest
disadvantages were the absence of a team,
unsuitable working conditions, fatigue and
psychological problems, or disturbed work life
balance, when people finish work in the
492
evenings. As many as 64% of respondents
confirmed that their employees felt less
connected to the collective. Companies thus
defined new needs for education or development
of corporate culture to improve the situation.
People working in HR identified the area of selfmanagement
(time
management,
stress
management, wellbeing) and the development of
digital skills as priorities. It was also important to
focus on communication, leadership and
building interpersonal relationships [27].
Since it was expected that the second wave of
the coronavirus crisis would last at least until the
spring of another year, employers faced another
challenge. Working from home was associated
with new needs for self-development of
employees, especially in the field of selfmanagement, digital skills, communication and
building interpersonal relationships, building the
ability to be flexible and adapt to changes,
developing cognitive skills (problem solving,
creativity, flexible thinking) and language skills.
Employees therefore expected that employers
would accommodate them in meeting these
needs, and some employers have already started
providing a contribution to support working from
home [28].
In March 2021, a year after the outbreak of
the coronavirus crisis in Slovakia, the number of
job offers stabilized [29]. There were even job
offers offering the entire performance of work
from home without the need to commute to the
workplace. Such offers were mainly in the
sectors of IT, telecommunications, translation,
marketing, and journalism. The higher number of
offers for telework was also complemented by
the increased occurrence of offers in which
employers offered the option of using the benefit
of working from home few days in a week [30].
As of September 2021, the offer of telework has
increased thirteenfold compared to 2019 [31].
On the other hand, as it follows from the
analysis of secondary data, the majority of
employees do not demand full remote work,
rather they are in favour of partial or hybrid form
[32]. Most employees feel that their work
performance during the home office is the same
or better than at the workplace. However,
employees perceive the pitfalls of working from
home.
In the research from August 2021, the
majority of respondents stated that they have a
problem to manage their work at home as part of
a home office. Other problems were the inability
to concentrate, balancing family and work,
creating a workspace or maintaining contact with
colleagues. People who do not live alone pointed
out the negatives of the home office the most.
The biggest problem for employees was
precisely the disturbance from other members of
the household. On the contrary, the survey found
that they had almost no problems with the new
digital skills required and arranging meetings
online. Workers had used to these things and
could adapt to them. As the biggest help, the
respondents mentioned particularly flexible
working hours enabling to take into account also
private needs. When working from home, the
independence and trust of the company in
solving tasks, suitable technical equipment,
regular internal communication, or online
education also helped to employees [33].
After a relatively good pandemic situation
during the summer of 2021, there was a
worsening again in the autumn and a lockdown
was introduced again, which in practice meant
closing stores and restricting the movement of
people. Employers reacted to the current
situation by slowing down the publication of job
offers, but the numbers were more positive
compared to the first and second waves. There
were more job vacancies on the labour market
than in previous years, even more than was usual
in the pre-pandemic period [34].
While before the pandemic only a few
companies offered their employees the option to
work from home, two years during the pandemic
changed the way most companies operate. Data
from the largest job portal Profesia.sk shows that
in 2022 the number of offers that offer job
seekers partial remote work increased. In this
case, the employers agree with the candidates
how many days they will work at home and how
much time they will spend in the office. A partial
home office combines several benefits:
flexibility, saves employees the time needed to
move to the office, but at the same time does not
deprive them of social contacts with colleagues.
The share of job offers with a partial home office
has been continuously growing since this period.
Some employers do not require the workers
to perform their work in a designated location.
Thus, employees can complete their tasks at
home or at any chosen location. If they need to
connect with colleagues, they can do it through
the online environment. The offer of telework in
Slovakia mostly concerns highly specialized IT
positions and is also continuously growing [35].
Although the COVID-19 disease had only a
mild course in Slovakia in the second half of
2022, other factors affected the economy and the
labour market. The war in Ukraine affected
Slovakia as an immediate neighbour with the
arrival of many immigrants. The labour market
thus came under pressure again. Most employers
have intensified communication about aid to
Ukraine for their workers. Data from the
company Profesia.sk have already shown in the
past that two years with the pandemic brought
more information about mental health to
companies. The horrors of war in Ukraine are
another topic that has a large effect on the psyche
of people in a short time. The current situation
therefore motivates employers to intensify
communication about mental health again [36].
Another event closely connected with the
events in Ukraine is high inflation, which causes
a worldwide increase in the prices of all
commodities. Along with the rise in prices,
salaries in Slovakia also rise slightly. The job
portal Profesia.sk recorded an increase in the
offered salaries by 9% compared to previous
year. The number of job offers promising regular
wage increases is also growing [37]. This is
certainly positive for employees, as the COVID19 pandemic in Slovakia has caused pressure to
reduce salaries. Employers also limited the
provision of bonuses to their employees during
the coronavirus crisis. Currently, there is a
shortage of applicants on the labour market, so
employers, in addition to offering higher salaries
and the promise of regular salary increases, also
offer applicants various benefits. The offer of a
financial bonus for employees who recommend
a new person to the company has increased
significantly. Slovak employers are more
providing health-related benefits to employees,
the so-called sick days. Also, the share of
employees with above-standard health care,
additional
health
insurance
or
wage
compensation in case of incapacity for work is
increasing. Many employers who were forced to
reduce benefits in 2021 have already returned
these options to their employees, for example,
education, employee discounts, or company
events. Other bonuses are e.g., employee parking
spaces or drinks at the workplace for free [38].
The months with the pandemic and the everexpanding home office have also increased the
availability of flexible working hours. The
growth of the job offers of this bonus can
currently be related to high inflation and high
energy prices when the natural desire of
493
companies to save is manifested. Since during
the two years of COVID-19 pandemics they
invested in the infrastructure for employees in
their home working environment and most
people like to work partially from home,
enabling work from home saves energy in
companies.
IV.
CONCLUSION
After two years of living with the disease of
COVID-19, we can conclude that the most
significant change in the labour market in the
Slovak Republic is the strengthening of work
from home. The number of job offers with a
home office option (a few days of work per
month from home) gradually grew. There has
also been a significant increase in interest in
teleworking, what means that the employee
performs all his work from home using
telecommunication technologies and is not
required to be present at the workplace at all.
As practice during the corona crisis showed,
the work performance of employees working
from home does not necessarily have to decrease.
On the contrary, in certain cases (customer
support, IT, marketing, translation), an employee
can better concentrate on work in the privacy of
his own home. In addition, since remote work
saves time and effort for preparation and transfer
to work, the employee can devote himself to
work longer and more concentrated. Due to the
fact that in many professions employees were
forced to work from home at the beginning of the
pandemic, which involved equipping the
household with the necessary technology and
furniture, today they can make full use of this
investment. Employers, on the other hand, are
aware of the benefits of working from home for
employees, so they offer the opportunity to work
at least part of the work from home as a
convenient work benefit.
The pitfalls of working from home are
primarily the laborious organization of working
time, as well as social isolation and poor contact
with the work team. Therefore, employees do not
even require full telework, but require a partial
home office, when they can work from home on
certain days. They demand more freedom and
flexibility from employers, also in working time,
work organization and remuneration system in
the sense of a greater focus on the result than on
the time spent at work.
Although the fourth wave of the COVID-19
disease is not yet expected in Slovakia, since the
494
beginning of 2022, the war in Ukraine, which lies
immediately next to Slovakia, has been
resonating in society. During the coronavirus
crisis, many employers understood the
importance of the mental health of their
employees and strengthened their internal
communication and employee support, which
they also used in the event of the war in Ukraine.
They could thus quickly communicate their
employees ways how to help and also provide
work for people coming to Slovakia. Due to this,
soon after the outbreak of the conflict, the job
offers for Ukrainian citizens exceeded the actual
demand.
In connection with inflation and rising prices,
we can see a continuous increase in the offer of
work through telework or partial home office in
the labour market. In this case, the employee
works completely or partially from home, which
allows the company to organize work at the
workplace to achieve the greatest possible energy
savings.
Based on the above information, we can see
that employers flexibly adapted to the situation
during the coronavirus crisis, and the labour
market and the economy in the Slovak Republic
did not suffer significantly. On the other hand,
other unpleasant situations such as the military
conflict in Ukraine and the global rise in prices
created additional pressure on Slovak companies.
But as can be seen from the analysis of data on
the labour market, even in this time the
companies were able to adapt to the new situation
and used the tools they built during the pandemic
period to maintain jobs and even to increase
salaries and provide employee bonuses.
However, it is certainly necessary for companies
to continue to monitor the situation both in the
area of inflation and in the area of the COVID-19
disease and to be prepared for new problems and
challenges that will arise in the future.
ACKNOWLEDGMENT
This contribution was supported by the
project No. 1/0134/22, “Changes in consumer
behavior due to the COVID-19 pandemic with
intent to predict its development”.
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PaKSoM 2022
History of Statistical Thinking: From
Uncertainty to Uncertain
Knowledge
Jan Kalina1, Lubomír Soukup2
1
The Czech Academy of Sciences, Institute of Computer Science, Prague , Czech Republic
2
The Czech Academy of Sciences, Institute of Information Theory and Automation,
Prague, Czech Republic
1
kalina@cs.cas.cz, 2soukup@cs.cas.cz
Abstract—Currently, an enormous amount of data
is available to the humankind in various fields and
it is exactly the data (information) which may be
transferred to practically useful knowledge. The
data are subject to uncertainty and their analysis,
i.e. extracting knowledge from the data, requires
statistical thinking and statistical methods. Thus,
the concept of the knowledge society requiring
reliable knowledge to be available to all citizens is
heavily depending on statistics. This paper is
devoted to an overview of the historical
development of basic probabilistic and statistical
concepts. Such overview is intended to encourage
readers to think anew about statistical ideas in the
light of their historical development. The paper
recalls that any knowledge obtained by statistical
methods is highly probable but not absolutely
certain.
Keywords – history of statistics, information and
knowledge, uncertainty, probability, data analysis,
methodology of science
I.
INTRODUCTION
A transformation of the current society
towards to the ideals of a knowledge society has
been a subject of intensive debates as well as
research. Such discussions require to understand
the concepts of information and knowledge, and
to consider methods for acquiring knowledge
from given information, i.e. for analyzing data,
which are most commonly obtained by means of
direct measurements, within randomized
experiments, or in surveys [1,2].
The data are typically imprecise because of
errors coming from various sources, which can
ISBN: 978-86-82602-00-2
classified as instrumental errors, method errors,
personal errors, errors caused by an unsuitable
design, or random errors [3]. Therefore, the
knowledge acquired from the data is always valid
with some level of uncertainty. The data acquired
in various fields of human activities require to be
analyzed by means of tools of multivariate
statistics, machine learning, information theory,
or artificial intelligence. Specific modern tools
have to be exploited when dealing with Big Data.
The everyday (statistical) analysis of data
from various sources gradually contributes to the
shift of the whole society towards the ideals of
the knowledge society. Available books on
history of statistics are typically focused only on
specific periods of history [4], or are very
intensively devoted to historical aspects without
bringing specific conclusion for the current
situation [5]. On the other hand, this paper is
interested in a very broad overview of the history
of statistical thinking. While the history of
commonly used statistical methods has been
thoroughly
overviewed
in
specialized
monographs [6], our aim is not to write
biographies of important personalities but rather
to present a broader context of historical
development of (philosophical) thinking related
to randomness, uncertainty, and data analysis.
II. ORIGINS OF PROBABILITY THEORY
Neither Ancient Greece nor medieval Europe
were able to capture randomness and uncertainty
and to acknowledge their importance. Therefore,
they have not incorporated probability thinking
to their philosophical systems. This is true in
497
spite of the fact that randomness is also explicitly
mentioned in the biblical text, e.g. Ecclesiastes
9:11 claims that success in the world (in secular
issues) is often governed by randomness
(chance), or the limitations of our knowledge are
confessed in 1 Corinthians 13:9. Still, it is true
that modern probabilistic thinking stems from
philosophical and theological considerations;
Pascal, Bernoulli and Leibniz namely were not
only interested in mathematical aspects, but they
all devoted themselves also to theology.
Pierre de Fermat (1607-1665) and Blaise
Pascal (1623-1662) are acknowledged as
founders of probability calculus. Fermat and
Pascal attempted to answer the question raised by
the French gambler Chevalier de Méré related to
the so-called problem of division of stakes. The
problem was how to fairly divide the stake when
a hazard game is unfinished. As the very
beginning of probabilistic thinking, their
correspondence from the year 1654 is usually
considered. Even today, their correspondence is
intrepreted as a useful teaching resource [7].
Pascal’s probability computations can be
interpreted as more influential than his
construction of a calculator la Pascaline, which
is perceived as a predecessor of a modern
computer.
Fermat and Pascal had an influence on
Christian Huygens (1629-1695), who wrote the
historically first work devoted to probability
calculus. This treatise De ratiociniis in ludo
aleae (in English On the Value of Chances in
Games of Fortune) was published already in
1657 as a supplement of a book [8] published by
the professor of Huygens.
Jacob Bernoulli (1655-1705) is considered to
be the founder of probability theory as a selfstanding scientific discipline especially thank to
his masterly book Ars Conjectandi [9], which
was published after the death of the author by his
nephew Nicolaus Bernoulli (1687-1759). The
English title (The Art of Conjecturing) evokes
that Bernoulli perceives probability calculus as
the task to compute (or in fact assign) a certain
probability to different random phenomena. The
book [9] is inspired by Huygens and is largely
devoted to combinators or 0-1 trials, i.e.
Bernoulli trials or trials with only two possible
outcomes. The book was very influential after
being published and had also a direct influence
on Abraham de Moivre [10], who will be
discussed later.
498
Gottfried Wilhelm Leibniz (1646-1716) is
well known as a German mathematician,
philosopher and theologian. It is much less
known that Leibniz was interested in probability
for his whole life. Already in his dissertation
thesis, Leibniz was the first in history who
defined conditional probability. In his logical
works, he presented the very first explicit
definition of classical probability [11]. He
literally understood probability as a degree of
possibility. Further he developed philosophical
ideas about probability in communication with
Jacob Bernoulli [12]. However, Leibniz has
never contributed to developing mathematical
aspects of probability calculus.
III. ABRAHAM DE MOIVRE
Abraham
de
Moivre
(1667-1754)
investigated mathematical foundations of hazard
games and overviewed his knowledge in a very
first textbook on probability theory.
Moivre’s book Doctrine of Chances [13],
where the word “chance” correspond to the
current concept of randomness, was published in
1718 as an English extension of Moivre’s treatise
De Mensura Sortis from 1711; the English title is
known as On the Measurement of Chance. Later,
Moivre revised the book and prepared its second
edition in 1738 and then to the third (again
largely revised) in 1759. Compared to the first
edition, each of the next editions was enriched by
an improved introduction and a series of new
problems and their solutions.
The Doctrine of Chances [13] was written for
a broad lay readership of non-mathematicians. It
was in fact a practical handbook or manual for
gamblers, which was written in English and thus
become a bestseller. Moivre explained all
concepts and approaches on comprehensible
practical examples and proceeds from simple
situations to more complex ones. Already in the
introduction, Moivre presented elementary
examples allowing the readers to grasp the
concept of chance and other concepts as well as
his way of thinking. Then the book quickly
proceeds to more practical problems. This whole
book is formed by an attempt to present a
systematic review of all possible tasks from
gambling practice, and this explains why Moivre
was denoted as the new Euclid after the father of
the
axiomatic
system
in
geometry
(325-260 B.C.).
Moivre was also interested in applying
probability calculus in the analysis of mortality
data (mortality tables or death rates). Moivre was
able to perceive statistical estimation as
an inverse probabilistic problem, which is based
on estimating probabilities of a given random
event based on data observed in reality. In the
year 1733, he derived the formula for the density
of normal distribution as a special case of the
binomial distribution. Moivre’s further important
works include the book Annuities upon Lives
(1725) about computing insurance premiums for
life insurance, and Miscellanea Analytica (in
English
Miscellaneous
Problems
in
Mathematical Analysis) published in 1730,
where he is proved as an excellent expert on
mathematical analysis [14]. Moivre particularly
contributed to infitessimal calculus, theory of
infinite series, geometry, and algebra.
IV.
ORIGINS OF STATISTICAL METHODS
The first statistical tasks did not consider any
uncertainty or probability. These tasks included
censuses performed already in the ancient times,
e.g. in the Babylonian Empire around the year
3800 B.C. Statistical thinking based on
probability calculus (i.e. from the 17th century)
started to develop in three distinct areas: hazard
games, insurance, and physics. These three fields
soon started to influence each other. Mortality
tables served as a valuable source of data for
fixing the payments of life insurance. A larger
number of thinkers was devoted to the analysis
of mortality data including also the astronomer
Edmund Halley (1656-1742). We can say that
statistical estimation discussed below was
proposed for the context of analyzing
measurements [4] and only much less for
designed experiments, which evolved in
a scientific way only later.
The Bayes theorem for evaluating
conditional proabilities first appeared in
a posthumously published paper by Thomas
Bayes (1702-1761). It seems not to be much
known that estimation based on the Bayes
theorem is historically older than the frequentist
(non-Bayesian) approach to estimation. From the
beginnings, the philosophy of the Bayesian
statistical analysis of physical measurements was
to naturally combine the results of given
measurements
with
available
prior
measurements [15]. This is true for Bayesian
estimates of location and also for estimates of
variability, which allow to evaluate the
uncertainty of the point estimates.
V.
PIERRE-SIMON DE LAPLACE
Pierre-Simon de Laplace (1749-1827) was
a universal thinker, who developed statistical
ideas of Bayes and Moivre. Laplace also
overviewed the whole celestial mechanics. Thus,
astronomy served him as a valuable inspiration
source for evaluating data contaminated by
errors, just like it inspired a number of other
experts of his era who investigated measurement
errors.
Laplace perceived Bayesian probabilistic
thinking as a natural extension of mathematical
logic and common sense and greatly contributed
to the development of probability theory e.g. by
rediscovering the Bayes theorem [16]. Laplace
explained his ideas in his fundamental work
A Philosophical Essay on Probabilities. The
prior distribution corresponds in Laplace’s work
to the uncertainty.
Laplace was intensively interested in
analyzing astronomic measurements by
regression models and was aware of the harmful
effect of measurement errors. Apart from the
median, Laplace also propagated using the
regression median in the linear regression model.
Laplace obtained an explicit solution for the
regression median, which was previously
outlined by Roger Joseph Boscovich (17111787). The Laplace’s work on the distribution of
the median published in 1818 was in fact the very
first rigorous work on robust statistical
estimation.
VI.
CARL FRIEDRICH GAUSS
Carl Friedrich Gauss (1777-1855) belonged
to the pioneers of a consistent usage of
probability theory in the processing of
measurements from various fields, mainly in
astronomy, geodesy, and physics. By
investigating properties of measurement errors
and formulating the law or error propagation, he
laid foundations of the theory of errors.
Gauss had strong mathematical skills and at
the same time a rich practical experience with
measurements and his statistical work aimed at
estimating physical constants by removing
(filtering out) measurement errors from the
relevant information. He developed the
maximum likelihood estimation, which became
one of pillars of mathematical statistics. Using
the maximum likelihood method, Gauss derived
the normal distribution denoted as “the law of
errors” and considered it as a suitable model for
measurement errors. By means of a Bayesian
499
argument, Gauss also theoretically justified the
least squares estimator [17].
VII. ADOLPHE QUETELET
Adolphe Quetelet (1796-1874) was a Belgian
polymath, who worked as a professor of
astronomy and mathematics at the Royal
Military Academy in Brussels. He was an expert
both in physics and mathematics and was well
known of fascinating discoveries in physics of
the 19th century. He strived for exploiting
probability calculus in the analysis of large-scale
data in physics and also in other fields than
physics, such as in sociology, demography,
criminalistics etc. Thus he found a new field,
which was at that time denoted as social physics
or social mechanics. Quetelet became the main
exponent of the new field and thus became a
predecessor of current sociology. He was using
physical methods to the science of man. These
physical methods naturally include probability
and statistics, which both were heavily
associated with the analysis of physical
measurements [18].
Quetelet was involved in the economic
statistics. Here, the aim was focused on
collecting facts, which described the human
activities in the country or the state of the society
and its development. Such collecting data
included also comparing corresponding facts
acquired in different countries [19].
As the president of the Belgian Statistical
Office and at the same time a gifted organizer,
Quetelet actively contributed to the development
of the official state statistics. Particularly, he
introduced regular censuses every ten years
starting from 1846, and he introduced modern
questionnaries for the purpose. At the same time
he was the main initiator and organizer of
international cooperation of statisticians. The
official state statistics was subsequently
organized also in other countries following
Quetelet’s model implemented in Brussels [20].
Quetelet was the first who applied the normal
distribution to measurements related to humans,
and in a more general sense he was the first who
applied the normal distribution to different
phenomena than measurement errors. He
interpreted the normal distribution, which was at
the time denoted as the law of errors of
(Gaussian) curve of errors, as a universal
principle. He used theological arguments for
using the normal distribution for analyzing
groups of individuals [21]. Such considerations
500
always assumed a homogeneous population and
Quetelet compared an individual with the
average. Instead of measurement errors
considered by Gauss, the uncertainty in
Quetelet’s data comes from indvidual variability.
Quetelet’s anthropometric measure-ments were
performed on random samples from the entire
population. The averaged values of the measured
dimensions thus expressed the averaged
characteristics of the appearance of a typical
representative of the given population.
Quetelet enjoyed evaluating various
indicators of social phenomena aggregated over
the whole Belgium. He especially focused on
data about crime or the number of suicide deaths.
He also constructed tables of the counts of mental
diseases for various countries [21].
This led Quetelet to introduce the concept of
an average human. According to his main
work [22], such being remains only fictituous but
with ideal properties in all aspects. Quetelet’s
interpretation is different from that of Gauss,
who considered the value of a measured physical
variable to be a constant. Gauss measured
objectively existing variables and the
measurement would find the constant precisely
in the ideal situation without measurement
errors. Moreover, the variability of physical
measurements is much smaller compared to
anthropometric measurements. Quetelet was
aware that for this reason he needs to perform a
much larger number of measurements.
VIII. FRANCIS GALTON
Francis Galton (1822-1911), who is generally
acknowledged as one of the most brilliant and
universal scientists, was professor of eugenics in
London. A very extensive biography of Galton
was written by his main follower and admirer
Karl Pearson (1857-1936) [23]. Galton was
thanks to his medical education very well
prepared to study different scientific disciplines.
He was literally obsessed by performing
measurements and quantification and he devoted
much time to performing measurements or
evaluations (counting) of various phenomena.
Galton was able to extensively influence
statistics with his original ideas, even though he
has never formulated them rigorously [24]. In
fact, he did not even have a sufficient
mathematical education; he started to study
mathematics in Cambridge in 1840, but in the
third grade left the study. Only after 1869, Galton
started to become acquainted with statistics [25],
as he started to feel the necessity to apply
statistics in his research of man. Galton published
papers with original statistical approaches
immediately from the beginning of 1870s, but
presented the main ideas in a very short period
between 1885 and 1888 [25].
Galton introduced correlation analysis and
his study of correlations instead of causality
dramatically changed the European statistical
tradition. His first application of correlation
analysis was in the antropological task of
comparing the height of children with the length
of their bones [26], but he needed the method
primarily for the study of heredity [27]. When
Galton stopped his active interest in science in
1888, he left open problems in correlation
analysis to a younger generation and the current
correlation coefficient was proposed by Pearson
by only a slight modification of Galton’s original
definition [28]. Further, Galton was the first to
use the concept of regression, while his
understanding of regression is now denoted as
regression to the mean [24].
For Gaussian distribution, Galton introduced
the notion of normal curve of distributions, or
more shortly normal curve, where the world
normal is clearly related to a norm as a standard,
model, or pattern. He was the first to discover
two-dimensional
Gaussian
distribution;
nevertheless, he had to ask for help his friend
Hamilton Dickson for a correct mathematical
description [25]. Galton used the (Gaussian)
method of least squares for estimating regression
parameters [29].
In addition, Galton introduced the concepts
of percentiles (originally as centiles) and
quantiles, and also their special cases (quartiles,
deciles). In the work [30], Galton applied them to
various anthropometric dimensions measured in
his laboratory. By defining quantiles, Galton was
able to overcome the mere averaging of variables
of Quetelet (p. 293 of [31]), who was
subjectively searching for suitable limits for
normally distributed variables. Galton replaced
the concept of error by deviation from normality.
In the eugenic spirit, he perceived individuals
different from the norm to be pathologically nonnormal, i.e. deviant.
Galton at the end of his life acted as a patron
of biometry (biometrics). The aim of biometry
was to perform measurements of outwar
physiological features on living organisms
(including humans). Galton’s contribution to
statistics was distinct also because his ideas were
elaborated and popularized by the very
influential Karl Pearson, who also founded and
led the English biometric school.
In 2022, the 200th anniversary of Galton’s
birthday is recalled. Still, Galton’s work has
been very critically evaluated [32], because his
scientific attempts stemmed from eugenics. He
struggled for political power for “intellectually
superior” individuals and also understood
eugenics as an alternative to all religions.
IX. KARL PEARSON
Karl Pearson (1857-1936) studied a diverse
spectrum of scientific disciplines and was able to
achieve a series of excellent attainments and
valuable scientific results. In 1911, he founded
the first statistical department in the world; it was
the Department of Applied Statistics in London,
where he acted as professor. The department was
in fact interdisciplinary and included also
biometric and eugenic laboratories.
Pearson felt an urgent need to use statistics in
applied research tasks in antropology, evolution
biology, medicine, epidemiology, and mainly
eugenics. The boundary between statistics and
biological disciplines was very unclear at the
beginning of the 20th century. As an example, let
us mention Pearson’s concept of contingency
table [33], which is until nowadays a general
statistical term for a table of counts. Pearson
analyzed such tables when searching for
evidence of the evolution theory, which was
according to him a purely statistical problem.
Contingency was understood as a much
discussed phenomenon in evolution theory
describing
randomness,
uncertainty,
unpredictable fact jointly influencing the whole
species of organisms [34]. Therefore, also
Charles Darwin (1809-1882) in his evolution
theory made the difference between laws, which
remain in the background, and contingency,
which is revealed in details. The term
contingency table remained in statistics as one of
many statistical concepts, which obtained a
biological name.
As the founder of the journal Biometrika,
Pearson led unjustified attacks on the legacy of
Gregor Mendel (1822-1884), the founder of
genetics; Pearson namely incorrectly believed in
a continuous character of heredity. Pearson
struggled for improving biological and genetic
features of individuals, therefore predicting the
genetic predispositions (and in general predicting
under uncertainty) was interesting for him.
501
Keeping in mind the biological motivation,
Pearson laid the foundations of estimation
theory, hypothesis testing, and multivariate
statistics. He is the author of the concept of
standard deviation. He founded the whole
multivariate statistics for the needs of
anthropology [35]. In his famous chi-square test,
Pearson made a substantial mistake, which was
later corrected by Ronald A. Fisher, who is
discussed in a later section. This only escalated
the already quite tense relationship between both
scientists. For this reason, both Pearson and
Fisher laid foundations of modern statistics in a
parallel way, because each of them avoided the
methods derived by his rival [36].
X. RONALD A. FISHER
Ronald A. Fisher (1890-1962) is denoted as
the father of modern statistics [37]. Fisher has an
extraordinary credit in establishing the
foundations of modern statistics and in
developing statistical methods for biological
applications. Fisher devoted his research also to
eugenics and evolutionary biology. In the study
of genetics, he was interested in predicting the
hereditary features (under uncertainty) and was
able to understand the discrete character of
heredity.
In statistics, Fisher developed the field of
statistical point estimation by deriving properties
of maximum likelihood estimators. He
contributed to the theory of hypothesis testing by
introducing permutations tests and analysis of
variance. In multivariate statistics, his main
contribution was the proposal of linear
discriminant analysis. Further, Fisher developed
statistical principles of design of randomized
experiments. He also predecessed ideas of
information
theory
by
understanding
measurements to reduce uncertainty of a system;
in this spirit, he proposed the Fisher information
of an unknown parameter as a quantification of
the information carried in a measurement about
this parameter.
Fisher criticized Pearson’s statistical
methods and refused to use them. This can be
illustrated on Fisher’s opinion that smoking does
not cause cancer. Pearson previously published
results of a study, where the idea of smoking
causing cancer was supported by the correlation
coefficient evaluated in a medical study. Fisher
was ironically attacking the study and in
an analogous way demonstrated that the number
of apples imported to England is associated (in a
causal sense) with the number of divorces [38].
502
Naturally this interpretation was intentionally
wrong,
because
correlation
(statistical
association) does not necessarily mean that there
is a causal relationship between the two
variables.
XI. STATISTICAL THINKING: FROM THE
HISTORY TOWARDS THE KNOWLEDGE SOCIETY
Statistical thinking represents a crucial
approach for transforming available data to
useful knowledge and thus remains important
also in the current era of big or high-dimensional
data [39]. Statistical methodology is
irreplaceable in complex data analysis tasks in
natural sciences [40], clinical medicine including
molecular genetics [41] or brain research [42],
engineering, metrology [43], economics [44], or
management [45]. In all these fields, tendencies
towards using information-based principles
(based on learning knowledge from given data)
have been well known and Big Data and artificial
intelligence tools become more available thanks
to the digitalization accelerated by the COVID19 pandemic. Decision making tasks represent
an important class of problems, where statistical
thinking plays a crucial role [46].
The remarkable personalities mentioned in
this paper, who have influenced the development
of statistical thinking, much contributed to our
current scientific way of perceiving the objective
reality. Decision making based on estimating
conditional probabilities, developed by the ideas
of Leibniz, Bayes and Laplace, should be a
natural component of our decision making.
Hypothesis testing derived by Pearson,
regression modeling developed by Galton, or
decision making of Fisher are examples of
established tools, which are reliable under the
assumption of normal distribution introduced by
Moivre and popularized by Gauss. Also the
renowned computer scientist Lofti Zadeh
(1921‒2017), founder of fuzzy mathematics,
contributed to formalizing the idea that the
objective world can be hardly captured by
objective criteria. At any case, the results of
statistical analysis are influenced by the
uncertainty in the data and require their
diagnostic tools [47,48]. They are valid for
an average situation (ignoring the influence of
random errors), as pointed out by Quetelet.
This paper is intended to encourage readers
to think anew about statistical ideas and methods
and the motivation for their using in the light of
the historical context. A mere acknowledging
that everyday processes around us have a random
character seems to represent an unusual situation
or obstacle for a general lay public, because
humans seem not to be prepared by their
biological evolution to incorporate uncertainty to
their own thinking [49]. Therefore, statistics
constantly needs an intensive popularization for
a broad public to arouse a well-deserved social
interest.
XII. CONCLUSION
Whenever statistical methods are used to
acquire knowledge, it is necessary to give
a warning that such knowledge is influenced by
uncertainty, and this is why results of statistical
analysis have to be always interpreted with care.
This remains to be true also in the context of the
knowledge society, where the knowledge can be
hardly obtained from given data without
statistical methods. Thus, statistics contribues
hand in hand with other disciplines towards the
development of the knowledge society. The
Czech polymath Jan Amos Comenius
(1592-1670), who can be perceived as a
predecessor of the knowledge society, demanded
the science to be available and beneficial for the
whole humankind, and prophesied a vision of
a universal science as a light for the world
leading to a general wisdom.
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PaKSoM 2022
Impact Factor of the Rest Rewarding
Taxes
Constantinos Challoumis1
1
National and Kapodistrian University of Athens (N.K.U.A.), Athens, Greece
1
challoumis_constantinos@yahoo.com
Abstract—This paper is about the comparison of
the cycle of money with the impact factor of
rewarding taxes, and without it. This analysis is
based on the cycle of money and the impact factor
of rest rewarding taxes. This means that we have a
study about the structural characteristics of the
economy which support the market and the
robustness of this economy. Thence, the impact
factor of the rest rewarding taxes is important as
enforces the economic dynamic of any economy.
As rest rewarding taxes are considered the taxes
which return to the economy making it have more
quality characteristics. Three types of taxes boost
the economy, which is about education, health, and
these are about the structure and functionality of
the economy e.g. electronic services by the
authorities which decline the bureaucracy, etc.
Then, we extract conclusions about the importance
of this impact factor. The current analysis is used
the Q.E. method.
Keywords - rest rewarding taxes, cycle of money
I.
INTRODUCTION
This paper analyzes the case of the cycle of
money with and without all the impact factors of
rewarding taxes. Then, in this scrutiny in one
case is used the impact factor of the rest
rewarding taxes is and in the other case is
avoided. Then, using the Q.E. method extracted
conclusions, about the importance of this impact
factor in the economy. Moreover, this impact
factor is about the administration of the public
sector to the private sector and the returns of
taxes to the market. Additionally should be
mentioned that any other rewarding taxes are
excluded from this study to estimate the utility of
this factor.
ISBN: 978-86-82602-00-2
II.
MAIN INNOVATIONS OF BASEL 3.1
The contracts and the agreements between
the participants of control transactions are these
which determine the allocation of profits and
losses. The agreements should mention the
changes in the contracts. This is the reason why
the tax authorities should make periodic
inspections. The periodic specification of
contracts is important for the comparability
analysis. These periodic inspections of the
companies which participate in controlled
transactions are crucial for the arm’s length
principle. Then, the determination of the costsharing depends on the periodic check of
companies that are tested parties. The scope of
the companies of controlled transactions is to
face the issues that relate to the taxation of their
activities. Therefrom, the requirements for the
companies of controlled transactions with the tax
authorities should be in the range of the arm’s
length principle. Thereupon, the appropriate
agreement of the companies of controlled
transactions is that which permits them the
maximization of their profits in tax environments
with a low tax rate, and the maximization of costs
in economic environments with a high tax
rate [1-11].
Moreover, should be notified that the
companies of controlled transactions and the
same time the inspections of tax authorities are
done under the condition of proportional
adjustments [4]. The interpretation of the
condition of the proportional adjustments is that
the companies which participate in controlled
transactions many times don’t have the
appropriate data and uncontrolled transactions of
similar circumstances to compare and therefore
they proportionally adjust their data [3,20-35].
This means that if the companies which are tested
505
parties conclude that the profits and losses of
companies from uncontrolled transactions are
much higher or much fewer then they make a
proportional analogy to compare them with their
data.
of profits and losses. Moreover, j1 is a coefficient
for the rate of taxes [36-43]. Then, author in [8]
shows the case of the arm’s length principle. In
addition the case of the fixed length principle:
The production of goods or services creates
profits and costs for the companies. Based on the
prior scrutiny we have that:
u s z f z d
(1)
z z 1
(2)
The symbol u is about the impact factor of the
comparability analysis which has any method to
the s. The symbol z is a coefficient that takes
values between 0 and 1. What value could
receive is determined by the influence of the
method (using the best method rule) on the s. The
symbol of f is about the cost which comes up
from the production of goods, and the symbol of
d is about the cost which comes from the
distribution of the goods.
According to (1) and (2) is plausible to
determine the following:
uc z f z d
(3)
b p uc j1
(4)
The symbol of b is about the amount of taxes
that should pay the companies of controlled
transactions in the application of the arm’s length
principle. The uc is the amount of money for tax
obligations that can avoid through the allocations
v p j2
The symbol of v shows the taxes that should
pay the enterprises of controlled transactions in
the application of the fixed-length principle.
Then, j2 is a coefficient for the rate of taxes in the
case of the fixed length principle. Thereupon, we
conclude according to the prior theory that:
v b
(6)
The tax for the companies which participate
in controlled transactions of transfer pricing in
the case of the fixed length principle is higher or
at least equal to that of the case of the arm’s
length principle.
Thereupon, with the fixed length principle
the enterprises of controlled transactions can
tackle issues that come from the allocation of
profits and losses . Thence, the tax authorities can
face the transfer pricing effects on the global tax
revenue.
The fixed length principle permits the
recovery of the tax losses of the global tax
revenue from the controlled transactions of the
transfer pricing. The next scheme has illustrated
the procedure that companies of controlled
transactions follow for their allocations of profits
and losses, the proportional adjustments of data,
and the fixed length principle [4,12-19]. Thence,
we have that:
Best method rule
Comparability analysis
Fixed length principle
Theoretical background
Generator
Results, graphs and
conclusions
Figure 1. Cost sharing and application of fixed length principle.
506
(5)
It is determined the procedure of the fixed
length principle and its quantity analysis for the
determination of the behavior of the model. The
next section has presented the theory of the cycle
of money. Moreover, the methodology which
followed stands on the Q.E. method.
III.
THE CYCLE OF MONEY AND THE IDEAL
CASE OF THE CYCLE OF MONEY
For the scope of this analysis below are
demonstrated:
s t or 1 v t
(7)
xm m a
(8)
m p
(9)
i
n
(10)
i 0
m
p p
(11)
cm dxm dm
(12)
c dx d
(13)
cy cm c
(14)
j 0
j
The variable of α has symbolized the case of
the escaped savings. This means that we have
savings that are not returning to the economy or
come back after a long-term period. The variable
of αs symbolizes the case that we have escaped
savings that come from transfer pricing
activities. The variable of αt it symbolizes the
case that we have escaped savings not from
transfer pricing activities but from any other
commercial activity. For instance, αt could refer
to the commercial activities which come from
uncontrolled transactions [43]. The variable of m
symbolizes the financial liquidity in an economy.
The variable of μ symbolizes the consumption in
an economy. The variable of αp symbolizes the
enforcement savings, which come from the
citizens and small and medium-sized enterprises.
The variable of xm symbolizes the condition of
financial liquidity in an economy. The variable
of cm symbolizes the velocity of financial
liquidity increases or decreases [17]. The
variable of cα symbolizes the velocity of escaped
savings. Therefore, the variable of cy symbolizes
the term the cycle of money. Thereupon, the
cycle of money shows the level of the dynamic
of an economy and its robustness [8,44-51].
Then, we have the following basic principles
about the cycle of money:
The citizens, the small and the middle-sized
enterprises substitute the services and the
property of the companies which save their
money and do not invest them or consume it
proportionally in the economy. Thereupon, the
companies of the controlled transactions are the
main cause of the escape savings.
The escaped savings are responsible for the
decline of the economic dynamic of the
economy. The key point of escape savings is that
the companies of controlled transactions of
transfer pricing are responsible for not reenter of
this amount of money in the market. This
situation causes a lack of financial liquidity in an
economy.
The substitution of controlled transactions is
not substituted from the citizens and the small
and middle size companies when there is not
plausible to offer the same added value to the
products and the services. This case happens
especially in the instance of factories, research
centers, etc. Therefrom, these cases in the
appropriate tax policy should be taxed as
uncontrolled transactions independently if they
participate in controlled transactions (using the
fixed length principle).
The enforcement savings are responsible for
the high economic dynamic of the economy. The
velocity of financial liquidity shows how rapidly
the economy's robustness grows or declines
accordingly. Then is an index for how well
structured any economy is.
The velocity of escaped savings shows how
rapidly the non-return savings are lost from the
market, or by the lack of investments, or by the
lack of consumption. The cycle of money
represents the condition of the economy. The
level of a well-structured tax system, and in
general the dynamic of the economy.
Controlled transactions in the theory of the
cycle of money are considered not only the cases
of transfer pricing, but any kind of administration
of profits and losses to avoid taxation.
Uncontrolled transactions in the theory of the
cycle of money are the case of the commercial
507
activity of citizens, small and medium-sized
enterprises, factories, research centers, and any
kind of commercial activity that cannot substitute
by the companies of controlled transactions. The
fixed length principle tackles issues subjects like
the case cycle of money. But, this doesn’t mean
that restriction must apply the fixed length
principle as the cycle of money is more widely
theory which exceeds the transfer pricing scope.
Therefrom, we obtain that the cycle of money
grows when there is a tax system like the case of
the fixed length principle which permits the low
taxation of uncontrolled transactions and the
higher taxation of controlled.
Moreover, there are three basic impact
factors of rewarding taxes. The rewarding taxes
are the only taxes that have an immediate and
important role in the market of any economy.
These factors are affiliated with education, with
the health system of each society, and with the
rest relevant structural economic factors of the
prior two impact factors. This issue is illustrated
in the next scheme:
Return to market
Fixed length principle
Cycle of
money
v≥b
Enforcement
savings
Rewarding
taxes
Lost from market
Escaping savings
Rest rewarding
taxes
education
health
Figure 2. The cycle of money with rewarding taxes.
Return to market
Fixed length principle
Cycle of
money
v≥b
Lost from market
Enforcement
savings
Rewarding
taxes
Escaping savings
Rest rewarding
taxes
Figure 3. The cycle of money only with the impact factor of rest rewarding taxes.
The tax system is included all the tax factors
and all the rewarding tax factors.
It is concluded from the previous scheme that
we have the case of only one impact factor,
which is about the rest rewarding taxes.
Therefore, it can proceed to mathematical and
quantity analysis of the cycle of money in the
case of rewarding taxes.
508
IV. DEFINITION AND MATHEMATICAL
APPROACH OF THE CYCLE OF MONEY WITH AND
WITHOUT THE IMPACT FACTOR OF THE REST
REWARDING TAXES
For the mathematical approach to the cycle of
money we use the prior subject to the next
conditions which are about the rewarding taxes:
p r n hn m hm
(15)
r n hn m hm
(16)
Some impact factors, which are ap which is
also demonstrated in (15), moreover the
variables αr, αn, hn, αm, and hm. The variable αr
symbolizes the impact factor of the rest
rewarding taxes. The symbol of αn is the impact
factor of education and any technical knowledge.
The symbol of αm is about the impact factor of
health anything relevant and supportive of this
issue. The symbol of hn, and the hm, are the
coefficients of the education and the health
impact factor accordingly. Therefore, we use (1)
to (10) and the next table for the coefficients of
the values of the cycle of money with and
without some impact factors of the rewarding
taxes. Then, we have that:
TABLE I.
COMPILING COEFFICIENTS.
Factors
Values
Values
αs
αt
μ
αr
αn*hn
αm*hm
0.6
0.7
0.9
0.4
-
0.6
0.7
0.9
-
The generator of this procedure used the
coefficients which appeared in the previous
table. Therefrom, the factors have an upper limit
of 1, and a lower limit of 0, but s and s ̃ are
plausible to receive values greater than one as
their mathematical structure allows this. After
461 iterations extracted the following diagram:
Figure 4. Comparison of the cycle of money with and
without the impact factor of rest rewarding taxes.
In the previous scheme, an economy with
structural problems has a lower cycle of money,
showing that the distribution of money is lower.
Therefore, this economy would have lower
consumption and lower investments.
V.
CONCLUSION
It is concluded that an economy with
structural problems has a lower economic
dynamic, in contradiction with an economy
without this problem. This means that the taxes
of this economy are not returned to the market.
Thence, the consumption and the investments of
this economy would be lower. Then, an economy
without taxes will be in a lower dynamic than an
economy that has the rest rewarding taxes. This
means that as most taxes have a negative impact
on the economy the rest rewarding taxes have a
positive effect on the economy, as they return to
the economy, for consumption and investments.
This is the difference in general between the
three rewarding taxes (rest-structural taxes,
education taxes, and health taxes), and the taxes.
This analysis showed that the case of the rest
(structural) rewarding taxes helps the economy.
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APPENDIX
A paradigm, and the general concept of the
program:
as=0; at=0; xm=0; m=0; m1=0; ap=0; cm=0;
ca=0; cy=0; t=0;
while t<10
t=t+1;
if rand()<9
as=0.6*rand();
end
if rand()<9
at=0.7*rand();
end
if rand()<9
m1=0.9*rand();
end
if rand()<9
ap=0.8*rand();
end
am=0.2;
a=(1-am)+as+at;
m=m1+ap+am;
xm=m-a;
cm=xm/a;
ca=xm/m;
cy=cm-ca;
tab=[a,xm,m,cm,ca,cy;tab];
end
511
512
PaKSoM 2022
Innovative Management based on
the Application of Internal Audit in
the Public Sector of the Republic of
Serbia
Jelena Vitomir1, Sonja Tomas-Miskin2, Goran Vitomir3, Slobodan Popović4
1
Megatrend University in Belgrade, Belgrade, Serbia
2
Belgrade Banking Academy, Belgrade, Serbia
3
Nova Banka A.D., Banja Luka, Bosna and Hercegovina
4
Faculty of Economics and Industrial Management in Novi Sad, Novi Sad, Serbia
1
jelena.vitomir1@gmail.com, 2sonjat984@gmail.com, 3g.vitomir85@gmail.com,
4
slobodan.popovic49@gmail.com
Abstract—Innovative management based on the real
application of internal audit is gaining more and more
importance within the functioning of a large number
of heterogeneous companies. One of the most
important segments of management is represented by
public companies that, as part of management in the
public sector of the Republic of Serbia, are
increasingly introducing some of the innovative forms
of management into their regular operations. One of
the ways of realistic observation of management is the
implementation of internal audit in the regular
operations of public companies in the Republic of
Serbia. The goal of the implementation of internal
audit in the regular operations of public companies is
to ensure the security of operations in all segments, all
sectors and parts of the public company that
introduced internal audit in regular operations.
Internal audit work is carried out by highly
professional personnel, who must be continuously
educated and perfected so that the consequences of
their activities are realistically visible to the top
management of a public company.
Keywords - innovative management, internal audit.
I.
INTRODUCTION
Innovative management based on the real
application of internal audit is gaining more and
more importance within the functioning of a
large number of public companies in the
Republic of Serbia. One of the ways to improve
ISBN: 978-86-82602-00-2
the overall operations of public companies is the
decision of the top management to introduce an
internal audit into their regular operations. It is a
strategic decision introduced with the aim of
improving the general level of management and
business security of public companies operating
within the public sector through the application
of internal audit.
The existence of strategic planning in the
business of public enterprises is one of the right
answers to the existence of a real crisis. As part
of such an observation, it is necessary to pay
attention to the real functioning of financial
institutions and banks, in addition to the
functioning of the public sector, because it is an
inseparable part of the functioning of the
economic system, which top management should
pay attention to in their real operations. In this
way, the business itself becomes more
economically realistic and essentially adapted to
the conditions prevailing in the environment of
the public sector and commercial banks.
Essential business operations require the
application of internal audit as a control
mechanism, through the application of which the
functioning of a large number of heterogeneous
legal entities in one country can be improved.
Such an observation comes to a great expression
in the conditions of economic crisis, war events,
natural disasters, etc.
513
Business in the public sector of the Republic
of Serbia managed by the top management
should be seen as real management in which the
real value and solvency of the capital is to be
preserved and that over a long period of time.
One of the ways to improve management is the
system of introducing internal audits into regular
business, which is of particular importance in
business in conditions of economic crisis,
breakdowns in the economy, the existence of
losses on global markets, the existence of war
events, lack of raw materials, rising prices of raw
materials, public business sectors and public
companies that are dominant in the economy
when it comes to meeting the public needs of the
population, etc.
The development of the public sector in the
Republic of Serbia is essentially measured by the
existence of real results of the public sector's
operations, and this observation should not be in
the short term but in a longer period of time.
Essentially, the top management as well as the
state should ensure the real growth of
management functions in the public sector,
which is associated with the existence of
numerous risks, and the application of internal
audit should prevent the occurrence of
manipulations in the management of the
mentioned companies.
The processes in which a public enterprise
can be found as well as the business situations in
which the entire public sector operates are
connected with the real existence of risks at all
levels of business [1-5], both in the public sector
and in the relations between the public sector and
the real economy.
The overall observation of making valid
business decisions of top management in the
public sector in the conditions of continuous
economic and financial crisis [6-9] is connected
with the existence and detection of public sector
business risks. In such conditions, the public
sector operates and it essentially strives to
develop, and internal audit can help it in this real
operation
if
it
is
significantly
implemented [10-11].
Such, that is, the realistic approach of top
management in the business of public companies
cannot be viewed separately from the
establishment of all control functions [12-15].
514
II. THE EXISTENCE OF RISIKS IN THE
ECONOMIC ENVIRONMENT OF THE PUBLIC
SECTOR IN THE REPUBLIC OF SERBIA
The risk of insolvency of the economic
collapse of public companies, the relation of the
financial environment, which is measured by the
activities of commercial banks, is most often
expressed in three forms, where each
qualification of insolvency contains a
description of the relationship between
insolvency (solvency) and losses.
Thus, a commercial bank can be:
1) solvent and without losses,
2) solvent with a loss, and
3) insolvent with a loss.
The presentation of the economic
environment of the public sector is given in
Table I.
TABLE I.
ELEMENTS OF THE SOLVENCY BALANCE
SHEET OF A COMMERCIAL BANK M REQUIREMENTS TO
SEEDLINGS.
Current reserves and
non-profit assets
Deposits and other
liabilities
Profitable assets
Share capital of the bank
III. BALANCE SHEET AND BUSINESS OF
COMMERCIAL BANKS WHICH ARE THE
ECONOMIC ENVIRONMENT OF THE PUBLIC
SECTOR
Balancing and operations of commercial
banks is one of the important activities that is
continuously carried out by the bank's top
management.
At the same time, it should be noted that the
top management of a bank that wants to do
business with the public sector should introduce
controls within its operations, and it should also
be said that the public sector introduces controls
and audits in its operations, all with the aim of
achieving optimal business results.
The presentation of the economic
development of public enterprises is given in the
form of Table II.
TABLE II.
ELEMENTS OF THE LOSS AND SOLVENCY
BALANCE SHEET OF A COMMERCIAL BANK
Assets
Passive
Current reserves and non
profit assets
Share capital of the bank
Profitable assets
Bank loss
Deposits and other
liabillities
IV.
FORMATION OF WORK FLOW AND
FUNCTIONONINF OF INTERNAL AUDIT IN THE
PUBLIC SECTOR OF THE REPUBLIC OF SREBIA
The managerial effects of top management in
the functioning of the public sector in the
Republic of Serbia should be aimed at realizing
the effects of general management in public
enterprises.
Then all management functions in public
enterprises can be improved in a real and
essential way, so the effects of management
decisions are visible in a short time after the
general decision to implement internal audit in
the real operations of the public enterprise.
The authors presented a possible overview of
internal audit activities in the real functioning of
the public sector in the Republic of Serbia by
presenting the most frequently observed steps in
the application of internal audit.
audit planning,
determining control objectives,
weakness identification system in the
company,
identification of internal control,
assessment control,
test,
conclusion, and
internal auditor's report.
V. APPLICATION OF A CLEAR BUSINESS
DECISION IN TOP MANAGEMENT DECISIONMAKING
The importance of making a rational
business decision by the top management in
public companies should be seen as one of the
important jobs that it performs as a permanent
process and permanent management activity in
the company.
The process of rational business decisionmaking is of particular importance for the
functioning and operations of companies that
perform their majority of business in public
activities where the needs of a wide range of the
population are met.
Public service can be seen as an activity that
does not have a particularly emphasized
requirement for making a profit compared to
other profit-making activities that depend on the
great influence of factors such as the demands of
capital owners, shareholders, banks, etc.
The authors emphasize that the process of
making a rational business decision begins with
the adoption of a valid management decision by
the top management, and what the authors
emphasize in this paper is the fact that these
decisions must have a built-in level of control
that can be achieved in different ways, and the
way that is shown in this work is the application
of internal audit in the operations of the public
sector of the Republic of Serbia.
The implementation of a valid business
decision in all parts of the company is of great
importance to be implemented immediately
because any delay in its implementation costs
the public company, but also the users of public
funds, the taxpayers who, in the final sense,
founded the public company to do the work for
their account and needs public work, i.e. work of
public importance.
In the work of internal audit, a whole series
of auxiliary means helps, and the authors point
out that the application of the achievements of
the IT sector in a public company can help in
faster implementation and making of valid
business decisions of the top management.
Therefore, the application of IT techniques
and software solutions can improve the
management of the public sector in the Republic
of Serbia in the short term.
An innovative way of management includes,
among other things, management in some nonstandard situations, such as for example:
management in conditions of an almost declared
pandemic, in conditions of crisis action (such as
emergency
situations,
expected
war
events, etc.).
All this imposes the need to turn
management functions by those who make
management decisions that are essentially nonstandard management decisions. In such
circumstances, innovative managers are more
difficult to come to the fore because they tend to
introduce a whole set of innovations that are
515
important for management in heterogeneous
companies.
Innovations in the management of various
spheres of social life become a significant lever
for the successful long-term development of the
business of very heterogeneous legal entities in
one economy. At the same time, innovation
should be seen as one of the main resources for
creating added value in the economy of a
country, but also as a state in which management
using an innovative approach implies the
application of greater control in the management
of legal entities. Precisely because of the facts
presented in this paper, the authors emphasized
the importance of management, which implied
the application of internal audit with the aim of
reducing the general risk in management.
Such application can substantially improve
the management functions of top management
and give positive results in a very short time. The
situation at the global level of management
requires that a very large number of
heterogeneous legal entities, primarily due to the
changed global circumstances, each decide in
their own way to introduce a greater number of
innovations. In this paper, the authors highlight
the use of a control mechanism by applying
internal audit, because in this way, overall
business risks are reduced in the short term, and
in such innovations, the application of internal
audit means an improvement in overall
management.
Questions of how to achieve innovations,
how to introduce them in the business of
management in legal entities is a process to
which no one has a unique and universal answer.
This paper indicates a real possibility of
management that can be improved by an
innovative approach using internal audit. The
work of internal auditors is reflected in the
writing of the audit report. They give
recommendations that top management can
adopt or not.
The authors of the paper emphasize the
importance of accepting the internal auditor's
recommendations, because their application can
significantly improve overall management,
which was the goal of drawing attention to this
essentially innovative approach.
VI.
It is a continuous activity of internal auditors
as well as top management in the business of the
public sector in the Republic of Serbia. In
addition to the prominent importance of risk
assessment, top management should also
consider the bad business decisions it had in the
previous period, then the existence of losses
shown in the financial statements, as well as the
current existence of illiquidity in the work of the
public company managed by top management.
The author's contribution is essentially
emphasizing
the
importance
of
the
implementation of internal audit within the
framework of the existence of control
mechanisms, which he introduces into regular
business with the aim of reducing the negativity
of business.
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[3]
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[5]
CONCLUSION
Management in public companies in the
Republic of Serbia is associated with the
516
existence of a large number of risks. Reducing
business risk is a real activity that every top
management strives for, including the top
management of a public company. In order to
reduce the risk to the overall operations of the
public company, the top management introduces
a number of controls. In this paper, the authors
presented the flow of internal audit as a model
of internal audit implementation that contains
most of the steps that internal auditors must
fulfill in their work.
[6]
Vitomir, J., Popović, S., Tomas-Miskin, S. (2022).
Macro-economic
respect
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production of healthy safe food, In Proceedings, 26
International Eco-Conference and 12 Safe Food, Novi
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Arnautović, I., Davidov, T., Nastić, S., & Popović, S.
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of top management in an agricultural company that
uses the practical application of new approaches to
software solutions in the it sector in the Republic of
Serbia. Poljoprivredna tehnika, 47(2), 51-57.
Tomas-Miskin, S. (2021). Financial crisis and its
general impact on developments within the banking
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a public company with predominantly agricultural
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Internal Control Audit Quality—Evidence from
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[9] Popović, S., Majstorović, A., Grublješić Ž. (2015).
Valuation of facilities in use and application of
international accounting standards, Аctual problems of
economics, 3(165), 379-387.
[10] Popović, S., Novaković, S., Đuranović, D., Mijić, R.,
Grublješić, Ž, Aničić, J., Majstorović, A. (2017):
Application of international accounting standard-16 in
a public company with predominantly agricultural
activities. Economic Research - Ekonomska
Istraživanja, 30(1), 1850-1864.
[11] Radović, M., Vitomir, J., Laban B., Jovin, S., Nastić
S., Popović, V., Popović, S. (2019). Management of
joint-stock companies and farms by using fair value of
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example of IMT 533 tractor, Economics of Agriculture,
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agricultural enterprises and individual farms in relation
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Movement of Novi Sad...
517
518
PaKSoM 2022
Features of Preschoolers’ Use of Digital
Media: New Socio-Cultural Context
Rubtsova Olga1, Klopotova Ekaterina2, Smirnova Svetlana3, Sorokova Marina4
1,2,3,4
1
Moscow State University of Psychology & Education, Moscow, Russia
ovrubsova@mail.ru, 2klopotova@yandex.ru, 3smirnovasy@mgppu.ru, 4sorokovamg@mgppu.ru
Keywords
Information revolution, digital media (devices),
preschool age, social situation of development
Summary
Under the IV Information Revolution,
children get introduced to gadgets extremely
early and their daily screen time is steadily
increasing. The mediators between the child and
digital technologies are parents. Therefore, it is
parents’ responsibility to convey to the child the
cultural way of using an object - a digital
device/gadget.
However,
many
parents
experience serious difficulties in organizing their
children’s interaction with gadgets. Despite the
importance of the problem, the research, devoted
to various aspects of preschoolers’ use of
technologies, is still rather scarce. The relevance
of such research is due to the need of
constructing efficient means of child-adult
cooperation, mediated by new digital signs.
In 2022 Moscow State University of
Psychology and Education (Moscow, Russia)
launched a research project, aimed at revealing
the peculiarities of the social situation of
development (L.S. Vygotsky) of contemporary
preschoolers under the digital transformation.
The project included an empirical study,
focusing on parents’ position in relation to
preschoolers’ use of digital media, that was
conducted by the “Center for Interdisciplinary
Research of Contemporary Childhood”
(childresearch.ru).
In the framework of the study a questionnaire
“Child-Adult Interactions Under the Digital
Transformation”, which included 19 questions,
was elaborated. The data was collected in
different social networks via a Google-form. The
ISBN: 978-86-82602-00-2
study sample included 6376 parents of children
aged from 2 to 7 years old (from the Russian
Federation). Quantitative analysis of the data
was conducted by the means of descriptive
statistics, while calculations were made in
SPSS V23.
The empirical data revealed some tendencies
in the use of digital devices by contemporary
Russian
preschoolers.
First,
Russian
preschoolers more often get access to “adult”
devices, such as smartphones, computers, or
tablets, rather than to gadgets, specifically
designed for children (IoToys, books with QRcodes). The data also showed, that, while
providing access to gadgets, parents of
preschoolers expect a developmental and
educational effect. However, while organizing
their children’s interaction with gadgets, most
parents rely on the child’s preferences and their
own curiosity, rather than on professional
recommendations.
The controversy stresses the importance of
elaborating guidelines for parents of
preschoolers, which could be used for organizing
children’s daily interactions with digital media.
The aim of the guidelines is not just to introduce
screen time norms, but rather to inform parents
about the most efficient ways of constructing
developing environments, mediated by new
digital tools.
References
[1]
[2]
Klopotova E.E., Kuznetsova T.Yu. (2017). The use of
«serious gaming» in educational work with children.
Journal of Modern Foreign Psychology, 6(4), 41-45.
Klopotova E.E., Smirnova S.Y., Rubtsova O.V.,
Sorokova M.G. (2022). Accessibility of Digital
Devices to Preschool Children: Differences in Parents’
Positions. Counseling Psychology and Psychotherapy,
30(2), 109-125.
519
[3]
[4]
520
Rubtsova O.V. (2019). Digital Media as a New Means
of Mediation (Part One). Cultural-Historical
Psychology, 15(3), 117-124.
Rubtsova O.V. (2019). Digital Media as a New Means
of Mediation (Part Two). Cultural-Historical
Psychology, 15(4), 100-108.
[5]
[6]
Smirnova E.O., Matushkina N.Y., Smirnova S.Y.
Virtual Reality in Early and Preschool Childhood.
Psychological Science and Education, 23(3), 42–53.
Smirnova S.Y., Klopotova E.E., Rubtsova O.V.,
Sorokova M.G. (2022). Features of Preschoolers’ Use
of Digital Media: New Socio-Cultural Context. Social
Psychology and Society, 13(2), 177-193.
PaKSoM 2022
Training Pre-service Teachers for
using Educational Software in Order
to Improve the Quality of the
Mathematics Teaching in Primary
Education
Radoslav Božić1, Ivica Nikolić2, Violeta Petković3
1,2,3
Faculty of Pedagogy, Educons University, Sremska Kamenica, Novi Sad, Serbia
1
radoslav.bozic@gmail.com, 2profilov@gmail.com, 3violeta.petkovic@gmail.com
Keywords
Educational
visualization
software,
mathematics,
Summary
The application of mathematics is present in
different disciplines and that is one of the most
important reasons for the significance of the
mathematics education at all levels of education.
However, a prerequisite for the successful study
of mathematical contents in secondary and
higher levels of education is the acquisition of
basic mathematical concepts and their properties,
which is being realized during the primary
education [1]. Bearing in mind the foregoing, the
teachers in primary education have a very
important, but not easy task – to introduce the
students into elementary mathematical concepts,
without defining them [2].
However, the teachers face the numerous
challenges
in
presenting
elementary
mathematical concepts and guiding the students
through the learning process [2-4]. One of the
most common challenges is presenting the
geometric concepts, as well as introducing the
students with the properties of the geometric
objects [2]. For a successful analysis of the
geometric object properties, an adequate
visualization is necessary. In order to visualize
geometric objects, the teachers usually use
ISBN: 978-86-82602-00-2
sketches and 3D models, which can be very
helpful [5].
With the development of the mathematical
software, new possibilities in visualization of the
geometric contents have appeared. One of the
most commonly used educational software,
adequate for the visualization of geometric
object, but also for work with different
mathematical contents, is GeoGebra. This
software is free and easy to use, which enable the
students in primary education to use it, with the
help of the teacher [5-7]. Visualization of the
geometric contents can be realized if this
software is used by a teacher, for presenting the
contents to the students, but, using the software
by the students (to the extent that this is possible)
contributes to greater students’ engagement and
the
development
of
their
digital
competencies [8].
For the successful application of this
software in teaching and learning mathematics, it
is necessary for the teacher to be well trained in
using this software. At the Faculty of Pedagogy,
Educons University, pre-service teachers are
being trained in using this software within the
course of Mathematics teaching methodology.
This training includes the methodology approach
in working with the primary school students
within the GeoGebra software environment. The
teachers must be very careful in using the
software at this level of education, in terms of the
521
contents and the task selection, but also in terms
of students’ working within the software
environment [9].
If used appropriately, taking into account the
age of the students, GeoGebra software can help
students to observe geometric objects in different
ways and, also, to analyze the properties of the
observed objects and the similarities, differences
and connections between the different objects.
The practice, but also the numerous research, has
shown that the use of this, or similar
mathematical software, with the students in
secondary or higher education, have significant
benefits in terms of the students’ achievements
in learning different mathematical contents
[5,6,10]. It can be expected that the use of this
kind of software can contribute to the primary
school students’ better achievements in learning
mathematical contents, with the accent on the
geometric contents.
References
[1]
522
Božić, R., Hasić, A., Jovanova, B. and Romano, D. A.
(2018). Geometrics Objects in the Final Grade of
Middle Schools in B&H, Croatia, Macedonia,
Montenegro, Serbia, and Turkey and Students' Progress
of Geometrical Thinking which their Mathematical
Curricula Enable. IMVI Open Mathematical
Educational Notes, 8(2), 47-59.
[2]
Dunphy, E. (2009). Early childhood mathematics
teaching: Challenges, difficulties and priorities of
teachers of young children in primary schools in
Ireland. International Journal of Early Years
Education, 17(1), 3-16.
[3] Ambrose, R. (2014). Initiating Change in Prospective
Elementary School Teachers' Orientations to
Mathematics Teaching by Building on Beliefs. Journal
of Mathematics Teacher Education, 7, 91–119.
[4] Shriki, A., & Patkin, D. (2016). Elementary school
mathematics teachers’ perception of their professional
needs. Teacher development, 20(3), 329-347.
[5] Korenova, L. (2017). GeoGebra in Teaching of Primary
School Mathematics. International Journal for
Technology in Mathematics Education, 24(3), 155-160.
[6] Božić, R., Takači, Đ. & Stankov, G. (2019). Influence
of dynamic software environment on students’
achievement of learning functions with parameters.
Interactive Learning Environments, 29(4), 655-669.
[7] Zilinskiene, I. (2014). Use of GeoGebra in primary
math education: a theoretical approach. Lietvous
Mathematikos Rinkinys, 55, 73-78.
[8] Božić, R. (2019). The application of modern technology
in teaching and learning stereometry. In: Mathematical
Society of Serbia - Scientific conference “Research in
Mathematics Education” Proceedings, Belgrade,
Serbia.
[9] Polly, D. (2014). Elementary School Teachers’ Use of
Technology During Mathematics Teaching. Computers
in the Schools, 31:4, 271-292.
[10] Zilinskiene, I., & Demirbilek, M. (2015). Use of
GeoGebra in Primary Math Education in Lithuania: An
Exploratory Study from Teachers' Perspective.
Informatics in Education, 14(1), 127-142.
PaKSoM 2022
Organizations of the Planetary
Civilization: Change between the
Organization of 2022 and 2092
Sergey Ivanov1
1
Department of Management, School of Business and Public Administration, University of
the District of Columbia, Washington, DC 20008, U.S.A.
1
sivanov@udc.edu
Keywords
Organizations,
planetary
civilization,
management hierarchy, leadership
Summary
The world of today is vastly different from
the one 150 years ago. The organization of 1800
was fundamentally different then the
organization of today. If one were to look at
organizations, one would have noticed great
fundamental changes [1].
Today, Musk (2021), Bezos (2018), and
others state that the humanity may only have a
short window to become a multi-planetary
species for the survival of the human race. Musk
(2021) argues that the growth of the population
is one of the keys, as does Bezos (2018)
envisioning trillions of human beings populating
the Solar System.
Others, on the other hand, such as Chomsky
(2022), Atomic Scientists (2022), warn that
humanity may have soon reached the point of a
complete destruction of the organized human life
on Earth, citing the dangers of a possible nuclear
war, environment, and other global humancreated troubles. Even Musk’s father (2022)
admits that Elon Musk thinks he is behind, and
should have been at today’s point five-years ago,
discussing Tesla and SpaceX’s Mars-ambitions.
Discussing a 1-million city on Mars, Musk
(2021) goes further and suggest direct
democracy, instead of today’s quasi-unknown
societal structure, that has its democratic aspects,
ISBN: 978-86-82602-00-2
but is also filled with totalitarian structures in
organizations.
Each developmental shift in the civilization
warrants different structure of the organization
and society. Another shift is rapidly approaching.
The organization and society of 2092 will
fundamentally change again, and will be
drastically different from the organization of
today, filled with new challenges and
opportunities.
Acknowledgement
I am grateful to many intellectual and moral
giants of thought and humanity with whom I
have been so privileged to meet and work,
including such incredible individuals, Professors
and Drs. Makhlouf, Carson, Jaques, Harvey, and
many others who have contributed to my growth
to begin discussing some areas of significance to
organizations and possibly societies. I am also
grateful to the community and comradeship of
the University of the District of Columbia, in
Washington DC, USA, and its absolutely
amazing students, faculty, and members of the
administration.
References
[1]
[2]
Reagan, M. D. (1979). The Visible Hand: The
Managerial Revolution in American Business. By
Alfred D. ChandlerJr.,(Cambridge, Mass.: Harvard
University Press, 1977). American Political Science
Review, 73(2), 580-581.
Deming, W. E. (1994). The New Economics: for
industry, government, education. Cambridge, MA:
MIT/CAES Press.
523
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[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
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[15]
524
Deming, W. E. (1992). Out of the Crisis. Cambridge,
MA: Massachusetts Institute of Technology.
Harvey, J. B. (1988). The Abilene paradox and other
meditations on management. Jossey-Bass.
Ivanov, S. (2011). Why Organizations Fail: A
Conversation about American Competitiveness.
International Journal of Organizational Innovation,
4(1).
Ivanov, S. (2013). Defects in modern organizations:
Field findings and discovery. International Journal of
Innovation, Management and Technology, 4(2), 204.
Ivanov, S. (2015). Exposing myths of modern
management: Innovation–identifying the problem.
Journal of Leadership and Management, 1(3).
Ivanov, S. (2015). Exposing myths of modern
management: Innovation–exploring a solution. Journal
of Leadership and Management, 2(4).
Ivanov, S. (2015). The work of associations: A hidden
dimension
of
all
managerial
hierarchies
(bureaucracies). Journal of Leadership and
Management, 2(4).
Ivanov, S. (2013). Defects in modern organizations:
Field findings and discovery. International Journal of
Innovation, Management and Technology, 4(2), 204.
Ivanov, S. (2011). US analyst predicts a nationwide
Russian crisis in 2035-2040: It is not the US but Russia
that may collapse... Again. International Journal of
Humanities and Social Science, 1(15), 215-216.
Jaques, E. (1995). Glossary of Key Terms in Requisite
Organization. Gloucester, MA: Cason Hall and Co.
Jacques, E. (1996). Requisite Organization: A Total
System for Effective Management Leadership for the
21st Century. Cason Hall.
Jaques, E. (2002). Social power and the CEO:
Leadership and trust in a sustainable free enterprise
system. Greenwood Publishing Group.
Jaques, E. (2002, February). The Psychological
Foundations of Managerial Systems: A General
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[17]
[18]
[19]
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[21]
[22]
[23]
[24]
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Antonio, Texas: Midwinter Conference of the Society of
Consulting Psychology.
Jaques, E. (1998). On Leaving the Tavistock
Institute. Human Relations, 51(3), 251-257.
Jacques, E. (1990). In Praise of Hierarchy–Harvard
Business Review, 68(1), 127-133.
Jaques, E. & Cason, K, (1994). Human Capability.
Rockville. MD: Cason Hall.
Jaques, E., & Clement, S. D. (1994). Executive
leadership: A practical guide to managing complexity.
John Wiley & Sons.
Jaques, E., Gibson, R. O., & Isaac, D. J. (1978). Levels
of Abstraction in Logic and Human Action a Theory of
Discontinuity in the Structure of Mathematical Logic,
Psychological Behaviour, and Social Organization.
Gershenfeld, N. (2011). Physics of the future: how
science will shape human destiny and our daily lives by
the year 2100. Physics Today, 64(10), 56.
Stanley, M. (1974). Obedience to Authority: An
Experimental View. New York, NY: Harper & Row
Publishers, Inc.
Toffler, A. (1970). Future Shock. New York, NY:
Random House, Inc.
Tesla, N. (2007). Myth3ery Truly Yours, Nikola Tesla.
Radford, VA: Wilder Publications, LLC.
Orwell, G. (1961). 1984. New York, NY: Signet
Classic.
Peck, M. S. (1983). People of the Lie: The Hope for
Healing Human Evil. New York, NY: Touchstone.
Fromm, E. (1955). The Sane Society. Greenwich, CT:
Fawcett Publications.
Kardashev, N. S. (1964). Transmission of Information
by Extraterrestrial Civilizations. Soviet Astronomy,
8, 217.
PaKSoM 2022
The Human Development Index as a
Function of the Measure of Human
Development in Serbia with Reference
to the Countries of the Region
Mirjana Štaka1
1
Faculty of Economics, Banja Luka, Bosnia and Herzegovina
1
mirjana.staka@gmail.com
Keywords
Index, human development, factors, education.
Summary
The Human Development Index (HDI), as
one of the more complex composite indicators of
the level of human potential and quality of life,
is a combination of three dimensions (indicators,
factors): life expectancy at birth, average number
of years of life, education and expected number
of years of schooling combined into a unique
index of education and economic benefits
expressed by production, i.e. GDP (gross
domestic product) according to purchasing
power. The same measures and average
achievements in the field of health, education
and standard of living are shown. The HDI was
first developed in 1990 by the United Nations
Development Program (UNDP) and was
published as the Human Development Reports
(HDR).
The paper is particularly concerned with a
more perspective view of human development on
the territory of Serbia and the countries of the
region, with a number of socio-economic
implications for the development policy of the
observed countries. The special importance of
the conducted research stems from the fact that
in the Balkan countries, the factors identified at
the beginning of the transition period were often
marginalized in the creation of macroeconomic
ISBN: 978-86-82602-00-2
policies, but in recent years there have been more
and more positive developments in this regard.
Acknowledgement
The scientific contribution of the research
results can serve economic policy makers for
other analyzes of the considered policy measures
that reproduce the determinants of household
consumption.
References
[1]
[2]
[3]
[4]
[5]
[6]
Alkire, S., & Santos, M. E. (2010). Acute
multidimensional poverty: A new index for developing
countries. Human Development Research Paper
2010/11. UNDP, New York. Econometrica: Journal of
the Econometric Society, 629-650.
Allen, R. G. (1936). Professor Slutsky's theory of
consumers' choice. The Review of Economic Studies,
3(2), 120-129.
Anand, S. (2013). Sustainable Human Development:
Concepts and Priorities. UNDP.Human Development
Report Office 1994 Occasional Papers.
Engel,
E.
(1895).
Die
Productions-und
Consumtionsverhältnisse des Königreichs Sachsen
(1857). Wiederabgedr. Derselbe, Die Lebenskosten
belgischer Arbeiter-Familien früher und jetzt. Ermittelt
aus Familien-Haushaltrechnungen und vergleichend
zusammengestellt. Dresden.
Engel, E. (1895). Die Lebenskosten belgischer
Arbeiter-Familien früher und jetzt. C. Heinrich.
Paraguas, M. D. S., & Kamil, A. A. (2005). Model
Selection of Meat Demand System Using the
Rotterdam Model and the Almost Ideal Demand
System (AIDS). Journal of Modern Applied Statistical
Methods, 5(2), 26.
525
526
PaKSoM 2022
The Elaboration of Computer Game
System for the Measurement of
Higher-Order Cognitive Skills by
Middle-School Students
Evgeniya Gavrilova1, Elena Shepeleva2, Yulia Tokarchuk3
1,2,3
Moscow State University of Psychology and Education, Moscow, Russia
1
gavrilovaev@mgppu.ru, 2shepelevaea@mgppu.ru, 3tokarchukyua@mgppu.ru
Keywords
The “PL-modified” computer game system,
higher-order cognitive skills, decision making
Summary
The present study focused on the testing of a
special computer game system which entitled
“PL-modified” as a measurement tool for the
higher-order cognitive skills by middle-school
students. The relevance of the present research
task is determined by the practical requirements
formed for the contemporary diagnostics that
tends to stick to the usage of the modern
computer technologies for the precise
assessment
of
children’s
cognitive
potential [1,2].
The methodological basis of the present
study grounds on the theory of developing
education [3,4] by postulating that theoretical
thinking plays the pivotal role in the cognitive
development of junior-school students and, as a
result, in their educational success at the very
beginning. There are three key components of
theoretical thinking process including the mental
functions of the higher order (or the higher
mental actions) such as analysis, planning, and
reflection. Thus, these higher-order cognitive
skills were at the research focus of the present
study.
For the measurement of the skills a special
computer game system “PL-modified” was
elaborated. The whole computer system
represented the game field with the design of 9x9
ISBN: 978-86-82602-00-2
cells where the balls of different colors appeared.
Three balls were displayed at each game turn.
Participants had to move one ball by one mouseclick in a free space of the field in a way to build
a vertical, horizontal or diagonal line of five or
more balls with the same color. After such line
of colored balls has been built, it completely
disappeared and participant earned his points.
The system was based on the game called
“Lines” created by Gamos Company, but unlike
the original version where the balls were
displayed randomly, the present research version
implied certain sequences due to a principle
which might be changed in different cycles of the
game in a hidden way by stimulating students’
reasoning about the possible regularity of how
the balls are appearing each time. We assume
that these sequences or so-called ‘rules’ of the
balls’ (and students’ attempt to discover and use
it while planning their moves) will booster the
whole game process by raising the chances of
participants to earn more points. So, the variable
“analysis” was measured as a number of
correctly chosen rules; the variable “planning”
was assessed as a total number of game points;
and the variable “reflection” was pointed as a
number of balls at the last game move (as an
indicator of the structure of the whole game
field).
To control the interactions between the
researched variables two samples of school
students participated in the study. The first group
was represented by the middle-school students
(78 persons; age range 10-11 years) who learned
527
in a special school where the educational process
was organized in accordance with the theory of
developing education. The second group
included school students of the same age from
the standard school (N=58 persons). All
participants played four game sets each lasting
for 10 minutes. After this procedure abstract
intelligence measured by the Raven’s Advanced
Progressive Matrices [5] was controlled for each
group.
We discuss our study in terms of the
prospects for computer games and other digital
platforms as the measurement instruments in the
field of psychology and education.
The statistical analysis revealed the
following results: 1) the group 1 outperformed
the group 2 by the total number of game points
(775 vs. 685, p = 0.05, respectively); 2) the total
number of game points turned out to be impacted
by the number of correctly chosen rules for the
group 1, whereas the same level of game
efficiency in the group 2 strongly correlated only
with the level of intelligence. These empirical
facts confirmed our assumption about the most
significant impact of the variable analysis on the
game efficiency (i.e., the variable planning) for
those participants who is learning in accordance
with the theory of developing education. 3) The
SEM analysis confirmed the strong interactions
between three researched variables in the
group 1, but not group 2.
[2]
528
References
[1]
[3]
[4]
[5]
Adachi, P. J., & Willoughby, T. (2013). More than just
fun and games: the longitudinal relationships between
strategic video games, self-reported problem solving
skills, and academic grades. Journal of youth and
adolescence, 42, 1041-1052.
Quiroga, M. A., Román, F. J., De La Fuente, J.,
Privado, J., & Colom, R. (2016). The measurement of
intelligence in the XXI century using video games. The
Spanish Journal of Psychology, 19, E89
Davydov, V. V. (1996). Teoriya razvivayushchego
obucheniya [The theory of developmental education].
Moscow: Publ. INTOR.
Elkonin, D. B. (1966). Vozrastne vozmozhnosti
usvoeniya znaniy (mladshie klassy shkoly) [Agerelated opportunities for the assimilation of knowledge
(primary
school)].
Moscow,
Prosveshchenie
[Education].
Raven, Dzh. K., Kort, Dzh. Kh., Raven, Dzh. (2002).
Rukovodstvo k progressivnym matrictsam Ravena I
slovarnym shkalam. Razdel 3. Standartnye
progressivnye
matritsy
Ravena
(Vklyuchaya
parallelnye I plus versii) [Guide to the Progressive
Raven Matrices and Vocabulary Scales: Section 3:
Standard Progressive Matrices (including parallel and
plus versions)]. Moscow, Kogito-Tsentr.
PaKSoM 2022
Profitability of Pakistan’s Banking
Sector and COVID-19
Syed Ahsan Ali Gardazi1, Shumaila Zeb2
1,2
SZABIST, Islamabad, Pakistan
1
ahsan.ali.gardazi@gmail.com, 2shumaila.zeb@gmail.com
Keywords
Profitability, Banks, COVID-19, Autoregressive
Distributed Lag.
Summary
The main of this study was to investigate the
impact COVID-19 pandemic has had on the
profitability of the banking sector of Pakistan.
The analysis was done using the
Autoregressive Distributed Lag (ARDL) bounds
testing approach to cointegration while the data
was taken from open data source [1]. Banking
sector’s performance was proxied by the ratio of
return on assets [2]. The factors that were
included to determine banking sector’s
performance were Inflation, Liquid Capital,
Non-Performing
Loans,
Large
Scale
Manufacturing [3], Market Treasury Bills rate
and COVID 19.
findings of the current study are in contrast to
other studies [4-7]. This contrasting research
outcome may be because of policy measures
taken by the Government of Pakistan and the
State Bank of Pakistan. Some countries handled
the COVID-19 crisis poorly and thus were left
financially vulnerable [8], but in Pakistan due to
a pro-active approach of government entities,
adverse impact of the COVID-19 crisis seems to
have been mitigated.
This positive impact maybe linked to the
policies and programmes started by the
government and the regulator to stimulate the
economy in the face of the COVID-19 pandemic.
Future research can be expanded by adding
policy decision data so that exact effect of each
policy measure can be judged and accurately
investigated.
Acknowledgement
This research has tried to encompass and
visualize the time series data impacting the
banking sector. It tried to incorporate the effect
of COVID-19 on the profitability of the banking
sector, all the while monitoring for banking
sector specific and macroeconomic factors.
Return on assets proxied the banking sector of
Pakistan’s profitability. Data availability was
from Q4 2011 till Q1 2022. The data was
analyzed using the Autoregressive Distributed
Lag approach. The data was tested with some
diagnostic tests to test the model’s robustness
and was found to be sufficient to explain the
relationship between different interacting
variables.
I am grateful to all of those with whom I have
had the pleasure to work during this and other
related projects especially Dr. Shumaila Zeb and
Dr. Mubahsir Ali Khan.
It has been found that rather than having a
negative impact, COVID-19 seems to have had a
positive impact on the profitability of the
banking sector of Pakistan in the short run. The
[4]
ISBN: 978-86-82602-00-2
References
[1]
[2]
[3]
Pesaran, M. H., Shin, Y., & Smith, R. J. (2001). Bounds
testing approaches to the analysis of level
relationships. Journal of applied econometrics, 16(3),
289-326.
Tiko, J., Skvarciany, V., & Jureviciene, D. (2015).
Drivers of bank profitability: Case of Latvia and
Lithunia. Intellectual Economics, 9, 120-129
Hussain, F., Hyder, K., & Rehman, M. (2018).
Nowcasting LSM growth in Pakistan. SBP Research
Bulletin, 14(1), 1-16.
Barua, B., & Barua, S. (2021). COVID-19 implications
for banks: evidence from an emerging economy. SN
Business & Economics, 1, 1-28.
529
[5]
[6]
530
Elnahass, M., Trinh, V. Q., & Li, T. (2021). Global
banking stability in the shadow of Covid-19
outbreak. Journal of International Financial Markets,
Institutions and Money, 72, 101322.
Segerink, C., & Roszbach, K. (2021). Performance in
the Banking Sector: An Evaluation of Bank
Characteristics during the COVID-19 Pandemic.
[7]
[8]
Siregar, R. Y., Gunawan, A. H., & Saputro, A. N.
(2021). Impact of the COVID-19 shock on banking and
corporate sector vulnerabilities in Indonesia. Bulletin of
Indonesian Economic Studies, 57(2), 147-173.
Demirgüç-Kunt, A., Pedraza, A., & Ruiz-Ortega, C.
(2021). Banking sector performance during the
COVID-19 crisis. Journal of Banking & Finance, 133,
106305.
PaKSoM 2022
Impact of Financial Technology on
Financial Inclusion and Financial
Performance: Empirical Evidence
from Financial Sector of Pakistan
Sehar Saleem1, Shumaila Zeb2
1,2
Department of Management Science, SZABIST, Islamabad, Pakistan
1
Seharsaleem1991@gmail.com, 2shumaila.zeb@gmail.com
Keywords
Financial technology, financial
financial performance, fintech firms
inclusion,
Summary
Fintech has become an essential part of
society as a result of the fourth industrial
revolution [1,2]. It has changed every aspect of
providing financial services, thus raising
financial inclusion [3] and increasing financial
performance [4]. Financial inclusion contributes
to growth, as well as poverty and inequality
alleviation [5,6]. However, the Pakistani Central
Bank's (SBP) survey found only 16% of the
population financially included. Thus, the
financial industry must implement measures to
increase financial inclusion for Pakistan's
underprivileged. Exclusion of basic financial
services reduces social welfare and protection,
causing economic stress and lowering the
nation's prosperity [7]. However, due to fintech
development, traditional financial institutions'
responses to fintech adaptability, innovation, and
new entrants also affect its profitability and need
to be explored. Fintech data is scarce, especially
in developing countries like Pakistan, making
research on its effects a new topic to look into.
The study brings into focus new insights from
the perspective of fintech based financial
inclusion and financial performance. The main
goal of the study is to find out how commercial
banks' fintech adaptability, innovation intensity,
and traditional branch-opening structure affect
ISBN: 978-86-82602-00-2
the financial inclusion gap and how they affect
bank performance. The study will also look at
how the growth of fintech firms affects the
financial inclusion gap and whether they are a
friend or foe.
The study used quantitative positivist
methods [8]. This study examined 2006–2021
data. Since Pakistan's FinTech development is
exceptional among emerging nations, secondary
data from Pakistani commercial banks was used
to assess the banks' financial inclusion (FI) and
performance (FP). Fixed effect model and
Generalized Methods of Moments (GMM)
model of dynamic panels were used as estimators
to handle various diagnostic test results and to
add robustness [9].
Excessive level of a bank’s fintech
adaptability negatively impacts FI and FP due to
banking regulation and risk. Innovation intensity
correlated negatively with FI and FP, suggesting
that it was seen as a strategic need rather than an
advantage. Bank branches ascertained a negative
relationship with FP as it has a high cost and
requires time for growth, while being positive
with FI, whereas fintech firms negatively affect
both FI and FP of banks, confirming their
inefficient use of technology and service
provision.
Scholars, professionals, and policymakers
will be interested in the study's findings as the
fintech industry grows and integrates with the
traditional economy and incumbent financial
institutions. According to the study, commercial
531
banks should collaborate with fintech firms and
choose cost-effective technology to improve
financial outcomes and inclusivity. Banks no
longer require branches because they understand
the impact of the digital revolution on
consumers [10].
Acknowledgement
I would like to thank everyone who helped
me out during this time. I am indebted to express
my deep gratitude to my parents and siblings.
References
[1]
[2]
[3]
[4]
532
Iman, N. (2018). Is mobile payment still relevant in the
fintech era?. Electronic Commerce Research and
Applications, 30, 72-82.
Lin, W. R., Lin, C. Y., & Ding, Y. H. (2020). Factors
affecting the behavioral intention to adopt mobile
payment:
An
empirical
study
in
Taiwan. Mathematics, 8(10), 1851.
Kanga, D., Oughton, C., Harris, L., & Murinde, V.
(2022). The diffusion of fintech, financial inclusion and
income per capita. The European Journal of
Finance, 28(1), 108-136..
Putri, W. H., Nurwiyanta, N., Sungkono, S., &
Wahyuningsih, T. (2019). The emerging fintech and
financial
slack
on
corporate
financial
performance. Investment Management & Financial
Innovations, 16(2), 348
[5] Ahmad, M., Majeed, A., Khan, M. A., Sohaib, M., &
Shehzad, K. (2021). Digital financial inclusion and
economic growth: Provincial data analysis of
China. China Economic Journal, 14(3), 291-310.
[6] Emara, N., & El Said, A. (2021). Financial inclusion
and economic growth: The role of governance in
selected MENA countries. International Review of
Economics & Finance, 75, 34-54.
[7] Naumenkova, S., Mishchenko, S., & Dorofeiev, D.
(2019). Digital financial inclusion: Evidence from
Ukraine. Investment Management and Financial
Innovations, 16(3), 194–205.
[8] Isukul, A., & Tantua, B. (2021). Financial inclusion in
developing countries: applying financial technology as
a Panacea. Economic Growth and Financial
Development: Effects of Capital Flight in Emerging
Economies, 1-21.
[9] Almulla, D., & Aljughaiman, A. A. (2021). Does
financial technology matter? Evidence from an
alternative banking system. Cogent Economics &
Finance, 9(1), 1934978.
[10] Hoang, Y. H., Nguyen, D. T., Tran, L. H., Nguyen, N.
T., & Vu, N. B. (2021). Customers’ adoption of
financial services offered by banks and fintechs
partnerships: evidence of a transitional economy. Data
Science in Finance and Economics, 1(1), 77-95.
PaKSoM 2022
Teens’ Communication via Social
Media: Risks vs Opportunities
Tatiana Poskakalova1, Margarita Khusnutdinova2, Olga Salomatova3
1,2,3
Center for Interdisciplinary Research on Contemporary Childhood, Moscow, Russia
1
poskakalova@gmail.com, 2husnutdinovamr@mgppu.ru, 3k-ta@list.ru
Keywords
Adolescents,
digital
socialization,
communication, social media, risks
Summary
The majority of research works on
adolescents’
online
activities
and
communication focus on the negative effects of
digital media use [1,2]. However, today the
virtual world cannot be seen only from the
perspective of threat. Today the borders between
the real and virtual worlds are extremely flexible,
creating specific conditions for young people to
develop and transit into adulthood [3,4].
The results of an empirical study “Digital
Socialization of Adolescents”, conducted on the
basis of the Center for Interdisciplinary Research
on Contemporary Childhood, MSUPE, proved
that social networks might provide new
communicative opportunities and become a
resource for obtaining social support and selfknowledge through the creation of desired
images and experimenting with selfpresentation.
The data in the framework of the project was
collected from May to June, 2022, via Google
Forms and represented a survey on the basis of
the a questionnaire with 73 questions, related to
the motives, preferences and adolescents’ online
behavioral patterns. The sample included 539
Russian adolescents, aged from 12 to 18 years
old.
The empirical data showed that even though
most adolescents appreciate the virtual
possibilities of online communication, they still
prefer real life contacts such as going out or
gathering
together
offline.
Moreover,
ISBN: 978-86-82602-00-2
adolescents prefer to make friends offline rather
than online, considering social media exclusively
as an additional channel to live communication.
On the other hand, adolescents value social
media for the opportunity to "be themselves and
say what they think". Interestingly, the majority
of respondents rely on their own opinions or
parental advice while making important
decisions, rather than on the opinions of their
friends, other adults (teachers, relatives, etc.) or
acquaintances from the Internet.
All in all, the study, in the line with other
Center’s projects on digital media use in
adolescence, demonstrates that the majority of
young people have already become attuned to the
virtual reality and have worked out safety rules
and priorities in living their lives in mixed
reality [5,6].
References
[1]
[2]
[3]
[4]
[5]
Abrosimova, E.E., Filipova A.G., & Ardalyanova, A.Y.
(2019). Video blogging through the eyes of children
and adults: a sociological analysis. St. Petersburg:
Asterion.
Bogacheva, N.V., et al (Ed). (2019). Myths about
“generation Z”. Modern analytics of Education, 1(22).
Koroleva, D.O. (2017) “Portrait” of a contemporary
teenager through his self-presentation on a social
network. Available at: https://publications.hse.ru/
mirror/pubs/share/direct/214135303
Soldatova, G.U. (2018). Digital socialization in the
cultural-historical paradigm: a changing child in a
changing world. Social Psychology and Society,
9(3), 71–80.
Poskakalova, T.A. (2021). The Impact of
Aggressiveness on Self-Presentation, Communication
and Behavioral Risks of Adolescents in Social Media.
Digital Humanities and Technology in Education
(DHTE 2021): Collection of Articles of the II AllRussian Scientific and Practical Conference with
533
[6]
534
International Participation. November 11-12, 2021.
Moscow: Publishing house MSUPE, 432–445.
Rubtsova, O.V., Poskakalova, T.A., & Shiryaeva, E.I.
(2021). Features of On-Line Behavior in Adolescents
with Different Levels of Self-Concept Clarity.
Psychological Science and Education, 26(4), 20–33
PaKSoM 2022
Education in Antimicrobial
Stewardship: Awareness of Antibiotics
in Drinking Water
Nikola Puvača1, Svetlana Ignjatijević2, Jelena Vapa Tankosić3, Radivoj
Prodanović4
1,2,3,4
Faculty of Economics and Engineering Management in Novi Sad, University Business
Academy in Novi Sad, Novi Sad, Serbia
1
nikola.puvaca@fimek.edu.rs, 2ceca@fimek.edu.rs, 3jvapa@fimek.edu.rs,
4
rprodanovic@fimek.edu.rs
Keywords
Education, antimicrobial resistance, sanitation,
water, public health
Summary
Overuse of antimicrobials in agriculture,
veterinary medicine, and medicine has resulted
in an epidemic of antimicrobial resistance
(AMR) [1]. Several factors are responsible for
the spread of antibiotic-resistant bacteria, such as
the use of antimicrobial drugs in health care,
agriculture
and
livestock,
and
the
environment [2]. Resistance genes and resistant
microorganisms enter the soil, air, drinking
water, and sediment through various routes and
hotspots, such as hospital wastewater,
agricultural waste, and wastewater treatment
plants indicating the need for antimicrobial
stewardship programs (AS) to be expanded in all
related systems [3,4]. Education is a key
component of antimicrobial stewardship
interventions; however, current guidelines
suggest that education should not be used alone,
but rather should support other stewardship
activities [5]. Typically, such interventions target
prescribers, often general practitioners or
veterinarians, with few studies targeting
pharmacists, nurses, or even stewardship staff.
There are many educational interventions
available regarding antimicrobial stewardship,
but they are not exclusive [6]. A concomitant
ISBN: 978-86-82602-00-2
stewardship intervention, such as a prospective
audit and feedback, is also provided. Prescription
behavior may be positively impacted by such
strategies, but education cannot be isolated from
other interventions. A variety of educational
methods have been used to teach students,
including one-time seminars and online elearning modules [7]. However, social media
platforms and problem-based learning modules
have also been employed in supporting education
in AS [8]. While there is little evidence
supporting the use of educational interventions
as stand-alone interventions outside of regional
public health interventions, they appear to be an
integral component of AS. To demonstrate a
broader role for education in AS activities, future
studies should investigate the efficacy of
educational interventions, such as those targeting
non-prescribers, diseases, and general public
education to raise their awareness of antibiotic
residues in the environment [9]. If global
mitigation strategies are to be effective, it is
important to identify high-risk environments that
cause resistance to evolve and spread. AMR
transmission is therefore impacted by factors
such as infection control, sanitation, access to
clean water, antimicrobials, diagnostics, travel,
and migration [2]. In this review, a variety of
mechanisms are discussed, including AMR as a
global problem and factors that may contribute
to its spread, as well as antibiotics in drinking
water, AS education, and awareness.
535
Acknowledgement
This paper is a part of the project financed by
the City Administration for Environmental
Protection of Novi Sad of the Republic of Serbia
under Grant 501-1/2022-35v-II “Identification of
antibiotics in drinking water to raise awareness
of the danger to public health and the
environment”.
[4]
References
[7]
[1]
[2]
[3]
536
Puvača, N., & de Llanos Frutos, R. (2021).
Antimicrobial Resistance in Escherichia Coli Strains
Isolated from Humans and Pet Animals. Antibiotics,
10, 69.
Puvača, N., Vapa Tankosić, J., Ignjatijević, S., Carić,
M., & Prodanović, R. (2022). Antimicrobial Resistance
in the Environment: Review of the Selected Resistance
Drivers and Public Health Concerns. Journal of
Agronomy, Technology, and Engineering Management,
5, 793–802.
Lehner, C., et al. (2020). Effect of Antimicrobial
Stewardship on Antimicrobial Prescriptions for
[5]
[6]
[8]
[9]
Selected Diseases of Dogs in Switzerland. Journal of
Veterinary Internal Medicine, 34, 2418–2431.
Majumder, M. A. A., et al. (2020). Antimicrobial
Stewardship: Fighting Antimicrobial Resistance and
Protecting Global Public Health. Infection and Drug
Resistance, 13, 4713–4738.
Satterfield, J., Miesner, A. R., & Percival, K.M. (2020).
The Role of Education in Antimicrobial Stewardship.
Journal of Hospital Infection, 105, 130–141.
King, S., et al. (2016). Antimicrobial Stewardship.
Rand Health Quarterly, 5, 2.
Saiyad, S., Virk, A., Mahajan, R., & Singh, T. (2020).
Online Teaching in Medical Training: Establishing
Good Online Teaching Practices from Cumulative
Experience. International Journal of Applied and Basic
Medical Research, 10, 149–155.
Courtenay, M., et al. (2022). Delivery of Antimicrobial
Stewardship Competencies in UK Pre-Registration
Nurse Education Programmes: A National CrossSectional Survey. Journal of Hospital Infection,
121, 39–48.
Rahman, M. M., et al. (2022). An Overview of
Antimicrobial Stewardship Optimization: The Use of
Antibiotics in Humans and Animals to Prevent
Resistance. Antibiotics, 11, 667,.